UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-KSB/A

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2000.        Commission File No. 0-28720.

                            SALES ONLINE DIRECT INC.
              (Exact name of small business issuer in its charter)

         Delaware                                      73-1479833
(State or Other Jurisdiction               (I.R.S. Employer Identification No.)
 of Incorporation or Organization)

                4 Brussels Street, Worcester, Massachusetts 01610
                (Address of principal executive office)(Zip Code)

         Issuer's Telephone Number, Including Area Code: (508) 791-6710
          (Securities registered pursuant to Section 12(b) of the Act)

                         Common Stock, $0.001 Par Value
                              (Title of each class)

Check  whether the Issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes  No X

Check if there is no  disclosure of  delinquent  filers  pursuant to Item 405 of
Regulation S-B is not contained on this Form 10-KSB/A, and no disclosure will be
contained,  to the best of the  registrant's  knowledge,  in definitive proxy or
information  statements  incorporated  by  reference  in Part  III of this  Form
10-KSB/A or any amendment to this Form 10-KSB/A. [ ]

State Issuer's revenues for its most recent fiscal year: $1,297,595.

As of May 1, 2001,  the  registrant  had  outstanding  56,626,655  shares of its
Common  Stock,  par value of $0.001,  its only class of voting  securities.  The
aggregate  market value of the shares of common stock of the registrant  held by
non-affiliates  on May 1,  2001  was  approximately  $2,257,061  based  upon the
average  over the counter  sales price of $.115 per share on such date

                       DOCUMENTS INCORPORATED BY REFERENCE

No  documents  are  incorporated  by  reference  into this Report  except  those
Exhibits so incorporated as set forth in the Exhibit Index.

This Form 10-KSB/A is being filed by Sales Online Direct,  Inc. (the  "Company")
to amend Part II, Item 7 Financial Statements,  to correct certain typographical
errors that were  included  in the Form  10-KSB  filed by the Company on May 11,
2001.



<PAGE>



                            Financial Statements and
                              Report of Independent
                          Certified Public Accountants

                            Sales Online Direct, Inc.
                           December 31, 2000 and 1999



                                      F-1
<PAGE>





                           SALES ONLINE DIRECT, INC.
                           DECEMBER 31, 2000 AND 1999
                              FINANCIAL STATEMENTS

   AUDITED FINANCIAL STATEMENTS

   Independent Auditors' Report........................................     F-3

   Balance Sheet at December 31, 2000 and 1999.........................     F-4

   Statements of Operations
   Years ended December 31, 2000 and 1999..............................     F-5

   Statements of Changes in Stockholders' Equity
   Years ended December 31, 2000 and 1999..............................     F-6

   Statements of Cash Flows
   Years ended December 31, 2000 and 1999.............................. F-7-F-8

   Notes to Financial Statements
   Years ended December 31, 2000 and 1999..............................F-9-F-23

                                       F-2



<PAGE>






                          INDEPENDENT AUDITORS' REPORT



The Board of Directors
Sales OnLine Direct, Inc.
Worcester, Massachusetts


     We have audited the  accompanying  balance  sheets of Sales OnLine  Direct,
Inc. as of December 31, 2000 and 1999, and the related statements of operations,
changes in stockholders'  equity and cash flows for the years then ended.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

     We conducted our audits in accordance  with  auditing  standards  generally
accepted in the United States of America.  Those standards  require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

     In our opinion,  the financial statements referred to above present fairly,
in all material respects, the financial position of Sales OnLine Direct, Inc. as
of December  31, 2000 and 1999,  and the results of their  operations  and their
cash flows for the years then ended in  conformity  with  accounting  principles
generally accepted in the United States of America.

     The accompanying  financial statements have been prepared assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 2 to the
financial statements,  the Company has incurred recurring losses from operations
and a working capital deficiency at December 31, 2000. These circumstances raise
substantial  doubt about the Company's  ability to continue as a going  concern.
Management's  plans in regard to these matter are also  described in Note 2. The
accompanying  financial  statements  do not include any  adjustments  that might
result from the outcome of this uncertainty.



/s/Wolf & Company, P.C.


May 7, 2001
Boston, Massachusetts

                                       F-3



<PAGE>


<TABLE>
<CAPTION>
                            SALES ONLINE DIRECT, INC
                                  BALANCE SHEET
                                  DECEMBER 31,


                                                                                 2000                1999
                                                                                 ----                ----
                                     Assets
Current assets:
<S>                                                                        <C>                 <C>
   Cash and cash equivalents                                               $     102,534       $  221,213
   Accounts receivable                                                                --           48,682
   Marketable securities                                                          17,196               --
   Inventory                                                                     385,973          629,729
   Prepaid expenses                                                              125,975           72,992
   Other current assets                                                           18,089           11,236
                                                                           -------------       ----------
      Total current assets                                                       649,767          983,852

Property and equipment, net                                                    1,490,247          613,365
Goodwill                                                                          26,797           49,765
Other intangible assets                                                        4,162,211           18,667

Debt financing costs, net                                                        165,000               --
                                                                           -------------       ----------

        Total assets                                                           6,494,022       $1,665,649
                                                                           =============       ==========

                      Liabilities and stockholders' equity
Current liabilities:
   Accounts payable                                                        $     137,277       $  348,504
   Accrued expenses                                                            1,003,564           81,483
                                                                           -------------        ---------
      Total current liabilities                                                1,140,841          429,987
                                                                           -------------        ---------

Convertible Debt                                                               2,737,196               --

Commitments and Contingencies                                                         --               --

Temporary equity (200,000 shares of common stock, $.001 par value)               237,500               --

Stockholders' equity:
   Common stock, $.001 par value, 100,000,000 shares
      authorized; 54,763,281 and 46,711,140 shares issued and
      outstanding at December 31, 2000 and 1999, respectively                     54,763           46,711
   Additional paid-in capital                                                 10,448,176        4,010,033
   Accumulated deficit                                                        (7,700,307)      (2,207,171)
   Unearned compensation                                                        (424,147)        (613,911)
                                                                           -------------       ----------

      Total stockholders' equity                                               2,378,485        1,235,662
                                                                           -------------       ----------

        Total liabilities and stockholders' equity                         $   6,494,022       $1,665,649
                                                                           =============       ==========
</TABLE>

                 See accompanying notes to financial statements



                                      F-4


<PAGE>



                            SALES ONLINE DIRECT, INC.
                            STATEMENTS OF OPERATIONS
                            YEARS ENDED DECEMBER 31,

                                                       2000              1999
                                                       ----              ----

Revenues                                           $ 1,297,595      $ 1,003,200

Cost of revenues                                     1,388,455          706,488
                                                   -----------      -----------

         Gross profit (loss)                           (90,860)         296,712

Operating expenses

   Selling, general and administrative expenses      3,064,024        1,807,958
   Website development costs                           785,406          651,785
                                                   -----------       ----------

