<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-KSB

     [X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2001

                                       OR

     [ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

                        Commission file number: 0-26381

                              WATTAGE MONITOR INC.
          (Name of Small Business Issuer as Specified in Its Charter)

            Nevada                                         86-0882633
     (State or Other Jurisdiction of                    (I.R.S. Employer
     Incorporation or Organization)                     Identification No.)

               1475 Terminal Way, Suite B, Reno, Nevada 89502
                    (Address of Principal Executive Offices)

                                 (775) 327-6000
                (Issuer's Telephone Number, Including Area Code)

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

      Securities registered pursuant to Section 12(g) of the Exchange Act:
                    Common Stock, Par Value $0.01 Per Share
                                (Title of Class)

         Check whether the issuer: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Act")
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-B is not contained herein, and will not be contained,
to the best of registrant's knowledge, in any amendment to this Form 10-KSB. [ ]

         Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]

         The registrant had revenues of $63,204 for the year ended December 31,
2001.

         On March 11, 2002, the aggregate market value of the voting stock of
Wattage Monitor Inc. held by non-affiliates of the registrant was approximately
$318,000 based on the average of the high bid and low asked prices of such
stock as reported by OTC Electronic Bulletin Board on such date. An affiliate
for this purpose is defined as the company's directors and executive officers
and beneficial owners of more than 5% of the company's common stock.

         The registrant had 44,396,520 shares of common stock, $.01 par value
per share, outstanding at March 11, 2002.

                   Documents Incorporated by Reference: None.

<PAGE>

                              WATTAGE MONITOR INC.
                          ANNUAL REPORT ON FORM 10-KSB

                                TABLE OF CONTENTS
                                                                            Page
                                                                            ----

PART I.........................................................................3
  ITEM 1 - DESCRIPTION OF BUSINESS.............................................3
  ITEM 2 - DESCRIPTION OF PROPERTY............................................12
  ITEM 3 - LEGAL PROCEEDINGS..................................................12
  ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................13

PART II.......................................................................14
  ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS...........14
  ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION........17
  ITEM 7 - FINANCIAL STATEMENTS...............................................20
  ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
            FINANCIAL DISCLOSURE..............................................38

PART III......................................................................39
  ITEM 9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
            COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.................39
  ITEM 10 - EXECUTIVE COMPENSATION............................................42
  ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT....44
  ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS....................47
  ITEM 13 - EXHIBITS, LIST AND REPORTS ON FORM 8-K............................47

SIGNATURES....................................................................48
EXHIBIT INDEX.................................................................49

                                        2

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                                     PART I

ITEM 1 - DESCRIPTION OF BUSINESS.

BUSINESS DEVELOPMENT.

         WattMonitor LLC, the predecessor to Wattage Monitor, was formed under
the laws of the State of Delaware on July 1, 1997. In February 1999, in
anticipation of the acquisition of WattMonitor LLC, Knowledge Networks Inc., a
publicly held corporation, changed its name to "Wattage Monitor Inc." On
February 26, 1999, Wattage Monitor Inc., a Nevada corporation, acquired
WattMonitor LLC, a Delaware company. The business of Wattage Monitor is
identical to that of WattMonitor LLC. For financial statement purposes, the
transaction has been treated as a recapitalization of WattMonitor LLC. For tax
purposes, the acquisition was a tax-free exchange of equity securities.
Subsequent to the acquisition, the sole activities of Wattage Monitor have been
those previously conducted by WattMonitor LLC. The historical activities of the
acquiring company's predecessor, Knowledge Networks, were limited to certain
immaterial software consulting contracts, all of which were completed prior to
the acquisition. Accordingly, the following discussion relates to the business
previously conducted by WattMonitor LLC as well as that of Wattage Monitor Inc.
subsequent to February 26, 1999. Wattage Monitor Inc. is a development stage
company.

BUSINESS OF WATTAGE MONITOR.

OUR BUSINESS.
-------------

         Our goal is to be the preeminent electric rate and service information
and transaction source in the competitive electricity market. We receive fees
from electricity suppliers for presenting residential and commercial consumers
with information about electric rates and allowing consumers to order
electricity from their chosen supplier. We also make our electricity news and
information available to partner web sites via a data-feed, and we may share
revenue with these partner sites. We also offer business services to industry
participants through our ability to develop and host private label sites,
assist with supplier marketing programs and provide customer service
implementation (switching) functionality. Finally, we provide electric market
research, a newsletter and consumer surveys to electric utilities and others
interested in this industry.

         From inception, we thought and, with the benefit of hindsight, still
believe there were three requirements necessary to prove our business model:

     .   Creation of the Wattage Monitor information system;
     .   Demonstration that consumers use the Wattage Monitor service; and
     .   Electricity supplier participation.

         We believe we have successfully demonstrated our ability to meet each
of these requirements. Our challenge is and has been to scale the business as
electric competition takes hold to demonstrate our ability to generate
significant revenue and profit.

         Our experience over the second half of 2001, with both consumers
interested in choosing a competitive electric supplier and with suppliers
reducing their competitive electric market activity reflects a significant
slowdown in the residential market. The Texas electricity market, which opened
to

                                        3

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competition on January 1, 2002, represents the primary residential opportunity
for us today and success or failure in that market is likely to be the key
determinant of our near term viability.

         According to Energy Information Administration
(http://www.eia.doe.gov/), there are over 110,000,000 households in the United
States using over $95 billion of electricity annually. Commercial consumers
consume another nearly $75 billion of electricity per year. As deregulation
permits these customers to choose a competing supplier, they require an
accurate, objective source of information to properly choose a supplier and
implement that choice. Serving that need is our primary focus. (Note:
Industrial customers comprise the third category of electric consumers. While
they consume about the same volume of electricity as their residential and
commercial counterparts, they pay approximately half as much per unit consumed.
Industrial customers are not expected to be an important market for Wattage
Monitor).

         Like other industries that have deregulated, the long-term
consequences of cost plus regulation results in inexplicable variations in the
cost of the product in question, in this case electricity, to consumers. The
complexity of "fixing the rate structure" and the economic consequences of not
doing so becomes sufficiently burdensome that a political decision is made to
let competitive market influences bring economic rationality to pricing. To see
just how dramatic these discontinuities have become, the following table shows
the highest average residential and the lowest average residential rate for
each state in which consumer choice exists today:

              RANGE (in cents) OF AVERAGE RESIDENTIAL RATES PER KWH
                   STATES WITH CHOICE AS OF DECEMBER 31, 2001

STATE                          HIGH      LOW      % VARIATION
Connecticut                    12.29     7.57          62%
Delaware                       10.54     7.81          35%
Maine                          22.08     5.42         307%
Massachusetts                  12.42     5.08         144%
New Jersey                     11.47     4.90         134%
New York                       23.53     3.19         638%
Pennsylvania                   13.19     5.34         147%
Rhode Island                   29.16     9.71         200%
Texas                          17.66     5.35         230%
Virginia                        9.98     4.84         106%

         Further, as over 3,000 electricity suppliers currently sell power to
US consumers, each must operate differently in a competitive business
environment or disappear. We provide impartial information to electricity
consumers regarding their service options and choices, and offer a
communication channel by which electric suppliers may reach potential customers.

         We derive our revenues principally from suppliers seeking new
customers. Such revenues result from fixed fees, transaction fees and marketing
fees (commissions), or a combination thereof. The marketing fee is designed to
be less than the equivalent cost of the advertising, direct mail, or other
programs suppliers undertake to inform and solicit potential customers. The
transaction fee results from a consumer's decision to choose a particular
supplier through our system.

                                        4

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         The two market considerations that create the opportunity for us to
build a national organization by offering our service are:

     .   The electric utility industry is restructuring, so that consumers have
         the ability to choose their electricity supplier; and

     .   The competition that results motivates electricity suppliers to seek
         efficient, cost-effective means to reach residential and commercial
         consumers.

         With the option of choosing their electric supplier, electric
consumers need information about their electricity options. This information
may be available from traditional sources such as advertising, general media
coverage, political discussion, and word of mouth, but there are no established
information sources assisting consumers to make an informed electric supply
choice. We believe that our service fills this void.

         The electricity market structure is particularly well suited for the
Wattage Monitor service. Its highly fragmented nature means that no electricity
supplier exercises significant market influence (see "The Electric
Industry - Fragmentation" below). This, in turn, ensures that the consumer has
great market influence, as is the case with other highly fragmented markets. By
determining the needs of consumers to make their electric supplier purchase
decisions, and by meeting those needs, we believe that Wattage Monitor is
positioned to become one of the important consumer service companies in a
competitive electric power marketplace.

         The Company is structured to discern consumer needs through numerous
channels and programs: surveys, focus groups, follow-up satisfaction surveys of
the users of our system, and our ElectricEye/SM/ program among others.
Additionally, the Company incorporates the suggestions of its participants,
comments from suppliers, suggestions from various regulatory commissions, the
active participation by consumer advocates and trade associations, and periodic
comprehensive service reviews by consumer marketing professionals. In doing so
it maintains an up-to-date, consumer-driven service.

The Electric Industry.
----------------------

         Overview.  Over three trillion kilowatt hours are used in the United
         ---------
States annually, divided roughly equally between residential, commercial and
industrial consumers. Measured by revenue, the residential and commercial
segments of the industry represent revenue approaching $170 billion annually.
(Note: the difference between commercial and industrial consumers is that
industrial customers are large-scale manufacturing concerns, while commercial
users are primarily small businesses, commercial real estate and retail
enterprises). The commercial sector acts like the residential sector and has
been subjected to regulated pricing policies similar to those of residential
customers. As described above, industrial customers are treated differently. We
anticipate, therefore, that most of our revenue will be derived from the
residential and commercial sectors, as has been the case to date.

         There are several secondary considerations that stand out as
important to the future demand for our services.

