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                     U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-KSB

(Mark One)

[X] Annual Report under Section 13 or 15(d) of the Securities Exchange Act of
    1934

           For the fiscal year ended March 31, 2000

[ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act
    of 1934

           For the transition period from _______________ to ________________

           Commission File No. 0-25521
                               -------

                            INC.UBATOR CAPITAL, INC.
                            ------------------------
                 (Name of Small Business Issuer in its Charter)

         Delaware                                               88-0407731
         --------                                               ----------
(State or Other Jurisdiction of                              (I.R.S. Employer
 Incorporation or Organization)                           Identification Number)

           9777 Wilshire Boulevard, Suite 718, Beverly Hills, CA 90212
           -----------------------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)

                                 (310) 205-6090
                                 --------------
                (Issuer's Telephone Number, Including Area Code)

       Securities registered under Section 12(b) of the Exchange Act: None

         Securities registered under Section 12(g) of the Exchange Act:

                             Common Stock, par value
                                 $.001 per share
                                 ---------------
                                (Title of Class)

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

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is contained in this form, and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of the Form 10-KSB.
[ ]

         State issuer's revenues for its most recent fiscal year: $580.00.

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         The aggregate market value of the 15,655,000 shares of Common Stock,
$.001 par value per share (the "Common Stock"), held by non-affiliates of the
Registrant as of May 31, 2000 was $46,965,000 million.

         The number of shares outstanding of the Registrant's sole class of
Common Stock as of May 31, 2000 was 17,655,000 shares.

                      DOCUMENTS INCORPORATED BY REFERENCE:

Part III - Proxy Statement for 2000 Annual Meeting of Stockholders.

Transitional Small Business Disclosure Format (Check One):
[ ] YES      [X] NO


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Item 1.  Description of Business

Forward Looking Statements

         When used in this Form 10-KSB, the words or phrases "will likely
result," "are expected to," "will continue," "is anticipated," "estimate,"
"projected," or similar expressions are intended to identify "forward looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such statements are subject to certain risks and uncertainties,
including but not limited to, lack of operating history, need for additional
financing and history of losses. Such factors, which are discussed in
Management's Discussion and Analysis of Financial Condition and Results of
Operations, could affect Inc.ubator Capital, Inc.'s ("Inc.ubator" or the
"Company") financial performance and could cause the Company's actual results
for future periods to differ materially from any opinion or statements expressed
herein with respect to future periods. As a result, the Company wishes to
caution readers not to place undue reliance on any such forward-looking
statements, which speak only as of the date made.

Formation and Recent History

         Inc.ubator was originally incorporated as Shanecy, Inc. in Delaware on
May 31, 1994, and was organized to act as a home health care analysis and
referral service. On March 10, 1999, the Company filed a registration statement
with the Securities and Exchange Commission ("SEC") in order to become a
reporting company. On November 11, 1999, the original business activities were
discontinued.

         In November 1999, a change in control and a change in the business
direction occurred, the two former directors of the Company resigned and Jason
W. Galanis and Kevin L. Washington were appointed to replace them. Under the
direction of its new board, Inc.ubator has initiated the business strategy and
organized a seasoned management team with diverse expertise to provide a range
of professional services to prospective and current investments. At the same
time, Inc.ubator acquired 100% of CASA@home.com, Inc. (formerly known as
CASA@home, Inc., and referred to in this document as "CASA") and Eikos
Acquisition Limited ("EAL"). On November 19, 1999, Harry J. Weitzel joined
Inc.ubator as Chairman of the Board and Chief Executive Officer, Michael Bodnar
became Treasurer, Chief Financial Officer, Secretary and a director, Dr. Rory F.
Knight became a director, and Leighton A. Bloom was appointed Chief Technology
Officer. George C. Pilallis and Nicholas Wise joined the Board of Directors on
December 31, 1999.

The Company

         Inc.ubator is an Internet oriented company that invests in businesses,
referred to as "Network Companies", that use (or will use) the Internet to
provide Internet-related support services, and access services to the novice
computer user, and to the small business office and home office markets
(referred to in this document as small businesses).


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         Inc.ubator's existing Network Companies, referred to in this document
as the Inc.ubator Network, intend to offer consumers and small businesses
various bundled packages of services and technology which include access
devices, support services, affinity discounts on non-discretionary purchases, as
well as offering important financial services through Visa/MasterCard and other
financing programs Inc.ubator is developing.

         The business model of the Network Companies is intended to address what
management believes is an increasing need for people to access the Internet,
while delivering significant value to consumers and small businesses. In
November 1999, Inc.ubator acquired CASA, a recently formed company that intends
to develop a consumer portal, and in May 2000, Inc.ubator signed a term sheet
and other transaction documents to acquire ThemeWare Corporation ("ThemeWare"),
a provider of software and consultancy services for individuals and small
businesses to connect to and learn about the Internet. See "Recent Developments"
for additional information regarding the proposed acquisition of ThemeWare. In
addition, Inc.ubator completed investments in EAL, a database technology
licensee, eCard Solutions, Inc. (formerly Brunswick Capital Partners, Inc. and
referred to in this document as "eCard Solutions"), a specialty financial
services company, and Infobase Direct Marketing Services, Inc. ("Infobase"), an
information based, technology driven direct marketing company.

         Assuming the completion of the ThemeWare acquisition, Inc.ubator will
be structured as two primary operating subsidiaries, CASA and ThemeWare, and
three additional investments. Management believes that CASA is developing and
ThemeWare has developed business models that introduce the novice computer and
small business user to the Internet and provide the necessary tools for them to
participate in the digital economy. Management further believes that all of the
Network Companies will provide strategic benefits and value-added services to
the Inc.ubator Network.

The Market

         Growth of the Online Population. The growth and rapid adoption of the
Internet continues to revolutionize the way in which people communicate, share
information and conduct business. International Data Corporation ("IDC"), a
leading industry analyst firm, estimates that the number of Internet users in
the United States will increase from approximately 81 million in 1999 to
approximately 177 million in 2003. Additionally, according to IDC, the number of
Internet users worldwide is projected to increase from approximately 196 million
in 1999 to approximately 502 million in 2003. Management believes this rapid
growth in Internet users is driven by a number of factors including:

         o  A large and growing installed base of personal computers;

         o  Easier, faster, more reliable and more affordable access to the
            Internet;

         o  The proliferation of content, commerce and services being offered on
            the Internet; and

         o  Necessity for businesses to compete in e-commerce.


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         According to IDC, the widespread acceptance and usage of the Internet
by consumers and businesses are fueling a new digital economy where goods,
services and information are being exchanged through electronic communications.
As more business transactions and information move online, management believes
that those who lack access to the Internet will be unable to participate in this
increasingly important and growing electronic marketplace.

         Barriers to Getting Online. Traditionally, to connect their homes to
the Internet, consumers have been required to purchase a computer, choose an
Internet provider and sign up for Internet access in a series of independent
transactions. After these steps, the consumer still has to install the computer
system and solve technical problems, often without the benefit of product
expertise or technical assistance.

         Accordingly, management of Inc.ubator believes that many households
have been discouraged from purchasing a computer system and obtaining Internet
access due to a number of factors including the:

         o  Imposing amount of information and unreliable, complex search
            engines;

         o  Lack of professional on-line or off-line technical assistance
            ("support services") limited access to payment cards (i.e. VISA(R));

         o  Traditionally high cost of a new computer system;

         o  Difficulty involved in installing and maintaining a home computer
            system;

         o  Computers are not typically sold where mass markets shop;

         o  Confusion involved in selecting an Internet access provider;

         o  Anxiety over choosing appropriate products and services;

         o  Threat of technological obsolescence;

         o  Limited access to on-line payment mechanisms (i.e. VISA (R) credit
            card); and

         o  Concerns about the privacy of personal information transmitted over
            the Internet.

         Small businesses face similar barriers, as well as numerous other
challenges in initiating a successful e-commerce venture. Small
business-specific challenges include:

         o  Web page development;

         o  Web-hosting;

         o  eCommerce enabling- merchant accounts (enabling the site for
            accepting credit cards);

         o  Site traffic generation and search engine registration; and o
            Availability of technical assistance (support portal).


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         Growth of Electronic Commerce and Value of the Consumer/Small Business.
The widespread adoption of the Internet has enabled the formation of a large and
rapidly expanding electronic commerce market. IDC estimates that annual
worldwide business-to-consumer commerce over the Internet will increase from
$31.0 billion in 1999 to $177.7 billion in 2003, while annual worldwide
business-to-business commerce over the Internet will increase from $80.4 billion
in 1999 to $1.1 trillion in 2003. Management believes that as the number of
merchants conducting business online proliferates and competition for online
customers intensifies, the costs of acquiring and retaining customers will
increase as well. IDC estimates that U.S. advertising spending on the Internet
will continue to grow, reaching $10.8 billion in 2003, an increase from the $3.4
billion spent on Internet advertising in 1999.

         Because the high cost of acquiring new customers, management believes
maintaining customer relationships and maximizing the value of those customers
is paramount to a merchant's success. According to IDC, these customer
relationships are most often acquired through advertising. However, traditional
methods of advertising can be a costly and inefficient means of acquiring new
customers since merchants are required to pay for advertising regardless of
whether the advertising is successful in delivering new customers. In addition,
traditional advertising often does little to retain customers. As a result,
merchants are increasingly seeking ways to reduce the costs of customer
acquisition and retention as well as improve the efficiency of their spending.

         Management believes that, based on its growth, the Internet will become
an increasingly complex environment for businesses and consumers to operate in
and derive a quality experience. As such, an essential element of the business
focus of our Network Companies is to use technology by way of such things as
support portals and professional on-line guidance to simplify and enhance
customer's Internet usage.

         Growth of the Small Business and Consumer Markets. Based upon
statistics compiled by IDC the growth of the small business (businesses with
less than 100 employees) market continues to show significant growth compared
with the consumption of technology by medium-sized and large companies (100-999
and 1,000+ employees). According to IDC, this segment of businesses is the
fastest growing segment of the U.S. business economy. IDC estimates that the
number of small businesses in the U.S. will grow from 7.4 million in 1999 to 8.2
million by 2003. These businesses account for 98.3% of all employers
representing approximately 38.0 million private sector employees, according to
the U.S. Small Business Administration.

         According to IDC, small businesses spent $38.8 billion in 1998 on
technology and equipment, which IDC estimates will grow to $57.0 billion by
2003. IDC also estimates that in 1999 only 58% of small businesses were online
with this number growing to 72% by 2003. According to IDC, this represents an
exponential increase in small business Internet-related expenditures from $6.6
billion in 1998 to $32.1 billion in 2003, a compound annual growth rate of 37%.


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Management believes that the tremendous growth in Internet penetration, coupled
with the sharp rise in Internet spending, creates a favorable environment for
specialized Internet solutions, including support portal services intended to be
offered by Inc.ubator.

         Management also believes that a significant percentage of the consumer
population, including home-based entrepreneurs, that is being left out of the
digital economy and represents a large untapped market. Government studies and
numerous related media articles indicate that moderate income consumers,
principally households with annual incomes of $25,000 to $50,000, have a
significant need for the benefits provided by the Internet. As a result,
Inc.ubator believes that the market they represent will be one of the next areas
of accelerated growth on the Internet. Further, Inc.ubator's analysis of the
Bureau of Labor Statistics and U.S. Census data and studies indicate that this
demographic group collectively has substantial annual purchasing power of over
$1.5 trillion. Yet despite the growing number of Internet users, the majority of
consumers have not yet connected their households to the Internet. According to
IDC, in 1999 only 52% of U.S. households owned a personal computer and only 32%
of U.S. households had access to the Internet.

Business Strategy

         Background of Current Business Strategy. Inc.ubator is an Internet
company that invests in the Network Companies that use (or will use) the
Internet to provide various services and technology as well as user friendly
access to information intended to improve individual economic well being and
enhance overall quality of life (referred to as "personal empowerment
information") to moderate income consumers and small businesses, businesses with
less than 100 employees. Bureau of Labor Statistics and Census Bureau statistics
and studies indicate that there are approximately 30 million moderate income
households in the U.S. IDC estimates that in 1999 there were approximately 7.4
million small businesses (less than 100 employees) in the U.S. Inc.ubator
believes that its business model provides it with the ability to be one of the
first companies in the moderate income consumer and small business markets.
Unlike other e-commerce and Internet companies that concentrate on the affluent
consumer, Inc.ubator believes that focusing on the moderate income consumer and
small businesses will allow its Network Companies to take advantage of the
opportunity presented by these markets that to date have had limited access to
the benefits of the Internet.

         Inc.ubator believes the moderate income consumer and small business
markets are underserved by most e-commerce businesses, which have chosen to
target more affluent Internet users or large businesses. Inc.ubator believes
that many of these enterprises have, in large part, established business models
around advertising revenue and as a result have sought an affluent
socio-demographic audience. Based on the assumption that those with higher
incomes have more discretionary/disposable spending power, these existing
Internet business models attempt to attract an affluent customer or large
business and therefore command a premium for advertising. However, Inc.ubator
believes that the moderate income consumer and small business markets represent
enormous aggregate purchasing power which has been largely untapped by existing


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Internet businesses. Consequently, Inc.ubator believes a significant opportunity
awaits those businesses that are able to utilize the Internet to cost
effectively provide products, services and access to personal empowerment
information to the moderate income consumer and small business markets.

         Inc.ubator seeks to invest in and manage companies that should have the
potential to be leaders in using the Internet to provide consumers and small
businesses with various bundled packages of services and technology which
include access devices, support services, offering discounts on
non-discretionary purchases, as well as offering important financial services.
One aspect of Inc.ubator's investment approach is that the Network Companies may
be provided with an incubation period during which the application of their
technologies, systems and business processes can be developed into a sustainable
enterprise. In order to accelerate the incubation period, Inc.ubator's
management will work closely with these companies in providing operational,
managerial, financial, marketing, human resources and technological support.

         The Digital Divide. In July, 1999 the U.S. Department of Commerce
published a report entitled Falling Through the Net: Defining the Digital Divide
(the "DOC Report"), which examines the availability of telephones, computers and
the Internet to American households. This DOC Report was prepared to better
define the "divide" between those who have and those who do not have access to
these new technologies so that concrete steps can be taken to address this gap.
The DOC Report indicates that less than 30% of moderate income households have
access to the Internet.

         In response to the DOC report, numerous articles have appeared in the
press and on the Internet, which have raised public awareness of moderate income
consumer's lack of Internet access. Further, various corporations and non-profit
groups have announced a variety of initiatives to improve Internet access to all
economic groups. In addition, on December 8, 1999, President Clinton hosted a
meeting of leading technology executives and representatives of minority and
civil rights groups during which he announced a series of partnerships and
initiatives to help "slam shut the digital divide between technology haves and
have-nots, so that access to computers and the Internet is as common as the
telephone." On December 9, 1999, Secretary of Commerce, Richard Daley, convened
the "Digital Divide Summit" which focused on expanding access to information
technologies for underserved portions of the population. Summit participants
from the Federal Government, technology industry, civil rights and non-profit
community groups, grassroots community organizations and the general public
examined public and private initiatives to close the technology gap and
discussed how to expand and coordinate these efforts. As a result of the Summit,
the "digitaldivide.gov" website was created as a central resource for Federal
Government information on closing the digital divide. It was also announced at
this Summit that closing the digital divide has been made an essential part of
President Clinton's New Markets Initiative which seeks to bring America's
prosperity to economically underserved areas.


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         Moderate Income Consumers. The DOC Report and numerous related media
articles indicate that moderate income consumers have a significant need for the
benefits provided by the Internet. As a result, Inc.ubator believes that the
market they represent will be one of the next areas of accelerated growth on the
Internet. Further, Inc.ubator's analysis of the Bureau of Labor Statistics and
U.S. Census data and studies indicate that this demographic group collectively
has substantial annual purchasing power of over $1.5 trillion. The majority of
the expenditures made by moderate income consumers are non-discretionary and
include primarily food, housing, transportation, clothing and personal
entertainment. Inc.ubator therefore believes that moderate income consumers can
be advantageously impacted by the competitive pricing made available by the
Internet for mortgages, insurance and other products and services, as well as
the availability of personal empowerment information.

         Inc.ubator also believes that the spending patterns of less affluent
consumers justify the expansion of e-commerce to this market. Moderate income
consumers spend a significantly greater proportion of their income on
necessities than do more affluent consumers and would benefit substantially from
the ability to take advantage of discounts and other electronic commerce offers
available on the Internet. As a group, moderate income consumers often pay
significantly more than affluent consumers for items such as home mortgages,
insurance, and auto loans, and other goods and services. Consequently, moderate
income consumers could gain a significant economic benefit if they expand their
buying power through discount purchases offered over the Internet, together with
access to personal empowerment information.

         Small Business. As previously mentioned, management believes the
business model of the Network Companies should deliver significant value to
consumers and small businesses. Management believes that small businesses should
benefit from recent and anticipated acquisitions in that developing business
models should introduce the small business user to the Internet and provide the
necessary tools for them to participate in the digital economy.

         Market Opportunities. The Internet has made possible very innovative
methods of connecting buyers and sellers in specific market segments. To date,
moderate income consumers and small businesses have had limited access to the
benefits of the Internet and e-commerce and continue to engage in commerce
through traditional methods.

         Inc.ubator believes there are significant opportunities for companies
that can assist moderate income consumers and small businesses in using the
Internet to purchase products, services and technology in a cost-effective
manner, as well as obtain personal empowerment information. However, to do so
successfully, companies must be able to efficiently locate these consumers using
data mining and information technology. Companies must also have the capability
to provide less affluent consumers with access to the Internet, either through
inexpensive hardware that enables them to access the Internet directly, or by
indirect access, whereby the companies access the Internet for their customers
and forward information to them by telephone or other communication devices.
Companies that are able to identify and contact moderate income consumers, and
provide those consumers with affordable access to the Internet, either directly
or indirectly, could become leaders in a $1.5 trillion market.


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         Inc.ubator believes that the experience of its management with the
moderate income consumer market provides it with a competitive advantage in
advising and consulting its Network Companies.

         Inc.ubator believes that its business model provides it with a
broad-based opportunity in the moderate income consumer and small business
markets. Unlike other e-commerce and Internet companies that concentrate on the
affluent consumer, or on business to business commerce, Inc.ubator believes that
focusing on the moderate income consumer will allow its Network Companies to
take advantage of an expanding market that has so far had limited access to the
benefits of the Internet. Inc.ubator believes this strategy will result in
long-term value for its stockholders as it will permit its Network Companies to
generate substantial revenues and significant numbers of customers, thereby
becoming first mover e-commerce providers to the moderate income consumer
market.

         Identify Potential Acquisitions. Inc.ubator's business strategy is to
identify potential Network Companies that have the ability to achieve for
themselves or enhance the ability of another Network Company to become leaders
in providing products, services, technology and personal empowerment information
to the moderate income consumer and small business markets via the Internet.
Primary factors that will influence Inc.ubator's investment decisions include:

         o  First Mover Potential -- Does the company possess the people,
            products, skills, technology, and business processes to achieve
            first mover position?

         o  Management Quality -- What is the overall quality and expertise of a
            potential Network Company's management and can any shortcoming be
            strengthened by access to Inc.ubator's support resources?

         o  Synergy -- To what degree does a potential Network Company
            contribute to and benefit from Inc.ubator's network and operational
            resources?

         o  Significant Ownership -- Will Inc.ubator be able to obtain a
            significant position in the new company and exert significant
            influence over it?

         Acquire Interests in Network Companies After identifying an attractive
potential Network Company, Inc.ubator will negotiate a significant, possibly
controlling investment interest. As a condition to an investment, Inc.ubator may
require representation on the company's Board of Directors to ensure its ability
to provide active guidance. Inc.ubator will also structure its investment to
permit management and key personnel to retain a meaningful equity stake in the
Network Company. During negotiations with potential Network Companies, the value
of Inc.ubator's collaborative network is emphasized, which management believes
may give Inc.ubator a competitive advantage over other acquirors in successfully
consummating transactions. Inc.ubator's other Network Companies, strategic


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investors and management assist in these discussions and assist in other stages
of the acquisition process, including the initial evaluation of potential
Network Companies and due diligence.

         Provide Strategic Guidance and Operational Support to Network
Companies. After Inc.ubator makes an investment in a new Network Company, it
will take an active role in the new company's affairs by providing both
strategic guidance and operational support.

         Strategic Guidance. Inc.ubator provides strategic guidance to its
Network Companies regarding market positioning, business model development and
methods of marketing to its targeted customer base. In addition, Inc.ubator
advises Network Company's management and directors on day-to-day management and
operational issues. Inc.ubator's focus on the moderate income consumer
e-commerce and small business markets and the knowledge base of its Network
Companies, strategic investors and management give it valuable experience that
is shared with its Network Companies.