          Total operating expenses                   3,849,430        2,459,743
                                                   -----------       ----------

          Loss from operations                      (3,940,290)      (2,163,031)

Other income (expense)
   Interest expense                                 (1,597,045)              --
   Other income                                         43,232           92,701
   Unrealized loss on marketable securities            (40,132)              --
   Gain (loss) on sale of securities                    41,099         (112,710)
                                                   -----------       ----------

          Total other expense                       (1,552,846)         (20,009)
                                                   -----------       ----------

          Loss before income taxes                  (5,493,136)      (2,183,040)

Provision for taxes on income                               --               --
                                                   -----------       ----------

          Net loss                                 $(5,493,136)     $(2,183,040)
                                                   ===========      ===========

Loss per share (Basic)                             $     (0.11)     $     (0.05)
                                                   ===========      ===========

Weighted average shares                             48,117,453       45,277,812
                                                   ===========      ===========

                 See accompanying notes to financial statements


                                       F-5



<PAGE>

<TABLE>
<CAPTION>


                            SALES ONLINE DIRECT, INC.
                 STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                     YEARS ENDED DECEMBER 31, 2000 AND 1999

                                                                     Additional              Stock
                                                Common Stock           Paid-in   Accumulated Subscriptions   Unearned
                                             Shares      Amount        Capital      Deficit  Receivable    Compensation   Total
                                             ------      ------        -------      -------  ----------    ------------   -----

<S>                                       <C>           <C>            <C>         <C>       <C>        <C>               <C>
Balance, January 1, 1999                   37,368,912      37,369             -      (24,131)  (1,000)             -        12,238
Collection of stock subscriptions
    receivable                                      -           -             -            -    1,000              -         1,000
Contribution of assets of World
    Wide Collectors Digest                          -           -        33,229            -        -              -        33,229
Contribution of collectibles
    Inventories                                     -           -       769,764            -        -              -       769,764
Acquisition of Securities Resolution
    Advisors, Inc.                          9,342,228       9,342        (8,854)           -        -              -           488
Proceeds from assignment of options                 -           -     2,450,000            -        -              -     2,450,000
Compensatory stock options granted                  -           -       757,848            -        -       (757,848)            -
Amortization of stock-based
    compensation                                    -           -             -            -        -        143,937       143,937
Issuance of stock options to consultant
    for services                                    -           -         8,046            -        -              -         8,046
Net loss                                            -           -             -   (2,183,040)       -              -    (2,183,040)
                                           ----------     -------    ----------  -----------     ----      ---------    ----------
Balance, December 31, 1999                 46,711,140     $46,711    $4,010,033  $(2,207,171)       -      $(613,911)   $1,235,662
Acquisition of assets of
    ChannelSpace Entertainment, Inc.        7,530,000       7,530     4,641,466            -        -              -     4,648,996
Common stock issued in connection
with call option agreement                    110,000         110          (110)           -        -              -             -
Issuance of common stock to
    consultant for services                    35,000          35        44,800            -        -              -        44,835
Common stock issued in payment of
interest on convertible debt                  377,141         377       125,211            -        -              -       125,588
Proceeds from assignment of options                 -           -        87,188            -        -              -        87,188
Beneficial conversion discount                      -           -     1,109,588            -        -              -     1,109,588
Issuance of warrant                                 -           -       430,000            -        -              -       430,000
Amortization of stock-based compensation            -           -             -            -        -        189,764       189,764
Net loss                                            -           -             -   (5,493,136)       -              -    (5,493,136)
                                           ----------     -------   -----------  -----------    -----       --------    ----------
Balance, December 31, 2000                 54,763,281     $54,763   $10,448,176  $(7,700,307)   $   -      $(424,147)   $2,378,485
                                           ==========     =======   ===========   ==========    =====       ========    ==========

</TABLE>

                 See accompanying notes to financial statements


                                      F-6

<PAGE>


<TABLE>
<CAPTION>



                            SALES ONLINE DIRECT, INC
                            STATEMENT OF CASH FLOWS
                            YEARS ENDED DECEMBER 31,

                                                                                 2000                1999
                                                                                 ----                ----
Operating activities:
<S>                                                                         <C>                 <C>
   Net (loss)                                                               $  (5,493,136)      $  (2,183,040)
      Adjustments to reconcile net loss to net
        cash used in operating activities
           Depreciation and amortization                                          524,499              92,667
           Amortization of unearned compensation                                  189,764             143,937
           Amortization of debt discount                                          167,196                   -
           Beneficial conversion feature                                        1,109,588                   -
           Stock issued in payment of interest                                    125,588                   -
           Stock options issued for compensation                                   44,835               8,046
           Net gain on marketable securities                                         (967)            112,710
           Loss on abandonment of leasehold improvements                           46,745
           Changes in assets and liabilities:
              Accounts receivable                                                  48,682             (36,841)
              Inventory                                                           243,756             171,489
              Accounts payable                                                   (211,227)            218,144
              Accrued expenses                                                    622,081              76,483
              Income taxes payable                                                      -              (2,160)
              Other, net                                                          (59,836)            (95,358)
                                                                            -------------        ------------

                  Net cash used in operating activities                        (2,642,432)         (1,493,923)
                                                                            -------------        ------------
Investing activities:
   Purchase of securities                                                        (401,203)         (3,247,091)
   Proceeds from sale of securities                                               384,974           3,134,381
   Acquisition of other intangible asset                                          (50,000)                  -
   Cash received from Rotman Auction, Inc. acquisition                                  -               9,864
   Cash received from Securities Resolution Advisors, Inc. acquisition                  -                 488
   Property and equipment additions                                              (227,206)           (633,506)
                                                                            -------------       -------------
                  Net cash used in investing activities                          (293,435)           (735,864)
                                                                            -------------       -------------
Financing activities:
   Proceeds from assignment of common stock call options                           87,188           2,450,000
   Net proceeds from convertible debt                                           2,300,000                   -
   Proceeds from sale of warrants                                                 430,000                   -
   Proceeds from stock subscriptions                                                    -               1,000
                                                                            -------------       -------------

                  Net cash provided by financing activities                     2,817,188           2,451,000
                                                                            -------------       -------------
Net increase (decrease)  in cash and equivalents                                 (118,679)            221,213
Cash and equivalents, beginning                                                   221,213                   -
                                                                            -------------       -------------
Cash and equivalents, ending                                                $     102,534       $     221,213
                                                                            =============       =============
</TABLE>

                 See accompanying notes to financial statements


                                       F-7



<PAGE>

<TABLE>
<CAPTION>

                            SALES ONLINE DIRECT, INC
                      STATEMENTS OF CASH FLOWS (continued)
                            YEARS ENDED DECEMBER 31

               SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

                                                                                 2000           1999
                                                                                 ----           ----

