================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                              --------------------
                                    FORM 20-F

(MARK ONE)

         [_]   REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                                       OR
         [X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
                                       OR
         [_]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                        COMMISSION FILE NUMBER 001-14957
                                TPN HOLDINGS PLC
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
                                ENGLAND AND WALES
                 (JURISDICTION OF INCORPORATION OR ORGANIZATION)
                          THE ANNEXE, EMPRESS BUILDINGS
                                380 CHESTER ROAD
                                   MANCHESTER
                         ENGLAND M16 9EB UNITED KINGDOM
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

                                                          NAME OF EACH EXCHANGE
                  TITLE OF EACH CLASS                      ON WHICH REGISTERED
                  -------------------                      -------------------
ORDINARY SHARES, NOMINAL VALUE (POUND)0.01P PER SHARE,   AMERICAN STOCK EXCHANGE
    REPRESENTED BY AMERICAN DEPOSITARY SHARES
    EVIDENCED BY AMERICAN DEPOSITARY RECEIPTS

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
SECURITIES FOR WHICH THERE IS A REPORTING OBLIGATION PURSUANT
 TO SECTION 15(D) OF THE ACT: NONE

     Indicate the number of outstanding  shares of each of the issuer's  classes
of capital or common  stock as of the close of the period  covered by the annual
report:

AS OF DECEMBER 31, 2000,  THE  REGISTRANT HAD  OUTSTANDING  10,033,009  ORDINARY
SHARES,  NOMINAL VALUE  (POUND)0.01 PER SHARE, AND 850,000 9% SERIES A PREFERRED
SHARES, NOMINAL VALUE (POUND)1.00 PER SHARE.

     Indicate by check mark  whether the  registrant:  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  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]

     Indicate by check mark which  financial  statement  item the registrant has
elected to follow.

[_] Item 17   [X] Item 18

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<PAGE>


                                TPN HOLDINGS PLC

                           ANNUAL REPORT ON FORM 20-F
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----
Certain Definitions and Conventions...........................................3

Special Note Regarding Forward-Looking Statements.............................3

PART I........................................................................3
    Item 1.   Identity of Directors, Senior Management and
                Advisors......................................................3
    Item 2.   Offer Statistics and Expected Timetable.........................4
    Item 3.   Key Information.................................................4
                  Selected Financial Data.....................................4
                  Exchange Rate Information...................................5
                  Risk Factors................................................6
    Item 4    Information on the Company.....................................18
                  History and Development....................................18
                      WWW.CO.UK Limited......................................18
                      Morbria Limited........................................19
                      BuyersGuide plc........................................19
                      Research Sales, Inc., d/b/a Rasmussen
                        Research.............................................20
                      24.7 Colour Limited....................................20
                      UK Property Channel.com Limited........................20
                  Business Overview..........................................21
                  Government Regulation......................................39
                  Insurance..................................................39
                  Organizational Structure...................................40
                  Property, Plants and Equipment.............................40
    Item 5.   Operating and Financial Review and Prospects...................41
                  Overview...................................................41
                  Our Operations ............................................42
                  Effect of Various Accounting Methods on
                    Our Results of Operations................................45
                  Results of Operations......................................46
                  Liquidity and Capital Resources............................53
    Item 6.   Directors, Senior Management and Employees.....................57
                  Directors and Senior Management............................57
                  Compensation...............................................60
                  Option Grants During 2000..................................61
                  Board Practices............................................63
                  Committees of the Board of Directors.......................63
                  Employment Agreements......................................64
                  Employees..................................................64
                  Share Ownership of Senior Management.......................65
    Item 7.   Major Shareholders and Related Party Transactions..............66
                  Major Shareholders.........................................66
                  Related Party Transactions.................................67

                                       i


<PAGE>


    Item 8.   Financial Information..........................................69
                  Consolidated and Supplemental Financial Statements.........69
                  Legal Proceedings..........................................69
    Item 9.   The Offer and Listing..........................................69
                  Nature of Trading Market...................................69
    Item 10.  Additional Information.........................................70
                  Memorandum of Association and Articles
                    of Association...........................................70
                  Board Action and Powers....................................71
                  Description of Share Capital ..............................73
                  Exchange Controls and Other Limitations Affecting
                    Security Holders.........................................78
                  Material Contracts.........................................79
                  Taxation...................................................81
    Item 11.  Quantitative and Qualitative Disclosures About
                Market Risk..................................................86
    Item 12.  Description of Securities Other than Equity
                Securities...................................................86

PART II......................................................................87
    Item 13.  Defaults, Dividend Arrearages and Delinquencies................87
    Item 14.  Material Modifications to the Rights of Security
                Holders and Use of Proceeds..................................87

PART III.....................................................................88
    Item 17.  Financial Statements...........................................88
    Item 18.  Financial Statements...........................................88
    Item 19.  Exhibits.......................................................88


                                       ii


<PAGE>


                       CERTAIN DEFINITIONS AND CONVENTIONS

     In this annual report,  references to "$" and "U.S.  dollars" are to United
States currency, and references to "(pound)",  "pounds sterling", "pence" or "p"
are to U.K. currency. Percentages and certain amounts contained herein have been
rounded for ease of presentation.  Any discrepancies in any table between totals
and the sums of amounts listed are due to rounding.

     Certain U.S. dollar amounts in this annual report have been translated from
pounds sterling to U.S. dollars at the December 31, 2000 noon buying rate in New
York City for cable  transfers as certified for customs  purposes by the Federal
Reserve Bank of New York of (pound)1.00 = $1.4935.

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     We make  certain  forward-looking  statements  in  this  Form  20-F  and in
documents  incorporated  by  reference  in this Form 20-F  within the meaning of
Section 27A of the  Securities  Act of 1933, as amended,  and Section 21E of the
Securities  Exchange  Act  of  1934,  as  amended,  relating  to  our  financial
condition,  profitability,  liquidity,  resources,  business  outlook,  proposed
acquisitions,  market forces,  corporate  strategies,  contractual  commitments,
capital requirements and other matters. The Private Securities Litigation Reform
Act of 1995  provides a safe harbor for  forward-looking  statements.  To comply
with the terms of the safe harbor, we note that a variety of factors could cause
our actual results and experience to differ  substantially  from the anticipated
results or other expectations expressed in our forward-looking  statements. When
words  and   expressions   such  as:   "believes,"   "expects,"   "anticipates,"
"estimates,"  "plans,"  "intends,"  "objectives,"  "goals," "aims,"  "projects,"
"forecasts,"  "possible,"  "seeks," "may," "could," "should," "might," "likely,"
"enable" or similar words or expressions  are used in this Form 20-F, as well as
statements  containing  phrases  such  as  "in  our  view,"  "there  can  be  no
assurance,"  "although  no  assurance  can  be  given"  or  "there  is no way to
anticipate with  certainty,"  forward-looking  statements are being made.  These
forward-looking statements speak as of the date of this Form 20-F.

     The forward-looking statements are not guarantees of future performance and
involve risk and  uncertainties.  These risks and  uncertainties  may affect the
operation, performance,  development and results of our business and could cause
future outcomes to differ materially from those set forth in our forward-looking
statements,  including  the  following  factors:  the  change  in  our  business
strategy; our growth strategies; anticipated trends in the industry; our ability
to enter into additional Web site design contracts;  our relationships  with our
customers;  general market and economic  conditions;  our ability to finance our
future business  requirements;  the ability to successfully  integrate  acquired
companies  and  businesses;  management  retention and  development;  changes in
Federal and state laws and regulations;  and the risks,  uncertainties and other
factors  described from time to time in our  Securities and Exchange  Commission
filings and reports.

     We undertake no obligation to publicly update or revise any forward-looking
statements as a result of future developments,  events and conditions outside of
our control.  New risk factors  emerge from time to time and it not possible for
us to predict  all such risk  factors,  nor can we assess the impact of all such
risk factors on our business or the extent to which any factor,  or  combination
of factors, may cause actual results to differ significantly from those forecast
in  any  forward-looking  statements.   Given  these  risks  and  uncertainties,
investors  should not overly rely or attach undue weight to our  forward-looking
statements as an indication of our actual future results.

                                     PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS.

        Not applicable.



                                       3
<PAGE>


ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE.

        Not applicable.

ITEM 3.  KEY INFORMATION.

SELECTED FINANCIAL DATA

     The following  selected  consolidated  financial data for each of the three
years in the period  ended  December 31, 2000 and at December 31, 1999 and 2000,
are derived from our  consolidated  financial  statements  and the notes thereto
appearing elsewhere in this annual report and which have been audited by Ernst &
Young,  independent auditors.  The selected consolidated  financial data for the
years ended  December 31, 1996 and 1997 and at December 31, 1996,  1997 and 1998
were derived from our consolidated  financial  statements which are not included
in this annual report and which have been audited by Ernst & Young,  independent
auditors.

     Solely  for  your  convenience,  certain  U.S.  dollar  amounts  have  been
translated from pounds sterling at the December 31, 2000 noon buying rate in New
York City for cable  transfers as certified for customs  purposes by the Federal
Reserve Bank of New York of (pound)1.00 = $1.4935. The data below should be read
in conjunction  with "Item 5. Operating and Financial  Review and Prospects" and
our  consolidated  financial  statements and the notes relating thereto included
elsewhere in this annual report.


<PAGE>



                   SUMMARY CONSOLIDATED FINANCIAL INFORMATION
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                  FOR THE YEARS ENDED DECEMBER 31,

                                    1996              1997              1998            1999              2000            2000
                              ---------------   ---------------   --------------- ----------------- -----------------  ------------
                                                    Amounts in Pounds Sterling                                          Amounts in
                                                    --------------------------                                          U.S. Dollars
                                                                                                                        ------------
<S>                           <C>               <C>               <C>             <C>               <C>                <C>
STATEMENT OF OPERATIONS DATA:
Net revenues                     (pound)6,225      (pound)8,359  (pound)1,120,103  (pound)7,247,846  (pound)6,939,524   $10,364,178
Cost of revenues                       21,750            43,781           743,630         4,649,317         7,380,565    11,022,874
                              ---------------   ---------------   --------------- ----------------- -----------------  ------------
Gross profit (loss)                   (15,525)          (35,422)          376,473         2,598,529          (441,041)     (658,696)

Operating expenses

 Research and development              21,148            40,832            67,910            77,371           542,553       810,302
 Sales and marketing                   24,943            20,194           351,633         1,028,005           416,399       621,893
 General and administrative            94,429           220,057           715,168         2,565,396         6,486,720     9,687,913
 Goodwill written off                      --                --                --                --         1,631,965     2,437,340
 Depreciation & amortization            9,289            12,572            42,022         1,088,606         4,139,297     6,182,041
                              ---------------   ---------------   --------------- ----------------- -----------------  ------------
Total operating expenses              149,809           293,655         1,176,733         4,759,378        13,216,934    19,739,489
Loss from operations                 (165,334)         (329,077)         (800,260)       (2,160,849)      (13,657,975)  (20,398,185)
Other income (expense)                 (1,575)          (17,487)          (71,836)          211,884         4,826,523     7,208,413
                              ---------------   ---------------   --------------- ----------------- -----------------  ------------
Loss before income taxes             (166,909)         (346,564)         (872,096)       (1,948,965)       (8,831,452)  (13,189,772)
Provision for income taxes                 --                --                --           108,669           (66,006)      (98,580)
                              ---------------   ---------------   --------------- ----------------- -----------------  ------------
Net loss                      (pound)(166,909)  (pound)(346,564)  (pound)(872,096)(pound)(2,057,634)(pound)(8,765,446) $(13,091,192)
                              ===============   ===============   =============== ================= =================  ============

Basic and diluted net
 income (loss) per share         (pound)(0.10)     (pound)(0.07)     (pound)(0.17)     (pound)(0.29)     (pound)(0.89)       $(1.33)
                              ===============   ===============   =============== ================= =================  ============
Shares used in computing
 basic and diluted net
 loss per share                     1,672,225         5,000,000         5,000,000         7,111,075         9,816,405     9,816,405
                              ===============   ===============   =============== ================= =================  ============

</TABLE>


                                       4
<PAGE>


<TABLE>
<CAPTION>
                                                                 AS OF DECEMBER 31
                                ----------------------------------------------------------------------------------------------------
                                    1996             1997              1998              1999              2000             2000
                                ------------     -------------     -------------    --------------   ----------------     ----------
                                                             Amounts in Pounds Sterling                                  Amounts in
BALANCE SHEET DATA:                                          --------------------------                                 U.S. Dollars
                                                                                                                        ------------
<S>                              <C>              <C>               <C>              <C>              <C>                  <C>
Cash and cash equivalents       (pound)2,408     (pound)12,868     (pound)33,868    (pound)647,035   (pound)4,197,955     $6,269,646
Deferred revenue                          --                --           228,244         4,425,939          3,025,855      4,519,113
Total assets                          20,544            36,437         1,631,931        27,585,947         21,472,427     32,069,066
Total stockholders' equity
   (net capital deficiency)           (2,461)         (349,025)       (1,221,121)       17,382,048          8,340,802     12,456,988
Ordinary Shares                       50,000            50,000            50,000            95,840            100,330        149,844
</TABLE>

EXCHANGE RATE INFORMATION

     The table below provides the following  information for the years indicated
concerning the number of British pounds sterling for which one U.S. dollar could
be exchanged:

o    the average of the noon exchange rates on the last day of each month during
     each year;

o    the high noon exchange rate during the year; and

o    the low noon exchange rate during the year.

     The noon exchange rate is the U.S.  dollar exchange rate in the City of New
York for cable  transfers in British  pounds  sterling at noon as certified  for
customs  purposes  by the  Federal  Reserve  Bank of New  York.  Such  rates are
provided  solely  for  your  convenience  and  should  not  be  construed  as  a
representation  that British pounds  sterling  amounts  actually  represent such
dollar amounts or that such British pounds sterling  amounts could have been, or
could be,  converted  into dollars at that rate or at any other rate.  We do not
use such  rates in the  preparation  of our  consolidated  financial  statements
included  elsewhere  herein.  See  the  notes  to  our  consolidated   financial
statements included elsewhere in this annual report.

YEAR                           AVERAGE            HIGH             LOW
----                           -------            ----             ---
1996..................    (pound)1.5624     (pound)1.7163    (pound)1.4888
1997..................           1.6392            1.7145           1.5662
1998..................           1.6576            1.7366           1.6078
1999..................           1.6178            1.6793           1.5470
2000..................           1.5170            1.6569           1.3945

     The following  table  provides  information  regarding the high and the low
noon exchange rates for each month during the first six months of 2001.

MONTH                                                  HIGH            LOW
-----                                            -------------    -------------
January 2001.....................................(pound)1.5103    (pound)1.4458
February 2001...........................................1.4833           1.4312
March 2001..............................................1.4764           1.4148
April 2001..............................................1.4500           1.4135
May 2001................................................1.4445           1.4070
June 2001...............................................1.4266           1.3677

     On July 27, 2001, the noon exchange rate was (pound)1.4287 to $1.00.


                                       5
<PAGE>




RISK FACTORS

     You should  carefully  consider  the  following  risks before you decide to
invest  in our  company.  If any of the  following  risks  actually  occur,  our
business,  financial condition or results of operations may suffer. As a result,
the trading price of our American  Depositary Shares could decline,  and you may
lose all or part of your investment.

WE HAVE EXPERIENCED SUBSTANTIAL NET LOSSES IN THE PAST.

      We have incurred  substantial  consolidated losses and negative cash flows
from  operations  in each annual  period since we were formed,  and we expect to
continue to incur substantial losses and negative cash flows for the foreseeable
future.  We had  consolidated  net losses of  approximately  (pound)8.8  million
($13.1 million) and (pound)2.0 million for the years ended December 31, 2000 and
1999, respectively.  As of December 31, 2000, we had an accumulated consolidated
deficit of approximately  (pound)12.3  million ($18.3  million).  It is possible
that we may never achieve profitability. Even if we do achieve profitability, we
may not be able to sustain or increase  profitability  on a quarterly  or annual
basis in the future.  Our future performance will depend, in part, on the amount
and rates of growth in our net revenue from e-business and  advertising,  and on
our ability to control our operating expenses, which may increase as we continue
to integrate the companies we acquired in 1999 and 2000. If revenues do not grow
at anticipated rates, or if our operating expenses exceed expectations or cannot
be  adjusted  in response  to slower  revenue  growth,  it could have a material
adverse effect on our business.

WE MAY BE UNABLE  TO  CONTINUE  AS A GOING  CONCERN  UNLESS WE RAISE  ADDITIONAL
CAPITAL IN THE FUTURE.

     Due to our  operating  losses  and lack of cash flow from  operations,  our
consolidated working capital surplus of (pound)3,398,975 as of December 31, 1999
was  reduced to a  consolidated  working  capital  deficit  of  (pound)2,163,645
($3,231,401) as of December 31, 2000. As a result,  we need to raise  additional
funds in order to conduct  our  business  and  prospects.  The  failure to raise
additional funds may prevent us from implementing our business  strategy,  which
would materially and adversely affect our business and prospects.  Currently, we
depend upon revenues  from  operations  and  borrowings  under a committed  bank
credit  facility  provided  by HSBC  Bank plc to meet our  working  capital  and
liquidity  requirements and to fund continued  losses.  We have received written
confirmation  from HSBC Bank that we may continue to utilize this facility up to
(pound)5.2 million ($7.8 million) until September 30, 2001. As of July 27, 2001,
this facility was substantially utilized. There can be no assurance that we will
achieve projected  revenues,  that our bank credit facility will be renewed,  or
that  additional  bank  borrowings  will  be  available  to us  on  commercially
attractive  terms, or at all, or that the costs actually incurred to operate our
business will not exceed our budget.  In addition,  if we expand our  operations
outside the United Kingdom or add services or other  capabilities  not presently
contemplated, either alone or with a strategic partner, revenues from operations
and  available  bank  borrowings  will  be  insufficient  to  meet  our  capital
requirements for such expansion.  If we are unable to obtain additional funds on
acceptable terms or at all, we would be unable to complete any such expansion as
planned  and our  business  and  financial  condition  would be  materially  and
adversely affected.  There is no assurance that any additional financing will be
available on commercially  attractive terms, in a timely fashion,  in sufficient
amounts, or at all.

     Any  additional  equity  financing may be on terms that dilute the value of
our company for our  existing  shareholders,  including  holders of our American
Depositary  Shares.  In addition,  new  securities may contain  certain  rights,
preferences  or privileges  that are senior to those of our ordinary  shares and
American   Depositary  Shares.  Debt  financing,   if  available,   may  involve
restrictive covenants which limit our operating flexibility.


                                       6
<PAGE>


     As  discussed  in Note 1 to our  financial  statements,  there are existing
uncertain conditions that we face relative to capital raising activities.  These
conditions  include  uncertainty over whether our credit facility with HSBC Bank
plc will be renewed on September 30, 2001, when it is due to expire,  or whether
additional funds will be made available under this facility. In addition,  there
is uncertainty over whether we will be able to realize sufficient  proceeds from
the possible sale of certain of our subsidiaries. There can be no assurance that
the bank credit facility will be renewed,  or that additional funds will be made
available  under such  facility.  There also can be no assurance that we will be
able to complete any sale of our  subsidiaries,  or that the  proceeds  from any
such sales will be sufficient to meet our capital requirements. Accordingly, our
independent  auditors have included an explanatory  paragraph in their report on
our  financial  statements  for the fiscal year ended  December 31, 2000,  which
describes that there are  substantial  doubts as to our ability to continue as a
going concern.

WE HAVE A LIMITED OPERATING HISTORY

     We commenced  our  business in November  1995 but  conducted no  meaningful
operations  until  1996,  when  we  began  conducting   experimental   prototype
operations which concluded in the Spring of 1998. Accordingly, we have a limited
operating  history upon which you can evaluate our business and  prospects.  Our
historical  data is of limited value in  projecting  future  operating  results,
particularly  because we have changed our business strategy and acquired several
additional  businesses in 1999 and 2000.  Therefore,  our historical  results of
operations  may not give you an  accurate  indication  of our future  results of
operations or prospects.  The limited amount of  information  about our business
and  financial  history  makes it difficult  for you to judge whether we will be
successful.  Companies  like us in an  early  stage  of  development  frequently
encounter risks,  uncertainties,  delays,  expenses and difficulties  associated
with  starting  a new  business,  many  of  which  may be  beyond  our  control,
including, among other risks set forth in this annual report, our ability to:

o    successfully  implement  our  business  plan or adapt it to  changes in the
     market;

o    attract more customers;

o    manage our expanding operations and growth;

o    attract, retain and motivate qualified personnel; and

o    anticipate and adapt to the changing Internet and new media market.

     These risks and difficulties  apply  particularly to us because our markets
are new and rapidly  changing.  We cannot assure you that our business  strategy
will be successful or that we will successfully address these risks.

OUR  REVISED  BUSINESS  STRATEGY  FOR  AVATAR  INTERACTIVE  LIMITED  MAY  NOT BE
SUCCESSFUL.

     In  September  2000,  we changed the business  strategy of our  subsidiary,
Avatar Interactive Limited (formerly known as Town Pages UK Limited). We may not
be able to successfully execute Avatar Interactive's new business strategy. Even
if we successfully execute this new business strategy, there can be no assurance
that such  strategy  will  improve our  operating  results.  Furthermore,  other
conditions  may exist such as  increased  competition,  reduction  in demand for
Internet-related services or an economic downturn, which may offset any improved
operational results that are attributed to Avatar Interactive's revised business
strategy.



                                       7
<PAGE>


MOST OF OUR HISTORICAL REVENUE WAS DERIVED FROM RELATED PARTIES.

     The success of our Web design and advertising  services  businesses depends
on our ability to attract and retain  customers.  Some of our largest  customers
are  affiliates of Kevin R. Leech, a significant  shareholder  and a director of
our company. Such customers represented 54% and 17% of our revenue during fiscal
years  ended  1999 and  2000,  respectively.  As part of the  change  in  Avatar
Interactive's  business strategy, in December 2000 we discontinued providing Web
channel design  services to ci4net.com,  Inc., an affiliate of Mr. Leech. We and
ci4net.com mutually agreed to terminate our obligations under these contracts. A
significant  portion of our revenue was derived from these contracts.  There can
be no assurance  that we will be able to replace  these  revenues  with revenues
from other sources. If we are unable to earn revenues from other sources,  there
would be a material and adverse effect on our business,  financial condition and
results of operations.

     Our future  performance  will depend,  in part,  on the amount and rates of
growth in our net revenue from  e-business and advertising and on our ability to
control our operating  expenses,  which may increase as we continue to integrate
the  companies  we  acquired  in 1999  and  2000.  If  revenues  do not  grow at
anticipated rates, or if our operating expenses exceed expectations or cannot be
adjusted in response to slower revenue growth,  it could have a material adverse
effect on our business.

THERE ARE RISKS  ASSOCIATED WITH  ACQUISITIONS WE HAVE MADE OR WHICH WE MAY MAKE
IN THE FUTURE WHICH COULD NEGATIVELY IMPACT OUR BUSINESS PROSPECTS.

      A key element of our growth  strategy over the last two years has been the
acquisition  of businesses and assets that  complement  our current  businesses.
There  can  be no  assurance  that  we  will  be  able  to  identify  attractive
acquisition  opportunities,  obtain  financing for  acquisitions on satisfactory
terms or successfully  acquire identified targets. In addition,  there can be no
assurance that we will be successful in integrating acquired businesses into our
existing  operations or that such  integration  will not result in unanticipated
liabilities or unforeseen  operational  difficulties,  which may be material, or
require a disproportionate amount of management's  attention.  Such acquisitions
may result in our company incurring additional indebtedness or issuing preferred
stock or additional ordinary shares. In addition, there can be no assurance that
competition  for  acquisition  opportunities  in the industry will not escalate,
thereby  increasing  the cost to us of  making  acquisitions  or  causing  us to
refrain from making further acquisitions.  In addition, the terms and conditions
of our credit  facility with HSBC Bank plc impose,  and the terms and conditions
of future debt  instruments  may impose,  restrictions  on us that,  among other
things, restrict our ability to make acquisitions.

OUR OPERATING RESULTS MAY FLUCTUATE IN FUTURE PERIODS WHICH MAY CAUSE VOLATILITY
OR A DECLINE IN THE PRICE OF OUR AMERICAN DEPOSITARY SHARES, AND MAY MAKE PERIOD
TO PERIOD  COMPARISONS OF OUR OPERATING  RESULTS AN UNRELIABLE  INDICATOR OF OUR
FUTURE PERFORMANCE.

     Our  historical  financial  data is not  reliable  as a basis upon which to
predict  our future  revenues  or  operating  expenses  for a number of reasons,
including our limited  operating  history,  the emerging  nature of our Internet
industry  category,  and because we have  revised the  business  strategy of our
subsidiary, Avatar Interactive. We expect to experience significant fluctuations
in our future results of  operations,  which may cause the price of our American
Depositary  Shares to fall.  Factors that could cause our  operating  results to
fluctuate include, among others:

o    specific economic conditions relating to the Internet;

o    use of the Internet;



                                       8
<PAGE>


o    demand for Internet-based advertising in general;

o    changes in advertising rates as a result of competition or other factors;

o    seasonal trends in advertising;

o    the advertising budgets of our existing and potential customers;

o    changes in our distribution  relationships  with Internet service providers
     or other third parties;

o    demand for our services;

o    incurrence of costs relating to acquisitions of businesses or technologies;

o    incurrence of other charges in connection  with the services  offered by us
     and our competitors;

o    introduction of enhanced services by us or our competitors;

o    market acceptance of new services;

o    delays in the  introduction of services or  enhancements  provided by us or
     our competitors;

o    changes in our pricing policies or those of our competitors;

o    capacity  constraints,  dependencies  on  Internet  and  telecommunications
     infrastructure, and related technical difficulties, downtimes, or "Internet
     brownouts"; and

o    general economic conditions.

     In addition,  Internet and e-business related industries are relatively new
and they have not been tested in a recessionary economic environment. In such an
environment,  spending on advertising  and other  discretionary  items generally
decreases,  which could  reduce sales of our  services.  For these  reasons,  we
believe  that  period-to-period  comparisons  of our  operating  results are not
necessarily  meaningful  and that such  comparisons  cannot  be  relied  upon as
indicators of future performance.  In addition, it is likely that in some future
quarters,  our operating  results will be below the  expectations  of securities
analysts  and  investors.  If this  happens,  the trading  price of our American
Depositary  Shares would  likely fall even if not  reflective  of any  long-term
problems with our business.

OUR BUSINESS IS INCREASINGLY COMPETITIVE.

     The  markets  for  local  interactive   content  and  services  are  highly
fragmented and intensely  competitive.  We compete on the Internet with Internet
service  providers,  online  service  providers,  search  engines and other site
aggregation companies,  services that sponsor communities of personal Web sites,
and various Web site operators and content providers,  and with Web site design,
consultancy and other similar  companies.  We also compete with more traditional
mediums of  communication,  such as print,  radio, and television for a share of
advertisers'  total advertising  budgets.  We expect competition in our lines of
business to intensify because there are relatively low barriers to entry.


                                       9
<PAGE>

UNITED KINGDOM  COMPETITORS  COULD  DUPLICATE OUR INFORMATION AND KIOSK STRATEGY
AND REDUCE ITS EFFECTIVENESS.

     United  Kingdom-based  companies,  such as British  Telecommunications  plc
(multimedia  payphones),  KDM  International  plc (County  Web),  Freepages  plc
(Scoot), Thomson Directories Ltd. (ThomWeb), Yellow Pages, a division of British
Telecommunications  plc (Yell), Time Out Group Ltd.  (TimeOut.com) and CitySpace
all provide  services in the United  Kingdom  that offer some of the features of
Town  Pages.  A  competing  kiosk  program  could  dilute the value of our kiosk
network.  Other  international  companies  also  could  enter the kiosk  network
market.

     The competition in the Web site solution and Internet services  consultancy
market in the U.K. is intense.  Razorfish,  Agency.com and Tagish, among others,
provide  business-to-business  services in the United  Kingdom and offer some of
the same features contained in our products and services.

MANY  ACTUAL  AND  POTENTIAL  COMPETITORS  HAVE  STRONG  BRAND  NAMES OR GREATER
RESOURCES THAN US.

     Many of our current and potential  competitors have  substantially  greater
human and financial resources,  experience,  and brand name recognition than us.
These companies also may have significant  competitive  advantages through other
lines of business and existing  business  relationships.  U.K.-based  companies,
such as British Telecommunications, have substantially greater resources than we
do. Some U.K.-based  business-to-consumer and business-to-business services such
as ThomWeb, Yell, TimeOut.com, Agency.com and Razorfish have stronger brand name
recognition than we have. In addition, there are currently a number of companies
which are  providing  services in other  countries  who have a higher brand name
recognition and financial and other resources than we have, and these advantages
could make them  serious  competitive  threats to us in the United  Kingdom  and
elsewhere  in the future.  These  services  include  Digital  City,  operated by
Digital City, Inc., a company owned by AOL TimeWarner and Tribune  Company,  Zip
2,  operated  by  Zip2   Corporation,   CitySearch,   operated  by  Ticketmaster
Online-CitySearch,  and Around Town, operated by WebTV Networks,  Inc., which is
owned by  Microsoft  Corporation.  There  also  are  international  networks  of
business-to-business  website solution and Internet services consultancies which
compete with us, including Agency.com.

     Services including GeoCities, TheGlobe.com, and Xoom sponsor communities of
personal  Web  sites  which  also  seek to create  topically  or  geographically
segregated online audiences for advertisers. GeoCities recently opened an office
in London,  England.  Search engines and other site aggregation  companies which
aggregate  links to web  sites  providing  local  content,  are  also  potential
competitors.  These competitors  include Excite,  Inc., which operates City.Net,
Lycos,  Inc., which operates Lycos City Guide,  and Yahoo!  Inc., which operates
Yahoo! Local.

OUR NEW  BUSINESS  STRATEGY  WILL STRAIN OUR  RESOURCES  IF OUR SERVICES ARE NOT
RECEIVED FAVORABLY BY CONSUMERS AND BUSINESSES.

     The pursuit of our new business strategy will place a significant strain on
our managerial, operational and financial resources. We will need to improve our
financial and management  controls,  reporting  systems and procedures.  We also
will have to expand,  train and manage our work force for  marketing,  sales and
technical  support,  product  development,  Web site  design,  and  network  and
equipment repair and maintenance, and manage multiple relationships with various
customers,  strategic  partners  and  other  third  parties.  We  will  need  to
continually  expand and upgrade our  technology  infrastructure  and systems and
ensure continued high levels of service, speedy operation,  and reliability.  In
addition,  we will have to improve our methods for measuring the performance and
commercial  success of our  different  services to better  respond to advertiser
demands for information on product  effectiveness  and to better determine which
products and services can be developed most profitably.


                                       10
<PAGE>


     To achieve our objectives,  we may have to acquire technologies or products
or enter into strategic alliances and acquisitions, although we have no plans or
agreements to do so at the present time. For those  initiatives  to succeed,  we
must make our existing technology,  business,  and systems work effectively with
those of our  strategic  partners  and any  acquired  properties  without  undue
expense, distraction of management from other priorities or other disruptions to
our existing business.

OUR BRAND AND REPUTATION WILL SUFFER IF OUR SERVICES ARE NOT FAVORABLY  RECEIVED
BY THE MARKETPLACE.

     We  plan  to  introduce  new  services,   including  e-business  and  kiosk
solutions, in order to generate additional revenues,  attract more consumers and
respond to competition.  There can be no assurance that we will be able to offer
our current and new services in a  cost-effective  or timely  manner or that our
efforts will be successful.  Furthermore,  any new service we launch that is not
favorably  received by consumers  could damage our reputation or our brand name.
Expansion of our services may also require  significant  additional expenses and
development and may strain our management,  financial and operational resources.
Our inability to generate sufficient revenues from our new services would have a
material  adverse  effect on our  business,  financial  condition and results of
operations.

ESTABLISHING AND MAINTAINING OUR BRAND  RECOGNITION AND REPUTATION ARE ESSENTIAL
TO OUR SUCCESS.

     We believe that our success will depend to a large degree on our ability to
successfully  establish and maintain our brand  recognition and  reputation.  In
order to  maintain a good  reputation  and strong  brand  name,  we will need to
invest  heavily in our  marketing  and maintain  high  standards  for actual and
perceived  quality,  usefulness,  reliability,  security  and ease of use of our
services. Even if we continue to provide good service to our customers,  factors
outside of our control,  including security  breaches,  software defects and the
loss of customer  data could affect our brand and the  perceived  quality of our
services, thereby damaging our business.

WE RELY UPON THIRD PARTIES FOR EQUIPMENT  AND FOR KIOSK  MANUFACTURE,  ASSEMBLY,
INSTALLATION, MAINTENANCE AND REPAIR.

     Although  our computer  and network  hardware and our kiosks are  assembled
from standard  components which may be outsourced from a number of manufacturers
and  distributors,  we have no  equipment  manufacturing  capacity  and  will be
dependent upon the timely delivery of quality  equipment by those  manufacturers
and distributors. Furthermore, our kiosk assembly and installation capacity, and
our equipment and kiosk  maintenance and repair capacity,  is quite limited.  We
will be dependent upon third party services for the timely, cost-effective,  and
proper installation,  maintenance, and repair of our touch-screen kiosks and for
the maintenance and repair of our equipment and network infrastructure.  Failure
by any of  these  third  parties  to  perform  as we  require  could  materially
adversely affect our business, operations, and financial condition.

KEVIN R. LEECH AND RAVEN  VENTURES  LIMITED OWN  SIGNIFICANT  PERCENTAGES OF THE
VOTING POWER OF OUR SHARE  CAPITAL,  AND THEIR  ABILITY TO EXERCISE  SIGNIFICANT
INFLUENCE OVER OUR AFFAIRS COULD ADVERSELY AFFECT OUR SHAREHOLDERS.

      Kevin R. Leech, a director of our company, and corporations  controlled by
Mr. Leech  beneficially  own  approximately 26.1% of our  outstanding  ordinary
shares.  Raven Ventures Limited  beneficially  owns  approximately  42.1% of our
outstanding  ordinary  shares.  The Raven Trust,  a trust for the benefit of Mr.
Leech and his family, is the sole shareholder of Raven Ventures Limited. Neither
Mr.  Leech nor any  member of his  family is a trustee  of The Raven  Trust or a
director of Raven  Ventures  Limited,  and as such they exercise no control over
the voting or disposition of the ordinary  shares of our company which are owned
by Raven Ventures Limited.


                                       11
<PAGE>


      The interests of Mr. Leech and Raven Ventures  Limited may differ from the
interests of our other shareholders.  Mr. Leech and Raven Ventures Limited have
the  ability  to  significantly  influence  the  outcome  of  corporate  actions
requiring shareholder approval, including:

     o    composition of our board of directors  and,  through it, the direction
          and policies of our company,  including the appointment and removal of
          officers;

     o    mergers or other business combinations involving our company;

     o    acquisition or disposition of assets of our company;

     o    future issuances of capital shares or other securities of our company;

     o    incurrence of debt by our company; and

     o    payment of dividends on our capital shares.

KEVIN R. LEECH,  AFFILIATES OF MR. LEECH AND ROBERT P. BRADSHAW,  A DIRECTOR AND
OUR  CHIEF  EXECUTIVE  OFFICER,  MAY  HAVE  INTERESTS  WHICH  CONFLICT  WITH OUR
INTERESTS.

     Mr.  Leech is a director  and  principal  stockholder  of other  technology
businesses  and  companies  that  invest  in  technology  companies,  and  is a
significant  stockholder  and  Chairman  of  ci4net.com,  Inc.  ci4net.com  owns
majority  interests  in several  European  Internet  companies  for whom we have
provided Web site development services. Several customers of Morbria, one of our
subsidiaries,  are owned by Glen Investments Limited, an affiliate of Mr. Leech.
While we do not believe that those companies  represent a competitive  threat to
us now or in the foreseeable future, it is possible that they may be competitors
at some  future  date,  or that  conflicts  of  interest  may arise  from  those
relationships.  Mr.  Bradshaw is the Chief  Executive  Officer of Heritage Great
Britain plc, a company  controlled by Kevin Leech.  During 2000, we provided Web
site development services to Heritage Great Britain.

WE MAY NOT BE ABLE TO SUCCESSFULLY PROTECT OUR PROPRIETARY RIGHTS.

     Our success and ability to compete is dependent  in part on the  protection
of our original content for the Internet and on the goodwill associated with our
trademarks,  trade names and trade secrets.  A substantial amount of uncertainty
exists  concerning the application of copyright laws to the Internet,  and there
can be no assurance that existing laws will provide adequate  protection for our
original  content.   In  addition,   because  copyright  laws  do  not  prohibit
independent  development  of similar  content,  there can be no  assurance  that
copyright laws will provide us with any competitive advantage.

     We will rely on trade secret and copyright laws to protect the  proprietary
technologies,  primarily  in the form of  software,  that we may  develop in the
future to manage and improve our Web site and  advertising  services,  but there
can be no assurance  that those laws will provide  sufficient  protection to us,
that others will not develop  technologies that are similar or superior to ours,
or that third parties will not copy or otherwise obtain and use our technologies
without authorization.

     Policing   unauthorized  use  of  our  proprietary   technology  and  other
intellectual  property  rights  could  entail  significant  expense and could be
difficult or  impossible,  particularly  given the global nature of the Internet
and the fact  that the  laws of other  countries  may  afford  us  little  or no
effective protection of our intellectual property.


                                       12
<PAGE>


     In addition, we rely on certain technology licensed from third parties, and
may be required to license additional  technology in the future. There can be no
assurance that these third-party  technology  licenses will be available or will
continue to be available to us on acceptable  commercial  terms or at all. If we
are unable to enter into and maintain any of these technology licenses, it could
damage our business.

OTHER COMPANIES MAY CLAIM WE ARE INFRINGING UPON THEIR PROPRIETARY TECHNOLOGY.

     Given the  nature of our  business,  we can not give  assurance  that third
parties will not bring claims of copyright or trademark  infringement against us
or claim that our use of certain technologies violates a patent.  Further, there
can  be  no  assurance   that  third   parties  will  not  claim  that  we  have
misappropriated  their creative ideas or formats or otherwise infringed on their
proprietary rights in connection with our Internet content.  We are not aware of
any such claims.  Any claims of  infringement,  with or without merit,  could be
time  consuming  to  defend,  result in  costly  litigation,  divert  management
attention,  require us to enter into costly royalty or licensing arrangements or
prevent us from using  important  technologies  or  methods,  any of which could
damage our business and financial condition.

WE NEED TO  CONTINUALLY  OBTAIN OR  DEVELOP  AND  DISPLAY  USEFUL  CONTENT IN AN
ATTRACTIVE FASHION TO ATTRACT USERS AND ADVERTISERS.

     Our  success  depends  in part upon our  ability  to  deliver  interactive,
locally-focused   content  in  order  to  attract   consumers  with  demographic
characteristics valuable to our customers. Rapidly changing technology, emerging
industry  standards and consumer  requirements  that are subject to rapid change
and  frequent  new  service  introductions  characterize  the  markets  for  our
services.  These  characteristics  are exacerbated by the emerging nature of the
local  interactive  content and  service  market and the  expectation  that many
companies  may  introduce  new Internet  products and services  addressing  this
market in the near future.  There can be no assurance that we will be successful
in obtaining or  developing  and providing new content and services or enhancing
our existing local  information  services on a timely basis, or that our content
and services will effectively address requirements of consumers or our customers
or achieve market acceptance.

WE MAY BE HELD LIABLE FOR ONLINE CONTENT PROVIDED BY THIRD PARTIES.

     We may face  potential  liability for  defamation,  negligence,  copyright,
patent or  trademark  infringement  and other  claims  based on the  nature  and
content of the materials that appear on TownPages. Claims of this type have been
brought, and sometimes successfully pressed,  against online services.  Although
we carry general liability insurance,  our insurance may not cover all claims or
may not be adequate to indemnify us for any liability  that may be imposed.  Any
imposition of liability, particularly liability that is not covered by insurance
or is in excess of our insurance coverage,  could have a material adverse effect
on our reputation, business, financial condition and results of operations.

USERS MAY CONFUSE OTHER COMPANIES' DOMAIN NAMES WITH OUR OWN.

     Avatar Interactive has registered with the InterNIC  registration  service,
the   Internet   domain   names:   www.townpagesnet.com,    www.townpages.co.uk,
www.townpages.org,          www.townpagesplc.com,           www.townpagesus.com,
www.townpagesuk.com,   and   www.townpageseu.com.   However,   there  are  other
substantially  similar domain names which are registered by companies  which may
compete with us and our subsidiaries.  In addition,  new domains may be added in
the  future,  allowing  combinations  and  similar  domain  names  that  may  be
confusingly  similar to our own. There can be no assurance that potential  users
and  advertisers  will not confuse our domain  names with other  similar  domain
names. If that confusion occurs:


                                       13
<PAGE>


     o    we may lose business to a competitor; and

     o    have to adjust our advertising rates and service fees accordingly; or

     o    some users of our services may have  negative  experiences  with other
          companies  on their Web sites that those users  erroneously  associate
          with us.

OUR BUSINESS  DEPENDS ON ACCEPTANCE OF THE INTERNET AS AN EFFECTIVE  ADVERTISING
MEDIUM AND COMMUNICATIONS AND INFORMATION SEARCH TOOL.

     The   Internet  is  still  a   relatively   new  medium  for   advertising,
communications,  and information search and retrieval. Advertisers may not agree
with our view that Internet advertising can be an effective means for satisfying
their needs. We may be unable to persuade a large enough number of consumers and
advertisers  that our  service  satisfies  their  needs and does so better  than
traditional methods for advertising,  communications,  or information search and
retrieval,  or other  Internet  providers.  Use of the Internet by consumers and
advertisers would be hindered if the reliability,  speed,  security, and ease in
use of the Internet  and  increased  access to the  Internet,  through  personal
computers or  otherwise,  does not continue to improve.  Also,  as consumers and
potential  customers develop an awareness of how best to use the Internet,  they
may find that our Web site and services do not satisfy  their  demands.  If that
happens,  we may be  unable  to  adapt  our  services  to  meet  those  demands.
Furthermore,  potential customers may not agree on standards for determining how
to measure  the  effectiveness  of Internet  advertising,  or whether it is more
effective than traditional advertising methods.

OUR BUSINESS COULD BE HARMED BY ACTUAL OR THREATENED  PENETRATION OF OUR NETWORK
SECURITY.

     Although we are not aware of any  attempts by  programmers  or "hackers" to
penetrate  our network  security,  there can be no assurance  that those actions
will not occur in the  future.  A party  who is able to  penetrate  our  network
security could misappropriate  proprietary information or cause interruptions in
the operation of TownPages,  which could have a material  adverse  effect on our
business,  financial condition and results of operations.  We may be required to
expend  significant  capital  and  resources  to protect  against  the threat of
security breaches or to alleviate problems caused by security breaches. Concerns
over the  security  of Internet  transactions  and the privacy of users may also
inhibit  the  growth  of the  Internet,  particularly  as a means of  conducting
commercial  transactions.  Security breaches or the inadvertent  transmission of
computer  viruses could expose us to a risk of loss or  litigation  and possible
liability.  We do not have "errors and  omissions" or other  insurance  coverage
specifically  against losses which might be incurred due to computer  viruses or
product defects.  Our business,  results of operations,  and financial condition
could be materially adversely effected if contractual  provisions  attempting to
limit our  liability in these areas are not  successful  or  enforceable,  or if
other  parties  do not  accept  these  contractual  provisions  as  part  of our
agreements.

OUR BUSINESS DEPENDS SPECIFICALLY ON THE INTERNET INFRASTRUCTURE.

     Many of the Internet service providers,  online service providers and other
Web site  operators  on whom we  depend  have  experienced  significant  service
slowdowns,  malfunctions,  outages and capacity limitations. We also depend upon
the reliability,  speed, data capacity,  ease of use, accessibility and security
of the  Internet  as  well  as its  continued  development  and  acceptance  for
commercial use generally.  A satisfactory Internet experience may also depend on
the proper  functioning and the continued  development of equipment such as high
speed  modems and personal  computers.  New  protocols  or  standards  have been
developed to handle new systems and increased level of activity at higher speeds
in  compliance  with  governmental  regulations.  Not all software and equipment
protocols and standards are compatible. Users may experience difficulties due to
computer-related,  telecommunications,  or other

                                       14
<PAGE>


equipment,  software,  or system  failures  or  shortcomings  unrelated  to  our
services.  If users  experience  these  difficulties,  our  reputation  could be
harmed.  Moreover,  failure of  Internet  service  providers  or online  service
providers  to provide  access to the Internet to our  customers  and users would
prevent  them from  accessing  our Web site,  which could result in reducing the
marketability of our services and an eventual loss of customers.

WE MUST CONSTANTLY ADAPT TO RAPID TECHNOLOGICAL CHANGE.

     Our industry is  characterized  by rapidly  changing  technology,  evolving
industry  standards,   frequent  new  service  and  product   introductions  and
enhancements,  and changing customer demands.  Our success will depend, in part,
on our ability to adapt rapidly to these developments. We must maintain adequate
financial and  technical  resources to adapt to these changes or our systems and
technologies  could become  incompatible or inefficient due to rapidly  evolving
software, computer hardware, and telecommunications standards.