      .  Fragmentation. The electric industry is fragmented. No one company
         enjoys name recognition by more than a small percentage of customers.
         Even when a name is recognized, that recognition is concentrated in a
         confined geographic area. No company accounts for more than about 5%
         of total industry revenue.  There are approximately 300 investor-owned
         utilities, which account for about three-quarters of the industry's
         revenue.  However, even the largest of these are generally

                                        5

<PAGE>

         geographically isolated and have less than 5% of the national market.
         Unlike telephones, in the emerging electricity industry there are few,
         if any, identifiable electricity providers. Therefore, electric
         suppliers will seek to gain access to a large number of new customers.
         Being able to provide or facilitate such access will likely be a
         valuable resource to electric suppliers.

      .  Information Vacuum. The electric consumer's working knowledge of
         electricity is limited. Once customers have a choice, some are likely
         to exercise it. In many cases they will want information about more
         than just their specific choices. We plan to serve this need as well.

      .  Predictable Electric Use. The deregulation of telecommunications,
         principally telephones, has had a significant influence on consumer
         views. This may affect electricity in two ways. First, consumers are
         suspicious of a profusion of pricing schemes which, given the large
         number of anticipated new entrants, is likely to occur. Second,
         consumers perceive electric service as a network in which they may
         conveniently and routinely switch suppliers.  Yet, unlike telephone
         usage, electricity use is consistent and predictable.  This makes
         quantifying a consumer's choice of electric suppliers straightforward,
         enhancing comparison shopping while eliminating complexity.

Wattage Monitor's Service.
--------------------------

         Overview.  Our efforts are centered around:
         ---------

      .  Residential information and transaction services;

      .  Commercial information and transactions services; and

      .  Market research and information.

         All information is organized by zip code or sub-zip code. Sub-zip
codes are used if more than one regulated utility serves the area to ensure
that the information is directly relevant to each consumer.

         Competition is new to the electric industry. Most consumers and most
investors are unfamiliar with the industry and the factors that influence
competition. Accordingly, a detailed description of the electric industry and
the most common questions that arise when considering the topic for the first
time are included in this business description.

         Historically the electric industry has classified its customer base as
comprising three broad categories of consumers: industrial, commercial, and
residential. Our service is designed to meet the needs of the latter two
classes of consumers - commercial and residential. It is structured to permit
suppliers to cost effectively reach these consumer classes with their
offerings. In general, industrial customers purchase enough electricity that
they enter into individually negotiated contracts. Our information and ordering
system is not designed to facilitate such negotiations. The characteristics of
our system in the residential and commercial market segments are tailored to
serve what we have learned about the specific needs of customers in these
classes.

         Residential Consumers.  The residential service we offer revolves
         ----------------------
around four principles. It is simple, straightforward, comparative, and
complete - all the information in one place. The regulated electricity market
in most states is not particularly simple. It typically has several different
electric service options. In highly populated areas there may be five or more
such options while in less populated areas either one or two is common. The
complexity of those rate structures are not overwhelmingly complicated, so with
a little work, simple, understandable comparisons for consumers can be
fashioned. To a significant degree, this is an important role we play.

                                        6

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         Our site is further structured to recognize that some consumers may
want additional information, to understand the fine print of supplier offering,
or to look at their alternatives in some detail. We allow consumers to choose
as much information as they want, but do not require them to consider more than
the basic comparisons. Most consumers prefer the summary approach of our basic
service.

         Commercial Consumers.  Commercial electric consumers average 5-6 times
         ---------------------
the electricity consumption of the average residential consumer. They need more
information than is provided to residential consumers. Commercial rate
structures are sufficiently complicated that it is not realistically possible
to impose on the commercial sector the simplicity we achieve in our residential
service. Furthermore, residential consumers tend to be fairly homogenous in
their electricity consumption pattern, while commercial enterprises represent
great variances in their needs. Commercial accounts may operate twenty-four
hours a day, seven days a week, or just Monday through Friday, from 9 to 5,
representing significantly different user profiles and requirements.

         A second differentiating characteristic of commercial businesses is
that the electricity purchasing decision is often made by a purchasing
professional. Our research indicates that commercial consumers' greatest need
is a relatively straightforward service through which to understand their
competitive attractiveness (or lack thereof) as an electricity consumer. Unlike
virtually everything else they buy, they have not developed an ability to
calibrate their importance as an electricity consumer. While our commercial
system cannot deliver simplicity because the market is not simple, it can
deliver concise information to assist the commercial decision-maker in quickly
becoming an informed consumer. We can also assist suppliers in approaching
commercial consumers with the specific consumption patterns and volumes they
most desire.

         Access.  Our services are available both through a toll-free telephone
         -------
service (1-888-WATTAGE) and through the Internet at www.wattagemonitor.com. The
Wattage Monitor service is free to consumers.

         Research and Information.  We have accumulated an information database
         -------------------------
that has several unique and valuable characteristics. The first is that our
information is relatively independent of today's high profile privacy concerns.
The information is primarily about facilities, homes, offices and buildings,
not about individuals. Second, our database is stable because it is based on
location. If the homeowner moves, a business relocates or a tenant changes
addresses, the value of our information is unaffected. Typically, such changes
lead to a loss in a database's value because it is about the person rather than
the location. Therefore, the nature of our service allows us to register a
particular location, provide our service to current and future occupants
thereof, amass location specific information and facilitate the choice of an
electric supplier by subsequent occupants.

         With such information we hope to become a leading provider of
analytical information about the residential and commercial competitive
electricity market. We provide research on a fee basis, publish industry
indices, and distribute a newsletter. In conjunction with our activities to
insure we meet the needs of electric consumers (such as those noted above) and
through the use of our service by consumers to choose an electricity supplier,
we believe we know as much about consumer participation in our segment of the
competitive electric market as any other entity.

         Web Site Partnerships, "Powered By WM".  Wattage Monitor offers a data
         ---------------------------------------
stream and transaction capability to other web sites that want to provide
electric pricing information and purchasing options to their visitors. Through
a combination of proprietary technology and industry-leading pricing
information, other web sites, Internet portals and information services can
access fast, accurate, and complete information regarding the electric energy
market place. In essence, we give other web properties the ability to compete
with Wattage Monitor's service under their own brand. These services

                                        7

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are expected to be increasingly valuable as the competitive electric market
expands nationally, as consumers become increasingly aware that they may choose
an electric supplier, and as a growing number of portals and web community
sites conclude that they should make such information available to their best
customers. By providing this information and transaction capability through
multiple portals, competing electric suppliers can access the widest possible
range of Internet purchasing consumers through their relationship with us. In
these transactions, Wattage Monitor shares revenue with the "host" web site.

         In the evolution of these partnerships, certain categories of
consumers have been identified who are more likely to be interested in choosing
a new electric supplier than others. These categories of consumers tend to use
products and services associated with the home or property (realty, mortgages,
moving services, etc.).

         In addition, governmental and not-for-profit consumer advocate web
sites have found facilitating access to comparative information for their
visitors is consistent with their objectives. Many of them, in locations where
consumers may choose their electric supplier, have chosen to link their sites
to Wattage Monitor. The Ohio Consumer Counsel and the Public Utility Commission
of Texas have each licensed access to our database and retained us to create
information services for their users. If an Ohio or Texas resident, accessing
the respective site, concludes they would like to use an electric supplier
identified therein, they may execute that choice through the Wattage Monitor
site.

         The Wattage Monitor System.  Our information system is designed to
         ---------------------------
integrate a data management and electronic commerce search engine to create an
efficient electric choice information system. The system was designed to convey
objectivity, simplicity, increasing levels of sophistication when necessary,
and a consumer orientation. The data management capability of our information
system contains numeric data, including zip codes and prices.

         Wattage Monitor v3.0, the current version of the system released in
January 2001, services all 50 states and provides a greater transaction
flexibility and more efficient implementation of web site partnering
opportunities than did v2.0.

         Operational Experience.  While not the first state to allow its
         -----------------------
citizens to choose an electric supplier, Pennsylvania was the first state to
structure its market to allow consumers to realize significant savings. The
first commercial release of our information system occurred in Pennsylvania on
October 19, 1998. About 375,000 Pennsylvania households switched suppliers in
the first several months of choice. Based on traffic on our system, it appears
that nearly 15% of those who switched used our system.

         As more states have adopted competition, we have experienced similarly
strong support from consumers and consumer advocate organizations. However, no
competitive electricity market in any of the states that offer choices has as
yet fostered pricing or marketing activity sufficient to generate even moderate
levels of residential and commercial switching. Texas, which opened its
electricity market to competition on January 1, 2002, represents the latest
attempt to change this circumstance. As the host of the state's rate comparison
web site, we are in a favorable position to achieve operational success if that
market produces a sustained level of switching. Our experience in the Texas
market will determine our ability to continue operating.

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Implementation.
---------------

         Consumer Awareness.  We have tested various methods to inform electric
         -------------------
consumers of our existence by using billboards, drive time radio, links to
other web sites and public relations. The most cost-effective of these methods
has been editorial coverage gained through PR efforts, primarily in the print
media, particularly newspapers.

         We also reach consumers through our partnerships with other web sites.
Because choosing an electric supplier is not an every day activity, portals
have been receptive to discussions about offering a co-branded or site-branded
(i.e. Electric Center) Wattage Monitor option for their visitors.

         Billboards and radio, while somewhat effective, have proven to be less
useful than newspapers in informing consumers of our service. Consumer
awareness and use of our system is also dependent upon the advertising programs
of suppliers. The more frequently suppliers approach consumers, the greater the
demand for the comparative information available from our system. Accordingly,
use of our system is dependent upon the active, independent marketing efforts
of suppliers.

         Finally, we solicit commercial customers to use our system, both
directly and through partnerships with commercial buying groups. We cannot be
certain that making consumers aware of our service will not be more costly,
take longer or be as effective as is currently anticipated.