Cash paid during the period for:
<S>                                                                         <C>              <C>
   Income taxes                                                             $         -      $    2,432
                                                                            ===========      ==========

   Interest                                                                 $         -      $        -
                                                                            ===========      ==========

                     SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Contributions of inventories                                                $         -      $  769,764
                                                                            ===========      ==========

Contribution of the net assets of World Wide Collectors Digest, Inc. were
   recorded at their fair values as follows:
      Due from shareholder                                                  $         -      $    2,737
      Other current assets                                                            -           1,000
      Property and equipment                                                          -          29,877
      Liabilities assumed                                                             -            (385)
      Additional paid-in capital                                                      -          33,229


Merger of Rotman Auction, Inc. accounted for utilizing the purchase
   method of accounting.  The assets were recorded at their fair values
   as follows:
      Cash received in the transaction                                                -           9,864
      Accounts receivable                                                             -          11,841
      Inventory                                                                       -          31,454
      Due from affiliate                                                              -          10,919
      Other current assets                                                            -           7,115
      Property and equipment                                                          -           1,697
      Due to shareholder                                                              -         (11,820)
      Other liabilities assumed                                                       -        (129,975)
      Goodwill                                                                        -          68,905


Acquisition of Internet Collectible Awards for stock
   Recorded as other intangible asset                                       $   237,500
Acquisition of certain assets of ChannelSpace Entertainment, Inc.
         Property and equipment                                             $   906,890
         Other intangible assets                                            $ 4,042,106
         Accrued expenses recorded                                          $  (300,000)

                 See accompanying notes to financial statements

</TABLE>

                                       F-8



<PAGE>



Note 1.   Organization

On February 25, 1999,  Securities  Resolution Advisors,  Inc. ("SRAD") purchased
all of the  outstanding  common  stock  of  Internet  Auction,  Inc.  ("Internet
Auction").  The  acquisition  was  made  pursuant  to an  Agreement  and Plan of
Reorganization  (the  "Agreement")  dated  January 31, 1999 between SRAD and the
principal shareholders ("IA Shareholders") of Internet Auction.  Pursuant to the
Agreement,  SRAD  acquired the  business  and all of the issued and  outstanding
shares of the capital stock of Internet  Auction in exchange for the issuance to
the  IA  Shareholders  of  an  aggregate  of  37,368,912  shares,   representing
approximately  80%, of SRAD's issued and  outstanding  common stock,  and SRAD's
principal  business became the business of Internet Auction.  In accordance with
the Agreement,  after the transaction  described above, the IA Shareholders were
appointed  to  SRAD's  Board of  Directors  and  became  officers  of SRAD.  The
previously serving directors resigned from the Board. SRAD subsequently  changed
its name to Sales OnLine Direct, Inc. (the "Company").

For accounting  purposes,  the  transaction  described  above is considered,  in
substance,  a capital  transaction  rather  than a business  combination.  It is
equivalent  to the  issuance  of common  stock by  Internet  Auction for the net
assets  of the  Company,  accompanied  by a  recapitalization.  This  accounting
treatment is identical to that resulting from a reverse acquisition, except that
no  goodwill  or other  intangible  asset had been  recorded.  Accordingly,  the
accompanying financial statements reflect the acquisition by Internet Auction of
the net assets of the Company  and the  recapitalization  of Internet  Auction's
common stock based on the exchange ratio in the Agreement.

On March 7, 2000,  the Company  acquired  Internet  Collectible  Awards  ("ICA")
(www.collectiblenet.com),  an internet business that polls consumers and reports
on the best  Internet  collectibles  Web sites in a variety  of  categories.  As
consideration  for the  acquisition,  the Company  recorded  accounts payable of
$50,000  and issued  200,000  shares of the  Company's  common  stock  valued at
$237,500  (based on the Company's stock price at the date of  acquisition).  The
value of these  shares is included  in  temporary  equity due to the  litigation
discussed  below.  The  acquisition  has been  accounted  for under the purchase
method of accounting.  The excess of the purchase price, $287,500, over the fair
value of the of the assets  acquired,  a web site,  has been  allocated to other
intangible  assets.  As  indicated  in Note  12,  the  Company  is  involved  in
litigation.  Subsequent to this acquisition management obtained information that
caused it to believe,  unbeknownst to the Company,  the beneficial  owner of ICA
was an officer and director and  significant  shareholder  of the Company at the
time of the  acquisition.  Upon  resolution  of the  litigation,  any  necessary
accounting adjustments will be made.

On  November  8, 2000,  the  Company  acquired  certain  assets of  ChannelSpace
Entertainment,   Inc.,  a  Virginia  corporation  (CSEI")  and  Discribe,  Ltd.,
("Discribe") a Canadian  corporation wholly owned by CSEI. CSEI and Discribe are
converged   Internet  content  providers  and  producers  of  affinity  portals,
including the  CollectingChannel.com  and the  CelticChannel.com  websites.  The
consideration  paid  by the  Company  for  the  acquired  assets  was  7,530,000
unregistered  shares of the  Company's  common  stock valued at  $4,648,996  and
$300,000 worth of the Company's  common stock to be registered  (711,136  shares
based upon the average  closing bid price of the stock on the five  trading days
prior to  February  6,  2001,  the date of filing  the  registration  statement.
Included in accrued  expenses at December  31, 2000 is $300,000  related to this
transaction.  The assets acquired - consisting principally of software licenses,
a video library,  a library of articles,  a user list, Domain names,  furniture,
fixtures and equipment, had an estimated fair value of approximately $4,974,000.
The fair values of the individual assets acquired,  and the consideration  paid,
have been determined by independent  appraisal.  The excess of the fair value of
the assets acquired over the purchase  price,  approximately  $25,000,  has been
allocated pro-rata to the intangible assets acquired.


                                       F-9
<PAGE>


                            SALES ONLINE DIRECT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999



Note 2.  Management's Plans

The Company  has  incurred  significant  losses for the last two years and has a
limited  operating  history.  For the years ended December 31, 2000 and 1999 the
Company reported losses of $5,493,136 and $2,183,040, respectively. In addition,
at December 31, 2000, the Company had negative working capital of $491,074.

To date we have met our cash needs from the proceeds of the convertible debt and
related warrants and the assignment of call options discussed in Note 7.

The  Company has  increased  revenue  from  auctions  and  reduced  costs by (i)
eliminating personnel and expenses related to the auctions,  (ii) eliminated our
expenses  associated  with the  operations  of the  Maryland  office,  and (iii)
eliminated the salary that was paid to a former officer.