OUR  BUSINESS  WOULD BE HARMED  IF  SERVICE  WAS  INTERRUPTED  DUE TO  HARDWARE,
SOFTWARE, TELECOMMUNICATIONS OR OTHER BREAKDOWNS.

     Our  operations  may  be  interrupted  if the  computer,  computer-related,
telecommunications,  or other  equipment and software  owned by us or by service
providers  upon whom we depend are damaged or prevented  from  operating.  If we
experience  a temporary  or permanent  business  interruption,  whether due to a
casualty or an operating  malfunction,  as a result of a move or otherwise,  our
business, operations, and financial condition could be adversely affected. We do
not have any business interruption insurance, and our property insurance may not
cover that type of loss.

WE ARE DEPENDENT ON OUR KEY MANAGEMENT.

     We depend upon our senior  management  team,  led by Robert P. Bradshaw and
Richard I. Walker,  to  successfully  implement  our business  strategy.  If Mr.
Bradshaw or Mr.  Walker or other  members of the senior  management  team become
unable or unwilling  to continue in their  present  positions,  our business and
financial conditions could be damaged. We do not currently maintain key man life
insurance on any of our officers.

WE MAY NOT BE ABLE TO ATTRACT AND RETAIN NEEDED TECHNICAL PERSONNEL.

     Currently,  a large  portion  of our  business  involves  Web site  design,
development and maintenance  and network and kiosk  operations,  maintenance and
repair.  Our success  depends in large part upon our ability to attract,  train,
motivate and retain qualified  technical  personnel.  We may be unable to do so,
particularly in view of the strong competition for individuals with Internet and
related technical experience.

WE MAY BECOME SUBJECT TO BURDENSOME GOVERNMENT REGULATION.

     There are currently few laws and regulations  directly applicable to access
to or commerce on the Internet.  However,  due to the increasing  popularity and
use of the Internet, it is possible that a number of laws and regulations may be
adopted,  or  existing  laws or  regulations  may be applied  differently,  with
respect to the  Internet,  covering  issues  such as user  privacy,  pricing and
quality of services.  These laws and  regulations  could hinder growth in use of
the  Internet  generally  and  decrease  the  acceptance  of the  Internet  as a
communications  and commercial  medium,  and could thereby cause our business to
suffer.  In addition,  several  telecommunications  carriers are seeking to have
telecommunications  over the Internet  regulated by agencies such as the Federal
Communications  Commission  in the  United  States  in the same


                                       15
<PAGE>


manner as other telecommunications  services. The costs of communicating on the
Internet could increase substantially as a result of this type of regulation
in the United States, the United Kingdom, or elsewhere,  potentially slowing the
growth in use of the  Internet.

     The  placement  and  operation of our  external  kiosks are also subject to
various  local  zoning and  similar  laws and  regulations  which  could  delay,
preclude, or increase the cost of kiosk installation and operation.

THE PRICE OF OUR SECURITIES MAY BE HIGHLY VOLATILE.

     The stock markets  generally,  and the Internet sector in particular,  have
experienced  and are likely to continue  to  experience,  significant  price and
volume  fluctuations.  This could result in sharp  decreases in the price of our
securities  no matter how well or poorly we perform.  The  trading  price of our
securities  could also fluctuate  significantly  in response to  fluctuations in
quarterly   operating   results,   failures  to  meet  analysts'   expectations,
developments in the Internet industry and our business, and other factors.

WE DO NOT PLAN TO PAY CASH DIVIDENDS.

     We are prohibited  from paying cash dividends on our ordinary shares in any
year in which we do not first  declare  and pay a 9%  dividend  on our  Series A
preferred  shares.  In any  case,  we do not  currently  intend  to pay any cash
dividends. In addition, if we intended to pay dividends, under English corporate
law  dividends  are  only  payable  out of  distributable  reserves,  which  are
essentially  equivalent to retained earnings. We currently have no distributable
reserves and we cannot determine at this time if or when we will generate any.

ALL OF OUR  OUTSTANDING  ORDINARY  SHARES WILL BE ELIGIBLE FOR IMMEDIATE  FUTURE
SALE.

     The market price of our ordinary  shares could drop as a result of sales of
substantial  amounts  of  our  ordinary  shares  in  the  public  market  or the
perception  that such sales may  occur.  These  factors  could also make it more
difficult for us to raise funds through future offerings of stock.

     The 2,200,000  ordinary  shares in the form of American  Depositary  Shares
sold in our initial  public  offering are freely  tradable  without  restriction
except for any shares purchased by our "affiliates" as defined in Rule 144 under
the Securities Act of 1933, as amended.

      On December 26, 2000, we filed a  registration  statement on Form F-3 with
the Securities and Exchange Commission pursuant to which we registered 7,833,009
ordinary shares, in the form of American Depositary Shares, under the Securities
Act of 1933, as amended.  These shares were previously issued in connection with
the  acquisitions  we made in 1999 and 2000,  and  pursuant to the  registration
statement, they are freely tradable without restriction.

     Our stock options and warrants are likely to be exercised,  if at all, at a
time when we otherwise  could obtain a price for the sale of our ordinary shares
that is higher than the exercise price per share of the options or warrants. Any
such  exercise or the  possibility  of such  exercise  may impede our efforts to
obtain additional financing through the sale of additional  securities,  or make
such financing more costly.

PREEMPTIVE RIGHTS MAY NOT BE AVAILABLE TO OUR ORDINARY STOCKHOLDERS.

      Under  English  corporate  law,  whenever  we issue new  shares  for cash,
subject  to  limited  exceptions,  we  must  grant  to all of our  stockholders,
including  holders  of our  ordinary  shares,  preemptive  rights to  purchase a
sufficient  number of shares to maintain  their existing  ownership  percentage.
These


                                       16
<PAGE>


statutory  preemptive  rights  will not apply to our  authorized  but  currently
unissued  shares  for the  period  commencing  December  15,  1998 and ending on
December 31, 2003, but will apply  thereafter.  In any event, we may not be able
to offer  preemptive  rights  to U.S.  holders  of  ordinary  shares  unless  an
effective  registration  statement  exists under the  Securities Act of 1933, as
amended,  covering those rights and the underlying shares. We intend to evaluate
at the time of any  rights  offering  the costs and  potential  liabilities  and
benefits  to  us of  enabling  U.S.  holders  of  ordinary  shares  to  exercise
preemptive  rights, and then make a decision whether to file such a registration
statement.  If holders of  ordinary  shares  are unable to  exercise  preemptive
rights because no  registration  statement is filed or effective,  Bankers Trust
will attempt to sell the holders' preemptive rights if a viable secondary market
exists and a profit can be realized  after  expenses.  Bankers  Trust would then
distribute  the net  proceeds  of the  sale,  net of  Bankers  Trust's  fees and
expenses,  to the holders of the ordinary  shares.  The equity  interests of the
holders of ordinary shares would be diluted  proportionately  if they are unable
to exercise preemptive rights.

YOU MAY BE SUBJECT TO BOTH UNITED STATES AND UNITED KINGDOM TAXES.

     We  strongly  urge you to consult  with your tax  advisors  concerning  the
consequences  of  investing  in  our  ordinary   shares.   Our  ordinary  shares
represented by American  Depositary Shares are traded in the United States,  but
we are  organized  under the laws of  England  and Wales.  A U.S.  holder of our
American  Depositary  Shares  will be  treated  as the  owner of the  underlying
ordinary shares for purposes of U.S. and U.K. tax laws. Therefore, U.S. federal,
state and  local  tax laws and U.K.  tax laws  will  apply to  ownership  of our
American Depositary Shares and the underlying ordinary shares. Tax laws of other
jurisdictions may also apply.

MARKET  PRICE  OF  OUR  ORDINARY  SHARES  MAY BE  SUBJECT  TO  FOREIGN  EXCHANGE
FLUCTUATIONS.

     Fluctuations  in the exchange rate between the British  pound  sterling and
the U.S.  dollar are likely to affect the market price of the  ordinary  shares.
For example, even though our financial statements are reported in British pounds
sterling,  if the value of the British  pound  sterling  falls  against the U.S.
dollar,  our  earnings  per share in U.S.  dollars  would be  reduced.  This may
adversely affect the price at which our ordinary shares trade on U.S. securities
markets.

UNITED STATES CIVIL LIABILITIES MAY NOT BE ENFORCEABLE AGAINST US.

     Five of our six directors, all of our executive officers and certain of the
experts  named in this annual  report are not residents of the United States and
virtually all of the assets of these  non-U.S.  persons and virtually all of our
assets  are  located  outside  the  United  States.  As a result,  it may not be
possible for you to serve summons and  complaints  within the United States upon
these  persons.  Similarly,  it may not be possible  to enforce in U.S.  courts,
against  these  persons or against us,  judgments of the U.S.  courts based upon
civil  liability  provisions of the U.S.  federal or state  securities  laws. In
addition,  it may be  difficult  for you in  original  suits or in suits for the
enforcement  of judgments of U.S.  courts to enforce  certain civil  liabilities
based upon U.S.  federal or state  securities  laws in England against us or our
directors or executive officers, or our experts.

UNDER U.K. LAW A VOTE OF 75% OF THE  STOCKHOLDERS IS REQUIRED TO APPROVE CERTAIN
SIGNIFICANT CORPORATE TRANSACTIONS.

     Under  English law we are required to obtain the vote or consent of holders
of 75% of our  outstanding  ordinary  shares  to  complete  certain  significant
transactions,   including   amendments  to  our   memorandum   and  articles  of
association. This may make it more difficult for us to complete a merger or sale
of our company which is deemed beneficial by our board of directors.


                                       17
<PAGE>


ITEM 4. INFORMATION ON THE COMPANY.

HISTORY AND DEVELOPMENT

     Our company, TPN Holdings plc, is a holding company which conducts business
through  its  subsidiaries,  which  include,  but are  not  limited  to,  Avatar
Interactive  Limited  (formerly  known  as Town  Pages  UK  Limited),  WWW.CO.UK
Limited,  Morbria  Limited,  BuyersGuide  plc and Research  Sales,  Inc.,  d/b/a
Rasmussen  Research.  We were incorporated on July 31, 1998 pursuant to the laws
of England and Wales under the name Town Pages  Holdings  plc. In April 1999, we
changed our name to TownPagesNet.com plc, and in March 2001, we changed our name
to TPN  Holdings  plc.  Our  headquarters  are  located at The  Annexe,  Empress
Buildings,  380 Chester Road,  Manchester,  England M16 9EB United Kingdom.  Our
telephone number is 011-44-161-772-7204.

     Our  objective  is to add value to our  clients'  businesses  by  providing
innovative,  high quality  solutions and services to consumers and businesses in
the new media (including e-business), interactive kiosk, polling and advertising
markets. Until June 2000, we were engaged primarily in the business of designing
and installing touch screen  informational kiosks in certain towns and cities in
the United  Kingdom  through our  subsidiary,  Avatar  Interactive  Limited.  In
September 2000,  Avatar  Interactive  implemented a new business  strategy which
focuses on providing e-business, kiosk and kiosk network solutions. In addition,
from July 1999 through March 2001, we consummated the six transactions described
below.  These  acquisitions  significantly  expanded  the range of  services  we
provide.

     WWW.CO.UK Limited

     In July 1999,  we  acquired  all of the issued  and  outstanding  shares of
capital stock of WWW.CO.UK Limited and its affiliated group of companies.  These
companies provide  cinema-related  services,  including Web site design,  indoor
cinema  advertising,  cinema preview  booklets and wallets on which  advertising
space is sold, as well as local community content for our Town Pages Information
Service.

     We acquired the WWW.CO.UK  group of companies for an initial total purchase
price of  approximately  (pound)4.0  million  ($6.0  million)  consisting of (i)
(pound)1.5  million  (approximately  $2.2 million) in cash paid at closing,  and
(ii)  488,281  unregistered  ordinary  shares  valued at the time at  (pound)2.5
million   (approximately  $3.7  million).   In  addition,   we  paid  contingent
consideration  in the amount of (pound)0.5  million ($0.75 million)  because the
WWW.CO.UK  group met  certain  revenue  targets  during the fiscal  years  ended
December 31, 1999 and 2000.

      In connection with this acquisition,  we also loaned (pound) 1.275 million
(approximately  $1.9 million) to the former owner of the WWW.CO.UK group under a
limited recourse  promissory note because the WWW.CO.UK group achieved specified
revenue thresholds under certain existing franchise agreements.  In addition, we
were  required to  facilitate  the sale of a portion of the  ordinary  shares we
issued  in this  transaction  within a  specified  time  period  or  provide  an
additional loan of (pound) 225,000  (approximately $0.3 million) under a limited
recourse  promissory  note.  We made  the  additional  loan  because  we did not
facilitate  the sale of such  shares by the  expiration  of the  specified  time
period.

      These loans bear  interest at a rate of 4% per annum,  and become due when
the former owner of the  WWW.CO.UK  group sells the 488,281  ordinary  shares we
issued at closing in connection  with the  acquisition.  As of December 31, 2000
approximately   (pound)1.6  million  (approximately  $2.4  million),   including
interest,  was  outstanding  under these  loans.  In December  2000,  we filed a
registration statement on Form F-3 registering these shares. However, as of July
27,  2001,  the shares had not been sold,  and these loans  remain  outstanding.
Since the loan of (pound)1.275 million is effectively a minimum



                                       18
<PAGE>

guaranteed  value for the  ordinary  shares we issued as  consideration  in this
transaction, we have established a reserve for the full amount of this loan as a
capital  transaction.  Since the loan of  (pound)225,000  was a penalty  for not
facilitating the sale of such ordinary shares by the expiration of the specified
time  period,  we have  established  a reserve  against this loan as a charge to
other  expenses.  We have  written off the interest on both loans as a charge to
other expenses.

     Morbria Limited

     In September 1999, we acquired all of the issued and outstanding  shares of
capital  stock of Morbria  Limited  and its  subsidiaries  from Glen UK Holdings
Limited,  an  affiliate  of Kevin R. Leech,  who is a director  and  significant
shareholder of our company. Morbria and its subsidiaries provide Website design,
advertising,  marketing, reprographics and printing services. Morbria's business
strategy  is to build a true  "Multi-Media  Group"  capable of  providing a wide
array of electronic and print media services to the  advertising,  marketing and
communications  business sectors. We acquired Morbria and its subsidiaries for a
purchase price consisting of 857,972 unregistered  ordinary shares valued at the
time at approximately  (pound)3.4 million ($5.1 million).  In addition,  we also
agreed  to  pay  contingent  consideration  up to a  maximum  of  (pound)930,000
(approximately  $1.4  million),  payable by the issuance of additional  ordinary
shares,  if Morbria and its subsidiaries  achieved certain operating results for
the fiscal  years  ended  March 31,  2000 and 2001.  Morbria did not achieve the
required  operating  results for the fiscal year ended March 31, 2000, and we do
not expect  Morbria to achieve  such results for the fiscal year ended March 31,
2001. We also assumed and repaid approximately (pound)1.7 million ($2.7 million)
in full satisfaction of bank overdrafts previously owed by Morbria.

     On the date we acquired Morbria and its subsidiaries, we owned 100% of each
of these  companies,  except  Centrix  Communications  Limited,  a subsidiary of
Morbria  which was 75%  owned.  The  remaining  25% was owned by a  director  of
Centrix  Communications.  On July 21, 2000,  we purchased  the 25%  shareholding
owned by such director,  and we now own 100% of the company.  The purchase price
for the 25% interest was 11,359 of our  ordinary  shares,  valued at the time at
(pound)15,000 (approximately $22,409).

     BuyersGuide plc

     In October  1999, we acquired all of the issued and  outstanding  shares of
capital  stock of  BuyersGuide  plc  (formerly  known as Buyers Guide  Limited).
BuyersGuide is an  Internet-based  business-to-government  company.  On July 24,
2000,  BuyersGuide  was admitted to trade on the Alternative  Investment  Market
("AIM") of the London  Stock  Exchange  following  the  public  offering  of its
ordinary  shares  pursuant to which it realized  net  proceeds of  approximately
(pound)4.4 million ($6.6 million).  After giving effect to BuyersGuide's  public
offering, we own approximately 75.1% of the company's outstanding capital stock.
The aggregate  purchase price of the  transaction was  approximately  (pound)2.9
million  (approximately  $4.7 million),  consisting of (i) 486,381  unregistered
ordinary shares valued at the time at (pound)2.5  million ($4.0 million),  which
were issued at closing, and (ii) 423,932 unregistered  ordinary shares valued at
(pound)437,000  ($653,000) which were based on certain operating results for the
six month period ended March 31, 2000.

     In December  2000 we filed a  registration  statement on Form F-3 under the
Securities  Act of 1933, as amended,  pursuant to which we registered for resale
the 910,313  ordinary  shares we issued in connection  with our  acquisition  of
BuyersGuide.



                                       19
<PAGE>

     Research Sales, Inc., d/b/a Rasmussen Research

     In November  1999,  we acquired  all of the  outstanding  shares of capital
stock of Research  Sales,  Inc.,  a  U.S.-based  online  polling  and  marketing
company,  which does business  under the name,  Rasmussen  Research.  We believe
Research Sales is one of the most accurate and innovative  polling  companies in
the U.S.  Research  Sales  utilizes an automated  polling  system which provides
accurate,  cost-effective,  objective data. The aggregate  purchase price of the
transaction was (pound)2.0 million  (approximately $3.0 million),  consisting of
551,302 unregistered ordinary shares issued at closing.

     24.7 Colour Limited

     In August 2000, our subsidiary,  Morbria  Limited,  acquired  approximately
75.01% of the  outstanding  shares of capital  stock of 24.7 Colour  Limited,  a
sheetfed printing company which had annual revenues of approximately  (pound)1.2
million ($1.8 million) in 2000. We believe that, despite advances in technology,
there will  always be a market for  conventional  printing.  We expect  that our
acquisition of 24.7 Colour will enable us to achieve our objective of creating a
true  "Multi-Media  Group" at Morbria  capable of  providing  a variety of media
services to the advertising, marketing and communications markets. The aggregate
purchase price of the transaction  consisted of a contribution to 24.7 Colour of
Morbria assets valued at the time at (pound)222,000 ($332,000). This resulted in
the  creation  of  (pound)227,549   ($340,000)  of  goodwill  on  the  financial
statements of Morbria.

     UK Property Channel.com Limited

     As of December 31, 2000, we owned 10% of the  outstanding  share capital of
UK Property Channel.com Limited,  which operates  www.ukpropertychannel.com,  an
Internet portal which lists real estate  available for sale  throughout  England
and  Wales.  In  March  2001,  we  acquired  an  additional  60% of UK  Property
Channel.com  Limited.  Upon completion of this acquisition,  we owned 70% of the
outstanding capital stock of UK Property Channel.com Limited. Our acquisition of
an additional 60% of the  outstanding  share capital of UK Property  Channel.com
Limited reflects our strategy of operating new media businesses which we believe
have growth potential.  The consideration consisted of a contribution of working
capital of (pound)1,413,803 ($2,111,515).

     Prior to our acquisition of WWW.CO.UK Limited, Morbria Limited,  BuyerGuide
plc,  Research  Sales,  Inc. and 24.7 Colour Limited,  substantially  all of our
revenues  were derived from Web design and other  related  services  provided by
Avatar  Interactive to affiliates of Kevin R. Leech,  our director and principal
shareholder.  These  affiliates  included  ci4net.com  Inc.,  a publicly  traded
company with investments in approximately  40  Internet-related  companies as of
December 31, 2000, 33 of which were majority owned subsidiaries.  Mr. Leech is a
significant shareholder of ci4net.com,  beneficially owning approximately 40% of
its outstanding  shares as of December 31, 2000.  Through  December 31, 2000, we
had entered into certain  transactions  with ci4net.com and other  affiliates of
Mr.  Leech.  In addition,  we and our  subsidiaries  had provided  approximately
(pound)6.1 million ($8.7 million) of services to subsidiaries and investments of
ci4net.com.  These customers  represented 54% of our consolidated revenue during
fiscal 1999 and 17% of our consolidated  revenue during fiscal 2000. In December
2000, we and ci4net.com entered into an agreement settling all open accounts and
obligations  between us and our  respective  subsidiaries.  See  "Related  Party
Transactions."



                                       20
<PAGE>

BUSINESS OVERVIEW

AVATAR INTERACTIVE LIMITED

     Avatar Interactive  Limited (formerly known as TownPages UK Limited) is the
primary  subsidiary through which we conduct our business of providing new media
related services to both consumers and businesses.

      In September  2000 we concluded  that the resources  and risks  associated
with  pursuing our original  business plan of striking  partnerships  with local
governments in the U.K. to offer their communities free touch-screen kiosks with
free Internet access were unacceptably high. We had expected to generate revenue
by  placing  local  and  national  advertisements  on  the  kiosks,  and  we had
anticipated that U.K. government  initiatives would increase demand for Internet
access and e-commerce.  However,  slower than expected development of e-commerce
in the United Kingdom and the  introduction of free Internet  service  providers
such as Freeserve and  Altavista  inhibited  our  expansion  plans.  A strategic
review of our business led us to conclude that the greatest  opportunity for the
achievement of  short-to-medium  term  profitability and subsequent growth would
arise from a transformation  of our business to focus on marketing,  selling and
delivering new media solutions to businesses in several niche areas. As a result
we decided to  significantly  reduce our planned  installation  of  thousands of
touch screen kiosks throughout the United Kingdom.

     Our new business strategy is to provide a range of professional services to
business,  including  Internet-based  business-to-business  practices  (commonly
known as e-business solutions),  interactive kiosk-based solutions and new media
solutions.  We call these  solutions  "bespoke  solutions."  Our  capability  to
deliver these  solutions  capitalizes on the skills we had already  assembled to
support our original  business  plan. We have recently  entered into  consulting
service arrangements with The National Trust, The Met Office,  British Petroleum
and Sita Equant for the  provision of such  services.  The most  significant  of
these is the recent award of consultancy work for The National Trust, which is a
national body that controls  over 612,000 acres of  countryside  in the U.K. and
over 200  noteworthy  buildings  and gardens in the U.K. We were  selected  from
among 18 agencies to complete this work.

     In connection with the transformation of our business strategy, we took the
following steps:

o    We appointed new executive directors to Avatar Interactive.

o    Between  September  2000 and January 2001, we  consolidated  our operations
     into a single location,  reduced the number of employees from approximately
     70 to 25,  reconfigured  our  organization to reflect our revised  business
     strategy  and  established  a new sales team  capable  of  selling  bespoke
     solutions through a highly consultative approach.

o    In October  2000,  we and NCR  Limited  mutually  agreed to  terminate  our
     agreement to purchase from NCR touch screen information kiosks.  Under this
     agreement,   we  were   required   to   purchase   from  NCR   3,500   Ci20
     Internet-enabled  touch screen kiosks over two years. Our failure to comply
     with our purchase  obligations  under the agreement  would have resulted in
     our paying approximately  (pound)700,000  ($1,045,000) in penalties to NCR.
     NCR agreed to terminate  our  obligation  to purchase  specific  numbers of
     kiosks  without  penalty  and  now  permits  us to  purchase  kiosks  on an
     as-needed, non-exclusive basis.

o    In December 2000, we discontinued  providing services to ci4net.com,  Inc.,
     an affiliate of our significant shareholder  and  director, Kevin R. Leech,
     under certain large web channel design contracts. We concluded that further
     work under these  contracts was no longer to our

                                       21
<PAGE>


     commercial advantage.  We and ci4net.com mutually agreed to terminate this
     contract without further obligation.

o    In  November  2000,  we changed the name of Town Pages UK Limited to Avatar
     Interactive  Limited.  Avatar  Interactive  currently focuses on three main
     business activities:

     E-BUSINESS SOLUTIONS. We believe the  business-to-business  (B2B) market in
the UK represents an attractive commercial opportunity. In order to exploit this
market's  potential,  we have partnered with InterShop,  a leading  German-based
e-commerce  software supplier,  to enable us to offer full service  capabilities
utilizing the data center for hosting both e-solutions and kiosk applications.

      KIOSK  SOLUTIONS.  We plan to use the  experience we gained  designing and
building kiosk  applications for our Wide Area Kiosk Network,  which remains the
largest in the U.K. with 207 touch screen kiosks installed and operational as of
December  31,  2000,  to develop  kiosk  applications  and  solutions  for third
parties.

     KIOSK  NETWORK.   We  believe  our  kiosks  represent  an  opportunity  for
advertisers to use an interactive medium to reach a large audience. We intend to
maximize the revenue  potential of this medium and increase  usage of the kiosks
by developing a "free to browse" kiosk model.  Trials are currently taking place
in  Southampton,  England.  This model will allow users to view any  information
they desire through the kiosk in addition to the TownPages  Information Service.
If  successful,  we  will  be the  first  company  in the  U.K.  to  offer  free
unrestricted access to the Internet via a kiosk.

BUSINESS STRATEGY

     We provide a range of professional  services to help our clients  implement
Internet-based  business  practices  (commonly  known as e-business  solutions),
interactive  kiosk-based  solutions  and new media  solutions.  We  continue  to
operate the  TownPages  Information  Service which we deliver via the World Wide
Web and through a network of information kiosks distributed throughout the U.K.

     We currently generate, and will continue to generate, revenues primarily in
the form of fees for  designing,  implementing,  project  managing,  hosting and
supporting  e-business,  kiosk-based and new media solutions for our clients. We
also may generate revenues from the sale of screensaver advertising on our kiosk
network.  Our goal is to become  widely  recognized  in the United  Kingdom  for
adding value to our clients' businesses by providing innovative and high-quality
e-business,  kiosk-based and new media solutions.  To achieve this goal, we plan
to:

     o    AGGRESSIVELY  MARKET THE AVATAR  INTERACTIVE BRAND. We will market our
          services  through a combination  of targeted  advertising  in relevant
          trade press,  presence at relevant industry sector exhibitions,  press
          releases  on  business  wins and  project  successes,  invitation-only
          seminars hosted by us, mailshots and cold-calling.

     o    UTILIZE  A  CONSULTATIVE  SALES  APPROACH  TO THE  DEVELOPMENT  OF NEW
          BUSINESS.  We have  recruited new sales  specialists  to spearhead the
          development  of  new  business  in  the  e-business  and   kiosk-based
          solutions areas. These sales people will work with prospective clients
          to  identify  bespoke  solutions  that can be  implemented  by  Avatar
          Interactive.

     o    MANAGE THE RELATIONSHIPS WITH EXISTING CLIENTS TO ENSURE OPPORTUNITIES
          FOR FOLLOW-ON  BUSINESS ARE MAXIMIZED.  Existing major clients such as
          British  Petroleum,  Heritage  Great  Britain,  the  Met  Office,  The
          National Trust and Sita Equant are assigned an account  manager who is
          responsible  for  assisting  in the  process of  developing  strategy,
          identifying emerging

                                       22
<PAGE>

          requirements and ensuring that Avatar Interactive
          is positioned to meet the clients' requirements.

     o    MANAGE  OUR  RELATIONSHIPS  WITH  SOFTWARE  AND  HARDWARE   TECHNOLOGY
          SUPPLIERS TO ENSURE THAT WE ARE ABLE TO DEVELOP APPROPRIATE  SOLUTIONS
          TO MEET OUR  CLIENTS'  NEEDS.  We will  continue  to be  proactive  in
          maintaining  and developing  relationships  with hardware and software
          suppliers.  This will ensure that we are both well informed concerning
          the technical capabilities of our suppliers' products and that we will
          be  in a  position  to  secure  supplies  as  needed  to  meet  client
          deadlines.

     o    MAINTAIN THE HIGHEST POSSIBLE LEVELS OF EXPERTISE IN CORE TECHNOLOGIES
          AND  SERVICE  CAPABILITIES.  We have  selected  Intershop  4,  Allaire
          ColdFusion,  Macromedia Director and Macromedia  Photoshop as the core
          tools enabling us to productively  and effectively  develop  reliable,
          high  quality   e-business,   kiosk-based  and  new  media  solutions.
          Principally  through in-house  training by relevant  experts,  we will
          ensure that production personnel have high levels of competence in the
          use of our core tools, other relevant technologies and creative design
          for new media.

     o    DEVELOP COMMERCIALLY-BASED RELATIONSHIPS TO GENERATE REVENUES FROM OUR
          INVESTMENT IN THE KIOSK NETWORK.  Over 200 kiosks have been rolled out
          as part of our nationwide  kiosk network.  We are seeking to establish
          relationships  with  media  sales  companies  with a view  to  selling
          advertising on our kiosks. We will continue to seek further commercial
          relationships  with  the  aim  of  maximizing  the  returns  from  our
          investment in creating a kiosk network.

OPERATIONS

     Our revised  organizational  structure  reflects the needs of an innovative
solutions provider. The business is organized into the following functions:

     o    Sales and marketing;

     o    Production,  which  is  subdivided  into  creative  design,  technical
          development and project management functions; and

     o    Administration  and  infrastructure,  which is subdivided  into office
          management, IT systems and user support and finance functions.

     A matrix management approach to project delivery has been adopted to ensure
flexibility  and the  optimal use of human  resources.  We are in the process of
rationalizing  our data  center  operation  to provide an  appropriate  level of
service to support our core solutions development business, to provide a limited
range of hosting  services  for clients  and to serve our network of kiosks.  We
will continue to impose tight controls on expenditures  with a view to achieving
a rapid reduction in cash burn as revenues grow.

PRODUCTS AND SERVICES

     E-business Solutions

     Our  e-business  solutions  division  provides  a  comprehensive  range  of
professional  services  to  help  our  clients  adopt  Internet-based   business
practices.  We assist our clients to develop e-business solutions by providing a
range of project management, design and technical services, including:



                                       23
<PAGE>

     o    Project management, consulting and production;

     o    Requirements analysis;

     o    Systems and information architecture development;

     o    Database design and implementation;

     o    E-commerce  solution  development and integration,  using, among other
          technologies,    Intershop4,    Intershop   CDK/IDK   and   ColdFusion
          technologies;

     o    User interface design;

     o    Content maintenance;

     o    Hosting and hosting outsourcing; and

     o    Application support.

     We have selected Intershop 4 and ColdFusion as core technologies with which
to build e-business solutions.

     Interactive Kiosk Solutions

     Our interactive kiosk solutions division provides a comprehensive  range of
professional services to help our clients acquire kiosk-based solutions. We have
renegotiated the exclusivity  contract  previously in place with NCR Limited for
the  purchase  of kiosks and we are now free to  purchase  the most  appropriate
kiosk  hardware to suit specific  application  and commercial  requirements.  We
assist our clients to implement  such  solutions by providing a range of project
management, design and technical services, including:

     o    Project management and production;
     o    Requirements analysis;
     o    Market research;
     o    Revenue model development;
     o    Kiosk hardware selection and configuration;
     o    Systems and information architecture development;
     o    User interface design;
     o    Kiosk  application  development,   including  heavy  and  light  kiosk
          application   development,   Internet-enabled   kiosk  implementation,
          multimedia kiosk development, digital video production and touchscreen
          kiosk design;
     o    Database design and implementation;
     o    Connectivity solution design and development;
     o    Content maintenance;
     o    Kiosk installation;
     o    Hosting and hosting outsourcing; and
     o    Application support.



                                       24
<PAGE>

     New Media Solutions

     Our  new  media  solutions  division  provides  a  comprehensive  range  of
professional  services  to  help  our  clients  implement  new  media  solutions
including  Web sites and  CD-ROMs.  We assist  our  clients  to  implement  such
solutions  by  providing  a range of project  management,  design and  technical
services, including:

     o    Project management and production;
     o    Requirements analysis;
     o    Web design,  including branding, look and feel, user interface design,
          information   architecture   design,   navigation   structure  design,
          illustration and animation;
     o    Multimedia  application  development using, among other  technologies,
          Macromedia Director; and
     o    CD-ROM production.

     Kiosk Network

     We continue to operate our network of over 200 touchscreen kiosks providing
a free-to-use  service for  individual  users.  The original  TownPages  branded
information service providing access to approximately 5,000 different sources of
information   continues  to  be   operated.   Additionally,   an   experimental,
free-to-browse service has been launched under the Ki-point brand.

     The kiosk  network  provides a delivery  channel  for  advertisers.  We are
placing a  particular  emphasis on  screensaver  advertising  since this form of
advertising  is viewable by both kiosk users and by people in the  vicinity of a
kiosk. In excess of 124 million people walk past our kiosks each year.

     Revenues

     We charge customers a fixed price for development projects,  based upon the
type and scope of the project.  However, for continuing consultancy engagements,
we charge customers for our time on a per person,  per day basis. We also charge
customers  for our time on a per  person,  per day basis  for new media  design,
consultancy  and  implementation  engagements,  and  for  e-business  and  kiosk
solutions  consultancy  services and technical  development  work.  Our fees for
maintenance  and  support  services  are  based  on a per  period  basis  and on
anticipated  utilization  of  resources.  We price our  hosting  services  to be
competitive with the market for such services.

SALES AND MARKETING

     We have  adopted a marketing  approach,  aimed at raising  awareness of the
Avatar   Interactive  brand  and  our   capabilities,   that  combines  targeted
advertising  in relevant  trade  press,  presence at  relevant  industry  sector
exhibitions,   press   releases   on  business   wins  and  project   successes,
invitation-only seminars hosted by us, mailshots and cold-calling.

     We employ a consultative sales approach to the development of new business.
We have  recruited new sales  specialists  to spearhead the  development  of new
business in the e-business and kiosk-based  solutions areas.  These sales people
work  with  prospective  clients  to  identify  bespoke  solutions  that  can be
implemented by Avatar Interactive.

     We proactively  manage our  relationships  with existing  clients to ensure
that opportunities for follow-on business are maximized.  Existing major clients
such as British  Petroleum,  Heritage  Great Britain,  the Met Office,  National
Trust and Sita Equant are  assigned an account  manager who is

                                       25
<PAGE>


responsible  for  assisting in the process of developing  strategy,  identifying
emerging requirements and ensuring that Avatar Interactive is positioned to meet
the clients' requirements.

     We  maintain  close  relationships  with  relevant  software  and  hardware
technology  suppliers  to  ensure  that  we are  able  to  assemble  appropriate
solutions to meet our clients' needs. Our supplier  relationships also enable us
to be well informed  concerning  the technical  capabilities  of our  suppliers'
products  and to be in a  position  to secure  supply  as needed to meet  client
deadlines.

COMPETITION

     E-business Solutions

     The management  structures and cost bases of both established  players such
as  IBM  Global  Services,  Logica,  Cap  Gemini,  PricewaterhouseCoopers,   and
Accenture  (formerly known as Anderson  Consulting),  and more recently  emerged
players such as Razorfish,  Scient, and MARCHFirst (formerly known as USWeb/CKS)
are configured primarily to address the needs of large corporate accounts.

     Our strategy of principally targeting mainly small and medium sized clients
means that we expect not to compete  against  the likes of IBM Global  Services,
Logica,  Cap  Gemini,  PricewaterhouseCoopers,   Accenture  (formerly  known  as
Anderson  Consulting),  Razorfish,  Scient,  and MARCHFirst  (formerly  known as
USWeb/CKS).

     There  are   approximately  60  companies  in  the  U.K.  offering  similar
Intershop-based  solutions development capabilities similar to those provided by
Avatar  Interactive.  It is our  belief  that only a small  proportion  of these
possess  the high  level of  technical  competence,  particularly  in the use of
ColdFusion  and the  excellence  in new  media  design,  that  exists  at Avatar
Interactive.

     Interactive Kiosk Solutions

     The principal kiosk hardware  manufacturers  based in the U.K. include NCR,
e-point,  NEO/LGC,  DVE,  Barcrest  and  GKN.  To our  knowledge  none of  these
companies have or intend to have,  software solution  development  capabilities.
These organizations currently represent the majority of kiosk hardware supply in
the U.K. and we have been quick to build  relationships with them in order to be
considered by them as a preferred supplier of bespoke software solutions.

     To  our  knowledge  the  number  of  competitors  in  the  kiosk  solutions
marketplace  possessing a similar track record to us in both  solution  delivery
and operational  management of a kiosk network is very limited.  A total bespoke
solutions  package is usually the  requirement  from the customer  with a single
point of  contact  backed  by a  strong  project  management  team  leading  the
implementation.

     There are clear  advantages from working with companies  including  Logica,
Cap  Gemini,  PricewaterhouseCoopers,  Accenture  (formerly  known  as  Anderson
Consulting),  Razorfish,  Scient,  and MARCHFirst  (formerly known as USWeb/CKS)
where kiosk based technology,  not in their repertoire, is required to fulfill a
project for one of their customers.

     New Media Solutions

     There are many  hundreds of new media  design  agencies  in the U.K.,  many
staffed by only two or three people.  Our new media design credibility is proven
through  historical  developments,  in  particular  from repeat  custom and from
recognition  in  competitions.   Our  capability  to  provide  industry-strength
technical  solutions  complementing our new media design work differentiates our
offering.




                                       26
<PAGE>

     Kiosk Network

     There are now a number of kiosk network operators in the U.K., most notably
British   Telecommunications   with  their   multimedia   phones.   Like  Avatar
Interactive's  trial  Ki-point  branded  kiosks,   British   Telecommunications'
multimedia phones provide free-to-use browsing of the Web.

INTELLECTUAL PROPERTY

     Our revised business  strategy relies upon our ability to create innovative
solutions  that meet our clients'  business  requirements.  These  solutions are
principally  built  upon third  party  intellectual  property  for which we have
appropriate licenses.

     We rely on  certain  technology  licensed  from third  parties,  and may be
required to license  additional  technology in the future, for use in developing
solutions  and hosting our clients'  solutions.  There can be no assurance  that
these third party  technology  licenses will be available or will continue to be
available to us on acceptable commercial terms or at all. The inability to enter
into and maintain any of these technology licenses could have a material adverse
effect on our business, financial condition and operating results.

     We have no patents or patent applications filed or pending.

     Policing   unauthorized  use  of  our  proprietary   technology  and  other
intellectual  property  rights  could  entail  significant  expense and could be
difficult or  impossible,  particularly  given the global nature of the Internet
and the fact  that the  laws of other  countries  may  afford  us  little  or no
effective protection of our intellectual property. In addition,  there can be no
assurance  that third  parties  will not bring  claims of copyright or trademark
infringement against us or claim that our use of certain technologies violates a
patent.  We  anticipate  an increase  in patent  infringement  claims  involving
Internet-related  technologies as the number of products and competitors in this
market  grows  and as  related  patents  are  issued.  Further,  there can be no
assurance that third parties will not claim that we have  misappropriated  their
creative ideas or formats or otherwise  infringed upon their proprietary  rights
in connection with our Internet  content.  Any claims of  infringement,  with or
without merit,  could be time consuming to defend,  result in costly litigation,
divert  management  attention,  require  us to  enter  into  costly  royalty  or
licensing  arrangements  or  prevent  us from using  important  technologies  or
methods,  any of which  could have a material  adverse  effect on our  business,
financial condition or operating results.

WWW.CO.UK LIMITED

     The WWW.CO.UK Limited group of companies provide  cinema-related  services,
including Web site design,  indoor cinema  advertising,  cinema preview booklets
and  wallets  on which  advertising  space is sold,  as well as local  community
content for our Town Pages Information  Service.  The WWW.CO.UK Limited group of
companies consists of WWW.CO.UK Limited,  Summerfields  Publishing Limited,  The
Platinum  Club  Limited,  Feature  Boards  Limited  and, as of July 27,  2001, a
majority interest in UK Property  Channel.com  Limited. As of December 31, 2000,
we owned only 10% of UK Property Channel.com Limited.

     The movie  cinema  industry  is  constantly  evolving.  It  includes  small
operators  and large chains.  The small  operators are usually based in areas of
low population density,  while the large multiplex chains tend to be in areas of
dense population. The U.K. cinema market is relatively fragmented, composed to a
much greater extent of single site operators.



                                       27
<PAGE>

     WWW.CO.UK  Limited.  WWW.CO.UK  Limited  operates  under  the name  Cinemas
Online. It produces the official Web sites for approximately 68% of the U.K. and
Irish  cinema  market.   These  Web  sites  display  the  times  of  the  cinema
performances for the forthcoming week, along with synopsis,  pictures and, where
applicable,  trailers and  hyperlinks to other film related  sites,  forthcoming
movies,  biographies of stars,  competitions and other related film information.
This information is regularly  updated.  The service is produced  free-of-charge
and is supported by targeted local,  regional and national  advertising by means
of rotating  banner  advertisements  displayed  above  information on current or
forthcoming film releases.

     Our Web sites receive free promotion because they are the cinemas' official
Web sites.  As a result,  our cinema Web site addresses  appear on virtually all
the cinemas' newspaper advertising.  Our sites are mentioned in hundreds of U.K.
newspapers  free-of-charge,   including  key  newspapers  such  as  the  Evening
Standard.

     In addition,  the larger cinemas in our client  portfolio  produce  between
5,000 and 10,000  leaflets  each week  bearing  information  on films  which are
currently showing.  These leaflets typically include the address of the Web site
we have developed for the cinema. We also produce magazines bearing the relevant
Web site addresses for the smaller  cinemas  within our portfolio.  Our Web site
addresses also appear on other cinema-related promotional materials.

     Some of our clients include  Cineworld,  Showcase Cinemas (a U.S. company),
ABC Cinemas and Apollo Cinemas.

     Summerfields  Publishing  Limited.  Summerfields  Publishing has agreements
with movie cinemas  pursuant to which it produces  film  quarterly or bi-monthly
preview  booklets  for  individual  cinemas and small  chains of cinemas free of
charge.  Summerfields  Publishing  has  agreements  with  approximately  85%  of
independent  U.K. cinema  operators.  The preview  booklets allow patrons of the
cinemas  to learn of  forthcoming  films for the next three  months and  general
cinema information,  free of charge.  Summerfields  Publishing sells advertising
space in the preview booklets to local businesses,  with a minimum of a two-year
duration period. Summerfields Publishing targets the small cinema chains, as the
multiplex cinemas expect a larger number of brochures to be produced,  resulting
in higher print bills.

     UK Property  Channel.com  Limited. As of December 31, 2000, we owned 10% of
the outstanding share capital of UK Property Channel.com Limited, which operates
www.ukpropertychannel.com,  an Internet portal which lists real estate available
for sale throughout  England and Wales. In March 2001, we acquired an additional
60% of the outstanding share capital of UK Property  Channel.com  Limited.  Upon
completion of this acquisition we owned 70% of the outstanding  share capital of
this  company.  UK Property  Channel.com  Limited  creates and  maintains  local
websites   for   independent   real  estate   agents,   including   Reeds  Rains
(www.reedrains.co.uk),  and  through  its  www.ukpropertychannel.com  Web  site,
offers a platform  through which real estate  agents can  advertise  their local
real estate listings  nationally.  UK Property  Channel.com provides real estate
agents with  proprietary  software  which allows them to  electronically  update
their listings on a daily basis. Approximately 55% of the real estate agents who
advertise their listings on www.ukpropertychannel.com are using this proprietary
software, and we expect that number to increase. As of July 27, 2001, with 2,233
branches of real estate agents as clients,  of which approximately 85% have live
websites,   UK  Property  Channel.com  Limited  serves  more  than  20%  of  the
independent  real estate  agents in England and Wales.  UK Property  Channel.com
Limited currently  generates  revenues through the sale of banner advertising on
its Web site. We believe other  opportunities to generate  advertising  revenues
for  www.ukpropertychannel.com  from regional and national  contracts plus other
sources will arise as the company increases its market share.



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<PAGE>


     The Platinum Club Limited.  The Platinum Club has  agreements  with cinemas
under which it produces ticket wallets for cinemas, which are given to customers
free of charge when they  purchase  tickets.  The Platinum  Club  currently  has
agreements to produce and distribute  cinema wallets with  approximately  30% of
U.K.  theatres.  We  generate  revenue  from  these  ticket  wallets  by selling
advertising space on them.

     WWW.CO.UK  Limited  was  incorporated  on  December  2, 1997.  Summerfields
Publishing  Limited was  incorporated on July 6, 1994. The Platinum Club Limited
was incorporated on September 15, 1993.  Feature Boards Limited was incorporated
on January 26, 1996, but is currently a dormant company.

BUSINESS STRATEGY

     We believe advertisers are becoming more Internet-aware,  and that Internet
usage and  e-commerce is expanding in the U.K. To take  advantage of the trends,
we are  expanding  the revenue  streams of the  WWW.CO.UK  group of companies by
selling  e-commerce and other new media services to their combined customer base
of approximately 7,500 advertisers.  We also are utilizing the advertising space
in WWW.CO.UK  publications  to increase  our sales and expand our U.K.  customer
base.

     WWW.CO.UK  Limited plans to continue to secure  agreements  with additional
independent  cinemas.  We will primarily  target those businesses which have not
yet signed up with us but for which
Summerfields  Publishing  already provides preview booklets.  Our management may
also explore opportunities in other markets outside the U.K.

     We expect that,  as the use of the Internet  expands in the U.K., we may be
able to charge higher premiums for the  advertisements  we display on our cinema
Web sites.  We also recognize that the Internet and digital  television may play
an important  part in the future sale of cinema  tickets.  Developments  of this
nature  are  likely to work in our  favor,  as users  would be able to  purchase
tickets  through our Web sites,  we would  continue to market our  facilities to
advertisers  and  may  also  be  able  to  secure  additional  revenues  through
agreements   whereby  we  were  entitled  to  a  percentage  of  the  e-commerce
transactions.