         Consumer Acceptance.  As noted, early consumer acceptance of our
         --------------------
services in Pennsylvania was quite good. Our follow-up surveys of customer
response have shown the following:

      .  High levels of satisfaction with our service;

      .  Great confusion about the process and consequences of switching
         suppliers;

      .  A lack of information about how electricity is supplied and how
         competition is possible;

      .  Reluctance to tackle the complexities of choosing a supplier,
         unfamiliar terms, unfamiliar suppliers, complicated rate structures
         and offers; and

      .  Overwhelming support for competition as a "good thing."

         The rate at which consumers become familiar and comfortable with
competition in the electric market will determine when they are willing to
choose a supplier. This may determine when consumers decide to use our system.
At this point, there can be no assurance that the rate of acceptance of our
service by consumers will be large enough and quick enough to allow us to
continue to provide our service.

         Our system has found supportive audiences among trade associations,
community-based organizations, church groups and similar associations. It is
anticipated that such groups will help create demand for our service and
influence suppliers to participate.

         Supplier Awareness.  Supplier participation has been gained through
         -------------------
direct marketing efforts undertaken directly with each supplier. Suppliers have
been reluctant to contract for our services. Initially, we expected that
creating a national electricity information service would require us to:

      .  Create the Wattage Monitor information system;

      .  Demonstrate consumers use that service; and

      .  Elicit electricity supplier participation.

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         We believe we demonstrated our ability to achieve the first two of
these "success criteria" within 18 months of forming Wattage Monitor. It has
proven more difficult to convince suppliers to participate. There are a number
of factors we believe affect a supplier's participation in our service. Three
of the most important are:

      .  Market Immaturity -- When states adopt electric competition,
         legislation is generally required. After adopting that legislation, a
         market structure and the requirements for participating in it evolve
         through hearings and implementing regulations issued by that state's
         Public Utility Commission.  That process is not complete today even in
         states that originally enacted legislation two or three years ago.
         Such a complicated, on-going process makes it difficult for suppliers
         to compete for customers when the market is first open, as the exact
         rules of engagement are not established.  One result, using
         Pennsylvania as an example, was that nearly eighty companies obtained
         licenses but only about thirty sought customers in the first year of
         competition.  Another result, using Texas as an example, was that the
         regulated price against which competitive suppliers compete was not
         established until ten days before the market opened. In such an
         environment, competing suppliers essentially test market a product or
         approach while they wait for the market to come into focus.  The need
         for our service only arises once suppliers decide to proceed full
         speed ahead.

      .  Consumer Behavior -- While a hundred million households and fifteen
         million businesses use electricity, virtually none have ever chosen
         their electric supplier. There is no confidence about how such
         customers will make those choices. Since we represent a novel
         distribution channel for most suppliers, they require us to
         demonstrate our effectiveness before they enroll.  Most suppliers
         choose to begin their marketing efforts using traditional marketing
         channels only.

      .  Organizational Immaturity -- All competing suppliers, including
         those (more than half) that are subsidiaries of very large
         enterprises, are nevertheless newly created. This ''start-up'' nature
         of all companies in this market means virtually every one of them was
         conceived by its founders and/or its parent to succeed by taking a
         certain approach. They are organizations newly created to implement a
         particular market approach.  Rarely are we part of those plans. Most
         suppliers conclude they need to try their originally adopted approach
         before they either (a) change directions or (b) add a service such as
         the one we offer.

         In spite of this initial reluctance on the part of suppliers to
participate in the Wattage Monitor system, our strategy was and is to show that
consumers find our system useful and use it. Continuing to demonstrate such,
along with our continued ability to offer our service, has resulted in
increasing supplier participation in the Wattage Monitor system.

         While its timing was not exactly that which we had originally
anticipated, the overall evolution of supplier participation in our system
occurred as and for the reasons we originally expected. In February 2000, the
first four suppliers agreed to transact orders through our system. It should be
noted, however, that suppliers who have entered one or more competitive
electricity markets have shown a great willingness to withdraw from the
market(s) if the originally expected business opportunity does not materialize.

                                       10

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State-by-State Status
---------------------

         Overview.  The  following  tables  summarize  the status of state
         ---------
efforts to allow  consumers a choice of electric suppliers.

                                           Number     Residential    Commercial
                                             of        Electric       Electric
Current Status                             States      Consumers     Consumers
--------------------------------------------------------------------------------
                                                      (millions)     (millions)
Enacted Legislation..................        23           55             7
Pending Legislation..................         0            0             0
Policy Development...................        16           42             5
No Substantial Activity..............        11           14             2
                                        ----------------------------------------
                                             50           111            14

         Other Considerations. Many states are actively in the process of
         --------------------
adopting competition for their electric industry. However, the timing of
competition is not the only factor in determining how, and to what degree,
demand for our information system will evolve. Demand for our service stems as
much from how competition is introduced as when it is introduced. States are
enacting legislation well in advance of implementing competition. While such
legislation typically sets a timetable for competition, it may also establish
specific requirements of how competition is to be phased in. For instance,
Pennsylvania adopted regulations that meant consumers could realize immediate
savings. By contrast, California structured the phase-in of competition in a
manner that did not permit consumers such savings. Accordingly, the demand for
our service will be determined by the timing of competition that individual
states adopt as well as by how it is phased in. There can be no assurance that
the state-by-state phase-in plans will be sufficiently timely or competitive to
allow demand for our service to develop in order for us to generate sufficient
revenue to continue to make our service available.

Competitive Environment.
-----------------------

         Since our inception in 1997, numerous (20+) companies, most news
services and a wide range of governmental entities have provided a variety of
information about the deregulating electric industry to consumers. Some of that
information may include rate and service information. However, none of those
have our specific approach to the market and/or offer the service we provide.
For instance, we believe we are the only non-supplier to directly enroll and
switch electric suppliers for residential consumers. To the best of our
knowledge, all other companies who profess to offer this type of service refer,
usually via email, consumers wanting to switch to an identified supplier rather
than provide switching functionality themselves.

         In comparing our activities to companies who are arguably similar in
approach to ours, only three of them remain active. However, as an internet
business, we are subject to the internet's rapidly changing business
environment, technology, and standards. Further, the internet, particularly for
information and shopping services such as the one we offer, is subject to rapid
new product and service introductions.

Proprietary Intellectual Property.
---------------------------------

         We have applied to the United States Patent and Trademark Office for
registration of several trademarks, logos and icons including "WM", "Wattage
Monitor," "Kilowatt Monitor", "WattMonitor," and "ElectricEye." Others are
currently pending. We have received certificates of registration for "Wattage
Monitor", "ElectricEye" and the Wattage Monitor logos.

                                      11

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Employees.
---------

     As of March 18, 2002, we employed 12 people. We believe that our relations
with our employees are good.

Insurance.
---------

     We maintain property and liability coverage with various insurers. We
believe that such coverage is adequate for our needs and customary for
information service companies of comparable size and maturity.

REPORTS TO SECURITY HOLDERS.

         We will file reports, proxy statements and other information with the
Securities and Exchange Commission. Such reports (generally Forms 10-QSB, 10-KSB
and 8-K), proxy statements and other information can be inspected and copied, at
the Public Reference Room of the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, at the Northeast Regional Office of
the Commission located at 233 Broadway, New York, New York 10279 and at the
Midwest Regional Office of the Commission located at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Please call the
Commission at 1-800-SEC-0330 for further information on the public reference
rooms. Our Commission filings will also be available to the public from the
Commission's web site at http://www.sec.gov.

ITEM 2 - DESCRIPTION OF PROPERTY.

     We maintain offices in several locations, including:

     .  San Rafael, California (this lease expires on March 31, 2004) 711 Grand
        Avenue, Suite 210 San Rafael, CA 94902

     .  Reno, Nevada (this lease expires on March 31, 2004)
        1475 Terminal Way, #B
        Reno, NV  89502

        Our offices cover an aggregate of approximately 7,190 square feet. As
of the date of this filing, required annual lease payments are: $166,900 for
2002, $186,850 for 2003 and $47,800 for 2004. In addition, we have offices
provided by our employees in and around Dallas, Texas. No lease expense is
required under arrangements with our employees.

ITEM 3 - LEGAL PROCEEDINGS.

         Not applicable.

                                      12

<PAGE>

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         On December 3, 2001, the Company held its Annual Meeting of
Stockholders for stockholders of record on October 12, 2001.

         The stockholders elected three (3) Directors to the Company's Board of
Directors. Set forth below are (i) the names of the persons elected to serve on
the Company's Board of Directors until the 2002 Annual Meeting of Stockholders
and until their successors are duly elected and qualified and (ii) the results
of the voting for the nominees.

Name                       For          % For        Withheld   % Withheld
----                       ---          -----        --------   ----------

Stephen Klein          32,259,705      99.85%         48,010       0.15%

Gerald Alderson        32,259,705      99.85%         48,010       0.15%

Alexander Ellis III    32,259,505      99.85%         48,210       0.15%

         The stockholders also ratified the appointment of Grant Thornton LLP as
the independent auditors of the Company for the fiscal year ended December 31,
2001. Set forth below are the results of said vote.

     For        % For    Against    % Against    Abstain    % Abstain
     ---        -----    -------    ---------    -------    ---------

 32,244,155    99.80%    61,410       0.19%       2,150       0.01%

                                      13

<PAGE>

                                     PART II

ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         Our common stock is currently quoted on the OTC Electronic Bulletin
Board under the symbol "WMON." There was no active market for Wattage Monitor's
securities until February 26, 1999. Prior to the reverse acquisition of
WattMonitor LLC by Wattage Monitor, Wattage Monitor was listed on the OTC
Electronic Bulletin Board from February 18, 1999 through February 25, 1999.

         The following table sets forth for the periods indicated the high and
low bid price information for the common stock as quoted on the OTC Electronic
Bulletin Board. The quotations reflect inter-dealer prices, without retail
mark-ups, mark-downs or commissions, and may not represent actual transactions.

