Exhibit 99.1

                                  RISK FACTORS

Risks Relating to the Company

We have a limited operating history and have experienced development stage
losses.

     Our  company was formed in stages and put  together  as a single  entity in
February,  1999.  Prior to that time,  our company (then  Securities  Resolution
Advisors,  Inc.) was engaged in an unrelated  business,  and the web hosting and
auction services were conducted separately by our current officers informally as
entrepreneurial businesses. Accordingly, there is an extremely limited operating
history  upon which to base an  evaluation  of the company and our  business and
prospects.  Our business and prospects must be considered in light of the risks,
expenses and  difficulties  frequently  encountered  by companies in their early
stage of development, particularly companies in new and rapidly evolving markets
such as electronic commerce. Such risks include:

          o    our ability to anticipate and adapt to a developing market;
          o    successful implementation of our global auction search engine;
          o    dependence upon the level of hits to our sites; and
          o    development of equal or superior Internet  portals,  auctions and
               related services by competitors;

     To address these risks, we must,  among other things,  increase  traffic to
our websites,  maintain our customer base,  attract  significant  numbers of new
customers,   respond  to   competitive   developments,   implement  and  execute
successfully  our  business  strategy  and  continue  to develop and upgrade our
technologies and customer services.  We cannot offer any assurances that that we
will be successful in addressing these risks.

     We incurred a net loss of $5,493,136  for the year ended  December 31, 2000
(which includes an interest expense of $1,597,045 in connection with the sale of
the 8% convertible note) and a net loss of $2,183,040 in the year ended December
31, 1999. There can be no assurance that we will be profitable in the future.

Our capital is limited and need additional financing to implement our business
plan and continue operations.

     We require  substantial  working  capital to fund our business.  Additional
funds are  necessary for our company to implement its business plan and continue
our operations.  If we are unable to obtain financing in the amounts desired and
on acceptable terms, or at all, we will be required to reduce  significantly the
scope of our presently  anticipated  advertising and other  expenditures,  which
could have a material  adverse  effect on our  growth  prospects  and the market
price of our  common  stock.  If we raise  additional  funds by  issuing  equity
securities,  our shareholders will be further diluted. Based on our current cash
position,  we currently  need an infusion of $750,000 of  additional  capital to
fund our  anticipated  marketing  costs and operating  expenses over the next 12
months.  If we do not receive this money, or at least an infusion of $50,000 per
month, then we will only be able to continue operations through the end of June.

There is substantial dout as to our ability to continue as a going concern, and
our business has a high risk of faiure.

     Due  to  our  recurring  losses  from  operations  and  a  working  capital
deficiency,  our independent  auditors have raised  substantial  doubt as to our
ability to  continue as a going  concern.  As stated  above,  the success of our
business operations will depend upon our ability to obtain further financing. If
we are unable to obtain an infusion of  additional  capital,  then our  business
will fail and our stock will be worthless.

<PAGE>





We have only recently introduced the collectibles portal and we are unable to
guarantee that the marketplace will except our services and products.

     The  collectibles  portal was only  launched  in January  2000.  We met our
initial  objectives with the collectibles  portal by December 31, 2000. When the
portal was  initially  launched,  it had the  capability  to search and  collect
information  from  every  collectibles  site  on the  Internet  and  store  this
information.  When we acquired the Collecting Channel in November 2000, we added
the following features to the portal: (1) providing  information on a variety of
collectible  topics including price guides,  show calendars,  auction  listings,
library  information,  grading  and  authentication,   publications  restoration
services,  collecting software,  dealers, and classifieds;  and (2) serving as a
gatekeeper by linking collectors immediately to selected websites.  During 2001,
we plan on  adding  new  features  to the  website  to  enhance  our  customers'
experience.  These  enhancements  may include a broadcast  and  broadband  video
archive, a members only area for certain archived articles and pricing data, and
an  interactive  tradeshow  and  events  calendar.  We also plan to add a global
auction search and bidding platform, which is still in progress. However, we are
unable to  provide  any  assurances  that the  marketplace  will  accept the new
direction the company has taken and the services it is offering, or that we will
be able to provide such services at a profit.  To date, the portal has generated
minimal revenue.

We expect to incur additional losses as a result of the anticipated significant
increase in marketing and promotional expenses.

     We intend to expend significant financial and management resources on brand
development,  research  site  development,  marketing and  advertising,  website
development, and technology and operating infrastructure.  Primarily as a result
of the anticipated  significant marketing and promotional expenses, we expect to
incur additional losses, and such losses are expected to increase  significantly
from current levels.  Depending upon the amount of financing that we may be able
to obtain in the near  term,  we expect to expend a  significant  percentage  of
those funds on marketing  and  promotional  expenses.  In  addition,  we plan to
continue to increase our operating  expenses  significantly in order to increase
our customer base,  increase the size of our staff, expand our marketing efforts
to  enhance  our  brand  image,  increase  our  visibility  on other  companies'
high-traffic  websites,  increase our software development efforts,  support our
growing infrastructure,  and acquire complementary  businesses and technologies.
Any  capital   expenditures  will  be  contingent  upon  securing  the  required
financing.

     Moreover,  to the extent that increases in such operating  expenses precede
or are not subsequently followed by increased revenues, our business, results of
operations and financial  condition will be materially  adversely  affected.  We
cannot provide any assurances that our revenues will increase,  or even continue
at their current  level,  or that we will achieve or maintain  profitability  or
generate positive cash flow from operations in future periods. We have made, and
expect  in  the  future  to  continue  to  make,   significant   investments  in
infrastructure and personnel in advance of levels of revenue necessary to offset
such  expenditures.  We may be unable to adjust  spending in a timely  manner to
compensate for any unexpected revenue shortfall.

Our operating results are unpredictable and are expected to fluctuate in the
future.

     You  should not rely on the  results  for any  period as an  indication  of
future performance.  Our operating results are unpredictable and are expected to
fluctuate  in the future due to a number of  factors,  many of which are outside
our control. These factors beyond our control include:

          o    our  ability to  significantly  increase  our  customer  base and
               traffic to our websites,  manage our inventory mix and the mix of
               products  offered,  liquidate our  inventory in a timely  manner,
               maintain gross margins, and maintain customer satisfaction;

                                       2

<PAGE>

          o    the availability and pricing of merchandise from vendors;
          o    consumer  confidence  in encrypted  transactions  in the Internet
               environment;
          o    the timing,  cost and availability of advertising on our websites
               and other entities' websites;
          o    temporary popularity of some collectibles;
          o    the amount  and  timing of costs  relating  to  expansion  of our
               operations;
          o    the  announcement  or  introduction  of new types of merchandise,
               service offerings or customer services by our competitors;
          o    technical  difficulties  with  respect  to  consumer  use  of our
               websites;
          o    our ability to make  acquisitions of  complementary  business and
               technologies;
          o    governmental regulation by federal or local governments; and
          o    general economic  conditions and economic  conditions specific to
               the Internet and electronic commerce.

     As a strategic response to changes in the competitive  environment,  we may
from  time to time make  certain  service,  marketing  or  supply  decisions  or
acquisitions  that  could  have a  material  adverse  effect on our  results  of
operations and financial condition.

We will increase our reliance on our relationships with online companies for
advertising.

     Achieving our goal of successfully  implementing  our business and creating
the collectible  portal will require increased  dependence on relationships with
other online companies.  Our current relationships  include, but are not limited
to,   agreements   for   promotional   placements,   sponsorships   and   banner
advertisements.  We have an  interactive  services  agreement  with  AOL  Canada
pursuant  to  which  we  handle  the  content  and  maintenance  of the  website
www.tartans.com,  and we sell  advertising and products on the site.  Generally,
our agreements are not exclusive and do not provide for guaranteed  renewal.  We
have been unable to establish any material  relationships  with online companies
and have, as a result,  generated minimal revenues from advertisements placed by
online companies. We will also need to expand our advertising  arrangements with
auction sites and other companies in the sports and  collectibles  arena.  These
website advertising arrangements will include mutual linking arrangements,  such
as other  companies  linking  to our site and our site  linking  to the sites of
those  companies.  We are  currently  not paying for any  advertisements  on the
Internet. This increased dependence on online advertising relationships includes
the following risks:

          o    a competitor could purchase  exclusive rights to attractive space
               on one or more key sites;
          o    it is uncertain that significant  spending on these relationships
               will increase our revenues substantially or at all;
          o    the expected revenue  increases  resulting from such spending may
               not occur within the time periods that we are expecting;
          o    space on other  websites or the same sites may  increase in price
               or cease to be available on reasonable terms or at all;
          o    even if these relationships are successful, we may not be able to
               obtain  adequate  amounts of  merchandise  to meet the  increased
               demand that is generated;
          o    online companies will be unable to deliver a sufficient number of
               customer visits or impressions; and
          o    online  companies may compete with our company for limited online
               auction revenues.