     The business objective of Summerfields Publishing is to become the dominant
provider of preview books to the independent  and small chain cinema market.  In
1995, we implemented an automatically  renewable  contract with our advertisers,
which  greatly  facilitates  the process of securing  renewal  business from our
portfolio of clients, while reducing the amount of commission we are required to
pay our  salespeople.  Consequently,  Summerfields has two core areas of growth:
sales to businesses, which do not form part of our current client portfolio, and
renewal  orders.  The profit margins of our renewal orders are higher than those
generated by our sales to  businesses  outside our current  portfolio.  Research
into markets in Holland,  Germany,  Europe and North America shows that our U.K.
strategy could prove successful in those geographical  areas. Our management may
further explore  opportunities in these or other markets.  We believe that there
is great  potential for expanding our advertiser  client base in the U.K. We are
able to include  additional  advertiser space in the preview books by adding one
or more sets of four pages.

     The  Platinum  Club's  expansion  plans are focused on securing  additional
contracts with cinemas. The scope for increasing the number of advertisements on
each cinema  wallet is limited,  as the size of the cinema  ticket  wallets they
produce is equivalent  to A4 size paper (which is slightly  larger than standard
letter size paper).

     We believe the UKPropertyChannel.com  service is unique in the U.K. in that
there is no charge involved for real estate agents,  while all costs are covered
through the sale of advertising.  UK

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<PAGE>

PropertyChannel  commenced  its  real  estate  advertising  sales  operation  in
February 2000. We believe that the online real estate  advertising  sector is an
area with substantial growth potential.

SALES AND MARKETING

     The sales  representatives  for the  WWW.CO.UK  group of companies  are all
independent contractors.  Other than the sales efforts of these representatives,
the WWW.CO.UK group of companies does not conduct any marketing activities.  The
WWW.CO.UK group of companies  shares  personnel and other  resources,  including
client  data,  which they  leverage  in an effort to boost  sales for the entire
group.

     Our clients  initially  enter into two-year  contracts to advertise on both
the electronic and  non-electronic  media produced by our WWW.CO.UK  group.  The
terms of and fees to be paid under these advertising contracts are negotiated on
a case-by-case basis.

COMPETITION

     WWW.CO.UK is the only  official  representative  for the cinemas  whose Web
sites we have  developed  and host.  Pearl & Dean and  Carlton  are our  closest
competitors.  These  companies,  however,  pay substantial  royalties for screen
rights, while we pay nothing.

     We do not believe that Summerfields  Publishing has any direct competitors.
There are several other companies which produce cinema brochures but they target
the multi-complex  cinema market, which is a completely different segment of the
market. However, it is possible that future increased competition from the large
cinema chains may force some smaller operators out of business.

     The Platinum  Club faces  competition  from other  companies  which produce
cinema ticket wallets.

     UK  Property  Channel.com  Limited  is in a  market  that is  still  in its
infancy. However, companies also offering real estate sales via the Internet are
Right Moves, Asserta Homes and Fish For Homes.

INTELLECTUAL PROPERTY

     WWW.CO.UK has registered the domain name www.cinemas-online.co.uk.

     UK    Property    Channel.com    has    registered    the    domain    name
www.ukpropertychannel.com.

MORBRIA LIMITED

     Morbria  Limited  through  its  subsidiaries   provides  Web  site  design,
advertising,  marketing and communications services. Morbria's business strategy
is to create a true  "Multi-Media  Group"  capable of  providing a wide array of
electronic  and  print  media  services  to  the   advertising,   marketing  and
communications business sectors. In addition to Morbria Limited, our Multi-Media
Group  currently  consists  of three  companies:  The  Graphic  Palette  Company
(Manchester) Limited, a reprographics business;  Centrix Communications Limited,
a design, print marketing and advertising  business;  and 24.7 Colour Limited, a
sheetfed printing company.

     Graphic Palette. The focus of Graphic Palette's business during 2000 was to
continue  the  development  of its new  media  division,  which is  concentrated
primarily  on the  provision  of Internet  web site  solutions  and  interactive
CD-ROMs.  Historically, our business centered on digital colour imaging and high
end digital  reprographics,  to which we have added digital multimedia  graphics
and Web site creation services.  These services now form the backbone of Graphic
Palette's business.



                                       30
<PAGE>

     Centrix  Communications.  Centrix  Communications  offers  all  aspects  of
design,  production and print,  marketing and  consultancy  services and a broad
range of  advertising  services  including TV,  radio,  outdoor and national and
local  press.  Centrix has a large U.K.  client  base which spans many  business
sectors.  We plan to  expand  our U.K.  client  base by  providing  services  to
companies  in  additional  business  sectors  and by using our  extensive  media
contacts and relationships to develop new media.

     24.7 Colour  Limited.  During  fiscal 1999,  we  developed a business  plan
designed to extend the life of the "digital  reprographics"  business of Graphic
Palette,  which had  experienced  a diminishing  market  place.  To execute this
business  plan,  we acquired 24.7 Colour  Limited,  an  established  traditional
printing company.  Prior to our acquisition of 24.7 Colour, the Morbria group of
companies spent approximately (pound)300,000 per year on outsourcing traditional
print requirements.

     Morbria was  incorporated on March 3, 1992 in England.  The Graphic Palette
Company was  incorporated in England on March 10, 1992.  Centrix  Communications
was  incorporated  in England on October  28,  1991.  24.7  Colour  Limited  was
incorporated on March 24, 1997.

PRODUCTS AND SERVICES

     Morbria provides the following products and services:

o    Concept and design;

o    Interface design;

o    Information architecture;

o    Dynamic and database driven site design;

o    Online business plans;

o    Online and off-line marketing;

o    Consultancy and project management;

o    Systems integration;

o    Content authoring, sourcing and management;

o    WAP enabled XML based site design; and

o    Kiosk/CD multimedia.

     The  fees  we  charge  for  these  services  typically  are  priced  to  be
competitive  with the market for such services,  but are variable based upon the
type of industry in which the client  operates and the specific  client project.
Fees for most of these  services  are  charged on a per  person,  per day basis.
However,  fees for  certain  concept  work and fixed  projects  are charged on a
weekly or monthly basis.



                                       31
<PAGE>


SALES AND MARKETING

     Morbria's sales and marketing is currently focused in four main areas:

o    Development of relationships with strategic partners

o    Third party introducers

o    Mail shots to qualified databases

o    Word of mouth referrals

     The development of relationships with organizations from related industries
is important, as over the medium to long term, it is often a good source of both
clients and  regular  revenue.  In the case of  advertising  agencies  which are
secured as strategic partners, they provide us, by default, with access to their
client  base to  allow  us to  supply  services  to  their  customers.  From the
advertising  agency's  perspective,  this  relationship  adds value to their own
services, which in turn assists them in the pursuit of client retention.

     Although mail shots are time consuming and not as immediately  effective as
other  sources of lead  generation,  mail shots are still a useful and effective
method of marketing our company and its services to specific  targeted  areas of
the business community. For mail shots to be effective,  time and research needs
to be invested to identify the most profitable target profile. We then follow up
our mail shots.  Although initial responses are typically low, we retain as much
information  as possible  about the  companies  with which we come into contact.
Where and when  appropriate,  we then follow up with those  companies at a later
date.  This  approach  often  results in a flow of leads over a longer period of
time than would otherwise be the case.

     We recognize  referrals as one of the best new business  sources and as our
preferred  mechanism of developing new business.  Referrals  typically come from
personal  recommendations  or through  personal  experience  with our  services.
Before  meeting  with  prospective  clients,  we generally  are provided  with a
description of the new client and its business, the project to be completed, and
project  budgets.  This  information  allows  us  to  prepare  presentations  to
prospective clients more efficiently and with greater speed.

     Business  leads  through  personal  knowledge,  although  not  as  directly
effective, are also a valuable source of referral. Typically, the person passing
us information  regarding an individual or company will have personal  knowledge
or inside  information  as to the  prospect  and their  potential  requirements.
Access to this kind of  information  allows  for a more  effective  and  focused
approach when following up a lead.

OPERATIONS

     By adopting a flat  structure,  our ability to use  initiative and speed of
decision-making to impact on the business in both reactive and proactive ways is
greatly increased. This approach fully supports the strategic development of the
company and operating  functions.  Morbria's internal  structure is dynamic.  We
constantly  review our business  practices to match  overall  market  growth and
advances in technology.



                                       32
<PAGE>

COMPETITION

     Morbria competes with local and national  agencies such as McCann Erickson,
XTML Creative, Nexus New Media, KMP Internet, Action Multimedia, LMS Information
Technology, Walsh Simmons, Odyssey Interactive, Brand New Media, and Moonfish.

     Centrix Communications competes with other marketing services agencies both
in Manchester,  England and elsewhere.  This marketplace is highly  competitive.
Other  marketing  services  agencies that we compete with in the Manchester area
are: Cicero Advertising & Marketing,  Marketing and Advertising  Principles plc,
GMM & ICA, Redmond Jones & Partners Ltd., Radford  Advertising Ltd., Hues & Co.,
Barrington Johnston Loraines, Bourden Dyble Hayes/TBWA, and Cheetham Bell.

     24.7 Colour Limited competes with local and national  companies,  including
County Offset, Pelican Press and Finch Mark.

INTELLECTUAL PROPERTY

     Morbria  owns  the Web  site  domain  name for  Graphic  Palette,  which is
www.graphicpalette.com.  In  accordance  with  U.K.  copyright  laws,  we retain
copyrights on all the designs we produce for our clients.

BUYERSGUIDE PLC

     BuyersGuide  plc  is a  leading  U.K.  provider  of  business-to-government
services.  BuyersGuide  publishes the Internet-based  Local Authority and Public
Service  "Buyer's  Guide," and offers a  comprehensive  online  procurement  and
specification  index  serving  purchasing  officers,  decision  makers  and  key
personnel within:

     o    Public Authorities

     o    Central Government departments

     o    Local Authorities

     o    NHS Trusts

     o    Other associated Public Sector departments

     The U.K.  government  has strict  procedures  regarding  the  selection  of
government suppliers. CCT (Compulsory Competitive Tendering) is now being phased
out and replaced by BVI (Best Value Initiative).  One of the implications of BVI
is that government  purchases of a value less than (pound)158,000 no longer have
to go through  traditional  lengthy tender procedures,  hence approved suppliers
and contractors have the benefit of direct quoting.

     In addition,  the recent  decentralization of government budgets, which has
created  a number  of new  decision-makers  and  budget  holders,  ensures  that
businesses  can not only maintain and develop their existing  government  supply
arrangements,  but more  importantly,  that they can attract new departments and
new customers which were previously  inaccessible.  This new procedure will also
allow additional  businesses to break through into the government sector for the
first time.


                                       33
<PAGE>


     The BVI system is designed to alleviate the problems faced by public sector
personnel  in  the  day-to-day  task  of  finding  high  quality  suppliers  and
up-to-date information on their products and services.

     Users of  BuyersGuide's  online  service  are able to search for  potential
suppliers in three ways.  First,  they have the benefit of searching by business
category  using  a  comprehensive   classification  index  covering  over  1,000
different  categories.  Second,  if a buyer is  already  aware  of a  particular
supplier,  but needs additional  information,  they can utilize the company name
search  facility.  The third option is a "fuzzy  logic"  search of the Web site,
allowing  the browser to search by  keywords,  concepts or specific  terminology
relating to their requirements.

     The BuyersGuide Web site only contains  information on suppliers which have
a history of supplying to this  marketplace and which consider  government to be
one of their target markets.

     We believe our  BuyersGuide  online service has been a success,  based upon
the increasing  number of clients and advertisers using the web site, as well as
a high rate of annual client  renewals.  BuyersGuide  has a growing  client list
which currently includes over 4,000 clients, including Coca-Cola, IBM and Canon,
together with a wide range of telecommunications companies.

     On July 24,  2000,  BuyersGuide  was  admitted to trade on the  Alternative
Investment  Market  ("AIM") of the London Stock  Exchange  following  the public
offering of its  ordinary  shares  pursuant to which it realized net proceeds of
approximately  (pound)4.4 million ($6.6 million). We currently own approximately
75.1% of the outstanding capital stock of BuyersGuide.

     BuyersGuide  plc  commenced  operations on October 1, 1996 as a partnership
under the name Bowden  Publishing.  It was incorporated on September 30, 1999 in
England just prior to being acquired by TPN Holdings plc in October 1999.

BUSINESS STRATEGY

     Our business  objective is to develop local government and  public-specific
online marketplaces to facilitate purchasing over the Internet by the government
sector. To achieve this objective, we plan to take the following steps:

     o    Expand the number of telesales  representatives we employ. We are also
          exploring the option of opening further U.K. branches.

     o    Continue to market the BuyersGuide  service to the public sector using
          direct marketing  channels such as telesales,  direct mail and e-mail,
          in conjunction  with  traditional  advertising in targeted  government
          magazines and circulars to further  increase usage of our web site and
          revenue for our  business  clientele.  We may also employ  field sales
          people to encourage high-budget buyers within the government sector to
          use our  service to source  suppliers,  which in turn could  result in
          additional   e-commerce  revenues  for  our  company,   together  with
          heightened awareness of our service.

     o    Increase  revenue by adopting new strategies such as the deployment of
          field sales  representatives  and the implementation of software which
          facilitates  the process of tendering for  contracts.  The use of this
          software  should allow  BuyersGuide to charge 1-3% of the revenue from
          processed transactions by way of commission.


                                       34
<PAGE>

     o    Complete  our  upgrade  of the  BuyersGuide  Web  site to  incorporate
          e-commerce  facilities.  This  will  allow  BuyersGuide  to offer  its
          advertisers  e-commerce facilities in exchange for a percentage of the
          profits resulting from the online transactions.

     o    Build on our  existing  client base and continue to secure high levels
          of client retention. We currently have a renewal rate of approximately
          65% of our clients per year,  together with an expanding  client base.
          Ongoing  marketing of our service  should result in  heightened  brand
          awareness of our company, together with increased levels of traffic to
          our Web site.  This in turn should  result in higher  revenues for our
          advertisers,   making  our  service  increasingly  attractive  to  our
          existing  advertisers  and to other  businesses  we hope to attract as
          clients. We also intend to form stronger relationships with government
          bodies and local government magazines.

     o    Develop additional Web sites to cater to the needs of other specialist
          marketplaces,  such as IT,  telecommunications,  education, NHS Trusts
          and the domestic  sector.  We expect that these additional sites would
          be likely to generate  additional revenues for BuyersGuide by allowing
          the client to  advertise  in both our general  directory  and a second
          directory which is specific to their sector.

     We are  examining  the  benefits  of  implementing  an online  and  offline
advertising  campaign targeted at the public sector to increase awareness of the
BuyersGuide online service and to generate additional business for the Web site.
In  furtherance  of this  advertising  campaign,  we may  engage in a variety of
public  relations  activities,   including   participating  in  exhibitions  and
conferences.


PRODUCTS AND SERVICES

     The BuyersGuide Web site (www.buyersguide.co.uk)  consists,  fundamentally,
of three key search  facilities,  designed to assist  public  sector  purchasing
officers  to source  products  with  greater  ease.  Users are able to search by
business  category,  company  name or keyword.  The business  information  which
appears as a result of conducting these searches relates to paying  advertisers.
Users are also able to easily access links through to local authority Web sites,
access our full  contact  details and  information  on how to get their  company
listed.

     The fees we charge  customers for  advertising on the BuyersGuide Web site,
including banner  advertising,  depends on the complexity of the  advertisement,
the size of the  company  advertising  and the  business  sector  in  which  the
advertisement  is to be  displayed.  We are able to  command  higher  prices for
larger, better-known advertisers who tend to receive more inquiries than smaller
companies.  We also are often able to charge a premium for prestigious  business
classifications.   Our  Web  site  currently  incorporates  approximately  1,000
business categories, each of which presents banner advertising opportunities.

     We have no manufacturing  capacity and only limited equipment  maintenance,
i.e.  our Web site.  We rely on third  parties for our  equipment  and all other
related  products and  services.  We use licensed  software site design tools to
maintain and build client profiles.

COMPETITION

     We  believe  that  BuyersGuide  has no  direct  competition  in the  online
government procurement industry. BuyersGuide competes with a number of magazines
in the government  purchasing business,  including L.G. News, L.G. Chronicle and
Municipal Journal,  as well as with directories such as L.A. & P.S. Yearbook and
IT Yearbook.


                                       35
<PAGE>

INTELLECTUAL PROPERTY

     BuyersGuide has registered the domain name www.buyersguide.co.uk.

RESEARCH SALES INC. (D/B/A RASMUSSEN RESEARCH)

     Research  Sales,  Inc.  was  incorporated  in the  State of  Washington  on
December  31,  1998.  It was  acquired by TPN  Holdings plc on November 1, 1999.
Research Sales, which conducts business under the name Rasmussen Research,  is a
public  opinion and market  research  company that has  developed a  proprietary
system, the Rasmussen Automated Polling System, for collecting  telephone survey
data at a fraction  of the time and cost  required  for  conducting  traditional
operator-assisted  surveys. The quality of this system was recently validated by
an  independent  analysis  by the  Washington  DC based  Progressive  Review,  a
political  magazine,  which  found our  system to be the most  accurate  polling
company in the United States during the 2000 Presidential primary elections.  We
are now using this system to generate  content for the Research  Sales Web site,
www.portraitofamerica.com.

     We believe the  information  age can best be fueled by access to objective,
insightful  information  that is unbiased,  unfiltered and distributed  over the
Internet and other channels. Access to objective,  relevant information can be a
potent tool for commerce and  individual  fulfillment.  Research  Sales plans to
grow its business by entering into relationships with strategic partners who can
benefit from its proprietary information gathering system.

         On February 24, 2000,  Research  Sales  entered into an agreement  with
Survey Sampling, Inc., a firm widely recognized by research professionals as one
of the most reliable sources of samples for telephone  surveys.  Survey Sampling
provides  Research Sales with all of its telephone  samples for survey research,
both  domestically  and  internationally.  Survey Sampling works with over 1,000
research  partners  worldwide  creating  samples for syndicated and  proprietary
custom  research for clients  including:  J.D. Power & Associates,  The Arbitron
Company, The Gallup Organization, Roper Starch Worldwide, and many others.

     In January 2001, the founder of Research Sales, Scott Rasmussen,  resigned.
The company is currently run by Alan Lindsay,  its Chief Operating Officer,  who
has been with the company since  inception.  Mr. Lindsay was responsible for the
development of the Automated Polling System.

PRODUCTS AND SERVICES

     Research Sales  historically has conducted  surveys on a for-hire basis. In
the  future,  however,  we also expect to provide  content  for our  Portrait of
America Web site  (www.portraitofamerica.com).  We currently are seeking a title
sponsor for the site. In addition,  we intend to sell other  products,  together
with data access through this site.

     In the future, we plan to customize our product offerings to meet the needs
of individual Web sites seeking to use our content.  In some cases, we expect to
receive a fixed fee for this service.  In others,  we will base the contracts on
cash and revenue sharing opportunities.

     We intend  to  develop  customized  content  packages  to meet the needs of
individual  customers.  Current packages being developed include a full range of
pricing options,  from barter  arrangements to annual contracts of a substantial
monetary  value.   Research  Sales  also  conducts  public  opinion  surveys  in
conjunction with media outlets.  Under these  arrangements,  the media outlet is
able to use its data in exchange  for  promoting  and  directing  traffic to the
Research Sales Web site.


                                       36
<PAGE>

     Research  Sales  owns  and  operates  a  proprietary   automated  telephone
interview  technology  that  allows  Research  Sales  to  collect  statistically
reliable  public  opinion and market  research  information at a fraction of the
cost and time required for  operator-assisted  surveys.  All of Research  Sales'
publicly  released survey data is collected via this method.  Although we report
our data on the Internet at www.portraitofamerica.com,  we do not collect survey
data online.

     While this survey  technique has proven to be very  reliable,  it does have
certain  limitations.   Our  surveys  are  relatively  short  compared  to  many
operator-assisted  surveys.  We rarely keep  respondents  on the line for longer
than five minutes.  Additionally,  we are unable to conduct business-to-business
surveys  or  other  surveys  in  which we must get  through  a  receptionist  or
switchboard to reach potential respondents.

     As with any opinion  research,  the most  important  step is designing  the
survey  instrument.  We take care in crafting  questions  designed to elicit the
most important and useful information.  Occasionally, we ask questions that have
not been asked before. When this happens, we always include other questions that
can be compared  to an existing  body of survey  research or actual  data.  This
helps  us  establish  confidence  in the  sample  and  the  results  for the new
question.

     To place our calls,  we randomly  select phone numbers  appropriate  to the
geographic  market being surveyed.  Unless clients specify otherwise all samples
are produced by Survey Sampling, Inc.

     Our automated  system conducts an interview with whoever answers the phone.
If the person  answering the phone is under 18, no interview is  conducted.  For
election  surveys,  we call a full  sample  of  adults  and then use a series of
screening  questions to determine which adults are likely voters.  The screening
questions include questions about their voting history, their intentions to vote
in the  upcoming  election,  and  other  matters.  As  with  all  survey  firms,
developing  screens to determine  likely  voters is one of our most  challenging
tasks. This is especially so during low-turnout primary elections.

     When the survey is completed,  we weight the data to reflect the population
being  surveyed in terms of age, race,  and gender.  Typically,  we find that we
have oversampled  women, white Americans,  and older Americans.  We weight these
oversampled populations down to an appropriate level relative to the rest of the
sample.

     Following the weighting  process,  we conduct a "sanity check" by comparing
the sample's  characteristics  to  verifiable  data.  This varies from survey to
survey. In surveys conducted  shortly after an election,  we frequently  measure
the stated  voting  behavior  of the sample with actual  voting  results.  Other
times, we may compare the employment  status of the sample to what we know about
the area's employment statistics.

     After  processing the data,  Research Sales either provides the information
to a client or posts it on its Web site. Sometimes,  a press release summarizing
the data is issued.  For  information  presented on Research Sales' Web site, we
typically  post the question  wording along with our summary of the data so that
people visiting the site can evaluate the questions for themselves. We also post
the survey  date,  sample size,  margin of sampling  error,  and other  relevant
information.

     Surveys provided to clients are sometimes kept private.  However, we inform
our clients that if our polling data is reported publicly, details of the entire
survey must be made public.  This includes a listing of all questions asked, the
responses to all  questions,  and details about the survey such as date,  sample
size, and margin of sampling error.



                                       37
<PAGE>


SALES AND MARKETING

     To date,  sales and marketing  efforts of Research Sales have been minimal,
except to the extent of building brand name recognition.

     In the course of Research Sales' public relations efforts, we have released
substantial  quantities  of data to the  media.  Our work has been cited on Good
Morning  America,  the Today Show,  the Jim Bohannon  Show,  and scores of other
broadcast outlets. In print, Research Sales' work has appeared in USA Today, the
Wall  Street  Journal,  Washington  Post,  New York Times,  Los  Angeles  Times,
Newsweek,  Charlotte Observer, London's Guardian Observer,  International Herald
Tribune, and countless other publications.

COMPETITION

     Research Sales'  competition in the objective  content arena falls into two
broad  categories:  telephone-based  research  companies and Web-based  research
companies.  The larger,  traditional  pollsters concentrate their efforts in the
telephone-based  arena, although some are experimenting with Web-based ventures.
Web-based  research firms tend to be new ventures  well-funded  through  venture
capital,  and  attempting to  differentiate  in a category that is  increasingly
crowded.  These firms  offer the  advantage  of  decentralizing  the  collection
process  allowing  small  businesses and  individuals  low cost and ease of use.
Unfortunately,  these firms  collect  data  through the Web using  self-selected
samples.  We  believe  that  the  combined   limitations  of  Web-audiences  and
self-selected samples render this research statistically unreliable.

     Traditional  research  competitors  include  Survey USA,  which is owned by
Hypotenuse,  a privately-held New Jersey company.  Its trade names for different
types of research offerings include: Survey USA, BulletPoll, Overnight Research,
Flash Poll, Voter Roll Call.  InterSurvey,  another  competitor,  was founded in
1998  by two  Stanford  University  professors.  Headquartered  in  Menlo  Park,
California,  InterSurvey claims to be the first and only Web-based research firm
that collects data from a scientifically  representative  sample.  The so-called
"no  compromise"  methodology  is said to blend the  statistical  reliability of
probability  sampling with the power of Web  interviewing  to solve the problems
associated  with  survey  research  on the  Web,  in  person,  by mail or on the
telephone.  Insight Express is one of the first fully automated  online research
services.  It has access to a database of 35 million people,  one of the largest
available.

     Informative, another competitor headquartered in San Francisco, California,
is similar to Insight  Express  and  Zoomerang.  It allows  users to build their
survey on line, link it to their Web site and view results in real-time  through
a Web  browser.  It has an  impressive  list of  clients  including  advertising
agencies,  e-commerce  companies such as Amazon.com,  market research companies,
portals like AltaVista and Lycos,  publishing and media companies and technology
companies such as Apple and Adobe Systems. Zoomerang, a division of MarketTools,
is a provider of  technology  and  advisory  services for  conducting  Web-based
market  research.  Members  register to build and conduct surveys with Zoomerang
using pre-formatted  surveys.  In turn,  Zoomerang sends surveys to panelists on
behalf of members.  Results are  accessed  through  members'  accounts.  Another
competitor,  Harris  Interactive,  formed in 1999,  has database of five million
online  panelists who register to participate at the Harris Poll Online Web site
or through one of its partner sites.

     Phone-based  research competitors include The Gallup Organization and Zogby
International. Both companies conduct public opinion polls.



                                       38
<PAGE>

INTELLECTUAL PROPERTY

     Research    Sales   owns   more   than   350   domain    names    including
www.portraitofamerica.com and www.portraitoftheUK.com.

GOVERNMENT REGULATION

     We are and will be subject to laws and regulations applicable to businesses
generally in the countries in which we operate.  Currently, there are relatively
few laws and  regulations  directly  applicable to access to and commerce on the
Internet.  However, due to the increasing popularity and use of the Internet, it
is  possible  that a number  of laws and  regulations  may be  adopted,  or that
existing laws or  regulations  may be applied  differently,  with respect to the
Internet, covering issues such as user privacy, pricing, and characteristics and
quality of products and  services.  Any such laws and  regulations  could hinder
growth in use of the Internet  generally,  and decrease  the  acceptance  of the
Internet as a  communications  and commercial  medium,  and could thereby have a
material  adverse effect on our business,  results of operations,  and financial
condition.

     In  addition,  several  telecommunications  carriers  are  seeking  to have
telecommunications  over the Internet  regulated by agencies such as the Federal
Communications Commission (FCC) in the United States in the same manner as other
telecommunications  services.  Local telephone carriers, such as Pacific Bell in
the  United  States,  have  petitioned  the  FCC to  regulate  Internet  service
providers  and online  service  providers in a manner  similar to long  distance
telephone  carriers and to impose  higher  access fees on the  Internet  service
providers  and  online  service  providers.  The costs of  communicating  on the
Internet could increase  substantially as a result of any such regulation in the
United States, the United Kingdom, or elsewhere,  potentially slowing the growth
in use of the Internet.

     We may be subject to various government laws and regulations, in the United
Kingdom and elsewhere, that regulate advertising in media, which may include the
Internet.   Those  laws  and  regulations   typically  require  advertisers  and
advertising  agencies  to have  substantiation  for  advertising  claims  before
disseminating  advertisements.  Such  laws  and  regulations  can  prohibit  the
dissemination of false, deceptive,  misleading, and unfair advertising,  and may
grant certain governmental  agencies enforcement powers to impose and seek civil
penalties, consumer redress, injunctive relief and/or other remedies.

     The placement and operation of our kiosks are also subject to various local
zoning and similar laws and regulations which could delay, preclude, or increase
the cost of kiosk installation and operation.

INSURANCE

     We believe that our insurance  coverage for our  businesses is generally in
accordance with industry  standards and is adequate in light of our business and
the risks to which we are  subject,  except  that we do not  presently  maintain
"errors  and  omissions"  insurance  or key man life  insurance.  Any failure to
maintain adequate insurance could have a material adverse effect on our business
and financial condition.



                                       39
<PAGE>

ORGANIZATIONAL STRUCTURE

     We  have  interests  in  several  subsidiaries.  Below  is a  list  of  our
significant subsidiaries, including name, country of incorporation or residence,
proportion of ownership  interest and, if different,  proportion of voting power
held, as of December 31, 2000.

<TABLE>
<CAPTION>
                                                                                              PERCENTAGE INTEREST
NAME                                                      JURISDICTION OF INCORPORATION           VOTING POWER
----                                                      -----------------------------        -----------------
<S>                                                            <C>                                   <C>
Avatar Interactive Limited                                      England and Wales                    100%
WWW.CO.UK Limited                                               England and Wales                    100%
Summerfields Publishing Limited                                 England and Wales                    100%(1)
The Platinum Club Limited                                       England and Wales                    100%(1)
UK Property Channel.com Limited                                 England and Wales                     10%(2)
Morbria Limited                                                 England and Wales                    100%
Graphic Palette Company (Manchester) Limited                    England and Wales                    100%(3)
Centrix Communications Limited                                  England and Wales                    100%(3)
24.7 Colour Limited                                             England and Wales                     75%(3)
BuyersGuide plc                                                 England and Wales                     75%
Research Sales, Inc., d/b/a Rasmussen Research                 State of Washington                   100%
</TABLE>
-----------------------

(1)  Denotes  indirect  ownership  by us through  our  wholly-owned  subsidiary,
     WWW.CO.UK Limited.

(2)  In March 2001,  we  acquired an  additional  60% of the  outstanding  share
     capital of UK Property  Channel.com  Limited, and currently own 70% of this
     company.

(3)  Denotes  indirect  ownership  by us through  our  wholly-owned  subsidiary,
     Morbria Limited.

PROPERTY, PLANTS AND EQUIPMENT

     We currently lease  approximately  670 square meters  (approximately  7,200
square feet) for the executive  offices of TPN Holdings plc and Morbria  Limited
at The Annexe,  Empress  Buildings,  380 Chester Road,  Manchester,  Lancashire,
England under a lease which  expires on July 12, 2009.  The rent for this office
space is (pound)36,750 per year. We previously occupied approximately 242 square
meters  (approximately 2,540 square feet) of office space at 11 Market Square in
Alton,  Hampshire,  England  under a lease  assigned  to Avatar  Interactive  by
Westbrook  Property  Developments  Ltd.  for  (pound)1.  We  paid  approximately
(pound)36,000  ($58,000) per year in rent under this lease.  Westbrook  Property
Developments Ltd. leased the premises from Lloyds Bank plc in 1989 for a 25 year
term.  Our lease for this  facility  expires on September  28, 2014.  In January
2001, we subleased this facility to The Vacancy Management Co. Limited for three
years at a rent of (pound)36,000  per year. If Vacancy  Management elects not to
renew this  sublease  when it expires,  and if we were unable to secure  another
subtenant on  acceptable  terms,  we would be  responsible  for any  obligations
remaining under the original lease.  Avatar  Interactive  conducts business from
Welton House, Mill Lane, Alton, Hampshire, England, under a sublease expiring on
April 26, 2004. The rent is (pound)31,150 per year.

     WWW.CO.UK Limited and UK Property  Channel.com  Limited lease approximately
670 square meters (approximately 7,200 square feet) for its principal offices at
34/36 Orchard Road, Lytham St. Annes,  Lancashire,  England,  under a seven year
lease  which  expires on  September  28,  2005.  The rent for this  facility  is
(pound)25,000 per year.


                                       40
<PAGE>

     BuyersGuide  leases  approximately 302 square meters  (approximately  3,250
square feet) for its principal offices at 2 Osborne Terrace, Jesmond,  Newcastle
upon Tyne,  England under a month-to-month  lease. The rent for this facility is
(pound)1,667 per month.  BuyersGuide also leases  additional  office space at 25
York Place, Leeds, England, where it maintains a telesales office. The lease for
this facility is on a  month-to-month  basis,  and the rent is (pound)1,000  per
month.

     Research Sales leases  approximately  60 square meters  (approximately  644
square feet) for its principal offices in Raleigh,  North Carolina. The rent for
this facility is $775 per month. The research and development  group of Research
Sales  moved  into  this  facility  in July  1999,  and all of  Research  Sales'
operations were consolidated  there in March 2001 from our facility in Matthews,
North Carolina. We plan to sublease the Matthews, North Carolina facility, which
is approximately 328 square meters  (approximately 3,510 square feet), until the
expiration of the current lease in April 2005. The rent for the Matthews,  North
Carolina  facility  is $5,118 per month.  In  addition,  Research  Sales  leases
approximately  400 square feet at 7520  Shawnee  Mission  Parkway,  Kansas City,
Missouri,  where it maintains a remote call center. We expect to close this call
center and move it to our Raleigh, North Carolina facility in the second quarter
of 2001.

     24.7 Colour Limited leases approximately 1,720 square meters (approximately
18,500  square  feet) for its  principal  offices  and  printing  operations  at
Longford Trading Estate, Thomas Street,  Manchester,  England. The rent for this
facility is (pound)3,917 ($5,850) per month.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS.

      YOU SHOULD READ THE FOLLOWING  DISCUSSION AND ANALYSIS IN CONJUNCTION WITH
"ITEM 3. SELECTED FINANCIAL DATA" AND OUR CONSOLIDATED  FINANCIAL STATEMENTS AND
NOTES  THERETO  INCLUDED  ELSEWHERE  IN  THIS  ANNUAL  REPORT.  IN  ADDITION  TO
HISTORICAL    INFORMATION,    THE   FOLLOWING    DISCUSSION   CONTAINS   CERTAIN
FORWARD-LOOKING   STATEMENTS   THAT   INVOLVE   KNOWN  AND  UNKNOWN   RISKS  AND
UNCERTAINTIES,  SUCH AS STATEMENTS OF OUR PLANS,  OBJECTIVES,  EXPECTATIONS  AND
INTENTIONS. SEE "SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS" APPEARING ON
PAGE 1 OF THIS ANNUAL REPORT.

OVERVIEW

     We  are  a  holding  company  and  we  conduct  our  business  through  our
subsidiaries,  which include, but are not limited to, Avatar Interactive Limited
(formerly known as Town Pages UK Limited),  WWW.CO.UK Limited,  Morbria Limited,
BuyersGuide plc and Research Sales, Inc., d/b/a Rasmussen Research. We commenced
operations in November 1995 but conducted no meaningful  operations  until 1996,
when we began conducting  experimental  prototype  operations which concluded in
the Spring of 1998.  On July 31, 1998,  we were  incorporated  under the laws of
England and Wales  under the name Town Pages  Holdings  plc.  In April 1999,  we
changed our name to TownPagesNet.com plc, and in March 2001, we changed our name
to TPN Holdings plc.

     Until June 2000, we were engaged primarily in the business of designing and
installing  touch  screen  informational  kiosks  with free  Internet  access in
certain towns and cities in the United Kingdom  through our  subsidiary,  Avatar
Interactive Limited. Under this business model, we expected to generate revenues
from local and national advertisements placed on the kiosks. However, the demand
for  e-commerce  and Internet  access in the United  Kingdom grew slower than we
expected,  despite U.K. government  initiatives  intended to increase demand. In
addition,  the introduction of free Internet service providers such as Freeserve
and Altavista inhibited our expansion plans.

     In  September  2000,  we  implemented  a new  business  strategy for Avatar
Interactive  which  focuses  on  providing  Internet-based  business-to-business
practices  (commonly  known as e-business  solutions),


                                       41
<PAGE>


interactive  kiosk-based
solutions and new media solutions.  We call these solutions "bespoke solutions."
In  addition,  from  July  1999  through  March  2001,  we  acquired  all of the
outstanding  share  capital  or a  majority  interest  in six  companies.  These
acquisitions  significantly  expanded  the range of services  we provide.  These
transactions include the acquisitions of WWW.CO.UK Limited and its subsidiaries,
Morbria Limited and its  subsidiaries,  BuyersGuide plc,  Research Sales,  Inc.,
d/b/a  Rasmussen  Research,  24.7  Colour  Limited  and  UK  PropertyChannel.com
Limited.

     WWW.CO.UK  Limited and its subsidiaries  provide  cinema-related  services,
including Web site design,  indoor cinema  advertising,  cinema preview booklets
and  wallets  on which  advertising  space is sold,  as well as local  community
content for our Town Pages Information Service.

     Morbria Limited and its subsidiaries provide Web site design,  advertising,
marketing and communications services using a wide array of electronic and print
media services.

     BuyersGuide  plc is an online  provider of goods and  services  procurement
information for government and public services bodies in the United Kingdom.  We
own 75% of the outstanding share capital of BuyersGuide.

     Research  Sales,  Inc. is a U.S.-based  online polling and market  research
company  which  has  developed   proprietary   Automated   Telephone   Interview
Technology.  Research  Sales,  Inc. is seeking to become an application  service
provider for polling professionals and market research  organizations.  Research
Sales,   Inc.   continues   to  operate   the   Portrait   of  America   website
(www.portraitofamerica.com) as a showcase for their research experience. In 1999
and 2000 they  conducted  more than 1000 surveys,  each of which is showcased on
the website.

      24.7  Colour  Limited  is an  established  traditional  sheetfed  printing
company,  which we  acquired to extend the life of the  "digital  reprographics"
business of Graphic  Palette,  a subsidiary of Morbria  which had  experienced a
diminishing market place. Despite the recent advances of technology,  we believe
that there  will  always be a market for  conventional  printing.  We expect our
acquisition of 24.7 Colour will allow us to offer our advertising, marketing and
communications  clients a range of electronic and print media  services.  We own
75.1% of the outstanding share capital of 24.7 Colour.

     UK Property  Channel.com  Limited  operates  www.ukpropertychannel.com,  an
Internet portal which lists real estate  available for sale  throughout  England
and Wales. UK Property  Channel.com Limited creates and maintains local websites
for independent real estate agents,  and through its Web site, offers a platform
through which real estate agents can advertise  their local real estate listings
nationally.  Real estate agents using UK Property Channel.com's website are able
to  electronically  update their listings on a daily basis. As of July 27, 2001,
with 2,233 branches of real estate agents as clients, of which approximately 85%
have live websites,  UK Property Channel.com Limited serves more than 20% of the
independent  real estate  agents in England and Wales.  UK Property  Channel.com
Limited currently  generates  revenues through the sale of banner advertising on
its Web site. We believe other  opportunities to generate  advertising  revenues
for  www.ukpropertychannel.com  from regional and national  contracts plus other
sources will arise as the company increases its market share. As of December 31,
2000, we owned 10% of the outstanding share capital of UK Property  Channel.com.
In March 2001,  we  increased  our  ownership to 70% of the company by acquiring
additional capital shares.

OUR OPERATIONS

     Our financial  statements are presented in pounds sterling and are prepared
in  accordance  with  generally  accepted  accounting  principles  in the United
States. For your convenience, we have translated certain pound sterling amounts
into U.S. dollar amounts. Our fiscal year ends on December 31. All

                                       42
<PAGE>


references to
operations and financial  condition for all fiscal periods prior to December 15,
1998  are to the  operations  and  financial  condition  of  Avatar  Interactive
Limited.  Unless the context otherwise indicates,  "fiscal 2000", "fiscal 1999",
"fiscal  1998" and "fiscal  1997" refer to the fiscal  years ended  December 31,
2000, 1999, 1998 and 1997, respectively.

     We have  incorporated  the  results  of each of our  subsidiaries  into our
consolidated financial statements from the date of their respective acquisition,
to the extent they were  majority-owned  as of December 31, 2000. Our stated net
loss of  (pound)8,765,446  ($13,091,192)  is after a charge of  (pound)3,069,092
($4,583,690) from the amortization of goodwill arising from the acquisitions and
a charge  of  (pound)1,631,965  ($2,437,430)  arising  from the write off of our
acquisition of Research Sales, Inc.

     The net loss is also stated  after a charge of  (pound)307,000  ($458,505),
arising from provisions made against certain loans receivable,  the repayment of
which are  dependent  upon sales of our  ordinary  shares by the  borrowers.  In
management's  view, it is unlikely  that, in the short or medium term, our share
price will  increase to the levels  necessary  for such sales to occur.  We have
therefore provided in full against these loans.

     A significant portion of our operating loss for the year ended December 31,
2000 was  incurred  by our Avatar  Interactive  subsidiary,  which has  incurred
operating losses since  inception.  In September 2000, we refocused the business
strategy of Avatar  Interactive.  We believe Avatar  Interactive's  new business
strategy will permit Avatar to substantially  reduce those losses and eventually
become  profitable.  As part of this new business  strategy,  we  appointed  new
executive  directors to run Avatar  Interactive  and  realigned  Avatar's  kiosk
business  focus.  The  appointment of these new directors was made to strengthen
Avatar   Interactive's   management  team  and  to  provide  greater  focus  and
accountability  to the TPN Holdings plc board. In addition,  Avatar  Interactive
eliminated  nearly  two-thirds of its  workforce.  The remaining  personnel were
relocated to our Welton House office in Alton,  which resulted in the closure of
the Market Square and Warrington offices, which reduced our overhead costs.

     The  components   described  below  comprise  our  revenues  and  costs  of
operations.

    Revenues

     Avatar  Interactive   Limited.  We  charge  customers  a  fixed  price  for
development projects, based upon the type and scope of the project. However, for
continuing  consultancy  engagements,  we charge customers for our time on a per
person,  per day basis.  We also charge  customers for our time on a per person,
per day basis for new media design, consultancy and implementation  engagements,
and for  e-business  and kiosk  solutions  consultancy  services  and  technical
development  work. Our fees for maintenance and support  services are based on a
per period  basis and on  anticipated  utilization  of  resources.  We price our
hosting services to be competitive with the market for such services.

     WWW.CO.UK  Limited.  Our clients initially enter into two-year contracts to
advertise in both the electronic and non-electronic  media produced by WWW.CO.UK
and its  subsidiaries.  The terms of and fees to be paid under these advertising
contracts are negotiated on a case-by-case basis.

     Morbria Limited. The fees we charge for the services offered by Morbria and
its  subsidiaries,  including  24.7 Colour  Limited,  typically are priced to be
competitive  with the current market for such  services,  but are variable based
upon the type of industry in which the client  operates and the specific  client
project.  Fees for most of these  services are charged on a per person,  per day
basis.  However, fees for certain concept work and fixed projects are charged on
a weekly or monthly basis.



                                       43
<PAGE>

     BuyersGuide  plc.  We charge  our  customers  fees for  advertising  on the
BuyersGuide Web site,  including banner advertising.  The amount charged depends
on the complexity of the advertisement,  the size of the company advertising and
the business sector in which the  advertisement is to be displayed.  We are able
to  command  higher  prices for  larger,  better-known  advertisers  who tend to
receive more inquiries than smaller companies.  We also are often able to charge
a premium for prestigious business classifications.

     Research Sales, Inc. Research Sales historically has conducted surveys on a
for-hire  basis. In the future,  however,  we also expect to provide content for
our Portrait of America Web site  (www.portraitofamerica.com).  We currently are
seeking  a title  sponsor  for the  site.  We  intend  to sell  other  products,
including  selling data access through this site, at fees to be  determined.  We
also plan to customize our product offerings to meet the needs of individual Web
sites seeking to use our content, for which we expect to receive a fixed fee. In
other cases, we will base contracts on cash and revenue  sharing  opportunities.
We also intend to develop customized content packages which include a full range
of pricing  options,  including  barter  arrangements  and annual contracts of a
substantial  monetary  value.  To date Research Sales has been unable to develop
the  strategic  relationships  management  believes are necessary to operate the
business successfully.  As a result,  Research Sales has not generated the level
of revenue we had expected when we purchased the company.  We believe that there
is a high risk  that  Research  Sales  will be  unable  to  generate  sufficient
revenues in the near future. If Research Sales is unable to generate revenue, it
would be unable  to  continue  its  operations  at its  current  level.  We have
therefore  fully  provided  against  the book  value of this  acquisition  as of
December 31, 2000.

     UK Property Channel.com. UK Property Channel.com Limited generates revenues
solely through the sale of banner  advertising.  There is no fee charged to real
estate agents for posting their real estate listings on the Web site. We believe
there  are  other  opportunities  by  which UK  Property  Channel  can  generate
advertising revenues from regional and national contracts and other sources.


    Cost of Revenues

     Maintenance  and  Hosting  Costs.  Maintenance  and hosting  costs  consist
primarily of Internet  connection  charges,  Web site  equipment  leasing costs,
costs to repair and maintain equipment, including kiosks, and systems, and costs
related to the collection, development and processing of locally-focused content
to be displayed on the TownPages Information Service.

     Costs of Contract and Other  Revenues.  Cost of contract and other revenues
consists primarily of Web site design and related operating costs.

     Advertising and Commission Costs.  Advertising and commission costs consist
primarily of the salaries and related  costs,  including  commissions  of direct
sales staff. Unlike advertising  revenues,  which are recognized over the period
of the contract, all direct costs are recognized when incurred.

     Operating Expenses

     Sales  and  Marketing  Expenses.   Sales  and  marketing  expenses  consist
primarily of salaries of marketing  personnel,  advertising  and other marketing
related expenses.  Sales and marketing expenses also include personnel costs and
costs  associated  with our  advertising  and telesales  campaigns in the United
Kingdom.