                                                           Common Stock
                                                  ----------------------------
                                                    High Bid        Low Bid
                                                  ------------   -------------
February 26, 1999 through March 31, 1999.....        $ 7.25         $ 4.00
April 1, 1999 through June 30, 1999..........        $16.00         $ 5.50
July 1, 1999 through September 30, 1999......        $ 6.75         $ 2.40
October 1, 1999 through December 31, 1999....        $ 4.56         $ 1.03
January 1, 2000 through March 31, 2000.......        $ 4.00         $ 1.38
April 1, 2000 through June 30, 2000..........        $ 2.94         $ 0.38
July 1, 2000 through September 30, 2000......        $ 2.44         $ 0.91
October 1, 2000 through December 31, 2000....        $ 1.75         $ 0.52
January 1, 2001 through March 31, 2001.......        $ 0.72         $ 0.20
April 1, 2001 through June 30, 2001..........        $ 0.86         $ 0.17
July 1, 2001 through September 30, 2001......        $ 0.37         $ 0.05
October 1, 2001 through December 31, 2001....        $ 0.10         $ 0.03

         On March 11, 2002, the closing bid price as quoted by the OTC
Electronic Bulletin Board for our common stock was $0.03. As of March 11, 2002,
there were 70 holders of record of our common stock.

         There is no public trading market for any of our preferred stock,
warrants or options.

         We have never declared or paid cash dividends on our common stock. We
presently intend to retain any earnings for use in the business and do not
anticipate paying cash dividends in the foreseeable future. Any future cash
dividends will be at the discretion of the board of directors and will depend on
our earnings, financial condition, cash flows, capital requirements and other
considerations that the board of directors may consider relevant.

         On January 18, 1999, Wattage Monitor issued 980,000 shares of our
common stock. We raised $9,800 from that offering, which was made under Rule 506
of Regulation D, promulgated under the Securities Act of 1933, as a non-public
offering solely to accredited investors.

         On February 5, 1999, Wattage Monitor entered into a Stock Purchase
Agreement in connection with the purchase of 2,750,000 shares of our common
stock. We raised $1,000,000 under the agreement, which was made under Rule 504
of Regulation D, promulgated under the Securities Act of 1933, as a non-public
offering solely to accredited investors.

                                      14

<PAGE>

         On February 24, 1999, Wattage Monitor completed an offering of
1,000,000 units, consisting of one share of our Series A preferred stock and one
warrant to purchase our Series B preferred stock at a price of $1.00 per share.
We raised $3,000,000 from that offering, which was made pursuant to Rule 506 of
Regulation D, promulgated under the Securities Act of 1933, as a non-public
offering solely to accredited investors. In addition, we received $3,500,000
from the full exercise of the warrants between September 23, 1999 and November
10, 1999 for a total of $6,500,000. In exchange we issued Preferred Stock
convertible into 3,500,000 shares of common stock for a total of 4,500,000
shares issued. The weighted average price of the underlying common stock issued
is $1.44 ($6,500,000 divided by 4,500,000).

         On February 26, 1999, we completed a reverse acquisition of WattMonitor
LLC. In connection with the merger, we converted all of the outstanding
membership interests in WattMonitor LLC into an aggregate of 7,550,450 shares of
our common stock. On February 26, 1999, we issued an additional 50,000 shares of
our common stock to Jonathan Cohen, an accredited investor. We received $50,000
as a result of the issuance. In connection with these transactions, we relied on
the statutory exemption provided by Section 4(2) of the Securities Act of 1933,
because the issuances did not involve public offerings. In addition, each
member, other than the controlling members, was entitled to acquire such number
of shares of our common stock at $1.00 per share as necessary to maintain the
same ownership percentage in Wattage Monitor as such members held in WattMonitor
LLC. In connection with this right, between February 26, 1999 and March 31,
1999, 657,366 shares of our common stock were issued to our existing
shareholders. In connection with these transactions, we relied on the statutory
exemption provided by Section 4(2) of the Securities Act of 1933, because these
issuances did not involve public offerings.

         In connection with the reverse acquisition, all of our employees
exchanged their contingent membership interests for stock options, exercisable
at $1.00 per share, totaling 918,000 shares of our common stock. In connection
with these transactions, we relied on the statutory exemption provided by
Section 4(2) of the Securities Act of 1933, because these issuances did not
involve public offerings.

         On May 29, 1999, Anne Alderson, an employee, exercised 150 options
issued pursuant to our 1999 Incentive Compensation Plan at $1.00 per share. In
connection with this transaction, we relied upon the statutory exemption
provided by Section 4(2) of the Securities Act of 1933, because this issuance
did not involve a public offering.

         On July 12, 1999, we issued a warrant to Camhy Karlinsky & Stein LLP
exercisable through July 11, 2009, to purchase 7,000 shares of our common stock
at an exercise price of $6.00 per share. The warrant was exercisable
immediately. In connection with this transaction, we relied upon the statutory
exemption provided by Section 4(2) of the Securities Act of 1933, because this
issuance did not involve a public offering.

         On September 14, 1999, we issued 4,500 shares of our common stock to
Michael Benzian, one of our employees, as a result of the exercise of an option
to purchase such shares for an aggregate amount of $4,500. In connection with
this transaction we relied on the statutory exemption provided by Section 4(2)
of the Securities Act of 1933, because this issuance did not involve a public
offering.

         Between September 23, 1999 and November 10, 1999, Valiant Growth Fund,
Orion Projects Limited, Delta Realty Limited, Bennett Finance Limited, Westin
Machineries Pension S.A. and Liegemen, S.A. exercised their warrants to purchase
an aggregate of 3,500,000 shares of Series B preferred stock for an aggregate
purchase price of $3,500,000. In connection with these transactions, we relied
upon the statutory exemption provided by Section 4(2) of the Securities Act of
1933, because these issuances did not involve public offerings.

                                      15

<PAGE>

         Between September 23, 1999 and November 10, 1999, we issued 1,000,000
shares of our common stock upon the automatic conversion of 1,000,000 shares of
our Series A preferred stock, which occurred as a result of the exercise of our
warrants. In connection with this transaction, we relied upon the statutory
exemption provided by Section 4(2) of the Securities Act of 1933, because these
issuances did not involve public offerings.

         On October 1, 1999, we issued to ThorGroup Ventures an option to
purchase 40,000 shares of our common stock at an exercise price of $3.00 per
share. Of these options, 10,000 are exercisable immediately. In connection with
this transaction, we relied upon the statutory exemption provided by Section
4(2) of the Securities Act of 1933, because this issuance did not involve a
public offering.

         On October 15, 1999, we issued a warrant to BlueGarni & Company,
exercisable through October 14, 2009, to purchase 6,500 shares of our common
stock at an exercise price of $6.00 per share. The warrant is exercisable at any
time. BlueGarni & Company has assisted in the recruitment of our management
personnel. In connection with this transaction, we relied upon the statutory
exemption provided by Section 4(2) of the Securities Act of 1933, because this
issuance did not involve a public offering.

         Between October 20, 1999 and November 10, 1999, John D. Westfield, an
employee, exercised 9,000 options issued pursuant to our 1999 Incentive
Compensation Plan at $1.00 per share. In connection with this transaction, we
relied upon the statutory exemption provided by Section 4(2) of the Securities
Act of 1933, because this issuance did not involve a public offering.

         On January 6, 2000, Bennett Finance Limited, Westin Machineries Pension
S.A. and Liegemen, S.A. converted an aggregate of 875,000 shares of Series B
preferred stock to 875,000 shares of common stock. In connection with this
transaction, we relied upon the statutory exemption provided by Section 4(2) of
the Securities Act of 1933, because this issuance did not involve a public
offering.

         On November 22, 2000, Valiant Growth Fund, Orion Projects Limited and
Delta Realty Limited converted an aggregate of 2,625,000 shares of Series B
preferred stock to 2,625,000 shares of common stock. In connection with this
transaction, we relied upon the statutory exemption provided by Section 4(2) of
the Securities Act of 1933, because this issuance did not involve a public
offering.

         On December 22, 2000, Wattage Monitor entered into a Stock Purchase
Agreement in connection with the purchase of 2,750,000 shares of our common
stock. We received cash in the amount of $27,500 and executed promissory notes
in the aggregate amount of $720,500 under the agreement, which was made under
Rule 504 of Regulation D, promulgated under the Securities Act of 1933 as a
non-public offering solely to accredited investors.

         On November 28, 2000, Wattage Monitor entered into a Stock Purchase
Agreement in connection with the purchase of 25,600,000 shares of our common
stock. Under the terms of the Stock Purchase Agreement, Wattage Monitor was
required to deliver shares covered by an effective registration statement on the
closing date. In accordance with the terms of such agreement, on December 28,
2000 we received capital in the amount of $6,963,200 and delivered shares
registered under the Securities Act of 1933, as amended.

                                      16

<PAGE>

ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

         This Form 10-KSB contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. These forward-looking
statements, identified by words like "estimate", "expects" and similar terms,
are subject to various known and unknown risks and uncertainties, some of which
are beyond our control. These include (i) the volatile and competitive nature of
the Internet, (ii) changes in domestic economic, financial and electricity
market conditions and (iii) the effect of federal and state regulation on our
businesses and the electricity industry. Our actual results could differ
materially from any anticipated in such forward-looking statements, and we
undertake no obligation to revise or publicly release the results of any
revision to any forward-looking statement(s). For more information about the
above referenced risks and uncertainties, please see the SEC filings of Wattage
Monitor Inc., available from us upon request and/or from the SEC's web site at
http://www.sec.gov/cgi-bin/srch-edgar.

         As of March 11, 2002, we had approximately $805,600 of cash in our
accounts. At today's expenditure levels, that will carry us into the third
quarter of 2002, assuming nominal revenue. The Report of Independent Certified
                                           -----------------------------------
Public Accountants issued by our auditors, Grant Thornton LLP, references doubt
------------------
about our ability to continue as a going concern. In its efforts to ensure the
Company's continuing operations, Management has taken steps it believes are
sufficient to provide the Company with the ability to continue in existence.
Although we have substantially reduced our monthly operating expenditures and we
expect our revenues to grow, we believe we will need to obtain additional
financing in the next six months to cover our expenses as they will exceed
revenue. We cannot be sure that we will be able to secure the financing we will
require, or that it will be available on favorable terms.