Any termination of our arrangements with other online companies could have a
material adverse effect on our business, results of operations and financial
condition.


                                        3


<PAGE>

The successful operation of our business depends upon the supply of critical
technology elements from other third parties, including our Internet service
provider and technology licensors.

     Our  operations  depend on a number of third  parties for  Internet/telecom
access,  delivery services,  and software services. We have limited control over
these third parties and no long-term  relationships  with any of them. We do not
own a  gateway  onto the  Internet,  but  instead  rely on an  Internet  service
provider to connect our websites to the  Internet.  We have an Internet  service
provider  agreement  with  Exodus  Communications.  From  time to time,  we have
experienced  temporary  interruptions  in our websites'  connection and also our
telecommunications  access.  We license  technology  and related  databases from
third parties for certain elements of our properties,  including,  among others,
technology  underlying the delivery of news, stock quotes and current  financial
information.  Furthermore,  we are  dependent on hardware  suppliers  for prompt
delivery,  installation,  and service of servers and other  equipment to deliver
our products and services. Our internally-developed  auction software depends on
an  operating  system,  database  and server  software  that was  developed  and
produced  by and  licensed  from  third  parties.  We  have  from  time  to time
discovered  errors and defects in the software  from these third parties and, in
part,  rely on these  third  parties to correct  these  errors and  defects in a
timely manner.  Any errors,  failures,  interruptions,  or delays experienced in
connection with these  third-party  technologies and information  services could
negatively impact our relationship with users and adversely affect our brand and
our business, and could expose us to liabilities to third parties.

We rely on third parties for our order fulfillment, and failures on the part of
these third parties could harm our business.

     We use overnight courier and delivery services for substantially all of our
auction products.  Should these services be unable to deliver our products for a
sustained  time period as a result of a strike or other  reason,  our  business,
results of operations and financial condition would be adversely  affected.  If,
due to computer systems failures or other problems related to these  third-party
service providers,  we experience any delays in shipment, our business,  results
of operations and financial condition would be adversely affected.

Our success will depend, in part, on our ability to enter into distribution
agreements with Web browser providers, operators of online networks and
websites, software developers and computer manufacturers.

     To increase traffic for our online  properties and make them more available
and  attractive  to  advertisers  and  consumers,  we hope to have  distribution
agreements  and  informal  relationships  with  leading Web  browser  providers,
operators of online  networks  and leading Web sites,  software  developers  and
computer  manufacturers.  These  distribution  arrangements  typically  are  not
exclusive  and do not  extend  over a  significant  amount  of  time.  Potential
distributors  may not offer  distribution  of our  properties  and  services  on
reasonable terms. Third parties that provide distribution  typically charge fees
or  otherwise  impose  additional  conditions  on  the  listing  of  our  online
properties.  Any failure to  cost-effectively  obtain  distribution or to obtain
distribution on terms that are reasonable,  could have a material adverse effect
on our business, results of operations, and financial condition.

Our failure to attract advertising revenue in quantities and at rates that are
satisfactory to us could harm our business.

     We  expect  in the  future to  derive a  portion  of our net  revenue  from
advertisements  displayed  on  our  websites.  Currently,  we  generate  minimal
revenues  from website  advertising  and our ability to achieve any  substantial
advertising revenue depends upon:

          o    the development of a large base of users  possessing  demographic
               characteristics attractive to advertisers;

                                       4
<PAGE>

          o    the level of traffic on our websites;
          o    our ability to derive better  demographic  and other  information
               from our users;
          o    acceptance by advertisers  of the Web as an  advertising  medium;
               and
          o    our  ability  to  transition  and  expand  into  other  forms  of
               advertising.

     No  standards  have yet  been  widely  accepted  for the  effectiveness  of
Web-based  advertising.  Advertising filter software programs are available that
limit or remove advertising from an Internet user's desktop.  Such software,  if
generally  adopted  by users,  may have a  materially  adverse  effect  upon the
viability of advertising on the Internet.  If we are  unsuccessful in sustaining
or increasing  advertising sales levels, it could have a material adverse effect
on our business, operating results and financial condition.

Our failure to manage growth could place a significant strain on our management,
operational and financial resources.

     We have rapidly and  significantly  expanded our  operations and anticipate
that  significant  expansion of our  operations  will continue to be required in
order to address potential market  opportunities.  This rapid growth has placed,
and is expected to continue to place,  a significant  strain on our  management,
operational  and financial  resources.  Increases in the number of employees and
the  volume  of  merchandise  sales  have  placed  significant  demands  on  our
management,  which currently includes only three executive officers. In order to
manage the  expected  growth of our  operations,  we will be  required to expand
existing   operations,   particularly  with  respect  to  customer  service  and
merchandising, to improve existing and implement new operational,  financial and
inventory systems, procedures and controls.

     If our company's growth continues,  we will experience a significant strain
on our resources because of:

          o    the  need  to  manage   relationships   with  various  technology
               licensors,  advertisers,  other  Websites and services,  Internet
               service providers and other third parties;
          o    difficulties in hiring and retaining skilled personnel  necessary
               to support our businesses;
          o    the need to train and manage a growing employee base; and
          o    pressures  for the  continued  development  of our  financial and
               information management systems.

     Difficulties we may encounter in dealing  successfully with the above risks
could  seriously  harm our  operations.  We cannot offer any assurance  that our
current personnel,  systems, procedures and controls will be adequate to support
our future operations or that management will be able to identify,  hire, train,
retain, motivate and manage required personnel.

If our  acquisitions  are not  successful,  or if we are not  able to  structure
future acquisitions in a financially efficient manner, there could be an adverse
effect on our business and operations.

     If  appropriate  opportunities  present  themselves,  we intend to  acquire
businesses,  technologies,  services  or products  that we believe  will help us
develop  and  expand  our  business.  The  process of  integrating  an  acquired
business,  technology,  service or product may result in operating  difficulties
and  expenditures   which  we  cannot  anticipate  and  may  absorb  significant
management  attention that would otherwise be available for further  development
of our existing business.  Moreover, the anticipated benefits of any acquisition
may not be realized. Any future acquisitions of other businesses,  technologies,
services  or  products  might  require  us to obtain  additional  equity or debt
financing,  which might not be available to us on favorable terms or at all, and
might be dilutive.  Additionally,  we may not be able to successfully  identify,
negotiate or finance future  acquisitions or to integrate  acquisitions with our
current business.

                                       5

<PAGE>

Our company's success still depends upon the continued services of Gregory
Rotman, Richard Rotman and John Martin.

     At  present,   our  company   employs  18  full-time   personnel.   We  are
substantially  dependent  on the  continued  services  of  members of our senior
management:  Gregory Rotman, our President and Chief Executive Officer;  Richard
Rotman, our Chief Financial  Officer,  Vice President,  and Secretary,  and John
Martin,  our  Vice  President  and  Chief  Technical  Officer.   Each  of  these
individuals  has acquired  specialized  knowledge and skills with respect to our
company and our operations.  As a result,  if any of these  individuals  were to
leave our company,  we could face  substantial  difficulty  in hiring  qualified
successors and could experience a loss in productivity  while any such successor
obtains  the  necessary  training  and  experience.  We do not have a  long-term
employment  agreements  with any of our key personnel and we do not maintain any
key person life insurance.

Our company's success will depend on our ability to attract and retain qualified
personnel.