                                       44
<PAGE>

     Research  and  Development  Expenses.  Research  and  development  expenses
include expenses  associated with the development of services,  products and our
Web site and consist principally of personnel costs,  overhead costs,  editorial
costs and supplies. These costs are charged as they are incurred.

     General and Administrative  Expenses.  General and administrative  expenses
consist primarily of salaries and related costs for general corporate functions,
including finance,  accounting,  information technology,  facilities,  legal and
other fees for professional services.

     Depreciation and Amortization Expenses.  Depreciation expenses consist of a
charge on all  equipment  and fixtures we own,  including  kiosks.  Amortization
expenses consist of a charge on the goodwill arising from our acquisitions.

     Interest and Other Income/Expense, Net. Interest and other income/expenses,
net includes income from our cash and  investments  and expenses  related to our
financing obligations.

EFFECT OF VARIOUS ACCOUNTING METHODS ON OUR RESULTS OF OPERATIONS

     Much of our revenues are derived from contracts that span a period of time.
We  recognize  revenues  ratably  over the  term of the  contracts.  For  Avatar
Interactive, Morbria and BuyersGuide, the terms of these contracts are generally
one year. For WWW.CO.UK, the terms of these contracts are generally two or three
years. Conversely, the corresponding costs are recognized as they are incurred.

     The deferred  income  figures,  short-term and long-term,  as stated in our
consolidated  financial  statements,  give an  indication  of  revenues  not yet
recognized.

                                       45

<PAGE>

RESULTS OF OPERATIONS

     The following table presents certain  consolidated  statement of operations
data for the periods indicated as a percentage of total net revenue.


                                                       Year End December 31,
                                                     1998     1999       2000
                                                     ----     ----       ----
                                                      %        %          %
Revenues:
   Advertising revenues                                4 %     18 %       63  %
   Contract and other revenues                        82 %     28 %       20  %
   Contract revenues from related parties             14 %     54 %       17  %
                                                    ----     ----       ----
Total revenues                                       100 %    100 %      100  %
Cost of revenues:
   Maintenance and hosting costs                      16 %     19 %       20  %
   Cost of contract revenue and other                 50 %     28 %       28  %
   Advertising and commission costs                   -- %     17 %       58  %
                                                    ----     ----       ----
Total cost of revenue                                 66 %     64 %      106  %
                                                    ----     ----       ----
Gross profit (loss)                                   34 %     36 %       (6) %
Operating Expenses:
   Sales and marketing                                31 %     14 %        6  %
   Research and development                            6 %      1 %        8  %
   General and administrative                         64 %     35 %       93  %
   Depreciation and amortization                       4 %     15 %       59  %
   Goodwill written off                              --  %     -- %      (24) %
                                                    ----     ----       ----
Total operating expenses                             105 %     65 %      142  %
                                                    ----     ----       ----
Loss from operations                                (71) %   (29) %     (148) %
Interest expense                                     (8) %    (1) %       (2) %
Interest income                                       -- %      2 %        1  %
Other income                                           2 %     -- %       --  %
Provision against loan receivable                     -- %     -- %       (4) %
Gain on sale of investment                            -- %     -- %       74  %
Accumulated other comprehensive gain                  -- %      2 %       --  %
Minority interests                                    -- %    (1) %        1  %
                                                    ----     ----       ----
Loss before income taxes                            (77) %   (27) %      (78) %
Provision for income taxes                            -- %    (1) %        1  %
                                                    ----     ----       ----
Net loss                                            (77) %   (28) %      (79) %
                                                    ====     ====       ====

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

REVENUES

     Advertising Revenue

     Advertising  revenue  increased  to  (pound)4,400,490  ($6,572,131)  during
fiscal  2000  from  (pound)1,312,561   during  fiscal  1999.  The  increase  was
principally  due to the  inclusion  in fiscal  2000 of a full year of  operating
results from the  companies we acquired in 1999,  as compared with the inclusion
of only a partial year of operating  results for fiscal 1999. We anticipate that
our advertising revenues will increase in the future as the advertising revenues
of the acquired businesses increase as anticipated.



                                       46
<PAGE>


     Contract and Other Revenue

     Contract  and other  revenues  decreased to  (pound)2,539,034  ($3,792,047)
during fiscal 2000,  of which  (pound)1,152,163  ($1,720,755)  were from related
parties,  from  (pound)5,935,285  during fiscal 1999, of which  (pound)3,885,242
were from related parties.  The decrease was principally due to the fact that we
did not  recognize  any  revenues in  connection  with Web  channel  development
contracts  during  fiscal 2000,  whereas in fiscal 1999 we recorded  revenues of
(pound)4,308,825.  As detailed elsewhere in this annual report,in December 2000,
we  entered  into an  agreement  to  terminate  these  Web  channel  development
contracts. Therefore our contract revenues are principally derived from printing
and multimedia  services through our Morbria group of subsidiaries and small Web
site design through our Avatar Interactive subsidiary, to third parties.

     We  anticipate  that  revenues  from Web site design  services  will form a
lesser percentage of total revenues as advertising and other services develop.

     We perform ongoing credit evaluations of our customers' financial condition
and generally do not require collateral on accounts  receivable.  When required,
we maintain allowances for credit losses and those losses have not been material
to date.  The balance of the allowance for doubtful  accounts as of December 31,
2000 was (pound)1,429,151 ($2,134,437), compared to a balance as of December 31,
1999 of  (pound)530,565.  This increase is primarily due to the inclusion in our
results of WWW.CO.UK  and  BuyersGuide,  which provide an allowance for specific
bad debts.

COST OF REVENUES

     Maintenance and Hosting Costs

     Maintenance  and hosting costs increased to  (pound)1,410,387  ($2,106,413)
during fiscal 2000,  from  (pound)1,388,408  during fiscal 1999. The increase in
maintenance and hosting costs was primarily due to the costs associated with the
installation and maintenance of additional TownPages kiosks. We anticipate that,
for the foreseeable  future,  these costs will remain relatively  constant,  but
will rise proportionally if additional kiosks are rolled out.

     Costs of Contract and Other Revenues

     Cost  of  contract  and  other  revenues   decreased  to   (pound)1,942,089
($2,900,510) during fiscal 2000, from  (pound)2,057,296  during fiscal 1999. The
decrease in costs was primarily  attributable  to the termination of Web channel
development  contracts  in  December  2000.  We expect  these  costs to  further
decrease  in  2001  as a  result  of  the  discontinuance  of  our  Web  channel
development  business.  Any such decrease will be offset by the inclusion in our
results of a full year of operating results for 24.7 Colour Limited.

     Advertising and Commission Costs

     Advertising and commission costs increased to (pound)4,028,089 ($6,015,951)
during fiscal 2000,  as compared to  (pound)1,203,613  during  fiscal 1999.  The
increase was due to the  inclusion of a full year of costs for our  subsidiaries
during 2000 compared with a partial contribution in fiscal 1999. We expect these
costs to increase in the future relative to an increase in advertising revenues.



                                       47
<PAGE>

OPERATING EXPENSES

     Sales and Marketing Expenses

     Sales and marketing expenses decreased to (pound)416,399  ($621,893) during
fiscal 2000,  from  (pound)1,028,005  for fiscal 1999. The decrease in sales and
marketing  expenses was primarily  due to bringing our  marketing  operations in
house during fiscal 2000,  whereas  during fiscal 1999, we had relied heavily on
U.K. and U.S.  marketing  agencies for our marketing  needs.  We expect that our
sales and marketing  expenses will continue to decline in relative terms for the
foreseeable future.

     Research and Development Expenses

     Research and development  expenses  increased to (pound)542,553  ($810,302)
during fiscal 2000,  from  (pound)77,371  during  fiscal 1999.  The increase was
primarily  due to the  inclusion  of a full year  contribution  of costs for our
subsidiaries  during  fiscal  2000,  including  Research  Sales  Inc.,  which we
acquired in November 1999. We expect that research and development expenses will
decrease as a result of the  maturation  of our  business and a reduction in our
research and development personnel.

     General and Administrative Expenses

      General  and  administrative   expenses   increased  to   (pound)6,486,720
($9,687,913) during fiscal 2000, from  (pound)2,565,396  during fiscal 1999. The
increase  was  primarily  due to the  inclusion  of a full year of costs for our
acquired subsidiaries, which increased as compared to the prior year, related to
the filling of key senior  executive  positions,  and costs  associated with the
increase in  professional  fees required for Securities and Exchange  Commission
and general corporate governance  compliance purposes.  Also included within the
fiscal  2000  figure is  (pound)1.0  million  ($1.5  million)  which  represents
compensation to directors of our BuyersGuide subsidiary pursuant to the original
acquisition agreement (see Note 4 of our financial statements). We do not expect
general and  administrative  expenses to increase in the foreseeable future as a
result  of the  implementation  of cost  containment  and  operating  efficiency
improvements,  including  a  reduction  of staff  levels and a  decrease  in our
reliance on outside vendors for certain services.

     Depreciation and Amortization Expenses

      Depreciation expenses increased to (pound)1,070,205  ($1,598,351),  during
fiscal 2000,  from  (pound)257,905  during  fiscal 1999.  Amortization  expenses
increased   to   (pound)3,069,092   ($4,583,690)   during   fiscal   2000   from
(pound)830,701  during fiscal 1999.  The increase in  depreciation  expenses was
primarily attributable to a charge on the assets of the subsidiaries we acquired
and the greater  number of kiosks  purchased  and  installed  during  2000.  The
increase in amortization expenses was due to the inclusion of a full year charge
in fiscal 2000  relating to the  goodwill  arising from the  acquisition  of our
subsidiaries,  compared to only a partial contribution in fiscal 1999. We expect
depreciation  expenses to be relatively  constant for the foreseeable  future as
the increased  maturity of our businesses  decreases the requirement for capital
expenditures.  We  expect  ongoing  amortization  costs to  decrease  due to the
goodwill arising from the Research Sales,  Inc.  acquisition being fully written
off as at December 31, 2000.

     Goodwill Written Off

     Write off of goodwill was (pound)1,631,965 ($2,437,340) during fiscal 2000.
There was no corresponding charge in the previous year. The write off relates to
our acquisition of Research Sales,  Inc. Expected  relationships  with strategic
partners and the consequent  revenue streams for Research  Sales,

                                       48
<PAGE>


Inc. have not
developed.  We believe that there is a high risk that  revenues will not develop
quickly enough, or at all, and we have therefore fully provided against the book
value of this acquisition.

     Interest and Other Income/Expense, Net

     Interest  and  other  income/expense,   net  moved  to  a  net  expense  of
(pound)86,069 ($128,543) during fiscal 2000, from a net income of (pound)118,190
during fiscal 1999. This movement was primarily due to the substantial  funds we
had on  deposit  in 1999 as a  result  of our  initial  public  offering,  which
occurred in the second quarter of 1999, reducing as the funds were expended, and
finance  leases we entered  into in 2000 to fund the purchase of  equipment.  We
expect to incur net  expenses as we carry  interest  on the  finance  leases for
complete  periods going  forward and we bear interest on the credit  facility we
recently entered into with HSBC.

     Provision Against Loan Receivable

     Provision  against loan  receivable was  (pound)307,000  ($458,505)  during
fiscal  2000.  There was no  corresponding  charge  in the  previous  year.  The
provision relates to a loan of  (pound)225,000  ($336,038),  plus  (pound)82,000
($122,467) in accrued interest,  made to HCC Holdings Limited,  the former owner
of WWW.CO.UK  Limited.  Repayment of this amount is dependent on the sale of our
ordinary shares by HCC Holdings.  Since there is no guarantee that the loan will
be fully  repaid from  proceeds  received  from the sale of the shares,  we have
established reserves for the full amount of this loan, plus interest.  We do not
anticipate similar charges in the future.

     Gain on Sale of Investment

     Gain on sale of investment  was  (pound)5,139,404  ($7,675,700)  for fiscal
2000.  There was no such gain or loss during  fiscal  1999.  This gain is wholly
attributable  to the gain realized on the sale of 24.91% of our  shareholding in
our BuyersGuide subsidiary.

     Foreign Exchange Gain

     Foreign  exchange gain was  (pound)37,381  ($55,829) during fiscal 2000, as
compared  to  (pound)163,653  during  fiscal  1999.  The  gain  results  from an
appreciation  in the dollar rate against the pound sterling  during that period.
We do not anticipate similar gains or losses in the foreseeable future.

     Net Loss

     Net loss increased to (pound)8,765,446 ($13,091,192) during fiscal 2000, as
compared to (pound)2,057,634  during fiscal 1999. The increase in net losses can
be attributable to several factors, including:

     o    the  realignment  of the Web  channels  development  strategy  and the
          consequent non-recognition of revenue from that source;

     o    high goodwill amortization charges resulting from our acquisitions;

     o    the  goodwill  write-off  of our  Research  Sales  subsidiary  and the
          continued  start-up  development  costs of Research  Sales  throughout
          fiscal 2000; and

     o    the provision made against certain of our loans receivable.



                                       49
<PAGE>

     We expect to continue to have operating  losses in the foreseeable  future,
albeit at  reduced  levels  due to the  actions  we took in 2000 to  restructure
certain of our businesses and implement new strategies.

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

REVENUES

     Advertising Revenue

     Advertising revenue increased to  (pound)1,312,561  during fiscal 1999 from
(pound)40,839  during  fiscal  1998.  This  increase  was  primarily  due to the
inclusion of revenues from our newly acquired subsidiaries.  Advertising revenue
derived from acquisitions made during fiscal 1999 was (pound)1,229,651.

     Contract and Other Revenues

     Contract and other  revenues  increased to  (pound)5,935,285  during fiscal
1999, of which (pound)3,885,242 were from related parties, from (pound)1,079,264
during  fiscal 1998,  of which  (pound)159,742  were from a related  party.  The
increase was  principally  due to the  commencement  of 20 new contracts for web
channel  development  services during fiscal 1999.  Revenues of (pound)4,308,825
were recognized  under the fiscal 1999 contracts to December 31, 1999.  These 20
contracts  accounted  for 59% of our  total net  revenues  during  fiscal  1999.
Contract  revenue  derived  from  our   acquisitions   during  fiscal  1999  was
(pound)325,209.

     We  performed  ongoing  credit  evaluations  of  our  customers'  financial
condition and generally do not require collateral on accounts  receivable.  When
required, we maintain allowances for credit losses, which have not been material
to date.  The balance of the allowance for doubtful  accounts as of December 31,
1999 was  (pound)530,565.  There was no provision as of December 31, 1998.  This
increase is due to the  inclusion of the results of WWW.CO.UK  and  BuyersGuide,
which provide an allowance for specific bad debts.

COST OF REVENUES

     Maintenance and Hosting Costs

     Maintenance and hosting costs increased to  (pound)1,388,408  during fiscal
1999,  from  (pound)179,776  during fiscal 1998. The increase in maintenance and
hosting costs was primarily due to the costs  associated  with the  installation
and maintenance of additional  TownPages  kiosks and hosting costs in respect of
channels.

     Costs of Contract and Other Revenues

     Cost of contract and other revenues  increased to  (pound)2,057,296  during
fiscal 1999, from  (pound)563,854  during fiscal 1998. The increase in costs was
principally due to the servicing of additional web channel development contracts
procured during the year. Cost of contract and other revenues during fiscal 1999
relating to our acquisitions were (pound)416,182.

     Advertising and Commission Costs

     Advertising and commission costs were (pound)1,203,613  during fiscal 1999.
There was no equivalent  in the prior year,  since these costs were derived from
commission  and other direct  selling costs  relating to the  advertising  sales
operations of our newly acquired subsidiaries.


                                       50
<PAGE>


OPERATING EXPENSES

     Sales and Marketing Expenses

     Sales and marketing  expenses increased to  (pound)1,028,005  during fiscal
1999,  from  (pound)351,633  during  fiscal  1998.  The  increase  in sales  and
marketing expenses was primarily due to the roll-out of the TownPages kiosks and
increases  in the  number  of  sales  personnel  and  expenses  associated  with
promotion and marketing efforts.

     Research and Development Expenses

     Research and development  expenses increased to (pound)77,371 during fiscal
1999,  from  (pound)67,910  during  fiscal  1998.  The  increase in research and
development  expenses was primarily  due to the continued  roll-out of TownPages
kiosks and  corresponding  increases in the number of personnel  involved in the
development of our Web site.

     General and Administrative Expenses

     General and administrative  expenses increased to  (pound)2,565,396  during
fiscal 1999, from (pound)715,168  during fiscal 1998. General and administrative
expenses   relating  to  the   companies  we  acquired   during  the  year  were
(pound)669,988,  or 26% of our  total  general  and  administrative  costs.  The
increase in general and  administrative  expenses was primarily due to increases
in the number of personnel to support the growth of our  business,  increases in
recruiting  costs  related to filling key senior  executive  positions and costs
associated  with the increase in  professional  fees required for Securities and
Exchange Commission and general corporate governance compliance purposes.

     Depreciation and Amortization Expenses

     Depreciation  expenses increased to (pound)257,905 during fiscal 1999, from
(pound)42,022  during  fiscal  1998.  This  increase  was  primarily  due to the
purchase of Townpages kiosks.

     Amortization  expenses increased to (pound)830,701 during fiscal 1999, from
zero  during  fiscal  1998.   This  increase  was   principally  the  result  of
amortization of goodwill arising from acquisitions we made during the year.

     Interest and Other Income/Expense, Net

     Interest  income,  net increased to  (pound)118,190  during fiscal 1999, as
compared to a net expense of (pound)71,836  during fiscal 1998. The increase was
primarily  due to the  monies  held on  deposit  following  our  initial  public
offering and the repayment of a debenture loan.

     Foreign Exchange Gain

     Foreign exchange gain was  (pound)163,653  during fiscal 1999. There was no
equivalent in the prior year. The gain resulted from funds held in a U.S. dollar
account  for a period of time  following  our  initial  public  offering  and an
appreciation in the dollar rate against the pound sterling during that period.

     Net Loss

     Net loss after  provision  for income taxes  increased to  (pound)2,057,634
during fiscal 1999, compared to a net loss of (pound)872,096 during fiscal 1998.
This increase was due to a substantial increase in operating


                                       51
<PAGE>


expenses to finance our continued development, increased penetration of existing
markets and expansion into additional markets including our acquisition program.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997.

REVENUES

     Advertising Revenues

     Advertising  revenues  increased to (pound)40,839  during fiscal 1998, from
(pound)5,063  during  fiscal  1997.  The  increase  was  due  primarily  to  the
commencement of commercial operations of TownPages in Winchester, England and an
increase in the number of subscribers to the TownPages  Information  Service. We
installed seven TownPages kiosks in Winchester,  England in May 1998 and a kiosk
in Brighton, England in July 1998.

     Contract and Other Revenues

     Contract and other  revenues  increased to  (pound)1,079,264  during fiscal
1998,  of which  (pound)159,742  were with a related  party,  from  (pound)3,296
during fiscal 1997. The increase was due to the  commencement  of four contracts
for complex Web site design  services  during the fourth quarter of 1998.  These
four contracts accounted for 19%, 14%, 30% and 33%,  respectively,  of total net
revenues for fiscal 1998.

COST OF REVENUES

     Maintenance and Hosting Costs

     Maintenance  and hosting costs  increased to  (pound)179,776  during fiscal
1998,  from zero during  fiscal 1997.  The increase in  maintenance  and hosting
costs  was  primarily  due to the costs  associated  with the  installation  and
maintenance of the eight TownPages kiosks.

     Costs of Contract and Other Revenues

     Cost of contract  and other  revenues  increased to  (pound)563,854  during
fiscal 1998 from  (pound)43,781  during fiscal 1997. The increase was due to the
commencement  of four contracts for Web site design  services  during the fourth
quarter of 1998. Costs of  (pound)526,044,  directly related to these contracts,
were incurred in the quarter.

OPERATING EXPENSES

     Sales and Marketing Expenses

     Sales and  marketing  expenses  increased to  (pound)351,633  during fiscal
1998, from (pound)20,194 during fiscal 1997. The increase in sales and marketing
expenses was  primarily  due to the roll-out of TownPages  into the  Winchester,
England market and corresponding  increases in the number of sales personnel and
increased expenses associated with promotion and marketing efforts.

     Research and Development Expenses

     Research and development  expenses increased to (pound)67,910 during fiscal
1998,  from  (pound)40,832  during  fiscal  1997.  The  increase in research and
development  expenses was  primarily  due to the roll-out of TownPages  into the
Winchester,  England  market  and  corresponding  increases  in  the  number  of
personnel involved in the development of our Web site.


                                       52
<PAGE>


     General and Administrative

     General and  administrative  expenses  increased to  (pound)715,168  during
fiscal 1998, from (pound)220,057 during fiscal 1997. The increase in general and
administrative  expenses  was  primarily  due  to  increases  in the  number  of
personnel to support the growth of our business,  increases in recruiting  costs
related to filling key senior executive  positions and costs associated with the
preparation  and  updating of our  business  plan.  General  and  administrative
expenses  decreased as a percentage of net revenues because of the growth in net
revenues.

     Interest and Other Income/Expense Net

      Interest expense,  net increased to (pound)71,836 during fiscal 1998, from
(pound)17,487  during fiscal 1997. The increase was primarily due to an increase
in borrowings  from an affiliate of Kevin R. Leech,  a director and  significant
shareholder  of our  company.  We  anticipate  that this  interest  expense will
decrease  significantly  after the lender  converts  the  indebtedness  into our
Series A preferred shares.

     Net Loss

     Although our net  revenues  increased  during  1998,  as compared to fiscal
1997,  a  substantial  increase in operating  expenses to finance the  continued
development  of  TownPages,   increased  penetration  of  existing  markets  and
expansion   into   additional   markets  caused  us  to  incur  a  net  loss  of
(pound)872,096  during fiscal 1998, as compared to a net loss of  (pound)346,564
during fiscal 1997.

LIQUIDITY AND CAPITAL RESOURCES

     Overview

     Since  inception,  we and our  subsidiaries  have  financed our  operations
through the sale of equity  securities and through loans from  institutions  and
related  parties.  We  do  not  use  derivative  financial  instruments  in  our
investment  portfolio.  We consider  investments  in highly  liquid  instruments
purchased with an original  maturity of 90 days or less to be cash  equivalents.
We hold cash and cash equivalents in pounds  sterling.  We do not hedge (through
the use of derivative or other  financial  instruments)  the  translation of our
profits from overseas  subsidiaries  or other interest rate or foreign  exchange
exposures;  therefore,  significant  changes in exchange rates or interest rates
may materially affect our results of operations.

     Equity Financings

      TPN Holdings  plc. On May 5, 1999,  we completed an  underwritten  initial
public  offering  in the United  States of 2.2  million of our  ordinary  shares
represented by American  Depositary  Shares at price of $10.00 per share.  After
underwriting  discounts  and  commissions,  as well  as  offering  expenses,  we
received proceeds of approximately  (pound)10.7 million ($17.3 million as of May
5, 1999).  As of December 31, 2000, we had used all of the net proceeds from our
initial public offering.

      BuyersGuide plc. On July 24, 2000, our BuyersGuide subsidiary was admitted
to trade on the  Alternative  Investment  Market of the  London  Stock  Exchange
following  the public  offering  of its  ordinary  shares  pursuant  to which we
realized net proceeds of  approximately  (pound)4.4  million ($6.6 million).  In
December  2000, we sold an additional  5.14% equity  interest in  BuyersGuide to
ci4net.com,  Inc., an affiliate of Kevin R. Leech, a significant shareholder and
director of our company. As consideration for such equity interest,  we received
(pound)1.3 million ($1.9 million). After giving effect to BuyersGuide's public


                                       53
<PAGE>


offering  and  sale  of  ordinary   shares  to  ci4net.com,   we  currently  own
approximately 75.1% of BuyersGuide.

     Institutional and Related Party Loans

      Glen Investments  Limited and Kevin R. Leech.  Prior to our initial public
offering,  we financed our operations primarily through a discretionary  secured
operating line of credit from Glen Investments Limited, an affiliate of Kevin R.
Leech, a significant  shareholder and director of our company.  Upon the closing
of our initial public offering on May 5, 1999, (pound)850,000 of the outstanding
balance under this line of credit was converted  into 850,000 Series A preferred
shares  of our  company.  We  repaid  the  remaining  balance  of  approximately
(pound)1.6  million  from the net proceeds we received  from our initial  public
offering.  Upon the repayment of the  outstanding  balance,  the credit line was
terminated.

     As of  December  31,  2000,  we had  received  a  working  capital  loan of
(pound)2.4 million  (approximately  $3.6 million) from Mr. Leech. The loan bears
interest at 2% above the U.K.  base rate,  which was 6% per annum as of December
31, 2000.  Amounts  outstanding under this working capital loan are repayable on
the earlier of January 5, 2002, or our receipt of the net proceeds from the sale
of any assets or equity securities of our  subsidiaries,  or any of our lines of
business.

      HSBC Bank  plc.  On  December  14,  2000,  we and our  subsidiary,  Avatar
Interactive, entered into a collective net overdraft facility with HSBC Bank plc
(HSBC).  Initially,  we were entitled to borrow up to  (pound)2.5  million ($3.7
million),  until  January  31,  2001.  On March 30,  2001,  HSBC  increased  the
borrowing  availability under the facility to (pound)4.0 million ($6.0 million).
In July 2001,  HSBC  further  increased  the  borrowing  availability  under the
facility to (pound)5.2 million ($7.8 million) until September 30, 2001, when the
facility is due to expire.  There can be no assurance that this facility will be
renewed when it expires or that  additional  funds will be made available  under
this  facility.  The facility bears interest at a rate of 2% over the prevailing
HSBC base rate,  which as of December 31, 2000, was 6% per annum. As of December
31,  2000,  there  was  (pound)2,329,504  ($3,479,114)  outstanding  under  this
facility.  As  of  July 27,  2001,  there  was  (pound)4,399,238   ($6,570,262)
outstanding  under this  facility.  Amounts  borrowed  under this  facility  are
repayable by our company upon demand at any time.

      Amounts  outstanding  under  the  HSBC  facility  are  secured  by a first
priority  security  interest  in all of  the  assets  of  our  company  and  its
subsidiaries,  both present and future, as well as a pledge of the shares we own
in each of our  subsidiaries.  Our  obligations are further secured by unlimited
guarantees  given  by  each  of  our  subsidiaries  and by  Kevin  R.  Leech,  a
significant shareholder and director, of our company.

     Natwest Bank.  Prior to fiscal year 2000,  our Graphic  Palette  subsidiary
entered into an uncommitted  bank facility with Natwest Bank, under which it may
borrow up to  (pound)200,000.  Amounts  outstanding  under  this  facility  bear
interest  at a rate  of  2.5%  over  the  prevailing  U.K.  base  rate  and  are
collateralized  by a debenture  giving a fixed and floating charge on all of the
assets of Graphic Palette.  As of December 31, 2000,  (pound)177,580  ($265,216)
was  outstanding   under  this  facility.   As  of  July 27,  2001,  there  was
(pound) 198,173 ($295,971) outstanding under this facility.

     Equipment Financing

      Between  March 16, 2000 and October 5, 2000, we  transferred  to Equipment
Rental  for  Finance  Limited  title  to  225 of the  customized  kiosks  we had
purchased from NCR Limited in exchange for (pound)1,238,710 ($1,850,013),  which
represented  our  original  cost to purchase the kiosks from NCR. We have leased
these kiosks back through capital leases from Equipment  Rental for various five
year terms expiring in October 2005.  During the fiscal year ending December 31,
2001,  we  are  obligated  to  make  annual  lease  payments  of  (pound)325,398
($485,982).


                                       54
<PAGE>


     Cash Flows Evaluation

     Net cash used in operating activities for the years ended December 31, 2000
and 1999 was (pound)4,425,221  ($6,609,052) and (pound)3,349,855,  respectively.
Cash used in  operating  activities  in the year  ended  December  31,  2000 was
primarily the result of funds used to finance the trading loss offset to a large
extent by high cash collections from the receivables. In the year ended December
31,  1999  there was a large  increase  in  accounts  receivable  related to the
expansion of web contracts offset by an increase in deferred income and accounts
payable.

     Net cash used in investing activities for the years ended December 31, 2000
and 1999 was (pound)2,162,133  ($3,229,145) and (pound)2,461,376,  respectively.
Cash used in  investing  activities  in the year  ended  December  31,  2000 was
primarily  related to the purchase of equipment  and fixtures and the payment of
an earnout to the former owner of WWW.CO.UK.  Cash used in investing  activities
in the year ended December 31, 1999 was primarily  related to the  acquisitions.
We  will  continue  to  evaluate  further  sales  of  our  investments  and  the
acquisition  of  products,  businesses  and  technologies  that  complement  our
business.

     Net cash provided by financing  activities for the years ended December 31,
2000  and  1999  was   (pound)10,138,264   ($15,141,497)  and  (pound)6,424,398,
respectively.  Cash provided by financing  activities in the year ended December
31, 2000 was principally derived from four main sources: bank credit facilities;
a short term loan advanced from one of our directors; the sale of a 24.91% stake
in our BuyersGuide subsidiary pursuant to a public offering of its shares in the
U.K.;  and the  procurement  of  capital  leases  to  finance  the  purchase  of
equipment.  Cash provided by financing activities in the year ended December 31,
1999 was  primarily  attributable  to net  proceeds  from the issuance of common
stock. Cash used in financing activities in the year ended December 31, 1999 was
related  to the  payback  of the  debenture  loan  from a  shareholder  and  the
repayment of acquired overdrafts.

     Our BuyersGuide  subsidiary is an independent  public company because 24.9%
of  its  outstanding  capital  stock  is  publicly  traded  on  the  Alternative
Investment  Market of the  London  Stock  Exchange.  Because  of its status as a
publicly-traded  company,  BuyersGuide's  cash  reserves  may be  used  only  by
BuyersGuide, and we have no right to use such funds for our purposes.

     Capital and Certain Other Expenditures

     Our principal  capital  expenditures  for year 2000 consisted of kiosks and
equipment  for a total of  (pound)1.3  million  ($1.9  million).  Our  principal
capital expenditures for year 1999 consisted of kiosks and equipment for a total
of  (pound)3.0  million.  Our  principal  capital  expenditures  for  year  1998
consisted  of  equipment  for  a  total  of  (pound)139,000.  Principal  capital
expenditures  currently  in  progress  consist of  approximately  (pound)100,000
($150,000) to be spent in the year ending December 31, 2001 for equipment.

     Between  March 16, 2000 and October 5, 2000,  we  transferred  to Equipment
Rental  for  Finance  Limited  title  to  225 of the  customized  kiosks  we had
purchased from NCR Limited in exchange for (pound)1,238,710 ($1,850,013),  which
represented  our  original  cost to purchase the kiosks from NCR. We have leased
these kiosks back from Equipment  Rental for various five year terms expiring in
October 2005.  During the fiscal year ending December 31, 2001, we are obligated
to make annual lease payments of (pound)325,398 ($485,982).

      Our  principal  operating  leases  are  for  office  buildings  and  motor
vehicles.  In most cases, we expect that these operating  leases will be renewed
or replaced by other leases in the normal course of business.  During the fiscal
year ending  December 31, 2001,  we are  obligated to make minimum  annual lease
payments of (pound)297,200 ($443,868).


                                       55
<PAGE>


     Current and Future Financing Needs

      We have incurred  substantial  consolidated losses and negative cash flows
from  operations  since we started our business.  We expect to continue to incur
substantial  losses and  negative  cash flows for the  foreseeable  future as we
implement our new business strategy and integrate acquired  businesses.  At this
time,  funds from  operations are not sufficient to meet our operating needs and
other anticipated financial requirements.

      As of December 31, 2000, we had a consolidated  working capital deficit of
(pound)2,163,645  ($3,231,401)  and  cash and cash  equivalents  and  short-term
investments of  approximately  (pound)4.2  million ($6.3 million).  However,  we
cannot use these cash  reserves  for our own  purposes  because  they  represent
proceeds received by our BuyersGuide subsidiary from its public offering on July
24, 2000 on the Alternative Investment Market of the London Stock Exchange. As a
result of undertakings we gave in connection with BuyersGuide's offering,  these
cash reserves are to be retained for investment within BuyersGuide.

      Our current  plans for the next 12 months  exceed our current  cash,  cash
equivalents and short-term investments. As a result, we need to raise additional
funds in order to conduct our business.

     We expect to raise additional funds through:

          o    anticipated revenue growth, primarily from our Avatar Interactive
               subsidiary;

          o    the possible sale of one of our subsidiaries,  which we expect to
               complete during the fourth quarter of 2001;

          o    the  phased  sale of  another  subsidiary,  which  we  expect  to
               complete by the end of the second quarter of 2002.

          o    cost savings  realized from the  restructuring  of certain of our
               subsidiaries during 2000 and 2001; and

          o    the implementation of additional cost cutting measures.

      There can be no assurance that anticipated revenue growth will materialize
or that we will be able to realize sufficient proceeds from the possible sale of
our  subsidiaries,  if any such  sales can be  completed.  There  also can be no
assurance  that  anticipated   cost-savings   resulting  from  recent  corporate
restructurings and the implementation of additional  cost-cutting  measures will
be sufficient to meet our capital requirements.

     Other potential sources of financing include public or private sales of our
shares or debt, strategic  relationships and related parties. We do not have any
committed  sources  of  financing  at this  time  and we are  uncertain  whether
additional  funding  will be  available  when we need it on terms  that  will be
acceptable  to us or at all.  If we raise  funds by selling  additional  capital
shares,  the interests of our existing  shareholders will be diluted.  If we are
not able to  obtain  financing  when we need it, or if our  currently  available
funding  is  not  renewed,   we  may  be  required  to  curtail  our  operations
significantly,  including possibly closing some or all of our subsidiaries. Such
actions may have a material adverse affect on our business, financial condition,
results  of  operations  and  prospects.  Due  to  our  cash  position  and  the
uncertainties  concerning our ability to raise additional funds, our independent
auditors have included an explanatory paragraph in their report on our financial
statements for the fiscal year ended


                                       56
<PAGE>


December  31, 2000 which  describes  that
there are  substantial  doubts as to our ability to continue as a going concern,
as further described in Note 1 to our financial statements.

EFFECTS OF THE EURO

     Under the terms of the Treaty on  European  Economic  and  Monetary  Union,
commonly  referred to as the EMU, as of January 1, 1999, the euro was introduced
as a common  currency  among the eleven  members of the European  Union that are
participating in this phase of EMU. Although the individual  currencies of these
countries  will continue to be used until the end of 2001,  their exchange rates
with the euro are fixed. The euro is now being used for transactions that do not
involve payment using physical notes and coins of the  participating  countries.
The  individual  currencies  will be  replaced  with euro notes and coins at the
start of 2002  when  all  countries  participating  in the EMU are  expected  to
operate with the euro as their exclusive common currency.

     The  current  government  of the United  Kingdom had stated that the United
Kingdom would not  participate in EMU and adopt the euro until after the general
election,  at the earliest.  The general  election was held in June 2001 and the
United  Kingdom may enter the EMU  following  confirmation  of the  government's
decision through a referendum.

     We do not currently operate in any countries that have adopted the euro and
we therefore do not face a significant  currency or competitive  exposure to the
euro. However, in the future we may expand into a number of these countries.

     In the event  that the  United  Kingdom  adopts  the euro,  we would face a
number of costs in altering our accounting-related systems for the new currency,
although  at present it is too early to  estimate  what  these  costs  might be.
Adoption  of  the  euro  in  the  United   Kingdom  would  also  create  greater
transparency between prices offered to our customers in different countries that
participate in EMU.

     A significant  amount of uncertainty  exists as to the effect that the euro
will  have on the  marketplace.  We are  assessing  the  effect  that  the  euro
introduction  will have on our internal systems and the sale of our products and
services.  We expect to take  appropriate  actions  based on the results of this
assessment.  The  adoption  of the euro  has not had a  material  impact  on our
liquidity or financial condition.

ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES.

DIRECTORS AND SENIOR MANAGEMENT

     The names,  positions and ages of our directors and senior management as of
July 27, 2001 are as follows:

<TABLE>
<CAPTION>
                                                                                                        DIRECTOR'S
                                                                                         YEAR              TERM
NAME                                  AGE     POSITION                                 APPOINTED           EXPIRES
----                                  ---     --------                                 ---------         ---------
<S>                                   <C>     <C>                                        <C>               <C>
Viscount Edward James                 52      Chairman of the Board of Directors         1998              2001
   Wingfield Lifford
Robert P. Bradshaw                    51      Chief Executive Officer and                2000              2003
                                              Director
Richard I. Walker                     38      Chief Financial Officer and                1999              2002
                                              Director
Kevin R. Leech                        57      Director                                   1998              2001
Simon J. Ward                         56      Director                                   1998              2001
Robert L. Brisotti, Jr.               55      Director                                   2001              2003
</TABLE>


                                       57
<PAGE>




BACKGROUND INFORMATION CONCERNING AND DIRECTORS AND SENIOR MANAGEMENT

     VISCOUNT  EDWARD JAMES  WINGFIELD  LIFFORD.  Viscount  Lifford has been the
Chairman of our Board of Directors  since  December 1998. For the past 25 years,
Viscount Lifford has served as an investment manager to a wide range of clients.
In 1990, Viscount Lifford was affiliated with the firm Neilson Cobbold, where he
managed funds for clients.  That company was acquired by Rathbone  Bros.  Plc in
1996.  He is now a director of Rathbone  Bros.  Plc,  which is  responsible  for
managing  several  billion  pounds of  discretionary  money  both in the  United
Kingdom and internationally. He is also a director of Basepoint Plc.

     ROBERT P. BRADSHAW. Robert P. Bradshaw has been Chief Executive Officer and
a director of our company  since April 2000.  Since May 1999,  Mr.  Bradshaw has
been a director of Heritage  Great Britain plc, a United  Kingdom  company which
operates  landmark  visitor  attractions  in the U.K.  Since January  1999,  Mr.
Bradshaw  has served as a director  of Edge Hill  College  of  Education.  Since
January  2000,  Mr.  Bradshaw has served as a director of the  Villages  Housing
Association  Limited.  Mr. Bradshaw is a chartered  accountant and was a partner
with PricewaterhouseCoopers for almost 30 years in the North West of England. In
that time he had a  responsibility  for  advising  a number of  publicly  quoted
companies,  including  those in high  technology  industries  and also  provided
corporate finance advice and audit services to clients.

     RICHARD  I.  WALKER.  Richard I.  Walker has served as our Chief  Financial
Officer and as one of our directors  since August 1999.  Mr. Walker was educated
at The Manchester  Grammar  School.  Mr. Walker spent 12 years from 1985 to 1997
working for Baker Tilly,  a top 20 U.K.  accounting  practice,  qualifying  as a
Chartered Accountant in 1990. Pre-qualifying, Mr. Walker specialized in business
services at Baker Tilly,  undertaking  a number of director  level  secondments.
Post-qualifying,  he progressed to a position of senior  management within Baker
Tilly's Corporate Special Services Department,  acting as an advisor to numerous
public and limited companies spanning a range of industries,  including leisure,
real estate and retail,  amongst others. In 1997, he joined Colourweb (UK) Ltd.,
a company specializing in web printing, as Managing Director (acting).

      KEVIN R. LEECH.  Kevin R. Leech has been a director  of our company  since
December 1998.  Mr. Leech is the Executive  Chairman of ML  Laboratories  plc, a
United  Kingdom  company listed on the London Stock Exchange which is engaged in
the research and development of ethical pharmaceuticals and related products. He
is the co-founder of ML Laboratories  and controls 53% of its equity.  Mr. Leech
is also a  significant  shareholder  and  Chairman of  ci4net.com,  Inc., a U.S.
public company that invests in European  Internet  companies.  In addition,  Mr.
Leech is a  director  and  principal  shareholder  of  numerous  privately-owned
companies resulting from his role as a provider of private venture capital.  The
activities   of  the   companies  are  varied  and  include  other  leisure  and
technology-related  companies.  Mr. Leech is also the beneficial owner, directly
and indirectly,  of Glen  Investments  Limited and Glen UK Holdings  Limited,
respectively,  both of which are private investment companies.  In October 1998,
Mr. Leech was awarded an honorary  Doctorate of Laws degree from the  University
of Manchester.

     SIMON J.  WARD.  Simon J. Ward has been a  director  of our  company  since
December 1998. Mr. Ward became qualified as a chartered accountant in the United
Kingdom in 1968.  He joined the Middle East branch of Ernst & Young and became a
partner in 1974 where he worked in East  Africa,  Kuwait,  Saudi  Arabia and the
United Arab Emirates.  He returned to the United Kingdom in 1988 and established
the firm  Cuthbert  Ward in 1991,  which firm was later merged with Fellowes and
Co. to form CW Fellowes  Limited.  CW Fellowes Limited served as the independent
business  advisor of Avatar  Interactive  Limited  from 1995 to 1999.  Mr.  Ward
specializes in advising  growing  businesses  particularly  in an  international
environment.


                                       58
<PAGE>

     ROBERT L. BRISOTTI,  JR. Robert L. Brisotti, Jr. has been a director of our
company since April 2001. Mr.  Brisotti is a licensed  securities  broker and is
currently  the  Senior  Vice  President,  Investment  Banking  of Jesup & Lamont
Capital  Markets,  Inc. During the past 15 years,  Mr. Brisotti has held various
positions  in  analysis,  institutional  sales  and  investment  banking.  As an
investment banker, Mr. Brisotti has raised over $300 million for mostly emerging
growth  companies in the public and private debt and equity markets.  At a prior
firm, Mr. Brisotti was the lead investment banker in our May 1999 initial public
offering. From 1969 until 1986, Mr. Brisotti worked in a variety of positions in
the chemical industry, including as a Chemist with Rohm and Haas Company, and in
managerial positions with Olin Corporation and Union Carbide Corporation.

BACKGROUND INFORMATION CONCERNING CERTAIN KEY EMPLOYEES

     BRIAN  GREEN.  Brian  Green has served as our  Financial  Controller  since
November  1999 and as Company  Secretary  since June 2000.  Prior to joining our
company,  Mr.  Green was a director of CW Fellowes  Limited.  He was educated at
Emanuel School in London prior to spending eight years at a commodities  trading
firm  in  London.  In 1989 he  joined  the  largest  firm  of  French  Chartered
Accountants,  Guerard Viala. Mr. Green joined CW Fellowes in 1996 where he acted
as our business  advisor.  Mr. Green specializes in all aspects of financial and
management  accounting,  and was recently appointed to the board of directors of
our Avatar Interactive subsidiary.

     DR. CHRIS SCOTT. Dr. Chris Scott has served as Managing  Director of Avatar
Interactive  since  October  2000.  He joined  the  company  in April 2000 as an
Executive  Producer.  Since joining the company, he has played a leading role in
the  development of Avatar  Interactive's  new business  strategy,  planning its
restructuring, and generating new business. Previously, Dr. Scott was Commercial
Director of the University of Southampton's  information technology consultancy,
the IT Innovation  Centre,  which he co-founded in 1991, and was a member of the
initial  management team that  raised(pound)3  million in initial investment for
the Centre.  While at the Centre,  Dr. Scott was  responsible for developing new
business  areas  in  high  performance  computing  and  information   management
applications  and built a portfolio of  applications in connection with research
and development projects. From 1995 until 2000, Dr. Scott was project manager of
several  multi-partner  pan-European  IT  projects.  Dr.  Scott was  educated at
Edinburgh University, where he gained an honours degree in Mathematical Physics,
and at the University of Southampton, where he gained a PhD.

     ROBERT DILLON. Robert Dillon has been the Chairman and Managing Director of
our Morbria  Limited  subsidiary  since 1992.  Previously,  Mr. Dillon served in
various capacities with international  advertising  agencies such as Saatchi and
Saatchi, Leo Burnett Worldwide, Fortune Proseven 'Middle East', Garret Balcombe,
Rex Stuart  International,  Broughton Jacques and CAS Advertising,  during which
time he serviced  the  accounts of British  Airways,  BMW  Motorcars,  North Sea
Ferries,  HSBC Hong Kong, National Bank of Bahrain and Gulf Airways.  Mr. Dillon
was educated at Wigan School of Art and Design, where he earned a degree in Art,
Design and Photography.

     LUCY BOWDEN. Lucy Bowden co-founded BuyersGuide in 1996. From 1992 until
1995, Ms. Bowden was a senior salesperson with Kemps Directories, a publisher of
hard copy directories of suppliers to government agencies.

     JEFFREY  SPECTOR.  Jeffrey Spector founded our WWW.CO.UK group in 1994, and
became a director  of  WWW.CO.UK  in 1998.  Previously,  Mr.  Spector  worked in
various capacities for several media companies, primarily in connection with the
hotel,  theatre and cinema industries  including  Adelaide  Publishing  Limited,
Leisuretime Publishing Limited and The Ingleby Group.