         Operational Support. Internet and e-commerce companies in the moderate
income consumer and small business markets may have difficulty obtaining senior
executive level guidance in the many areas of expertise successful companies
need. Inc.ubator assists its Network Companies by providing access to skilled
managers who guide the Network Companies in the following functional areas:

         o  Sales and Marketing - Several members of Inc.ubator's management
            team will provide guidance to its Network Companies' sales,
            marketing, product positioning and advertising efforts.

         o  Executive Recruiting and Human Resources - Members of Inc.ubator's
            management team will assist its Network Companies in recruiting key
            executive talent. In providing this assistance, Inc.ubator leverages
            the contacts developed by its network of Network Companies and
            management team.

         o  Information Technology - Inc.ubator's Chief Technology Officer,
            Leighton Bloom, is dedicated to helping its Network Companies with
            their information systems strategies and solving problems relating
            to their current information technology.

         o  Finance - Certain of Inc.ubator's officers will provide financial
            and accounting guidance to the Network Companies in areas such as
            corporate finance, financial reporting, accounting and treasury
            operations. In providing these services, these executives will
            leverage the skills and experience of Inc.ubator's internal finance
            and accounting group, its Network Company network and outside
            consultants.


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         o  Business Development - Inc.ubator will assist its Network Companies
            in evaluating, structuring and negotiating joint ventures, strategic
            alliances, joint marketing agreements, acquisitions or other
            transactions.

         Promote Collaboration Among Network Companies. One of the principal
goals of Inc.ubator's network is to promote innovation and collaboration among
its Network Companies, which management believes will result in shared knowledge
and business contacts among its Network Companies and the formation of numerous
strategic alliances. The collaboration of Inc.ubator's Network Companies is the
intended result of its role as the hub of the network. Through the network,
Inc.ubator identifies prospective alliances, makes introductions, assists in
strategic planning and monitors the ongoing relationships among its Network
Companies.

         Customer Acquisition. Inc.ubator believes that the vast majority of
Internet companies invest substantial sums in expensive and ineffective general
advertising to broad-based audiences, which often include a significant number
of consumers that are not likely customers for a company's product or service
offerings. As such, Inc.ubator will encourage its Network Companies to use
certain of its proprietary information management systems and technologies that
use data mining, consumer profiling and demographic selection to target
specific, likely consumers that would benefit the most from the goods and
services provided by its Network Companies.

         Organic Growth. As a result of Inc.ubator's investments, the individual
Network Companies may be provided an incubation period during which the
application of their technologies, systems and business processes can be
developed into a sustainable enterprise. In order to accelerate the incubation
period, Inc.ubator will work closely with these companies in providing
operational, managerial, financial, marketing, human resources legal and
technological support. Emphasis is also placed on rapidly acquiring customers
and users who have the additional potential to serve as a pre-defined customer
base for Inc.ubator's other Network Companies.

         Growth Through Targeted Acquisitions. Inc.ubator expects to continue to
pursue strategic acquisitions to strengthen its company network, consumer
information database, product and service offerings, access to personal
empowerment information and overall Internet presence. Inc.ubator believes that
by acquiring such companies, it can integrate them into its network and improve
its customer base, access to information, products and services, and financial
results. Inc.ubator intends to not only develop new acquisitions through its
existing investments and other Network Companies, but also through the advice
and consultation of its management team. Management believes that contributions
to its Network Companies will increase the value of individual companies, which
will in turn increase the value of Inc.ubator, and ultimately benefit its
stockholders.


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         Enhance Value Through Spin-Off Transactions. The ultimate goal of
Inc.ubator is to maximize value for its stockholders by developing transactions
for its Network Companies that include IPOs, mergers, sales, and other spin-off
transactions that increase the value of the shares of the individual Network
Companies, which in turn, enhance value for Inc.ubator's stockholders. Due to
Inc.ubator's ownership interests in the Network Companies, transactions that may
result in the recognition of value with respect to particular Network Companies
will result in a corresponding increased value to stockholders of Inc.ubator.

         Inc.ubator will counsel and advise each of its Network Companies from
its early stages to the time of its spin-off, and help develop the particular
Network Company in such a way that its value is maximized at the time of the
transaction. Inc.ubator will be able to absorb market fluctuations and other
financial risks that would otherwise impact the Network Companies during their
development, until the Network Company is fully developed and prepared to
participate in a spin-off transaction that will maximize its value.

Network Company Market Strategy

         Management believes that the barriers to full participation in the
digital economy need to be addressed more fully. The strategy of Inc.ubator's
Network Companies is to become the provider of choice for novice Internet users
by reaching out to them and by providing aggregated technology decisions that
lessen apprehension. We believe a collaborative investment network strategy can
assist in the next large wave of Internet adoption.

         There are four critical elements to the market strategy which include:
(1) acquire customers, (2) retain customers, (3) produce viable revenue per
customer, (4) ensure the Inc.ubator Network is synergistic and enhances overall
value.

         Customer Acquisition. Inc.ubator's customer acquisition strategy
intends to leverage experience with `legacy', or `old economy' business methods
in order to efficiently establish a subscribers/ members base. Marketing
channels are as follows:

         o  Television advertising;

         o  Tele-sales/ direct marketing;

         o  Print advertising;

         o  Online advertising and web-site marketing;

         o  A broad-based public relations and promotions program;

         o  Consumer products packaging; and

         o  Retail merchandising.

         To illustrate, CASA intends to offer a bundle of four primary services
in one easy transaction in order to make the purchase decision simple. The
bundle will consist of:


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         o  A new VISA(R) 'e-commerce' credit card;

         o  A low cost non-PC Internet access device;

         o  Low cost ISP service; and

         o  Vertical portal providing highly customized Subscriber-specific
            content services.

         Upon the acquisition of ThemeWare, Inc.ubator also intends to utilize
certain "old economy" methods. ThemeWare currently utilizes direct response
television whereby the consumer is reached by way of 30-minute advertisements.
This process is supplemented by a celebrity endorsement, which has measurable
effects on evoking a positive response to such an initiative. Here, too, the
barriers to getting online for consumers and small businesses are reduced.

         Both TV and direct marketing tele-sales methods reach consumers and
small business entrepreneurs primarily in their home and, therefore, obviate the
need for the consumer to take the initiative to go to a local technology
retailer. Further, they involve reaching out for the consumer and small business
rather than relying passively on the consumer to take the initiative.

         Integral to the strategy is management's belief that the ability to
successfully acquire customers is increasingly critical to generate traffic as
the Internet matures and competition increases and that customer acquisition can
be achieved on a profitable basis, as opposed to a loss-leader approach which we
believe is unsustainable. Management believes that b-2-c and b-2-b business
models have been significantly challenged by the high capital costs associated
with customer acquisition, advertising and brand name development. The business
methods of Inc.ubator's Network Companies are designed to attract new customers
at a net-zero cost, or at a profit, by providing the customer the utility of
one-stop shopping for which management believes the customer and entrepreneur
will pay a convenience premium to the Network Companies.

         Customer Retention. As described above, Inc.ubator's Network Companies
anticipate predictable customer retention rates by employing several techniques.
Most notably at the core of each strategy is the ability to deliver a credit
card as part of a `bundled' package of Internet services, with the VISA payment
card being one essential digital economy tool that encourages consumers to
maintain a relationship with the company.

         More generally, Inc.ubator's Network Company's strategy is to attempt
to impress a strong brand relationship with the consumer by employing some of
the techniques discussed above. Similarly, they will rely on the brand
recognition of certain financial products that will be provided to consumers and
small businesses such as VISA. VISA has developed international recognition as a
trusted payment mechanism for millions of merchants and hundreds of millions of
consumers. Management believes brand recognition has a material impact on
customer retention.


                                       14
<PAGE>

         Revenue Strategy. CASA and ThemeWare have similar business models but
such models target c-2-b and b-2-small-b markets, respectively. It is intended
that revenue (assuming the completion of the ThemeWare acquisition) will be
generated in the following ways:

         o  Sale of Internet Tool Box Business Edition 3.0;

         o  eCommerce Package Sales;

         o  Web Site construction;

         o  Web Coaching;

         o  Merchant Account Residuals;

         o  Virtual Warehouse- iClub Product Sales;

         o  Third-party Coaching Fees;

         o  ISP Referral Fees (Earthlink);

         o  ISP Subscriber fees (private label ISP);

         o  Credit card fees;

         o  eCommerce referral fees from merchants;

         o  Upfront Subscriber fees (CASA);

         o  Merchant fees; and

         o  Portal advertising.

         Network Company Strategy. As an Internet oriented company, Incubator's
ultimate strategy is to develop the Inc.ubator Network of companies. As the
Network Companies develop critical masses of subscriber/members, their strategy
will be to leverage their customer base by providing traffic to merchants,
vendors or other technology providers. Management believes that consumers and
small businesses will continue to respond favorably to simplified one-stop
shopping e-commerce solutions. The Company's Network Companies intend to provide
easy-to-use products and services bundled with necessary e-commerce technology
applications.

         Based on the ability to manage customer acquisition, the Company's
strategy is to leverage the customer base of its Network Companies in order to
make investments in companies that present a strategic fit within the Inc.ubator
Network. In determining what acquisitions to pursue management focuses on the
quality of its members' experience, the scalability of its operations, and on
building the critical mass required to drive costs down for its members,
enterprises, merchants, suppliers and the Company.


                                       15
<PAGE>

Recent Developments

         Name and Symbol Change. On June 1, 2000, the Company filed Amended and
Restated Articles of Incorporation with the Secretary of State of Delaware,
changing its name to Inc.ubator Capital, Inc. As a result of its name change,
Inc.ubator also changed its ticker symbol to "IBTR" on the NASDAQ OTC Bulletin
Board.

         Frankfurt Listing. On May 12, 2000, our common stock was listed and
began trading internationally in Germany on the Third Market Segment of the
Frankfurt Stock Exchange by the Deutsche Borse AG. The trading symbol is "SW6"
and the German securities code is 935 139. The Frankfurt Stock Exchange is a
leading European exchange with a technology orientation. Recently, the London
Stock Exchange and Deutsche Borse announced their plans for a merger of equals
to create a new company, to be called iX. In addition, iX and NASDAQ have signed
a memorandum of understanding to create a pan-European, high growth market.

         Proposed Acquisition of ThemeWare. On May 22, 2000, Inc.ubator entered
into a term sheet (the "Term Sheet") and other agreements described below, to
acquire all of the outstanding capital stock of ThemeWare, a California
corporation, which provides software and consulting services for individuals and
small businesses to connect to and learn about the Internet.

         The Term Sheet provides that Inc.ubator will acquire 100% of the
outstanding capital stock of ThemeWare for $135 million in Inc.ubator's
registered common stock. Based on the market price of the Company's stock at
June 20, 2000, the Company would be required to issue approximately 33.0 million
shares of its common stock to the current shareholders of ThemeWare. The Term
Sheet further provides that 10% of the shares of Inc.ubator's common stock to be
exchanged for ThemeWare's shares would be held in escrow to fund any indemnity
obligations of ThemeWare under the definitive agreements. All shares of the
Inc.ubator common stock will be subject, for a two year period, to certain
transfer restrictions. There will also be certain "leak-out" provisions whereby
ThemeWare's shareholders may sell a limited percentage of their Inc.ubator
shares.

         The Term Sheet further provides that Inc.ubator will invest a total of
five million dollars in ThemeWare, of which one million dollars was invested on
June 2, 2000 pursuant to a promissory note executed by ThemeWare in favor of
Inc.ubator. The note is a demand note and provides for an annual interest rate
of eight percent. This note will convert into equity upon the closing of the
acquisition and will constitute part of the five million dollar investment by
Inc.ubator into ThemeWare. The second one million dollars will be invested upon
the execution of the definitive agreements memorializing the transaction
contemplated by the Term Sheet. The third one million dollars will be invested
upon the Securities and Exchange Commission's declaration that the Registration
Statement on Form S-4 concerning this transaction is effective and that a
majority of the shareholders of ThemeWare have approved the transaction. The
remaining two million dollars is anticipated to be invested over the 12 month
period following closing of the proposed transaction. The term sheet was
approved by a majority of the members of ThemeWare's Board of Directors on May
22, 2000.


                                       16
<PAGE>

         The consummation of the transaction contemplated by the Term Sheet is
subject to, among other things, approval of a definitive agreement by the boards
of directors of ThemeWare and Inc.ubator by July 22, 2000, the execution of
definitive agreements, the SEC declaring the registration statement effective,
and approval of shareholders. The merger agreement will contain customary
representations and warranties, covenants and closing conditions and will be
subject to all requisite governmental and regulatory approvals. There is no
assurance that the acquisition referenced in the Term Sheet will be consummated.
It is possible that the parties to the Term Sheet will agree to modify or waive
one or more terms and/or conditions of the Term Sheet in accordance with such
Term Sheet. If the acquisition is consummated, it is also possible that, by
agreement of the parties, one or more terms and/or conditions of any legally
binding definitive agreements will differ materially from the terms and
conditions of the Term Sheet.

         On May 22, 2000, Inc.ubator entered into a Voting Agreement with
ThemeWare and a majority of the shareholders of ThemeWare, which provides,
generally, that such shareholders will vote in favor of the transactions at the
time of the vote of the ThemeWare shareholders.

         On May 22, 2000, Inc.ubator also entered into an Interim Operating
Agreement (the "Operating Agreement") with ThemeWare. All of ThemeWare's
existing management agreements are to remain in effect. However, during the
period between the execution of the Term Sheet and the closing of the proposed
acquisition, Inc.ubator will assume management oversight of the daily operations
of ThemeWare through the implementation of the Operating Agreement. The
Operating Agreement provides that Inc.ubator will maintain all of ThemeWare's
current business relationships, including those with manufacturers,
distributors, producers, vendors, creditors, and the parties will operate the
business of ThemeWare in the usual and ordinary course of business.

         In order to fund the initial payment required in respect of the
ThemeWare acquisition described above, the Company received a $1,000,000 loan
from Derek M. Galanis, a brother of Jason Galanis. Subsequently, on July 7,
2000, the stockholder agreed to convert this loan into 1,000,000 non-voting,
non-redeemable, Series B, 8% cumulative preferred shares in return for 50,000
two year warrants each entitling the holder to acquire one common share for
$2.50. The preferred shares are convertible into 250,000 common shares, subject
to anti-dilution provisions.

         ThemeWare's Business. ThemeWare is a branded consumer and small
business Internet company comprised of Internet Connectivity/Hosting, Support
Portal Services, Application Services, Merchant Services and a Portal that acts
as a hub/entry point for customers and their web experience. ThemeWare's
principal product is The Internet Tool Box(TM), a multi-media kit that provides
an array of software and tutorials that teaches the novice everything they need
to know about accessing and using the Internet. While there are similarities
with the CDs offered by other internet service providers to acquire subscribers,
ThemeWare believes The Internet Tool Box(TM) offers a much more comprehensive


                                       17
<PAGE>

set of multi-media materials that not only eases the user's entry onto the
Internet but also enhances their ability to more quickly and effectively use the
Internet.

         Inc.ubator believes ThemeWare's e-commerce solution is a complete
online transaction processing package consisting of Internet software and
services. The software component of ThemeWare's e-commerce solution has been
developed with a leading provider of Internet-based transaction services with
thousands of online and traditional business customers throughout the world. The
service component is comprised of a merchant account that provides entrepreneurs
and small business owners with the ability to accept credit cards or electronic
checks online. ThemeWare's strategic partnerships with online merchant account
processing companies allow it to provide a very high approval rate for consumers
or businesses that seek this service.

         ThemeWare currently offers, web-based tools that provide, among other
services:

         o  Custom built web sites;

         o  Website hosting;

         o  ISP services and e-mail;

         o  Remote technical assistance (support portal);

         o  Other consulting services;

         o  Financial services such as installment credit, credit cards (small
            business and personal);

         o  Financial services advice such as tax, legal etc. (third party
            providers); and

         o  Merchant services and shopping cart/cash register technology.

         The celebrity status of Richard Karn from the ABC TV sitcom Home
Improvement has been used by ThemeWare as a means to establishing a recognized
and trusted brand. ThemeWare believes that the worldwide recognition from the
long-running show reinforces ThemeWare's branding strategy. ThemeWare has a
media budget of over $1.2 million per month in television alone.

         ThemeWare recently launched its vertical portal, www.toolbox.com, which
provides members search capability, the ability to create a personalized web
page, free email, chat, and online tech support, as well as focused content
through iChannels featuring Entertainment, News Headlines, Sports, Stocks,
Weather, Horoscope and the Lottery.

         Consumers purchased over 131,000 Internet Tool Boxes from ThemeWare
during 1999. ThemeWare generated $13.3 million in revenue in 1999 and generated
approximately $7.9 million in the first quarter of 2000. Founded in 1996,
approximately 100 people are employed at ThemeWare's Newport Beach, California
facility.


                                       18
<PAGE>

Risk Factors

Inc.ubator has no significant operating history upon which to assess the
viability of its business strategy or management.

         Although Inc.ubator has been in existence since 1994, it has no
significant operating history upon which its management, business and prospects
may be evaluated. In addition, Inc.ubator only recently installed a new
management team and determined to pursue a new business strategy. Furthermore,
Inc.ubator's prospects must be considered in light of the risks, expenses and
difficulties frequently encountered by companies in new, unproven and rapidly
evolving markets. To address these risks, Inc.ubator must, among other things:

         o  Develop and expand the consumer base of the Network Companies;

         o  Respond to competitive developments;

         o  Continue to attract, retain and motivate qualified employees; and

         o  Continue to upgrade its technologies and improve the technologies of
            the Network Companies.

         There can be no assurance that Inc.ubator will be successful in
addressing these risks and if it is not successful its ability to make a profit
will be adversely affected.

Inc.ubator anticipates incurring losses for the foreseeable future.

         Since its recent change in business strategy, Inc.ubator has incurred
costs to expand its base of Network Companies, to attract qualified employees
and to upgrade and improve technologies of its Network Companies. As a result,
the Company has incurred significant losses and expects to continue to incur
losses on a quarterly and annual basis for the foreseeable future. As of March
31, 2000, Inc.ubator had an accumulated deficit of approximately $1.1 million.
There can be no assurance that Inc.ubator will be able to generate sufficient
revenues from operations to achieve or maintain profitability on a quarterly or
annual basis in the future. Inc.ubator expects negative cash flow from
operations to continue for the foreseeable future.


                                       19
<PAGE>

Inc.ubator will require additional long and short term financing in order to
fund its working capital requirements, implement its business plan and fund the
acquisition of additional Network Companies.

         In order to fund its working capital requirements, implement its
business plan and fund the acquisition of additional Network Companies,
Inc.ubator will require additional equity and/or debt financing in the
short-term future. Inc.ubator anticipates that it will need to raise
approximately $30.0 million over the next 12 to 18 months to implement its
business plan and to fund the amounts to be invested in ThemeWare and other
ventures. Incubator also expects that it will be required to raise additional
funds over the long term. It may not be possible for Inc.ubator to secure debt
or equity financing on terms acceptable to it at the time that it seeks such
financing. As a result of these funding needs, Inc.ubator will need to seek
additional external debt and/or equity financing. Adequate funds on terms
acceptable to Inc.ubator, whether through additional equity financing, debt
financing or other sources, may not be available when needed or may result in
significant dilution to existing shareholders. If the Company is unable to
obtain sufficient funds from operations and external sources, the Company will
not succeed.

If Inc.ubator is unsuccessful in re-negotiating its investment commitment with
eCard Solutions, it may lose a portion of its investment in eCard Solutions.

         In connection with the Company's purchase of eCard Solutions, Inc, the
Company agreed to pay the $1,000,000 purchase price for the Series B preferred
shares in four equal installments of $250,000 on March 13, 2000, April 13, 2000,
May 12, 2000 and June 12, 2000. Failure to pay any of the installments could
result in forfeiture of all or part of the Series B preferred stock and up to
$250,000 in prior installments paid by the Company. As of June 28, 2000, only
$250,000 of the $1,000,000 purchase price had been paid. On May 24, 2000, eCard
Solutions delivered Inc.ubator a notice of default on its obligation. Inc.ubator
is currently negotiating with eCard Solutions to restructure this transaction so
that no further payments on the part of Inc.ubator will be required; however,
the parties have not yet reached a formal agreement on this matter. If
Inc.ubator's negotiations with eCard Solutions are not successful, eCard
Solutions could retain the $250,000 already paid, Inc.ubator could be required
to return all of the Series B preferred shares granted, and could possibly be
subject to other breach of contract claims made on behalf of eCard Solutions.

Inc.ubator is entering into new high-risk markets and its success will depend on
performance of its investments in companies in this market.

         Inc.ubator has entered into the moderate income consumer Internet
market which is still developing, speculative and uncertain, and intends to
enter the small business market. Internet companies generally face a high degree
of risk of failure and volatility in market price. Moreover, Inc.ubator is
focusing on a particular segment of this high-risk market by investing in
companies that will use the Internet to provide products, services and
information content to moderate income consumers and small businesses. If
Inc.ubator's Network Companies do not succeed, the value of its assets and the
price of its Common Stock will decline.


                                       20
<PAGE>

Because the business model proposed by Inc.ubator is unproven, it is uncertain
whether it will succeed.

         Inc.ubator's business model is unproven. The success of Inc.ubator's
business model depends on the willingness of companies to join Inc.ubator's
collaborative network and the ability of that network to assist the Network
Companies. If Inc.ubator cannot convince companies of the value of its business
model, Inc.ubator's ability to attract new companies will be adversely affected
and its strategy of building a collaborative network may not succeed.