     We  believe  that our  future  success  will  depend  upon our  ability  to
identify,  attract,  hire,  train,  motivate  and  retain  other  highly-skilled
managerial,  merchandising,  engineering,  technical  consulting,  marketing and
customer  service  personnel.  We  cannot  offer  assurances  that  we  will  be
successful in attracting, assimilating or retaining the necessary personnel, and
the failure to do so could have a material adverse effect on our business.

Our success is dependent upon our ability to purchase inventory at attractive
prices and to liquidate inventory rapidly.

     Although we have shifted our focus to our collectibles site, at the present
time  Rotman  Auction is still a distinct  operating  entity and is our  primary
source  of  revenue.   Our  Rotman   Auction   operations   presently   comprise
approximately  98% of our revenues.  In addition to auctioning  collectibles  on
consignment,  currently  approximately  80% of the  aggregate  sales  prices  of
collectibles sold at our auctions are from our own inventory.  We purchase these
collectibles  from dealers and  collectors  and assume the  inventory  and price
risks of these items until they are sold.  Due to the  inherently  unpredictable
nature of auctions, it is impossible to determine with certainty whether an item
will sell for more than the price we paid. Further,  because minimum opening bid
prices for the merchandise  listed on our websites  generally are lower than our
acquisition  costs for such  merchandise,  we cannot offer any assurance that we
will  achieve  positive  gross  margins on any given  sale.  If we are unable to
resell  our  purchased  collectibles  when  we want or  need  to,  or at  prices
sufficient to generate a profit on their  resale,  or if the market value of our
inventory of purchased collectibles were to decline, our operating results would
be negatively affected.

Our success is dependent upon market awareness of our brand.

     We believe that the importance of brand  recognition  will increase as more
companies engage in commerce over the Internet. Development and awareness of our
company will depend  largely on our success in increasing  our customer base. If
vendors do not perceive us as an effective marketing and sales channel for their
merchandise,   or   consumers  do  not  perceive  our  company  as  offering  an
entertaining and desirable way to purchase  merchandise,  we may be unsuccessful
in promoting and maintaining  our brand.  Depending upon the amount of financing
that  we may be  able to  obtain  in the  near  term,  we  expect  to  expend  a
significant  percentage of those funds on marketing and promotional expenses. We
also intend enter into reciprocal advertising agreements with other companies.

     Furthermore,  in order to attract and retain  customers  and to promote and
maintain  our  company in  response  to  competitive  pressures,  we may find it
necessary to increase our  marketing  and  advertising  budgets and otherwise to


                                       6
<PAGE>

increase  substantially  our financial  commitment  to creating and  maintaining
brand loyalty among  vendors and  consumers.  We will need to continue to devote
substantial financial and other resources to increase and maintain the awareness
of our online brands among website users,  advertisers  and e-commerce  entities
that we have advertising relationships with through:

          o    Web advertising and marketing;
          o    traditional media advertising campaigns; and
          o    providing a high quality user experience.

Our results of operations could be seriously harmed if our investment of
financial and other resources, in an attempt to achieve or maintain a leading
position in Internet commerce or to promote and maintain our brand, does not
generate a corresponding increase in net revenue, or if the expense of
developing and promoting our online brands becomes excessive.

Our competitors often provide Internet access or computer hardware to our
customers and they could make it difficult for our customers to access our
services.

     Our users must access our services through an Internet access provider,  or
ISP,  with which the user  establishes  a direct  billing  relationship  using a
personal computer or other access device. To the extent that an access provider,
such as America Online,  or a computer or computing device  manufacturer  offers
online services or properties  that are  competitive  with those of our company,
the user may find it more  convenient  to use the services or properties of that
access  provider  or   manufacturer.   In  addition,   the  access  provider  or
manufacturer may make it difficult to access our services by not listing them in
the access provider's or manufacturer's  own directory.  Also, because an access
provider gathers  information from the user in connection with the establishment
of the billing  relationship,  an access provider may be more effective than our
company in tailoring  services and  advertisements to the specific tastes of the
user.  To the extent that a user opts to use the services  offered by his or her
access provider or those offered by computer or computing  device  manufacturers
rather  than the  services  provided by our  company,  our  business,  operating
results and financial condition will be materially adversely affected.

System failures could result in interruptions in our service, which could harm
our business.

     A key  element of our  strategy is to generate a high volume of traffic to,
and use of,  our  websites.  A portion of our  revenues  depend on the number of
customers  who  use our  websites  to  purchase  merchandise.  Accordingly,  the
satisfactory   performance,   reliability  and  availability  of  our  websites,
transaction-processing systems, network infrastructure and delivery and shipping
systems are critical to our operating results, as well as our reputation and our
ability to attract and retain customers and maintain  adequate  customer service
levels.

     We periodically  have experienced  minor systems  interruptions,  including
Internet  disruptions.  Some  of the  interruptions  are  due to  upgrading  our
equipment to increase speed and  reliability.  During these upgrades the outages
may have lasted for a few hours.  During the past year we had one system failure
on September 20, 2000 when our Sun E450 server's  motherboard had a failure that
disrupted  our web hosting  service for  approximately  eight  hours.  We have a
service  agreement  with Sun,  but the website was still down for  approximately
eight hours. Any systems  interruptions,  including Internet  disruptions,  that
result in the  unavailability  of our  websites  or  reduced  order  fulfillment
performance  would  reduce  the  volume  of goods  sold,  which  could  harm our
business.  In addition to placing  increased  burdens on our engineering  staff,
these outages create a flood of user  questions and  complaints  that need to be
responded  to by our  personnel.  Although we have been taking steps to increase
the reliability and redundancy of our system, these steps are expensive,  reduce
our margins,  and may not be successful in reducing the frequency or duration of
unscheduled downtime. We cannot offer assurances that:

                                       7

<PAGE>

          o    we will be able to  accurately  project  the  rate or  timing  of
               increases if any, in the use of our websites;
          o    we will be able to timely  expand and  upgrade  our  systems  and
               infrastructure  to  accommodate  increases  in  the  use  of  our
               websites;
          o    we will have uninterrupted access to the Internet;
          o    our users will be able to reach our Web sites;
          o    communications via our Web sites will be secure;
          o    we or our  suppliers'  network will be able to timely  achieve or
               maintain  a  sufficiently  high  capacity  of data  transmission,
               especially if the customer usage of our websites increases.

Any disruption in the Internet access to our Websites or any systems failures
could significantly reduce consumer demand for our services, diminish the level
of traffic to our websites, impair our reputation and reduce our commerce and
advertising revenue.

We do not have redundant systems, a disaster recovery plan or alternate
providers with respect to our communications hardware and computer hardware.

     In June 2000,  we moved all of our  communications  hardware  and  computer
hardware  from our leased  facility in Owings  Mills,  Maryland to our corporate
headquarters  in  Massachusetts.  We then  relocated  our main servers to Exodus
Communications,   located  45  minutes  from  our  corporate  headquarters.  Our
Worcester   facilities  are  not  protected  from  fire,   flood,   power  loss,
telecommunication failure, break-in and similar events. We do not presently have
fully  redundant  systems,  a  formal  disaster  recovery  plan  or  alternative
providers of hosting services. A substantial interruption in these systems would
have a  material  adverse  effect on our  business,  results of  operations  and
financial condition.

     Our servers are also vulnerable to computer viruses, physical or electronic
break-ins,  attempts by third parties to deliberately exceed the capacity of our
systems and similar disruptive  problems.  Computer viruses,  break-ins or other
problems caused by third parties could lead to  interruptions,  delays,  loss of
data or  cessation  in service to users of our  services  and products and could
seriously harm our business and results of operations.

Our future revenues will depend upon the continued consumer interest in the
collectibles industry and demand for the types of collectibles that are listed
for sale.