                                       59
<PAGE>



COMPENSATION

     Compensation of Directors

     We have  entered  into  agreements  with our  independent  directors  which
provide  that each  independent  director,  other  than  Viscount  Edward  James
Wingfield Lifford, will be paid (pound)6,000 ($8,961) per year for attending all
of the  meetings  of our  Board of  Directors.  This  figure  was  increased  to
(pound)10,000  ($14,935) per year beginning  January 1, 2001. In addition to his
payment of (pound)6,000, Simon Ward received an additional (pound)625 ($933) for
his  service  as a member of the  audit  committee  of the  Board of  Directors.
Viscount  Lifford  was  paid  (pound)12,000  ($17,922)  per year to serve as the
Chairman of our Board of Directors.  This figure was increased to  (pound)20,000
($29,870)  per year  beginning  January 1,  2001.  Directors  who are  employees
receive no cash  compensation  for serving on the Board of Directors.  Directors
who  resigned  during  the  year  were  paid  pro  rata up to when  they  ceased
performing  duties for us. All directors  are  reimbursed  for their  reasonable
expenses  incurred to attend  meetings of the Board of Directors.  We anticipate
that our Board of  Directors  will hold  regularly  scheduled  meetings at least
quarterly.

     Compensation of Senior Management

     The  following  table  sets  forth all  compensation  we paid to our senior
management during the fiscal year ended December 31, 2000.

                           Summary Compensation Table
<TABLE>
<CAPTION>
                                                                        Long-Term
                                                                      Compensation
                                      Annual Compensation                 Awards
                                                                        Securities
                                                                        Underlying                                All Other
Name and Principal Position      Salary (pound)      Bonus (pound)     Options/SARs    Pension (pound)      Compensation (pound))
---------------------------      ---------------    ---------------    ------------   -----------------    ----------------------
<S>                                 <C>                 <C>               <C>                 <C>                  <C>
Robert P. Bradshaw (1).........       --                  --              170,000              --                     --
   Chief Executive Officer

Richard I. Walker..............     75,000              15,000            95,000              9,045                10,714(2)
   Chief Financial Officer
Andrew N. Lyndon-Skeggs (3)....    64,323(4)            20,000              --                 --                    7,948
   Former President/Director
</TABLE>
--------------------

(1)  Robert  P.  Bradshaw  became  our Chief  Executive  Officer  in April  2000
     pursuant to a Management  Agency  Agreement dated April 2000 among Heritage
     Great Britain plc, our company and Mr. Bradshaw. Mr. Bradshaw is a director
     of  Heritage  Great  Britain  plc. We did not pay any  compensation  to Mr.
     Bradshaw  for his service to us as a Chief  Executive  Officer  during year
     2000, but we did pay  management  fees of  (pound)64,638  to Heritage Great
     Britain plc. If you would like more information about our relationship with
     Heritage Great Britain plc, see "Item 7 -- Major  Shareholders  and Related
     Party Transactions."

(2)  Represents   health  care  allowances   of(pound)741   and  car  allowances
     of(pound)9,973.

(3)  Mr. Lyndon-Skeggs was a founder of our company and served as a director and
     President of our company from 1998 until December 1, 2000, when he resigned
     from our company and from the Board of Directors.

(4)  Includes a severance payment of(pound)23,489.



                                       60
<PAGE>

OPTION GRANTS DURING 2000

     The following table sets forth  information  concerning  options granted to
our directors and senior  management  during the fiscal year ended  December 31,
2000. All of the options listed in the table below represent options to purchase
our ordinary shares.

                                        Number of
                                         Options    Exercise Price   Expiration
Name                                    Granted(1)     Per Share        Date
----                                    ----------     ---------        ----
Viscount Edward James Wingfield Lifford.   30,000     (pound)2.77     4/14/10
                                           90,000     (pound)0.33    11/22/10
Robert P. Bradshaw.....................    50,000     (pound)2.18      5/4/10
                                           20,000     (pound)1.59     7/28/10
                                          100,000     (pound)0.33    11/22/10
Richard I. Walker .....................    20,000     (pound)1.59     7/28/10
                                           75,000     (pound)0.33    11/22/10
Kevin R. Leech ........................    60,000     (pound)0.33    11/22/10
Simon J. Ward .........................    60,000     (pound)0.33    11/22/10
Robert L. Brisotti, Jr.(2) ............     --             --             --
--------------------

(1)  Represents  options which have not vested. All of the options listed become
     fully  exercisable  on the date  which is three  years from the date of the
     grant.

(2)  Robert L.  Brisotti,  Jr.  became a  director  of our  company in April
     2001.

EXECUTIVE SHARE OPTION PLAN

     We operate a share  option plan,  The  Executive  Share Option Plan,  under
which our directors and employees may acquire ordinary shares.  Awards under the
plan are not  pensionable  and the plan is not designed to be a plan approved by
the U.K. Inland Revenue. A summary of the plan follows.

     Number of Ordinary  Shares.  An  aggregate  of 10% of the  ordinary  shares
issued and  outstanding  from time to time may be issued or  issuable  under the
plan and all other  employee  share schemes or plans which may be established by
us in the  future.  For the  purposes  of this  limit,  options  which  lapse or
ordinary shares held in treasury are not taken into account.

     Eligibility. Full-time executive directors and all employees of our company
and any of our subsidiaries (designated by the directors) who are not within two
years of their normal retirement date are eligible to participate in the plan.

     Grant of Options.  Options will be granted by our compensation committee, a
majority  of whose  members  consists of  independent  directors.  Options  will
normally only be granted concurrently with or within 42 days of the announcement
of our annual or interim results.

     Performance  Conditions.  The  compensation  committee  may  grant  options
subject to  performance  conditions  which are  intended to link the exercise of
options to sustained improvements in our underlying financial performance.

     Option Price.  Options will be granted at option prices to be determined by
the compensation  committee,  which, excluding options granted concurrently with
this  offering,  shall  not be less than  100% of the fair  market  value of the
ordinary  shares on the date of grant.  Fair market  value is defined as a value
for the ordinary  shares based on the closing  price of our American  Depositary
Shares,  as traded on the American  Stock  Exchange or the other  principal U.S.
market for our securities, on the business day

                                       61
<PAGE>


immediately  preceding  the  date of  grant.  Where  ordinary  shares  are to be
subscribed  on the  exercise of an option,  the option price cannot be less than
the nominal value of an ordinary share.

     Limitation  on  Employee  Participation.  An  employee's  participation  is
limited so that,  excluding any options granted concurrently with this offering,
the  aggregate  price  payable for ordinary  shares under option in any ten-year
period does not exceed a multiple of ten times the employee's remuneration. This
limit applies to options  granted under the plan and any other  executive  share
plan established by us or associated companies.

     Exercise of Options.  Options will normally be exercisable,  subject to any
performance condition being satisfied and the optionholder  remaining a director
or employee of ours or of any of our  subsidiaries,  on the third anniversary of
grant.  Options  may also be  exercised  early  in  certain  circumstances,  for
example,  upon an optionholder  ceasing to be an employee due to death,  injury,
ill health,  disability,  redundancy,  retirement,  or  following  our sale of a
subsidiary  or  division  in  which  the  optionholder   works,  or  in  certain
circumstances where the optionholder is transferred to work overseas,  or in the
event of a takeover or winding up of our company.  Options are not  transferable
and may only be exercised  by the persons to whom they are granted,  except that
in the case of the death of the optionholder,  options may be transferred to his
or her heirs or estate.

     Exchange of Options.  In the event we are taken  over,  optionholders  may,
subject to the consent of the  acquiring  company,  exchange  their  options for
options  for  ordinary  shares  or  shares in the  acquiring  company,  or other
associated compensation in the acquiring company.

     Issues of Ordinary  Shares.  Ordinary  shares  issued upon the  exercise of
options  will rank equally  with  ordinary  shares of the same class in issue by
reference to a prior record date.

     Variation  in Share  Capital.  Options  may be adjusted  following  certain
variations in our share capital, including a capitalization or rights issue.

     Termination of the plan. No options may be granted under the plan after the
tenth anniversary of the adoption of the plan.

     Amendments.  The  directors  may  amend the plan,  except  that  amendments
relating to  eligibility  to  participate  in the plan,  the  limitations on the
benefits of  optionholders  under the plan, the number of ordinary  shares which
may be issued under the plan, and the basis for  determining  the exercise price
of options  may not be made to the  advantage  of  optionholders  without  prior
approval of our shareholders in a general  meeting,  except for minor amendments
relating to tax and  administrative  matters.  Additionally no amendments  which
would adversely effect the rights of existing  optionholders may be made without
their consent.

PENSION PLAN

     We sponsor a defined contribution pension plan for our directors,  officers
and  employees.  All  employees  are  eligible  to join  the  plan  and can make
contributions  into the plan. At the  discretion  of our board of directors,  we
contribute  amounts up to 10% of participating  employees'  annual  compensation
into the plan.  Total  contributions  for all  employees  for the  period  ended
December  31,  2000  were  (pound)68,476   ($102,269),  of  which  (pound)21,391
($31,947)  was set aside for our directors  and senior  management.  The plan is
administered by Pembroke Asset Management Ltd., Southampton, United Kingdom.


                                       62
<PAGE>



BOARD PRACTICES

     Our  amended  Articles  of  Association  provide  that at the first  annual
general  meeting of our  shareholders,  all of our  directors  shall retire from
office, but they can nominate  themselves for election as directors.  In English
companies,  when a director  ceases to be a  director,  whether  voluntarily  or
otherwise,  we say that the director has "retired." Our directors are subject to
retirement by rotation.  At every one of our subsequent annual general meetings,
one-third  of our  directors  who are subject to  retirement  by rotation or, if
their  number is not  three or a  multiple  of  three,  the  number  nearest  to
one-third  of our  directors,  shall  retire from  office.  If there is only one
director who is subject to retirement by rotation,  that director  shall retire.
Subject to the  provisions  of the U.K.  Companies  Act 1985,  the  directors to
retire by rotation  shall be those who have been  longest in office  since their
last  appointment  or  retirement.  As between  persons  who became or were last
reappointed  directors on the same day,  those to retire shall be  determined by
lot unless they  otherwise  agree  among  themselves.  If a director  retires by
rotation  and the  vacancy  is not  filled  by the  shareholders,  the  retiring
director  shall be  deemed  to have  been  reappointed  if he is  willing  to be
reappointed.  However,  the director in that situation shall not be deemed to be
reappointed,  if  the  shareholders  determine  not to  fill  the  vacancy  or a
resolution  to  reappoint   the  director  is  voted  upon  and  defeated.   Our
shareholders  holding a majority of our ordinary  shares may remove any director
from office at any time, with or without cause.

     We granted to the  representative of the underwriters in our initial public
offering  the right,  for a period of five years  from May 1999,  to  nominate a
designee of the  representative  for election to our board of directors.  If the
representative  elects not to exercise this right, then the  representative  may
designate  one  person  to  attend  meetings  of our  board  of  directors.  The
representative's  designee  has attended  our board  meetings,  but has not been
elected to our board.

     Non-executive   directors  are  not  entitled  to  any  benefits  or  other
remuneration  upon the termination of their  affiliation  with our company,  but
may, upon the discretion of the board of directors,  remain  entitled to acquire
ordinary shares of our common stock pursuant to the Executive Share Option Plan.
Under the terms of their  employment  agreements with us, Robert P. Bradshaw and
Richard I.  Walker,  both  executive  directors of our  company,  may,  upon the
discretion of the board of directors,  be entitled to acquire ordinary shares of
our common stock pursuant to the Executive Share Option Plan.

COMMITTEES OF THE BOARD OF DIRECTORS

     Our Board of Directors has appointed an Audit  Committee and a Compensation
Committee.

     Audit Committee.  The Audit Committee has the authority and  responsibility
to:

     o    recommend to our Board of Directors  independent public accountants to
          be nominated for shareholder  ratification to audit our books, records
          and  financial  statements  and to review our  systems  of  accounting
          (including our systems of internal control);

     o    discuss with our independent  public accountants the results of audits
          and reviews;

     o    conduct  periodic  independent  reviews of our  systems of  accounting
          (including systems of internal control); and

     o    make reports  periodically  to our Board of Directors  with respect to
          its findings.

     The  current  members of the Audit  Committee  are  Viscount  Edward  James
Wingfield Lifford, Simon J. Ward and Robert L. Brisotti, Jr.

                                       63
<PAGE>


     Compensation  Committee.  The  Compensation  Committee is  responsible  for
administering the operation of our share option plan and for recommending to our
board of directors compensation plans and arrangements,  including awards of any
stock  options,  with  respect to our  executive  officers,  directors,  and key
personnel. The current members of the Compensation Committee are Viscount Edward
James Wingfield Lifford,  Simon J. Ward and Robert L. Brisotti, Jr. Our board of
directors does not currently have and does not currently  intend to establish an
executive  committee or a nominating  committee,  as those  functions  are to be
performed by our entire board of directors.

EMPLOYMENT AGREEMENTS

     We have entered into employment  agreements with our executive officers and
key  employees.  Each of these  employment  agreements is not  restricted  for a
particular  period of time, and provides,  among other things,  that each of the
employees party thereto shall provide  services to us on a full-time  basis. The
agreements are cancelable by either party on short notice (generally 30-90 days'
notice). The agreements contain post-termination  restrictive covenants relating
to non-competition with us, non-solicitation of our customers,  non-dealing with
our customers and non-solicitation of our suppliers and employees.  In addition,
each employment  agreement  contains an express obligation of confidentiality in
respect of our trade secrets and confidential information and provides for us to
own any intellectual property rights created by the executives and key employees
in the course of their employment.

     Each of our executive  officers has the right to  participate  in our share
option schemes and plans. If any of our directors is removed from office without
cause on less than six months'  notice,  the director  will  continue to receive
fees for attending directors' meetings for the balance of the six months.

EMPLOYEES

     As of July 27, 2001, we employed 187 full-time and nine part-time employees
(including executive officers) and 20 independent contractors, of whom:

     o    13 are senior management personnel;

     o    75 are design, production and technical personnel;

     o    56 are sales and marketing personnel; and

     o    43 are administrative personnel.

     We have 179  employees  in the United  Kingdom and eight  employees  in the
United States.

     Our employees are not represented by a union or other collective bargaining
organization and we have never experienced a work stoppage.  We believe that our
employee relations are good.

     The  average   number  of  employees   employed  by  our  company  and  our
subsidiaries during the years ended December 31, 1998, 1999 and 2000 were 26, 55
and 204  respectively.  The sharp rise in  average  employees  employed  between
fiscal  years 1999 and 2000 was due to the  acquisitions  being only counted for
part of the year in 1999, whereas they were fully counted for the entire year in
2000.  In 1998,  we had no  subsidiaries  and  therefore  the average  employees
throughout the year was based on one entity.


                                       64
<PAGE>


SHARE OWNERSHIP OF SENIOR MANAGEMENT

     The  table  below  sets  forth  certain  information  concerning  the share
ownership of our directors and senior management as of July 27, 2001.

<TABLE>
<CAPTION>

                                                   NUMBER OF
                                                   ORDINARY
                                    NUMBER OF     SHARES WHICH                                                   PERCENTAGE OF
                                    ORDINARY         MAY BE            RANGE OF                                 ORDINARY SHARES
                                     SHARES      ACQUIRED UNDER    EXERCISE PRICES       RANGE OF EXPIRATION     BENEFICIALLY
NAME                                OWNED(1)     OPTION PLANS(2)   OF OPTIONS(POUND)       DATES OF OPTIONS        OWNED (3)
---------------------------------  ------------  --------------  ----------------------  --------------------  ------------------
<S>                                    <C>           <C>               <C>                   <C>                         <C>
Viscount Edward James
   Wingfield Lifford ............      19,000        135,000           0.33-6.19             5/05/09-11/22/10             *
Robert P. Bradshaw ..............          --        170,000           0.33-2.18             5/04/10-11/22/10            --
Richard I. Walker ...............          --        145,000           0.33-4.33             7/27/09-11/22/10            --
Kevin R. Leech(4) ...............          --         70,000           0.33-6.19             5/05/09-11/22/10            --
Simon J. Ward ...................       5,000         70,000           0.33-6.19             5/05/09-11/22/10             *
Robert L. Brisotti, Jr. .........      13,783             --               --                       --                    *

</TABLE>
---------------------

     *    Represents less than 1%.

     (1)  Represents  shares owned  beneficially by the named  individual  other
          than those shares  which may be acquired  under our  company's  option
          plans. Unless otherwise noted, all persons referred to above have sole
          voting and sole investment power.

     (2)  Includes  all  shares  which  the  named  individual  has the right to
          acquire under all vested and unvested  options and warrants granted to
          such individual under our company's option plans.

     (3)  This information is based on 10,033,009 ordinary shares outstanding as
          of July 27,  2001.  Ordinary  shares  subject to  options  exercisable
          within 60 days are deemed  outstanding  for computing  the  percentage
          ownership  of the  person  holding  the  options  but are  not  deemed
          outstanding  for  computing  the  percentage  ownership  of any  other
          person.

     (4)  Mr. Leech is a  significant  shareholder  and director of our company.
          This table does not include  850,000  ordinary  shares issuable at any
          time upon the  conversion  of a like  number of 9% Series A  preferred
          shares owned by Glen Investments  Limited,  or 772,174 ordinary shares
          that are owned by Glen UK Holdings  Limited.  Mr.  Leech is a director
          and the sole  shareholder of Glen  Investments  Limited,  which is the
          sole shareholder of Glen UK Holdings Limited. This table also does not
          include 1.0 million ordinary shares that are owned of record by Milner
          Laboratories  Limited,  of which Mr. Leech owns 68% of the outstanding
          share capital. By virtue of owning, directly or indirectly, at least a
          majority of the outstanding share capital of Glen Investments Limited,
          Glen UK Holdings Limited and Milner  Laboratories  Limited,  Mr. Leech
          may be deemed to  beneficially  own all of the ordinary  shares of our
          company  held by these  companies  because of his  ability to exercise
          sole investment and dispositive  power over such shares.  In addition,
          this table does not include 97,268  ordinary  shares that are owned of
          record  by  ci4net.com,  Inc.,  of  which  Mr.  Leech  owns 40% of the
          outstanding share capital. Mr. Leech disclaims beneficial ownership of
          the  ordinary  shares  owned by  ci4net.com.  This table also does not
          include  4,225,254  ordinary  shares that are owned by Raven  Ventures
          Limited.  The Raven Trust,  a trust  administered  by Abacus  Trustees
          (Guernsey)  Limited,  as sole trustee for the benefit of Mr. Leech and
          his family,  is the sole  shareholder of Raven Ventures  Limited.  Mr.
          Leech is not a trustee of The Raven Trust or a stockholder or director
          of Raven  Ventures  Limited,  and  therefore he  disclaims  beneficial
          ownership  of the  ordinary  shares  of our  company  owned  by  Raven
          Ventures Limited.


                                       65
<PAGE>


ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS.

MAJOR SHAREHOLDERS

         The following  table  contains  information  regarding  the  beneficial
ownership of our ordinary shares,  including our American  Depositary Shares, as
of July 27, 2001 for all shareholders known by us to beneficially own 5% or more
of our ordinary shares.

<TABLE>
<CAPTION>
                                                           Number of        Percentage of Outstanding
                                                        Ordinary Shares          Ordinary Shares
Name of Beneficial Owner                               Beneficially Owned        Beneficially Owned(1)
------------------------------------                   ------------------   --------------------------
<S>                                                        <C>                        <C>
Raven Ventures Limited (2) .........                       4,225,254                  42.1%
Kevin R. Leech,
   Glen Investments Limited,
   Glen UK Holdings and
   Milner Laboratories Limited (3) ..                      2,622,174                  26.1%

</TABLE>
--------------------

(1)  The information in this table is based on our records, information provided
     to us by our directors and executive officers and a review of any Schedules
     13D and 13G filed by our  shareholders  with the  Securities  and  Exchange
     Commission. Beneficial ownership is determined in accordance with the rules
     of the  Securities and Exchange  Commission and includes  shares over which
     the indicated  beneficial owner exercises voting and/or  investment  power.
     Our ordinary shares subject to options or warrants currently exercisable or
     exercisable  within  60 days  are  deemed  outstanding  for  computing  the
     percentage  ownership of the person holding the options or warrants but are
     not deemed outstanding for computing the percentage  ownership of any other
     person. This information is based on 10,033,009 ordinary shares outstanding
     as of July 27, 2001.

(2)  The  Raven  Trust,  a trust  administered  by  Abacus  Trustees  (Guernsey)
     Limited, as sole trustee, for the benefit of Kevin R. Leech and his family,
     is the sole  shareholder  of Raven  Ventures  Limited.  Mr.  Leech is not a
     trustee of The Raven Trust or a  stockhlder  or director of Raven  Ventures
     Limited,  and therefore he disclaims  beneficial  ownership of the ordinary
     shares of our company owned by Raven Venture Limited.

(3)  Consists  of: (i)  850,000  ordinary  shares  issuable at any time upon the
     conversion  of a like number of 9% Series A preferred  shares owned by Glen
     Investments Limited; (ii) 772,174 ordinary shares owned by Glen UK Holdings
     Limited; and (iii) 1.0 million shares owned by Milner Laboratories Limited.
     Mr. Leech is the sole shareholder of Glen Investments Limited, which is the
     sole shareholder of Glen Uk Holdings Limited. Mr. Leech alo owns 68% of the
     outstanding  share  capital of Milner  Laboratories  Limited.  By virtue of
     owning,  directly or  indirectly,  at lease a majority  of the  outstanding
     share  capital of Glen  Investments  Limited,  Glen UK Holding  Limited and
     Milner Labororatories  Limited, Mr. Leech may be deemed to beneficially own
     all of the ordinary shares of our company held by these  companies  because
     of his ability to exercise sole investment and dispositive  power over such
     shares. Does not include 97,276 ordinary shares owned by ci4net.com,  Inc.,
     of  which  Mr.  Leech  disclaims  beneficial  ownership.  Mr.  Leech is the
     Chairman of ci4net.com, Inc., and owns 40% of its outstanding common stock.
     Also does not include  4,225,254  ordinary  shares owned by Raven  Ventures
     Limited,  of which  Mr.  Leech  disclaims  beneficial  ownership.  For more
     information about Raven Ventures Limited, see footnote (2) above.

     9% Series A Preferred Shares

     As of July 27, 2001, there were 850,000 9% Series A preferred shares issued
and  outstanding.  These  shares  are owned by Kevin R.  Leech.  The 9% Series A
preferred shares have no voting rights and are not redeemable,  except by mutual
agreement  of our company and Mr.  Leech.  The 9% Series A preferred  shares are
convertible into our ordinary shares, at the option of Mr. Leech, at any time at
a conversion price equal to (pound)8.03 ($12.00) per share. For more information
regarding our 9% Series A preferred shares, see "Item 5. Operating and Financial
Review and Prospects-Liquidity and Capital Resources" and "Item 7. Related Party
Transactions."


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<PAGE>


     Significant Changes in Ownership of Ordinary Shares

     On March 20, 2001,  Kevin R. Leech, a significant  shareholder and director
of our company, purchased from John and Lucy Bowden, shareholders of our company
and the former owners of our BuyersGuide plc subsidiary, 725,254 ordinary shares
of our company which they owned, at a purchase price of (pound)0.83  ($1.20) per
share, or approximately  (pound)605,429  ($870,304),  pursuant to the terms of a
share  option  agreement  entered  into by the Bowdens and Mr. Leech in December
2000.  Pursuant to the terms of the share option agreement,  the Bowdens had the
right to "put" such shares to Mr.  Leech at any time  between  February 16, 2001
and March 16, 2001. The Bowdens  exercised  their right to "put" these shares to
Mr.  Leech on March  16,  2001.  The  ordinary  shares  purchased  by Mr.  Leech
represent  approximately 7.2% of the outstanding ordinary shares of our company,
and were  purchased  by Mr.  Leech as  nominee  for Raven  Ventures  Limited,  a
corporation  wholly-owned  by The  Raven  Trust  and  the  beneficial  owner  of
approximately  42.1% of our  outstanding  ordinary  shares.  On May 3, 2001, Mr.
Leech  transferred  the  ordinary  shares  acquired  from the  Bowdens  to Raven
Ventures  Limited.  No  consideration  was paid to Mr.  Leech by Raven  Ventures
Limited for these shares. The 725,254 ordinary shares purchased by Mr. Leech and
subsequently  transferred to Raven  Ventures  Limited are reflected in the table
set forth above entitled "Major Shareholders".

     Securities and Record Holders in the United States

     As of July 27,  2001,  2,567,400  of our ordinary  shares,  represented  by
American Depositary Shares, were held by 29 U.S. record holders.

RELATED PARTY TRANSACTIONS

      Prior to our initial public offering, we financed our operations primarily
through a discretionary  operating line of credit with Glen Investments Limited,
a  corporation  wholly-owned  by Kevin R. Leech, a  significant  shareholder and
director  of our  company.  Upon the  closing of our  initial  public  offering,
(pound)850,000  of the outstanding  balance was converted into 850,000 shares of
our 9%  Series  A  preferred  stock.  The  remaining  balance  of  approximately
(pound)1,600,000,  was repaid from the net proceeds  received from the offering.
Upon payment of the remaining balance, the facility was discontinued.

     As at  December  31,  2000,  we had  received  a  working  capital  loan of
(pound)2,400,000 ($3,584,400) from Kevin R. Leech. The loan bears interest at 2%
above the U.K. base rate, which was 6% per annum as at December 31, 2000, and is
repayable  on the earlier of January 5, 2002 or our receipt of the net  proceeds
from the realization of any of our investments.

      Both prior to and  subsequent  to the  completion  of our  initial  public
offering,  we sold  significant  services  to and  purchased  certain  goods and
services from certain  subsidiaries of Glen  Investments  Limited and ci4net.com
Inc., a United States  publicly-traded  company.  Kevin R. Leech is the Chairman
and beneficially  owns  approximately  40% of the outstanding  shares of capital
stock of ci4net.com Inc.

      ci4net.com,  Inc.  has  majority  interests  in  companies to whom we have
provided  exclusive Web site development  services.  In the years ended December
31,  2000,  1999 and 1998,  ci4net.com  directly  accounted  for  revenues to us
totaling   (pound)226,836   ($338,779),   (pound)1,186,175  and  (pound)163,397,
respectively. As of the end of the years ended December 31, 2000, 1999 and 1998,
we   had   accounts   receivable   due   from   ci4net.com   of   (pound)22,619,
(pound)1,222,925 and (pound)235,000,  and deferred income of zero, (pound)23,285
and  (pound)136,603,   respectively.   The  (pound)22,619  receivable  due  from
ci4net.com  as of December  31,  2000 has been fully  provided  for.  Additional
customers in which ci4net.com has a majority interest  accounted for revenues to
us totaling  (pound)480,621 and (pound)2,260,525 in the years ended December 31,
2000 and 1999, and deferred income of zero and (pound)813,625, respectively. As
of the end of the years ended December  31,  2000 and

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<PAGE>


1999,  we  had  accounts  receivable  due from  such  companies of (pound)57,576
($197,488) and (pound)3,491,600, respectively.  Out of the (pound)57,576 balance
due, as of December 31, 2000 we had provided for (pound)52,373.

     Planet Edge Limited,  a former  subsidiary of ci4net.com,  is a provider of
Web site development and hosting services for Avatar Interactive Limited. Planet
Edge also provides secure e-commerce transaction and Web site hosting facilities
to Morbria which Morbria's subsidiary, Graphic Palette,  resells to its clients.
The  company   purchased   goods  and   services   from  Planet  Edge   totaling
(pound)152,899,  (pound)738,680  and (pound)111,422 for the years ended December
31, 2000,  1999,  and 1998,  respectively.  At December  31, 2000 and 1999,  the
outstanding balances payable were nil and (pound)247,642, respectively.

     On December 12, 2000,  we entered into  agreements  with Kevin R. Leech and
ci4net.com to settle all outstanding  obligations among our company,  ci4net.com
and their operating subsidiaries. Under the terms of these agreements, we agreed
to sell to  ci4net.com  4,482,759  shares  of our  BuyersGuide  plc  subsidiary,
representing 5.14% of its outstanding shares, in exchange for (pound)1.3 million
($1.94  million),  or (pound)0.29  ($0.41) per share,  and Planet Edge agreed to
cancel  the  accounts  receivable  we  owed  it,  which  equaled   approximately
(pound)360,000  ($538,000). In addition, we agreed to cancel accounts receivable
of  approximately  (pound)623,000  ($886,000)  owed to our  Graphic  Palette and
Centrix  Communications  subsidiaries  by  certain  ci4net.com  subsidiaries  in
exchange  for an  assignment  from  ci4net.com  of a  (pound)524,000  ($745,000)
obligation   owed   to   ci4net.com   by   UKPropertyChannel.com   Limited.   As
consideration,  we received  1,098,280  shares of the common stock of ci4net.com
valued at approximately  (pound)1.5 million ($2.1 million),  or $2.00 per share,
the closing  price of  ci4net.com's  common stock on the OTC  Bulletin  Board on
December 12, 2000. Kevin Leech, a principal shareholder of ci4net.com,  provided
the  1,098,280  shares of common  stock that were  required to  consummate  this
transaction.  These shares are presently  unregistered.  We and ci4net.com  have
agreed that these  shares may be  registered  with the  Securities  and Exchange
Commission in due course, free from any encumbrances.

      Prior to our September 1999  acquisition of Morbria  Limited,  Morbria was
controlled  by  Glen  UK  Holdings  Limited,  a  company  wholly-owned  by  Glen
Investments  Limited.  The sole shareholder of Glen Investments Limited is Kevin
R.  Leech,  a  significant  shareholder  and  director of our  company.  Glen UK
Holdings  Limited  received 772,174 of our ordinary shares valued at $5,019,131,
or $6.50 per share,  in connection  with our acquisition of the Morbria group of
companies.

      Morbria has a number of customers who are  affiliates of Glen  Investments
Limited.  Revenues  from these  companies  from  September 24, 1999 (the date of
acquisition of Morbria), to December 31,1999 were (pound)438,542.  Revenues from
these companies for the year ended December 31, 2000 were  (pound)1,027,683.  At
December  31,  2000  and  1999,  these  companies  owed  us  (pound)291,748  and
(pound)827,952, respectively, for services we had rendered to them.

     In March 2000, we paid  (pound)500,000  ($746,750) to John and Lucy Bowden,
the  former  owners of our  BuyersGuide  subsidiary,  pursuant  to the terms and
provisions of the agreement by which we acquired  BuyersGuide.  Lucy Bowden is a
director of BuyersGuide.  Pursuant to the BuyersGuide acquisition agreement, the
Bowdens  assigned  97,276  ordinary  shares of our company to ci4net.com,  which
agreed to sell the shares,  passing the proceeds on to our  company.  The shares
have not yet been sold and there can be no  assurance  that our share price will
be sufficiently high in the future for us to fully recoup the (pound)500,000. In
addition,  pursuant to the terms of the BuyersGuide  acquisition  agreement,  in
July  2000,  a further  payment  of  (pound)500,000  ($746,750)  was made to the
Bowdens.  The Bowdens also were issued 336,141  ordinary  shares of our company,
and 87,791 ordinary shares classed as option shares. Upon the sale of the 87,791
option  shares,  the sale proceeds are to be paid in full to our company.  These
shares remain unsold and there can be no assurance  that our share price will be
sufficiently high in the future for us to fully recoup the (pound)500,000.


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<PAGE>


     Robert P.  Bradshaw,  our Chief  Executive  Officer,  is also a director of
Heritage Great Britain plc, a U.K.-based company. In the year ended December 31,
2000, we purchased (pound)64,638 ($96,537) worth of services from Heritage Great
Britain  plc.  As of December  31,  2000,  we owed  Heritage  Great  Britain plc
(pound)5,875  ($8,774)  for such  services.  During the year ended  December 31,
2000, we sold (pound)20,149  ($30,092) worth of Web site development services to
Heritage Great Britain plc.

     Simon J. Ward, a director of our company, is also a director of CW Fellowes
Limited,  which serves as our independent  business advisor.  In the years ended
December 31, 2000, 1999 and 1998, CW Fellowes  supplied  services to us totaling
(pound)27,413,  (pound)176,430 and (pound)68,395,  respectively.  As of December
31, 2000, we owed CW Fellowes (pound)18,935 for services rendered.


ITEM 8.  FINANCIAL INFORMATION.

CONSOLIDATED AND SUPPLEMENTAL FINANCIAL STATEMENTS

     Our financial statements and supplemental  financial statement schedule set
forth  in the  accompanying  Index  to  Consolidated  Financial  Statements  and
Supplemental Financial Statement Schedule included in this Report following Part
III beginning on pages F-1 and S-1,  respectively,  are hereby  incorporated  in
this Report by reference. Our consolidated financial statements and schedule are
filed as part of this Report.

LEGAL PROCEEDINGS

     We are  not  involved  in  any  material  pending  or,  to  our  knowledge,
threatened legal proceedings. We may from time to time become a party to various
legal proceedings arising in the ordinary course of business.

ITEM 9.  THE OFFER AND LISTING.

NATURE OF TRADING MARKET

     Our ordinary  shares are not directly  publicly traded in the United States
or any foreign market. Our American Depositary Shares are traded on the American
Stock Exchange.  Each American  Depositary  Share represents one ordinary share.
Price  quotations  for our  American  Depositary  Shares  were  reported  on the
American Stock  Exchange under the symbol "TPN"  beginning on May 5, 1999. As of
July 27, 2001, we had 10,033,009 ordinary shares issued and outstanding of which
2,200,000 are represented by American  Depositary  Shares  evidenced by American
Depositary  Receipts  issued by Bankers  Trust  Company,  as  depositary.  As of
December 31, 2000, all 2,200,000 of our American  Depositary Shares were held of
record by one registered holder, our depositary,  a United States company.  This
represents approximately 22% of our outstanding ordinary shares.

     The following table sets forth the high and low closing sale prices for our
American Depositary Shares on the American Stock Exchange, from the beginning of
trading  on May 5, 1999 to July 27,  2001.  Such  prices do not  reflect  retail
markup,  markdown  or  commissions  and may  not  necessarily  represent  actual
transactions.

                                                HIGH                 LOW
                                                ----                 ---

FIVE MOST RECENT FINANCIAL YEARS
--------------------------------
Year ended December 31, 1996 .........          --                   --
Year ended December 31, 1997 .........          --                   --
Year ended December 31, 1998 .........          --                   --


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<PAGE>


Year ended December 31, 1999 .........        $10.125               $4.250
Year ended December 31, 2000 .........        $ 9.375               $0.313

FISCAL 1999
-----------
   Second Quarter (from May 1999) ....        $10.125              $ 6.625
   Third Quarter .....................        $ 9.375              $ 6.250
   Fourth Quarter ....................        $ 7.875              $ 4.250

FISCAL 2000
-----------
   First Quarter .....................        $ 9.375              $ 4.875
   Second Quarter ....................        $ 6.000              $ 1.625
   Third Quarter .....................        $ 3.250              $ 1.000
   Fourth Quarter ....................        $ 1.500              $ 0.313


                                                HIGH                 LOW
                                                ----                 ---

MOST RECENT SIX MONTHS
----------------------
   January 2001 ......................        $ 0.750              $ 0.500
   February 2001 .....................        $ 0.510              $ 0.420
   March 2001 ........................        $ 0.420              $ 0.150
   April 2001 ........................        $ 0.400              $ 0.180
   May 2001 ..........................        $ 0.510              $ 0.160
   June 2001 .........................        $ 0.510              $ 0.310
   July 2001 (through July 27) .......        $ 0.310              $ 0.300


DIVIDEND INFORMATION

     We have  never  paid  cash  dividends  on our  ordinary  shares  and do not
anticipate  paying cash  dividends  on our  ordinary  shares in the  foreseeable
future. In addition, the terms of our 9% Series A preferred shares do not permit
us to pay cash  dividends  on our  ordinary  shares  in any year  unless we also
declare  and pay a 9%  non-cumulative  dividend on our  outstanding  9% Series A
preferred shares.

REGISTRAR, TRANSFER AGENT AND DEPOSITARY

     Lloyd's TSB Registrars  acts as our registrar and transfer  agent.  Bankers
Trust  Company acts as our  depositary  with respect to our American  Depositary
Receipts.

ITEM 10.  ADDITIONAL INFORMATION.

MEMORANDUM OF ASSOCIATION AND ARTICLES OF ASSOCIATION

     Set forth below is information  concerning our equity capital structure and
related  summary  information   concerning   provisions  of  our  Memorandum  of
Association  and amended  Articles of Association  and  applicable  English law.
Since it is a summary,  it does not contain all of the  information  that may be
important  to you,  and the summary is qualified in its entirety by reference to
the U.K.  Companies  Act 1985 and our  Memorandum  of  Association  and  amended
Articles of Association.  A Copy of our amended Articles of Association has been
filed as an exhibit to this annual report on Form 20-F. See "Item 19. Exhibits."

     We are  incorporated  under the name TPN  Holdings  plc and our  company is
registered in England and Wales with the registered number 3608347. Our Articles
of  Association  do not include a stated


                                       70
<PAGE>


purpose.  Our  Articles of  Association  grant  to us a wide range  of corporate
capabilities to effect these objectives.

BOARD ACTION AND POWERS

     Our  amended   Articles  of  Association   provide  that  unless  otherwise
determined by ordinary  resolution,  our board of directors shall consist of not
less than two nor more than 10 members.

     Except as noted below,  the board of directors  may at any time appoint any
person to be a director  either to fill a vacancy or as an additional  director,
provided  that the  number  of  directors  does not  exceed  10.  Any  person so
appointed by the board of directors shall hold office only until the next annual
general meeting of  shareholders  and shall then be eligible for election by the
shareholders,  but shall not be taken into account in determining  the number of
directors who are to retire by rotation at such meeting as set out below.

     Our board is divided into three classes,  each serving staggered three year
terms.  Under this  classified  structure,  at each  annual  general  meeting of
shareholders,  one-third of our directors (or, if their number is not a multiple
of three, the number nearest to but not greater than one-third) must retire from
office by rotation. The directors to retire by rotation shall include (as far as
may be  necessary  to obtain the number  required)  any  director  who wishes to
retire and not to offer  himself for  re-election,  and shall then include those
members  who have  served  the  longest  on the board of  directors.  A retiring
director is eligible for immediate re-election.  A classified board of directors
may have the effect of deterring  or delaying  any attempt to obtain  control of
our company by a proxy contest since any person  seeking  control would need two
separate annual meetings of the shareholders in order to elect a majority of the
members of our Board of Directors.

     Any  provisions  of the U.K.  Companies  Act 1985 or other  United  Kingdom
statutes  applicable  to us which would have the effect of rendering  any person
ineligible  for  appointment  as a  director  or liable  to  vacate  office as a
director  by virtue of his having  reached  any  specified  age or of  requiring
special notice or any other special formality in connection with the appointment
or election of any director over a specified age, do not apply to us.

     Directors  are not  required to hold any of our  ordinary  shares by way of
qualification.  A  director  who  is not a  shareholder  shall  nevertheless  be
entitled to attend and speak at shareholders' meetings.

     Borrowing Powers

     Subject to the limitations  noted below, the directors may exercise all our
powers to borrow money and to mortgage or charge our  undertaking,  property and
uncalled capital or any part or parts thereof, and to issue debentures and other
securities,  whether outright or as collateral security for any debt,  liability
or obligation  of us or of any third party.  The  directors  shall  restrict our
borrowings and exercise all voting and other rights, powers or control or rights
of influence exercisable by us and any of our subsidiaries or in relation to our
subsidiaries so that the aggregate amount for the time being  outstanding of all
money borrowed by us and for the time being  remaining  outstanding of all money
borrowed by us (exclusive of borrowings  owed by us to any  subsidiary or by any
subsidiary  to us or  another  subsidiary)  shall  not at any time  without  the
previous sanction of an ordinary  resolution of our shareholders  exceed the sum
of two times shareholders equity as set forth in our consolidated  balance sheet
for  our  most  recent  fiscal  year,  from  time to  time,  as  audited  by our
independent public accountants.


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<PAGE>

     Compensation and Expenses

     The  compensation  of the  directors  is  determined  by  the  Compensation
Committee  of our  board  of  directors  but  may  not in the  aggregate  exceed
(pound)250,000  ($415,700) per year  (disregarding  any compensation  payable to
directors in their  capacity as  executives)  or such higher  amount as may from
time to  time  be  determined  by an  ordinary  resolution  of our  board.  Such
compensation  shall  (unless such  resolution  otherwise  provides) be divisible
among the directors as they may agree or,  failing  agreement,  equally,  except
that any  director  who holds office for only part of the period with respect to
which such compensation is payable is entitled only to rank in such division for
a  proportion  of  compensation  related to the period  during which he has held
office.  Any director who holds any executive office (including for this purpose
the  office  of  chief  executive  officer  or  vice-chairman  of the  board  of
directors,  whether or not such office is held in an executive  capacity) or who
serves on any committee of the  directors,  or who otherwise  performs  services
which in the opinion of the  directors  are  outside  the scope of the  ordinary
duties of a  director,  may be paid such  extra  compensation  by way of salary,
commission or otherwise or may receive such other  benefits as the directors may
determine. The directors may repay to any director all reasonable expenses as he
may incur in attending  and  returning  from meetings of the directors or of any
committee of the directors or shareholders'  meetings or otherwise in connection
with our business.

     Pensions and Other Benefits

     The  directors  shall  have the power to pay and  agree to pay  gratuities,
pensions or other retirement  benefits,  death or disability  benefits to (or to
any person in respect of) any  director or  ex-director  and, for the purpose of
providing any such  gratuities,  pensions,  or other benefits,  to contribute to
such scheme or to pay premiums.

     Interested Director Transactions

     Subject to certain  provisions  of the U.K.  Companies Act 1985 designed to
enforce fair dealing by directors and prevent their taking financial  advantage,
and provided  that a director  has  disclosed  to the  directors  the nature and
extent of any interest, a director:

     o    may be party to or otherwise interested in any contract,  transaction,
          or arrangement with us or in which we are otherwise interested;

     o    may be a director  or other  officer of or  employed by a party to any
          contract,  transaction or arrangement with or otherwise  interested in
          any  corporate  body  promoted  by us or in  which  we are in any  way
          interested; and

     o    (or any firm of which he is a partner,  employee or member) may act in
          a  professional  capacity  for  us  (other  than  as  auditor)  and be
          compensated therefor and shall not (unless otherwise agreed by him) be
          accountable  to us for any  benefit  which  he  derives  from any such
          contract,  transaction  or  arrangement  or from  any such  office  or
          employment or from any interest in any such corporate body or for such
          compensation.

     No such contract,  transaction or arrangement shall be liable to be avoided
on the grounds of any such interest or benefit.

     Except as otherwise provided below, a director shall not vote in respect of
any contract or arrangement or any other proposal whatsoever in which he has any
material interest  otherwise than by virtue of interests in shares or debentures
or other securities of, or otherwise in or through,  us. A director shall not be
counted in the quorum of a meeting in relation to any  resolution on which he is
not  entitled to

                                       72
<PAGE>


vote.  Provided  that a  director  has  disclosed  the  nature and extent of his
interests, a director shall (in the absence of some other material interest than
is  indicated  below) be  entitled  to vote (and be  counted  in the  quorum) in
respect of any resolution concerning any of the following matters:

     o    the giving of any security, guarantee or indemnity with respect to (a)
          money lent or  obligations  incurred by him or by any other  person at
          the  request  of or  for  the  benefit  of our  company  or any of our
          subsidiaries,  or (b) a debt or other obligation of our company or any
          of our subsidiaries for which he himself has assumed responsibility in
          whole or in part under a guarantee  or  indemnity  or by the giving of
          security;

     o    any  proposal  concerning  an offer of shares or  debentures  or other
          securities of or by us or any of our subsidiaries in which offer he is
          or may be entitled to  participate as a holder of securities or in the
          underwriting or subunderwriting of which he is to participate;

     o    any  proposal  concerning  any  other  corporate  body in  which he is
          interested,  directly  or  indirectly,  and  whether  as an officer or
          shareholder  or  otherwise,  provided  that he (together  with persons
          connected  with him  (within  the  meaning of Section  346 of the U.K.
          Companies  Act 1985)) does not have any interest (as that term is used
          in Sections 198 to 211 of the U.K.  Companies  Act 1985) in 1% or more
          of the issued equity share capital of any class of such body corporate
          (or of any third company  through which his interest is derived) or of
          the voting rights available to members of the relevant  corporate body
          (any  such  interest  being  deemed  for the  purpose  of the  amended
          Articles   of   Association   to  be  a  material   interest   in  all
          circumstances);

     o    any  proposal  relating  to an  arrangement  for  the  benefit  of our
          employees  or any of our  subsidiaries  which  does not  award him any
          privilege or benefit not  generally  awarded to the  employees to whom
          such arrangement relates; and

     o    any  proposal  concerning  insurance  which we propose to  maintain or
          purchase  for the benefit of  directors  or for the benefit of persons
          who include directors.

DESCRIPTION OF SHARE CAPITAL

GENERAL

     Our authorized  share capital is 20,000,000  ordinary  shares of lp nominal
value per share, and 5,000,000 Series A preferred shares of (pound)1.00  nominal
value per share.

PREFERRED SHARES

     Our amended  Articles of Association  authorize our board of directors,  by
resolution,  to issue  the  preferred  shares  in such  number  as the  board of
directors may, from time to time,  determine  without any further vote or action
by the shareholders. Any preferred shares so issued would have priority over our
ordinary shares with respect to dividend or liquidation rights, or both.