Management is currently in discussions  with the holder of the convertible  debt
to obtain  additional  financing to fund  operations for the next 12 months with
approximately  $1,500,000 upon the  effectiveness of the Augustine  registration
statement.  While  management  believes  that these  discussions  will result in
obtaining the proposed financings,  there can be no assurances that they will be
concluded  on  reasonably  acceptable  terms.  If  the  financings  are  not  so
completed,  management  will seek  alternative  sources  of  capital  to support
operations.  Based on current cash  positions,  the Company needs an infusion of
$750,000 of additional capital to fund anticipated marketing costs and operating
expenses over the next 12 months.  If management  does not receive this capital,
or at least an infusion of $50,000 per month, then the Company will only be able
to continue operations through the end of June.

Finally,  the Company  does not expect to incur the same level of legal costs in
the long term that it has sustained in the past year because of the  substantial
discovery and hearings conducted through December 2000 for the litigation.

Although  there can be no assurances,  the Company  believes that the above cost
reductions and  anticipated  financings will be sufficient to meet the Company's
working capital requirements through the end of 2001.


Note 3.   Summary Of Significant Accounting Policies

Basis of presentation

The accompanying  1999 financial  statements  reflect the operations of Internet
Auction since January 1, 1999 and those of Rotman Auction Inc.  (Rotman Auction)
and the assets of World Wide Collectors Digest,  Inc. ("WWCD") for periods after
February 25, 1999,  the date of the merger between  Internet  Auction and Rotman
Auction,  the acquisition of the WWCD assets, and the capital  transactions with
SRAD.  Prior to the  transaction  described  above  the  business  conducted  by
Internet Auction was through three related  companies:  Internet Auction and its
Internet Collectibles division,  Rotman Auction and WWCD. In anticipation of the
transaction with the Company, the companies and the assets of WWCD were combined
and their operations integrated as follows:


                                      F-10

<PAGE>


Summary of Significant Accounting Policies (continued)

     Auction  operations,   generating  approximately  98%  of  revenues,  which
     include:

          A full  service  auction  house  providing a full range of services to
          sellers  and  buyers   including  live  online  bidding,   consignment
          services,  authentication of merchandise,  digital photography as well
          as purchases and sales of authentic memorabilia.

          A person-to-person auction site offering sellers a vehicle for listing
          items for sale and allows buyers to bid on items of interest.

          Buying, warehousing, distribution, marketing and selling collectibles.
          Internet Collectibles  maintains inventory of memorabilia with popular
          and historical significance that allows customers to directly purchase
          the  memorabilia  without the  competition  from bidders in an auction
          format.

     Web hosting service:

          An e-commerce  website for dealers in the collectibles  community that
          designs,  hosts,  and maintains  dealer websites  allowing  clients to
          create  online  storefronts,  set prices,  and sell directly to online
          shoppers.

Inventory Purchase Agreements

          On  February  12,  1999,   Internet  Auction  acquired   collectibles,
          collectors  items and memorabilia  from Rotman  Production,  a related
          party,  with an  estimated  fair value of  approximately  $629,000  in
          exchange  for  236  shares  of the  Internet  Auction's  common  stock
          received  from a stockholder  of Internet  Auction.  In addition,  the
          seller was assigned the right to acquire 700,000 option shares of SRAD
          common stock from Universal Funding, Inc. at $.50 per share. (see Note
          7).

          On  February  25,  1999,   Internet  Auction  acquired   collectibles,
          collectors  items and memorabilia  from Kim Stengel,  a related party,
          with an estimated value of approximately  $140,000 in exchange for 236
          shares  of  the  Internet  Auction's  common  stock  received  from  a
          stockholder of Internet Auction.

Purchase of Assets of World Wide Collectors Digest, Inc.

          On February 25, 1999,  Internet Auction acquired the assets of WWCD, a
          related party,  with an estimated  value of  approximately  $34,000 in
          exchange for 3,835 shares of Internet  Auction's common stock received
          from a stockholder of Internet Auction.

Merger with Rotman Auction, Inc.

          Effective  February  25,  1999,  Internet  Auction  merged with Rotman
          Auction, a related party. Under the terms of the merger agreement, the
          shareholder  of Rotman  received 870 shares of the Internet  Auction's
          common  stock  in  exchange  for  the  Rotman   shares  owned  by  the
          shareholder.  Internet  Auction was the surviving  corporation  in the
          merger.   The  merger  was  recorded  using  the  purchase  method  of
          accounting.  The  operations  of Rotman are included in the  financial
          statements from the date of merger.



                                       F-11



<PAGE>


                            SALES ONLINE DIRECT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999



Summary Of Significant Accounting Policies (continued)

          In connection with the acquisition, the Company recognized goodwill in
          the amount of  $68,905.  Amortization  of  goodwill  for 2000 and 1999
          amounted to $22,968 and $19,140, respectively.

Cash and cash equivalents

          The Company considers all highly liquid investments  purchased with an
          original maturity of three months or less to be cash equivalents.

Marketable Securities

          The Company  classifies  its marketable  equity  securities as trading
          securities  in  accordance  with  Statement  of  Financial  Accounting
          Standards  No. 115  "Accounting  for Certain  Investments  in Debt and
          Equity  Securities."  Consequently,  unrealized  gains and  losses are
          recognized in earnings for the period.

Inventory

          Inventory  consists of collectible  merchandise for sale and is stated
          at the lower of average cost or market on a first-in, first-out (FIFO)
          method.

          On  a  periodic  basis  management  reviews  inventories  on  hand  to
          ascertain if any is slow moving or obsolete.  In connection  with this
          review,  at December  31,  2000 the  Company  has  provided a $200,000
          reserve.

Property and Equipment

          Property and  equipment are stated at cost.  Depreciation  is computed
          using the double  declining  balance method over the estimated  useful
          life  of  5  years.   Leasehold   improvements   are  amortized  on  a
          straight-line  basis over the shorter of the estimated  useful life of
          the asset or the term of the related lease.

Goodwill

          Goodwill is being amortized on a straight-line basis over an estimated
          useful life of three years.

Other Intangible Assets

          Other intangible  assets are being amortized on a straight-line  basis
          over an estimated useful life of five years.

Debt Financing Costs

          Debt financing costs are being amortized on a straight-line basis over
          the life of the related debt, two years.



                                       F-12



<PAGE>


                            SALES ONLINE DIRECT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999



Summary Of Significant Accounting Policies (continued)

Revenue Recognition

          The Company generates revenue on sales of its purchased  inventory and
          from fees and  commissions on sales of merchandise  under  consignment
          type arrangements.

          For sales of  merchandise  owned and  warehoused  by the Company,  the
          Company  is  responsible  for  conducting  the  auction,  billing  the
          customer,  shipping  the  merchandise  to  the  customer,   processing
          merchandise  returns and collecting accounts  receivable.  The Company
          recognizes the gross sales amount as revenue upon  verification of the
          credit card transaction and shipment of the  merchandise,  discharging
          all obligations of the Company with respect to the transaction.