         Inc.ubator's business also depends upon the performance of its Network
Companies, which is uncertain. Economic, governmental, industry and internal
company factors outside its control affect each of the Network Companies. A
significant portion of Inc.ubator's assets will be comprised of ownership
interests in the Network Companies. It is expected that, from time to time,
Inc.ubator's investment in one Network Company or a few Network Companies could
represent a significant portion of its market capitalization. If Inc.ubator's
Network Companies do not succeed, the value of its assets will decline, which
could result in a reduction in the value of Inc.ubator's common stock.

Early stage company investments are particularly risky.

         Many of the companies in which Inc.ubator will acquire an interest are
in the early stages of their development. Some of these companies have not yet
commenced material operations, and consequently, do not have any operating
history upon which an evaluation of those companies can be based. Inc.ubator's
business and prospects must be considered in light of the risk, expense and
difficulties frequently encountered by companies in an early stage of
development, particularly companies in new and rapidly evolving markets such as
Internet and e-commerce serving the moderate income and small business markets,
as well as the problems, expenses, difficulties, complications and delays
frequently encountered in connection with the investments in new business in
general. If Inc.ubator is unable to effectively allocate its resources and help
grow the Network Companies, its stock price may be adversely affected and it may
be unable to execute its business strategy.

If Inc.ubator is unable to assemble and maintain the required key employees, its
ability to compete could be harmed.

         Inc.ubator's success is dependent on the retention and successful
performance of its key personnel and the key personnel of its Network Companies.
If one or more members of Inc.ubator's management, or the management of its
Network Companies, were unable or unwilling to continue in their present
positions, Inc.ubator's business and operations could be disrupted. If existing
management proves inadequate to the success of Inc.ubator's business plan, then
Inc.ubator may be unable to find and hire additional qualified management and
professional personnel to help lead it and its Network Companies because


                                       21
<PAGE>

competition for managers and professionals in the high technology and e-commerce
industries is extremely tight.

         Inc.ubator's performance also depends on its ability to attract, retain
and motivate additional key officers and employees. Inc.ubator may be unable to
retain its employees or to attract, assimilate and retain other qualified
employees with relevant e-commerce industry skills in the future. If Inc.ubator
fails to attract, retain and motivate qualified employees, its business will be
harmed.

Inc.ubator may be unable to implement its investment strategy on acceptable
terms.

         Inc.ubator may have difficulty acquiring additional companies that
complement its business strategy at acceptable prices. This could occur for many
reasons, including:

         o  A failure to agree on the terms of the acquisition, such as the
            amount or price of an acquired interest;

         o  Incompatibility with management of the company;

         o  Competition from other acquirors of e-commerce companies; and

         o  A lack of low-cost capital to acquire an interest in the company.

         Many of the acquiror companies with which Inc.ubator will compete for
interest in Internet-related companies have substantially greater financial
resources than Inc.ubator. Inc.ubator's management is aggressively pursuing
other acquisition and investment opportunities, although except as disclosed
herein, it does not have agreements with respect to any such opportunities.
There is no assurance that any of these opportunities will materialize.

Inc.ubator recently completed significant acquisitions of businesses and
technologies and Inc.ubator may make other business acquisitions in the future
which may be difficult to integrate into its existing business and may disrupt
or negatively impact its business.

         Inc.ubator recently made, and will continue to make investments in and
acquisitions of complementary companies, technologies and assets that constitute
critical aspects of its current and future business operations. If it fails to
successfully integrate the operations of these companies, technologies or assets
into its business, Inc.ubator may not be able to successfully execute its
business strategy. Since November, 1999, Inc.ubator acquired CASA and EAL and
substantial interests in eCard Solutions and InfoBase. In addition, the
acquisition of ThemeWare is currently proposed.


                                       22
<PAGE>

         These and any future acquisitions may result in:

         o  Difficulties in assimilating technologies, products, personnel and
            operations;

         o  Diversion of management's attention;

         o  Entering markets in which Inc.ubator has no or limited prior
            experience;

         o  Loss of key employees of acquired organizations; and

         o  Capital requirements in excess of what Inc.ubator currently
            anticipates.

         In the future, acquiring companies, assets or technologies may also
require Inc.ubator to make cash payments, assume debt, incur large write-offs
related to intangible assets and issue equity, that will dilute ownership
interests of current stockholders.

Inc.ubator could become subject to regulation under the Investment Company Act
of 1940 and its business decisions may be impacted by this act if Inc.ubator is
to remain unregulated.

         Inc.ubator may have to take certain actions to avoid inadvertently
becoming an investment company required to register under the Investment Company
Act of 1940, as amended. To minimize the risk that it could be deemed a
regulated investment company, Inc.ubator intends to apply to the SEC for an
exemptive order from the Investment Company Act of 1940 on the basis that
Inc.ubator is primarily and actively engaged in the business through its Network
Companies. If Inc.ubator receives the exemptive order, it would not be regulated
by the Investment Company Act of 1940 as long as it continues to be primarily
engaged in e-commerce through majority-owned subsidiaries or controlled
companies. However, Inc.ubator cannot be certain that the SEC will grant this
exemption. If it does not, Inc.ubator may need to make significant changes to
its business activities.

         Generally, a company must register under the Investment Company Act and
comply with significant restrictions on operations and transactions with
affiliates if its investment securities exceed 40% of the company's total
assets, or if it holds itself out as being primarily engaged in the business of
investing, owning or holding securities. Under an alternative test, a company is
not required to register under the Investment Company Act if not more than 45%
of its total assets consist of, and not more than 45% of its net income is
derived from, securities other than government securities and securities of
majority-owned subsidiaries and companies primarily controlled by it.


                                       23
<PAGE>

Inc.ubator's interests in Network Companies will be heavily concentrated on the
speculative Internet and e-commerce markets.

         The success of Inc.ubator's Network Companies depends on the
development of the e-commerce market for moderate income consumers and small
businesses, which is speculative and uncertain. The development of the
e-commerce markets for moderate income consumers and small businesses are in the
early stages. If widespread commercial use of the Internet does not develop in
this market, or if the Internet does not develop as an effective medium for the
provision of services and technology to these markets, the Network Companies may
not succeed.

Internet competition is intense and barriers to entry are low.

 Competition for Internet products and services is intense. As the e-commerce
markets for moderate income consumers and small businesses grow, management
expects that competition will intensify. Barriers to entry are minimal, and
competitors can offer products and services at a relatively low cost. Increased
competition could result in price reductions, diminished demand, fewer customer
orders, reduced gross margins and loss of market share. Network Companies
compete for a share of a customer's or a small business' purchasing budget for
goods and services, and compete to attract and retain a critical mass of buyers
and sellers.

         In addition, certain of the potential competitors of the Network
Companies have longer operating histories, significantly greater financial,
technical, marketing and other resources, greater name recognition and
significantly larger existing customer bases than the Network Companies. These
competitors may be able to respond more quickly to changes in consumer
preferences and to devote greater resources to the development, promotion and
sale of their products and services than Inc.ubator. There can be no assurance
that Inc.ubator will be able to compete successfully with these competitors.

Inability of Network Companies to protect intellectual property could impede
growth and value.

         Some of Inc.ubator's Network Companies may be unable to protect their
proprietary rights and may infringe on the proprietary rights of others. In
addition, effective patent, copyright and trademark protection may be
unenforceable or limited in certain countries, and the global nature of the
Internet makes it impossible for some of the Network Companies to control the
dissemination of their work and use of their services.

Technological and equipment breakdowns could interrupt and adversely effect the
business.

         Some of the Network Companies' businesses depend on the efficient and
uninterrupted operation of their computer and communications hardware systems
and related software. Any system interruptions could adversely affect the
Network Companies' business, financial condition and operating results.


                                       24
<PAGE>

Interruptions could result from natural disasters as well as power loss,
telecommunications failure and similar events.

 Capacity limits on some of the Network Companies' technology, transaction
processing systems and network hardware and software may be difficult to project
and they may not be able to expand and upgrade their systems to meet increased
use. As the Network Companies' customer base begins to increase, they must
expand and upgrade their technology, transaction processing systems and network
hardware and software. The Network Companies may be unable to accurately project
the rate of increase in demand for their goods and services. In addition, the
Network Companies may not be able to expand and upgrade their systems and
network hardware and software capabilities to accommodate an increased customer
base, and the operations and processes of Inc.ubator's Network Companies may be
disrupted.

The Internet and e-commerce businesses are rapidly developing and transforming,
and pose numerous technological and market risks relating to security and
reliability.

         Concerns regarding security of transactions and transmitting
confidential information over the Internet may have an adverse impact on
Inc.ubator's business. Company management believes that concern regarding the
security of confidential information transmitted over the Internet prevents many
potential customers from engaging in online transactions. If the Network
Companies that depend on such transactions do not add sufficient security
features to their future product releases, the Network Companies' products may
not gain market acceptance or there may be additional legal exposure to them.
The infrastructure of Network Companies will be vulnerable to physical or
electronic break-ins, viruses or similar problems. If a person circumvents the
security measures imposed by any one of the Network Companies, he or she could
misappropriate proprietary credit or other information or cause interruption in
operations of the Network Company. Security breaches that result in access to
confidential information could damage the reputation of any one of the Network
Companies and expose the Network Company affected to a risk of loss or
liability.

         Some of the Network Companies may be required to make significant
investments and efforts to protect against or remedy security breaches.
Additionally, as e-commerce becomes more widespread, Network Company customers
will become more concerned about security. If the Network Companies are unable
to adequately address these concerns, their ability to sell their products,
services and information content could be harmed.

Regulation of Inc.ubator's Internet businesses may increase, which could result
in a reduction in revenues.

         Government regulations and legal uncertainties may place financial
burdens on Inc.ubator's business and the businesses of Inc.ubator's Network
Companies. As of the date hereof, there were few laws or regulations directed
specifically at e-commerce. However, because of the Internet's popularity and
increasing use, new laws and regulations may be adopted. These laws and


                                       25
<PAGE>

regulations may cover issues such as the collection of and use of data from
website visitors and related privacy issues, pricing, content, copyrights,
online gambling, distribution and the quality of goods and services. The
enactment of any additional laws or regulations may impede the growth of the
Internet and e-commerce in the moderate income consumer and small business
markets, which could decrease the revenue of Inc.ubator's Network Companies and
place additional financial burdens on Inc.ubator's business and the businesses
of Inc.ubator's Network Companies.

         Laws and regulations directly applicable to communications or commerce
over the Internet are becoming more prevalent. The U.S. Congress enacted
Internet laws regarding children's privacy, copyrights, taxation and the
transmission of sexually explicit material. The European Union recently enacted
its own privacy regulations. The law of the Internet, however, remains largely
unsettled, even in areas where there has been some legislative action. It may
take years to determine whether and how existing laws such as those governing
privacy, libel and taxation apply to Inc.ubator's business. The delays that
these governmental processes entail may cause order cancellations or
postponements of product purchases by our customers, which would seriously harm
Inc.ubator's business. The rapid growth and development of the market for online
commerce may prompt calls for more stringent consumer protection laws, both in
the United States and abroad, that may impose additional burdens on companies
conducting business online. The adoption or modification of laws or regulations
relating to the Internet business could result in a decrease in demand for
Inc.ubator's products, which would cause a decline in Inc.ubator's revenues.

If there is a downturn in the market for Internet-related companies,
Inc.ubator's ability to grow its business would be impaired.

         Inc.ubator's success could be impaired by future market conditions for
Internet-related companies, as it is dependent on the health of this market for
initial public offerings and other financings of the Network Companies. If the
market for Internet-related companies and initial public offerings were to
weaken for an extended period of time, the ability of the Network Companies to
grow and access the capital markets will be impaired.

Fluctuations in Inc.ubator's stock price may result in a decline in the market
price of Inc.ubator's common stock.

         Prior to November, 1999, there was no public market for Inc.ubator's
Common Stock and currently there is only a limited market for these securities
on the NASDAQ OTC Bulletin Board. Accordingly, the market price of Inc.ubator's
Common Stock, like the market for Internet-related and technology companies in
general, is highly volatile. Any significant fluctuations in the future might
result in a material decline in the market price of Inc.ubator's Common Stock.

         The price at which Inc.ubator's Common Stock will trade in the future
is likely to be highly volatile and may fluctuate substantially due to factors
such as:


                                       26
<PAGE>

         o  Actual or anticipated variations in quarterly operating results;

         o  Announcements of technological innovations;

         o  New sales formats of new products or services;

         o  Changes in or failure to meet financial estimates of securities
            analysts;

         o  Conditions or trends in the Internet industry;

         o  Announcements by Inc.ubator or its competitors of significant
            acquisitions, strategic partnerships or joint ventures;

         o  Capital commitments;

         o  Additions or departures of key personnel; or

         o  Sales of Common Stock.

         In addition, the U.S. stock markets have from time to time experienced
significant price and volume fluctuations that have affected the market price
for the Common Stock of technology companies, particularly Internet companies.
In the past, these broad market fluctuations have been unrelated or
disproportionate to the operating performance of these companies. In the past,
following periods of volatility in the market price of a particular company's
securities, securities class action litigation has often been brought against
that company. Inc.ubator may become involved in this type of litigation in the
future. Litigation is often expensive and diverts the attention and resources of
management, which could harm Inc.ubator's business.

Possible Adverse Effect of Penny Stock Rules on Liquidity of the Company's
Securities

         The SEC regulations define a "penny stock" to be an equity security not
registered on a national securities exchange or for which quotation information
is disseminated on the Nasdaq Stock Market that has a price of less than $5.00
per share or an exercise price of less than $5.00 per share, subject to certain
exemptions. For any transaction involving a penny stock, unless exempt, the
rules require delivery, prior to a transaction in a penny stock, of a disclosure
schedule prepared by the SEC relating to the penny stock market. Disclosure is
also required to be made about commissions payable to both the broker-dealer and
the registered representative and current quotations for the securities.
Finally, monthly statements are required to be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks.

         The foregoing required penny stock restrictions will not apply to the
Company's securities if such securities are listed on the Nasdaq SmallCap Market
and have certain price and volume information provided on a current and
continuing basis, or meet certain minimum net tangible assets or average return
criteria. In any event, even if the Company's securities were exempt from such
restrictions, it would remain subject to Section 15(b)(6) of the Securities
Exchange Act of 1934, which gives the SEC the authority to prohibit any person
that is engaged in unlawful conduct while participating in a distribution of a
penny stock from associating with a broker-dealer or participating in a


                                       27
<PAGE>

distribution of a penny stock, if the SEC finds that such a restriction would be
in the public interest. If the Company's securities were subject to the rules on
penny stocks, the market liquidity for the Company's securities could be
adversely effected.

Inc.ubator's unissued preferred stock may deter potential acquisition bids for
Inc.ubator's business, including bids that may be beneficial to shareholders.

         Inc.ubator's amended and restated certificate of incorporation permits
its board of directors to issue up to 25,000,000 shares of preferred stock in
one or more series. The board of directors can fix the number of shares of each
class and the voting rights, preferences, limitations and special rights, if
any, without any further vote or action by Inc.ubator's stockholders. The
issuance of shares of preferred stock without further action by Inc.ubator's
stockholders may delay or prevent a change in control transaction. The issuance
of shares of preferred stock may adversely affect shares of Common Stock held by
current shareholders.

Delaware law may deter potential acquisition bids for its business, including
bids which may be beneficial to shareholders.

         Delaware law may deter potential bidders for Inc.ubator's business.
Inc.ubator is subject to the anti-takeover provisions of the Delaware General
Corporation Law, which regulates corporate acquisitions. Delaware law prevents
the Company from engaging in a business combination with any interested
stockholder for three years following the date that the stockholder became an
interested stockholder. For purposes of Delaware law, a business combination
includes a merger or consolidation involving Inc.ubator and the interested
stockholder and the sale of more than 10% of Inc.ubator's assets. In general,
Delaware law defines an interested stockholder as any entity or person
beneficially owning 15% or more of the outstanding voting stock of a corporation
and any entity or person affiliated with, controlling or controlled by such
entity or person. Under Delaware law, a Delaware corporation may opt out of the
anti-takeover provisions. Inc.ubator does not intend to opt out of these
anti-takeover provisions.

Certain of the Network Companies were acquired from affiliated parties and as a
result were not the result of arms-length negotiations.

         Several of the members of Inc.ubator's management team, namely, Harry
Weitzel, Chairman and Chief Executive Officer, Jason Galanis, President and
Chief Operating Officer and Dr. Rory Knight, a director of Inc.ubator were
principals of Thesseus International Asset Fund, NV ("Thesseus"), the entity
from which Inc.ubator acquired its interests in EAL, eCard Solutions and
InfoBase. In addition, Michael Bodnar is the CFO of Thesseus and a director of a
subsidiary of Thesseus. CASA was acquired from K. Washington-Galanis
Investments, LLC, a company controlled by Jason Galanis, the President and Chief
Operating Officer of Incu.bator, and Kevin Washington, an Executive Vice
President and director of Inc.ubator. Therefore, the transactions were not the


                                       28
<PAGE>

result of arms-length negotiations and the related agreements may include terms
and conditions that may be more or less favorable to Inc.ubator than terms
contained in similar agreements negotiated with third parties.

A significant portion of Inc.ubator's outstanding Common Stock and all of the
shares of preferred stock are owned by certain members of management and their
affiliates.

         Certain members of management of Inc.ubator, specifically Kevin
Washington and Jason Galanis, will own or control when issued, 100% of the
outstanding preferred stock of Inc.ubator. As of March 31, 2000, management
beneficially owned approximately 58.3% of Inc.ubator's capital stock (based on
the issuance of shares agreed to be issued to Thesseus). See "Security Ownership
of Certain Beneficial Owners and Management." Together these individuals will
have sufficient voting power to control the outcome of all corporate matters
submitted to the vote of shareholders, including the election of directors,
changes in the size and composition of the Board of Directors, mergers, tender
offers and open-market purchase programs that could give shareholders of
Inc.ubator the opportunity to realize a premium over the then-prevailing market
price for their shares. In addition, the concentration of ownership in these
individuals and their affiliates could have the effect of delaying or preventing
a change in control of Inc.ubator and may affect the market price of the Common
Stock.

Inc.ubator does not intend to pay cash dividends for the foreseeable future.

         Inc.ubator has never declared or paid any cash dividends on its Common
Stock. Inc.ubator does not anticipate paying any cash dividends on its Common
Stock or any preferred stock in the foreseeable future.

Risks Particular to the Subsidiary CASA.

If CASA does not obtain the additional funding needed to implement its business
plan, it will never attain profitable operations.

         The Company estimates that CASA will require approximately $1.5 million
to complete its platform development and to implement its marketing plan.
Substantial additional funding will also be required to support CASA's ongoing
development and operations. CASA plans to seek such funding through equity
and/or debt financing as well as from commercial financing sources that may be
available. Inc.ubator currently has no commitments for such financing and no
assurance can be given that it will be able to obtain financing on acceptable
terms, if at all. In addition, because CASA has been newly organized and has not
yet commenced operations, no assurance can be given that its business will ever
generate material revenue or be commercially viable. See "Network Company
Acquisitions - CASA@Home.com, Inc."


                                       29
<PAGE>

If CASA's websites cannot support the growth in electronic commerce,
Inc.ubator's earnings could be reduced.

         If CASA does not develop its systems to sufficiently support growth in
the demand for their services, Inc.ubator's business will be harmed.
Specifically, Inc.ubator would be harmed if:

         o  CASA fails to develop and expand its infrastructure, including its
            website, Internet software and servers to accommodate an increased
            number of users; and

         o  CASA fails to adapt its products and services to be compatible with
            new technology, and are therefore unable to provide its services to
            users of the new technology.

CASA could face liability for information retrieved from or transmitted through
its website, which could result in high litigation or insurance costs.

         As publishers and distributors of online content, CASA could face
potential liability for defamation, negligence, copyright, patent or trademark
infringement and other claims based on the nature and content of the materials
that CASA intends to publish or distribute on its website. Any imposition of
liability could negatively impact Inc.ubator's reputation and result in
increased insurance costs. Claims have been successfully brought against online
services. Although Inc.ubator will carry general liability insurance, its
insurance may not cover claims of these types or may not be adequate to cover it
for all liability that may be imposed.

If CASA is unable to develop and preserve its network capacity and technical
operations, its business would be adversely affected.

         CASA's operations will be dependent on its ability to develop and
protect its computer equipment and the information stored in its data centers
against damage by fire, power loss, telecommunications failures, unauthorized
intrusions and other events. Any damage or failure that causes interruptions in
CASA's operations could have a material adverse effect on its business. Software
defects and server and network expansion could also cause service outages. There
can be no assurance that CASA's future efforts to prevent or reduce outages will
be successful, and the failure to do so could have a material adverse effect on
CASA's business.

CASA expects that it may experience seasonal fluctuations in its results of
operations.

         Both subscriber acquisitions and the amount of time spent by customers
using CASA's services may fluctuate seasonally. Member acquisition is expected
to be highest in the autumn and winter months, when sales of new computers and
computer software are highest due to the holiday season. Customer usage is
expected to be lower in the summer months due largely to extended day-light
hours and competing outdoor leisure activities.