9% SERIES A PREFERRED SHARES

     On May 5, 1999,  upon the completion of our initial public  offering,  Glen
Investments  Limited, a corporation  wholly-owned by Kevin R. Leech, a member of
our board of directors and our principal shareholder,  exchanged  (pound)850,000
($1,269,475)  principal  amount of 9% demand notes  payable by us for 850,000 of
our 9% Series A  preferred  shares.  As the holder of the 9% Series A  preferred
shares,  Glen


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<PAGE>


Investments Limited is entitled to receive annual  non-cumulative  dividends out
of funds  legally  available  therefor,  and each of those  shares  will  have a
preference in the amount of (pound)1.00  ($1.4935)  over the ordinary  shares in
the  event of our  liquidation  or  dissolution.  The  terms of our 9%  Series A
preferred  shares  prohibit the payment of cash dividends on our ordinary shares
in any year  until we also  declare  and pay a 9%  dividend  on our 9%  Series A
preferred shares.  The 9% Series A preferred shares are not entitled to vote and
are not be  redeemable,  except  by mutual  agreement  of our  company  and Glen
Investments  Limited. The 850,000 Series A preferred shares are convertible into
a like number of ordinary shares, at the option of Glen Investments  Limited, at
any time at a conversion  price equal to  (pound)8.03  ($12.00)  per share.  See
"Related Party Transactions."

ORDINARY SHARES

     As of July 27,  2001,  10,033,009  of our  ordinary  shares were issued and
outstanding  and are fully paid or credited  as fully paid,  each of which is in
registered  form.  No  holder  of  ordinary  shares  will  be  required  to make
additional contributions of capital in respect of those shares in the future.

ISSUE OF SHARES

     Subject to any special  rights  previously  conferred on the holders of any
issued  shares or class of  shares,  any  share of ours may be  issued  with any
preferred, deferred, or other special rights. They may also be issued subject to
restrictions,  including without limitation restrictions on dividends, return of
capital,  voting or otherwise, as an ordinary resolution of a general meeting of
our  shareholders  may  from  time  to  time  determine,   and  subject  to  any
determination  by them,  as our board of directors may  determine.  We may issue
redeemable  shares provided that there are shares in issue at the time which are
not redeemable.

     Subject to the  provisions of the U.K.  Companies Act 1985,  the authorized
but unissued  shares are at the disposal of the directors  who may issue,  grant
options over or otherwise dispose of them to those persons and on whatever terms
they deem appropriate.

     By virtue of Section 80 of the U.K.  Companies Act 1985,  our directors may
not,  subject  to limited  exceptions  in respect  of  employee  share  schemes,
exercise  any power to issue  shares  (or grant  any right to  subscribe  for or
convert other  securities into shares) unless they have been authorized to do so
by an ordinary  resolution.  Any authorization  must state the maximum amount of
shares which may be issued under it and the date of which it will expire,  which
must not be more than five years  from the date the  resolution  is  passed.  On
December 15, 1998, an ordinary  resolution was passed  authorizing  our board of
directors,  pursuant to Section 80 of the U.K.  Companies  Act 1985, to exercise
all  their  powers  to  issue  shares  up to an  aggregate  of the  whole of our
authorized but unissued share capital, until December 31, 2003.

     If  ordinary  shares  are to be  issued  for cash,  Section  89 of the U.K.
Companies  Act 1985  requires,  subject  to  limited  exceptions  in  respect of
employee share schemes,  that those shares first be offered to existing  holders
of shares in  proportion  to their  holdings.  However,  Section  95 of the U.K.
Companies  Act 1985 provides  that in certain  circumstances  the directors of a
company may by special  resolution  be given power to issue shares as if Section
89 did not apply. On December 15, 1998, a special resolution was passed pursuant
to which the provisions of Section 89 were rendered inapplicable with respect to
the  issuance of shares in  connection  with a rights issue and  otherwise  with
respect  to the  issuance  of  shares  up to an  aggregate  of the  whole of our
authorized but unissued share capital,  that authority to expire at the close of
business on December 31, 2003.

     See "Risk Factors" for limitations on exercise of preemptive rights.


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ALTERATION OF SHARE CAPITAL

     We  may  from  time  to  time  by  ordinary   resolution  approved  by  our
shareholders at a general meeting:

     o    increase  our share  capital by the sum, to be divided  into shares of
          those amounts, as the resolution shall prescribe;

     o    consolidate  and divide all or any of our share capital into shares of
          larger amount than our existing shares;

     o    cancel any shares which, at the date of the passing of the resolution,
          have not been taken, or agreed to be taken, by any person and diminish
          the amount of our capital by the amount of the shares so canceled; and

     o    subdivide our shares,  or any of them,  into shares of smaller  amount
          than is fixed by our  Memorandum  of  Association  (provided  that the
          proportion  between the amount paid and the amount,  if any, unpaid on
          each  reduced  share  must be the same as on the share  from which the
          reduced  share is  derived),  and so that the  resolution  whereby any
          share is subdivided may determine  that, as between the holders of the
          shares resulting from that subdivision, one or more of the shares may,
          as compared with the others,  have any preferred,  deferred,  or other
          special rights or be subject to any restrictions,  as we have power to
          attach to unissued or new shares.

     We may  purchase  or  enter  into a  contract  under  which  we will or may
purchase any of our own shares of any class (including any redeemable shares, if
any then exist)  provided  that the required  shareholder  approval is obtained.
However,  shares may only be  repurchased  out of  distributable  profits or the
proceeds of a new issuance of shares made for the  purpose,  and any premium (if
any  is  applicable)  must,  subject  to  certain  exceptions,  be  paid  out of
distributable profits. If there are any outstanding shares which are convertible
into equity share capital of the class proposed to be purchased, then we are not
permitted  to  purchase  or enter  into a  contract  under  which we will or may
purchase  those  equity  shares  unless  either  the  terms  of  issue  of those
convertible shares include  provisions  permitting us to purchase our own equity
shares or the purchase, or contract, has first been approved by an extraordinary
resolution  passed at a  separate  meeting of the  holders of those  convertible
shares.

     We may by special  resolution  approved  by our  shareholders  at a general
meeting  reduce  our share  capital or any  capital  redemption  reserve,  share
premium account,  or other  undistributable  reserve in any way, subject in each
case to confirmation by the English courts.

DIVIDEND RIGHTS

     Holders of ordinary  shares are entitled to receive those  dividends as may
be recommended by our board of directors and declared by the  shareholders  in a
general  meeting,  but no larger dividend may be declared than is recommended by
our board of directors, and the shareholders, in a general meeting may declare a
smaller  dividend,  and those  interim  dividends as our board of directors  may
decide.  However,  the terms of our 9% Series A preferred  shares  prohibit  the
payment  of cash  dividends  on our  ordinary  shares in any year  until we also
declare and pay a 9% non-cumulative dividend on our 9% Series A preferred shares
during that year.

     Our board of  directors  may fix a date as the record date by  reference to
which a dividend on the ordinary shares or the 9% Series A preferred shares will
be  declared  or  paid,  whether  or not it is  before


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<PAGE>


the date on which the  declaration is made. Any dividend on the ordinary  shares
or the 9% Series A preferred  shares unclaimed for a period of 12 years from our
date of payment  shall be  forfeited  and shall  revert to us. No dividend on an
ordinary share or a 9% Series A preferred share will bear interest.

RIGHTS IN LIQUIDATION

     Subject  to the  rights  attached  to  the 9%  Series  A  preferred  shares
described  above and any other shares  issued on special  terms and  conditions,
upon our  liquidation or winding up, after all our debts and liabilities and the
expenses of the  liquidation  have been  discharged,  any surplus assets will be
divided among the holders of ordinary  shares in  proportion  to their  holdings
after deducting any amounts remaining unpaid in respect of those shares.

NOTIFICATION OF INTEREST IN ORDINARY SHARES

     Section 198 of the U.K.  Companies Act 1985 obliges any person  (subject to
exception)  who  acquires an interest  of 3% or more of our  ordinary  shares to
notify us of his interest  within two business  days  following the day on which
the  obligation  to  notify  arises.  After  the 3% level is  exceeded,  similar
notification must be made if the whole percentage figure increases or decreases,
rounded  down to the next whole  number.  For the  purposes of the  notification
obligation, the interest of a person in the shares means any kind of interest in
shares  (subject to certain  exceptions)  including  any shares (1) in which his
spouse or his child or stepchild,  is interested,  (2) in which a corporate body
is  interested  where  either  (a)  that  corporate  body or its  directors  are
accustomed to act in accordance with that person's  directions or  instructions,
or (b)  that  person  controls  one  third or more of the  voting  power of that
corporate body, or (3) in which another party is interested where the person and
that other party are parties to a "concert party" agreement under Section 204 of
the U.K.  Companies  Act 1985 and any interest in shares is in fact  acquired by
any one of the parties pursuant to the agreement. A "concert party" agreement is
an agreement  which provides for one or more parties to it to acquire  interests
in shares of a particular company and imposes obligations or restrictions on any
one or  more  of the  parties  as to  the  use,  retention  or  disposal  of the
interests.

     In  addition,  Section 212 of the U.K.  Companies  Act 1985  enables us, by
notice in writing,  to require a person whom we know or have reasonable cause to
believe to be, or to have been at any time  during the three  years  immediately
preceding  the date on which  the  notice  is  issued,  interested  in shares to
confirm that fact or (as the case may be) to indicate whether or not that is the
case,  and where he holds or has during this  relevant  time held an interest in
the shares,  to give  further  information  as may be  required  relating to his
interest and any other interest in the shares of which he is aware.

     In addition to the  restrictions on the rights  attaching to shares imposed
by the U.K.  Companies Act 1985 for noncompliance  with Section 212 of that Act,
our  Memorandum  of  Association  and  amended  Articles  of  Association  apply
additional  restrictions.  The  restrictions  imposed or applied can potentially
include disenfranchisement,  loss of entitlement to dividends and other payments
and restrictions on alienability.

VOTING RIGHTS OF ORDINARY SHARES AND SHAREHOLDER MEETINGS

     Under English law, there are two types of general meeting of  shareholders,
annual general meetings and extraordinary  general  meetings.  An annual general
meeting must be held at least once in each  calendar  year and not later than 15
months from the previous annual general  meeting.  At the annual general meeting
matters  such as the  election of  directors,  appointment  of auditors  and the
fixing of their remuneration, approval of the annual accounts and the directors'
report and declaration of dividends are considered. Any other general meeting is
known as an extraordinary general meeting.


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<PAGE>


     The directors may convene an extraordinary general meeting and must convene
one if demanded by holders of not less than 10% of the paid-up shares. An annual
general  meeting and an  extraordinary  general meeting called to pass a special
resolution must be called by at least 21 days' notice  specifying the place, day
and time of the meeting and the general nature of the business to be transacted.
No business  may be  transacted  at any general  meeting  unless a quorum of two
persons  entitled to vote on the business to be  transacted is present in person
or by proxy.

     At a general meeting,  a simple majority of the votes cast is sufficient to
pass an ordinary  resolution.  A special  resolution  requires a majority of not
less  than 75% of the  votes of those  shareholders  (being  entitled  to do so)
voting in person or by proxy on the  resolution  in question.  A small number of
matters  relating to variation of the rights  attaching to different  classes of
shares and proceedings in a winding-up require the authority of an extraordinary
resolution,  which requires the same majority as a special resolution (including
matters such as amending our Articles of  Association or approving a sale of our
company through merger in some circumstances).

     Subject to the restrictions  referred to in the following  paragraph,  at a
meeting of  shareholders  every  holder of shares who (being an  individual)  is
present in person or (being a  corporation)  is present by a  representative  or
proxy not being himself a member shall have one vote on a show of hands,  and on
a poll, every holder of shares present in person or by proxy shall have one vote
for every share held. Shareholders are not entitled to cumulative voting rights.
A poll can be demanded by:

     o    the chairman of the meeting;

     o    not less than three shareholders  present in person or by proxy having
          the right to vote at the meeting;

     o    a holder or holders of shares or his or their proxy  representing  not
          less than 10% of the total voting  rights of all  shareholders  having
          the right to attend and vote at the meeting; or

     o    by a holder or holders of shares or his or their  proxy  conferring  a
          right to attend and vote at the meeting on which an aggregate  sum has
          been paid up equal to not less than one tenth of the total sum paid up
          on all shares conferring that right.

     A holder of shares  shall not be  entitled  (except as a proxy for  another
shareholder) to be present or vote at any general meeting:

     o    in respect of any shares  held by him in  relation  to which he or any
          other  person  appearing  to be  interested  in those  shares has been
          served with a notice under Section 212 of the U.K. Companies Act 1985,
          requiring him to provide  information in accordance  with that section
          and   containing  a  statement   that  upon  failure  to  supply  such
          information  before  the  expiration  period  specified  in the notice
          (which  may not be less  than 28 days)  the  registered  holder of the
          share is not  entitled  to vote in  respect of those  shares,  and the
          person on whom such notice was served fails to supply the  information
          within the specified period; or

     o    unless all amounts  presently payable by him in respect of such shares
          have been paid.

     All or any of the rights or privileges  attached to the shares may, subject
to certain  provisions of the U.K. Companies Act 1985, be varied either with the
consent in writing of the holders of 75% in nominal  value of the issued  shares
or with the sanction of an extraordinary resolution passed at a separate meeting
of the holders of shares, but not otherwise.


                                       77
<PAGE>


TRANSFER OF SHARES

     The  instrument  of  transfer of a share may be in any usual form or in any
other form of which the directors  approve and shall be executed by or on behalf
of the  transferor  and,  unless the share is fully paid, by or on behalf of the
transferee.  The directors may, in their absolute  discretion without giving any
reason  therefor,  refuse to register the transfer of a share which is not fully
paid provided that any such refusal will not prevent dealings in the shares from
taking place on an open and proper basis.  The directors may decline to register
a transfer to a person  known to be a minor,  bankrupt or person who is mentally
disordered  and a patient  for the  purpose of any  statute  relating  to mental
health.

     Subject to the  previous  paragraph,  our amended  Articles of  Association
contain no  restrictions  on the  registration of transfers of fully paid shares
provided  that all stamp  duties  payable on the  shares  have been paid and the
transfers  are  accompanied  by any  certificate  for the  shares and such other
evidence,  if any,  as the  directors  may  require  to prove  the  title of the
intending  transferor or his right to transfer the shares,  and in the case of a
transfer to joint holders, to no more than four such joint holders. The register
of  shareholders  may be  closed  at such  times  and for  such  periods  as the
directors  may  determine  not  exceeding 30 days in each year. We have resolved
that  title to any  shares  may be  transferred  by means of CREST  (Centralized
Electronic  Share Trading  System),  being a relevant system for the purposes of
the Uncertified Securities Regulations 1995.

ISSUANCE OF AMERICAN DEPOSITARY SHARES

     The  terms  of  our  Deposit  Agreement  with  Bankers  Trust  Company,  as
depositary,  permit the  issuance  of  American  Depositary  Receipts,  or ADRs,
evidencing American Depositary Shares, or ADSs, for ordinary shares accepted for
deposit by the depositary.  Ordinary shares may be deposited with the depositary
upon the receipt by the depositary of evidence that any necessary approvals have
been waived or granted by any governmental or quasi-governmental body in England
and Wales and also an opinion that the ordinary shares are not deemed Restricted
Securities as defined in the Deposit Agreement.

ISSUANCE OF RESTRICTED AMERICAN DEPOSITARY SHARES

     The terms of the Deposit  Agreement  permit the issuance of Restricted ADRs
evidencing  Restricted  ADSs for  ordinary  shares  that are  deemed  restricted
securities  under Rule 144(a)(3) of the  Securities  Act, are held by certain of
our  affiliates,  as defined in the Securities  Act of 1933, as amended,  or are
subject to a lock-up agreement (which has since expired) between the shareholder
and the underwriter,  once those ordinary shares are accepted for deposit by the
depositary.  Ordinary  shares  may be  deposited  with the  depositary  upon the
receipt by the depositary of an opinion of U.S. counsel that the issuance of the
Restricted ADRs and Restricted ADSs does not violate the Securities Act of 1933,
as amended,  or the terms of the lock-up  agreement.  The  Restricted  ADRs will
contain a legend and will be  transferable  only upon delivery to the depositary
of an  opinion  of U.S.  counsel  setting  forth the  conditions  upon which the
Restricted ADRs are transferable  under the applicable  securities laws and that
the transfer  restrictions set forth in the legend on the Restricted ADRs are no
longer applicable.

EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS

     There are currently no United Kingdom foreign exchange control restrictions
on the payment of dividends or other  payments to holders of ordinary  shares or
on the conduct of our operations.

     There are currently no restrictions  under our Memorandum of Association or
amended  Articles of  Association or under English law which limit the rights of
non-resident or foreign owners to freely hold, vote and transfer ordinary shares
in the same manner as United Kingdom residents or nationals.


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<PAGE>


CHANGE OF CONTROL

     Our authorized share capital  consists of 20,000,000  ordinary shares of 1p
nominal value per share,  and 5,000,000 Series A preferred shares of (pound)1.00
nominal value per share. The board of directors, without any further vote by the
holders of ordinary  shares,  has the authority to issue preferred shares and to
determine the price, preferences, rights and restrictions,  including voting and
dividend rights,  of these shares.  The rights of the holders of ordinary shares
are subject to the rights of holders of any  preferred  shares that the board of
directors may issue in the future.  That means,  for example,  that we can issue
preferred  shares  with more voting  rights,  higher  dividend  payments or more
favorable  rights  upon  dissolution,  than the  ordinary  shares.  If we issued
certain types of preferred  shares in the future,  it may also be more difficult
for a third-party to acquire a majority of our outstanding voting shares.

     In  addition,  we  have a  "classified"  Board  of  Directors  because  our
directors must retire by rotation.  This means that only approximately one-third
of our directors are eligible for election each year. Therefore, if shareholders
wish to change the composition of the board of directors, it would take at least
two years to remove a majority  of the  existing  directors,  and three years to
change all directors.

MATERIAL CONTRACTS

     The following is a summary of our  company's  material  contracts,  entered
into since January 1, 1999.

     1. Shareholders Agreement by and among TPN Holdings plc, Squash Limited and
UKPropertyChannel.com  Limited,  dated  February 28,  2001,  with respect to the
outstanding  share  capital of  UKPropertyChannel.com  Limited.  Pursuant to the
terms and  conditions  of this  agreement,  we and Squash  Limited  agreed  upon
matters relating to the corporate governance of UKPropertyChannel.com Limited, a
corporation organized under the laws of England and Wales. We and Squash Limited
own  70%  and  30%,   respectively   of  the   outstanding   share   capital  of
UKPropertyChannel.com Limited.

     2. Collective Net Overdraft  Facility by and among TPN Holdings plc, Avatar
Interactive  Limited and HSBC Bank plc, dated December 14, 2000. Pursuant to the
terms and conditions of this agreement,  we were initially  entitled to borrower
up  to  (pound)2.5  million  ($3.7  million),   until  January  13,  2001,  with
incremental  steps  thereafter.  On March 30, 2001,  HSBC agreed to increase the
borrowing  availability under the facility to (pound)4.0 million ($6.0 million).
The facility bears interest at a rate of 2% over the prevailing  HSBC base rate,
which as of December 31, 2000, was 6% per annum. As of December 31, 2000,  there
was  (pound)2,329,504  ($3,479,114)  outstanding  under this  facility.  Amounts
borrowed  under this  facility  are  repayable by our company upon demand at any
time.  Amounts  outstanding  under  the HSBC  facility  are  secured  by a first
priority  security  interest  in all of  the  assets  of  our  company  and  its
subsidiaries,  both present and future, as well as a pledge of the shares we own
in each of our  subsidiaries.  Our  obligations are further secured by unlimited
guarantees  given  by  each  of  our  subsidiaries  and by  Kevin  R.  Leech,  a
significant shareholder and director of our company.

     3.  Management  Agency  Agreement  by and among  TPN  Holdings  plc  (f/k/a
TownPagesNet.com  plc),  Heritage Great Britain plc and Robert  Bradshaw,  dated
April  2000.  Pursuant to the terms and  conditions  of this  agreement,  Robert
Bradshaw  became our Chief  Executive  Officer in April 2000. Mr.  Bradshaw is a
director of Heritage Great Britain plc. We did not pay any  compensation  to Mr.
Bradshaw for his service to us as a Chief Executive  Officer during 2000, but we
did pay  management  fees of  (pound)64,638  to Heritage  Great  Britain plc. In
addition, we granted to Mr. Bradshaw options to purchase 170,000 ordinary shares
at exercise prices ranging from (pound)0.33 to (pound)2.18 per share.


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<PAGE>


     4.   Employment   Agreement   by  and  among  TPN   Holdings   plc   (f/k/a
TownPagesNet.com  plc) and Richard Walker,  dated July 27, 1999. Pursuant to the
terms  and  conditions  of this  agreement,  Richard  Walker  became  our  Chief
Financial  Officer  and a director of our  company in July 1999.  During  fiscal
2000,  we paid to Mr.  Walker an annual  salary of  (pound)75,000  and bonus and
other  compensation of  (pound)34,759 in exchange for his service to us as Chief
Financial  Officer.  In addition,  we granted to Mr. Walker  options to purchase
95,000  ordinary   shares  at  exercise  prices  ranging  from   (pound)0.33  to
(pound)1.59 per share.

     5. Agreement for the Acquisition of BuyersGuide  Limited,  dated October 1,
1999, by and among TPN Holdings plc (f/k/a  TownPagesNet.com  plc),  John Bowden
and Lucy Bowden.  Pursuant to the terms and  provisions  of this  agreement,  we
acquired all of the outstanding  capital stock of BuyersGuide Limited (now known
as  BuyersGuide  plc.  The  aggregate  purchase  price  of the  transaction  was
approximately (pound)2.9 million (approximately $4.7 million), consisting of (i)
486,381  unregistered  ordinary shares valued at the time at (pound)2.5  million
($40  million),  which were issued at  closing,  and (ii)  423,932  unregistered
ordinary shares valued at (pound)437,000  ($653,000) which were based on certain
operating results for the six month period ended March 31, 2000.

     6. Agreement for the  Acquisition of Morbria  Limited,  dated September 24,
1999,  by and among TPN  Holdings  plc  (f/k/a  TownPagesNet.com  plc),  Glen UK
Holdings Limited and Robert Dillon. Pursuant to the terms and provisions of this
agreement,  we acquired all of the outstanding capital stock of Morbria Limited,
as well as its  subsidiaries.  We acquired  Morbria and its  subsidiaries  for a
purchase price consisting of 857,972 unregistered  ordinary shares valued at the
time at approximately  (pound)3.4 million ($5.1 million).  In addition,  we also
agreed to pay  contingent  consideration  up to the  maximum  of  (pound)930,000
(approximately  $1.4  million),  payable by the issuance of additional  ordinary
shares,  if Morbria and its subsidiaries  achieved certain operating results for
the fiscal  years  ended  March 31,  2000 and 2001.  Morbria did not achieve the
required  operating  results for the fiscal year ended March 31, 200,  and we do
not expect  Morbria to achieve  such results for the fiscal year ended March 31,
2001. We also assumed and repaid approximately (pound)1.7 million ($2.7 million)
in full satisfaction of bank overdrafts previously owned by Morbria.

     7. Agreement and Plan of Merger,  dated September 9, 1999, by and among TPN
Holdings plc (f/k/a  TownPagesNet.com  plc),  Rasmussen  Acquisition  Corp.  and
Research Sales, Inc. Pursuant to the terms and provisions of this agreement,  we
acquired all of the outstanding shares of capital stock of Research Sales, Inc.,
d/b/a  Rasmussen  Research.  The  aggregate  purchase  price of the  transaction
was(pound)2.0  million  (approximately  $3.0  million),  consisting  of  551,302
unregistered ordinary shares issued at closing.

     8.  Agreement  for  the  Acquisition  of  WWW.CO.UK  Limited,  Summerfields
Publishing  Limited and The Platinum Club  Limited,  dated July 19, 1999, by and
among TPN Holdings plc (f/k/a  TownPagesNet.com  plc), and HCC Holdings Limited.
Pursuant to the terms and provisions of this  agreement,  we acquired all of the
outstanding  shares  of  capital  stock  of  WWW.CO.UK   Limited,   Summerfields
Publishing  Limited and The Platinum  Club  Limited.  We acquired the  WWW.CO.UK
group  of  companies  for an  initial  total  purchase  price  of  approximately
(pound)4.0   million  ($6.0  million)   consisting  of  (i)  (pound)1.5  million
(approximately  $2.2  million)  in  cash  paid  at  closing,  and  (ii)  488,281
unregistered   ordinary  shares  valued  at  the  time  at  (pound)2.5   million
(approximately $3.7 million). In addition we also paid contingent  consideration
in the amount of (pound)0.5  million ($0.75 million) because the WWW.CO.UK group
met certain  revenue targets during the fiscal years ended December 31, 1999 and
2000.  We also loaned  (pound)1.5  million  (approximately  $2.2 million) to the
former  owner of the  WWW.CO.UK  group  because  the  WWW.CO.UK  group  achieved
specified revenue  thresholds under certain existing franchise  agreements.  The
loan bears  interest at a rate of 4% per annum,  and becomes due when the former
owner of the  WWW.CO.UK  group  sells the 488,281  ordinary  shares we issued at


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<PAGE>


closing  in  connection   with  the   acquisition.   As  of  December  31,  2000
approximately   (pound)1.6  million  (approximately  $2.4  million),   including
interest,  was  outstanding  under  the  loan.  In  December  2000,  we  filed a
registration statement on Form F-3 registering these shares. However, as of July
27,  2001,  the  shares  had not been  sold,  and  therefore  the  loan  remains
outstanding.

     9. Sale and Purchase  Agreement,  dated  September 7, 2000 by and among The
Graphic Palette Company (Manchester) Limited, Cornbrook Precision Colour Limited
(now known as 24.7  Colour  Limited),  David  Mantel,  Jane  Mantel and  Morbria
Limited.  Pursuant to the terms and provisions of this  agreement,  we agreed to
acquire all of the  outstanding  capital  stock of  Cornbrook  Precision  Colour
Limited (now known as 24.7 Colour Limited).  The aggregate purchase price of the
transaction  consisted of a contribution of 24.7 Colour of Morbria assets valued
at the time at  (pound)222,000  ($332,000).  This  resulted  in the  creating of
(pound)227,549 ($340,000) of good will on the financial statements of Morbria.

TAXATION

UNITED STATES FEDERAL INCOME TAX AND UNITED KINGDOM TAX  CONSEQUENCES TO PERSONS
WHO ARE OWNERS OF AMERICAN DEPOSITARY SHARES

     The following generally summarizes certain United States federal and United
Kingdom tax consequences of the purchase,  ownership and disposition of American
Depositary  Shares  evidenced  by  American  Depositary  Receipts to citizens or
residents of the United  States for United  States  federal  income tax purposes
(who are not also resident or, in the case of individuals,  ordinarily resident,
in the  United  Kingdom  for  United  Kingdom  tax  purposes),  corporations  or
partnerships  created or  organized  under the laws of the United  States or any
State  thereof,  or  estates  or trusts the income of which is subject to United
States federal income  taxation  regardless of its source  (collectively,  "U.S.
Holders").  This summary does not address any U.S. state income tax consequences
to any U.S. Holder.

     The  statements of United States and United  Kingdom tax laws set out below
are based (i) on the laws in force and as interpreted  by the relevant  taxation
authorities  as of the date of this Annual Report and are subject to any changes
in the United  States or English  law, or in the  interpretation  thereof by the
relevant taxation authorities, or in the double taxation conventions between the
United States and the United Kingdom (the  "Conventions"),  occurring after such
date and (ii) in part, on  representations  of the  Depositary,  and assume that
each obligation in the Deposit Agreement (the "Deposit  Agreement") entered into
by TPN Holdings  plc, the  Depositary,  and the  registered  holders of American
Depositary  Receipts  and the  owners of a  beneficial  interest  in bank  entry
American  Depositary  Receipts,  and any related  agreement will be performed in
accordance with its terms. No assurance can be given that taxing  authorities or
the courts will agree with this analysis.

     This  summary is of a general  nature only and does not discuss all aspects
of  United  States  and  United  Kingdom  taxation  that  may be  relevant  to a
particular  investor.  This summary deals only with American Depositary Receipts
held as capital assets and does not address special classes of purchasers,  such
as  dealers  in  securities,  persons  who  hold  ordinary  shares  or  American
Depositary  Shares  as part of a  larger  integrated  financial  transaction  or
straddle, U.S. Holders whose functional currency is not the United States dollar
and certain U.S. Holders  (including,  but not limited to, insurance  companies,
tax exempt  organizations,  financial  institutions  and persons  subject to the
alternative  minimum  tax) who may be  subject to  special  rules not  discussed
below.  In  particular,  the following  summary does not address the adverse tax
treatment of U.S.  Holders who own,  directly or by attribution,  10% or more of
our outstanding  voting share capital in the event that we were to be classified
as a "controlled  foreign  corporation"  for United States federal tax purposes.
Although we were not a  controlled  foreign  corporation  as of the date of this
Annual  Report,  there  can be no  assurance  that we will  not be a  controlled
foreign  corporation  in the  future.  This  summary  does not  address the U.S.
federal income tax


                                       81
<PAGE>


consequences  to  us  or  any  U.S. Holder if  we are determined to be a foreign
personal  holding  company,  a personal  holding  company  or a passive  foreign
investment  company,  as such  terms are  defined  for U.S.  federal  income tax
purposes.

     For purposes of the Conventions and the United States Internal Revenue Code
of 1986, as amended (the "Internal Revenue Code"),  U.S. Holders will be treated
as the  beneficial  owners  of  the  ordinary  shares  represented  by  American
Depositary Shares evidenced by American Depositary Receipts.

TAXATION OF DIVIDENDS

     United Kingdom

     Under  current  U.K.  law, if we pay  dividends to our  shareholders,  U.K.
resident  individual  shareholders will receive a notional  (non-repayable)  tax
credit equal to one-ninth of the net cash dividend  (10% of the gross  dividend)
such that the  individual's  lower and basic rate tax liability on the amount of
the  dividend  and  notional  tax credit  will be  satisfied.  Only  higher rate
taxpayers will be required to pay any further  income tax  (equivalent to 25% of
the dividend received).

     Different  rules and rates apply to  shareholders  who are trustees of U.K.
resident trusts.

     Dividends paid by U.K. resident  companies to other U.K. resident companies
carry a tax  credit  (currently  one-ninth)  in  respect  of the  amount  of the
dividend.  The dividend and tax credit will constitute franked investment income
in the hands of the recipient  company and normally a U.K. resident company will
not be liable to U.K. tax on any such dividends.  For dividends paid on or after
April 6, 1999, U.K. companies are no longer entitled to claim a repayment of the
tax credit in any circumstances.

     An Eligible U.S.  Holder (as defined in the  Convention)  is entitled under
the  Convention  relating  to income  taxes (the  "Income Tax  Convention")  and
current United  Kingdom tax  legislation to claim from the United Kingdom Inland
Revenue a refund (a "Treaty  Payment")  for an amount equal to the amount of the
tax credit to which an  individual  resident  in the United  Kingdom  for United
Kingdom tax purposes  would have been entitled had he received the dividend (the
"Tax Credit Amount")  subject to a United Kingdom  withholding tax of 15% of the
sum of the  dividend  paid and the  related  Tax  Credit  Amount.  However,  the
reduction  in the rate of the tax credit from April 6, 1999 to  one-ninth of the
amount of any dividend  means that Eligible U.S.  Holders have ceased to be able
to obtain a Treaty Payment as from that date. It should be noted that the United
States  Treasury  announced on October 1, 1998, its intention to hold a round of
talks  with the  United  Kingdom  for the  purpose  of  updating  the Income Tax
Convention to reflect tax law  developments in the respective  countries.  It is
not  anticipated  that any new Income Tax Convention  will be effective prior to
January 1, 2000.

     United States

     Subject  to  the  discussion  below  under  the  heading  "Passive  Foreign
Investment  Company  Considerations,"  for  United  States  federal  income  tax
purposes,  the gross amount of a dividend plus the Tax Credit Amount (i) will be
included in gross income by an Eligible U.S.  Holder and (ii) will be treated as
foreign source  dividend income to the extent paid out of current or accumulated
earnings  and  profits  as  determined  for  United  States  federal  income tax
purposes.  Subject to certain  limitations  including  certain  minimum  holding
periods,  the 15% United  Kingdom  withholding  tax will be treated as a foreign
income tax eligible for direct credit against such Eligible U.S. Holder's United
States  federal  income  taxes.  For the  purposes  of the  foreign  tax  credit
limitation,  dividends  distributed  by the Company  will  generally  constitute
"passive  income"  or,  in the  case of  certain  holders,  "financial  services
income." The  consequences  of these  limitations  will depend on the nature and
sources of each U.S. Holder's income and


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<PAGE>


the  deductions  appropriately  allocated or apportioned  thereto.  No dividends
received  deduction  will be  allowed  with  respect  to  dividends  paid by the
Company.  If  dividends  paid by the  Company  were to exceed  its  current  and
accumulated  earnings and profits as determined for United States federal income
tax purposes,  such excess will be treated as a non-taxable return of capital to
the  extent  of the U.S.  Holder's  adjusted  basis in the  American  Depositary
Shares, and any excess will be treated as a capital gain.

     As mentioned  above,  certain  minimum holding periods must be met in order
for a U.S. Holder to credit the foreign tax imposed on foreign source dividends.
For  dividends  paid or accrued after  September 4, 1997, a U.S.  Holder will be
denied a foreign tax credit for foreign  withholding taxes imposed on a dividend
if the U.S. Holder has not held the ordinary share or American  Depositary Share
for more than 15 days in the 30-day holding period  beginning 15 days before the
ex-dividend  date.  Any  days  during  which  a U.S.  Holder  has  substantially
diminished its risk of loss on the ordinary share or American  Depositary  Share
are not counted toward meeting the holding  period  required by statute.  A U.S.
Holder that is under an obligation to make related  payments with respect to the
ordinary shares or American  Depositary  Receipts (or  substantially  similar or
related  property)  also is not  entitled  to claim a foreign  tax  credit  with
respect to a foreign tax imposed on a dividend.  U.S.  Holders that fail to meet
the holding period  requirements  are instead  allowed a deduction  equal to the
foreign tax credits disallowed.

TAXATION OF CAPITAL GAINS

     United Kingdom

     A U.S.  Holder who is not  resident  or  ordinarily  resident in the United
Kingdom for United  Kingdom tax purposes  will not be liable for United  Kingdom
tax on  capital  gains  realized  or accrued  on the sale or other  disposal  of
American  Depositary  Shares unless the American  Depositary  Shares are held in
connection with a trade or business carried on by such U.S. Holder in the United
Kingdom through a branch or agency which  constitutes a permanent  establishment
or fixed base, and the American Depositary Shares are or have been used, held or
acquired for the purposes of such trade or business of such branch or agency.

     United States

     Subject  to  the  discussion  below  under  the  heading  "Passive  Foreign
Investment  Company  Considerations,"  a U.S.  Holder  will be liable for United
States federal income tax on such gains to the same extent as on any other gains
from sales or dispositions  of stock.  In the case of individual  U.S.  Holders,
such gains may be eligible for  preferential  capital  gains rates  depending on
holding period,  date of sale and the  individual's  marginal federal income tax
rate.  Generally,  for sales or exchanges of stock that occur after December 31,
1997,  any capital  gain will be subject to a maximum tax rate of 20% for shares
held for more than one year.  Shares  held less than one year will be treated as
short-term  capital  gain and  taxed as  ordinary  income  at the U.S.  Holder's
marginal  income tax rate.  Capital gains and losses realized on the disposition
of ordinary  shares  generally will be United States source gains and losses for
purposes of the United States foreign tax credit limitations.

     A U.S.  Holder that is liable for both United Kingdom and United States tax
on a gain on the disposal of the American  Depositary Shares should generally be
entitled,  subject  to  certain  limitations  and  pursuant  to the  Income  Tax
Convention,  to credit the amount of United Kingdom capital gains or corporation
tax, as the case may be, paid in respect of such gain against such U.S. Holder's
United States federal income tax liability in respect of such gain. U.S. Holders
should seek  professional  tax advice to determine  their  entitlement to credit
United Kingdom tax against their United States federal income tax liability.


                                       83
<PAGE>


PASSIVE FOREIGN INVESTMENT COMPANY CONSIDERATIONS

     If the  Company  is deemed to be a passive  foreign  investment  company (a
"PFIC") for United States federal income tax purposes,  any gain recognized by a
U.S. Holder upon the sale of American  Depositary  Shares (or receipt of certain
distributions)  would be  treated  as  ordinary  income.  Such  income  would be
allocated  over the holding  period of the U.S.  Holder and an  interest  charge
would be imposed on the amount of deferred tax on such income allocated to prior
taxable years.  We will be classified as a PFIC if either (i) 75% or more of our
gross  income is  passive  income or (ii) 50% or more of our  average  assets by
value produce or are held for the production of passive income (including cash).
We have  determined  that we were not a PFIC for our taxable year ended December
31,  1997 and intend to manage our  business  so as not to become a PFIC.  If we
were determined to be a PFIC, however, a U.S. Holder could elect to treat his or
her American  Depositary  Shares as an interest in a qualified  electing fund (a
"QEF Election"),  in which case, the U.S. Holder would be required to include in
income his or her  proportionate  share of our  earnings and profits in years in
which we are a PFIC, but any gain subsequently  recognized upon the sale by such
U.S. Holder of his or her American Depositary Shares generally would be taxed as
a capital  gain.  We will  continue  to monitor  our  status and will,  promptly
following the end of each taxable year,  notify  shareholders if we believe that
we are  properly  classified  as a PFIC for that  taxable  year to  enable  U.S.
Holders to consider  whether to make a QEF Election.  In addition,  we intend to
comply with the applicable  information reporting  requirements for U.S. Holders
to make a QEF Election.  U.S. Holders should consult with their own tax advisers
regarding the eligibility, manner and advisability of making the QEF Election if
we are treated as a PFIC. If we were deemed to be a PFIC, in addition to the QEF
election,  under the  mark-to-market  regime,  an electing  shareholder may also
report as gross  income (or loss) any amount by which the  stock's  fair  market
value exceeds (or is less than) the tax basis in the stock at year end.

UNITED KINGDOM INHERITANCE TAX

     An American  Depositary  Share  beneficially  owned by an  individual  U.S.
Holder who is domiciled in the United States for the purposes of the  Convention
relating to estate and gift taxes (the "Estate and Gift Tax  Convention") is not
subject to United Kingdom inheritance tax on the individual's death or on a gift
made by the individual during his lifetime, except where the American Depositary
Share  is  part  of  the  business   property  of  a  United  Kingdom  permanent
establishment of the individual or pertains to a United Kingdom fixed base of an
individual used for the performance of independent personal services. The Estate
and Gift Tax Convention generally provides for tax paid in the United Kingdom to
be credited  against  tax  payable in the United  States and for tax paid in the
United  States to be credited  against  any tax  payable in the United  Kingdom,
based on  priority  rules  set  forth  in that  Convention,  in a case  where an
American  Depositary Share is subject to both United Kingdom inheritance tax and
United States  federal gift or estate tax.  There are special rules  applying to
trusts.

UNITED STATES GIFT AND ESTATE TAXES

     An individual  U.S. Holder will be subject to United States gift and estate
taxes with respect to the American Depositary Receipts in the same manner and to
the same extent as with respect to other types of personal property.

UNITED KINGDOM STAMP DUTY AND STAMP DUTY RESERVE TAX

     The  acquisition  or transfer of ordinary  shares is subject to U.K.  stamp
duty at (pound)0.50 per (pound)100 (or part thereof) of the consideration price.
There is also a charge to U.K.  Stamp Duty  Reserve Tax  ("SDRT") at 0.5% of the
consideration on the agreement to transfer ordinary shares but repayment of SDRT
may be obtained if an instrument to transfer the ordinary shares is executed and
stamp duty is paid  within six


                                       84
<PAGE>


years of the date of the agreement (or, in the case of a conditional  agreement,
when the condition is satisfied).

     Stamp  duty or SDRT at the same  rates  arise on the  deposit  of  ordinary
shares  with  the  Custodian  of a  depositary  (or  certain  persons  providing
clearance  services)  or their  nominees  or agents  and will be  payable by the
depositary or such person,  under the deposit agreement.  In accordance with the
terms of the deposit agreement, holders of American Depositary Receipts must pay
an amount in respect of such tax to the Depositary.

     There is no U.K.  Stamp Duty on the  acquisition or transfer of an American
Depositary Share provided that any agreement to transfer the American Depositary
Share is executed and retained  outside the U.K. The transfer of ordinary shares
by the Custodian of the depositary  (or its nominee) to the American  Depositary
Share  holder will  attract  stamp duty of  (pound)0.50  provided  the  American
Depositary Share holder is not transferring beneficial ownership.

BACKUP WITHHOLDING AND INFORMATION REPORTING

     In  general,  information  reporting  requirements  will apply to  dividend
payments  (or other  taxable  distributions)  in respect of American  Depositary
Shares or  ordinary  shares  made  within the United  States to a  non-corporate
United States person,  and "backup  withholding"  at a rate of 31% will apply to
such  payments  if the holder or  beneficial  owner fails to provide an accurate
taxpayer  identification  number in the manner required by United States law and
applicable regulations, if there has been notification from the Internal Revenue
Service of a failure by the holder or beneficial owner to report all interest or
dividends  required to be shown on its federal income tax returns or, in certain
circumstances, if the holder or beneficial owner fails to comply with applicable
certification requirements. Certain corporations and persons that are not United
States persons may be required to establish  their  exemption  from  information
reporting and backup  withholding by certifying their status on Internal Revenue
Service Forms W-8BEN, W-8ECI or W-9.

     In general,  payment of the proceeds  from the sale of American  Depositary
Shares or ordinary  shares to or through a United  States  office of a broker is
subject to both United  States  backup  withholding  and  information  reporting
unless the holder or beneficial  owner  certifies its  non-United  States status
under penalties of perjury or otherwise establishes an exemption.  United States
information  reporting  and  backup  withholding  generally  will not apply to a
payment  made  outside the United  States of the  proceeds of a sale of American
Depositary Shares or ordinary shares through an office outside the United States
of a non-United  States broker.  However,  United States  information  reporting
requirements  (but not backup  withholding) will apply to a payment made outside
the United  States of the  proceeds of a sale of American  Depositary  Shares or
ordinary shares through an office outside the United States of a broker (a) that
is a United States person,  (b) that derives 50% or more of its gross income for
a  specified  three-year  period  from the conduct of a trade or business in the
United States, (c) that is a "controlled  foreign  corporation" as to the United
States,  or (d) with respect to payments made after December 31, 1999, that is a
foreign  partnership,  if at any time  during  its tax year,  one or more of its
partners are U.S. persons (as defined in United States Treasury Regulations) who
in the  aggregate  hold more than 50% of the income or capital  interest  in the
partnership or if, at any time during its tax year, such foreign  partnership is
engaged in a United States trade or business,  unless the broker has documentary
evidence in its files that the holder or beneficial owner is a non-United States
person or the holder or beneficial owner otherwise establishes an exemption.

     Amounts withheld under the backup withholding rules may be credited against
a holder's tax liability, and a holder may obtain a refund of any excess amounts
withheld under the backup  withholding rules by filing the appropriate claim for
refund with the United States Internal Revenue Service.


                                       85
<PAGE>


DOCUMENTS ON DISPLAY

     We have  filed  this  Annual  Report on Form 20-F with the  Securities  and
Exchange  Commission  under the  Securities  Exchange  Act of 1934,  as amended.
Statements  made in this  annual  report  as to the  contents  of any  contract,
agreement  or other  document  referred to are not  necessarily  complete.  With
respect to each such  contract,  agreement or other document filed as an exhibit
to this annual  report,  reference  is made to the  exhibit for a more  complete
description  of the matter  involved,  and each such  statement  shall be deemed
qualified in its entirety by such reference.

     We are subject to the informational requirements of the Securities Exchange
Act and file  reports and other  information  with the  Securities  and Exchange
Commission.  Reports and other information which we file with the Securities and
Exchange Commission, including this Annual Report on Form 20-F, may be inspected
and copies at the public  reference  facilities of the  Securities  and Exchange
Commission at:

   450 Fifth Street N.W.     7 World Trade Center       500 West Madison Street
   Room 1024                 New York, New York  10048  Suite 1400
   Washington, D.C.  20549                              Chicago, Illinois  60661

     You can also  obtain  copies  of this  material  by mail  from  the  Public
Reference Section of the Securities and Exchange  Commission,  450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. Additionally,  copies of this
material may also be obtained  from the  Securities  and  Exchange  Commission's
Interest  site at  http://www.sec.gov.  The  Commission's  telephone  number  is
1-800-SEC-0330.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     We do  not  hedge  (through  the  use  of  derivative  or  other  financial
instruments) the translation of our profits from overseas  subsidiaries or other
interest rate or foreign exchange exposures;  therefore,  significant changes in
exchange  rates  or  interest  rates  may  materially   affect  our  results  of
operations.

     For purposes of specific  risk  analysis,  we use  sensitivity  analysis to
determine  the impact that market risk  exposures may have on the fair values of
our financial instruments.

     To perform sensitivity  analysis, we assess the risk of loss in fair values
from the impact of hypothetical  changes in foreign  currency  exchange rates on
market  sensitive  instruments.  The market values for foreign exchange risk are
computed based on spot rates in effect at December 31, 2000. The  differences in
this comparison are the hypothetical  gains or losses  associated with each type
of risk.  A 10%  movement  in the level of the pound  sterling  against the U.S.
dollar with all other  variables  held  constant  would result in an  immaterial
change in the fair value of our U.S. dollar denominated balances at December 31,
2000.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

     Not applicable.