     We obtain some of our revenues from fees from sellers for listing  products
for sale on our service and fees from successfully  completed  auctions.  Demand
for collectibles is influenced by the popularity of certain themes, cultural and
demographic trends,  marketing and advertising expenditures and general economic
conditions.  The popularity of certain  categories of items, such as toys, dolls
and memorabilia,  among consumers may vary over time due to perceived  scarcity,
subjective  value,  and societal and consumer  trends in general.  Because these
factors  can  change  rapidly,  customer  demand  also can shift  quickly.  Some
collectibles  appeal to customers  for only a limited  time.  The success of new
product  introductions  depends on various factors,  including product selection
and quality,  sales and marketing  efforts,  timely  production and delivery and
consumer  acceptance.  We  may  not  always  be  able  to  respond  quickly  and
effectively  to changes in  customer  taste and demand due to the amount of time
and financial  resources that may be required to bring new products to market. A
decline in the popularity of, or demand for, certain collectibles or other items
sold through our service could reduce the overall volume of  transactions on our
service, resulting in reduced revenues. In addition, certain consumer "fads" may
temporarily  inflate the volume of certain types of items listed on our service,
placing a significant strain upon our  infrastructure and transaction  capacity.
These trends may also cause  significant  fluctuations in our operating  results
from one  quarter to the next.  Any  decline in demand for the goods or services
offered  through  our  collectibles  portal as a result of changes  in  consumer
trends could have a material adverse effect on our business.

                                       8

<PAGE>

There are certain provisions of Delaware law that could have anti-takeover
effects.

     Certain provisions of Delaware law and our Certificate of Incorporation, as
amended,  and  Amended  and  Restated  Bylaws  could  make  more  difficult  our
acquisition  by means of a tender  offer,  a proxy  contest or otherwise and the
removal  of  our  incumbent   officers  and   directors.   Our   Certificate  of
Incorporation  and  Amended  and  Restated  Bylaws  do not do  not  provide  for
cumulative  voting in the  election of  directors.  Our Bylaws  include  advance
notice  requirements  for the  submission by  stockholders  of  nominations  for
election to the Board of Directors and for  proposing  matters that can be acted
upon by stockholders at a meeting.

     We are  subject  to the  anti-takeover  provisions  of  Section  203 of the
Delaware  General  Corporation  Law (the  "DGCL"),  which will  prohibit us from
engaging in a "business  combination"  with an  "interested  stockholder"  for a
period of three  years  after the date of the  transaction  in which the  person
became an interested  stockholder unless the business combination is approved in
a prescribed  manner.  Generally,  a "business  combination"  includes a merger,
asset or stock sale, or other  transaction  resulting in a financial  benefit to
the interested stockholder.  Generally, an "interested  stockholder" is a person
who, together with affiliates and associates,  owns (or within three years prior
to the determination of interested stockholder status, did own) 15% or more of a
corporation's voting stock. The existence of this provision would be expected to
have an  anti-takeover  effect  with  respect to  transactions  not  approved in
advance by the Board of Directors,  including  discouraging  attempts that might
result in a premium over the market price for the shares of common stock held by
stockholders.  Section 203 could adversely affect the ability of stockholders to
benefit  from  certain  transactions  which  are  opposed  by  the  Board  or by
stockholders  owning 15% of our common stock, even though such a transaction may
offer our  stockholders the opportunity to sell their stock at a price above the
prevailing market price.

Our  success  is  dependent  in part  on our  ability  to  obtain  and  maintain
proprietary protection for our technologies and processes.

     Our most important  intellectual  property  relates to the software for our
web-hosting services and our research center. We do not have any patents for our
designs or  innovations  and we may not be able to obtain  copyright,  patent or
other protection for our proprietary technologies or for the processes developed
by our employees.  Legal standards  relating to intellectual  property rights in
computer software are still developing and this area of the law is evolving with
new  technologies.  Our  intellectual  property  rights  do  not  guarantee  any
competitive  advantage and may not sufficiently  protect us against  competitors
with similar technology.

     As  part  of  our  confidentiality  procedures,  we  generally  enter  into
agreements   with  our  employees  and  consultants  and  limit  access  to  and
distribution of our software,  documentation and other proprietary  information.
We  cannot  offer   assurances  that  the  steps  we  have  taken  will  prevent
misappropriation  of our  technology  or that  agreements  entered into for that
purpose will be enforceable.  Notwithstanding  the precautions we have taken, it
might be  possible  for a third  party to copy or  otherwise  obtain and use our
software or other proprietary  information  without  authorization or to develop
similar software  independently.  Policing unauthorized use of our technology is
difficult,  particularly  because  the global  nature of the  Internet  makes it
difficult to control the ultimate  destination  or security of software or other
data  transmitted.  The laws of other countries may afford our company little or
no effective  protection of its  intellectual  property.  Because our success in
part relies upon our technologies,  if proper protection is not available or can
be circumvented, our business may suffer.


                                        9


<PAGE>


Intellectual property infringement claims would harm our business.

     We  may  in  the  future  receive  notices  from  third  parties   claiming
infringement by our software or other aspects of our business. Any future claim,
with or  without  merit,  could  result  in  significant  litigation  costs  and
diversion of resources, including the attention of management, and require us to
enter into royalty and licensing agreements, which could have a material adverse
effect on our business,  results of operations  and  financial  condition.  Such
royalty and  licensing  agreements,  if required,  may not be available on terms
acceptable  to the company or at all.  In the  future,  we may also need to file
lawsuits  to enforce  our  intellectual  property  rights,  to protect our trade
secrets,  or to determine  the validity and scope of the  proprietary  rights of
others.  Such litigation,  whether  successful or unsuccessful,  could result in
substantial  costs and  diversion  of  resources,  which  could  have a material
adverse effect on our business, results of operations and financial condition.

Our success is dependant on licensed technologies.

     We rely on a variety of technologies that we license from third parties. We
license most of our software from third party vendors. We license our portal and
global auction search  technology  from Verity,  Inc. Our principal web server's
software is Apache, a free web server  software.  When we acquired the assets of
CollectingChannel.com we were granted two perpetual licenses for the proprietary
software  eCMS and  acquired the source  codes for these  licenses.  This is the
content  management system primarily used by the  CollectingChannel.com  We also
rely on encryption and authentication  technology licensed from VeriSign through
an online user agreement to provide the security and authentication necessary to
effect secure transmission of confidential information.

     We cannot make any assurances that these  third-party  technology  licenses
will continue to be available to our company on commercially  reasonable  terms.
The loss of  these  licenses  could  have a  material  impact  on our  business.
Although no single  software  vendor  licensor  provides  us with  irreplaceable
software,  the  termination  of a license and the need to obtain and install new
software on our systems would interrupt our company's operations.  Our inability
to maintain or obtain upgrades to any of these technology  licenses could result
in  delays  in  completing  our  proprietary   software   enhancements  and  new
developments  until  equivalent  technology  could be  identified,  licensed  or
developed and integrated.  Any such delays would materially adversely affect our
business, results of operations and financial condition.

We may be exposed to liability for content retrieved from our websites.

     We may be exposed to liability for content retrieved from our websites. Our
exposure to  liability  from  providing  content on the  Internet  is  currently
uncertain. Due to third party use of information and content downloaded from our
websites, we may be subject to claims relating to:

          o    the  content  and  publication  of  various  materials  based  on
               defamation,  libel,  negligence,  personal injury and other legal
               theories;
          o    copyright,  trademark or patent  infringement and wrongful action
               due to the actions of third parties; and
          o    other  theories  based  on  the  nature  and  content  of  online
               materials made available through our websites.

     Our  exposure  to  any  related  liability  could  result  in us  incurring
significant  costs  and  could  also  be a  drain  on our  financial  and  other
resources.  We do not  maintain  insurance  specifically  covering  such claims.
Liability or alleged  liability could further harm our business by diverting the
attention and resources of our  management and by damaging our reputation in our
industry and with our customers.

                                       10

<PAGE>

We are involved in litigation.

     We are currently involved in a dispute with Marc Stengel and Hannah Kramer,
each of whom is a substantial  shareholder  of our company,  and with Whirl Wind
Collaborative  Design,  Inc.  ("Whirl  Wind") and Silesky  Marketing,  Inc., two
entities  affiliated  with Marc Stengel.  Mr.  Stengel and Ms. Kramer are former
directors of the company. Mr. Stengel is also a former officer and employee.