         We receive fees from electricity suppliers for presenting residential
and commercial consumers with information about electric rates and allowing
consumers to order electricity from their chosen supplier. We make our
electricity news and information available to partner web sites via a data-feed,
and we may share revenue with these partner sites. We offer business services to
industry participants through our ability to develop and host private label
sites, assist with supplier marketing programs and provide customer service
implementation (switching) functionality. Finally, we provide electric market
research to electric utilities and others interested in this industry. We began
to generate revenue during the first quarter of 2000, and although revenue has
increased, the total revenue generated during the years ended December 31, 2000
and December 31, 2001 is not significant.

         By enrolling suppliers in the first half of 2000 we demonstrated the
last of the three criteria we initially established as necessary to prove our
business model: (a) creation of an information system; (b) demonstration that
consumers use our system/service; and (c) electricity supplier participation.
Our task now is to scale our business as competition spreads to generate
sufficient revenue to cover our costs.

         The first step in scaling our business was to secure and maintain
relationships with competing suppliers in territories with active competition.
We are now focused on the logical next step in scaling our business:
demonstrating our ability to generate significant revenue. While our
revenue-generating transactions have grown in the past year, they remain less
than our expenses. We continue pursuing additional ways to generate revenue.

         Our experience over the past several months, with both consumers
interested in switching their electricity service and suppliers revising their
strategies, has reflected a significant slowdown in the development of active
residential competition. To try to adjust to this residential slowdown, we
strengthened our small-medium size commercial switching activities. This
directly influenced our staffing and resource allocation.

                                      17

<PAGE>

         On September 30, 2001, we implemented changes we believe were
consistent with a less active competitive electricity market. We reduced our
emphasis on the residential sector and increased our service to the commercial
sector, all the while maintaining our ability to pursue a variety of
web/technology driven and data-sharing revenue opportunities. The net effect of
these changes was the reduction of our monthly expenditures, before depreciation
and amortization, by more than 40%.

         Having opened to competition on January 1, 2002, the Texas electricity
market represents our primary near term opportunity and will likely determine
our viability. With active relationships with a majority of the state's
competitive suppliers, we believe our market position is strong. However,
supplier marketing and advertising activities, over which we have no control, is
likely to determine if the Texas market will provide enough consumer switching
to support our business.

Liquidity and Capital Resources
-------------------------------

         On a month-to-month basis our expenditures exceed our revenue. That is
expected to continue for the remainder of the year and into 2003. Our existing
cash resources will allow us to continue at our current activity level into the
third quarter of 2002. Accordingly, our ability to continue as an operating
entity will require additional financing. The only likely source of such
financing, if it is available, will be through issuance of additional equity
securities that will result in substantial dilution to current shareholders.

RESULTS OF OPERATIONS - TWELVE MONTHS ENDED DECEMBER 31, 2001 VS. TWELVE MONTHS
-------------------------------------------------------------------------------
ENDED DECEMBER 31, 2000
-----------------------

         Revenue for 2001 rose more than 85% over 2000 revenue, from $33,830 to
$63,204. An examination of our revenue sources - transaction fees earned when
consumers switch electricity service through our site and fixed fees earned
under our "Powered By WM" relationships - reveals that the revenue change was
driven by our "Powered By WM" business. Launched in the fourth quarter of 2000,
our "Powered By WM" business generated more than $60,000 in revenues for the
year ended December 31, 2001, versus roughly $17,000 for 2000. Conversely, our
transaction fees dropped from almost $15,000 in 2000 to less than $2,500 for
2001. This decline in transaction fees was driven primarily by the market
factors discussed herein, including reduced marketing and sales activities by
competitive electricity suppliers in the second half of 2001, and the slower
than anticipated development of electricity competition in a number of states.

         Operating expenditures were consistent with our plans for both
twelve-month periods. Our year 2000 operating expenditures were $4,747,921, or
$395,660 per month, while our 2001 operating expenditures were $4,124,561, or
$343,713 per month - both within our anticipated range of $350,000 to $400,000.
While our spending was generally consistent over both years, our business worked
through quite different experiences in 2000 and 2001. After securing active
supplier participation in the first half of 2000, we spent substantial resources
in the second half of the year preparing our business to take advantage of our
market position as additional states stood ready to open to electricity
competition in 2001. Late 2000 and early 2001 saw higher than anticipated
monthly spending, driven by our expectation that certain deregulated and
deregulating electricity markets would experience a strong increase in market
activity and consumer switching. As we operated into the middle of 2001, those
circumstances did not materialize and we began adjusting our operations
accordingly. Consequently, 2000 was a generally building year, while 2001 was a
year generally spent reducing our activities to meet market conditions.

                                      18

<PAGE>

         Monthly expenditures of our operations group averaged approximately
$51,800 in 2001, vs. an average of approximately $89,400 in 2000. This roughly
42% reduction was driven by the savings associated with supporting our toll free
1-888-WATTAGE service in-house since the beginning of 2001 and the net
beneficial impact of staffing changes to support changing market circumstances.

         Year vs. year monthly system development expenditures were virtually
unchanged, at approximately $77,100 in 2001 and approximately $77,300 in 2000.
This result was predominantly driven by roughly equivalent spending during both
late-2000 and early-2001 to increase staffing and hardware/software to support
our developing "Powered By WM" business and prepare our systems to leverage the
data-feed and content value of our proprietary retail electricity rate
information.

         Expenditures supporting our marketing efforts averaged approximately
$70,300 per month in 2001, vs. an average of approximately $61,200 per month in
2000. This increase of roughly 15% was due to the cost of our adding senior
level expertise to our sales and marketing efforts outweighing the impact of
reduced consumer program spending in response to changing market conditions.
Included in all of 2001, but only partially in the last quarter of 2000, are the
salary and expenses of a senior sales person focused exclusively on our "Powered
By WM" opportunities and a vice president of marketing focused on leveraging our
supplier relationships to maximize higher revenue commercial switching activity
through our service.

         Monthly general and administrative expenses decreased roughly 24% from
approximately $139,400 in 2000 to approximately $105,700 in 2001. This change
was largely the result of two factors: (i) reduction in overhead associated with
our September 30, 2001 staffing and resource allocation changes, and (ii) lower
professional fees due to no 2001 financing activities. Depreciation and
amortization expense averaged approximately $38,800 for the year ended December
31, 2001, vs. approximately $28,400 per month for 2000. This roughly 36%
increase was substantially the result of amortization of development costs
related to the latest release/version of our web site, WM v3.0.

         Net interest and dividend income was $138,511 in 2001, up 90% from
$72,762 in 2000 as a result of higher cash balances in our interest bearing
accounts. A loss on disposal of assets of $46,008 resulted from our September
30, 2001 staffing and resource allocation changes.

                                      19

<PAGE>

ITEM 7 - FINANCIAL STATEMENTS.

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------

Board of Directors
Wattage Monitor Inc.

We have audited the accompanying balance sheet of Wattage Monitor Inc. (a
development stage company) as of December 31, 2001, and the related statements
of operations, stockholders' equity (deficit), and cash flows for the period
from inception (July 1, 1997) through December 31, 2001 and for the years ended
December 31, 2000 and 2001. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Wattage Monitor Inc. as of
December 31, 2001, and the results of its operations and its cash flows for the
period from inception (July 1, 1997) through December 31, 2001 and for the years
ended December 31, 2000 and 2001 in conformity with accounting principles
generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note B, the Company
incurred a net loss of $4,013,346 during the year ended December 31, 2001, and
as of that date has been unable to generate significant revenue or secure
additional financing. These factors, among others, as discussed in Note B to the
financial statements, raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans in these matters are also
described in Note B. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

/s/ GRANT THORNTON LLP

Reno, Nevada
January 30, 2002

                                      20

<PAGE>

                              Wattage Monitor Inc.
                          (a development stage company)

                                  BALANCE SHEET

                                December 31, 2001

                                     ASSETS

CURRENT ASSETS
  Cash and cash equivalents                                      $    1,390,320
  Accounts receivable                                                    21,152
  Prepaid expenses                                                       75,636
                                                                 --------------
           Total current assets                                       1,487,108
                                                                 --------------

PROPERTY AND EQUIPMENT, net                                             801,355
                                                                 --------------

OTHER ASSETS
  Patents and trademarks                                                 37,161
  Deposits                                                               18,626
                                                                 --------------
             Total other assets                                          55,787
                                                                 --------------

                                                                 $    2,344,250
                                                                 --------------

               LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
    Accounts payable                                             $       20,772
    Accrued liabilities                                                  80,175
                                                                 --------------
             Total current liabilities                                  100,947
                                                                 --------------
                                                                             --
COMMITMENTS                                                      --------------

STOCKHOLDERS' EQUITY
  Preferred stock, Series B, convertible; $0.01 par value,
    5,000,000 shares authorized, no shares
    issued and outstanding
  Common stock, $0.01 par value, 75,000,000 shares
    authorized, 44,396,520 shares issued and
    outstanding                                                         443,966
  Additional paid-in capital                                         18,828,253
  Note receivable received from the sale
    of common stock                                                    (720,500)
  Deficit accumulated during the development stage                  (16,308,416)
                                                                 --------------
    Total stockholders' equity                                        2,243,303
                                                                 --------------

                                                                 $    2,344,250
                                                                 ==============

         The accompanying notes are an integral part of this statement.