                                       30
<PAGE>

If CASA is unable to obtain access to suitable content providers, it may never
obtain profitable operations.

         As competition in the online services market intensifies, it may become
more difficult or expensive to secure and retain content and/or content
providers. If CASA is unable to obtain and maintain content, its ability to
achieve profitable operations would be reduced.

If CASA does not stay abreast of rapidly changing technologies, its viability
would be threatened.

         As online services evolve, CASA will be required to offer technological
advances such as, for example, improved data compression and delivery of voice
and full-motion video technologies. Currently, online services are accessed
primarily by personal computers via modem. As online services become accessible
by screen-based telephones, television or other consumer electronic devices, and
become commercially deliverable over other wired conduits such as coaxial and
fiber optic cable, CASA may have to develop new technologies or modify its
existing technologies to keep pace with these developments. Pursuit of these
technological advances will require substantial expenditures, and there can be
no assurance CASA will succeed in adapting its business to alternate access
devices and conduits.

Certain legal actions create uncertainties for CASA's business.

         The Federal Communications Commission is considering reforming the
current system of access charges under which long distance telecommunications
carriers pay local telephone companies for using local networks to complete long
distance telephone calls. Historically, Internet service providers have been
exempt from paying such network access charges. A change in the system of
network access charges to require Internet service providers to pay network
access charges could have a material adverse impact on the CASA's business.

CASA will face risks as a consequence of credit card relationships with its
customers.

         CASA intends to retain the economic risks associated with the VISA(R)
credit cards to be issued to its customers as part of CASA's marketing strategy.
See "Network Company Acquisitions - CASA@Home.com, Inc." Therefore, CASA will
face risks similar to those borne by eCard Solutions described below with
respect to its reliance on third parties for issuance, processing and
maintenance of credit card accounts, credit card fraud, credit risk, consumer
protection and other laws, interest rate risk and other risks of credit card
receivables and relationships.

Lending to moderate income borrowers may result in higher delinquencies, which
could adversely impact CASA's revenues.

         Since CASA intends to market credit cards to moderate income consumers,
certain of which are either unable or unwilling to obtain financing from


                                       31
<PAGE>

traditional sources such as commercial banks, such lending is riskier than
traditional lending because the extension of credit to these borrowers may
entail a higher risk of delinquency and loss than loans made to borrowers who
use traditional financing sources. While CASA intends to use underwriting
standards and collection procedures designed to mitigate the higher credit risk
associated with lending to these borrowers, its standards and procedures may not
offer adequate protection against risks of default. In the event these borrowers
experience higher delinquencies than anticipated, CASA's revenues would be
adversely affected.

         CASA intends to maintain an allowance for credit losses to account for
credit card receivables that are delinquent. The allowance is calculated based
upon its estimate of the expected collectibility of these receivables
outstanding based upon a variety of factors, including but not limited to
economic conditions and credit and collateral considerations.

Uncertain acceptance of the Internet as a medium for product sales to moderate
income customers may impact CASA's profitability.

         Use of the Internet by moderate income consumers is a relatively new
development and market acceptance of the Internet by this consumer group is
subject to a high level of uncertainty. CASA's future success will depend in
part on its ability to significantly increase revenues, which will require the
development and widespread acceptance of the Internet by moderate income
consumers. There can be no assurance that CASA's target market group of
consumers will be willing to purchase products or services over the Internet.

         There can be no assurance that CASA's products and services will be
attractive to a sufficient number of users to generate significant revenues.
There can also be no assurance that CASA will be able to anticipate, monitor and
successfully respond to rapidly changing technology and consumer preferences so
as to continually attract and retain a sufficient number of customers. If CASA
is unable to develop and implement competitively priced products that allow it
to attract, retain and expand its customer base, its revenues would be
materially adversely affected.


                                       32
<PAGE>

Risks Particular to the Subsidiary Eikos Acquisition Limited.

The payments received from EAL are subject to fluctuations which are outside
Inc.buator's control, which could reduce Inc.ubator's earnings.

         Inc.ubator can make no representation as to the amount of the payments
it will receive through EAL since this amount will be based on factors beyond
Inc.ubator's control. See "Network Company Acquisitions -- Eikos Acquisition
Limited" for an explanation of this payment. These include, among others, the
financial resources of The Credit Store and its ability to generate credit card
receivables. In addition, Eikos Management LLC ("Eikos"), an entity in which EAL
owns 49.5%, is administered by Ionian Trust Company Limited ("Ionian"), a
company controlled by a brother of the Company's President, pursuant to an
agreement (the "Administration Agreement") dated August 31, 1998. The
Administration Agreement grants Ionian the right to determine the amount and
timing of any distributions that may be made to the members of EAL. Accordingly,
although EAL has, in effect, a 49.5% interest in the royalty revenue stream,
Ionian will control the amount and timing of any distributions to EAL.

Risks Particular to the Subsidiary, eCard Solutions.

Since eCard Solutions cannot issue credit cards, other than through an agreement
with a bank, its business could be severely disrupted if its bank agreements
were terminated.

         Because eCard Solutions does not have a bank charter, it cannot issue
credit cards other than through agreements with banks. CorTrust Bank, N.A, Sioux
Falls, South Dakota ("CTB") and First National Bank of Brookings, South Dakota
("FNB") are the issuing banks for eCard Solution's credit cards and are
responsible for compliance and regulatory issues. If eCard Solutions' issuing
agreements with CTB and/or FNB were terminated or otherwise disrupted, there is
a risk that eCard Solutions would not be able to enter into an agreement with
alternate providers on terms that eCard Solutions considers favorable, or in a
timely manner without disruption of the eCard Solutions' business, in which case
its revenues would be adversely affected. See "Network Company Acquisitions --
eCard Solutions, Inc."

If the third parties on which eCard Solutions relies to market its credit cards
were unable to fulfill their duties, eCards Solutions revenues would be reduced.

         eCard Solutions is dependent on arrangements with various third parties
to market its credit card programs. If these marketing firms are unable to
continue operations or otherwise unable to fulfill their duties under these
marketing arrangements, eCard Solutions' revenues would be reduced. One of these
arrangements is with InfoBase, an affiliated company.


                                       33
<PAGE>

Because eCard Solutions outsources its account processing functions, any
disruption or termination of that outsourcing relationship could harm eCard
Solutions' business.

         Pursuant to its agreements with CTB and FNB, eCard Solutions outsources
account processing functions for the credit card accounts to CTB and FNB. In
addition, card maintenance is outsourced to First Data Resources, Inc. If these
agreements were terminated or otherwise disrupted, there is a risk that eCard
Solutions would not be able to enter into similar agreements with alternate
providers on terms that eCard Solutions considers favorable, or in a timely
manner without disruption of eCard Solutions' business, in which case its
financial condition and results of operations would be adversely affected.

eCard Solutions will require substantial additional funding to support its
ongoing development and operations, as well as its credit card receivables.

         Substantial additional funding will also be required to support eCard
Solutions' ongoing development, operations and credit card receivables. eCard
Solutions plans to seek such funding through equity and/or debt financing as
well as from commercial financing sources that may be available. Inc.ubator
currently has no commitments for such financing and no assurance can be given
that it will be able to obtain financing on acceptable terms, if at all. In
addition, because eCard Solutions has been in business a relatively short period
of time, no assurance can be given that its business will ever generate material
revenue or be commercially viable.

If eCard Solutions is unsuccessful in evaluating the creditworthiness of its
clients, it may not price its credit products so as to attain profitable
operations.

         eCard Solutions may be unsuccessful in evaluating the creditworthiness
of its clients and may not price its credit products so as to attain profitable
operations. eCard Solutions' target market generally has a higher risk of
nonpayment, higher frequencies of delinquencies and higher credit losses than
consumers who are served by more traditional providers of consumer credit. Some
of the consumers included in eCard Solutions' target market are consumers who
are dependent upon finance companies, who have only retail store credit cards
and/or are lacking general purpose credit cards, and consumers who may have had
delinquencies, defaults or, in some instances, a bankruptcy in their credit
histories.

Certain of eCard Solutions' products may not be able to successfully compete
with other products, which would negatively impact eCard Solutions' revenues.

         eCard Solutions has several competitors who provide credit cards to the
moderate income consumer market, including Capital One, Cross Country Bank,
First National Bank of Marin, First Premier, Renaissance Bank and Providian
National Bank. These institutions whose primary or sole focus on the moderate
income consumer or non prime market currently have a dominant market share


                                       34
<PAGE>

position. eCard Solutions may not be able to compete with companies that have
greater capital resources and technology than eCard Solutions.

Consumer protection laws may make collection of credit card account balances
more difficult or may expose eCard Solutions to the risk of litigation.

         Federal and state consumer protection laws regulate the creation and
enforcement of consumer loans, including credit card accounts and receivables.
Changes or additions to those regulations could make it more difficult to
collect payments on credit card receivables. The U.S. Congress or state or local
legislatures could pass legislation limiting the finance charges and fees that
may be charged on credit card accounts. The impact could be a reduction of eCard
Solutions revenues. Receivables that do not comply with consumer protection laws
may not be valid or enforceable in accordance with their terms against the
obligors on those receivables.

         Any failure by eCard Solutions or CTB, as the issuer of the credit
cards or servicer of the credit card accounts, to comply with legal requirements
could significantly impair the ability of eCard Solutions to collect the full
amount of the credit card account balances and may expose such parties to the
risk of litigation under state and federal consumer protection statutes, rules
and regulations.

Changes in law may increase eCard Solutions' credit losses and administrative
expenses, restrict the amount of interest and other charges imposed on the
credit card accounts or limit eCard Solutions' ability to make changes to
existing accounts.

         Numerous legislative and regulatory proposals are advanced each year
which, if adopted, could harm eCard Solutions' profitability or limit the manner
in which eCard Solutions conducts its activities. Changes in federal and state
bankruptcy and debtor relief laws may increase eCard Solutions' credit losses
and administrative expenses. More restrictive laws, rules and regulations may be
adopted in the future which could make compliance more difficult or expensive,
further restrict the amount of interest and other charges imposed on credit card
accounts originated or marketed by eCard Solutions, limit eCard Solutions'
ability to make changes to the terms on existing accounts or otherwise
significantly harm eCard Solutions' business.


                                       35
<PAGE>

Litigation affecting credit cards may have unpredictable results.

         In October, 1998, the U.S. Justice Department filed a complaint against
MasterCard International Incorporated, Visa U.S.A., Inc. and Visa International,
Inc., asserting that duality (the overlapping ownership and control of both the
MasterCard and Visa associations by the same group of banks) restrains
competition between Visa and MasterCard in the market for general purpose card
products and networks in violation of the antitrust laws. The government seeks
as relief that only member banks "dedicated" to one association be permitted to
participate in the governance of that association. In addition, the complaint
challenges the rules adopted by both MasterCard and Visa that restrict member
banks from joining American Express, Discover/Novus or other competitive
networks. MasterCard and Visa have stated that they consider the suit without
merit, and intend to deny the allegations of the complaint. Neither the ultimate
outcome of this litigation nor its effect on the competitive environment in the
credit card industry if the lawsuit succeeds can be predicted with any
certainty.

Interest rate changes may adversely impact eCard Solutions' business.

         The rate of interest eCard Solutions pays on its borrowings may
increase if market interest rates rise. If the rate of interest eCard Solutions
earns does not increase by the same amount, its earnings could be reduced.
Earnings could also be hurt in a period of falling interest rates if the rates
on its consumer loans fall faster than those on its borrowings.

eCard Solutions faces fraud and other risks associated with the issuance of
credit cards.

         eCard Solutions faces the risk of fraud by accountholders and third
parties, as well as the risk that increased criticism from consumer advocates
and the media could hurt consumer acceptance of its products. There is also a
risk of litigation, including class action litigation, challenging eCard
Solutions' product terms, rates, disclosures, collections or other practices,
under state and federal consumer protection statutes and other laws. If a
cardholder sought protection under Federal or state bankruptcy or debtor relief
laws, a court could reduce or discharge completely the cardholder's obligations
to repay amounts due on its account and, as a result, the related receivables
would be written off as uncollectible.


                                       36
<PAGE>

Network Company Acquisitions

         CASA@Home.com, Inc.

         In November 1999, as the initial step in implementing its strategy,
Inc.ubator acquired CASA from K. Washington-Galanis Investments LLC, an entity
owned by Jason Galanis and Kevin Washington, for two million shares of Common
Stock. CASA is a recently formed company which intends to develop an
Internet-based consumer portal which will focus on providing moderate income
consumers access to the financial and non-financial benefits of the Internet.
The sole asset of CASA at the date of acquisition was certain intellectual
capital and a business plan for an Internet-based provider of services.

         CASA intends to offer a bundle of four primary services in order to
introduce the moderate income consumer to the benefits of the Internet. The
bundle will consist of: (1) a new VISA(R) `E-Commerce' credit card, (2) a low
cost non-PC Internet access device, (3) low cost ISP service, (4) highly
customized subscriber content services.

         Because the Internet makes possible lower offering, distribution and
transaction costs, CASA believes its systems will offer subscribers the ability
to reduce their expenditures, thereby increasing the income available for
discretionary spending. Toward that end, CASA intends to position itself as a
facilitating portal. Further, since these moderate income consumers tend to be
relatively unsophisticated in the use of what is still a somewhat complex
technology, CASA believes that they will be less migratory than more affluent
consumers. As a result, CASA believes that its subscriber base will not
experience the attrition rates of more typical Internet product and service
providers. CASA believes that it may be able to acquire and maintain a
proprietary subscriber base of several hundred thousand users. CASA's basic
program is expected to deliver a no cash, up front means for new Internet users
to obtain an Internet access device, a no-security deposit credit card required
for e-commerce, low cost monthly Internet access and personal empowerment
informational services only available through the Internet.

         CASA intends to enter into an agreement with eCard Solutions, an
affiliate, to issue a VISA(R) credit card to its subscribers, which can be used
anywhere, including on the Internet; more particularly through CASA's proposed
web portal which is currently under development, which will be installed as the
home page on the Internet access device provided to the subscriber. CASA's
proprietary database management systems monitor the activity of the card, the
credit file and the web portal, simultaneously providing statistically based
information to better assess individual customer requirements. CASA's ability to
issue a VISA(R) credit card will provide its customers with a payment mechanism
for e-commerce transactions that CASA plans to facilitate, while simultaneously
providing CASA (and Inc.ubator) with statistically based information to better
assess individual customer requirements, which will be integrated into its
network.


                                       37
<PAGE>

         CASA intends to distinguish itself by managing complex database
systems, in order to provide targeted services relevant to moderate income
consumers. In addition, CASA believes the credit card will provide an efficient
subscriber acquisition tool. CASA believes that there will be several important
revenue channels available to it:

         o  Recurring monthly subscriber fee;

         o  Non-recurring initial subscriber fee;

         o  A monthly per account fee from the credit card issuer;

         o  Value-added/cross sell opportunities; and

         o  Advertising revenue.

         Eikos Acquisition Limited

         Concurrent with the acquisition of CASA, Inc.ubator also acquired 100%
of the stock of EAL from Thesseus in exchange for 3.0 million shares of Common
Stock (adjusted for stock split) and 8.5 million shares of Series A Preferred
Stock convertible into 17.0 million (adjusted for anti-dilution on conversion)
shares of common stock. Three of the Company's directors were directors of
Thesseus. EAL, through Eikos holds the technology licensing rights to a database
management system developed at the founder's prior business, described below.
The licensing agreement also calls for royalty payments to be made to Eikos.

         Inc.ubator's management believes that the technology may be useful to
CASA and has granted CASA an unrestricted licensing right. Further, management
believes that the gross royalty agreement paid by The Credit Store provides
Inc.ubator with a more consistent cash flow.

         EAL is a corporation formed in October, 1999 under the laws of the Isle
of Man, which, through other assets, is eligible to receive a royalty payment
equal to 49.5% of an amount up to $24 million (the "Fee"). This amount is based
upon the only material asset of EAL, which is a 49.5% equity interest in Eikos,
a limited liability company with its principal asset being a Mutual Business
Development Agreement (the "MBDA") with The Credit Store, Inc. (OTCBB: PLCR).
The Credit Store is a nationwide financial services company, with offices in
Sioux Falls, South Dakota. Pursuant to the MBDA, Eikos is entitled to the Fee,
based on a percentage of gross credit card receivable originations (as defined
in the MBDA) produced during a period ending on May 31, 2005. Approximately $1.7
million of the $24 million limit had been paid prior to Inc.ubator's acquisition
of EAL. As amended, the MBDA obligates The Credit Store to pay Eikos $75,000 per
month in cash through May 2005 and accrue any Fee overage. At that time, the
parties will determine the aggregate amount of the Fee then earned by Eikos and
any difference between the amount earned up to an aggregate of $24 million and
the amount previously paid, will be remitted to Eikos by The Credit Store. In
consideration for the accrual, The Credit Store is also obligated to pay Eikos a
monthly deferral fee of $22,500 in cash or, at its option, $25,000 in performing
credit cards, commencing June 1, 1999.


                                       38
<PAGE>

         The MBDA also permits Eikos to use, outside of the United States and
Canada, proprietary technology developed at The Credit Store and other
intellectual property relating to the administration and information processing
of databases connected with consumer credit cards, and the electronic consumer
credit business generally.

         eCard Solutions, Inc.

         On January 18, 2000, Inc.ubator acquired, through a wholly-owned
subsidiary, Shanecy Holding, Inc. ("SHI"), 400 shares of preferred stock in
eCard Solutions which were initially convertible into approximately 40% of eCard
Solutions. This interest in eCard Solutions and InfoBase was acquired from
Thesseus through a merger, effective January 11, 2000, between SHI and a
subsidiary of Thesseus, in return for two million common shares of the Company.
Three of the Company's directors were directors of Thesseus.

         eCard Solutions is a specialty financial services company that intends
to use proprietary database mining, marketing techniques, automated systems and
information technology to issue credit cards to moderate income consumers. eCard
Solutions will manage the resulting portfolio of accounts in an attempt to
ensure that they remain in a performing status. General purpose credit cards
have become the primary payment mechanism for e-commerce transactions over the
Internet. eCard Solutions is headquartered in Sioux Falls, South Dakota. eCard
Solutions management has over ten years of experience in the origination and
servicing of credit cards.

         The income level of moderate income consumers ($25,000 to $50,000 per
year) presents a profile that is unattractive to the majority of credit card
issuers who are focused on the upper income consumer that can qualify for gold
and platinum cards. Given their economic circumstances, eCard Solutions believes
moderate income consumers that have had access to credit, often experience
problems due largely to circumstances beyond their control (i.e. employment
interruption, marriage break-up, extended uninsured illness, etc.). Once a
credit problem has tarnished an individual's credit report, it becomes extremely
difficult to obtain new credit, regardless of the change in the individual's
economic circumstances. Compounding the credit access problems of many moderate
income consumers is the fact that they generally have not been schooled in the
basics of personal financial management.

         To address the opportunity represented by what eCard Solutions believes
is an underserved, 30 million to 40 million household market, eCard Solutions
intends to use its proprietary data mining, neural network analysis and database
management software, to identify those moderate income consumers who it believes
have a high probability of handling a credit card responsibly. It is intended
that identified individuals will be sent direct mail pieces, which will be
followed up by telephone contact. The telephone contact is intended to focus the
consumer on the offer, gather comprehensive current information so that
underwriting the credit application can properly evaluate the consumer's present
financial status and educate the consumer on the importance of the timely
payments. eCard Solutions believes that the telephone contact also represents


                                       39
<PAGE>

the first important step in building a personalized relationship between eCard
Solutions and the customer. The initial credit limit established will generally
be $300 to $2,500, which will permit the borrower to demonstrate that the credit
now available can be successfully handled. The consumer will earn additional
credit in two ways. First, as the balance owed is paid down, automatic access
will be provided to additional credit up to the approved limit. Second, as
successful payment performance is demonstrated, the credit limit will be
increased. Thus consumers will be given every incentive to properly handle the
credit made available, as a means of improving their overall credit profile, as
well as gaining expanded credit availability from eCard Solutions.

         eCard Solutions intends to establish relationships with leading vendors
regarding credit card origination, issuing, processing and servicing. Through
these relationships, eCard Solutions anticipates that it will be able to
cost-effectively optimize the operational aspects of its business, as well as
scale up or down as conditions and circumstances warrant. In turn, Inc.ubator
believes these arrangements will permit eCard Solutions' management to
concentrate their efforts and energies on marketing and account management
functions.

         eCard Solutions intends to use several companies to market its programs
and acquire customers. One of the companies used will be InfoBase, an affiliated
company described below. Unsecured VISA(R) credit cards will be issued to eCard
Solutions' customers through an Issuing and Participation Agreement with CTB.
CTB will be responsible for compliance and regulatory issues, account set up,
daily settlement, customer service, complaints, and customer correspondence, as
well as all aspects of account servicing and delinquency management under eCard
Solutions' oversight and in accordance with eCard Solutions' policies. eCard
Solutions has advised Inc.ubator that it has also entered into an agreement with
Universal Transactions, Inc. ("UTI") to provide fully automated, on line, credit
scoring and application processing and underwriting. UTI's system accesses the
consumer's credit report and automatically evaluates it relative to underwriting
guidelines that have been established by eCard Solutions and CTB. First Data
Resources, Inc. will be responsible for all credit card payment processing,
collections, and billing.

         eCard Solutions also intends to market credit cards to moderate income
consumers via the Internet. Developmental efforts are currently underway with
respect to an Internet based, online account processing and underwriting system.
Upon completion, the consumer would be able to apply for eCard Solutions
products online and be given a credit approval decision in seconds, all in
accordance with eCard Solutions' pre-established underwriting criteria. eCard
Solutions further intends to provide interactive customer service support,
permitting the customer to make online inquiries regarding their applications
and obtain other account information, make inquiries, resolve account issues,
etc.