                                       86
<PAGE>


                                     PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.

     There  are no  defaults,  dividend  arrearages  or  delinquencies  that are
required to be disclosed.

ITEM 14.  MATERIAL  MODIFICATIONS  TO THE RIGHTS OF SECURITY  HOLDERS AND USE OF
          PROCEEDS.

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS

     There are no material  modifications to the rights of security holders that
are required to be disclosed.

USE OF PROCEEDS FROM INITIAL PUBLIC OFFERING

     On May 5, 1999, the Securities and Exchange  Commission  declared effective
our Registration Statement on Form F- l (File No. 333-72075),  pursuant to which
we  completed  our  initial  public   offering  of  2,200,000   ordinary  shares
represented by ADSs at an initial public offering price of $10.00 per share. Our
initial  public  offering was managed by Dirks & Company,  Inc.,  J.P.  Turner &
Company, L.L.C., and Security Capital Trading, Inc.

      Net proceeds to us from our initial public offering,  after calculation of
the underwriters'  discounts and commissions of (pound) 1,157,895 ($1,870,000 as
of May 5, 1999) and offering expenses of (pound)1,755,720  ($2,835,488 as of May
5, 1999),  totaled (pound)10.7 million ($17,294,512 as of May 5, 1999). Of these
expenses,  (pound)20,628  ($33,315  as of May 5,  1999) was paid to CW  Fellowes
Limited,  for professional  services rendered in connection with the offering, a
company whose shareholders include Simon J. Ward, one of our directors. No other
expenses  incurred  in our  initial  public  offering  were  direct or  indirect
payments to our directors,  officers,  general partners or their associates,  to
persons  owning  ten  percent  or more of any class of our  equity or our equity
securities or to our affiliates.

      As of December  31,  2000,  we had used all of the net  proceeds  from our
initial public offering.  From the net proceeds of the offering,  $2,584,000 was
paid to  retire  indebtedness  owed by us to a  company  controlled  by Kevin R.
Leech, a significant shareholder and director of our company. In connection with
the  acquisition  of  WWW.CO.UK  Limited,   we  paid  a  cash  consideration  of
approximately  $2,422,000,  extended  a loan  to the  sellers  of  approximately
$2,059,000  and  paid  the  sellers  approximately  $363,000  in the  form of an
additional  loan. The loans are to be repaid upon  registration  of the ordinary
shares issued to the former owners of WWW.CO.UK.  A loan of approximately  $2.75
million was paid in connection  with the  acquisition  of Morbria to retire that
company's  indebtedness  to a bank.  The majority  stockholder of Morbria was an
investment  company owned by Kevin R. Leech.  Approximately  $2,205,560 has been
advanced  to  Research  Sales,  Inc.  as working  capital  loans to enable it to
accelerate  its start up operations and build its  infrastructure.  We used $5.9
million to purchase  equipment to support the growth of our  business  including
the  development  of our own data  center and the  procurement  of  kiosks,  the
expansion  of  in-house  resources  to support our Web site  solutions  division
including  the  rental  of  additional  premises,  and other  general  corporate
purposes.


                                       87
<PAGE>


                                    PART III

ITEM 17. FINANCIAL STATEMENTS.

     Our consolidated financial statements have been prepared in accordance with
Item 18 hereof.

ITEM 18.  FINANCIAL STATEMENTS.

     The  following  consolidated  financial  statements  and related  schedule,
together with the report of Ernst  &Young,  LLP are filed as part of this Annual
Report.

<TABLE>
<CAPTION>
CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------
                                                                                                               PAGE
                                                                                                               ----
<S>                                                                                                            <C>
Report of Independent Auditors.............................................................................    F-1
Consolidated Balance Sheets as of December 31, 1999 and 2000...............................................    F-2
Consolidated Statements of Operations for the years ended December 31, 1998, 1999 and 2000.................    F-4
Consolidated Statements of Shareholders' Equity for the years ended December 31, 1998, 1999
   and 2000................................................................................................    F-5
Consolidated Statements of Cash Flows for the years ended December 31, 1998, 1999 and 2000.................    F-6
Notes to Consolidated Financial Statements.................................................................    F-7

FINANCIAL STATEMENT SCHEDULE
----------------------------
                                                                                                              PAGE
                                                                                                              ----
Schedule II - Valuation and Qualifying Accounts for the years ended December 31,
1998, 1999 and 2000.......................................................................................     S-1
</TABLE>

ITEM 19.  EXHIBITS.
1.1            Articles of  Association  of TPN  Holdings plc  (incorporated  by
               reference from Exhibit 3.1 to Registration  Statement on Form F-1
               (File No. 333-72075) filed by TPN Holdings plc).
1.2            Memorandum of  Association of TPN Holdings plc  (incorporated  by
               reference from Exhibit 3.2 to Registration  Statement on Form F-1
               (File No. 333-72075) filed by TPN Holdings plc).
1.3*           Certificate   of   Incorporation   on   Change   of   Name   from
               TownPagesNet.com plc to TPN Holdings plc.
2.1*           Specimen Form of American Depository Receipts.
2.2*           Specimen Form of Ordinary Share Certificate.
3.1*           Shareholders  Agreement  by and among  TPN  Holdings  plc  (f/k/a
               TownPagesNet.com  plc), Squash Limited and  UKPropertyChannel.com
               Limited, dated February 28, 2001, with respect to the outstanding
               share capital of UKPropertyChannel.com Limited.
4.1*           Form of  Collective  Net  Overdraft  Facility  by and  among  TPN
               Holdings plc (f/k/a  TownPagesNet.com  plc),  Avatar  Interactive
               Limited and HSBC Bank plc, dated December 14, 2000.
4.2*           Form of Management Agency Agreement by and among TPN Holdings plc
               (f/k/a  TownPagesNet.com  plc),  Heritage  Great  Britain plc and
               Robert Bradshaw, dated April 2000.
4.3*           Form of Employment Agreement by and among TPN Holdings plc (f/k/a
               TownPagesNet.com plc) and Richard Walker, dated July 27, 1999.
4.4            Agreement  for the  Acquisition  of  BuyersGuide  Limited,  dated
               October  1,  1999,   by  and


                                       88
<PAGE>


               among TPN Holdings plc (f/k/a TownPagesNet.com plc),  John Bowden
               and Lucy Bowden (incorporated by reference  from  Exhibit  4.1 to
               Report  of  Foreign  Private  Issuer on Form 6-K for the month of
               December  1999,  filed on March 28, 2000).

4.5            Agreement for the Acquisition of Morbria Limited, dated September
               24, 1999,  by and among TPN Holdings plc (f/k/a  TownPagesNet.com
               plc), Glen UK Holdings Limited and Robert Dillon (incorporated by
               reference from Exhibit 4.1 to Report of Foreign

               Private  Issuer on Form 6-K for the month  ended  December  1999,
               filed on January 27, 2000).
4.6            Agreement  and Plan of Merger,  dated  September 9, 1999,  by and
               among TPN Holdings plc (f/k/a  TownPagesNet.com  plc),  Rasmussen
               Acquisition  Corp.  and Research  Sales,  Inc.  (incorporated  by
               reference from Exhibit 4.1 to Report of Foreign Private Issuer on
               Form 6-K for the month ended December 1999,  filed on January 27,
               2000).

4.7            Agreement for the Acquisition of WWW.CO.UK Limited,  Summerfields
               Publishing Limited and the Platinum Club Limited,  dated July 19,
               1999, by and among TPN Holdings plc (f/k/a TownPagesNet.com plc),
               and HCC Holdings Limited  (incorporated by reference from Exhibit
               4.1 to Report of Foreign Private Issuer on Form 6-K for the month
               ended July 1999, filed on August 11, 1999).

4.8            Employment  Agreement  dated July 19, 1999  between  Summerfields
               Publishing Limited and Jeffrey Spector (incorporated by reference
               from Exhibit 4.2 to Report of Foreign  Private Issuer on Form 6-K
               for the month ended July 1999, filed on August 11, 1999).
4.9*           Sale and Purchase  Agreement,  dated  September  7, 2000,  by and
               among The Graphic Palette Company (Manchester) Limited, Cornbrook
               Precision  Colour  Limited  (now known as 24.7  Colour  Limited),
               David Mantel, Jane Mantel and Morbria Limited.
4.10           Form   of    Agreement    between   TPN   Holdings   plc   (f/k/a
               TownPagesNet.com plc) and Viscount Edward James Wingfield Lifford
               (incorporated  by reference  from  Exhibit  10.6 to  Registration
               Statement   on  Form   F-1   (File   No.   333-72075)   filed  by
               TownPagesNet.com plc).
4.11           Form   of    Agreement    between   TPN   Holdings   plc   (f/k/a
               TownPagesNet.com  plc) and each non-executive member of the board
               of  directors  (incorporated  by  reference  from Exhibit 10.5 to
               Registration  Statement on Form F-1 (File No. 333-72075) filed by
               TPN Holdings plc (f/k/a TownPagesNet.com plc)).
4.12           1998 Executive Share Option Plan  (incorporated by reference from
               Exhibit  10.1 to  Registration  Statement  on Form F-1  (File No.
               333-72075)  filed by TPN  Holdings  plc  (f/k/a  TownPagesNet.com
               plc)).
8.1*           Subsidiaries of TPN Holdings plc.
------------------
* Filed herewith.


                                       89
<PAGE>


                  REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
                  ---------------------------------------------

To The Board of Directors and Stockholders of TPN Holdings plc

We have audited the accompanying consolidated balance sheets of TPN Holdings plc
as of  December  31, 2000 and 1999 and the related  consolidated  statements  of
operations,  stockholders' equity, and cash flows for each of the three years in
the period  ended  December  31, 2000.  Our audits also  included the  financial
statement  schedule listed in the Index at Item 18. These  financial  statements
and  schedule  are  the   responsibility  of  the  Company's   Management.   Our
responsibility  is to  express  an opinion  on these  financial  statements  and
schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 consolidated  financial statements referred to above present
fairly, in all material  respects,  the consolidated  financial  position of TPN
Holdings plc at December 31, 2000 and 1999, and the consolidated  results of its
operations  and its cash  flows  for the each of the three  years in the  period
ended  December 31, 2000, in conformity  with  accounting  principles  generally
accepted in the United States.  Also, in our opinion, the related financial
statement  schedule,   when  considered  in  relation  to  the  basic  financial
statements taken as a whole,  presents  fairly,  in all material  respects,  the
information set forth therein.

As  discussed in Note 1, the 1999  financial  statements  have been  restated to
reflect a loan, related to shares issued as consideration for an acquisition, as
a component of shareholders' equity.

The  accompanying  financial  statements  have been  prepared  assuming that TPN
Holdings plc will continue as a going  concern.  The Company has a  consolidated
net working  capital  deficit of  (pound)2,163,645  and has  incurred  recurring
losses  from  operations.  As  described  in more  detail in Note 1, there is no
certainty  that the Company's  bank  financing  facility  will  continue  beyond
September  2001.  Also as  explained  in Note 1, the Company is dependent on the
proceeds of the sale of investments and significant increases in revenue.  There
is no  certainty  that these  investment  sales or  increases  in revenue can be
achieved  either at all or at an amount  sufficient to meet the  Company's  cash
requirements.  For these reasons, the Company's available cash, cash equivalents
and short-term  investments  may be insufficient to fund operations for the next
twelve months. These factors raise substantial doubt about the Company's ability
to continue as a going concern.  Management's plans as to these matters are also
described in Note 1. The financial  statements do not include any adjustments to
reflect the possible future effects on the  recoverability  or classification of
assets or the amounts and  classification  of liabilities that might result from
the outcome of this uncertainty.

                                                            ERNST & YOUNG LLP
                                                            /s/Ernst & Young LLP

Reading, England

July 30, 2001


                                      F-1
<PAGE>



                                TPN HOLDINGS PLC
                         (formerly TOWNPAGESNET.COM PLC)
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                                   December 31,                  December 31,
                                                                       ------------------------------------
                                                                             1999               2000                2000
                                                                         As Restated
                                                                       ----------------    ----------------    ----------------
                                                                             Amounts in pounds sterling         Amounts in U.S.
                                                                                                               Dollars (Note 1)
                                                                       ------------------------------------    ----------------
<S>                                                                      <C>               <C>                       <C>
ASSETS:
Current Assets:
        Cash and cash equivalents                                        (pound)647,035    (pound)4,197,955          $6,269,646
        Accounts receivable, net of allowances for doubtful                   5,355,865           2,088,001           3,118,430
        accounts of(pound)530,565 - 1999 and
        (pound)1,429,151 - 2000
        Receivable from related party                                         5,542,477              16,971              25,346
        Other receivables                                                       274,225              32,276              48,204
        Loan receivable                                                         247,000                  --                  --
        Marketable securities available for sale                                     --             802,111           1,197,953
        Loan receivable related parties                                              --           1,886,156           2,816,974
        Prepaid expenses                                                        127,116             184,062             274,896
        Other current assets                                                    215,500             255,668             381,841
                                                                       ----------------    ----------------    ----------------
        Total current assets                                                 12,409,218           9,463,200          14,133,290

Equipment and fixtures
        Motor Vehicles                                                          169,025             197,407             294,827
        Computer equipment                                                    1,160,328           1,317,172           1,967,196
        Furniture and fixtures                                                  249,436             507,605             758,107
        Equipment                                                             1,932,077           3,043,250           4,545,093
                                                                       ----------------    ----------------    ----------------
                                                                              3,510,866           5,065,434           7,565,223
        Less: Accumulated depreciation                                        1,105,333           1,711,030           2,555,424
                                                                       ----------------    ----------------    ----------------
                                                                              2,405,533           3,354,404           5,009,799
Intangible assets, net of accumulated amortization of
(pound)3,158,027                                                             12,771,196           8,654,823          12,925,977
                                                                       ----------------    ----------------    ----------------
                                                                      (pound)27,585,947   (pound)21,472,427         $32,069,066
                                                                       ================    ================    ================


LIABILITIES AND STOCKHOLDERS' EQUITY (NET CAPITAL DEFICIENCY):

Current Liabilities:
        Book overdraft                                                   (pound)299,749    (pound)2,534,738          $3,785,630
        Accounts payable                                                      2,638,837           1,649,969           2,464,229
        Accounts payable to related parties                                          --           2,400,000           3,584,400
        Accrued expenses and other liabilities                                  767,379             613,815             916,733
        Accrued interest                                                             --              97,036             144,923
        Taxes and social security payable                                       448,177             372,489             556,312
        Deferred income                                                       3,431,866           2,631,076           3,929,511
        Current portion of obligations under capital lease                      139,414             457,468             683,229
        Amounts payable under Web site design agreements                      1,284,821                  --                  --
        Other creditors                                                              --             870,254           1,299,724
                                                                       ----------------    ----------------    ----------------
        Total current liabilities:                                            9,010,243          11,626,845          17,364,691

</TABLE>


                                      F-2
<PAGE>



                                TPN HOLDINGS PLC
                         (formerly TOWNPAGESNET.COM PLC)
                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                                   December 31,                  December 31,
                                                                       ------------------------------------
                                                                             1999               2000                2000
                                                                         As Restated
                                                                       ----------------    ----------------    ----------------
                                                                             Amounts in pounds sterling         Amounts in U.S.
                                                                                                               Dollars (Note 1)
                                                                       ------------------------------------    ----------------
<S>                                                                      <C>               <C>                       <C>


Deferred income, long term portion                                              994,073             394,779             589,602
Long term portion of obligations under capital lease                            102,849           1,022,032           1,526,403
Deferred taxation                                                                    --              42,663              63,717
Minority interests                                                               96,734              45,306              67,665

Commitments

STOCKHOLDERS EQUITY (NET CAPITAL DEFICIENCY)
9% Series A redeemable  convertible
preferred stock (pound)1 par value, 5,000,000
Shares authorized,  850,000 issued and
outstanding at December 31, 1999 and 2000,
respectively                                                                    850,000             850,000           1,269,475

Ordinary shares:
(pound)0.01 par value; 20,000,000 shares authorized,
9,583,936 and 10,033,009 issued and outstanding
at December 31, 1999 and 2000, respectively                                      95,840             100,330             149,844
Additional Paid-In Capital                                                   21,183,537          20,356,577          30,402,548
Loan receivable related to shares issued on an acquisition                   (1,275,000)                 --                  --
Accumulated other comprehensive loss                                                 --            (710,265)         (1,060,781)
Accumulated deficit                                                          (3,472,329)        (12,255,840)        (18,304,098)
                                                                       ----------------    ----------------    ----------------



        Total shareholders' equity                                           17,382,048           8,340,802          12,456,988
                                                                       ----------------    ----------------    ----------------

                                                                      (pound)27,585,947   (pound)21,472,427         $32,069,066
                                                                       ================    ================    ================

</TABLE>


                             See accompanying notes



                                      F-3


<PAGE>




                                TPN HOLDINGS PLC
                         (formerly TOWNPAGESNET.COM PLC)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                                      Year ended December 31,
                                           --------------------------------------------------------------------------------
                                                 1998                 1999                 2000                 2000
                                           -----------------   ------------------   ------------------   ------------------
                                                                Amounts in pounds sterling                 Amounts in U.S.
                                                                                                           Dollars (Note 1)
                                           ------------------------------------------------------------  ------------------
Revenues:
<S>                                           <C>               <C>                  <C>                        <C>
 Advertising revenues                         (pound)40,839     (pound)1,312,561     (pound)4,400,490           $6,572,131
 Contract revenues and other                        919,522            2,050,043            1,386,871            2,071,292
 Contract revenues from related parties             159,742            3,885,242            1,152,163            1,720,755
                                           -----------------   ------------------   ------------------ --------------------
 Total revenues                                   1,120,103            7,247,846            6,939,524           10,364,178

Cost of revenues:
 Maintenance and hosting costs                      179,776            1,388,408            1,410,387            2,106,413
 Cost of contract revenues and other                563,854            2,057,296            1,942,089            2,900,510
 Advertising and commission costs                        --            1,203,613            4,028,089            6,015,951
                                           -----------------   ------------------   ------------------ --------------------
 Total cost of revenues                             743,630            4,649,317            7,380,565           11,022,874

Gross profit  (loss)                                376,473            2,598,529             (441,041)            (658,696)

Operating expenses:
 Sales and marketing                                351,633            1,028,005              416,319              621,893
 Research and development                            67,910               77,371              542,553              810,302
 General and administrative                         715,168            2,565,396            6,486,720            9,687,913
 Depreciation                                        42,022              257,905            1,070,205            1,598,351
 Amortization                                            --              830,701            3,069,092            4,583,690
 Goodwill written off                                    --                   --            1,631,965            2,437,340
                                           -----------------   ------------------   ------------------ --------------------
   Total operating expenses                       1,176,733            4,759,378           13,216,934           19,739,489

Loss from operations                               (800,260)          (2,160,849)         (13,657,975)         (20,398,185)

Interest expense                                    (91,385)             (76,048)            (148,220)            (221,366)
Interest income                                       1,500              190,043               48,699               72,732

Other income                                         18,049                4,195               13,452               20,091
Provision against loan receivable                        --                   --             (307,000)            (458,505)
Gain on sale of investment                               --                   --            5,139,404            7,675,700
Foreign Exchange Gain                                    --              163,653               37,381               55,829
Minority Interests                                       --              (69,959)              42,807               63,932
                                           -----------------   ------------------   ------------------ --------------------
Loss before income taxes                           (872,096)          (1,948,965)          (8,831,452)         (13,189,772)

Provision for income taxes                               --              108,669              (66,006)             (98,580)

                                           -----------------   ------------------   ------------------ --------------------
Net loss                                    (pound)(872,096)   (pound)(2,057,634)   (pound)(8,765,446)        $(13,091,192)
                                           =================   ==================   ================== ====================

Basic and diluted net loss per share           (pound)(0.17)        (pound)(0.29)        (pound)(0.89)              $(1.33)
                                           =================   ==================   ================== ====================

Shares used in computing basic and
diluted net loss per share                        5,000,000            7,111,075            9,816,405            9,816,405
                                           =================   ==================   ================== ====================
</TABLE>

                             See accompanying notes



                                      F-4


<PAGE>

                                TPN HOLDINGS PLC
                         (FORMERLY TOWNPAGESNET.COM PLC)
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
<TABLE>
<CAPTION>
                                                 PREFERENCE SHARES            ORDINARY SHARES
                                            --------------------------   -------------------------     ADDITIONAL
                                            NUMBER OF                     NUMBER OF                      PAID-IN
                                             SHARES        AMOUNT          SHARES       AMOUNT           CAPITAL
                                            ---------  ---------------   ----------  -------------  -----------------
                                                                               Amounts in pounds sterling

                                            ---------------------------------------------------------------------------
<S>                                           <C>      <C>                <C>        <C>             <C>
Balance at January 1, 1997                          -   (pound)      -    5,000,000  (pound)50,000     (pound)122,500

Net loss                                            -                -            -              -                  -
                                            ---------  ---------------   ----------  -------------  -----------------
Balance at December 31, 1997                        -                -    5,000,000         50,000            122,500

Net loss                                            -                -            -              -                  -
                                            ---------  ---------------   ----------  -------------  -----------------
Balance at December 31, 1998                        -                -    5,000,000         50,000            122,500

Issuance of shares in respect of IPO                -                -    2,200,000         22,000         10,686,677

Issuance of shares in respect of
acquisitions                                        -                -    2,383,936         23,840         10,374,360

Issuance of Series A preferred stock          850,000          850,000            -              -                  -

Loan Receivable                                     -                -            -              -                  -

Net loss                                            -                -            -              -                  -

Dividends paid to minority
shareholders                                        -                -            -              -                  -
                                            ---------  ---------------   ----------  -------------  -----------------
Balance at December 31, 1999                  850,000  (pound) 850,000    9,583,936  (pound)95,840  (pound)21,183,537

Issuance of shares in respect of
acquisitions                                        -                -       25,141            251             14,884

Issuance of shares in respect of
earnout                                             -                -      423,932          4,239            433,156

Provision Against Loan Receivable                   -                -            -              -        (1,275,000)

Net loss                                            -                -            -              -                  -

Foreign Currency Translation                        -                -            -              -                  -

Unrealized loss on marketable
securities available for sale                       -                -            -              -                  -

Comprehensive Loss                                  -                -            -              -                  -

Dividends paid to minority
shareholders                                        -                -            -              -                  -

                                            ---------  ---------------   ----------  --------------- -----------------
Balance at December 31, 2000                  850,000  (pound)850,000    10,033,009  (pound)100,330  (pound)20,356,577
                                            =========  ===============   ==========  ==============  =================
</TABLE>


<PAGE>


<TABLE>
<CAPTION>
                                     LOAN RECEIVABLE
                                          RELATED                               ACCUMULATED            TOTAL
                                     TO SHARES ISSUED       ACCUMULATED            OTHER           SHAREHOLDERS
                                     ON AN ACQUISITION        DEFICIT        COMPREHENSIVE LOSS        EQUITY            TOTAL
                                     ------------------  -------------------  ----------------   -----------------  ---------------
                                                                                                                    AMOUNTS IN U.S.
                                                                                                                    DOLLARS (NOTE 1)
                                                                                                                    ----------------
                                     -----------------------------------------------------------------------------
<S>                                   <C>                 <C>                 <C>                <C>                <C>
Balance at January 1, 1997           (pound)          -     (pound)(174,961) (pound)         -      (pound)(2,461)  $       (3,675)

Net loss                                              -            (346,564)                 -           (346,564)        (517,593)
                                     ------------------  -------------------  ----------------   -----------------  ---------------
Balance at December 31, 1997                                       (521,525)                 -           (349,025)        (521,268)

Net loss                                              -            (872,096)                 -           (872,096)      (1,302,475)
                                     ------------------  -------------------  ----------------   -----------------  ---------------
Balance at December 31, 1998                          -          (1,393,621)                 -         (1,221,121)      (1,823,743)

Issuance of shares in respect of IPO                  -                    -                            10,708,677       15,993,409

Issuance of shares in report of
acquisitions                                          -                    -                 -          10,398,200       15,529,711

Issuance of Series A preferred stock                  -                    -                 -             850,000        1,269,475

Loan Receivable                             (1,275,000)                    -                 -         (1,275,000)      (1,904,213)

Net loss                                              -          (2,057,634)                 -         (2,057,634)      (3,073,076)

Dividends paid to minority
shareholders                                          -             (21,074)                 -            (21,074)         (31,474)
                                     ------------------  -------------------  ----------------   -----------------  ---------------
Balance at December 31, 1999         (pound)(1,275,000)   (pound)(3,472,329)                 -   (pound)17,382,048  $    25,960,089

Issuance of shares in respect of
acquisitions                                          -                    -                 -              15,135           22,604

Issuance of shares in respect of
earnout                                               -                    -                 -             437,395          653,248

Provision Against Loan Receivable             1,275,000                    -                 -                   -                -

Net loss                                              -          (8,765,446)                 -         (8,765,446)     (13,091,192)

Foreign Currency Translation                          -                    -           (3,230)             (3,230)          (4,824)

Unrealized loss on marketable
securities available for sale                         -                    -         (707,035)           (707,035)      (1,055,957)
                                                                                                 -----------------  ---------------

Comprehensive Loss                                    -                    -                 -         (9,475,711)     (14,151,973)

Dividends paid to minority
shareholders                                          -             (18,065)                 -            (18,065)         (26,980)

Balance at December 31, 2000         (pound)          -  (pound)(12,255,840)  (pound)(710,265)           8,340,802  $    12,456,988
                                     ==================  ===================  ================   =================  ===============
</TABLE>


                                      F-5
<PAGE>



                                TPN HOLDINGS PLC
                         (formerly TOWNPAGESNET.COM PLC)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                 Year Ended December 31,
                                                   --------------------------------------------------------------------------------
                                                           1998                1999                  2000                   2000
                                                   -----------------------------------------------------------------
                                                                          Amounts in pounds sterling                     Amounts in
                                                                                                                        U.S. Dollars
                                                                                                                          (Note 1)
                                                   -----------------------------------------------------------------  -------------
<S>                                                   <C>                 <C>                   <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES
 Net loss                                            (pound)(872,096)    (pound)(2,057,634)    (pound)(8,765,446)     $(13,091,192)
 Adjustments to reconcile net loss to net cash
 provided by operating activities:

  Depreciation                                                 42,022               257,905             1,070,205        1,598,351
  Amortization of goodwill                                         --               830,701             3,069,092        4,583,690
  Goodwill written off                                             --                    --             1,631,965        2,437,340
  Provision against loan receivable                                --                    --               307,000          458,505
 Gain on sale of investment                                        --                    --            (5,139,404)      (7,675,700)

Changes in operating assets and liabilities:

  Accounts receivable                                        (590,350)           (2,950,278)            3,638,718        5,434,424
  Receivable from related party                              (235,000)           (5,307,477)            3,409,899        5,092,684
  Unbilled receivables                                       (422,872)              422,872                    --               --
  Other receivables                                             3,285              (272,525)              242,098          361,574
  Prepaid expenses and other current assets                  (223,313)              433,728               (41,500)         (61,980)
  Accounts payable                                            211,174             1,269,722            (1,255,889)      (1,875,670)
  Accrued expenses and other liabilities                      111,280                (2,544)              143,557          214,401
  Accrued interest                                             86,215               (84,203)                   --               --
  Taxes and social security payable                            35,442               144,523               (50,601)         (75,573)
  Deferred income                                             228,244             3,092,503            (1,400,084)      (2,091,026)
  Amounts payable under Web site design agreements            411,969               872,852            (1,284,821)      (1,918,880)
                                                   --------------------------------------------------------------------------------
Net cash used in operating activities                      (1,214,000)           (3,349,855)           (4,425,211)      (6,609,052)
                                                   --------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES

  Purchases of equipment and fixtures                        (148,266)             (720,504)           (1,930,456)      (2,883,136)
  Purchase of subsidiaries                                         --            (1,740,872)               (8,052)         (12,025)
  Proceeds from sale of tangible fixed assets                      --                    --                26,375           39,391
  Payment of earnout                                               --                    --              (250,000)        (373,375)
                                                   --------------------------------------------------------------------------------
Net cash provided (used in) by investing
activities                                                   (148,266)           (2,461,376)           (2,162,133)      (3,229,145)
                                                   --------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES

  Proceeds from debenture loan from shareholder             1,383,266               767,854                    --               --
  Repayment of debenture loan from shareholder                     --            (1,600,044)                   --               --
  Proceeds from overdraft facility                                 --                    --             2,206,599        3,295,555
  Repayment of acquired overdrafts                                 --            (2,055,387)                   --               --
  Short term loan from related party                               --                    --             2,400,000        3,584,400
  Proceeds from sale of shares in subsidiary                       --                    --             4,386,563        6,551,332
  Net proceeds from issuance of ordinary shares                    --            10,708,677                    --               --
  Issuance of note receivable                                      --            (1,522,000)                   --               --
  Dividends paid                                                   --               (21,074)                   --               --
  Proceeds from sale and leaseback of
    equipment under capital leases                                 --               102,135             1,277,963        1,908,637
  Payments on capital lease obligations                            --               (25,722)             (104,471)        (156,027)
  Dividends paid to (contributions from)
    minority interest                                              --                69,959               (28,390)         (42,400)
                                                    --------------------------------------------------------------------------------
Net cash provided by financing activities                   1,383,266             6,424,398            10,138,264       15,141,497
                                                   --------------------------------------------------------------------------------
Net increase in cash and cash equivalents                      21,000               613,167             3,550,920        5,303,300
Cash and cash equivalents at the beginning
of the period                                                  12,868                33,868               647,035          966,346
                                                   --------------------------------------------------------------------------------
Cash and cash equivalents at the end of the period      (pound)33,868        (pound)647,035      (pound)4,197,955       $6,269,646
                                                   ================================================================================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
  Interest paid                                             (pound) -        (pound)106,203         (pound)90,502         $135,165
                                                   ================================================================================
</TABLE>

                             See accompanying notes

                                      F-6
<PAGE>


                                TPN HOLDINGS PLC
                        (FORMERLY TOWNPAGESNET.COM PLC)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS AND GOING CONCERN CONSIDERATIONS

      TPN Holdings plc (the "Company") operates, through subsidiaries,  a number
of diverse businesses principally specializing in the provision of new media and
advertising related services to both businesses and consumers.  The Company also
offers a fully  integrated  development  program  enabling larger  businesses to
enter the e-commerce marketplace on the Internet. The Company's name was changed
to TownPagesNet.com plc in April 1999 and further changed to TPN Holdings plc in
March 2001.

      On July 24, 2000, a subsidiary,  BuyersGuide plc, was admitted to trade on
the Alternative Investment Market ("AIM") of the London Stock Exchange following
the public  offering of its  ordinary  shares  pursuant to which it realized net
proceeds of approximately (pound)4.4 million ($6.6 million) from institutions at
an offering price of (pound)0.29  ($0.43).  As a result of undertakings given in
the  offer  document,  the  proceeds  of the  offering  are to be  retained  for
investment  within  BuyersGuide.  Its cash balance of  (pound)4.1  million ($6.2
million) at December 31, 2000 is therefore restricted for use within BuyersGuide
and the Company does not have access to these funds.

      At December 31, 2000, the Company had incurred recurring  consolidated net
losses  and,  as  of  that  date,  had a  consolidated  accumulated  deficit  of
approximately   (pound)12.3   million   (approximately   $18.3  million)  and  a
consolidated  working capital  deficiency of  approximately  (pound)2.2  million
(approximately $3.2 million).

      The accompanying financial statements have been prepared assuming that the
Company continues as a going concern.  Management's planned expenditure,  net of
revenue,  for the next twelve months exceeds current cash, cash  equivalents and
short-term investments.  Included in Management's plans is significant growth in
revenue to be generated by a subsidiary over the next twelve months.  Management
believes  that this is  achievable.  In the  event  that  this  growth  does not
materialize, Management will implement further cost cutting measures.

      The  Company  is  actively  pursuing  the  outright  sale  of  one  of its
subsidiaries,  and is in the early stages of negotiation  with various  parties.
Management is seeking to complete the sale of the subsidiary early in the fourth
quarter of 2001. The Company is also planning to secure additional funds through
the phased  realization  of its  investment  in another  subsidiary.  Management
anticipates  undertaking  this  realization  during the  period  from the fourth
quarter  of 2001 to the  second  quarter  of 2002.  In  addition  certain of the
Company's  subsidiaries were  significantly  restructured,  both during the year
ended  December  31,  2000 and since the year end.  The  Company is reliant on a
committed  bank facility  provided by HSBC Bank plc  ("HSBC"),  and has received
written  confirmation  from HSBC that the Company can  continue to utilize  this
facility up to (pound)5.2  million ($7.8 million)  until  September 30, 2001. At
the  present  time the  facility  is  substantially  utilized.  There  can be no
assurance  that this facility will be renewed or that  additional  funds will be
made available under this facility.

      Substantial  doubt  exists  about the  Company's  ability to continue as a
going  concern and there can be no  assurance  that the Company  will be able to
raise any additional  funds as described  above or that the Company's  currently
available funding will remain available to them. The financial statements do not
include  any   adjustments  to  reflect  the  possible  future  effects  on  the
recoverability or classification of


                                      F-7
<PAGE>

assets or the amounts and  classification  of liabilities that might result from
the outcome of this uncertainty.

      If the Company is unsuccessful in securing  additional funding through the
sources  described above it will take further action to reduce its spending.  In
doing so,  Management  may  consider  more  substantial  restructuring  options,
including  the closure of some or all of its  subsidiaries.  These actions would
have material adverse effects on the Company's  business,  results of operations
and prospects.

BASIS OF PRESENTATION

     The consolidated  financial  statements include the accounts of the Company
and its  subsidiaries.  All significant  intercompany  transactions and balances
have been eliminated upon consolidation.

     In December  1998, the Company  acquired  Avatar  Interactive  Limited in a
transaction  accounted for as a reorganization of companies under common control
in a manner  similar to pooling of interests.  The  transaction  was effected by
means of a share  exchange  whereby each share of Avatar  Interactive  Limited's
ordinary stock was converted into  approximately  66.208  ordinary shares of the
Company.

     The financial  statements  expressed in pounds  sterling as of December 31,
2000 have been translated into United States Dollars, solely for the convenience
of the reader,  at the noon buying rate in New York City for cable  transfers as
certified  for  customs  purposes  by the  Federal  Reserve  Bank of New York of
(pound)1.00  =  $1.4935.   These   translations   should  not  be  construed  as
representations  that the pound sterling amounts actually  represent U.S. dollar
amounts or that they could be converted into U.S. dollars at this rate indicated
or at any other rate.

RESTATEMENT

     In  connection  with the  acquisition  of the WWW Group  (see Note 2),  the
Company issued a loan of (pound)1,275,000 to the majority shareholder of the WWW
Group.  Because  this loan was  repayable  only from  proceeds  from the sale of
shares issued as consideration  for the acquisition,  this loan is effectively a
guaranteed  minimum value for such shares.  This loan  receivable was previously
recorded  as an asset.  Accordingly,  the 1999  financial  statements  have been
restated to reflect this loan receivable as a component of shareholders' equity.
The   restatement   resulted   in  a  decrease   in   shareholders'   equity  of
(pound)1,275,000  but had no effect on the net loss for the year ended  December
31, 1999.

USE OF ESTIMATES

     The preparation of financial  statements in conformity with U.S.  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts in the  consolidated  financial
statements  and  accompanying  notes.  Actual  results  could  differ from those
estimates.

REVENUE RECOGNITION

     Some of the Company's contract revenues are derived from services performed
under development contracts for the design, coordination, and integration of the
customer's  content and links into the TownPages  directory.  Revenues for these
services are recognized as the service is performed.

     Revenues  from  Web  site  design   agreements  are  recognized  using  the
percentage of completion  method where  reliable  estimates of costs to complete
the contracts are available.  If reliable estimates of costs to complete are not
available, the completed contract method is used.


                                      F-8
<PAGE>


     The Company's  advertising  revenues are derived principally from long-term
advertising  contracts  which  are  recognized  ratably  over  the  term  of the
contract.

     Hosting  revenues  are  recognized  ratably  over the  term of the  hosting
period, which is generally one year.

     Deferred revenue is primarily  comprised of payments received from Web site
design  contracts  in advance of revenue  recognition  and billings in excess of
recognized revenue relating to advertising contracts.

EQUIPMENT AND FIXTURES

     Equipment and fixtures are stated at cost. Depreciation and amortization of
equipment  and  fixtures  are  provided  so as to  write  down  the  cost of the
equipment and fixtures to their  estimated  residual  value over their  expected
useful lives, as follows:

   Motor vehicles            4 years reducing balance or 4 years straight line

   Computer equipment        3 to 10 years straight line

   Furniture and Fixtures    4 to 10 years reducing balance or 4 to 10 years
                             straight line

   Equipment                 2 to 10 years straight line

     Assets held under capital leases are capitalized and are amortized over the
lesser of the useful life of the asset or the lease term.  Amortization of these
assets is included with  depreciation  of owned  assets.  Property and equipment
financed  under  capital  leases  and  related   accumulated   amortization  was
(pound)1,813,966 and (pound)500,961  respectively at December 31, 2000. Property
and equipment financed under capital leases and related accumulated amortization
was (pound)290,222 and (pound)63,401 respectively at December 31, 1999.

CASH AND CASH EQUIVALENTS

     The Company considers  investments in highly liquid  instruments  purchased
with an  original  maturity  of 90 days  or  less to be cash  equivalents.  Such
amounts are stated at cost, which approximates market value.

CONCENTRATIONS OF CREDIT AND OTHER RISKS

     Potential  concentrations of credit risk to the Company consist principally
of short-term  cash  investments  and trade  receivables.  The Company sells its
products to customers in diversified  industries worldwide and performs on-going
credit evaluations of its customers'  financial condition and generally requires
no collateral.  Allowances for potential credit losses are maintained and actual
credit  losses  have been within  management's  expectation.  The  Company  only
deposits cash surpluses with high credit quality banks and institutions.

PENSION PLAN

     The Company sponsors defined  contribution pension plans for the benefit of
directors and employees.  The pension charge  represents the amounts  payable by
the Company to the plans.  All  employees  are eligible to join the plan and can
make contributions into the plan. The Company


                                      F-9
<PAGE>


contributes  into the plans per the  discretion  of the board of directors. Con-
tributions for all plans for the years ended December 31,  2000, 1999  and  1998
were (pound)68,476, (pound)41,461 and (pound)19,327, respectively.

RESEARCH AND DEVELOPMENT

     All  research  and  development  expenses  are  charged  to  operations  as
incurred.

ADVERTISING

     Costs related to advertising are expensed as incurred.  Advertising expense
for the  years  ended  December  31,  2000,  1999 and  1998  was  (pound)19,398,
(pound)66,187 and (pound)44,861, respectively.

GOODWILL

     The Company amortizes goodwill from the acquisitions of its subsidiaries on
a straight line basis over its estimated economic useful life of five years.

     The Company operates in a highly technological industry with relatively low
entry market barriers. Due to the fast moving nature of the Internet market, the
Company does not believe that goodwill will have a useful  economic life of more
than five years.  The carrying amount of goodwill is reviewed on a regular basis
for indicators of impairment. Indicators of impairment include reduced levels of
revenue in the businesses and a reduction in the  utilization of the current web
network. Should indicators of impairment exist, such impairment will be reviewed
through the examination of future discounted cash flows.

     The  Company  has  evaluated  its  long-lived  assets  including  goodwill.
Expected  relationships  with  strategic  partners  and the  consequent  revenue
streams from our Research Sales Inc.,  subsidiary have not been  forthcoming and
we have  therefore  assessed  that  goodwill  has  been  impaired.  Based on the
Company's  analysis of Research Sales,  Inc., and the conclusion that there is a
high risk that revenues will not now develop quickly  enough,  it was decided to
write off (pound)1,631,965 ($2,437,340), being the book value of this investment
as at December 31, 2000.

FOREIGN CURRENCY TRANSLATION

     Assets and  liabilities  of the  Company's  United  States  subsidiary  are
translated at year-end  rates and income and expenses are  translated at average
exchange rates prevailing during the year. Translation  adjustments arising from
differences  in exchange rates from period to period have been reported as other
comprehensive loss in shareholders' equity.

     Exchange gains and losses arising from foreign  currency  transactions  for
the  years   ended   December   31,  2000  and  1999  were   (pound)37,381   and
(pound)163,653, respectively. There was no foreign exchange gain or loss for the
year ended  December  31,  1998.  To date the Company  has not entered  into any
foreign   currency   forward   exchange   contracts  or  other  such  derivative
instruments.

PER SHARE AMOUNTS

     Basic EPS is  calculated  using the  weighted  average  number of  ordinary
shares  outstanding.  Diluted EPS is  calculated  based on the weighted  average
number of ordinary shares plus the dilutive  ordinary shares from employee share
options.  In periods  when the  Company  reports a net loss,  diluted EPS is not
reported because the effect of potential common shares is anti-dilutive.


                                      F-10
<PAGE>

<TABLE>
<CAPTION>
                                                                            Year ended December
                                                                            ===================
                                                                   1998                1999               2000
                                                                   ----                ----               ----
<S>                                                            <C>              <C>                  <C>
Net loss                                                      (pound)(872,096) (pound) (2,057,634)  (pound)(8,765,446)
                                                            =================   =================   =================

Weighted average shares outstanding                                 5,000,000           7,111,075           9,816,405
Effect of dilutive securities-employee stock options                       --                  --                  --
Shares used to compute basic and diluted
net loss per share                                                  5,000,000           7,111,075           9,816,405
                                                            =================   =================   =================


Basic and diluted net loss per share                            (pound)(0.17)       (pound)(0.29)       (pound)(0.89)
                                                            =================   =================   =================
</TABLE>

COMPREHENSIVE LOSS

     Under  SFAS No.  130,  Reporting  Comprehensive  Income,  foreign  currency
translation adjustments and unrealized losses on marketable securities available
for sale are included in other comprehensive loss.

     The following are the components of comprehensive loss:
<TABLE>
<CAPTION>
Year ended December 31, (in thousands)               1998                   1999                    2000
                                              --------------------    -----------------     ----------------------

<S>                                                    <C>                <C>                        <C>
Net loss                                              (pound)(872)       (pound)(2,058)             (pound)(8,765)

Foreign currency translation adjustments                        -                    -                        (3)

Unrealized  loss  on  marketable  securities                    -                    -                      (707)
available for sale
                                             --------------------    -----------------     ----------------------
Total comprehensive loss                              (pound)(872)       (pound)(2,058)             (pound)(9,745)
                                             --------------------    -----------------     ----------------------
</TABLE>

No income tax effect has been recorded related to the comprehensive  loss due to
the doubt about the realizability of the related deferred tax assets.

NEW ACCOUNTING PRONOUNCEMENTS

     The Financial  Accounting  Standards Board ("FASB") has issued Statement of
Financial  Accounting  Standards No. 133,  which has not yet been adopted by the
Company.  SFAS No.  133,  "Accounting  for  Derivative  Instruments  and Hedging
Activities",  is effective for fiscal years  beginning after June 15, 2000. This
standard  requires  all  derivatives  to  be  recognized  as  either  assets  or
liabilities  on the balance sheet at their fair values.  It also  prescribes the
accounting  to be followed  for the  changes in the fair  values of  derivatives
depending  upon their intended use and resulting  designation.  It supercedes or
amends the existing  standards which deal with hedge accounting and derivatives.
The Company has reviewed the effects of this  standard  and does not expect that
adopting this standard will have a material effect on its financial statements.

     In June 2001, the Financial Accounting Standards Board issued Statements of
Financial  Accounting  Standards No. 141,  Business  Combinations,  and No. 142,
Goodwill and Other Intangible Assets, effective for fiscal years beginning after
December 15, 2001. Under the new rules, goodwill will no longer be amortized but
will be subject to annual  impairment  tests in accordance  with the Statements.
Other intangible assets will continue to be amortized over their useful lives.

     The Company will apply the new rules on  accounting  for goodwill and other
intangible  assets  beginning in the first quarter of 2002.  Application  of the
nonamortization  provisions of the Statement is


                                      F-11
<PAGE>


expected to result in a decrease in net loss of (pound)3.0 million  ((pound)0.30
per share) in the year ended  December 31, 2002.  During 2002,  the Company will
perform the first of the required  impairment  tests of goodwill and  indefinite
lived  intangible  assets as of January 1, 2002 and has not yet determined  what
the effect of these tests will be on the earning and  financial  position of the
Company.

2.   BUSINESS COMBINATIONS AND ACQUISITIONS

ACQUISITION OF WWW GROUP

     On July 19, 1999, the Company  completed the acquisition of four companies,
WWW.CO.UK Limited,  Summerfields  Publishing Limited, The Platinum Club Limited,
and Feature Boards Limited,  all corporations under common control and organized
under the laws of England and Wales  (collectively  referred  to as "WWW").  WWW
provides  advertising  management and  optimization  services to
advertisers  and  agencies in both print media and  through  the  Internet  from
locations in the United Kingdom. Under the trading name 'Cinemas Online,' WWW is
an Internet provider of cinema information in England and Ireland. In connection
with the acquisition,  in exchange for all the outstanding  capital stock of the
four   companies  of  WWW,  the  Company   paid   (pound)1.5   million  in  cash
(approximately  U.S.$2.2 million) and issued 488,281 ordinary shares,  valued at
(pound)2.5  million  (approximately  U.S.$3.7  million),  based on U.S.$8.00 per
share calculated in accordance with EITF 95-19.