                                       21

<PAGE>

                              Wattage Monitor Inc.
                          (a development stage company)

                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                                     Cumulative
                                                                                                   from Inception
                                                       Year Ended December 31,                    (July 1, 1997) to
                                                      2000                2001                    December 31, 2001
                                            -----------------          ----------------          ------------------

<S>                                              <C>                       <C>                       <C>
Revenue                                          $     33,830              $     63,204              $       97,034

Operating expenses
   Operations                                    $  1,072,383              $    621,164              $    3,156,632
   System development                                 927,004                   925,388                   2,998,797
   Marketing                                          734,029                   843,817                   2,846,020
   General and administrative                       1,673,248                 1,312,555                   4,846,172
   Depreciation and amortization                      341,257                   466,129                   1,001,630
                                                 ------------              ------------              --------------

     Net loss from operations                     (4,714,091)               (4,105,849)                (14,752,217)
                                                 ------------              ------------              --------------

Other income (expense)
  Interest expense                                    (8,124)                         -                 (1,832,421)
  Interest and dividend income                         80,886                   138,511                     337,549
  Loss on disposal of assets                                -                  (46,008)                    (61,327)
                                                 ------------              ------------              --------------
                                                       72,762                    92,503                 (1,556,199)
                                                 ------------              ------------              --------------

     NET LOSS                                    $(4,641,329)              $(4,013,346)              $ (16,308,416)
                                                 ============              ============              ==============

Basic and diluted
  loss per common share                          $     (0.34)              $     (0.09)              $       (0.92)
                                                 ============              ============              ==============

Weighted average number of
  common shares outstanding                        13,836,659                44,396,520                  17,721,912
                                                 ============              ============              ==============
</TABLE>

        The accompanying notes are an integral part of these statements.

                                       22

<PAGE>

                              WATTAGE MONITOR INC.
                          (A DEVELOPMENT STAGE COMPANY)

                  STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
                                         Class I              Class II                  Series A                  Series B
                                    Membership Units       Membership Units           Preferred Stock           Preferred Stock
                                   -----------------       ----------------           ---------------          ----------------
                                    Units     Amount       Units      Amount         Shares      Amount         Shares     Amount
----------------------------------------------------------------------------------------------------------------------------------

<S>                              <C>          <C>         <C>         <C>                 <C>   <C>                 <C>   <C>
Inception, July 1, 1997                  -  $       -           -     $      -            -     $    -              -     $    -
Issuance of membership
    units                        5,000,000    450,000           -            -            -          -              -          -
Net loss                                 -          -           -            -            -          -              -          -

----------------------------------------------------------------------------------------------------------------------------------
Balances,
    December 31, 1997            5,000,000    450,000           -            -            -          -              -          -
Issuance of membership
    units, net offering cost             -          -     666,667      949,710            -          -              -          -
Beneficial conversion
    feature on debt                      -          -           -            -            -          -              -          -
Amortization of
    discount on debt                     -          -           -            -            -          -              -          -
Net loss                                 -          -           -            -            -          -              -          -
Recapitalization                (5,000,000)  (450,000)   (666,667)    (949,710)           -          -              -          -

----------------------------------------------------------------------------------------------------------------------------------
Balances,  December 31, 1998             -  $       -           -    $       -            -     $    -              -     $    -

==================================================================================================================================
</TABLE>

<TABLE>
<CAPTION>
                                                                                                            Deficit
                                                                                                          Accumulated
                                                              Add'l     Note Receivable     Unamortized    During the
                                       Common Stock          Paid-In       Issued for        Discount     Development
                                       ------------
                                      Shares    Amount       Capital     Common Stock         on Debt      Stage            Total
----------------------------------------------------------------------------------------------------------------------------------

<S>                                <C>         <C>       <C>               <C>              <C>          <C>            <C>
Inception, July 1, 1997                    -   $     -   $         -       $         -      $        -   $          -   $        -
Issuance of membership
    units                                  -         -             -                 -               -              -      450,000
Net loss                                   -         -             -                 -               -      (177,935)    (177,935)

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

Balances, December 31, 1997                -         -             -                 -               -      (177,935)      272,065
Issuance of membership
    units, net offering cost               -         -             -                 -               -              -      949,710
Beneficial conversion
    feature on debt                        -         -       880,000                 -       (880,000)              -            -
Amortization of discount on debt           -         -             -                 -         495,000              -      495,000
Net loss                                   -         -             -                 -               -    (2,591,399)  (2,591,399)
Recapitalization                   7,500,000    75,000     1,324,710                 -               -              -            -

-----------------------------------------------------------------------------------------------------------------------------------
Balances, December 31, 1998        7,500,000   $75,000   $ 2,204,710       $         -      $(385,000)   $(2,769,334)  $ (874,624)

===================================================================================================================================
</TABLE>

                         The accompanying notes are an integral part of these
                         statements.

                                       23

<PAGE>

                              Wattage Monitor Inc.
                          (a development stage company)

             STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT Continued)
<TABLE>
<CAPTION>

                                Class I             Class II                Series A                  Series B
                           Membership Units     Membership Units        Preferred Stock           Preferred Stock
                          -----------------     ----------------        ----------------          -----------------
                          Units     Amount       Units    Amount        Shares   Amount         Shares     Amount

-------------------------------------------------------------------------------------------------------------------
<S>                          <C>    <C>             <C>   <C>      <C>           <C>                   <C> <C>
Sale of common stock         -      $    -          -     $    -            - $       -                -   $     -
Exercise of stock options    -           -          -          -            -         -                -         -
Conversion of debt to
   common stock              -           -          -          -            -         -                -         -
Acquisition of
  Wattage Monitor Inc. -
  net of offering costs      -           -          -          -    1,000,000    10,000                -         -
Beneficial conversion
  feature on debt            -           -          -          -            -         -                -         -
Amortization of
  discount on debt           -           -          -          -            -         -                -         -
Exercise of warrants         -           -          -          -            -         -        3,500,000    35,000
Conversion of preferred
  stock to common stock      -           -          -          -  (1,000,000)  (10,000)                -         -
Net loss                     -           -          -          -            -         -                -         -

-------------------------------------------------------------------------------------------------------------------
Balances, December 31, 1999  -      $    -          -     $    -            - $       -        3,500,000   $35,000

===================================================================================================================

</TABLE>

<TABLE>
<CAPTION>
                                                                                                     Deficit
                                                                                                    Accumulated
                                                         Add'l        Note Receivable  Unamortized  During the
                                      Common Stock      Paid-In        Issued for        Discount   Development
                                      ------------
                                    Shares    Amount    Capital       Common Stock        on Debt      Stage     Total
----------------------------------------------------------------------------------------------------------------------------
<S>                              <C>         <C>        <C>           <C>              <C>          <C>          <C>
Sale of common stock                707,366  $   7,074  $    700,292  $          -     $       -    $       -    $  707,366
Exercise of stock options            14,100        141        13,959             -             -            -        14,100
Conversion of debt to
  common stock                    3,075,054     30,751     1,456,829             -             -            -     1,487,580
Acquisition of Wattage Monitor Inc.
  - net of offering costs           250,000      2,500     2,806,784             -             -            -     2,819,284
Beneficial conversion
  feature on debt                         -          -       880,000             -     (880,000)            -             -
Amortization of
  discount on debt                        -          -             -             -     1,265,000            -     1,265,000
Exercise of warrants                      -          -     3,465,000             -             -            -     3,500,000
Conversion of preferred
  stock to common stock           1,000,000     10,000             -             -             -            -             -
Net loss                                  -          -             -             -             -  (4,884,407)   (4,884,407)

----------------------------------------------------------------------------------------------------------------------------
Balances, December 31, 1999      12,546,520  $ 125,466  $ 11,527,574  $          -     $       - $(7,653,741)    $4,034,299

============================================================================================================================

</TABLE>

              The accompanying notes are an integral part of these statements.

                                      24

<PAGE>

                                     WATTAGE MONITOR INC.
                                 (A DEVELOPMENT STAGE COMPANY)

             STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT Continued)

<TABLE>
<CAPTION>
                                Class I             Class II                Series A               Series B
                           Membership Units     Membership Units        Preferred Stock        Preferred Stock
                          -----------------     ----------------        ----------------       -----------------
                          Units     Amount       Units    Amount        Shares  Amount         Shares     Amount

-----------------------------------------------------------------------------------------------------------------
<S>                           <C>    <C>             <C>  <C>              <C>  <C>                 <C> <C>

Sale of common stock          -      $   -           -    $  -             -    $    -               -  $      -

Conversion of preferred
  stock to common stock       -          -           -       -             -         -     (3,500,000)   (35,000)

Compensation expense
  on option grants            -          -           -       -             -         -               -          -

Net loss                      -          -           -       -             -         -               -          -

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

Balances, December 31, 2000   -      $   -           -    $  -             -    $    -     (3,500,000)  $(35,000)

=================================================================================================================

Compensation expense
  on option grants            -          -           -       -             -         -               -          -

Net loss                      -          -           -       -             -         -               -          -

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

Balances, December 31, 2001   -      $   -           -    $  -             -    $    -               -          -

=================================================================================================================
</TABLE>

<TABLE>
<CAPTION>
                                                                                                     Deficit
                                                                                                   Accumulated
                                                      Add'l       Note Receivable  Unamortized      During the
                                  Common Stock        Paid-In       Issued for       Discount      Development
                                 --------------
                                 Shares    Amount      Capital      Common Stock      on Debt        Stage         Total
----------------------------------------------------------------------------------------------------------------------------

<S>                          <C>         <C>         <C>             <C>             <C>               <C>       <C>
Sale of common stock         28,350,000  $ 283,500   $  7,218,864    $ (720,500)     $      -          $     -   $ 6,781,864

Conversion of preferred
    stock to common stock     3,500,000     35,000              -              -            -                -             -

Compensation expense
    on option grants                  -          -         37,323              -            -                -        37,323

Net loss                              -          -              -              -            -      (4,641,329)   (4,641,329)

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

Balances, December 31, 2000  44,396,520  $ 443,966   $ 18,783,761    $ (720,500)     $      -   $ (12,295,070)   $ 6,212,157

============================================================================================================================

Compensation expense
    on option grants                  -          -         44,492              -            -                -        44,492

Net loss                              -          -              -              -            -      (4,013,346)   (4,013,346)

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

Balances, December 31, 2001  44,396,520  $ 443,966   $ 18,828,253    $ (720,500)     $      -   $ (16,308,416)   $ 2,243,303

============================================================================================================================
</TABLE>

               The accompanying notes are an integral part of these statements.