     The lawsuit was initially  filed against Mr. Stengel alone in June 2000. It
remains  pending in the US District Court for the District of Maryland.  A First
Amended  Complaint  was  filed on  October  11,  2000,  which  added  the  three
additional  defendants  identified  above.  The First  Amended  Complaint  seeks
rescission  of the  transactions  pursuant to which Mr.  Stengel and Ms.  Kramer
obtained their  substantial  stock  interests in the company,  and seeks damages
against Mr. Stengel and Ms. Kramer,  in both cases, for  misrepresentations  and
omissions under the common law of fraud, the Maryland Securities Act and certain
contractual  warranties and  representations.  The First Amended  Complaint also
seeks  damages and remedies  against Mr.  Stengel for breach of his  contractual
duties as an employee of the company and for  misrepresentations  he made to the
company while acting as an employee;  these claims relate to businesses operated
by Mr.  Stengel  in  competition  with  our  company  and  using  our  company's
resources.  The First Amended  Complaint also seeks to recover  damages from Mr.
Stengel and the two  corporate  defendants  for  conversion  of certain of Sales
Online's assets, resources and employee services, and for unjust enrichment. All
defendants  have filed answers to the First Amended  Complaint.  Mr. Stengel has
filed  a  counterclaim   seeking   damages  against  Sales  Online  for  alleged
interference  with his ability to sell shares of common  stock of Sales  Online.
Whirl Wind has filed a  counterclaim  against  Sales Online for  conversion of a
small quantity of computer equipment alleged to be owned by Whirl Wind.

     On or about June 16, 2000, Marc Stengel commenced an action in the Delaware
Chancery Court pursuant to Section 225 of the Delaware  General  Corporation Law
(the "Delaware 225 Action")  seeking a determination  from the Court that he was
improperly  removed  as an  officer  and  director  of the  Company,  should  be
reinstated  as such,  and that Gregory  Rotman and Richard  Rotman be ordered to
dismiss the Maryland  action.  The  Delaware  225 Action was stayed  pending the
outcome of a special meeting of  shareholders,  discussed  below.  Following the
results  of that  meeting,  we moved for  summary  judgment  and asked  that the
Delaware litigation be dismissed.  Oral argument on this motion was presented on
January  18,  2001.  The Court  granted  our motion  for  summary  judgment  and
dismissed  the Delaware  225 Action.  The Court  concluded  that (1) the special
meeting of the our  stockholders  held on September 19, 2000 to elect  directors
(discussed  below) was  authorized by our bylaws and as a result,  the new board
was  properly  elected and had the  authority  to  terminate  Mr.  Stengel as an
officer; (2) Marc Stengel's  post-election  challenge to the special meeting was
barred by his own inequitable  conduct; and (3) his claim for back pay could not
be pursued in the Court of Chancery action.

     On July 20,  2000,  in  accordance  with our Amended and  Restated  Bylaws,
Gregory  Rotman,  called a special  meeting  of the  stockholders  to be held on
September  19, 2000 for the election of  directors.  Gregory  Rotman and Richard
Rotman nominated  themselves,  Andrew Pilaro and John Martin for election to our
Board of  Directors  and  filed  soliciting  materials  with  the SEC.  No proxy
soliciting  materials  were filed by any other  party.  The  meeting was held on
September  19, 2000 and the  nominated  slate of  directors  were elected as our
Board of Directors.

     A  special  Board  of  Directors  meeting  was  called  by  Gregory  Rotman
immediately following the special meeting of stockholders on September 19, 2000.
At that  meeting,  the new Board  removed  Marc  Stengel  as an officer of Sales
Online,  formally  ratified and approved the initiation  and  prosecution of the
Maryland action against Marc Stengel and authorized Gregory Rotman, as president
and CEO to take all actions necessary to prosecute Sales Online's claims against
Marc Stengel and others.

                                       11

<PAGE>

     On or about October 3, 2000, Mr. Stengel submitted to Sales Online a demand
for advancement of certain  expenses  (including  attorneys'  fees) he allegedly
incurred in connection with the Delaware 225 Action and the Maryland action.  In
his  advancement  request,  Mr. Stengel  claimed to have incurred  approximately
$96,800 in legal  expenses in the Delaware  225 Action and the  Maryland  action
through  August,  2000.  On October 20, 2000,  we notified Mr.  Stengel that the
Board of Directors had denied Mr. Stengel's advancement request.

     On or about  October 24, 2000,  Mr.  Stengel  filed a second  action in the
Delaware  Court of  Chancery  pursuant to Section  145 of the  Delaware  General
Corporation  Law seeking a  determination  from the Court that,  pursuant to our
Bylaws, he is entitled to be advanced his expenses,  including  attorneys' fees,
incurred by him in  connection  with the  Delaware  225 Action and the  Maryland
action (the "Delaware 145 Action").  Mr. Stengel sought  advancement of expenses
in the amount of $120.000.  Sales Online and Mr.  Stengel each moved for summary
judgment in the  Delaware  145 Action.  A hearing on the Delaware 145 Action was
held on January 2, 2001, at which time the Court of Chancery  granted our motion
for summary judgment and denied Mr. Stengel's  motion.  Mr. Stengel has appealed
this decision to the Delaware Supreme Court.

     On  November  1,  2000,  we filed  with the  Maryland  Court a Motion for a
Preliminary  Injunction  requesting  that the Court  enjoin Mr.  Stengel and Ms.
Kramer from selling,  attempting to sell, or otherwise disposing of their shares
of the  Company's  stock  pending  resolution  of the  merits  of our  claim for
rescission.  On November 9, 2000,  Mr. Stengel filed an Opposition to our Motion
for a  Preliminary  Injunction.  On November 9, 2000,  Mr.  Stengel also filed a
Motion for  Preliminary  Injunction  requesting  that the Court (i) order  Sales
Online to instruct  its transfer  agent to  implement  and complete all measures
necessary  to sell his  restricted  stock in  compliance  with Rule 144 and (ii)
enjoin Sales Online from interfering with or preventing the sale of stock by Mr.
Stengel in accordance  with Rule 144. The District Court  conducted an extensive
evidentiary  hearing on both motions,  which  concluded on January 23, 2001. The
parties  briefed the issues and the Court heard final  arguments on February 22,
2001.  On March 19,  2001,  the Court (1) denied our motion for the  preliminary
injunction  against  Marc  Stengel and Hannah  Kramer,  (2) granted in part Marc
Stengel's  motion for a preliminary  injunction  insofar as we are enjoined from
interfering  with any sale of stock by Marc Stengel that  complies with SEC Rule
144, (3) determined that the evidence  supported a finding that Marc Stengel and
Hannah Kramer are acting in concert in the  disposition  of their shares and (4)
denied Marc Stengel's and Hannah Kramer's motions to dismiss our lawsuit against
them. The Court has scheduled the case for trial in December, 2001.

     We cannot give any  assurance  with  respect to the  positions  asserted by
Sales Online in the Maryland lawsuit, and substantial costs, including attorneys
fees, are being incurred in connection with this dispute.

Risks Associated With Our Industry

The market for online  services is  intensely  competitive  with low barriers to
entry.

     The market for Internet  products and services is new, rapidly evolving and
intensely  competitive,  and we expect  competition  to intensify in the future.
Barriers to entry are relatively low, and current and new competitors can launch
new sites at a relatively low cost using  commercially  available  software.  We
currently or potentially  compete with a variety of other companies depending on
the type of merchandise and sales format offered to customers. These competitors
include:

          o    various  Internet  auction  houses  such as eBay,  ONSALE,  uBID,
               Yahoo!  Auctions,  First  Auction  (the auction site for Internet
               Shopping  Network,  a  wholly-owned  subsidiary  of Home Shopping

                                       12

<PAGE>


               Network  Inc.),  Surplus  Auction (a  wholly-owned  subsidiary of
               Egghead,  Inc.), WebAuction (the auction site for MicroWarehouse,
               Inc.), Insight Auction (the auction site for Insight Enterprises,
               Inc.) and others;
          o    a number of indirect  competitors  that  specialize in electronic
               commerce or derive a  substantial  portion of their  revenue from
               electronic  commerce,  including Internet Shopping Network,  AOL,
               Shopping Com and Cendant Corp.;
          o    a variety of other  companies that offer  merchandise  similar to
               ours but through physical  auctions and with which we compete for
               sources of supply; and
          o    other  companies  that have combined a variety of services  under
               one  brand in a  manner  similar  to ours  including  CMGI  (Alta
               Vista),  the Walt Disney  Company  (The GO  Network),  Excite and
               Lycos.