          For sales of  merchandise  under  consignment-type  arrangements,  the
          Company  takes  physical  possession  of the  merchandise,  but is not
          obligated  to  and  does  not  take  title  to  or  ownership  of  the
          merchandise. When an auction is completed, consigned merchandise which
          has  been  sold is  shipped  upon  receipt  of  payment.  The  Company
          recognizes  the net commission  and service  revenues  relating to the
          consigned  merchandise  upon  receipt of the gross sales  proceeds and
          shipment of the  merchandise.  The Company then releases the net sales
          proceeds to the Consignor,  discharging all obligations of the Company
          with respect to the transaction.

Advertising Costs

          Advertising costs totaling approximately $237,000 in 2000 and $346,000
          in 1999, are charged to expense when incurred.

Income Taxes

          Deferred  tax  asset  and   liabilities  are  recorded  for  temporary
          differences  between the  financial  statement and tax bases of assets
          and  liabilities  using the enacted income tax rates expected to be in
          effect when the taxes are actually paid or  recovered.  A deferred tax
          asset is also  recorded for net operating  loss,  capital loss and tax
          credit carry  forwards to the extent their  realization is more likely
          than not.  The  deferred  tax  expense for the period  represents  the
          change in the deferred tax asset or  liability  from the  beginning to
          the end of the period.

Use of Estimates

          In  preparing  financial   statements  in  conformity  with  generally
          accepted  accounting  principles,   management  is  required  to  make
          estimates and assumptions  that affect the amounts  reported of assets
          and  liabilities  as of the date of the  balance  sheet  and  reported
          amounts of revenue and expenses during the reporting period.  Material
          estimates that are particularly  susceptible to significant  change in
          the near term relate to inventory,  intangible assets and deferred tax
          asset  valuations.  Although these estimates are based on management's
          knowledge of current events and actions,  they may  ultimately  differ
          from actual results.



                                       F-13



<PAGE>


                            SALES ONLINE DIRECT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999



Summary Of Significant Accounting Policies (continued)

Stock Compensation Plans

          Statement  of  Financial   Accounting   Standards  ("SFAS")  No.  123,
          "Accounting for Stock-Based  Compensation," encourages all entities to
          adopt a fair value  based  method of  accounting  for  employee  stock
          compensation plans, whereby compensation cost is measured at the grant
          date  based  on the  value of the  award  and is  recognized  over the
          service period, which is usually the vesting period.  However, it also
          allows an entity to  continue to measure  compensation  cost for those
          plans using the intrinsic value based method of accounting  prescribed
          by Accounting  Principles Board Opinion No. 25, " Accounting for Stock
          Issued to Employees," whereby compensation cost is the excess, if any,
          of the  quoted  market  price of the stock at the grant date (or other
          measurement  date) over the amount an employee must pay to acquire the
          stock.  Stock  options  issued under the  Company's  stock option plan
          typically have no intrinsic value at the grant date, and under Opinion
          No. 25 no  compensation  cost is recognized  for them. The Company has
          elected to continue with the accounting  methodology in Opinion No. 25
          and, as a result, has provided pro forma disclosures of net income and
          earnings per share and other  disclosures,  as if the fair value based
          method of accounting had been applied.

Earnings Per Common Share

          Basic  earnings  per  share  represents  income  available  to  common
          stockholders divided by the  weighted-average  number of common shares
          outstanding  during the period.  Diluted  earnings per share  reflects
          additional  common shares that would have been outstanding if dilutive
          potential common shares had been issued,  as well as any adjustment to
          income that would result from the assumed  issuance.  Potential common
          shares that may be issued by the Company  relate to  convertible  debt
          and  outstanding  stock  options  and  warrants.  The number of common
          shares that would be issued upon  conversion of the  convertible  debt
          would have been 16,438,356  shares as of December 31, 2000. The number
          of  common  shares  that  would  be  included  in the  calculation  of
          outstanding  options and  warrants is  determined  using the  treasury
          stock method.  The assumed  conversion of  outstanding  dilutive stock
          options and warrants would increase the shares  outstanding  but would
          not  require an  adjustment  of income as a result of the  conversion.
          Stock options and warrants  applicable  to 957,000  shares and 579,000
          shares at December 31, 2000 and 1999, respectively, have been excluded
          from the computation of diluted earnings per share, as have the common
          shares that would be issued upon conversion of the  convertible  debt,
          because they were  antidilutive.  Diluted  earnings per share have not
          been presented as a result of the Company's net loss for each year.


                                       F-14



<PAGE>


                            SALES ONLINE DIRECT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999



Summary Of Significant Accounting Policies (continued)

Asset Impairment

          In accordance  with SFAS No. 121,  "Accounting  for the  Impairment of
          Long-Lived  Assets and for Long-Lived  Assets to be Disposed Of," long
          lived  assets  to be held  and used by the  Company  are  reviewed  to
          determine whether any events or changes in circumstances indicate that
          the  carrying  amount  of  the  asset  may  not  be  recoverable.  For
          long-lived  assets  to  be  held  and  used,  the  Company  bases  its
          evaluation on such impairment  indicators as the nature of the assets,
          the future economic  benefits of the assets,  any historical or future
          profitability   measurements,   as  well  as  other  external   market
          conditions  or  factors  that  may  be  present.  If  such  impairment
          indicators  are present or other  factors exist that indicate that the
          carrying  amount  of the  asset may not be  recoverable,  the  Company
          determines  whether an impairment  has occurred  through the use of an
          undiscounted  cash flow  analysis  of assets at the  lowest  level for
          which  identifiable  cash flow exist. If impairment has occurred,  the
          Company  recognizes  a loss for the  difference  between the  carrying
          amount and the  estimated  value of the  asset.  The fair value of the
          asset is measured using an estimate of discounted cash low analysis.

Web Site Development Costs

          The Company has adopted,  effective January 1, 2000, the provisions of
          EITF 00-2,  "Accounting for Web Site Development Costs" ("EITF 00-2"),
          which  requires  that costs  incurred in  planning,  maintaining,  and
          operating stages that do not add  functionality to the site be charged
          to  operations  as  incurred.  External  costs  incurred  in the  site
          application   and   infrastructure   development   stage  and  graphic
          development are capitalized.  During the year ended December 31, 2000,
          the Company capitalized approximately $155,200 of Web site development
          costs.   Such   capitalized   costs  are  included  in  "Property  and
          equipment".

          Had the Company  applied  EITF 00-2 in 1999,  on a pro forma basis the
          net loss would have been  reduced by $75,437,  which would have had no
          effect on earnings per share.

Recent Accounting Pronouncements

          In June 1998, the FASB issued SFAS No. 133,  Accounting for Derivative
          Instruments and Hedging  Activities,  which the Company is required to
          adopt effective January 1, 2001. SFAS No. 133 will require the Company
          to record all  dervatives  on the  balance  sheet at fair  value.  The
          Company does not have any derivative instruments, nor does the Company
          engage in any hedging activities.  Consequently,  the adoption of SFAS
          133 is not  expected  to have an  impact  on the  Company's  financial
          position or results of its operations.