                                       25

<PAGE>

                              WATTAGE MONITOR INC.
                          (A DEVELOPMENT STAGE COMPANY)

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                               Cumulative
                                                                                             from Inception
                                                         Year ended December 31,            (July 1, 1997) to
                                                      2000                   2001           December 31, 2001
                                                 ---------------        ---------------     ------------------
<S>                                              <C>                    <C>                 <C>
Cash flows from operating activities:
   Net loss                                      $  (4,641,329)         $  (4,013,346)      $    (16,308,416)
                                                 ---------------        ---------------     ------------------
   Adjustments to reconcile net loss to
   net cash used in operating activities:
     Write off of software license                            -                      -                184,875
     Loss on disposal of assets                               -                 46,008                 61,327
     Amortization of discount on debt                         -                      -              1,760,000
     Depreciation and amortization                      341,257                466,129              1,001,630
     Non-cash stock compensation                         37,323                 44,492                 81,815
     Changes in:
       Accounts receivable                             (21,502)                    350               (21,152)
       Prepaid expenses                                (28,903)               (17,077)               (75,635)
       Other assets                                    (21,476)                (2,364)               (59,607)
       Accounts payable                                 335,491              (744,543)              (220,549)
       Accrued liabilities                               31,199                  1,940                 80,175
       Accrued interest                                   8,124                (8,124)                 62,580
                                                 ---------------        ---------------     ------------------
         Total adjustments                              681,513              (213,189)              2,855,459
                                                 ---------------        ---------------     ------------------
         Net cash used in operating activities      (3,959,816)            (4,226,535)           (13,452,957)
                                                 ---------------        ---------------     ------------------

Cash flows from investing activities:
   Acquisitions of property and equipment             (529,714)              (232,202)            (1,804,047)
                                                 ---------------        ---------------     ------------------

Cash flows from financing activities:
   Deferred offering costs                                    -                      -                      -
   Issuance of membership units                               -                      -              1,399,710
   Issuance of notes payable to related parties         757,000                      -              2,486,000
   Payments on notes payable to related parties       (757,000)                      -            (1,061,000)
   Acquisition of Wattage Monitor, Inc.                       -                      -              2,819,284
   Common stock issued                                6,781,864                      -              7,489,230
   Series B preferred stock warrants exercised                -                      -              3,500,000
   Stock options exercised                                    -                      -                 14,100
                                                 ---------------        ---------------     ------------------
         Net cash provided by
         financing activities                         6,781,864                      -             16,647,324
                                                 ---------------        ---------------     ------------------

       NET INCREASE (DECREASE) IN
       CASH AND CASH EQUIVALENTS                      2,292,334            (4,458,737)              1,390,320
Cash and cash equivalents beginning of period         3,556,723              5,849,057                      -
                                                 ---------------        ---------------     ------------------
Cash and cash equivalents end of period          $    5,849,057         $    1,390,320      $       1,390,320
                                                 ---------------        ---------------     ------------------

Supplemental disclosure of non-cash
investing and financing activities:
   Software license agreement and development
   costs included in accounts payable            $            -         $            -      $         373,129
                                                 ---------------        ---------------     ------------------

   Notes payable converted to common stock       $            -         $            -      $       1,487,580
                                                 ===============        ===============     ==================
</TABLE>

   During the year ended December 31, 2000, notes receivable of $720,500 were
   received as partial payment for 2,750,000 shares of common stock.

        The accompanying notes are an integral part of these statements.

                                       26

<PAGE>

                              WATTAGE MONITOR INC.
                          (A DEVELOPMENT STAGE COMPANY)

                          NOTES TO FINANCIAL STATEMENTS

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF BUSINESS

1.   ORGANIZATION AND NATURE OF BUSINESS
     -----------------------------------

         WattMonitor LLC was organized by its members on July 1, 1997 in
Delaware. On February 26, 1999, Wattage Monitor Inc. (a Nevada corporation),
"the Company" acquired all of the membership units of WattMonitor LLC. For
accounting purposes, the acquisition is treated as a recapitalization with
WattMonitor LLC as the acquirer (a reverse acquisition). The financial
statements give retroactive effect to the conversion of members' equity into
common stock to reflect the recapitalization. The Company is a development stage
enterprise and plans to provide electrical rate information to commercial and
residential consumers nationwide. Revenue comes primarily from: (i) referral
fees and commissions charged to electricity suppliers who offer their products
and service through the Company, and (ii) business services provided to industry
participants through the Company's ability to develop and host private label web
sites, assist with supplier marketing programs and provide customer service
implementation (switching) software functionality in states with competition.

2.   REVENUE RECOGNITION
     -------------------

         Revenue from referral fees and commissions charged to electricity
suppliers ("transaction fees") are recognized when consumers switch electric
service through the Company. Revenue from business services provided to industry
participants ("fixed fees") are recognized in the month in which the service is
performed, provided that no significant Company obligations remain and
collection of the resulting receivable is probable.

         In December 1999, the U.S. Securities and Exchange Commission ("SEC")
issued Staff Accounting Bulletin 101, "Revenue Recognition" ("SAB 101"), which
provides guidance on the recognition, presentation, and disclosure of revenue in
financial statements filed with the SEC. SAB 101 outlines the basic criteria
that must be met to recognize revenue and provides guidance for disclosure
related to revenue recognition policies. The Company's revenue recognition
practices are in conformity with the guidelines prescribed in SAB 101.

3.   CASH EQUIVALENTS
     ----------------

         The Company considers all short-term investments with original
maturities of ninety days or less to be cash equivalents.

4.   DEPRECIATION AND AMORTIZATION
     -----------------------------

         Depreciation and amortization sufficient to relate the cost of
depreciable assets to operations over their estimated service lives is provided
using the straight-line method of depreciation.

                                       27

<PAGE>

                              WATTAGE MONITOR INC.
                          (A DEVELOPMENT STAGE COMPANY)

                   NOTES TO FINANCIAL STATEMENTS - (Continued)

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF BUSINESS -
(Continued)

5.   INCOME TAXES
     ------------
         Through February 26, 1999, the Company was not subject to income tax.
Income was taxed directly to its members. Accordingly, no provision has been
made for federal income tax. Further, because losses incurred have been reported
by the members, no operating losses are available to offset future income.

         After February 26, 1999, the Company provides for income taxes based
upon income reported for financial reporting purposes. Certain charges to
earnings will differ as to timing from those deducted for tax purposes. The tax
effect of those differences will be recorded as deferred income taxes.

6.   SOFTWARE LICENSE AND DEVELOPMENT COSTS
     --------------------------------------

         The Company has entered into several software license agreements to
enable customers to access information and order services provided via the
internet. Some of these agreements require the Company to pay an annual
maintenance fee. Additionally, the Company incurs software development costs to
tailor such software to its specific requirements. Such customization costs when
internally incurred or purchased from third parties are capitalized until the
project is substantially complete and ready for its intended use. License and
development costs are amortized straight-line over three years while maintenance
fees are charged to expense ratably over the contract period. Periodically,
management evaluates the estimated useful life of intangible assets based on
projected future undiscounted cash flows.

         The Company intends to provide its information services principally
over the internet through both licensed and custom software. No licensee fees
were paid in 2000 or 2001. In addition, the Company capitalized third party
payments for software customization of approximately $84,000 and $61,000 for the
years ended December 31, 2000 and 2001, respectively. The Company capitalized
internally incurred customization costs of $282,000 and $160,000 for the years
ended December 31, 2000 and 2001, respectively.

7.   PATENTS AND TRADEMARKS
     ----------------------

         The Company has applied for trademarks to limit the use by others of
WM, Wattage Monitor, Kilowatt Monitor, WattMonitor and ElectricEye. In 2000, the
Company received certificates of registration from the U.S. Patent and Trademark
Office for WM and Wattage Monitor. In 2001, the Company received a certificate
of registration from the U.S. Patent and Trademark Office for ElectricEye.
Trademark expenses will be amortized on the straight-line method over fifteen
years.

8.   ADVERTISING
     -----------

         The Company expenses advertising costs as incurred. Advertising expense
was $32,355 for 2000 and $5,534 for 2001.

                                       28

<PAGE>

                              WATTAGE MONITOR INC.
                          (A DEVELOPMENT STAGE COMPANY)

                   NOTES TO FINANCIAL STATEMENTS - (Continued)

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF BUSINESS -
(Continued)

9.   USE OF ESTIMATES
     ----------------

         In preparing these financial statements in conformity with accounting
principles generally accepted in the United States of America, management is
required to make estimates and assumptions. These affect the carrying value of
the Company's assets and liabilities, revenues and expenses during the reporting
period and disclosures relating to contingent assets and liabilities. Actual
results may differ from these estimates.

10.   CONCENTRATION OF CREDIT RISK
      ----------------------------

         Financial instruments which potentially subject the Company to credit
risk consist primarily of cash and cash equivalents. The Company maintains its
cash in bank deposit accounts which, at times, may exceed federally insured
limits. The Company believes it is not exposed to any significant credit risk
related thereto.

11.   RECLASSIFICATION
      ----------------

         Certain reclassifications have been made to the December 31, 2000
financial statements to conform with the December 31, 2001 presentation, which
have no effect on income.

12.   FAIR VALUE OF FINANCIAL INSTRUMENTS
      -----------------------------------

         The fair value of financial instruments approximates their carrying
amounts.

13.   DISCOUNT ON DEBT
      ----------------

         Costs incurred in connection with the issuance of debt are amortized
over the expected life of the debt. The Company also records a discount on its
debt for instruments issued with beneficial conversion features. Such discount
is amortized over the term of the debt using the effective interest method.