     In  connection  with the  acquisition  of WWW,  the  Company has loaned the
former  majority  shareholder of WWW  (pound)1,275,000  (approximately  U.S.$1.9
million) under a limited recourse promissory note which bears interest at 4% per
annum. In addition, the Company was required to facilitate the sale of a portion
of the shares issued as  consideration  within a specified  placement  period or
provide an additional loan of (pound)225,000  (approximately $0.3 million) under
a limited  recourse  promissory  note which bears interest at 4% per annum.  The
additional  loan  was  also  provided   because  the  sale  of  shares  was  not
facilitated.  The loans are due upon the vendor's sale of the ordinary shares of
the Company, issued in connection with the acquisition. As of December 31, 2000,
the balance due under such note including interest accrued was (pound)1,582,000.
Since there is no  guarantee  that the loan will be fully  repaid from  proceeds
received from the sale of the shares, we have established  reserves for the full
amount of this loan,  plus the  interest.  As  discussed  in Note 1, the loan of
(pound)1,275,000 is effectively a minimum guaranteed value for the shares issued
as consideration  and,  therefore,  the provision  related to that loan has been
accounted for as a capital  transaction.  The  provision  related to the loan of
(pound)225,000  is a penalty for not fulfilling an obligation under the contract
and is included in other  expenses.  The  interest  written off on both loans is
included in other expenses.

     In addition,  in  accordance  with the  acquisition  agreement  the Company
agreed to pay to the former owners of WWW, a maximum of (pound)250,000 within 90
days after the end of each of fiscal years ending December 31, 1999 and December
31,  2000 in the event that the  aggregate  turnover  or sales  revenues  of WWW
equals or exceeds (pound)2,139,000 and (pound)2,861,000 in fiscal years 1999 and
2000, respectively.  The target for the year ended December 31, 1999 was met and
the related  contingent  consideration  was subsequently paid in March 2000. The
target for the year ended  December  31, 2000 was met.  The  related  contingent
consideration  does not fall due for payment until 2001. The  (pound)250,000 was
recorded in goodwill and accrued  expenses and other  liabilities as at December
31, 2000.

     The  acquisition  was accounted for using the purchase method of accounting
and resulted in goodwill of approximately  (pound)5.4  million.  The goodwill is
being  amortized  over a 5 year period on a straight line basis.  The results of
operations of WWW are included in the accompanying  statement of operations from
the date of acquisition.


                                      F-12
<PAGE>


      As of December 31, 2000, we owned 10% of the outstanding  share capital of
UK Property Channel.com Limited,  which operates  www.ukpropertychannel.com,  an
Internet portal which lists real estate  available for sale  throughout  England
and  Wales.  In  March  2001,  we  acquired  an  additional  60% of UK  Property
Channel.com  Limited.  Upon completion of this acquisition,  we owned 70% of the
outstanding  share  capital  stock  of  UK  Property  Channel.com  Limited.  The
consideration  consisted of amounts  previously  advanced for working capital of
(pound)1,413,803 ($2,111,515).

ACQUISITION OF MORBRIA LIMITED

     On September 24, 1999, the Company  consummated  the acquisition of Morbria
Limited, and its subsidiaries, The Graphic Palette Company (Manchester) Limited,
Centrix Communications Limited and Review Marketing and Advertising Limited, all
corporations  organized  under  the  laws of  England  and  Wales  (collectively
referred to as "Morbria"). Morbria, through its subsidiaries, specializes in web
site design and advertising  services.  In connection with the  acquisition,  in
exchange for all the outstanding  capital stock of Morbria Limited,  the Company
issued 857,972  ordinary  shares,  valued at  approximately  (pound)3.4  million
(approximately  U.S.$5.1  million),  based on a price of  U.S.$6.50  per  share,
representing  a 20% discount of the per share  closing  price of the ADSs on the
American  Stock  Exchange on September 23, 1999.  The share value was discounted
due to the fact that the shares issued are  restricted  and the holders of these
ordinary shares have no registration rights.

     On the date of acquisition,  all of the  subsidiaries  were 100% owned with
the  exception  of Centrix  Communications  Limited,  which was 75%  owned.  The
remaining 25% was owned by a director of Centrix Communications Limited, who was
entitled to dividends in  proportion  to his  ownership.  On July 21, 2000,  the
Company  agreed to purchase the remaining 25% minority  shareholding  in Centrix
Communications  Limited.  In exchange  for the 25%  minority  shareholding,  the
Company issued 11,359 ordinary shares,  valued at  (pound)15,000  (approximately
U.S.$22,400), based on a price of U.S.$2 per share.

     In addition,  the Company agreed to pay to the former owners of Morbria,  a
maximum of  (pound)930,000  if the net  revenues  of Morbria  for the year ended
March 31, 2000  exceeded  (pound)3,160,000.  This target was not met. If the net
revenues in the year ending March 31, 2001 exceed  (pound)3,160,000,  Town Pages
is  obligated  to pay a sum equal to the  amount by which  net  revenues  exceed
(pound)3,160,000  multiplied by a factor of 1.77. The  contingent  consideration
will be satisfied by the issue of ordinary shares.

     The  acquisition  was accounted for using the purchase method of accounting
and resulted in goodwill of approximately  (pound)3.7  million.  The goodwill is
being  amortized  over a 5 year period on a straight line basis.  The results of
operations of Morbria are included in the  accompanying  statement of operations
from the date of acquisition.

     On August 31, 2000,  Morbria  completed the  acquisition  of 75.01% of 24.7
Colour Limited,  formerly known as Cornbrook  Precision Colour (CPC) Limited,  a
sheetfed  print  company.  As  consideration  for the  acquisition of the 75.01%
shareholding,  Morbria infused  (pound)222,000  ($332,000)  worth of assets into
24.7 Colour.  The  acquisition  was accounted  for using the purchase  method of
accounting and resulted in goodwill of  approximately  (pound)0.2  million ($0.3
million) in Morbria.  The goodwill is being  amortized over a 5 year period on a
straight  line basis.  The results of  operations of 24.7 Colour are included in
the accompanying statement of operations form the date of acquisition.

ACQUISITION OF BUYERSGUIDE LIMITED

     On October 1, 1999, the Company  consummated the acquisition of BuyersGuide
Limited,  a  corporation  organized  and existing  under the laws of England and
Wales ("BuyersGuide").  BuyersGuide publishes the Internet-based Local Authority
& Public  Service  "Buyer's  Guide."  In  connection  with the


                                      F-13
<PAGE>


acquisition,  in exchange for all the outstanding  capital stock of BuyersGuide,
the  Company  issued  486,381  ordinary  shares,  valued at  (pound)2.5  million
(approximately  U.S.$3.7 million),  based on a price of U.S.$8.60,  representing
the average of the  closing  price per share of the ADSs on the  American  Stock
Exchange on the five business days prior to the closing date of the acquisition.

     In addition,  in accordance  with the  acquisition  agreement,  the Company
agreed to pay to the former owners of  BuyersGuide  an amount equal to ten times
the amount, if any, by which the pretax income of Buyers Guide for the 12 months
ending March 31, 2000, exceeded  (pound)250,000.  Such Contingent  Consideration
payable in the form of TownPages shares, calculated at U.S.$8.60 per share. This
contingent  consideration  was satisfied on July 5, 2000 by the issue of 423,932
TownPages ordinary shares valued at approximately (pound)437,000  (approximately
$653,000).  This  amount was  recorded in  goodwill.  In  addition,  there was a
secondary  earnout paid in cash of  (pound)166,750,  as sales invoices issued by
Buyers  Guide for the six months ended March 31, 2000  exceeded  (pound)900,000.
This was recorded in goodwill.

     The  acquisition  was accounted for using the purchase method of accounting
and resulted in goodwill of approximately  (pound)2.96  million. The goodwill is
being  amortized  over a 5 year period on a straight line basis.  The results of
operations  of  BuyersGuide  are  included  in  the  accompanying  statement  of
operations from the date of acquisition.

     On July 24,  2000,  BuyersGuide  was  admitted to trade on the  Alternative
Investment  Market  ("AIM") of the London Stock  Exchange  following  the public
offering of its  ordinary  shares  pursuant to which it realized net proceeds of
approximately (pound)4.4 million ($6.6 million) from institutions at an offering
price of  (pound)0.29  ($0.43).  On the same  date,  the  authorized  capital of
BuyersGuide was increased to 120,000,000  shares of which 87,250,000 shares were
outstanding upon the closing of that offering.  The Company recognized a gain of
approximately (pound)5.1 million ($7.6 million) from this transaction.

ACQUISITION AND MERGER WITH RESEARCH SALES INC.

     On  November  1,  1999,   the  Company   consummated   the  merger  of  its
newly-formed, wholly-owned subsidiary, Rasmussen Acquisition Corp., a Washington
corporation,  with and into Research Sales, Inc. (d/b/a Rasmussen  Research),  a
Washington corporation  ("Research Sales").  Research Sales is an Internet-based
polling and market research firm. In connection with the merger, in exchange for
all of the capital stock of Research Sales,  the Company issued 551,302 ordinary
shares, valued at approximately  (pound)2.0 million (U.S.$3.0 million), based on
the U.S.$ 6.00 per share  closing  price of the  Company's  ADSs on the American
Stock Exchange on October 29, 1999.

     The  acquisition  was accounted for using the purchase method of accounting
and resulted in goodwill of approximately  (pound)2.0  million.  The goodwill is
being  amortized  over a 5 year period on a straight line basis.  The results of
operations of Research Sales Inc. are included in the accompanying  statement of
operations from the date of acquisition.

      As at  December  31,  2000,  there  was a net  balance  after  accumulated
amortization of (pound)1,631,965  ($2,437,340) arising from goodwill relating to
Research  Sales,  Inc.  Management  believes  that  there  has been  significant
impairment and has therefore written this balance off in full at that date.


                                      F-14
<PAGE>


     An analysis of the allocation of the purchase prices of the acquisitions is
as follows:
<TABLE>
<CAPTION>
                                                    -----------     ------------     ---------    --------      --------
                                                                                       Buyers     Research
                                                          WWW         Morbria          Guide        Sales        24.7
                                                    -----------     ------------     ---------    --------      --------
<S>                                                  <C>             <C>              <C>          <C>           <C>
(IN THOUSANDS)

Fair value of assets Acquired                       (pound)(769)    (pound)(384)     (pound)30    (pound)82     (pound)2
Goodwill                                                  5,359           3,835          2,962        1,998          233
                                                    -----------     ------------     ---------    --------      --------
Total purchase Price                               (pound)4,590    (pound)3,451   (pound)2,992 (pound)2,080   (pound)235
                                                    -----------     ------------     ---------    --------      --------
</TABLE>

PRO FORMA EFFECT OF ACQUISITIONS


     The  unaudited  pro forma  effect  of the  acquisitions  set  forth  above,
assuming  each of the  acquisitions  was  consummated  at the  beginning  of the
respective year of acquisition and the immediately preceding year is as follows:

                                            YEARS ENDED DECEMBER 31,
                                         1999                      2000
                              --------------------     ----------------------
Revenues                      (pound)  11,298,731      (pound)     7,958,521
Net loss                      (pound)  (4,305,402)     (pound)    (8,794,202)
Net loss per share            (pound)       (0.60)     (pound)         (0.90)



3.   BORROWING ARRANGEMENTS

      The Company and its subsidiaries finance working capital in part through a
committed bank facility of (pound)2.5 million ($3.7 million). As of December 31,
2000,  the  amount   outstanding   under  this  facility  was   (pound)2,329,504
($3,479,114).  On  March  30,  2001,  HSBC  agreed  to  increase  the  borrowing
availability  under the facility to (pound)4.0  million ($6.0 million).  In July
2001, HSBC further  increased the facility to (pound)5.2  million ($7.8 million)
until September 30, 2001. This facility is provided by HSBC Bank plc (HSBC). The
facility  bears  interest  at a rate of 2% over the  prevailing  HSBC base rate.
Security  given against the facility was as follows:  an unlimited  multilateral
Company  guarantee  given by each  subsidiary to secure all  liabilities of each
other;  a  debenture  including  fixed  equitable  charge  over all  present and
freehold and  leasehold  property;  56,914,500  Ordinary  Shares of 0.1p each of
BuyersGuide  plc first Legal Charge given by  Buyersguide  Holdings  Limited;  a
memorandum of deposit by TownPagesNet.com  plc over the Ordinary Shares it holds
in each  subsidiary.  The  Company  also has an  uncommitted  bank  facility  of
(pound)200,000.  This  facility  bears  interest  at a rate  of  2.5%  over  the
prevailing U.K. base rate and is  collateralized  on a debenture  giving a fixed
and floating charge on all assets of Graphic  Palette  (Manchester)  Limited,  a
wholly-owned subsidiary within the Morbria group.

4.   RELATED PARTY TRANSACTIONS

     Prior  to  our  initial  public  offering  in May  1999,  we  financed  our
operations  primarily  through a discretionary  secured operating line of credit
from  Glen  Investments   Limited.   Glen  Investments   Limited  is  a  company
wholly-owned  by Kevin R. Leech,  a director of our company who is,  through his
other affiliates Glen UK Holdings Limited and Milner Laboratories  Limited,  the
beneficial owner of approximately 26.1% of our outstanding ordinary shares. Upon
completion of the offering, we converted (pound)850,000  ($1,269,475) we owed to
Glen  Investments  into  850,000 of our Series A  preferred  shares,  which have
priority  over our  ordinary  shares with  respect to dividend  and  liquidation
rights and are  convertible  into ordinary  shares at 120% of the initial public
offering price per ADS,  commencing on May 5, 2000. The (pound)1.6 million ($2.3
million)  balance of the indebtedness  owed to a Glen Investments  affiliate was
repaid from the net proceeds of our initial public offering.


                                      F-15

<PAGE>


     As at  December  31,  2000,  we had  received  a  working  capital  loan of
(pound)2,400,000  ($3,584,400)  from Kevin R. Leech,  of which the entire amount
was outstanding as of December 31, 2000. The loan bears interest at 2% above the
U.K. base rate, which was 6% per annum as at December 31, 2000, and is repayable
on the  earlier of January 5, 2002 or our receipt of the net  proceeds  from the
realization of any of our investments.

     Both prior to and subsequent to completion of our initial public  offering,
our company has sold  significant  services to and  purchased  certain goods and
services from certain  subsidiaries  of Glen  Investments  as well as ci4net.com
Inc.,  a United  States  publicly  traded  company in which  Kevin R. Leech is a
significant   stockholder,   beneficially   owning   approximately  40%  of  its
outstanding shares.

      ci4net.com,  Inc.  has  majority  interests  in  companies to whom we have
provided exclusive Web site development services.  ci4net.com directly accounted
for  revenues   totaling   (pound)226,836   ($338,779),   (pound)1,186,175   and
(pound)163,397   in  the  years  ended   December  31,  2000,   1999  and  1998,
respectively.  We had accounts  receivable due from ci4net.com of (pound)22,619,
(pound)1,222,925   and  (pound)235,000,   and  the  income  deferred  was  zero,
(pound)23,285  and  (pound)136,603,   at  December  31,  2000,  1999  and  1998,
respectively.  The  (pound)22,619  receivable due from ci4net.com as of December
31, 2000 has been fully provided for.  Additional  customers in which ci4net.com
has a majority  interest  accounted  for revenues  totaling  (pound)480,621  and
(pound)2,260,525  in the years ended  December  31, 2000 and 1999,  and at those
dates we had accounts  receivable due from such companies of  (pound)57,576  and
(pound)3,491,600,   respectively,   and  the  income   deferred   was  zero  and
(pound)813,625,  respectively.  Out of the  (pound)57,576  balance  due,  we had
provided for (pound)52,373.

     Planet Edge Limited,  a former  subsidiary of ci4net.com,  is a provider of
Web site development services for Avatar Interactive  Limited.  Planet Edge also
provides  secure  e-commerce  transaction  and Web site  hosting  facilities  to
Morbria which Morbria's subsidiary, Graphic Palette, resells to its clients. The
Company  purchased goods and services from Planet Edge totaling  (pound)152,899,
(pound)738,680  and  (pound)111,422 for the years ended December 31, 2000, 1999,
and 1998, respectively.  At December 31, 2000 and 1999, the outstanding balances
payable were nil and (pound)247,642, respectively.

     On December 12, 2000,  we entered into  agreements  with Kevin R. Leech and
with  ci4net.com  to settle  all  outstanding  obligations  among  the  Company,
ci4net.com and their operating subsidiaries.  Under the terms of the agreements,
we agreed to sell to ci4net.com  for  (pound)1.3  million  ($1.94  million),  or
(pound)0.29  ($0.41)  per  share,   4,482,759  shares  of  our  BuyersGuide  plc
subsidiary,  representing 5.14% of its outstanding shares, and further agreed to
cancel our accounts payable of approximately  (pound)360,000  ($538,000) owed by
us to the  Planet  Edge  Limited  subsidiary  of  ci4net.com.  We  also  settled
approximately   (pound)623,000   ($930,000)   of  amounts  owed  by   ci4net.com
subsidiaries to our Graphic Palette and Centrix Communications  subsidiaries and
received from ci4net.com an assignment of a (pound)524,000 ($783,000) obligation
owed to  ci4net.com  by  UKPropertyChannel.com  Limited.  As  consideration,  we
received  1,098,280  shares of the common stock of  ci4net.com,  Inc.  valued at
approximately (pound)1.5 million ($2.1 million), or $2.00 per share, the closing
price of the  ci4net.com  common  stock as traded on the OTC  Bulletin  Board on
December  12,  2000.  Kevin R. Leech,  a principal  shareholder  of  ci4net.com,
provided the 1,098,280  shares of common stock that were required for ci4net.com
to consummate this transaction.  These shares are presently unregistered. We and
ci4net.com  have agreed that these shares may be registered  with the Securities
and Exchange  Commission  under the Securities  Act of 1933, as amended,  in the
name of TPN Holdings plc, in due course, free from any encumbrances.

      Prior to our  September  1999  acquisition  of that  company,  our Morbria
Limited  subsidiary  was  controlled  by Glen UK  Holdings  Limited,  a  company
wholly-owned by Glen  Investments  Limited,  whose sole  shareholder is Kevin R.
Leech.  Glen UK Holdings  Limited  received  772,174 of our  ordinary  shares in
connection with our acquisition of the Morbria group of companies.


                                      F-16
<PAGE>


     As at  December  31  2000  we have  advanced  the  sum of  (pound)1,886,156
($2,816,974) to  UKPropertyChannel.com  Limited, a company in which we had a 10%
shareholding  as of  December  31,  2000.  We  acquired  an  additional  60%  of
UKPropertyChannel.com in March 2001.

     Morbria,  a  wholly-owned  subsidiary  of the  Company,  has  various  Glen
Investment Limited companies as its customers. Revenues for these companies from
September 24, 1999 (the date of acquisition of Morbria), to December 31,1999 was
(pound)438,542.  Revenues for these  companies  for the year ended  December 31,
2000 totaled  (pound)1,027,683.  At December 31, 2000 and 1999, the  outstanding
balances  from  these   companies   was   (pound)291,748   and   (pound)827,952,
respectively.

     In March 2000, a payment of (pound)500,000  ($746,750) was made to John and
Lucy Bowden,  directors of  Buyersguide  Limited,  in relation to the October 1,
1999 acquisition  agreement  whereby the Bowdens assigned 97,276 Ordinary Shares
of TPN Holdings plc to ci4net.com,  which under the assignment  agreement agreed
to sell the Ordinary Shares,  passing the proceeds on to the Company. The 97,276
Ordinary  Shares have not yet been sold and there is no guarantee that the share
price will be valued  sufficiently  in the future for the  Company to recoup the
(pound)500,000 in full. Therefore, the payment has been provided against in full
and is included in general and administrative  expenses as at December 31, 2000.
Similarly,  in July 2000 and in connection with the October 1, 1999  acquisition
agreement,  a further  payment of  (pound)500,000  was made to the Bowdens.  The
Bowdens  were  also  issued  336,141  TownPagesNet.com  plc  shares  and  87,791
TownPagesNet.com  plc shares  classed as "the  Option  Shares".  On sale of "the
87,791 Option  Shares",  the sale proceeds would be paid in full to the Company.
Again, these shares remain unsold and there is no guarantee that the share price
will be  valued  sufficiently  in the  future  for the  Company  to  recoup  the
(pound)500,000 in full.  Therefore,  the payment has been posted to compensation
and is included in general and administrative expenses as at December 31, 2000.

     The Company's Chief Executive Officer,  Robert Bradshaw, is also a director
of Heritage Great Britain plc, a U.K. based company. In the year ending December
31, 2000,  Heritage Great Britain plc supplied  services to the Company totaling
(pound)64,638  ($96,537). The balance outstanding to Heritage Great Britain plc,
as at December 31, 2000, was  (pound)5,875  ($8,774).  There were no comparative
figures for previous years. The Company also sold goods and services to Heritage
Great Britain plc, totaling (pound)20,149 ($30,092) for the year ending December
31, 2000. The outstanding balance from Heritage Great Britain plc as at December
31, 2000 was nil and there were no comparative figures for previous years.

     Simon J.  Ward,  one of the  members of our board of  directors,  is also a
director of CW Fellowes Limited,  our independent business advisor. In the years
ending December 31, 2000, 1999 and 1998, CW Fellowes  supplied services totaling
(pound)27,413,   (pound)176,430   and  (pound)68,395,   respectively.   Balances
outstanding  to CW Fellowes as at December 31, 2000 and 1999 were  (pound)18,935
and (pound)54,045, respectively.



                                      F-17
<PAGE>


5.   COMMITMENTS

LEASE OBLIGATIONS AND OPERATING LEASES

     The Company's principal operating leases are for office buildings and motor
vehicles.  In most  cases,  it is  expected  that the  operating  leases will be
renewed or  replaced  by other  leases in the  normal  course of  business.  The
following is a schedule of future  minimum lease  payments  under both operating
and capital leases at December 31, 2000:

<TABLE>
<CAPTION>
                                                    Operating Leases       Sublease Rentals    Capital Leases
                                                    ----------------       ----------------    --------------
<S>                                         <C>                      <C>                    <C>
Years ending December 31:
         2001                              (pound)       297,200    (pound)       17,358   (pound)   525,197
         2002                                            297,200                  35,179             450,246
         2003                                            214,906                  36,000             369,633
         2004                                            158,584                  27,000             346,500
         2005                                            150,796                                     131,657
         2006 and thereafter                             750,107                                      25,263
                                            --------------------      ------------------   ------------------
Total minimum lease payments required       (pound)    1,868,793      (pound)    115,537           1,848,496
                                            ====================      ==================
Less amount representing interest                                                                   (368,994)
                                                                                           ------------------
Present value of future lease payments                                                             1,479,502
Less current portion                                                                                 457,468
                                                                                           -----------------
Non current portion                                                                        (pound) 1,022,032
                                                                                           =================
</TABLE>


     Rental   expense   under  these   operating   leases  was   (pound)286,520,
(pound)83,953, and (pound)40,300 for the years ended December 31, 2000, 1999 and
1998, respectively.

     In 1999, the Company entered into an agreement with NCR Limited whereby the
Company  committed to  purchasing a specified  number of kiosks  through  August
2001.  The cost of the  kiosks  are  capitalized  at the time of  purchase.  The
contract provided for cancellation  penalties should the Company not fulfill the
requirements  of the  agreement.  On October 19, 2000 the  contract  was jointly
terminated, eliminating our obligation to purchase specific numbers of kiosks on
specified dates and to permit us to purchase kiosks on an as needed basis. Thus,
a potential penalty of (pound)703,286 (U.S.$ 1,050,358) was avoided.

      On March 16, 2000 the Company signed an agreement  with  Equipment  Rental
for Finance  Limited,  passing title to them of 91  customized  kiosk units from
Avatar  Interactive.   Consideration  of  this  transaction  was  (pound)501,062
($748,336),  being the  initial  cost of the 91 kiosks and was  received  by the
Company on March 16, 2000.  These  kiosks were then leased back through  capital
leases to the Company over 5 years. Similarly,  title to 92 kiosks was passed to
Equipment  Rental for Finance on May 5, 2000.  Consideration of this transaction
was (pound)506,184  ($755,986),  being the initial cost of the 92 kiosks and was
received by the Company on May 5, 2000. Again these kiosks were then leased back
through  capital leases to the Company over 5 years. On October 5, 2000 title to
a further 42 kiosks was passed to Equipment  Rental for  Finance.  Consideration
for this transaction was  (pound)231,464  ($345,691),  being the initial cost of
the 42 kiosks and was  received by the  Company on October 5, 2000.  Again these
kiosks were then leased back to the Company over 5 years.



                                      F-18
<PAGE>


6.   STOCKHOLDERS' EQUITY

ORDINARY SHARES

     On May 5, 1999,  we  completed  our  initial  public  offering  of American
Depositary Shares  representing  2,200,000 shares of our common stock.  Proceeds
from the offering were approximately (pound)10,708,677, net of offering costs.

PREFERRED STOCK

     In December 1998, the Company's  shareholders  passed a resolution  whereby
the  articles of  association  of the Company were amended to increase the share
capital  of the  Company  to  allow  for the  creation  of a class  of  Series A
preferred stock,  (pound)1 par value, whereby the Company is authorized to issue
up to 5,000,000  shares.  The Series A preferred  stock will not be  redeemable,
except by mutual  agreement of the Company and holder  within 12 months from the
completion of the initial public  offering of the Company's  shares.  The shares
are  non-voting.  The  preferred  stockholders  are  entitled to  non-cumulative
dividends at a 9% coupon rate.  The  liquidation  rate of the Series A preferred
shares are at their par value, and the Series A preferred shares have preference
in that amount in liquidation or dissolution over the ordinary shares. The terms
of the Series A preferred  shares  prohibit the payment of cash dividends on the
ordinary  shares  in any year  until the  Company  also  declares  and pays a 9%
dividend on the Series A  preferred  shares.  The Series A preferred  shares are
convertible into ordinary shares,  at the option of the holder, at any time from
May 6, 2000 at a conversion price of U.S.$12.00 per share.

7.   SEGMENTAL INFORMATION

     The Company's businesses are organized,  managed and internally reported as
separate business units which are reportable under SFAS No. 131.

     As required, we have determined that we have five principal businesses: (1)
Avatar  Interactive  (formerly  Town Pages UK Limited)  which provides new media
related services,  (2) WWW which is an internet  provider of cinema  information
and advertising  services,  (3) Morbria which provides web site design services,
(4)  BuyersGuide  which  publishes the internet based Local Authority and Public
Service  "Buyers  Guide",  and (5)  Research  Sales which is an  internet  based
polling and market  research  firm.  In  addition,  those  expenses not directly
attributable to any of the foregoing have been categorized as General Corporate,
which  primarily  comprises  amortization  of goodwill  and certain  head office
costs.

     The accounting  policies of the segments are the same as those described in
the summary of significant  accounting  policies.  We evaluate  performance  and
allocate resources based on segmental operating income (loss).

                                      F-19
<PAGE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                                                                                  ITEMS TO      RESULTS
(IN THOUSANDS)                                                                                         RECONCILE TO      PER
                                                                       BUYERS    RESEARCH    GENERAL     FINANCIAL    FINANCIAL
                                  AVATAR       WWW        MORBRIA      GUIDE       SALES    CORPORATE    STATEMENTS   STATEMENTS
                                  ------       ---        -------      -----       -----    ---------    ----------   ----------
                                 (POUND)     (POUND)      (POUND)     (POUND)     (POUND)    (POUND)       (POUND)     (POUND)
<S>                                <C>         <C>           <C>      <C>         <C>         <C>         <C>          <C>
Net sales
        2000                          343     2,297         2,920      1,354          26          --          --         6,940
        1999                        5,254       837         1,081         62          14          --          --         7,248
        1998                        1,120        --            --         --          --          --          --         1,120
Intersegment sales
        2000                           11        --           171         --          --          --        (182)           --
        1999                           --        --           448         --          --          --        (448)           --
        1998                           --        --            --         --          --          --          --            --
Operating income (loss)
        2000                       (4,165)     (171)         (380)    (1,511)     (2,304)     (3,011)     (2,116)      (13,658)
        1999                         (913)     (198)          512       (163)       (119)       (460)       (820)       (2,161)
        1998                         (800)       --            --         --          --          --          --          (800)
Long-lived assets
        2000                        1,707       141         1,166        155         516       8,324          --        12,009
        1999                        1,434        82           577         11         416      13,500        (843)       15,177
        1998                          125        --            --         --          --          --          --           125
Depreciation and amortization
        2000                          799        39           171         50         426       2,288          --         3,773
        1999                          185        20            32          1          21         830          --         1,089
        1998                           42        --            --         --          --          --          --            42
Additions to long-lived assets
        2000                        1,068        97           129          9         251          --          --         1,554
        1999                        1,483        46             3          1           6      13,389          --        14,928
        1998                          148        --            --         --          --          --          --           148

</TABLE>



                                      F-20
<PAGE>


GEOGRAPHIC INFORMATION

     Our  operations  outside the U.K.  include the activities of our U.S. based
wholly owned  subsidiary,  Research  Sales,  Inc. All non U.K.  activities  were
within the United States. The following is a summary of the Company's operations
by geographic region at and for the three years ended December 31, 2000.

<TABLE>
<CAPTION>
                                                                       AT AND YEARS ENDED DECEMBER 31,
                                                       ----------------------------------------------------------
                                                                2000                1999               1998
                                                       ----------------------  ----------------   ---------------
                                                                               (IN THOUSANDS)
<S>                                                    <C>                     <C>                  <C>
Revenues from customers
         United Kingdom                                   (pound)    6,914     (pound)  4,115       (pound)  771
         United States                                                  26              3,133                349
                                                       ----------------------  ----------------   ---------------
              Total                                       (pound)    6,940     (pound)  7,248     (pound)  1,120
                                                       ======================  ================   ===============

Long-lived assets
         United Kingdom                                     (pound) 11,493     (pound) 14,761       (pound)  125
         United States                                                 516                416                 --
                                                       ----------------------  ----------------   ---------------
              Total                                    (pound)      12,009     (pound) 15,177       (pound)  125
                                                       ======================  ================   ===============
</TABLE>


8.   STOCK BASED BENEFIT PLANS

STOCK OPTION PLAN

     In December 1998, the board of directors  approved a stock option plan, the
Town Pages Executive Share Option Plan ("the Plan") in the Company,  whereby the
directors and employees may acquire ordinary shares.  Options are exercisable on
the third anniversary of the date of grant and expire ten years from the date of
grant.  Options  granted shall not be at less than 100% of the fair value of the
ordinary shares on the date of grant. Where ordinary shares are to be subscribed
on the  exercise of an option,  the option price cannot be less than the nominal
value of an ordinary share. An employee's  participation  is limited so that the
aggregate  price payable for ordinary shares under option in any ten year period
does not  exceed  a  multiple  of ten  times  the  employee's  remuneration.  An
aggregate of 10% of the ordinary shares issued and outstanding from time to time
may be  issued or  issuable  under the Plan.  For the  purposes  of this  limit,
options  which  lapse or ordinary  shares  held in  treasury  are not taken into
account.

     The   following  is  a  summary  of  stock  option   activity  and  related
information:



                                      F-21
<PAGE>

<TABLE>
<CAPTION>
          Outstanding                              Outstanding                                  Outstanding      Weighted Average
          December 31,                             December 31,                                 December 31,   Remaining Contractual
             1998     Granted  Exercised  Cancelled    1999     Granted  Exercised  Cancelled      2000           Life (Years)

<S>           <C>     <C>         <C>       <C>     <C>             <C>      <C>     <C>         <C>                  <C>
$10.00        --      177,500     --        --      177,500         --       --      (60,000)    117,500              8.42

$7.00         --       29,526     --        --       29,526         --       --           --      29,526              8.58

$6.75         --      155,500     --        --      155,500         --       --      (36,750)    118,750              8.92

$6.375        --       57,974     --        --       57,974         --       --      (10,000)     47,974              8.92

$6.25         --           --     --        --           --      2,500       --           --       2,500              9.33

$4.13         --           --     --        --           --     30,000       --           --      30,000              9.33

$3.25         --           --     --        --           --     50,000       --           --      50,000              9.42

$2.125        --           --     --        --           --     51,000       --           --      51,000              9.50

$2.375        --           --     --        --           --     60,000       --           --      60,000              9.58

$1.00         --           --     --        --           --     45,750       --           --      45,750              9.83

$0.50         --           --     --        --           --    445,000       --           --     445,000              9.92

        ---------------------------------------------------------------------------------------------------------------------------
Total         --      420,500     --        --      420,500    684,250        0     (106,750)    998,000              9.25

Weighted
exercise
price         --        $8.09     --        --        $8.09      $1.20       --        $8.54       $3.32             --
</TABLE>



                                      F-22
<PAGE>


STOCK-BASED COMPENSATION

     As  permitted  under SFAS No.  123,  we have  elected to follow  Accounting
Principles  Board Opinion No. 25 and related  interpretations  in accounting for
stock-based  awards to employees.  Pro forma information  regarding net loss and
net loss per share is required by SFAS No. 123 for awards granted after December
31, 1994, as if we had accounted for our  stock-based  awards to employees under
the fair  value  method of SFAS No.  123.  We  estimated  the fair  value of our
stock-based awards to employees using a Black-Scholes  option pricing model. The
Black-Scholes model was developed for use in estimating the fair value of traded
options  which  have no  vesting  restrictions  and are fully  transferable.  In
addition,  the  Black-Scholes  model  requires  the input of  highly  subjective
assumptions   including  the  expected  stock  price  volatility.   Because  our
stock-based  awards to employees have  characteristics  significantly  different
from  those of traded  options,  and  because  changes in the  subjective  input
assumptions  can  materially  affect the fair value  estimate,  in  management's
opinion,  the  existing  models do not  necessarily  provide a  reliable  single
measure of the fair value of our stock-based awards to employees. The fair value
of our  stock-based  awards to  employees  was  estimated  assuming  no expected
dividends and the following weighted-average assumptions:

              Expected life (years)                         4.0
              Expected stock price volatility              86.2%
              Risk-free interest rate                       5.5%

     For pro forma purposes,  the estimated fair value of our stock-based awards
to employees  is  amortized  over the  options'  vesting  period.  Our pro forma
information follows:

<TABLE>
<CAPTION>

         (In thousands except per share amounts)                  1999             2000
---------------------------------------------------------   ---------------    --------------
<S>                                                         <C>                <C>
Net loss - as reported                                      (pound)(2,058)     (pound)(8,765)
Net loss - pro forma                                        (pound)(2,283)     (pound)(9,375)
Basic and diluted net loss per share - as reported          (pound) (0.29)     (pound) (0.89)
Basic and net loss per share - pro forma                    (pound) (0.32)     (pound) (0.96)

</TABLE>

      Because the first stock-based  awards were not granted until 1999, the pro
forma effect will not be fully reflected until  approximately 2002. We granted a
total  of  420,500  and  684,250   stock-based  awards  during  1999  and  2000,
respectively, with exercise prices equal to the market price of the stock on the
grant date. Based on the  Black-Scholes  model,  the per share  weighted-average
fair value of options  granted during the years ended December 31, 1999 and 2000
was $5.22 and $0.77, respectively.

9.   INCOME TAXES

     Deferred income taxes reflect the net tax effects of temporary  differences
between the carrying amount of assets and  liabilities  for financial  reporting
purposes and the amount used for corporation tax purposes.


                                      F-23
<PAGE>


     Significant  components of the deferred tax assets and  liabilities  are as
follows:

                                                    AS AT DECEMBER 31,
                                                    ------------------
                                                2000                  1999
                                                ----                  ----
Deferred Tax Assets:
      Net operating loss carryforwards     (pound)(3,210,08  (pound)(1,007,535)
      Accelerated capital allowances                (6,228)             (6,624)
      Unrealized losses on marketable
        available for sale securities             (212,111)                  -
      Other temporary differences                  (92,551)               (668)
                                            --------------      --------------
      Total deferred tax asset                  (3,520,972)         (1,014,827)
      Less: valuation allowance                  3,520,972           1,014,827
                                            --------------      --------------

Deferred Tax Liabilities

      Accelerated capital allowances                42,663             108,669
                                             --------------      --------------
      Net deferred tax liability             (pound)42,663      (pound)108,669
                                             ==============      ==============

     Because of the Group's  lack of earnings  history,  the deferred tax assets
have been fully  offset by a valuation  allowance:  As of December  31, 2000 the
Group had net operating loss carryforwards of approximately (pound)10.7 million.
There is no expiration date on the operating losses.

STATEMENT OF OPERATIONS

Pretax loss was as follows:

                               2000                 1999             1998
                               ----                 ----             ----

Domestic              (pound)(6,411,471)   (pound)(1,830,371)  (pound)(872,096)
Foreign                      (2,419,981)          (  118,594)           -
                      ------------------   ------------------  ----------------
                      (pound)(8,831,452)   (pound)(1,998,965)  (pound)(872,096)
                      ==================   ==================  ================

TAX CHARGE

     Significant  components  of  the  income  tax  expense primarily related to
domestic operations are as follows:

                                         2000            1999             1998
                                         ----            ----             ----

Current Tax                         (pound)  -           (pound) -    (pound) -
Deferred Tax                           (66,006)            108,669            -
                                 ---------------     --------------  ----------
Income tax expense / (credit)    (pound)(66,006)     (pound)108,669   (pound) -
                                 ===============     ==============  ==========


                                      F-24
<PAGE>

RECONCILIATION OF TAX CHARGE

     The actual income tax expense in 2000 and 1999 differs from the tax expense
computed at the U.K. statutory rate of 30% and 31%, respectively, as follows:

                                                          2000             1999
                                                          ----             ----

Consolidated loss before tax                       (8,831,452)      (1,948,965)
Computed expected income tax benefit               (2,649,436)        (571,644)
Permanent differences, primarily                      246,656          326,606
    nondeductible goodwill and gain
Losses for which no tax benefit is available        2,336,774          353,707

Income tax expense/(credit)                           (66,006)         108,669
                                                 ============      ============


                                      F-25

<PAGE>


                                   SCHEDULE II
                                TPN HOLDINGS PLC
                        VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>

                                                     Balance at         Additions                               Balance
                                                    beginning of    Charged to costs                             at end
                   Description                         period         and expenses       Deductions            of period
                   -----------                      ------------    ----------------     ----------            ---------
<S>                                              <C>              <C>                                     <C>

ALLOWANCE FOR DOUBTFUL ACCOUNTS:

Year ended December 31, 1998
Allowance for doubtful accounts:                         --                --                --                      --


Year ended December 31, 1999
Allowance for doubtful accounts:                         --         (pound)530,565           --             (pound)530,565

Year ended December 31, 2000
Allowance for doubtful accounts:                (pound)530,565      (pound)898,586           --           (pound)1,429,151

PROVISION FOR LOANS RECEIVABLE:

Year ended December 31, 2000
Loans receivable:                                        --         (pound)307,000           --           (pound)  307,000
</TABLE>



                                      S-1
<PAGE>


                                   SIGNATURES

     Pursuant to the  requirements of Section 12 of the Securities  Exchange Act
of 1934, the  registrant  certifies  that it meets all of the  requirements  for
filing on Form 20-F and has duly caused  this annual  report to be signed on its
behalf by the undersigned, thereunto duly authorized.

Dated:  July 30, 2001         TPN HOLDINGS PLC


                              By:  /s/ VISCOUNT EDWARD JAMES WINGFIELD LIFFORD
                                   --------------------------------------------
                                   Viscount Edward James Wingfield Lifford
                                   Chairman / Director

                              By:  /s/ RICHARD I. WALKER
                                   --------------------------------------------
                                   Richard I. Walker
                                   Director

                              By:  /s/ ROBERT P. BRADSHAW
                                   --------------------------------------------
                                   Robert P. Bradshaw
                                   Director

                              By:  /s/ KEVIN R. LEECH
                                   --------------------------------------------
                                   Kevin R. Leech
                                   Director

                              By:  /s/ SIMON J. WARD
                                   --------------------------------------------
                                   Simon J. Ward
                                   Director

                              By:  /s/ ROBERT L. BRISOTTI, JR.
                                   --------------------------------------------
                                   Robert L. Brisotti, Jr.
                                   Director


<PAGE>



                                  EXHIBIT INDEX

EXHIBIT NO.    DESCRIPTION OF EXHIBIT
-----------    ----------------------
1.1            Articles of  Association  of TPN  Holdings plc  (incorporated  by
               reference from Exhibit 3.1 to Registration  Statement on Form F-1
               (File No. 333-72075) filed by TPN Holdings plc).
1.2            Memorandum of  Association of TPN Holdings plc  (incorporated  by
               reference from Exhibit 3.2 to Registration  Statement on Form F-1
               (File No. 333-72075) filed by TPN Holdings plc).
1.3*           Certificate   of   Incorporation   on   Change   of   Name   from
               TownPagesNet.com plc to TPN Holdings plc.
2.1*           Specimen Form of American Depository Receipts.
2.2*           Specimen Form of Ordinary Share Certificate.
3.1*           Shareholders  Agreement  by and among  TPN  Holdings  plc  (f/k/a
               TownPagesNet.com  plc), Squash Limited and  UKPropertyChannel.com
               Limited, dated February 28, 2001, with respect to the outstanding
               share capital of UKPropertyChannel.com Limited.
4.1*           Form of  Collective  Net  Overdraft  Facility  by and  among  TPN
               Holdings plc (f/k/a  TownPagesNet.com  plc),  Avatar  Interactive
               Limited and HSBC Bank plc, dated December 14, 2000.
4.2*           Form of Management Agency Agreement by and among TPN Holdings plc
               (f/k/a  TownPagesNet.com  plc),  Heritage  Great  Britain plc and
               Robert Bradshaw, dated April 2000.
4.3*           Form of Employment Agreement by and among TPN Holdings plc (f/k/a
               TownPagesNet.com plc) and Richard Walker, dated July 27, 1999.
4.4            Agreement  for the  Acquisition  of  BuyersGuide  Limited,  dated
               October  1,  1999,   by  and  among  TPN   Holdings   plc  (f/k/a
               TownPagesNet.com  plc), John Bowden and Lucy Bowden (incorporated
               by reference from Exhibit 4.1 to Report of Foreign Private Issuer
               on Form 6-K for the month of  December  1999,  filed on March 28,
               2000).
4.5            Agreement for the Acquisition of Morbria Limited, dated September
               24, 1999,  by and among TPN Holdings plc (f/k/a  TownPagesNet.com
               plc), Glen UK Holdings Limited and Robert Dillon (incorporated by
               reference from Exhibit 4.1 to Report of Foreign Private Issuer on
               Form 6-K for the month ended December 1999,  filed on January 27,
               2000).
4.6            Agreement  and Plan of Merger,  dated  September 9, 1999,  by and
               among TPN Holdings plc (f/k/a  TownPagesNet.com  plc),  Rasmussen
               Acquisition  Corp.  and Research  Sales,  Inc.  (incorporated  by
               reference from Exhibit 4.1 to Report of Foreign Private Issuer on
               Form 6-K for the month ended December 1999,  filed on January 27,
               2000).
4.7            Agreement for the Acquisition of WWW.CO.UK Limited,  Summerfields
               Publishing Limited and the Platinum Club Limited,  dated July 19,
               1999, by and among TPN Holdings plc (f/k/a TownPagesNet.com plc),
               and HCC Holdings Limited  (incorporated by reference from Exhibit
               4.1 to Report of Foreign Private Issuer on Form 6-K for the month
               ended July 1999, filed on August 11, 1999).
4.8            Employment  Agreement  dated July 19, 1999  between  Summerfields
               Publishing Limited and Jeffrey Spector (incorporated by reference
               from Exhibit 4.2 to Report of Foreign  Private Issuer on Form 6-K
               for the month ended July 1999, filed on August 11, 1999).
4.9*           Sale and Purchase  Agreement,  dated  September  7, 2000,  by and
               among The Graphic Palette Company (Manchester) Limited, Cornbrook
               Precision  Colour  Limited  (now known as 24.7  Colour  Limited),
               David Mantel, Jane Mantel and Morbria Limited.
4.10           Form   of    Agreement    between   TPN   Holdings   plc   (f/k/a
               TownPagesNet.com plc) and Viscount Edward James Wingfield Lifford
               (incorporated  by reference  from  Exhibit  10.6 to  Registration
               Statement   on  Form   F-1   (File   No.   333-72075)   filed  by


<PAGE>


               TownPagesNet.com plc).

4.11           Form   of    Agreement    between   TPN   Holdings   plc   (f/k/a
               TownPagesNet.com  plc) and each non-executive member of the board
               of  directors  (incorporated  by  reference  from Exhibit 10.5 to
               Registration  Statement on Form F-1 (File No. 333-72075) filed by
               TownPagesNet.com plc)).
4.12           1998 Executive Share Option Plan  (incorporated by reference from
               Exhibit  10.1 to  Registration  Statement  on Form F-1  (File No.
               333-72075)  filed by TPN  Holdings  plc  (f/k/a  TownPagesNet.com
               plc)).
8.1*           Subsidiaries of TPN Holdings plc.
------------------
* Filed herewith.