Reclassifications

          Certain   amounts  in  the  1999   financial   statements   have  been
          reclassified to conform with the 2000  presentation  with no effect on
          previously reported net loss, loss per share, or accumulated deficit.


                                       F-15



<PAGE>


                            SALES ONLINE DIRECT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999



Note 4.   Property and Equipment

At December 31, 2000 and 1999 property and equipment consisted of the following:

                                                   2000               1999
                                                   ----               ----

             Computer equipment and software    $  825,583         $ 518,434
             Office Furniture                      120,000            56,075
             Leasehold Improvements                      -            54,995
             Video and article archives            449,283                 -
             Video equipment                       158,513                 -
             Web site development costs            155,226                 -
             Purchased software                     70,000            70,000
                                                ----------         ---------
                                                 1,778,605           699,504
             Accumulated depreciation             (288,358)          (86,139)
                                                ----------         ---------

                                                $1,490,247         $ 613,365
                                                ==========         =========

Depreciation  and  amortization  expense of property and equipment for the years
ended   December  31,  2000  and  1999   amounted  to  $210,469  and  $  72,194,
respectively.

The Company  leases its former  technology  location  under an  operating  lease
commencing  on January 1, 2000 and  expiring  on  December  31,  2004.  Prior to
December 31,  2000,  the Company  abandoned  this  facility and ceased  payments
required under the lease. The Company is currently negotiating a settlement with
the landlord and has recorded an estimated  liability of $100,000 in  connection
with any future charges associated with the lease. This expense,  along with the
net book value of the  related  leasehold  improvements,  has been  included  in
selling,  general and administrative  expenses in the accompanying  statement of
operations.

The Company leases offices and warehouse facilities for approximately $2,500 per
month on a tenant-at-will basis.

Rent expense for the years ended December 31, 2000 and 1999 totaled $99,277 and
$29,265, respectively.

Note 5.   Other Intangible Assets

At  December  31, 200 and 1999 other  intangible  assets  are  comprised  of the
following:

                                                   2000                1999
                                                   ----                ----

             Software licenses                  $3,091,760         $       -
             Domain Names                           77,025            20,000
             Acquired Web Sites                    796,801                 -
             Customer and User lists               350,857                 -
             Other                                  33,163                 -
                                                ----------         ---------

                                                 4,349,606            20,000
             Accumulated amortization             (187,395)           (1,333)
                                                ----------         ---------

                                                $4,162,211         $  18,667
                                                ==========         =========



                                       F-16


<PAGE>

                            SALES ONLINE DIRECT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999


Note 6.   Accrued Expenses

At December 31, 2000 and 1999 accrued expenses are comprised of the following:

                                               2000              1999
                                               ----              ----

            General Oeprating expenses   $    92,171           $35,013
            Professional fees                421,721            46,470
            Common shares to be issued
             in connection with CSEI
             transaction (Note 1)            300,000                --
            Lease termination costs          100,000                --
            Interest                          89,672                --
                                          ----------           -------
            Total                         $1,003,564           $81,483
                                          ==========           =======

Note 7.   Common Stock

Call Option Agreement

     In connection with the agreement described in Note 1, on February 25, 1999,
     SRAD  entered  into a  Call  Option  Agreement  ("Option  Agreement")  with
     Universal  Funding,  Inc.  ("Universal"),  a  shareholder  of  SRAD  and  a
     beneficial  owner of 3,000,000  shares of SRAD's  common  stock.  Under the
     Agreement,  Universal  agreed to grant  certain  options to SRAD to acquire
     2,000,000  shares of SRAD's  common stock owned by  Universal.  The options
     consist of 1,000,000 shares at $.50 per share exercisable  through February
     25,  2000 and  1,000,000  shares  at $.75  per  share  exercisable  through
     February  25,  2001.  The  exercise  price was  reduced  to $.375 per share
     through April 30, 1999.

     In addition,  the Company  assigned  options to purchase  160,000 shares of
     stock from Universal to Richard Singer,  the former  President of SRAD, for
     services  rendered to SRAD in connection  with the  acquisition of Internet
     Auction, Inc. These services were provided to SRAD prior to the date of the
     acquisition  of Internet  Auction,  Inc.  and,  as a result,  have not been
     reflected in the financial statements of the acquirer, Sales Online Direct,
     Inc. Also, the Company assigned options to purchase 700,000 shares of stock
     from Universal in connection with the  acquisition of certain  inventories,
     resulting  in an increase in  additional  paid in capital of  approximately
     $629,000 which  represents the fair value of the  inventories  contributed.
     (See Note 3).

     In April 1999, the Company  assigned  options to purchase 500,000 shares of
     stock from  Universal to certain  individuals  in exchange for  $2,450,000,
     which was added to the paid-in capital of the Company.

     In March 2000, the Company  assigned  options to purchase 142,500 shares of
     stock from Universal to certain individuals in exchange for $87,188,  which
     was added to the paid in capital of the Company.

     At December 31, 2000, the Company had a balance of 497,500 shares remaining
     under the agreement with an exercise price of $.75. These remaining options
     expired on February 25, 2001.

                                      F-17

<PAGE>

                           SALES ONLINE DIRECT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999


Stock Options

     In June 1999,  the  Company's  Board of  Directors  adopted  the 1999 Stock
     Option Plan (the "1999 Plan") which provided for the issuance of options to
     directors,  officers,  employees and consultants of the Company to purchase
     up to 1,000,000 shares of the Company's common stock. Options granted under
     the plan may be either  incentive  stock  options  ("ISO") or  nonqualified
     stock options ("NSO").

     The 1999 Plan provides that each option be granted at a price determined by
     the Board of  Directors  on the date  such  option  is  granted  and have a
     maximum option term of ten years.  The options  granted become  exercisable
     during a period of time as  specified by the Board of Directors at the date
     such option is granted.

     In July 1999,  the  Company  granted an option to an  employee  to purchase
     471,000 shares of common stock at $.01 per share. The option is exercisable
     over a four-year  period.  The Company  recorded  unearned  compensation of
     $757,848,  based on the  difference  between  the fair  value of the common
     stock at the grant date and the exercise price.  The unearned  compensation
     is being  amortized  over the vesting  period of the  option.  Amortization
     expense related to unearned  compensation amounted to $189,764 and $143,937
     for the years ended December 31, 2000 and 1999, respectively.

     There were no options  granted  under the plan in 2000.