                                       40
<PAGE>

         On March 13, 2000, a transaction was completed by which: (i) eCard
Solutions issued 255 shares of Common Stock to three new stockholders who also
became employees of eCard Solutions, (ii) eCard Solutions filed an amendment to
its articles of incorporation to create two separate series of preferred stock
(i.e. Series A and Series B) and to change its name to eCard Solutions from its
former name of Brunswick Capital Partners, Inc., (iii) eCard Solutions issued to
Inc.ubator 1,000,000 shares of Series B Preferred Stock for $1,000,000, to be
paid on an installment basis, and (iv) eCard Solutions repurchased 255 shares of
Common Stock from one of its existing stockholders. eCard Solutions has the
right to redeem the Series B preferred shares held by Inc.ubator for $1.00 per
share until March 1, 2003. The preferred stock originally acquired by Inc.ubator
was reclassified as Series A Preferred Stock.

         As a result of this transaction, the Series A Preferred Stock is
convertible into 20% of the Common Stock of eCard Solutions at any time after
March 1, 2003 if the Series B Preferred Stock has been redeemed on or before
such date. If the Series B Preferred Stock has not been redeemed on or before
such date, then the Series A Preferred Stock and the Series B Preferred Stock
will, together, be convertible by Inc.ubator into 40% of the Common Stock of
eCard Solutions. Inc.ubator agreed to pay the $1,000,000 purchase price for the
Series B preferred shares in four equal installments of $250,000 on March 13,
2000, April 13, 2000, May 12, 2000 and June 12, 2000, respectively. Failure to
pay any of the required installments would result in forfeiture of all or part
of the Series B Preferred Stock and up to $250,000 in prior installments paid by
Inc.ubator. As of June 28, 2000 only $250,000 of the $1,000,000 purchase price
had been paid. On May 24, 2000, eCard Solutions delivered Inc.ubator a notice of
default on its obligation. Inc.ubator is currently negotiating with eCard
Solutions to restructure this transaction so that no further payments on the
part of Inc.ubator will be required. Although Inc.ubator believes that the
restructuring of this transaction is in the best interests of Inc.ubator and its
shareholders, the parties have not yet received a formal agreement on this
matter.

         InfoBase Direct Marketing Services, Inc.

         On January 18, 2000, Inc.ubator acquired, through SHI, preferred stock
in InfoBase, convertible into 49% of the outstanding Common Stock of InfoBase.
Through a wholly-owned subsidiary, SHI, the Company acquired 400 preferred
shares in eCard Solutions, convertible into 40% of the common stock of eCard
Solutions. This interest in eCard Solutions and InfoBase was acquired from
Thesseus through a merger, effective January 11, 2000, between SHI and a
subsidiary of Thesseus, in return for two million common shares of the Company.

         InfoBase is an information based, technology driven direct marketing
company that designs, develops and implements sophisticated inbound and outbound
marketing programs using the Internet and computerized call management systems
for companies targeting the moderate income consumer. InfoBase has developed
proprietary software to facilitate sales tracking, data mining, neural
networking and data base management designed to individually target consumers.
The management of InfoBase has over 60 years experience designing and


                                       41
<PAGE>

implementing inbound and outbound programs to moderate income consumers.
InfoBase is headquartered in Carlsbad, California.

         InfoBase provides its clients inbound/outbound telemarketing and
Internet based services consisting of direct sales activities, integrated direct
mail programs, call list analysis profiling, sales tracking, data analysis and
reporting. Dialing strategies are created and distributed as calling campaigns
to the sales agents. InfoBase's computerized call management system utilizes
predictive dialers that automatically dial telephone numbers, determine if a
live connect is made and present connected calls to a sales agent.

         InfoBase provides inbound teleservices support for activities such as
customer service, response to customer inquiries and order processing. InfoBase
uses automated call distributors (Voice Response Units) to direct callers to the
appropriate agent, who has access to on-line support databases to address
customers' needs. Scripts are drafted and approved by the client for sales
agents to use. To enable quality assurance, call monitoring and sales
verification are employed. All sales confirmations are recorded and management
personnel verify accuracy and authenticity of transactions.

         InfoBase uses the latest technologies to extract data from the client's
database for sales/performance analysis and reporting. Data-Mining, neural
networking and fuzzy logic software helps InfoBase's staff design, develop and
analyze key information for clients relative to the performance of their
programs. Reports are produced on request, daily, weekly and monthly. Pre and
post sales analysis of call lists are provided for the client so it may evaluate
the effectiveness of Shanecy, Inc.'s sales techniques and strategies.

         InfoBase provides integrated direct mail programs that are developed
and tailored to each client's customer base. InfoBase believes it achieves a
higher response rate to the mailing as calling campaigns are implemented to
coincide with the mail.

         Given the growing potential of primary channel alternatives, InfoBase
is constantly expanding its capabilities in database marketing. InfoBase has
brought its customer list in house for this first phase as its database
sophistication is expanded. Registration cards and periodic customer surveys
assists InfoBase in understanding its customer and measure the success of the
marketing, sales and product activities. Profile overlays of other lists fill in
the awareness gaps. This in-house presence provides the sales and technical
support teams with tools that streamline operations while updating customer
knowledge. InfoBase's customer information system helps in making sound
decisions by providing historical answers to the marketing questions posed.

         Inc.ubator and its wholly-owned subsidiary, SHI, amended their
agreement with Thesseus with respect to the acquisition of eCard Solutions and
InfoBase to change the delivery date of the 2,000,000 shares of Common Stock
that Thesseus was entitled to receive as consideration from February 29, 2000
until the filing of Inc.ubator's amended and restated certificate of
incorporation, which occurred on June 1, 2000.


                                       42
<PAGE>

Employees

         At March 31, 2000, the Company employed directly one person on a
full-time basis and no persons on a part-time basis. None of the Company's
employees are covered by a collective bargaining agreement. The Company
considers its employee relations to be good.

Executive Officers

         The information required to be included in this Form 10-KSB regarding
the company's executive officers is incorporated by reference from certain
information contained in the Registrant's definitive proxy statement for its
2000 annual meeting of stockholders to be filed with the SEC not later than 120
days after the end of the Registrant's fiscal year covered by this report.

Item 2.  Description of Property

         The Company presently has a three year lease for office space at 9777
Wilshire Boulevard, Suite 718, Beverly Hills, CA 90212. The lease has an annual
rental cost of approximately $120,000.00. It expires on March 31, 2003 and there
is no renewal option.

Item 3.  Legal Proceedings

         From time to time, the Company is involved as plaintiff or defendant in
various other legal proceedings arising in the normal course of its business.
While the ultimate outcome of these various legal proceedings cannot be
predicted with certainty, it is the opinion of management that the resolution of
these legal actions should not have a material effect on the Company's financial
position, results of operations or liquidity.

Item 4.  Submission of Matters to a Vote of Security Holders

         No matter was submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the quarter ended March 31, 2000.
Holders of a majority of the issued and outstanding Common Stock approved
certain actions by written consent adopted on April 24, 2000, including an
amendment and restatement of the Company's Certificate of Incorporation, the
adoption of a Stock Option Plan, and approval of the Company's acquisition of
EAL and CASA as described in the Company's Information Statement dated April 26,
2000, which was mailed on April 28, 2000 to shareholders of record as of April
24, 2000.


                                       43
<PAGE>

                                     PART II

Item 5.  Market for the Registrant's Common Stock and Related Stockholder
         Matters

         The Company's Common Stock is currently traded on the NASDAQ OTC
Bulletin Board ("NASDAQ Bulletin Board") under the symbol "IBTR" (recently
changed from "SECY" pursuant to the Company's name change to Inc.ubator Capital,
Inc.). The Common Stock began trading on the NASDAQ Bulletin Board on December
1, 1999. Prior to the commencement of trading on the NASDAQ Bulletin Board,
there was no active trading market for the Common Stock.

         The following table sets forth the high and low closing prices of the
Common Stock from, December 1, 1999, the date on which the Common Stock
commenced trading on the NASDAQ Bulletin Board through March 31, 2000. On June
23, 2000, the closing price of the Common Stock on the NASDAQ Bulletin Board was
$3.50. The prices in the table reflect interdealer prices without retail markup
or commissions and may not represent actual transactions.

                   Quarter Ended                               High         Low
---------------------------------------------------         --------      ------
December 31, 1999 (December 1, 1999 through
    December 31, 1999).............................         $ 4.0625      $ 2.00

March 31, 2000.....................................         $  13.00      $ 3.75


         On May 12, 2000, the Company's common stock was listed and began
trading internationally in Germany on the Third Market Segment of the Frankfurt
Stock Exchange by the Deutsche Borse AG. The trading symbol is "SW6" and the
German securities code is 935 139. The Frankfurt Stock Exchange is a leading
European exchange with a technology orientation. Recently, the London Stock
Exchange and Deutsche Borse announced their plans for a merger of equals to
create a new company, to be called iX. In addition, iX and NASDAQ have signed a
memorandum of understanding to create a pan-European, high growth market.

         As of March 31, 2000, there were 602 record holders and approximately
800 beneficial holders of the Common Stock.

         On December 30, 1999, the Company effected a two-for-one stock split
(in the form of a 100% stock dividend). The stock price information in the table
above has been adjusted to reflect this stock dividend.

         During fiscal 2000, the Company did not pay any cash dividends on its
Common Stock. The payment by the Company of cash dividends in the future is in
the sole discretion of its Board of Directors and will depend, among other
things, upon the Company's earnings, its capital requirements and financial
condition, as well as other relevant factors.


                                       44
<PAGE>

         As a Delaware corporation, the Company may not declare and pay cash
dividends on its capital stock if the amount paid exceeds an amount equal to the
excess of the Company's net assets over paid-in-capital or, if there is no
excess, its net profits for the current and/or immediately preceding fiscal
year.

         On November 11, 1999, the Company issued 4,000,000 shares (as adjusted
for the stock split) of Common Stock to K. Washington-Galanis Investments LLC in
connection with the acquisition of CASA.

         On November 11, 1999, the Company issued 3.0 million shares (as
adjusted for the stock split) of its Common Stock and agreed to issue 8.5
million shares of Series A preferred stock to Thesseus in connection with the
Company's acquisition of EAL.

         On January 18, 2000, the Company agreed to issue 2.0 million shares of
Common Stock to Thesseus in connection with the Company's acquisition of an
interest in eCard Solutions and Infobase.

         On January 24, 2000, the Company granted an option to purchase 500,000
shares to a shareholder of the Company at an exercise price of $7.00 per share.

         On February 8, 2000, the Company issued warrants to Donner Corp.
International to purchase 12, 500 shares of the Company's Common Stock as
consideration for investment banking and related services. Such warrants have an
exercise price of $12.00 per share. The Company also agreed to issue warrants to
purchase an additional 37,500 shares of its common stock as follows: 12,500
warrants with an exercise price of $14.00 per share upon the Company's stock
price closing at $25.00; (b) 12,500 shares with an exercise price of $16.00 per
share upon the Company's stock price closing at $35.00; and (c) 12,500 warrants
with an exercise price of $18.00 per share upon the Company's stock price
closing at $45.00. The warrants expire on November 1, 2003.

         On December 29, 1999, the Company issued 400,000 shares (as adjusted
for the stock split) of Common Stock to OTC Filing.com, Inc. as partial
consideration for financial consulting and investor relations services provided.

         On May 16, 2000, in consideration for services rendered under an
investor relations agreement, the Company issued Sabre Communications, Inc. a
warrant to purchase 200,000 shares of its Common Stock, with an exercise price
of $4.00 per share for a two year term commencing on November 16, 2000.

         On May 22, 2000, in consideration for investment services, the Company
issued Quadrant Investment Bankers a warrant to purchase 100,000 shares of its
Common Stock, with an exercise price of $4.00 per share for a two year term
commencing on November 22, 2000.


                                       45
<PAGE>

         On May 12, 2000, in consideration for obtaining a listing on the
Frankfurt Stock Exchange and for ongoing long-term market making sponsorship
services, the Company issued Berliner Freiverkehr a warrant to purchase 200,000
shares of its Common Stock, with an exercise price of $7.00 per share for a two
year term commencing on May 12, 2000.

         As of March 31, 2000, the Company granted, pursuant to its Share Option
Plan, options to purchase an aggregate 10,500,000 common shares to certain
officers and directors at exercise prices of between $0.04 and $2.00 per share.
The options have either a five or ten year term and are currently exerciseable.

         On June 7, 2000, the Company voluntarily withdrew its application to
the Nasdaq SmallCap Market. The Company currently plans on resubmitting its
application in the future.

         Exemption from registration for the issuance described above was
claimed pursuant to Section 4(2) of the Securities Act of 1933, as amended, in
reliance upon the fact that such sales did not involve a public offering. As a
result, such securities are subject to certain transfer restrictions.


Item 6.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations or Plan of Operation

Background

         On November 11, 1999, the two existing directors of Inc.ubator resigned
and appointed Jason W. Galanis and Kevin L. Washington to replace them. Prior to
this event, the Company was inactive and had no material assets or liabilities.
On November 19, 1999, three additional Directors were appointed and on December
31, 1999, three final appointments were made, bringing the total number of
Directors to eight. As described in the Current Report on Form 8-K/A filed on
January 25, 2000, the Company, a development stage enterprise, changed its
business direction as a result of the Company's new management team and launched
a new business plan to act as an Internet-related operating company that
concentrates on businesses using the Internet to provide products and services
to the moderate income consumer and small business markets. Since acquiring
control of the Company in mid-November of 1999, current management has been
concluding the initial acquisitions discussed below, including negotiating the
recent proposed acquisition of ThemeWare.

General

         The Company has a limited operating history upon which to base an
evaluation of its business. The Company's business and prospects must be
considered in light of the risks, expenses and difficulties frequently
encountered by companies in the early stages of development, particularly
companies in new and rapidly evolving markets. In addition, because the Company


                                       46
<PAGE>

acquires significant interests in companies which concentrate on businesses
using the Internet to provide products and services to moderate income
consumers, many of which generate net losses, it is experiencing, and expects to
continue to experience, significant volatility in its operating results. The
Company does not know when or if it will report net income, and it expects that
it will report net losses in many quarters for the foreseeable future. See "Risk
Factors - Inc.ubator has no significant operating history upon which to assess
the viability of its business strategy and management."

         The Company intends to evaluate, on an ongoing basis, the carrying
value of its ownership interests in and advances to its Network Companies for
possible impairment, based on achievement of business plan objectives, the
financial condition and prospects of the Network Companies and other relevant
factors. Such factors may be financial or non-financial in nature.

Effect of Accounting Methods

         The various interests that Inc.ubator acquires in its Network Companies
are accounted for under the equity, consolidation or cost method. The applicable
accounting method is generally determined based on the Company's voting interest
in the Network Companies. In the future, the presentation of the Company's
financial statements may differ from period to period, primarily due to whether
or not it applies the consolidation method or the equity method. This could
result if its voting interest in a company either rises above or drops below
50%. See Note 2 of the notes to the Consolidated Financial Statements for a
detailed discussion of these accounting methods.

Results of Operations for the Year Ended March 31, 2000

         The fiscal year of the Company ended March 31, 2000 reflects start-up
results only as Inc.ubator began operations November 11, 1999, a period of
approximately five months.

         The Company's reported results of operations include all amounts for
the parent company, Inc.ubator, and its wholly-owned subsidiary companies, CASA,
EAL and SHI. As all three subsidiaries were either formed or acquired recently
and/or have limited operations, their operating results were not a material part
of the operating results of the consolidated entity for the year ended March 31,
2000. The acquisition of EAL was accounted for as a recapitalization of the
Company as the Company had no substantive operations prior to the transaction.
Accordingly, the comparative financial statements were restated to reflect the
investment in Eikos as if it had been owned by the Company since December 2,
1997, the date it was acquired by Thesseus. Since the Company commenced its new
business strategy in November 1999, comparisons to prior years are not
appropriate.

         During the 2000 fiscal year, the Company had no significant operations
other than the acquisition of the entities described herein. The Company
reported a net operating loss of $1.1 million, or $0.08 per share, for the year
ended March 31, 2000.


                                       47
<PAGE>

         Revenue. The Company had revenue of $580 for the year ended March 31,
2000 which represents interest from funds on deposit. As reflected in Note 2 (d)
of the consolidated financial statements, the Company accounts for payments
received from Eikos under the MBDA on a cost recovery basis and hence no revenue
will be recognized until the carrying value of the asset has been reduced to
zero.

         Expenses. The Company had expenses of $1.1 million for the fiscal year
ended March 31, 2000 of which consulting and legal fees represented $434,000 and
$365,000, respectively. The Company's expenses related to the commencement of
operations as a public company, the acquisitions of the companies discussed
herein and the preparation of the information statement and other securities
documents. Expenses also included audit and accounting expenses of $73,000 and
an administration fee payable to Thesseus Services Ltd., a subsidiary of
Thesseus, of $71,000. Non cash expenses reflected in the Company's loss for the
year amounted to $332,500.

Financial Condition

         At March 31, 2000, the Company's assets were comprised primarily of the
investments and intellectual property described below.

         CASA and Eikos Acquisition. On November 11, 1999, the Company acquired
100% of CASA from K. Washington-Galanis Investments, LLC and 100% of the stock
of EAL from Thesseus. See "Network Company Acquisitions" for further details
regarding these acquisitions. The carrying value of assets acquired in the
transactions is $6,447,494 as of March 31, 2000 and is reflected as
"Investments" and "Intellectual capital" on the consolidated balance sheet. See
Note 4 of the audited consolidated financial statements for the year ended March
31, 2000 included in this Form 10K-SB, for a description of these investments.

         eCard Solutions and InfoBase Acquisition. On January 18, 2000, the
Company acquired interests in eCard Solutions and InfoBase from Thesseus, a
related party. The investments were transferred at book values previously
recorded by Thesseus totaling $6,644,787 and are reflected in "Investments" in
the consolidated balance sheet attached. Reference is made here to Note 4 of the
consolidated financial statements for additional information regarding these
acquisitions.

         On March 13, 2000, eCard Solutions created two separate series of
preferred shares. The then existing 400 preferred shares acquired were
reclassified as Series A and have a total redemption value equal to the
$6,276,996 carrying value acquired. Additionally, the Company committed to
invest $1.0 million in eCard Solutions through the acquisition of one million
Series B preferred shares in eCard Solutions. Payment was to be made in four
equal installments of $250,000 on March 13, April 13, May 12 and June 12, 2000.
At March 31, 2000, $250,000 had been paid and the balance of $750,000 was
reflected as a note payable in the consolidated financial statements. Inc.ubator
has determined that the interests of its shareholders would best be served by
attempting to restructure this transaction so as to eliminate any future
payments for the Series B preferred stock. As of June 28, 2000, Inc.ubator and


                                       48
<PAGE>

eCard Solutions were in negotiations but had not yet reached formal agreement on
this matter. If Inc.ubator's negotiations with eCard Solutions are unsuccessful,
eCard Solutions could retain the $250,000 already paid and Inc.ubator could be
required to return all of the Series B preferred shares acquired from eCard
Solutions, which would have a negative impact on the Company's financial
condition and results of operations. See "Risk Factors - If Inc.ubator is
unsuccessful in re-negotiating its investment commitment with eCard Solutions it
may lose a portion of its investment in eCard Solutions."

         The Company had an accumulated deficit of $1.1 million at March 31,
2000.

Liquidity and Capital Resources

         A major objective of Inc.ubator is to raise sufficient capital to fund
growth, fulfill Inc.ubator's business strategy and meet all cash requirements
with cash and short term equivalents.

         The primary source of cash to date has been Inc.ubator's debt financing
described below. The primary use of cash has been for general and administrative
expenses and the initial installment of $250,000 made to e-Card Solutions to
fund the partial payment for the Series B preferred shares. At March 31, 2000,
Inc.ubator had a cash balance of approximately $10,000. Inc.ubator expects
negative cash flows from operations to continue for the foreseeable future, as
it continues to develop and implement its business strategy.

         During the fiscal year ended March 31, 2000, the Company's operations
were financed primarily through intermediate-term advances from shareholders and
other investors known to Company principals ($390,000), short-term advances from
related parties ($158,782), short-term accounts payable ($455,779) and cash flow
from the Company's 49.5% interest in Eikos, which the Company holds through its
wholly-owed subsidiary, EAL ($148,500). Through this investment, the Company has
to date been eligible to receive up to $37,125 per month pursuant to the terms
of the MBDA. Shares were also issued for services and options were granted in
exchange for payment of company expenses. The Company has used share for share
exchanges in connection with its acquisitions. During fiscal 2000, the Company
issued 4.0 million shares (as adjusted for the stock split) of common stock to
an entity controlled by two directors in connection with the acquisition of
CASA. The Company also agreed to issue 5.0 million shares (as adjusted for the
stock split) of its common stock to Thesseus in connection with the acquisition
of EAL, eCard Solutions and InfoBase.