     We believe that the principal  competitive factors affecting our market are
the  ability to attract  customers  at  favorable  customer  acquisition  costs,
operate  the  websites in an  uninterrupted  manner and with  acceptable  speed,
provide  effective  customer  service  and obtain  merchandise  at  satisfactory
prices.  We cannot offer any  assurances  that we can  maintain our  competitive
position  against  current  and  potential  competitors,  especially  those with
greater financial, marketing, customer support, technical and other resources.

     Current   competitors  have   established  or  may  establish   cooperative
relationships  among  themselves or directly with vendors to obtain exclusive or
semi-exclusive  sources of  merchandise.  Accordingly,  it is possible  that new
competitors or alliances  among  competitors  and vendors may emerge and rapidly
acquire  market  share.  Increased  competition  is likely to result in  reduced
operating  margins,  loss of market share and a diminished brand franchise,  any
one of  which  could  materially  adversely  affect  our  business,  results  of
operations  and  financial   condition.   Many  of  our  current  and  potential
competitors have significantly greater financial,  marketing,  customer support,
technical and other resources than the company.  As a result,  such  competitors
may be able to secure  merchandise  from vendors on more favorable terms than we
can,  and they may be able to  respond  more  quickly  to  changes  in  customer
preferences or to devote  greater  resources to the  development,  promotion and
sale of their merchandise than we can.

     With respect to our new collectibles  portal,  several other companies have
combined  a variety  of  services  under one  brand in a manner  similar  to our
portal,  including Yahoo!, Microsoft (MSN), Excite, Lycos and CMGI (Alta Vista).
Although our portal is focused specifically on the collectibles industry, we run
the risk of other sites  entering into this sector and there can be no assurance
that we can maintain our competitive  position  against  potential  competitors,
especially those with greater financial,  marketing, customer support, technical
and other resources than our company.  Increased competition is likely to result
in  reduced  operating  margins,  loss of market  share and a  diminished  brand
franchise,  any one of which could  materially  adversely  affect our  business,
results of operations and financial condition.

Market consolidation has created and continues to create companies that are
larger and have greater resources than us.

     As the online commerce market  continues to grow, other companies may enter
into  business  combinations  or alliances  that  strengthen  their  competitive
positions.  In the  recent  past,  there  have  been  a  number  of  significant
acquisitions and strategic plans announced among and between companies that have
divisions offering services that compete with our company, including:

          o    CMGI's acquisition of 83% of AltaVista;
          o    Disney's  acquisition  of the remaining  interest in Infoseek not
               already owned by Disney;
          o    @Home Network's acquisition of Excite;
          o    Yahoo!'s acquisition of GeoCities and Broadcast.com; and


                                       13

<PAGE>

          o    FairMarket's new alliance  network  comprised of Microsoft Corp.,
               Excite@home, Ticketmaster Online and many others.

     The effects of these completed and pending acquisitions and strategic plans
may have on us cannot be predicted  with accuracy,  but some of these  companies
that maintain divisions that compete with us are aligned with companies that are
larger  or better  established  than us.  Even  though  some of the  competitive
services  offered  by these  companies  may  comprise  a small  amount  of their
business,  their potential access to greater financial,  marketing and technical
resources would put them in a stronger  competitive  position as compared to our
company.  In addition,  these companies  include  television  broadcasters  with
access to unique  content and  substantial  marketing  resources that may not be
available to our company.

Security breaches and credit card fraud could harm our business.

     We rely on encryption and authentication  technology licensed from VeriSign
through an online user  agreement  to provide the  security  and  authentication
necessary to effect secure transmission of confidential information.  We believe
that a significant  barrier to  electronic  commerce and  communications  is the
secure transmission of confidential  information over public networks. We cannot
give assurances that advances in computer  capabilities,  new discoveries in the
field of  cryptography  or other  events or  developments  will not  result in a
compromise or breach of the  algorithms we use to protect  customer  transaction
data.  If any such  compromise  of our security  were to occur,  it could have a
material  adverse  effect on our business,  results of operations  and financial
condition.  A party  who is able  to  circumvent  our  security  measures  could
misappropriate proprietary information or cause interruptions in our operations.
To the extent that activities of our company or third-party  contractors involve
the storage and  transmission  of proprietary  information,  such as credit card
numbers,  security  breaches could expose us to a risk of loss or litigation and
possible  liability.  We may be required to expend significant capital and other
resources  to  protect  against  the  threat  of such  security  breaches  or to
alleviate problems caused by such breaches.  We cannot offer assurances that our
security measures will prevent security breaches or that failure to prevent such
security breaches will not have a material adverse effect on our business.

Our industry may be exposed to increased government regulation.

     Our company is not currently subject to direct regulation by any government
agency,  other  than  regulations  applicable  to  businesses  generally,   laws
applicable  to  auction  companies  and  auctioneers,  and  laws or  regulations
directly applicable to access to, or commerce on, the Internet.  Today there are
relatively few laws specifically directed towards online services.  However, due
to the  increasing  popularity  and use of the  Internet,  it is possible that a
number of laws and  regulations  may be adopted  with  respect to the  Internet,
covering issues such as user privacy,  freedom of expression,  pricing,  content
and quality of products and services, fraud, taxation, advertising, intellectual
property rights and information security.  Compliance with additional regulation
could hinder our growth or prove to be prohibitively expensive.

     Furthermore, the growth and development of the market for Internet commerce
may prompt calls for more  stringent  consumer  protection  laws that may impose
additional burdens on those companies conducting business over the Internet. The
adoption of any additional  laws or  regulations  may decrease the growth of the
Internet,  which, in turn,  could decrease the demand for our Internet  auctions
and increase our cost of doing  business or otherwise  have an adverse effect on
our business, results of operations and financial condition.

     Several  recently passed federal laws could have an impact on our business.
The Digital  Millennium  Copyright  Act is intended to reduce the  liability  of
online  service  providers for listing or linking to  third-party  websites that
include  materials  that  infringe  copyrights  or other  rights of others.  The
Children's Online  Protection Act and the Children's  Online Privacy  Protection
Act are  intended to  restrict  the  distribution  of certain  materials  deemed

                                       14

<PAGE>

harmful to children and impose additional  restrictions on the ability of online
services to collect user  information  from minors.  Such legislation may impose
significant  additional  costs  on our  business  or  subject  us to  additional
liabilities.

     Moreover,  the  applicability  to the Internet of existing  laws in various
jurisdictions  governing issues such as property ownership,  auction regulation,
sales  tax,  libel and  personal  privacy  is  uncertain  and may take  years to
resolve.  In  addition,  because our service is  available  over the Internet in
multiple states, and we sell to numerous consumers resident in such states, such
jurisdictions  may claim that we are  required  to qualify to do  business  as a
foreign  corporation  in each such  state.  Our  failure to qualify as a foreign
corporation  in a  jurisdiction  where it is required to do so could subject our
company  to  taxes  and  penalties  for the  failure  to  qualify.  Any such new
legislation  or  regulation,  or the  application  of laws or  regulations  from
jurisdictions whose laws do not currently apply to the our business,  could have
a material  adverse  effect our business,  results of  operations  and financial
condition.

Risks Associated with our Common Stock

Our stock price has been and may continue to be very volatile.