     An analysis of the activity in the 1999 Plan is as follows:

                                                                      Weighted
                                                                       Average
                                                                      Exercise
                                                      Shares            Price
                                                      ------            -----

        Shares under option:

         Outstanding at January 1, 1999                    -         $      -
         Granted                                     597,000             0.33
         Exercised                                         -                -
         Expired/Cancelled                           (18,000)            1.63
                                                    --------

         Outstanding at December 31, 1999            579,000              .29
         Granted                                           -                -
         Exercised                                         -                -
         Expired/Cancelled                           (22,000)            1.63
                                                    --------

         Outstanding at December 31, 2000            557,000             0.24
                                                    --------

        Options exercisable at year end              227,575         $   0.15
                                                    ========

     Weighted average fair value of
       options granted during the year
                  1999                                 $1.62         $   0.33
                                                    ========         ========
                  2000                                     -         $      -
                                                    ========         ========


                                      F-18

<PAGE>
                           SALES ONLINE DIRECT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999


         Information pertaining to options outstanding at December 31, 2000 is
as follows:

                 Options Outstanding                         Options Exercisable
---------------------------------------------------------  ---------------------

                                     Weighted
                                     Average     Weighted              Weighted
                                    Remaining     Average               Average
     Range of          Number      Contractual   Exercise   Number     Exercise
  Exercise Prices    Outstanding      Life         Price   Exercisable   Price
  ---------------    -----------   -----------  --------   ----------- ---------

     $    .01         471,000       8 years       $0.010    206,625      0.010
          .812         14,000       8              0.812      2,550      0.812
         1.625         72,000       8              1.625     18,400      1,625
                     --------                               -------

Outstanding at end
of year               557,000                     $0.240    227,575     $0.150
                      =======                               =======

     During July 1999,  the  Company's  Board of Directors  adopted,  subject to
     stockholders'  approval,  the 1999 Omnibus Share Plan (the "Omnibus  Plan")
     which provides for both incentive and  non-qualified  stock options,  stock
     appreciation  rights and other awards to directors,  officers and employees
     of the  Company  to  purchase  or  receive  up to  1,000,000  shares of the
     Company's  stock.  A  committee  of the  Board of  Directors  ("Committee")
     establishes  the option  price at the time each  option is  granted,  which
     price may, in the  discretion  of the  Committee,  be less than 100% of the
     fair  market  value of the  shares on the date of the  grant.  The  options
     granted  will  have a maximum  term of ten  years and shall be  exercisable
     during a period as  specified  by the  Committee.  There were no  incentive
     options granted under the Omnibus Plan during 1999.

     The Company applies Accounting  Principles Board Opinion No. 25 and related
     interpretations  in  accounting  for its stock option  plans.  Accordingly,
     compensation  cost has been recognized only to the extent  described above.
     Had  compensation  cost for the Company's stock option plan been determined
     based on the fair  value at the  grant  dates  for  awards  under  the plan
     consistent  with the method  prescribed  by FASB  Statement  No.  123,  the
     Company's net income and earnings per share would have been adjusted to the
     pro forma amounts indicated below:

                                              Years Ended December 31,
                                             ------------------------
                                            2000                    1999
                                            ----                    ----

         Loss
                  As reported          $ (5,493,136)             $(2,183,040)
                  Pro forma            $ (5,518,862)             $(2,197,613)

         Basic loss per share
                  As reported          $      (0.11)             $     (0.05)
                  Pro forma            $      (0.11)             $     (0.05)


                                      F-19

<PAGE>

                           SALES ONLINE DIRECT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999


     The fair value of each option grant is estimated on the date of grant using
     the Black-Scholes  option-pricing model with the following weighted-average
     assumptions:

                                           Years Ended December 31,

                                            2000              1999
                                            ----              ----


         Expected life                       N/A             4 years
         Risk-free interest rate             N/A             6.00%
         Dividend yield                      N/A             None
         Volatility                          N/A             254%

Note 8.   Income Taxes

There was no provision  for income  taxes for the years ended  December 31, 2000
and 1999 due to the  Company's  net  operating  loss and its  valuation  reserve
against deferred income taxes.

The difference  between the provision for income taxes from amounts  computed by
applying  the  statutory  federal  income  tax  rate of 34%  and  the  Company's
effective tax rate is due  primarily to the net  operating  loss incurred by the
Company and the valuation reserve against the Company's deferred tax asset.

The tax effects of temporary  differences  and carry  forwards that give rise to
deferred taxes are as follows:

                                                              2000        1999
                                                              ----        ----

         Federal net operating loss carry forwards       $2,257,000     625,000
         State net operating loss carry forwards            699,000     195,000
         Stock-based compensation recognized for
         financial statement purposes                       136,000      60,000
                                                         ----------   ---------

                                                          3,092,000     880,000

         Valuation reserve                               (3,092,000)   (880,000)
                                                         ----------   ---------

         Net deferred tax asset                         $        -    $       -
                                                        ===========   =========

The valuation  reserve  applicable to net deferred tax asset for the years ended
December  31, 2000 and 1999 is due to the  likelihood  of the  deferred  tax not
expected to be utilized.

At December 31, 2000, the Company has federal and state net operating loss carry
forwards of approximately  $7,350,000  available to offset future taxable income
which will expire in 2020.

Note 9.   Related Party Transaction

During  September 1999, the Company  purchased  certain  computer  equipment and
internet   research   technology  and  coding   material  from  Timeline,   Inc.
("Timeline")  in the amount of $70,000.  Timeline is a related  party,  owned by
Gregory Rotman and Richard Rotman, officers of the Company.  See Note 3.

                                      F-20

<PAGE>

                           SALES ONLINE DIRECT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999



Note 10.   Convertible Debt Financing

On March 23, 2000, the Company entered into a Securities Purchase Agreement (the
"Agreement"),  whereby the Company sold an 8% convertible  note in the amount of
$3,000,000, due March 31, 2002 to Augustine Fund, L.P. (the "Buyer").

The note is  convertible  into common stock at a  conversion  price equal to the
lesser of: (1) one hundred  ten percent  (110%) of the lowest of the closing bid
price for the  common  stock for the five (5)  trading  days  prior to March 23,
2000, or (2) seventy-five  percent (75%) of the average of the closing bid price
for the common stock for the five (5) trading  days  immediately  preceding  the
conversion date.

Had the  Buyer  converted  the note on March 23,  2000,  the  Buyer  would  have
received  $4,000,000 in aggregate  value of the company's  common stock upon the
conversion of the $3,000,000  convertible note. As a result, the intrinsic value
of the beneficial conversion feature of $ 1,000,000 has been charged to interest
expense with an offsetting increase in additional paid in capital during 2000.

In connection with the Agreement,  the Company also issued warrants to the Buyer
and Delano Group  Securities  to purchase  300,000 and 100,000  shares of common
stock,  respectively.  The purchase  price per share of common stock is equal to
one  hundred and twenty  percent  (120%) of the lowest of the closing bid prices
for the common stock during the five (5) trading days prior to the closing date.
The  warrants,  which expire on March 31, 2005,  have been valued based upon the
Black-Scholes  option-pricing  model at  $430,000.  The value of the warrants is
being amortized over two years, the term of the related convertible debt.