         At March 31, 2000, the Company had a working capital deficit of
approximately $1.2 million. The Company anticipates that it will require
substantial additional financing to fund its ongoing operations and has secured
commitments for a portion of those requirements. Further, the Company is
currently exploring various options to raise additional capital. The Company
currently anticipates it will need to raise approximately $30.0 million over the
next 12 to 18 months in order to fund its obligations to ThemeWare, to implement


                                       49
<PAGE>

its business strategy, including the funding of further acquisitions, and to
fund operating expenses. There can be no assurance, however, that additional
funding will be available or, if available, that it will be available on terms
acceptable to the Company. If adequate funds are not available, it may not be
able to continue. There can be no assurance that the Company will be able to
raise additional cash if its cash resources are exhausted. The Company's ability
to arrange such financing in the future will depend in part upon the prevailing
capital market conditions as well as the Company's business performance.

         On December 20, 1999, the Company declared a 2 for 1 stock split in the
form of a 100% stock dividend which was payable to stockholders of record on
December 30, 1999.

Future Initiatives

         On May 22, 2000, the Company entered into a Term Sheet to acquire all
of the outstanding capital stock of ThemeWare and an Interim Operating Agreement
under which Inc.ubator assumed management oversight of ThemeWare. In connection
with the Interim Operating Agreement, Inc.ubator has entered into Voting
Agreements with a majority of the outstanding shareholders of ThemeWare, whereby
the shareholders have agreed to vote their shares in favor of a proposed merger
of Inc.ubator and ThemeWare pursuant to the terms agreed to by the parties in a
term sheet.

         ThemeWare is a branded consumer and small business Internet company
comprised of Internet Connectivity/Hosting, Application Services, Merchant
Services and a Portal that acts as a hub/entry point for customers and their web
experience. ThemeWare's principal customer acquisition product is The Internet
Tool Box(TM), an innovative multi-media kit that provides an array of software
and tutorials that teaches the novice everything they need to know about
accessing and using Internet. While there are similarities with the CDs, etc.
offered by Internet Service Providers to acquire subscribers, the Internet Tool
Box(TM) offers a much more comprehensive set of multi-media materials that not
only eases the users entry onto the Internet but greatly enhances their ability
to more quickly and effectively use the Internet as well.

         Upon completion of the ThemeWare acquisition, together with its
existing Network Companies Incubator intends to offer consumers and small
businesses various bundled packages of services and technology which include
access devices, support services, affinity discounts on non-discretionary
purchases, as well as offering important financial services through
Visa/MasterCard and other financing programs Inc.ubator is developing.


                                       50
<PAGE>

         Partnered with CASA, ThemeWare will form the main engine of the
Inc.ubator network. The staffs of Inc.ubator and ThemeWare are already hard at
work on ways in which to improve the effectiveness of ThemeWare's operations and
achieve improved financial efficiencies. With the ability to share technology
and Internet portals with ThemeWare, management believes CASA will be positioned
to move forward with its plans in a more timely and cost effective manner than
originally anticipated. Further, the ThemeWare acquisition may provide a
leveragable platform to market the Company's other Internet-based financial
services products and lifestyle services.

         ThemeWare's experience in assisting small business owners to compete on
the Web can be leveraged into providing a wide array of continuing support
services. Incubator considers this to be an important capability as it believes
that becoming a true value added Support Portal can enable ThemeWare and
Inc.ubator's other Network Companies to create stronger client-vendor
relationships and the enhanced potential for generating multiple recurring
revenue streams.

         Inc.ubator believes that the ThemeWare acquisition, if and when
completed, will benefit Inc.ubator and its shareholders because the acquisition
will:

         o  Increase its consolidated revenues;

         o  Enable the Network Companies to take advantage of certain operating
            and other synergies;

         o  Improve its ability to raise capital by providing an established
            revenue base and significantly greater technological resources;

         o  Increase product offerings which will potentially enable Inc.ubator
            to more rapidly implement its business plan;

         o  Provide potential cross marketing opportunities; and

         o  Acquire technical expertise, which would allow Inc.ubator to more
            quickly develop the CASA website and accelerate the growth of eCard
            Solutions and InfoBase.

         There can be no assurance as to whether or when the ThemeWare
acquisition will be completed. See "Recent Developments" for additional details
regarding the proposed acquisition of ThemeWare.

         Under the terms of the transaction as currently proposed, ThemeWare's
shareholders will receive $135.0 million of Inc.ubator's stock for their shares.
Inc.ubator anticipates that revenues will increase as a result of ThemeWare's
revenues which were $19.7 million for the twelve months ended March 31, 2000


                                       51
<PAGE>

Year 2000 Issue

         As of March 31, 2000, Company management had no knowledge of any Year
2000 computer problems that have had, are having or will have a material adverse
effect on the Company's financial condition or results of operations.

         The Company has completed its assessment of its information technology
systems, as well as its non-information technology systems. The Company
reasonably believes that it will not be materially adversely affected by Year
2000 issues.


                                       52
<PAGE>

Item 7.    Financial Statements

                                                                        Page
                                                                        ----

Report of Independent Chartered Accountants                              54

Consolidated Balance Sheets                                              55

Consolidated Statements of Operations                                    56

Consolidated Statements of Stockholders' Equity                          57

Consolidated Statements of Cash Flows                                    59

Notes to Consolidated Financial Statements                               60






                                       53


<PAGE>

AUDITORS' REPORT TO THE STOCKHOLDERS


We have audited the consolidated balance sheets of Inc.ubator Capital, Inc.
(formerly Shanecy, Inc., a Development Stage Enterprise) as at March 31, 2000
and 1999 and the consolidated statements of operations, stockholders' equity and
cash flows for the years ended March 31, 2000 and 1999 and for the period from
incorporation on May 31, 1994 to March 31, 2000. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as at
March 31, 2000 and 1999 and the results of its operations and its cash flows for
the years ended March 31, 2000 and 1999 and for the period from incorporation on
May 31, 1994 to March 31, 2000 in accordance with accounting principles
generally accepted in the United States of America.




/s/ KPMG LLP
---------------------
Chartered Accountants


Vancouver, Canada

June 9, 2000






                                       54

<PAGE>


INC.UBATOR CAPITAL, INC.
(formerly Shanecy, Inc.)
(A Development Stage Enterprise)

Consolidated Balance Sheets
(Expressed in U.S. Dollars)
March 31, 2000 and 1999

<TABLE>
<CAPTION>
==================================================================================================
                                                                        2000              1999
--------------------------------------------------------------------------------------------------
                                                                                        (note 3)
<S>                                                                <C>                <C>
Assets

Current assets:
     Cash                                                          $     10,694       $        122
     Receivable from related parties (note 7(a))                         24,540               --
     Refundable deposits                                                150,000               --
     Prepaids                                                            37,912               --
--------------------------------------------------------------------------------------------------
                                                                        223,146                122

Investments (note 4)                                                 14,090,281          6,807,038

Intellectual capital                                                      2,000               --
--------------------------------------------------------------------------------------------------

                                                                   $ 14,315,427       $  6,807,160
==================================================================================================

Liabilities and Stockholders' Equity

Current liabilities:
     Accounts payable and accrued liabilities                      $    455,779       $       --
     Payable to related parties (note 7(a))                             183,322               --
     Note payable to eCard Solutions, Inc. (note 4(b))                  750,000               --
--------------------------------------------------------------------------------------------------
                                                                      1,389,101               --

Notes payable (note 5)                                                  390,000               --
--------------------------------------------------------------------------------------------------
                                                                      1,779,101               --

Stockholders' equity:
     Share capital:
         Authorized:
               20,000,000 common shares with par value of $0.001
         Issued and fully paid:
               17,655,000 (1999 - 10,665,000) common shares              17,655             10,665
     Common shares to be authorized and issued (note 4(b))                2,000               --
     Preferred shares to be authorized and issued (note 4(a))         6,592,494               --
     Additional paid-in capital                                       7,008,872               --
     Equity of Thesseus in Eikos (note 3)                                  --            6,807,038
     Deficit accumulated during the development stage                (1,084,695)           (10,543)
--------------------------------------------------------------------------------------------------
                                                                     12,536,326          6,807,160

Contingency (note 4(b))
Subsequent events (note 10)
--------------------------------------------------------------------------------------------------

                                                                   $ 14,315,427       $  6,807,160
==================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                       55
<PAGE>


INC.UBATOR CAPITAL, INC.
(formerly Shanecy, Inc.)
(A Development Stage Enterprise)

Consolidated Statements of Operations
(Expressed in U.S. Dollars)

================================================================================
                                      Period from
                                 incorporation on
                                          May 31,
                                          1994 to      Year ended     Year ended
                                        March 31,       March 31,      March 31,
                                             2000            2000           1999
--------------------------------------------------------------------------------

Revenue:
     Interest                         $       580     $       580       $     -

Expenses:
     Accounting and audit                  72,500          72,500             -
     Administration fees (note 7(b))       70,765          70,565             -
     Consulting                           434,338         434,338             -
     Credit card fees and expenses         29,444          29,444             -
     Legal                                364,888         364,888             -
     Marketing                              8,634           8,634             -
     Miscellaneous                          7,580           4,002          3,578
     Payroll                               37,985          37,985             -
     Printing                              18,832          18,832             -
     Regulatory filings                     3,566           3,566             -
     Stock transfer fees                    5,666           5,666             -
     Telephone                              4,070           4,070             -
     Travel                                 8,167           8,167             -
--------------------------------------------------------------------------------
                                        1,066,435       1,062,657          3,578
--------------------------------------------------------------------------------

Net loss                              $ 1,065,855     $ 1,062,077       $  3,578
================================================================================

Basic loss per share                  $      0.12     $      0.08       $   0.00
================================================================================

See accompanying notes to consolidated financial statements.









                                       56
<PAGE>


INC.UBATOR CAPITAL, INC.
(formerly Shanecy, Inc.)
(A Development Stage Enterprise)

Consolidated Statements of Stockholders' Equity
(Expressed in U.S. Dollars)

Period from incorporation on May 31, 1994 to March 31, 2000

<TABLE>
<CAPTION>
====================================================================================================================================
                                                                             Preferred          Common
                                                                          shares to be    shares to be    Additional
                                                    Common                  authorized      authorized       paid-in    Accumulated
                                                    shares     Par value    and issued      and issued       capital        deficit
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                <C>          <C>        <C>             <C>           <C>            <C>
June 14, 1994
  Shares issued for services                       100,000      $      1   $      --       $      --     $        99    $      --
------------------------------------------------------------------------------------------------------------------------------------

Balance, March 31, 1995                            100,000             1          --              --              99           --
July 31, 1995
  Shares issued                                     37,000          --            --              --           3,700           --
Net loss, year ended March 31, 1996                   --            --            --              --            --             (100)
------------------------------------------------------------------------------------------------------------------------------------

Balance, March 31, 1996                            137,000             1          --              --           3,799           (100)

Net loss, year ended March 31, 1997                   --            --            --              --            --             --
------------------------------------------------------------------------------------------------------------------------------------

Balance, March 31, 1997                            137,000             1          --              --           3,799           (100)

December 2, 1997
  Acquisition of equity of Thesseus in Eikos          --            --       7,177,500*           --            --             --

February 28, 1998
  Shares issued for services                       100,000             1          --              --              99           --
February 28, 1998
  Forward stock split 45:1                      10,428,000           105          --              --            (105)          --


Net loss, year ended March 31, 1998                   --            --            --              --            --             (100)
------------------------------------------------------------------------------------------------------------------------------------

Balance, March 31, 1998                         10,665,000           107     7,177,500            --           3,793           (200)
September 30, 1998
  Eikos distributions                                 --            --        (370,462)*          --            --             --
October 7, 1998
  Change par value from $0.00001 to $0.001            --          10,558          --              --          (3,793)        (6,765)

Net loss, year ended March 31, 1999                   --            --            --              --            --           (3,578)
------------------------------------------------------------------------------------------------------------------------------------
Balance, March 31, 1999                         10,665,000        10,665     6,807,038            --            --          (10,543)
</TABLE>
(Continued on next page)


                                       57

<PAGE>

INC.UBATOR CAPITAL, INC.
(formerly Shanecy, Inc.)
(A Development Stage Enterprise)

Consolidated Statements of Stockholders' Equity (Continued)
(Expressed in U.S. Dollars)

Period from incorporation on May 31, 1994 to March 31, 2000

<TABLE>
<CAPTION>
====================================================================================================================================
                                                                             Preferred          Common
                                                                          shares to be    shares to be    Additional
                                                    Common                  authorized      authorized       paid-in    Accumulated
                                                    shares     Par value    and issued      and issued       capital        deficit
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                <C>          <C>        <C>             <C>           <C>            <C>
Balance Forward, March 31, 1999                 10,665,000        10,665     6,807,038            --            --          (10,543)

September 14, 1999
  Cancellation of shares issued for services    (9,000,000)       (9,000)         --              --           9,000            --

September 16, 1999
  Forward stock split 2:1                        1,665,000         1,665          --              --            --           (1,665)

September 28, 1999
  Forward stock split 1.5:1                      1,665,000         1,665          --              --            --           (1,665)

November 10, 1999
  Eikos distributions                                 --            --        (214,544)*          --            --             --

November 11, 1999
  Shares issued on acquisition of
    CASA@Home, Inc. and
    Eikos Acquisition Limited                    3,500,000         3,500     6,592,494            --            --             --

December 29, 1999
  Shares issued - 50,000 for cash,
    200,000 for services                           250,000           250          --              --         124,750           --

December 30, 1999
  Stock dividend                                 8,745,000         8,745          --              --            --           (8,745)

January 10, 2000
  Shares issued for services                        40,000            40          --              --          19,960           --

January 18, 2000
  Acquisition of investments in eCard
    Solutions, Inc. and InfoBase Direct
    Marketing Services, Inc. (2,000,000 shares)       --            --            --           2,000       6,642,787           --

January 24, 2000
  Payment for stock options                           --            --            --              --         150,000           --

February 14, 2000
  Shares issued for services                       125,000           125          --              --          62,375           --

Net loss, year ended March 31, 2000                   --            --            --              --            --       (1,062,077)
------------------------------------------------------------------------------------------------------------------------------------

Balance, March 31, 2000                         17,655,000      $ 17,655   $ 6,592,494     $   2,000     $ 7,008,872    $(1,084,695)
====================================================================================================================================
</TABLE>

* The transactions prior to November 11, 1999 relate to the Company's
  acquisition of the equity of Thesseus in Eikos, and distributions from Eikos
  paid to Thesseus on the Company's behalf (note 3).

See accompanying notes to consolidated financial statements.


                                       58
<PAGE>


INC.UBATOR CAPITAL, INC.
(formerly Shanecy, Inc.)
(A Development Stage Enterprise)

Consolidated Statements of Cash Flows
(Expressed in U.S. Dollars)

<TABLE>
<CAPTION>
===============================================================================================================
                                                                Period from
                                                           incorporation on
                                                                    May 31,
                                                                    1994 to        Year ended       Year ended
                                                                  March 31,         March 31,        March 31,
                                                                       2000              2000             1999
---------------------------------------------------------------------------------------------------------------
<S>                                                           <C>               <C>               <C>
Cash flows from operating activities:
     Net loss                                                 $  (1,065,855)    $  (1,062,077)    $     (3,578)
     Items not involving cash:
         Common shares issued for services                          182,700           182,500               -
         Payment of expense for stock options                       150,000           150,000               -

     Changes in non-cash operating working capital:
         Increase in refundable deposits                           (150,000)         (150,000)              -
         Increase in prepaids                                       (37,912)          (37,912)              -
         Increase in accounts payable
           and accrued liabilities                                  455,779           455,779               -
---------------------------------------------------------------------------------------------------------------
     Net cash used in operating activities                         (465,288)         (461,710)          (3,578)

Cash flows from investing activities:
     Investment in eCard Solutions, Inc.                           (250,000)         (250,000)              -
     Distributions from Eikos Acquisition Limited                   148,500           148,500               -
---------------------------------------------------------------------------------------------------------------
     Net cash used in investing activities                         (101,500)         (101,500)              -
---------------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
     Notes payable                                                  390,000           390,000               -
     Issuance of common shares                                       28,700            25,000               -
     Advances from related parties, net                             158,782           158,782               -
---------------------------------------------------------------------------------------------------------------
     Net cash provided by financing activities                      577,482           573,782               -
---------------------------------------------------------------------------------------------------------------

Increase (decrease) in cash                                          10,694            10,572           (3,578)

Cash, beginning of period                                                -                122            3,700
---------------------------------------------------------------------------------------------------------------

Cash, end of period                                           $      10,694     $      10,694     $        122
---------------------------------------------------------------------------------------------------------------
</TABLE>

Supplementary information (note 9)

See accompanying notes to consolidated financial statements.


                                       59

<PAGE>


INC.UBATOR CAPITAL, INC.
(formerly Shanecy, Inc.)
(A Development Stage Enterprise)

Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)

Years ended March 31, 2000 and 1999

--------------------------------------------------------------------------------

1.   General:

     Inc.ubator Capital, Inc. ("Inc.ubator" or the "Company") was incorporated
     on May 31, 1994 under the laws of the State of Delaware in the United
     States of America (the "United States"). The Company changed its name from
     Shanecy, Inc. effective as of the filing of an amended and restated
     certificate of incorporation on June 1, 2000. The Company is an
     Internet-related operating company that invests in businesses that use the
     Internet to provide products, services and personal empowerment information
     directed toward moderate-income consumers. As the Company has not generated
     significant revenues from these activities since its incorporation, it is
     considered for financial reporting purposes to be a development stage
     enterprise. Being a development stage enterprise does not impact the
     accounting principles applied.

2.   Significant accounting policies:

     (a) Going-concern assumption:

         These financial statements have been prepared in accordance with
         generally accepted accounting principles in the United States that are
         applicable to a going concern, which assume that the Company will
         continue its operations and be able to satisfy its obligations as they
         come due through fiscal 2001. As at March 31, 2000, the Company has a
         working capital deficiency of $1,165,955, incurred a loss during the
         2000 fiscal year of $1,062,077 and has not generated a profit since
         incorporation. Future operations of the Company depend upon the
         continued financial support of stockholders and common controlled
         companies. Management is of the opinion that the going concern
         assumption is appropriate, and is currently evaluating different
         alternatives to increase the Company's capital. As disclosed in note
         10, subsequent to March 31, 2000, the Company has taken certain steps
         to provide additional capital to finance operations.

     (b) Principles of consolidation:

         The various interests that the Company acquires in its investee
         companies are accounted for under one of the following three methods as
         appropriate in the circumstances: consolidation, equity method and cost
         method. The applicable accounting method is generally determined by the
         Company's voting interest in each company.

         These consolidated financial statements include the accounts of the
         Company and its wholly-owned subsidiaries, Shanecy Holdings, Inc.
         ("SHI"), Eikos Acquisition Limited ("EAL") and CASA@Home, Inc.
         ("CASA"). Companies in which the Company directly or indirectly owns
         more that 50% of the outstanding voting securities are generally
         accounted for under the consolidation method of accounting. Under this
         method, an investee company's results of operations are reflected
         within the Company's consolidated statement of operations, and
         inter-company accounts and transactions are eliminated. Participation
         of other stockholders in the earnings or losses of a consolidated
         investee company that is not wholly-owned will be reflected in the
         caption "minority interest" in the Company's consolidated statement of
         operations. Minority interest adjusts the Company's consolidated
         earnings (loss) so that they only reflect the Company's share of the
         earnings or losses of the consolidated investee company.



                                       60

<PAGE>


INC.UBATOR CAPITAL, INC.
(formerly Shanecy, Inc.)
(A Development Stage Enterprise)

Notes to Consolidated Financial Statements, page 2
(Expressed in U.S. Dollars)

Years ended March 31, 2000 and 1999

--------------------------------------------------------------------------------


2.   Significant accounting policies (continued):

     (b) Principles of consolidation (continued):

         Investee companies whose results are not consolidated, but over which
         the Company exercises significant influence, are accounted for under
         the equity method of accounting. Whether or not the Company exercises
         significant influence with respect to an investee company depends on an
         evaluation of several factors, including representation on the investee
         company's board of directors and ownership percentage, which is
         generally a 20% to 50% interest in the voting securities of the
         investee company, including voting rights associated with the Company's
         holdings in common, preferred and other convertible instruments in the
         investee company. Under the equity method of accounting, the investee
         company's accounts are not reflected within the Company's consolidated
         financial statements; however, the Company's share of the earnings or
         loss of the investee company will be reflected in the caption "equity
         income (loss)" in the consolidated statement of operations. The
         Company's investees accounted for under the equity method have December
         31 fiscal year ends, and accordingly in the Company's annual
         consolidated financial statements it will record the investees' results
         of operations based on their fiscal year ended immediately preceding
         March 31. The excess of cost over net assets acquired for equity
         accounted investments will be amortized to earnings on a straight-line
         basis over ten years.