     The market price of the shares of our common stock has been,  and is likely
to be,  highly  volatile.  During the 12 months prior to May 1, 2001,  our stock
price as traded on the OTC  Bulletin  Board has ranged  from a high of $1.06 per
share to a low of $.10 per  share.  The  variance  in our share  price  makes it
extremely  difficult to forecast with any certainty the stock price at which you
may might be able to buy or sell your  shares of our  common  stock.  The market
price for our stock could be subject to wide fluctuations in response to factors
that are out of our control such as:

          o    actual or anticipated variations in our results of operations,
          o    announcements of new products or technological innovations by our
               competitors;
          o    developments  with respect to patents,  copyrights or proprietary
               rights;
          o    developments in Internet and auction regulation; and
          o    general  conditions and trends in the Internet,  collectibles and
               electronic commerce industries.

     The trading prices of many  technology  companies'  stock have  experienced
extreme price and volume fluctuations in recent months. These fluctuations often
have been unrelated or  disproportionate  to the operating  performance of these
companies.  The valuation of many Internet stocks are extraordinarily high based
on conventional valuation standards such as price to earnings and price to sales
ratios.  We cannot  offer any  assurance  that  these  trading  prices and price
earnings  ratios will be  sustained.  These broad market  factors may  adversely
affect the market price of our common stock. These market fluctuations,  as well
as general  economic,  political  and market  conditions  such as  recessions or
interest rate fluctuations,  may adversely affect the market price of our common
stock.  Any  negative  change in the  public's  perception  of the  prospects of
Internet or e-commerce companies could depress our stock price regardless of our
results.

We have issued options, warrants and a convertible note that could have a
dilutive effect on our shareholders.

     We have issued numerous options,  warrants,  and convertible  securities to
acquire our common stock that could have a dilutive effect on our  shareholders.
As of  December  31,  2000,  we had  issued  employee  stock  options to acquire
$557,000 shares of our common stock,  exercisable at prices ranging from $.01 to
$1.625 per share,  with a weighted average exercise price of approximately  $.33
per  share.  In  addition  to  these  options,  we have  reserved  approximately
52,000,000 shares of common stock for issuance upon conversion of and payment of
interest  on our 8%  convertible  note  and  700,000  shares  issuable  upon the
exercise of the warrants issued in connection with the 8% convertible note.

                                       15
<PAGE>


     The note is  convertible at a floating rate equal to the lesser of (1) 110%
of the lowest  closing bid price for the common  stock for the five trading days
prior to March 23, 2000,  or (2) 75% of the average of the closing bid price for
the common stock for the five trading days immediately  preceding the conversion
date.  The number of shares of common stock that may  ultimately  be issued upon
conversion is presently  undeterminable  and could fluctuate.  If the applicable
conversion  price is 110% of the lowest of the  closing bid price for the common
stock for the five (5)  trading  days prior to March 23,  2000,  which is $2.48,
then the  number of shares  that may be issued  upon  conversion  of the note is
approximately  1,210,000 shares, subject to adjustment pursuant to stock splits,
dividends or similar events. Because the registration statement was not declared
effective by March 23, 2001, the applicable  conversion percentage has decreased
to 50% of the average of the closing bid price for the common stock for the five
(5) trading days  immediately  preceding the conversion  date. The Company is in
discussions  regarding a possible  renegotiation of the terms of the convertible
debt, but if the parties are unable to restructure the transaction,  then if the
convertible  note would have been  converted as of May 1, 2001,  the  applicable
conversion  price  would have been  $.0595 per share (50% of the  average of the
closing bid price for the common stock for the five (5) trading days immediately
preceding the conversion date) and the number of shares issuable upon conversion
would  have  been  approximately  50,420,168.  If the note is  converted  on its
current  terms,  we will have to increase our total  number of authorized shares
that we may issue under our charter.

     It is likely that the  conversion  price will be a percentage of the market
price, and as a result,  the lower the common stock price at the time the holder
converts, the more common shares the holder will receive upon conversion. Due to
the  conversion  ratio,  there is no limit on the aggregate  number of shares of
common  stock  into  which the note can be  converted.  To the extent the holder
converts a portion of the convertible note and sells its shares of common stock,
the price of our stock may decrease due to the additional  shares in the market.
This could allow the holder to subsequently  covert an additional portion of the
convertible  note into greater amounts of common stock,  the sale of which would
further decrease the stock price. Purchasers of our common stock could therefore
experience substantial dilution upon conversion of the convertible note.

     The following table describes the amount of shares of our common stock into
which the convertible  note is convertible at various  percentages of the market
price as of May 1, 2001 and the percentage of our total outstanding common stock
represented by conversion of the convertible note:

<TABLE>
<CAPTION>

Percentage of Market          Conversion            Number of Shares of        Percentage of our
Price per Shares of our       Price (based on       Common Stock Issuable      Outstanding Common
Common Stock at May           a conversion          upon Conversion of the     Stock Respresented by the
1, 2001                       price that is         8% Convertible Note        Shares of Common Stock
                              50% of the                                       Issuable upon
                              market price)                                    Conversion of the
                                                                               Convertible Note

<S>                           <C>                   <C>                        <C>
At $.119 per share,           $.0595 per share            50,420,168                 47%
market price

At $.0893 per share           $.0446 per share            67,264,574                 54%
(75% of market price)

At $.0595 per share           $.0298 per share           100,671,141                 64%
(50% of market price)

At $.0298 per share           $.0149 per share           201,342,282                 78%
(25% of the market price)

</TABLE>

     However,  the selling  shareholder may only convert the convertible note to
the extent the selling shareholder's  ownership interest in the company does not

                                       16

<PAGE>

exceed 4.99 percent.  This 4.99% limit, however, may not prevent any holder from
converting all of its convertible  note or exercising its warrants,  because the
holder can convert the convertible  note or exercise  warrants into 4.99% of our
outstanding  common stock, then to the extent it liquidates some or all of these
shares,  the holder can convert  additional amounts of the convertible note As a
result, the 4.99% limit does not prevent selling  shareholders from selling more
than  4.99% of our  common  stock.  During  the terms of these  securities,  the
holders will have the  opportunity  to profit from either an increase or, in the
case of the convertible  note,  decrease in the market price of our common stock
followed by a subsequent  increase,  with  resulting  dilution to the holders of
shares who purchased  shares for a price higher than the respective  exercise or
conversion  price. In addition,  the increase in the  outstanding  shares of our
common stock as a result of the exercise or conversion of these securities could
result in a significant decrease in the percentage ownership of our common stock
by the purchasers of our common stock.

     Additionally,  we have  filed a  registration  statement  tht has not  been
declared  effetive by the SEC, for the  registration  of  approximately  711,000
shares to be issued to CSEI in connection with our purchase of assets.

We may have difficulty obtaining additional financing as a result of the
significant number of shares that may be acquired upon conversion of the
convertible note.

     The  potentially  significant  number of shares issuable upon conversion of
our 8% convertible note could make it difficult to obtain additional  financing.
Due to the  significant  number of shares of our common stock which could result
from a conversion of our 8%  convertible  note, new investors may either decline
to make an investment in our company due to the potential  negative  effect this
additional  dilution  could  have on their  investment  or  require  that  their
investment be on terms at least as favorable as the terms of the 8%  convertible
note. If we are required to provide similar terms to obtain  required  financing
in the future,  the potential adverse effect of these existing  financings could
be perpetuated and significantly increased.

We have been penalized for failing to register shares underlying our 8%
convertible note and the warrants issued in connection with the 8% convertible
note that we issued in March, 2000.

     We have incurred penalties and costs under the terms of registration rights
agreement and the 8% convertible note and the warrants issued in connection with
the purchase of the 8% convertible  note, all issued in the private placement in
March,  2000,  because we were  unable to  register  the shares of common  stock
issuable upon the conversion of the 8% convertible  note and the exercise of the
warrants by December 15, 2000.  The cash  penalties  are two percent (2%) of the
purchase price  ($3,000,000) of the convertible note and warrant for each thirty
day  period,  until the  registration  statement  is  declared  effective,  on a
pro-rated basis.  Additionally,  if the registration  statement was not declared
effective  by December 15,  2000,  the  applicable  conversion  percentage  will
decrease  by two  percent  (2%) each  thirty day period  until the  registration
statement  is  declared  effective,  with a  floor  of  50% if the  registration
statement is not declared  effective by March 23, 2001. Because the registration
statement  was not declared  effective by December  15, 2000,  unless  otherwise
agreed to by the holder of the convertible note, as of May 1, 2001, we currently
owe  $270,000  to the holder of the  convertible  note and the conversion  price
has  decreased  to 50% of the  average  of the  closing  bid  price for the five
trading days immediately preceding May 1, 2001.