In addition,  the Company entered into a Registration Rights Agreement,  whereby
the Company  agreed to file a  Registration  Statement  with the  Securities and
Exchange  Commission (SEC), on or  before October 25, 2000,  covering the common
stock to be  issued  upon  the  conversion  of the  convertible  note and  stock
purchase warrants.  The Registration Rights Agreement contains a provision which
decreases  the  conversion  percentage  by two percent  (2%) for each thirty day
period after December 15, 2000 that the  Registration  Statement is not declared
effective by the SEC, as well as cash penalties,  as liquidating damages,  equal
to two percent (2%) for each thirty day period beyond that date.

As of December  31, 2000 the SEC had not  declared  the  Registration  Statement
effective.  Consequently,  the  Company  has  recorded  $30,000  in  liquidating
damages,  as additional  interest  expense,  during the year ended  December 31,
2000. In addition, the applicable conversion percentage has been reduced to 73%,
and the  additional  intrinsic  value of the  beneficial  conversion  feature of
$109,588 has been charged to interest  expense  with an  offsetting  increase in
additional paid in capital during 2000.

The  Registration  Statement  was not  declared  effective  by March  23,  2001;
accordingly  the  applicable  conversion  percentage  became 50% resulting in an
additional intrinsic value of the beneficial conversion feature of $1,890,412 as
of March  23,  2001.  The  Company  is in  discussions  with the  holder  of the
convertible  note  regarding  the  possible  renegotiation  of the  terms of the
convertible debt.

All fees and expenses related to the registration of the common stock will be
paid by the Company.

                                      F-21

<PAGE>

                            SALES ONLINE DIRECT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999

Note 11.   Issuance of Common Stock

On February 17, 2000,  the Company  issued  75,000 shares of its common stock to
Universal  Funding,  Inc. for payment of certain fees due in connection with the
granting of the common  stock call options and  temporary  reduction of the call
option  exercise  price.  In addition,  the Company  issued 35,000 shares of its
common stock to an investment consultant for service rendered in connection with
the common stock option grant transactions.

Also, on February 17, 2000, the Company issued 35,000 shares to a consultant for
services  rendered in the first quarter of 2000.  The value of the common shares
at the date of issuance of the shares described above was $1.28 per share.

The Company issued 377,141 shares of Common Stock in connection with the payment
of $125,588 of interest due on its convertible debt.

Note 12.   Litigation

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

The lawsuit was initially  filed against  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 defendants  other than
Stengel  identified  above. The First Amended  Complaint seeks rescission of the
transactions  pursuant to which Stengel and Kramer  obtained  their  substantial
stock interests in the Company, and seeks damages against Stengel and 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  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 Stengel in competition
with the Company and using the Company's resources.  The First Amended Complaint
also seeks to recover damages from Stengel and the two corporate  defendants for
conversion of certain of Company assets,  resources and employee  services,  and
for unjust  enrichment.  All defendants  have filed answers to the First Amended
Complaint.  Stengel has filed a counterclaim seeking damages against the Company
for alleged  interference  with his ability to sell shares of our common  stock.
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,  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,  the Company moved for summary  judgment and asked that
the Delaware 225 Action be dismissed. Oral argument on this motion was presented
on January 18, 2001. The Court granted the Company's motion for summary judgment
and dismissed the Delaware 225 Action.  The Court concluded that (1) the special

                                      F-22

<PAGE>

                            SALES ONLINE DIRECT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999


meeting of stockholders held on September 19, 2000 to elect directors (discussed
below) was authorized by the Company's bylaws and as a result, the new board was
properly elected and had the authority to terminate  Stengel as an officer;  (2)
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 the Company's  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 the
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  was elected as the
Company's 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  Stengel as an officer of the Company,  formally
ratified and approved the  initiation  and  prosecution  of the Maryland  action
against Stengel and authorized  Gregory Rotman, as president and CEO to take all
actions  necessary to prosecute the Company's  claims against Stengel and others
and  authorized  the  reimbursement  of  approximately  $75,000 of the  Rotmans'
expenses in connection with the aforementioned solicitation.

On or about  October  3, 2000,  Stengel  submitted  to the  Company 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,  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, the Company  notified Stengel that the Board
of Directors had denied his advancement request.

On or about  October 24,  2000,  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 he is entitled,  pursuant to the
Company's  Bylaws,  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").  The  Company and 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
the Company's motion for summary judgment and denied Stengel's  motion.  Stengel
has appealed this decision to the Delaware Supreme Court.

On November 1, 2000,  the Company  filed with the Maryland  Court a Motion for a
Preliminary  Injunction requesting that the Court enjoin Stengel and 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,  Stengel  filed an  Opposition to our Motion for a Preliminary
Injunction.  On November 9, 2000,  Stengel  also filed a Motion for  Preliminary
Injunction  requesting  that the Court (i) order the  Company  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 the Company from
interfering  with or preventing the sale of stock by. 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 the Company's  motion for the  preliminary  injunction  against
Stengel  and  Kramer,  (2) granted in part  Stengel's  motion for a  preliminary
injunction  insofar as the Company is enjoined from interfering with any sale of
stock by  Stengel  that  complies  with SEC Rule 144,  (3)  determined  that the
evidence  supported a finding  that  Stengel and Kramer are acting in concert in
the  disposition of their shares and (4) denied Stengel and Kramer's  motions to
dismiss the Company's lawsuit against them. The Court has scheduled the case for
trial in December, 2001.

                                      F-23
<PAGE>

                            SALES ONLINE DIRECT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999



The  Company  is  unable to  predict  the  ultimate  outcome  of the  litigation
described  above.  The  Company's  financial   statements  do  not  include  any
adjustments related to these matters.

Note 13.   Subsequent Event

On February 1, 2001,  the Company  adopted the 2001  Non-Qualified  Stock Option
Plan  (the  "2001  Plan")  and  filed a  Registration  Statement  on Form S-8 to
register 3,000,000 shares of its common stock. Under the 2001 Plan employees may
elect to receive their gross  compensation in the form of options to acquire the
number of shares of the Company's common stock equal to their gross compensation
divided  by the fair value of the stock on the date of grant at $.001 per share.
As of April 1, 2001 approximately  566,500 shares have been issued in connection
with this plan.

                                      F-24

<PAGE>






                                   SIGNATURES


         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Form 10-KSB/A to be
signed on its behalf by the undersigned hereunto duly authorized.


                                         SALES ONLINE DIRECT INC.




Date: May 18, 2001                       By: /s/ Gregory Rotman
                                             -----------------------------------
                                             Gregory Rotman, President



<PAGE>