         Investee companies not accounted for under the consolidation or equity
         method are accounted for under the cost method of accounting. Under
         this method the carrying value of long-term investments is cost unless
         there is a permanent impairment in value. The Company's share of the
         earnings or losses of such companies will only be included in the
         consolidated statement of operations to the extent of dividends
         received from post-acquisition retained earnings of the investee
         company.

     (c) Measurement uncertainty:

         Financial statements prepared in conformity with generally accepted
         accounting principles in the United States require management to make
         estimates and assumptions that can affect the reported amounts of
         assets and liabilities and the disclosure of contingencies as at the
         date of the balance sheet, and the revenues and expenses recognized in
         the period. Assumptions underlying asset valuations are limited by the
         availability of reliable data and the uncertainty of predictions
         concerning future events. By their nature, asset valuations include a
         subjective element. Accordingly, amounts actually realized or incurred
         may vary from recorded amounts.



                                       61

<PAGE>


INC.UBATOR CAPITAL, INC.
(formerly Shanecy, Inc.)
(A Development Stage Enterprise)

Notes to Consolidated Financial Statements, page 3
(Expressed in U.S. Dollars)

Years ended March 31, 2000 and 1999

--------------------------------------------------------------------------------


2.   Significant accounting policies (continued):

     (d) Revenue recognition:

         Payments received from Eikos Management LLC ("Eikos") under the Mutual
         Business Development Agreement ("MBDA") are accounted for using the
         cost recovery basis, whereby the full amount of the payment reduces the
         carrying value of the investment. Payments received after the carrying
         value has been reduced to zero will be recognized as revenue when
         earned.

     (e) Valuation of shares:

         Shares issued for services are recorded at the fair value of the
         services rendered, unless not readily determinable, in which case the
         shares are valued based on the most recent issuance of shares for cash.

     (f) Earnings (loss) per share:

         Basic per share amounts are calculated based on the weighted average
         number of shares outstanding and give retroactive effect to the stock
         splits, stock dividend and share cancellation to the beginning of the
         periods presented. Net income (loss) per share ("EPS") is computed
         using the weighted average number of common shares outstanding during
         the year of 13,272,616 (1999 - 9,990,000; from incorporation on May 31,
         1994 to March 31, 2000 - 8,611,764). Fully diluted earnings (loss) per
         share has not been disclosed as the effect of the exercise of options,
         warrants and the conversion of convertible preferred shares would be
         anti-dilutive.

     (g) Stock options:

         The Company applies the intrinsic value-based method of accounting
         prescribed by Accounting Principles Board ("APB") Opinion No. 25,
         "Accounting for Stock Issued to Employees," and related
         interpretations, in accounting for its fixed plan stock options. As
         such, compensation expense is recorded on the date of grant only if the
         current market price of the underlying shares exceeds the exercise
         price. SFAS No. 123, "Accounting for Stock-Based Compensation,"
         established accounting and disclosure requirements using a fair
         value-based method of accounting for stock-based compensation plans. As
         allowed by SFAS No. 123, the Company has elected to continue to apply
         the intrinsic value-based method of accounting described above for
         stock options granted to employees and directors, and has adopted the
         disclosure requirements of SFAS No. 123. For options granted to others,
         compensation cost will be recognized equal to the fair value of the
         options at the date of grant.

     (h) Cash and cash equivalents:

         For the purpose of the statements of cash flows, all highly liquid
         investments with an initial term to maturity of three months or less
         are considered to be cash equivalents. There are no cash equivalents as
         at March 31, 2000 or 1999.


                                       62


<PAGE>


INC.UBATOR CAPITAL, INC.
(formerly Shanecy, Inc.)
(A Development Stage Enterprise)

Notes to Consolidated Financial Statements, page 4
(Expressed in U.S. Dollars)

Years ended March 31, 2000 and 1999

--------------------------------------------------------------------------------


2.   Significant accounting policies (continued):

     (i) Income taxes:

         Income taxes are accounted for under the asset and liability method.
         Deferred tax assets and liabilities are recognized for the future tax
         consequences attributed to differences between the financial statement
         carrying amounts of existing assets and liabilities and their
         respective tax bases, and operating loss and tax credit carryforwards.
         Deferred tax assets and liabilities are measured using enacted tax
         rates expected to apply to taxable income in the years in which those
         temporary differences are expected to be recovered or settled. The
         effect on deferred tax assets and liabilities of a change in tax rates
         is recognized in income in the period that includes the enactment date.
         When it is considered unlikely that a deferred tax asset will be
         realized, a valuation allowance is provided.

         The Company, SHI and CASA are subject to taxation in the United States.
         EAL is subject to taxation in the country of its domicile, the Isle of
         Man.

     (j) Foreign currency:

         Monetary items denominated in a foreign currency are translated into
         United States dollars, the Company's functional currency, at exchange
         rates in effect at the balance sheet date and non-monetary items are
         translated at rates of exchange in effect when the assets were acquired
         or obligations incurred. Revenues and expenses are translated at rates
         in effect at the time of the transactions. Foreign exchange gains and
         losses are included in income.

     (k) Comparative figures:

         Certain of the comparative figures have been reclassified to conform
         with the presentation adopted in the current period.


3.   Recapitalization and change in business direction:

     Control of the Company changed on November 11, 1999 at which time a new
     Board of Directors was appointed. The Company, under the direction of its
     new Board, has initiated a business plan to act as a publicly traded
     Internet-related operating company that invests in and operates businesses
     that use the Internet to provide products, services and personal
     empowerment information directed toward the moderate-income consumer
     market.

     Concurrent with the above event, the Company acquired its interest in EAL
     (note 4(a)). This transaction has been accounted for as a recapitalization
     of the Company as the Company had no substantive operations prior to the
     transaction. Accordingly, the comparative financial statements have been
     restated to reflect the investment in Eikos as if the Company had owned it
     since December 2, 1997, the date it was acquired by the vendor. The other
     assets and liabilities of the Company have not been adjusted, as their
     values were considered by management to have approximated fair values.



                                       63

<PAGE>


INC.UBATOR CAPITAL, INC.
(formerly Shanecy, Inc.)
(A Development Stage Enterprise)

Notes to Consolidated Financial Statements, page 5
(Expressed in U.S. Dollars)

Years ended March 31, 2000 and 1999

--------------------------------------------------------------------------------

3.   Recapitalization and change in business direction (continued):

     Also on November 11, 1999, the Company agreed with K. Washington-Galanis
     Investments, LLC ("WGI"), a private investment entity controlled by two
     Company directors, to acquire 100% of CASA for 2,000,000 common shares of
     the Company. The shares were issued to 19 investors represented by WGI. The
     sole asset of CASA at the date of acquisition was certain intellectual
     capital and a business plan for an Internet-based provider of services. The
     Company carries this asset at the par value of the shares issued which
     represents the cost base of the former owners.



4.   Investments:

<TABLE>
<CAPTION>
     ========================================================================================
                                                                       2000              1999
     ----------------------------------------------------------------------------------------
<S>                                                            <C>                <C>
     Cost recovery basis of accounting:
         Eikos                                         (a)     $  6,445,494       $ 6,807,038
     Equity basis of accounting:
         eCard Solutions, Inc. preferred shares:
              Series A                                 (b)        6,276,996                -
              Series B                                 (b)        1,000,000                -
     InfoBase Direct Marketing Services, Inc.          (c)          367,791                -
     ----------------------------------------------------------------------------------------
                                                                  7,644,787                -
     ----------------------------------------------------------------------------------------

                                                               $ 14,090,281       $ 6,807,038
     ========================================================================================
</TABLE>

     As at March 31, 2000, all of the above investments are accounted for by the
     cost method. These investments were acquired from Thesseus International
     Asset Fund N.V. ("Thesseus"), (with the exception of the eCard Solutions,
     Inc. Series B preferred shares), and were transferred at the book values
     previously recorded by Thesseus. Thesseus is considered a related party by
     virtue of two Company directors also being, directly and indirectly,
     stockholders of Thesseus.

     (a) Eikos:

         The Company, through its wholly-owned subsidiary EAL, holds a 49.5%
         interest in Eikos.

         On November 11, 1999, the Company acquired 100% of EAL from Thesseus in
         exchange for 1.5 million common shares and 8.5 million convertible
         preferred shares (subject to adjustment for anti-dilution upon
         conversion) to be issued immediately after the Company's Articles of
         Incorporation are amended to authorize the Company to issue preferred
         shares. Such amendment occurred June 1, 2000. Each preferred share is
         convertible into one common share of the Company.



                                       64

<PAGE>


INC.UBATOR CAPITAL, INC.
(formerly Shanecy, Inc.)
(A Development Stage Enterprise)

Notes to Consolidated Financial Statements, page 6
(Expressed in U.S. Dollars)

Years ended March 31, 2000 and 1999

--------------------------------------------------------------------------------


4.   Investments (continued):

     (a) Eikos (continued):

         EAL is a corporation formed in October, 1999 under the laws of the Isle
         of Man. The sole asset of EAL, as described below, is a 49.5% equity
         interest in Eikos, which is recorded at its carrying value in EAL. The
         principal asset of Eikos is the MBDA dated October 8, 1996, as amended
         December 16, 1997 and September 1, 1998, with The Credit Store, Inc.
         ("TCS"), an unrelated publicly-held Delaware corporation. TCS is a
         nationwide financial services company engaged in the acquisition and
         recovery of non-performing consumer receivables and the origination and
         servicing of credit cards. It acquires portfolios of non-performing
         consumer receivables and originates new credit cards to those consumers
         who satisfy certain credit criteria and agree to pay all or a portion
         of the outstanding amount due on their debt.

         The MBDA entitles Eikos to receive payments generally equal to five
         percent of certain monthly "performing" credit card production of TCS.
         The aggregate payments to Eikos under the terms of the MBDA, as
         amended, are limited to a maximum of $24,000,000. Approximately $1.7
         million of this amount had been paid prior to the Company's acquisition
         of EAL.

         As amended September 1, 1998, the MBDA obligates TCS to pay Eikos a
         monthly royalty payment of $75,000 in cash from June 1, 1999 through
         May 31, 2005, plus an additional $22,500 cash or, at the option of TCS,
         $25,000 in performing credit card receivables with provision for a
         final balloon payment within 90 days of May 31, 2005.

         The monthly payment is accounted for on a cost recovery basis with the
         value of the investment in Eikos reduced for all payments received (see
         note 2(d)).

         Eikos is administered by Ionian Trust Company, a Republic of Ireland
         corporation owned by a brother of the Company's President. Pursuant to
         an administration agreement dated August 31, 1998, Ionian has the right
         to determine the amount and timing of any distributions that may be
         made to the members of Eikos.

     (b) eCard Solutions, Inc.:

         On January 18, 2000, the Company acquired, through a wholly-owned
         subsidiary, Shanecy Holdings, Inc. ("SHI"), 400 preferred shares in
         eCard Solutions, Inc. ("eCard", formerly Brunswick Capital Partners,
         Inc.), convertible into 40% of the common stock of eCard. This
         interest, together with a preferred share interest in InfoBase Direct
         Marketing Services, Inc. ("InfoBase") (note 4(c)), was acquired from
         Thesseus through a merger, effective January 11, 2000, between SHI and
         a subsidiary of Thesseus, for which the Company agreed to issue 2
         million common shares to Thesseus. The initial purchase agreement was
         revised to provide that delivery of the 2 million shares would not be
         required until the filing and effectiveness of an amended and restated
         certificate of incorporation with the Secretary of the State of
         Delaware to increase the Company's authorized capital, which occurred
         on June 1, 2000. The investment was transferred at the book value
         previously recorded by Thesseus of $6,276,996.




                                       65
<PAGE>


INC.UBATOR CAPITAL, INC.
(formerly Shanecy, Inc.)
(A Development Stage Enterprise)

Notes to Consolidated Financial Statements, page 7
(Expressed in U.S. Dollars)

Years ended March 31, 2000 and 1999

--------------------------------------------------------------------------------


4.   Investments (continued):

     (b) eCard Solutions, Inc. (continued):

         eCard is a national, specialty financial services company that uses
         proprietary database mining, marketing techniques, automated systems
         and information technology to issue credit cards to moderate-income
         consumers. eCard manages the resulting portfolio of accounts in an
         attempt to ensure that they remain in a performing status.

         In a recapitalization effected on March 13, 2000, eCard created two
         separate series (A and B) of preferred shares. The 400 shares purchased
         on January 18, 2000 were reclassified as Series A preferred shares. The
         Company acquired 1 million Series B preferred shares in eCard for
         $1,000,000, to be paid in four equal instalments of $250,000 on March
         13, April 13, May 12 and June 12, 2000. $750,000 remains as a note
         payable at year end. On May 24, 2000, eCard delivered the Company a
         notice of default on its obligation. As at June 9, 2000, none of the
         remaining instalment payments on the note have been made and the shares
         and initial investment are subject to forfeiture under the Company's
         agreement with eCard, although management has indicated an intention,
         on the part of both parties, to renegotiate the terms of the Company's
         investment commitment. If Inc.ubator's negotiations with eCard are not
         successful, eCard could retain the $250,000 already paid and Inc.ubator
         could be required to return all of the Series B preferred shares and
         write-off that investment net of the unpaid balance of the note.

         On or before March 1, 2003, eCard can redeem, in whole but not in part,
         the Series B preferred shares for $1.00 per share. If the Series B
         shares are not redeemed before March 1, 2003, Series A and Series B
         preferred shares held by the Company may be converted, at the option of
         the Company, into 40% of eCard's outstanding common shares, on a
         fully-diluted basis. If the Series B shares are redeemed before March
         1, 2003, Series A preferred shares may at any time after March 1, 2003,
         at the option of the Company, be converted into 20% of eCard's
         outstanding common shares, on a fully-diluted basis.

         The audited financial statements of eCard (a Development Stage
         Enterprise) as at December 31, 1999 show total stockholders' equity of
         approximately $5,200,000, total liabilities of approximately $900,000
         and total assets of approximately $6,100,000, substantially all of
         which is represented by non-performing consumer debts. Stockholders'
         equity is net of a deficit of approximately $1,240,000 accumulated
         during the development stage. eCard has a working capital deficiency of
         $175,000, a loss for its 1999 fiscal year of $690,000 and has not
         generated profit since incorporation. Future operations of eCard depend
         on the continued financial support of stockholders (including
         Inc.ubator) and common controlled companies.





                                       66

<PAGE>


INC.UBATOR CAPITAL, INC.
(formerly Shanecy, Inc.)
(A Development Stage Enterprise)

Notes to Consolidated Financial Statements, page 8
(Expressed in U.S. Dollars)

Years ended March 31, 2000 and 1999

--------------------------------------------------------------------------------


4.   Investments (continued):

     (c) InfoBase:

         On January 18, 2000, the Company acquired, through SHI, 4,900 preferred
         shares in InfoBase convertible into a 49% participating interest. This
         interest, together with a preferred share interest in eCard (note
         4(b)), was acquired from Thesseus through a merger, effective January
         11, 2000, between SHI and a subsidiary of Thesseus, for which the
         Company agreed to issue 2 million common shares to Thesseus. The
         initial purchase agreement was revised to provide that delivery of the
         2 million shares would not be required until the filing and
         effectiveness of an amended and restated certificate of incorporation
         with the Secretary of the State of Delaware to increase the Company's
         authorized capital, which occurred on June 1, 2000. The investment was
         transferred at the book value previously recorded by Thesseus of
         $367,791.

         InfoBase is an information-based, technology-driven direct marketing
         company that designs, develops and implements sophisticated inbound and
         outbound marketing programs on behalf of credit card companies that
         target the moderate-income consumer. In support of its marketing
         efforts, InfoBase has developed proprietary software to facilitate
         sophisticated sales tracking, support activities such as customer
         service and order processing, data mining, neural analysis and database
         management.

         The audited financial statements of InfoBase (a Development Stage
         Enterprise) as at December 31, 1999 show a stockholders' deficit of
         approximately $25,000, total liabilities of $125,000 and total assets
         of $100,000, the majority of which are fixed assets. Stockholders'
         deficit includes a deficit of $395,000 accumulated during the
         development stage. InfoBase has a working capital deficiency of
         $75,000, a loss for its 1999 fiscal year of $240,000 and has not
         generated profit since incorporation. Future operations of InfoBase
         depend upon the continued financial support of stockholders (including
         Inc.ubator) and common controlled companies.


5.   Notes payable:

     Notes payable are unsecured, bear interest at 8% per annum payable on
     maturity and are repayable on April 27, 2001. $290,000 of these notes are
     payable to stockholders of the Company.





                                       67
<PAGE>


INC.UBATOR CAPITAL, INC.
(formerly Shanecy, Inc.)
(A Development Stage Enterprise)

Notes to Consolidated Financial Statements, page 9
(Expressed in U.S. Dollars)

Years ended March 31, 2000 and 1999

--------------------------------------------------------------------------------

6.   Stock options and warrants:

     (a) Stock Option Plan:

         During fiscal 2000, the 1999 Stock Option Plan (the "Plan") was
         approved by the stockholders, whereby common shares of the Company may
         be issued to designated employees, officers and directors pursuant to
         the Plan, as approved by the Compensation Committee or the Board of
         Directors. Subject to stockholder approval of an increase in the
         authorized share capital of the Company, as at March 31, 2000, the
         Company has granted, pursuant to the Plan, options to purchase an
         aggregate of 10,500,000 common shares to certain officers and directors
         at exercise prices of between $0.04 and $2.00 per share. Subsequent to
         year end, on April 24, 2000, the stockholders approved an increase in
         the authorized share capital of the Company, which was formalized with
         the filing of an amended and restated certificate of incorporation on
         June 1, 2000 (note 10(d)). Consequently, compensation expense in
         respect of these options granted subject to stockholder approval will
         be recorded at the date of stockholder approval on April 24, 2000.

     The following table summarizes the status of options outstanding under the
     Plan:

<TABLE>
<CAPTION>
     ==========================================================================================================
                                                                            Stock options             Weighted
                                                                              outstanding        average price
     ----------------------------------------------------------------------------------------------------------

<S>                                                                            <C>                 <C>
     Outstanding, April 1, 1998 and 1999                                               -           $        -
     Granted during 2000                                                       10,500,000                 0.42
     Exercised during 2000                                                             -                    -
     Forfeited during 2000                                                             -                    -
     ----------------------------------------------------------------------------------------------------------

     Outstanding, March 31, 2000                                               10,500,000          $      0.42
     ==========================================================================================================

     Exercisable, March 31, 2000                                               10,500,000
     ==========================================================================================================
</TABLE>

     The following table provides details of options outstanding at March 31,
     2000:

<TABLE>
<CAPTION>
     ==========================================================================================================
                                      Number                                           Number
                                 outstanding        Weighted        Weighted      exercisable         Weighted
      Range of                      March 31,    average life        average        March 31,          average
      exercise price                    2000        remaining          price             2000            price
     ---------------------------------------------------------------------------------------------------------
                                                     (years)
<S>                                <C>                   <C>        <C>             <C>               <C>
      $0.04 to $0.045              8,500,000             4.6        $  0.045        8,500,000         $  0.045
      $2.00                        2,000,000             9.5            2.00        2,000,000             2.00
     ---------------------------------------------------------------------------------------------------------

                                  10,500,000             5.5       $    0.42       10,500,000        $    0.42
     ==========================================================================================================
</TABLE>

     The Plan provides that the Compensation Committee or the Board of Directors
     may determine vesting or exercisability of any option granted, but, if not
     otherwise determined, options will vest and be exercisable at the date of
     grant. The 10,500,000 options granted will terminate on the earlier of five
     or ten years after the date of issuance or ninety days after the optionee
     ceases to be affiliated with the Company.


                                       68
<PAGE>


INC.UBATOR CAPITAL, INC.
(formerly Shanecy, Inc.)
(A Development Stage Enterprise)

Notes to Consolidated Financial Statements, page 10
(Expressed in U.S. Dollars)

Years ended March 31, 2000 and 1999

--------------------------------------------------------------------------------

6.   Stock options and warrants (continued):

     (b) Other options:

         The Company has issued options to an unrelated party, which are not
         covered by the 1999 Stock Option Plan, for consideration of $150,000.
         These options were granted on January 24, 2000, are for 500,000 common
         shares, have an exercise price of $7.00 and are exercisable for two
         years from the date of grant.

     (c) Warrants to purchase shares:

         On February 4, 2000, the Company signed an Investment Banking Agreement
         with Donner Corp. Pursuant to this agreement the Company issued, on
         February 8, 2000, 12,500 warrants to purchase common shares at $12.00
         per share. The agreement also stipulated the issuance of three
         additional tranches as follows:

         o  12,500 warrants exercisable at $14.00, to be issued immediately
            after the first day that the Company's Common Stock closes at or
            above $25.00; and

         o  12,500 warrants exercisable at $16.00, to be issued immediately
            after the first day that the Company's Common Stock closes at or
            above $35.00; and

         o  12,500 warrants exercisable at $18.00, to be issued immediately
            after the first day that the Company's Common Stock closes at or
            above $45.00.