Conversion of the convertible note and exercise of the warrants and subsequent
public sale of our common stock while its market price is declining may result
in further decreases in the price.

     The  number of  shares of common  stock  issuable  upon  conversion  of our
convertible note will increase as the price of our common stock decreases, which
may  adversely  affect the price of our  common  stock.  On May 1, 2001,  we had
issued and outstanding $3,000,000 principal amount of an 8% convertible note. If
the convertible note were converted in full on May 1, 2001, the number of shares
of common stock issuable to the holder would be 50,420,168. The number of shares
of  common  stock  that  may  ultimately  be  issued  upon  conversion  of these
securities  is  presently  indeterminable  and  could  fluctuate  significantly.

                                       17

<PAGE>

Purchasers of common stock could therefore experience  substantial dilution upon
conversion  of the  convertible  note.  In addition,  the  significant  downward
pressure on the market  price of our common  stock could  develop as the holders
convert/exercise and sell material amounts of common stock which could encourage
market  manipulation  through  short  sales by the  holders or  others,  placing
further downward pressure on the market price of our common stock.

Future sales of our common stock in the public market could adversely affect the
price of our common stock.

     Sales of substantial  amounts of common stock in the public market that are
not currently freely tradable,  or even the potential for such sales, could have
an adverse  effect on the market  price for shares of our common stock and could
impair the ability of purchasers of our common stock to recoup their  investment
or make a profit. As of May 1, 2001, these shares consist of:

          o    18,464,456  shares  of our  outstanding  common  stock  owned  by
               Gregory Rotman and Richard Rotman,  two of our executive officers
               and directors ("Rotman Shares");
          o    18,064,456  shares of our  outstanding  common stock owned by two
               former  directors,  Hannah Kramer and Marc Stengel (together with
               the Rotman  Shares,  the  "Affiliate  Shares").  Between July and
               September  2000,  Hannah  Kramer  sold  400,000  shares  and Marc
               Stengel  filed a Form 144 with the SEC  indicating  an  intent to
               sell 470,000 shares;
          o    7,350,000  shares of our common stock issued to CSEI  pursuant to
               the Asset Purchase  Agreement,  dated November 8, 2000,  that are
               subject to an escrow agreement (the "Escrow Shares"); and
          o    approximately 557,000 shares issuable to option holders.

     The Escrow  Shares are subject to an escrow  agreement  for the purposes of
complying  with the Rule 144  holding  period  and  securing  certain  indemnity
obligations  made  by the  selling  shareholder  in the  acquisition  documents.
Additionally,  until  November 8, 2002,  the number of Escrow Shares that may be
released  from the escrow in any one  calendar  month may not exceed ten percent
(10%) of the reported aggregate monthly trading volume in our common stock.

     Unless the Affiliate  Shares and the shares  issuable to option holders are
further  registered  under the securities  laws,  they may not be sold except in
compliance  with Rule 144  promulgated by the SEC, or some other  exemption from
registration. Rule 144 does not prohibit the sale of these shares but does place
conditions  on their  resale  which must be  complied  with  before  they can be
resold.

Future sales of our common stock in the public market could limit our ability to
raise capital.

     Sales of  substantial  amounts  of our common  stock in the  public  market
pursuant to Rule 144, upon  exercise or  conversion of derivative  securities or
otherwise,  or even the potential for such sales,  could also affect our ability
to raise capital through the sale of equity securities.

The issuance of the convertible note and warrants required us to record non-cash
expenses.

     As a  result  of the  issuance  of our 8%  convertible  note,  we  recorded
non-cash interest expense attributable to the beneficial  conversion feature and
amortization  of the related  debt  acquisition  costs and the fair value of the
related warrants of approximately  $1,597,000 during the year ended December 31,
2000.  From  January 1, 2001  through  March 23, 2002 we will record  additional
non-cash  interest  expense  attributable  to  amortization  of the related debt
acquisition  costs and the fair value of the related  warrants of  approximately
$428,000.  In addition,  if we are  unsuccessful  in  restructuring  our current
convertible debt, we will incur additional  interest expense due to the increase
in the beneficial conversion feature of $1,890,000.

                                       18

<PAGE>

Present  management  and  former  directors  may  control  the  election  of our
directors and all other matters submitted to the stockholders for approval.

     Our executive  officers and directors,  in the aggregate,  beneficially own
approximately 40% of our outstanding  common stock.  Additionally,  Marc Stengel
and Hannah Kramer, each a former director of our company,  own approximately 40%
of our outstanding common stock. As a result, each group, by joining forces with
the holders of 10% our outstanding common stock, may be able to exercise control
over all matters  submitted  to our  stockholders  for approval  (including  the
election and removal of directors and any merger,  consolidation  or sale of all
or  substantially  all  of  our  assets).  Accordingly,  such  concentration  of
ownership  may have the effect of delaying,  deferring or preventing a change in
control  of the  company,  impede a  merger,  consolidation,  takeover  or other
business  combination  involving the company or discourage a potential  acquirer
from making a tender  offer or  otherwise  attempting  to obtain  control of the
company,  which in turn could have an adverse  effect on the market price of our
common stock.

"Penny stock"  regulations may impose certain  restrictions on  marketability of
securities.

     The SEC adopted  regulations  which generally define "penny stock" to be an
equity security that has a market price of less than $5.00 per share. Our common
stock may be subject to rules that impose additional sales practice requirements
on  broker-dealers  who sell such  securities to persons other than  established
customers and  accredited  investors  (generally  those with assets in excess of
$1,000,000, or annual incomes exceeding $200,000 or $300,000 together with their
spouse).  For transactions covered by these rules, the broker-dealer must make a
special  suitability  determination for the purchase of such securities and have
received the purchaser's prior written consent to the transaction.

     Additionally,   for  any  transaction,   other  than  exempt  transactions,
involving  a  penny  stock,  the  rules  require  the  delivery,  prior  to  the
transaction,  of a risk disclosure  document mandated by the SEC relating to the
penny stock market. The broker-dealer also must disclose the commissions payable
to both the broker-dealer and the registered representative,  current quotations
for the  securities  and, if the  broker-dealer  is the sole  market-maker,  the
broker-dealer must disclose this fact and the  broker-dealer's  presumed control
over the market.  Finally,  monthly  statements must be sent  disclosing  recent
price information for the penny stock held in the account and information on the
limited  market in penny  stocks.  Consequently,  the  "penny  stock"  rules may
restrict the ability of  broker-dealers  to sell our common stock and may affect
the ability to sell our common stock in the secondary market.

The market for our company's  securities is limited and may not provide adequate
liquidity.

     Our common stock is currently traded on the OTC Bulletin Board ("OTCBB"), a
regulated  quotation service that displays  real-time quotes,  last-sale prices,
and volume information in  over-the-counter  equity securities.  As a result, an
investor may find it more difficult to dispose of, or obtain accurate quotations
as to the price of, our  securities  than if the  securities  were traded on the
Nasdaq Stock market, or another national  exchange.  As of May 1, 2001 the OTCBB
reports that there are 16 active market makers of our common stock. Eight of the
16 market  makers have  accounted  for  approximately  71% of the trading of our
common stock year to date. In order to trade shares of our common stock you must
use one of these 16 market  makers  unless  you trade  your  shares in a private
transaction.  In the 120 days  prior to May 1, 2001 the  actual  trading  volume
ranged  from a low of 200 shares of common  stock to a high of 492,000 shares of
common stock.  This low trading  volume means there is limited  liquidity in our
shares of common stock.  Selling our shares is more  difficult  because  smaller
quantities  of shares are bought  and sold and news media  coverage  about us is
limited.  These factors result in a limited  trading market for our common stock
and  therefore  holders  of our  company's  stock may be  unable to sell  shares
purchased should they desire to do so.


                                       19


<PAGE>