         All of the warrants covered by this agreement are no longer exercisable
         after November 1, 2003.


7.   Related party balances and transactions:

     (a) Amounts receivable from/payable to related parties are unsecured,
         non-interest bearing and have no specific terms of repayment.

     (b) The Company was charged $70,565 (1999 - $0) in administration fees by
         Thesseus Services Ltd., a wholly-owned subsidiary of Thesseus.


8.   Income taxes:

     A flat tax of 30 percent is imposed on a foreign corporation's gross income
     from "Interest (other than original issue discount as defined in Section
     1273 of U.S. tax law), dividends, rents, salaries, wages, premiums,
     annuities, compensation, remunerations, emoluments, and other fixed or
     determinable annual or periodical gains, profits, and income," but only to
     the extent the amount is received from sources within the United States or
     is effectively connected with the conduct of a trade or business by such
     corporation within the United States and which is received from sources
     outside the United States.

     As of November 11, 1999, through its subsidiary EAL, the Company owns 49.5%
     of the equity of Eikos, an Isle of Man limited liability company (note
     4(a)). Eikos is a party to the MBDA with TCS, the successor to Service One
     International Corporation under the MBDA, which operates within the United
     States.



                                       69

<PAGE>


INC.UBATOR CAPITAL, INC.
(formerly Shanecy, Inc.)
(A Development Stage Enterprise)

Notes to Consolidated Financial Statements, page 11
(Expressed in U.S. Dollars)

Years ended March 31, 2000 and 1999

--------------------------------------------------------------------------------


8.   Income taxes (continued):

     The MBDA provides that Eikos is to provide certain consumer debt portfolio
     acquisition and financing services to TCS, outside the United States, and
     that Eikos is to treat income received under the MBDA as a distribution
     from an entity taxed as a partnership. It is possible that the United
     States Internal Revenue Service could assert that such income is income
     effectively connected to the United States. In the opinion of management of
     the Company, the outcome of such assertion is not determinable at this
     time. However, the Company intends to treat any income from Eikos as exempt
     from United States taxation because it is earned in connection with the
     operations of Eikos outside the United States.

     There is no provision for income taxes for the period ended March 31, 2000.
     The Company has loss carry forwards of approximately $867,000.

     ===========================================================================
                                                                  2000      1999
     ---------------------------------------------------------------------------

     Future income tax asset related to loss carry forward   $ 295,000   $ 1,000

     Less valuation allowance                                  295,000     1,000
     ---------------------------------------------------------------------------

     Future income taxes per financial statements            $    -      $  -
     ===========================================================================














                                       70

<PAGE>


INC.UBATOR CAPITAL, INC.
(formerly Shanecy, Inc.)
(A Development Stage Enterprise)

Notes to Consolidated Financial Statements, page 12
(Expressed in U.S. Dollars)

Years ended March 31, 2000 and 1999

--------------------------------------------------------------------------------


9.   Supplementary cash flow information:

<TABLE>
<CAPTION>
     =========================================================================================================
                                                                Period from
                                                           incorporation on
                                                                    May 31,
                                                                    1994 to        Year ended       Year ended
                                                                  March 31,         March 31,        March 31,
                                                                       2000              2000             1999
     ---------------------------------------------------------------------------------------------------------
<S>                                                                 <C>          <C>               <C>
     Non-cash investing and financing activities:
         Common shares issued to unrelated parties on
            acquisition of CASA (note 3)                        $      2,000     $      2,000      $        -
         Common shares issued to Thesseus on
            acquisition of EAL (note 4(a))                             1,500            1,500               -
         Eikos distributions received by Thesseus on behalf
            of the Company                                           585,006          214,544          370,462
         Preferred shares to be authorized and issued to
            Thesseus on acquisition of EAL                         6,592,494        6,592,494               -
         Common shares issued for services *                         182,500          182,500               -
         Common shares to be authorized and issued to
            Thesseus on acquisition of investments in
            eCard and InfoBase                                     6,644,787        6,644,787               -
         Note payable to eCard for investment in Series B
            preferred shares                                        (750,000)        (750,000)              -
     =========================================================================================================
</TABLE>

     * Net of cancellation.


10.  Subsequent events:

     (a) On May 12, 2000, in consideration for obtaining a listing on the
         Frankfurt Stock Exchange and for ongoing long-term market making
         sponsorship services, the Company issued Berliner Freiverkehr warrants
         to purchase 200,000 shares of its Common Stock, with an exercise price
         of $7.00 per share, for a two year term commencing on May 12, 2000.

     (b) On May 16, 2000, the Company appointed Sabre Communications, Inc. as a
         management advisor with responsibility for investor relations, and
         issued them 200,000 cashless warrants bearing a strike price of $4.00
         per share exercisable for two years after November 15, 2000.

     (c) On May 22, 2000, the Company entered into a term sheet to acquire all
         of the outstanding capital stock of ThemeWare Corporation ("ThemeWare")
         in exchange for $135.0 million of the Company's common stock and a
         commitment to invest a total of $5.0 million in ThemeWare, of which
         $1.0 million was invested on signing the term sheet. A further $1.0
         million is to be invested on the signing of definitive agreements,
         which is to occur by July 22, 2000, and another $1.0 million is to be
         invested upon the Securities and Exchange Commission's declaration that
         the registration statement on Form S-4 concerning this transaction is
         effective. The final $2.0 million is to be invested within twelve
         months of the closing of the transaction. Related to this




                                       71


<PAGE>


INC.UBATOR CAPITAL, INC.
(formerly Shanecy, Inc.)
(A Development Stage Enterprise)

Notes to Consolidated Financial Statements, page 12
(Expressed in U.S. Dollars)

Years ended March 31, 2000 and 1999

--------------------------------------------------------------------------------


10.  Subsequent events (continued):

         proposed transaction, effective June 27, 2000, the Company signed a
         financing commitment with a third party investor, who has agreed,
         subject to certain conditions, to invest $5,000,000 in an as yet
         undetermined number of common or preferred shares of the Company to
         facilitate completion of the ThemeWare acquisition.

     (d) On May 22, 2000, the Company engaged Quadrant Investment Bankers, Inc.
         as financial advisor and placement agent and issued them warrants to
         purchase 100,000 shares at $4.00 per share, exercisable for two years
         after November 22, 2000.

     (e) On June 1, 2000, the Company filed an Amended and Restated Certificate
         of Incorporation, thereby officially changing its name and increasing
         its authorized capital to 150 million common shares and 25 million
         preferred shares.

     (f) In order to fund the initial payment required in respect of the
         ThemeWare acquisition described above, the Company received a
         $1,000,000 loan from a stockholder. Subsequently, on July 7, 2000, the
         stockholder agreed to convert this loan into 1,000,000 non-voting,
         non-redeemable, Series B, 8% cumulative preferred shares in return for
         50,000 two year warrants each entitling the holder to acquire one
         common share for $2.50. The preferred shares are convertible into
         250,000 common shares, subject to anti-dilution provisions.











                                       72

<PAGE>


Item 8.  Changes In and Disagreements With Accountants on Accounting and
         Financial Disclosure

         Effective January 11, 2000, the Company determined not to renew its
engagement with the accounting firm of Barry Friedman, P.C. and appointed KPMG,
LLP as its independent auditors. There were no disagreements on any matter of
accounting principles or practices, financial statement presentation or
disclosure, or auditing scope or procedures with the Company's prior
accountants. The independent accountants' reports on the Company's financial
statements for the past two years did not contain an adverse opinion, disclaimer
of opinion nor was it qualified or modified as to uncertainty, audit scope or
accounting principles. The decision to change certifying accountants was
approved by the Company's Board of Directors. During the Company's two most
recent fiscal years there were no disagreements or "reportable events" with the
Company's former or current independent accountants on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure.








                                       73

<PAGE>

                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons:
         Compliance With Section 16(a) of the Exchange Act

         The information required to be included in Item 9 of Part III of this
Form 10-KSB incorporates by reference certain information from the Registrant's
definitive proxy statement, for its 2000 annual meeting of stockholders to be
filed with the SEC not later than 120 days after the end of the Registrant's
fiscal year covered by this report.

Section 16(a) Beneficial Ownership Reporting Compliance

         Section 16(a) of the Exchange Act ("Section 16(a)") requires the
Company's directors, executive officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Officers, directors and greater than
10% stockholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file.

         To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended March 31, 2000 all Section
16(a) filing requirements applicable to its officers, directors and greater than
10% beneficial owners were complied except for the late filing of a Form 3 by
Messrs. Pilallis, Wise, Weitzel, Knight, Galanis, Washington and Bodnar.

Item 10. Executive Compensation

         The information required to be included in Item 10 of Part III of this
Form 10-KSB incorporates by reference certain information from the Registrant's
definitive proxy statement, for its 2000 annual meeting of stockholders to be
filed with the SEC not later than 120 days after the end of the Registrant's
fiscal year covered by this report.

Item 11. Security Ownership of Certain Beneficial Owners and Management

         The information required to be included in Item 11 of Part III of this
Form 10-KSB incorporates by reference certain information from the Registrant's
definitive proxy statement, for its 2000 annual meeting of stockholders to be
filed with the SEC not later than 120 days after the end of the Registrant's
fiscal year covered by this report.

Item 12. Certain Relationships and Related Transactions

         The following information is required to be included in Item 12 of Part
III of this Form 10-KSB incorporates by reference certain information from the
Registrant's definitive proxy statement, for its 2000 annual meeting of
stockholders to be filed with the SEC not later than 120 days after the end of
the Registrant's fiscal year covered by this report.


                                       74
<PAGE>


                                     PART IV

Item 13. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

             (a) (1)  Financial Statements:

             The following financial information is included in Item 7:

                                                                            Page
                                                                            ----
Report of Independent Chartered Accountants                                   54

Consolidated Balance Sheets                                                   55

Consolidated Statements of Operations                                         56

Consolidated Statements of Stockholders' Equity                               57

Consolidated Statements of Cash Flows                                         59

Notes to Consolidated Financial Statements                                    60

             (a)(2) Financial Statement Schedules:

             None.

             (a)(3) Exhibits:


Exhibit Number    Description
--------------    -----------

      2.1         Stock Purchase Agreement dated November 11, 1999 between
                  Shanecy, Inc. and K. Washington-Galanis Investments, LLC,
                  (incorporated by reference from the amendment to the Current
                  Report on Form 8-K/A, dated November 11, 1999, filed with the
                  SEC on January 25, 2000).

      2.2         Acquisition Agreement dated November 11, 1999 between Thesseus
                  International Asset Fund N.V., Eikos Management LLC, Eikos
                  Acquisition Limited and Shanecy, Inc. (incorporated by
                  reference from the amendment to the Current Report on Form
                  8-K/A, dated November 11, 1999, filed with the SEC on January
                  25, 2000).

      2.3         Acquisition Agreement dated December 30, 1999 between Shanecy
                  Holdings, Inc. and Shanecy, Inc. (incorporated by reference
                  from the Current Report on Form 8-K, dated January 18, 2000,
                  filed with the SEC on February 2, 2000).


                                       75
<PAGE>

Exhibit Number    Description
--------------    -----------

      2.4         Acquisition Agreement dated December 30, 1999 between Thesseus
                  Holdings, Inc. and Thesseus International Asset Fund N.V.
                  (incorporated by reference from the Current Report on Form
                  8-K, dated January 18, 2000, filed with the SEC on February 2,
                  2000).

      2.5         Agreement and Plan of Merger dated December 30, 1999 among
                  Shanecy Holdings, Inc., Shanecy, Inc., Thesseus Holdings, Inc.
                  and Thesseus International Asset Fund N.V. (incorporated by
                  reference from the Current Report on Form 8-K, dated January
                  18, 2000, filed with the SEC on February 2, 2000).

      2.6         Amendment to Agreement and Plan of Merger dated December 30,
                  1999 among Shanecy Holdings, Inc., Shanecy, Inc., Thesseus
                  Holdings, Inc. and Thesseus International Asset Fund N.V.
                  (incorporated by reference from the Current Report on Form
                  8-K/A, dated January 18, 2000, filed with the SEC on April 5,
                  2000).

      3.1         Amended and Restated Certificate of Incorporation
                  (incorporated by reference from Annex A of Shanecy, Inc.'s
                  Information Statement for the fiscal year ended March 31, 2000
                  filed on April 27, 2000, File No. 000-25521 (the "2000
                  Information Statement")).

      3.2         Bylaws of Company (incorporated by reference from Annex D of
                  the 2000 Information Statement).

      3.3         Certificate of Designation, Preference and Rights of Series B
                  Convertible Preferred Stock.

     10.1         1999 Stock Option Plan (incorporated by reference from Annex B
                  of the 2000 Information Statement).

     10.2         Agreement concerning issuance of shares and related corporate
                  transactions, dated March 13, 2000 among Brunswick Capital
                  Partners, Inc., Shanecy, Inc., Greg L. Ticknor, Jeremy Juiper,
                  David Andera, and Scott Swain.

     10.3         Promissory Note (incorporated by reference from Exhibit 99.1
                  of Form 8-K, dated May 22, 2000, filed with the SEC on June 7,
                  2000).

     10.4         Voting Agreement (incorporated by reference from Exhibit 99.2
                  of Form 8-K, dated May 22, 2000, filed with the SEC on June 7,
                  2000).


                                       76
<PAGE>

Exhibit Number    Description
--------------    -----------

     10.5         Interim Operating Agreement (incorporated by reference from
                  Exhibit 99.3 of Form 8-K, dated May 22, 2000, filed with the
                  SEC on June 7, 2000).

     10.6         Class B Warrant Agreement, dated July 7, 2000 among Inc.ubator
                  Capital, Inc. and Derek M. Galanis.

     10.7         Letter Agreement, dated May 30, 2000 among Inc.ubator Capital,
                  Inc. and Derek M. Galanis.

     10.8         Letter Agreement, dated July 7, 2000 among Inc.ubator Capital,
                  Inc and Derek M. Galanis.

     10.9         Letter Agreement, dated June 27, 2000 between Inc.ubator
                  Capital, Inc. and GrayBox, LLC.

     11           Statement of Computation of Per Share Earnings.

     16           Letter regarding change in Accountants (incorporated by
                  reference from Form 8-K, dated January 12, 2000, filed with
                  the SEC on January 18, 2000).

     21           Subsidiaries of the Company.

     27           Financial Data Schedule.

             (b) Reports on Form 8-K:

Except for the Current Reports on Form 8-K, dated January 12, 2000, filed with
the SEC on January 18, 2000, Form 8-K/A, dated November 11, 1999, filed with the
SEC on January 25, 2000 and Form 8-K dated January 18, 2000, filed with the SEC
on February 2, 2000, there have been no Current Report on Form 8-K filed during
the quarter ended March 31, 2000.

                                       77
<PAGE>




                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                 INC.UBATOR CAPITAL, INC.


Date: July 12, 2000              By: /s/ Harry J. Weitzel
                                     -------------------------------------------
                                     Name:  Harry J. Weitzel
                                     Title: Chairman and Chief Executive Officer
                                            (Duly Authorized Officer)

         In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.


<TABLE>
<CAPTION>
<S>                                              <C>
/s/ Harry J. Weitzel                             /s/ Jason W. Galanis
--------------------------------------------     --------------------------------------------
Name:  Harry J. Weitzel                          Name:  Jason W. Galanis
Title: Chairman and Chief Executive              Title: President, Chief Operating Officer,
       Officer (Principal Executive Officer)            Chief Business Development
                                                        Officer and Director

Date:  July 12, 2000                             Date:  July 14, 2000
       -------------------------------------            -------------------------------------

/s/ Michael Bodnar
--------------------------------------------     --------------------------------------------
Name:  Michael Bodnar                            Name:  Leighton A. Bloom
Title: Treasurer, Chief Financial                Title: Chief Technology Officer and Director
       Officer, Secretary and Director
       (Principal Financial and Accounting
       Officer)

Date:  July 12, 2000                             Date:
       -------------------------------------            -------------------------------------


/s/ George C. Pilallis
--------------------------------------------     --------------------------------------------
Name:  George C. Pilallis                        Name:  Kevin L. Washington
Title: Executive Vice President and              Title: Executive Vice President and Director
       Director

Date:  July 12, 2000                             Date:
       -------------------------------------            -------------------------------------


                                                 /s/ Nicholas Wise
--------------------------------------------     --------------------------------------------
Name:  Dr. Rory F. Knight                        Name:  Nicholas Wise
Title: Director                                  Title: Director

Date:                                            Date:  July 12, 2000
       -------------------------------------            -------------------------------------

</TABLE>

<PAGE>


                                  EXHIBIT INDEX
                                  -------------

Exhibit Number    Description
--------------    -----------

      2.1         Stock Purchase Agreement dated November 11, 1999 between
                  Shanecy, Inc. and K. Washington-Galanis Investments, LLC,
                  (incorporated by reference from the amendment to the Current
                  Report on Form 8-K/A, dated November 11, 1999, filed with the
                  SEC on January 25, 2000).

      2.2         Acquisition Agreement dated November 11, 1999 between Thesseus
                  International Asset Fund N.V., Eikos Management LLC, Eikos
                  Acquisition Limited and Shanecy, Inc. (incorporated by
                  reference from Form 8-K/A, dated November 11, 1999, filed with
                  the SEC on January 25, 2000).

      2.3         Acquisition Agreement dated December 30, 1999 between Shanecy
                  Holdings, Inc. and Shanecy, Inc. (incorporated by reference
                  from the Current Report on Form 8-K, dated January 18, 2000,
                  filed with the SEC on February 2, 2000).

      2.4         Acquisition Agreement dated December 30, 1999 between Thesseus
                  Holdings, Inc. and Thesseus International Asset Fund N.V.
                  (incorporated by reference from the Current Report on Form
                  8-K, dated January 18, 2000, filed with the SEC on February 2,
                  2000).

      2.5         Agreement and Plan of Merger dated December 30, 1999 among
                  Shanecy Holdings, Inc., Shanecy, Inc., Thesseus Holdings, Inc.
                  and Thesseus International Asset Fund N.V. (incorporated by
                  reference from the Current Report on Form 8-K, dated January
                  18, 2000, filed with the SEC on February 2, 2000).

      2.6         Amendment to Agreement and Plan of Merger dated December 30,
                  1999 among Shanecy Holdings, Inc., Shanecy, Inc., Thesseus
                  Holdings, Inc. and Thesseus International Asset Fund N.V.
                  (incorporated by reference from the Current Report on Form
                  8-K/A, dated January 18, 2000, filed with the SEC on April 5,
                  2000).

      3.1         Amended and Restated Certificate of Incorporation
                  (incorporated by reference from Annex A of Shanecy, Inc.'s
                  Information Statement for the fiscal year ended March 31, 2000
                  filed on April 27, 2000, File No. 000-25521 (the "2000
                  Information Statement")).

<PAGE>

Exhibit Number    Description
--------------    -----------

      3.2         Bylaws of Company (incorporated by reference from Annex D of
                  the 2000 Information Statement).

      3.3         Certificate of Designation, Preference and Rights of Series B
                  Convertible Preferred Stock.

     10.1         1999 Stock Option Plan (incorporated by reference from Annex B
                  of the 2000 Information Statement).

     10.2         Agreement concerning issuance of shares and related corporate
                  transactions, dated March 13, 2000 among Brunswick Capital
                  Partners, Inc., Shanecy, Inc., Greg L. Ticknor, Jeremy Juiper,
                  David Andera, and Scott Swain.

     10.3         Promissory Note (incorporated by reference from Exhibit 99.1
                  of Form 8-K, dated May 22, 2000, filed with the SEC on June 7,
                  2000).

     10.4         Voting Agreement (incorporated by reference from Exhibit 99.2
                  of Form 8-K, dated May 22, 2000, filed with the SEC on June 7,
                  2000).

     10.5         Interim Operating Agreement (incorporated by reference from
                  Exhibit 99.3 of Form 8-K, dated May 22, 2000, filed with the
                  SEC on June 7, 2000).

     10.6         Class B Warrant Agreement, dated July 7, 2000 among Inc.ubator
                  Capital, Inc. and Derek M. Galanis.

     10.7         Letter Agreement, dated May 30, 2000 among Inc.ubator Capital,
                  Inc. and Derek M. Galanis.

     10.8         Letter Agreement, dated May 30, 2000 among Inc.ubator Capital,
                  Inc. and Derek M. Galanis, dated July 7, 2000.

     10.9         Letter Agreement, dated June 27, 2000 between Inc.ubator
                  Capital, Inc. and GrayBox, LLC.

     11           Statement of Computation of Per Share Earnings.

     16           Letter regarding change in Accountants (incorporated by
                  reference from Form 8-K, dated January 12, 2000, filed with
                  the SEC on January 18, 2000).

     21           Subsidiaries of the Company.

     27           Financial Data Schedule.

             (b) Reports on Form 8-K:

Except for the Current Reports on Form 8-K, dated January 12, 2000, filed with
the SEC on January 18, 2000, Form 8-K/A, dated November 11, 1999, filed with the
SEC on January 25, 2000 and Form 8-K dated January 18, 2000, filed with the SEC
on February 2, 2000, there have been no Current Report on Form 8-K filed during
the quarter ended March 31, 2000.