14.   BASIC AND DILUTED LOSS PER SHARE
      --------------------------------

         Basic loss per share excludes any dilutive effects of options, warrants
and convertible securities. Basic loss per share is computed using the weighted
average number of common shares outstanding, net of shares subject to
repurchase, during the period. Retroactive effect was given to common shares
issued to members of WattMonitor LLC upon completion of the recapitalization.
Dilutive loss per share is computed using the weighted average number of common
and common stock equivalent shares outstanding during the period; common stock
equivalent shares are excluded from the computation as their effect is
antidilutive. Common stock equivalent shares consisted of convertible preferred
stock, warrants and stock options. (See Notes E and F).

                                       29

<PAGE>

                              WATTAGE MONITOR INC.
                          (A DEVELOPMENT STAGE COMPANY)

                   NOTES TO FINANCIAL STATEMENTS - (Continued)

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF BUSINESS -
(Continued)

15.   New Accounting Pronouncements
      -----------------------------

         On July 20, 2001, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) 141, Business
Combinations, and SFAS 142, Goodwill and Intangible Assets. SFAS 141 is
effective for all business combinations completed after June 30, 2001. SFAS 142
is effective for fiscal years beginning after December 15, 2001; however,
certain provisions of this Statement apply to goodwill and other intangible
assets acquired between July 1, 2001 and the effective date of SFAS 142. Major
provisions of these Statements and their effective dates for the Company are as
follows:

      .  All business combinations initiated after June 30, 2001 must use the
         purchase method of accounting. The pooling of interest method of
         accounting is prohibited except for transactions initiated before July
         1, 2001.

      .  Intangible assets acquired in a business combination must be recorded
         separately from goodwill if they arise from contractual or other legal
         rights or are separable from the acquired entity and can be sold,
         transferred, licensed, rented or exchanged, either individually or as
         part of a related contract, asset or liability.

      .  Goodwill, as well as intangible assets with indefinite lives, acquired
         after June 30, 2001, will not be amortized. Effective January 1, 2002,
         all previously recognized goodwill and intangible assets with
         indefinite lives will no longer be subject to amortization.

      .  Effective January 1, 2002, goodwill and intangible assets with
         indefinite lives will be tested for impairment annually and whenever
         there is an impairment indicator.

      .  All acquired goodwill must be assigned to reporting units for purposes
         of impairment testing and segment reporting.

         The Company does not believe that SFAS 142 will have a material impact
         upon adoption.

         In August 2001, the Financial Accounting Standards Board issued SFAS
144, Accounting for the Impairment or Disposition of Long Lived Assets. This
Statement supersedes SFAS 121, Accounting for the Impairment of Long-lived
Assets and for Long-lived Assets to be Disposed of, and the accounting and
reporting provisions of Accounting Principles Board Opinion No. 30, Reporting
Results of Operations - Reporting the Effect of Disposals on a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions for the disposal of a business segment. This statement retains the
fundamental provisions of SFAS 121 for recognition and measurement of
impairment, but amends the accounting and reporting standards for segments of
business to be disposed of. The provisions of this Statement are required to be
adopted no later than fiscal years beginning after December 31, 2001, with early
adoption encouraged. We are currently evaluating the impact of the adoption of
SFAS 144 but do not expect its impact to be material to the Company's financial
position or results of operations.

                                       30

<PAGE>

                              WATTAGE MONITOR INC.
                          (A DEVELOPMENT STAGE COMPANY)

                   NOTES TO FINANCIAL STATEMENTS - (Continued)

NOTE B - REALIZATION OF ASSETS

         The accompanying financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of America,
which contemplate continuation of the Company as a going concern. However, the
Company has sustained substantial losses from operations in recent years, and
such losses have continued during the unaudited quarter ended March 31, 2002.
In addition, the Company has used rather than provided, cash in its operations.
At December 31, 2001, the Company does not have cash sufficient to support
operations for a full year.

         In view of the matters described in the preceding paragraph,
recoverability of a major portion of the recorded asset amounts shown in the
accompanying balance sheet is dependent upon continued operations of the
company, which is in turn dependent upon the Company's ability to generate
significant revenue or obtain additional financing. The financial statements do
not include any adjustments relating to the recoverability and classification of
recorded asset amounts or amounts and classification of liabilities that might
be necessary should the Company be unable to continue in existence.

         In its efforts to ensure the Company's continuing operations,
Management has taken steps it believes are sufficient to provide the Company
with the ability to continue in existence. Management has substantially reduced
the Company's operating expenditures, enhanced the Company's market position
and begun pursuing additional financing opportunities. Specifically, over
the past six months, the Company has reduced its monthly operating expenditures
by approximately 40% while maintaining its ability to pursue its primary revenue
generating opportunities. While the circumstances positively affect the
Company's ability to continue operations, the Company believes it must obtain
additional financing to operate through the next twelve months. There is no
assurance that such financing will be available or available at terms acceptable
to the Company.

NOTE C - RELATED PARTY TRANSACTIONS

         During 2000, the Company purchased approximately $4,900 of equipment
from Kirshenbaum, Bond & Partners, the principals of which have an ownership
interest in the Company; a former partner is also a director of the Company.

         During the fourth quarter of 2000, certain stockholders and related
entities loaned the Company $757,000 with interest payable at 12% per annum. The
notes were repaid prior to year-end. In connection with these notes, the Company
issued warrants to the stockholders to purchase 497,795 shares of common stock
at $0.272 per share, exercisable immediately.

                                       31

<PAGE>

                              WATTAGE MONITOR INC.
                          (A DEVELOPMENT STAGE COMPANY)

                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)

NOTE D - PROPERTY AND EQUIPMENT

         Property and equipment consisted of the following at December 31, 2001:

<TABLE>
<CAPTION>

                                                                                  Lives
                                                                           -------------
<S>                                                         <C>              <C>

                       Furniture and equipment                245,150        5-7 years
                                      Software              1,355,498          3 years
                                                    -------------------
                                                            1,600,648
                 Less accumulated depreciation
                              And amortization               (799,293)
                                                    -------------------

                                                            $ 801,355
                                                    ===================
</TABLE>

NOTE E - STOCKHOLDERS' EQUITY (DEFICIT)

         In January 1999, WattMonitor LLC sold 37,777 membership units.

         On February 26, 1999, Wattage Monitor Inc. (a Nevada corporation)
acquired all of the equity (membership units) of WattMonitor LLC. For accounting
purposes, the acquisition is treated as a recapitalization with the WattMonitor
LLC as the acquirer (a reverse acquisition). Pro forma information is not
presented since the acquisition is not a business combination. The members
exchanged their membership units for 7,550,450 shares of common stock
(approximately 72% of the outstanding common stock) of Wattage Monitor Inc. In
addition, each member, other than the controlling members, was entitled to
acquire such number of shares of common stock at $1.00 per share as necessary to
maintain the same ownership percentage in Wattage Monitor Inc. as such member
held in WattMonitor LLC. In connection with this right, 657,366 shares were
issued. Also, in connection with the recapitalization, all employees exchanged
their contingent membership interests for stock options to purchase 918,000
shares of Wattage Monitor Inc. exercisable at $1.00 per share.

         Certain stockholders of Wattage Monitor Inc. advanced approximately
$500,000 in January 1999, which, along with $500,000 advanced in 1998, was
converted into 2,750,000 shares of common stock in 1999. In October 1999, notes
payable and accrued interest of $487,580 were converted to 325,054 shares of
common stock.

         In connection with its recapitalization, Wattage Monitor Inc. issued
1,000,000 shares of Series A 6% Convertible Preferred Stock for $3,000,000. The
Series A 6% Preferred Stock accrues dividends at 6% per annum, payable annually,
commencing on February 26, 2000. The dividend at the option of the Company may
be paid in common stock. Each share of Series A 6% Preferred Stock was
convertible into one share of common stock upon the occurrence of certain
events.

                                       32

<PAGE>

                              WATTAGE MONITOR INC.
                          (A DEVELOPMENT STAGE COMPANY)

                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)

NOTE E - STOCKHOLDERS' EQUITY (DEFICIT) - (CONTINUED)

         In 1999, 1,000,000 Series B warrants were exercised to purchase
3,500,000 shares of Series B Convertible Preferred Stock at $1.00 per share.
Each share of Series B Preferred Stock was convertible into one share of common
stock. During 2000, 3,500,000 shares of the Series B Preferred were converted
into common stock. Pursuant to their respective terms, upon exercise of the
Series B warrants, the Series A Convertible Preferred Stock was converted to
1,000,000 shares of common stock.

         In connection with the merger, a warrant was issued to the holder of
250,000 shares of preferred stock which represents the right to purchase 100,000
shares of common stock at $1.00 per share. Also, warrants to purchase 449,999
shares of common stock at $1.50 per share are outstanding. These warrants were
issued in connection with notes payable to related parties which were repaid
during the year ended December 31, 1999.

         In December 2000, 25,600,000 shares of our common stock were issued for
$6,963,200 ($0.272 per share) under a Stock Purchase Agreement entered into on
November 28, 2000. Also, in December 2000, 2,750,000 shares of common stock were
issued to certain stockholders under a Stock Purchase Agreement entered into on
December 22, 2000 for a combination of cash and notes receivable totaling
$748,000 ($0.272 per share).

         In connection with certain debt issued in the fourth quarter of 2000,
warrants to purchase 497,795 shares of common stock at $0.272 share were issued.

         The 2,750,000 shares issued to certain stockholders are subject to the
Company's right to repurchase them, exercisable solely at its discretion, at the
price at which they were sold if a purchasing employee's employment is
terminated for any reason before the end of the repurchase period. The Company
can repurchase a percentage of the purchaser shares equal to a fraction, the
numerator which is the difference between the repurchase period and the number
of whole months passed since the date of the Purchase Agreement and the
denominator of which shall be the repurchase period. The repurchase period was
48 months for one employee who purchased 2,500,000 shares. The repurchase period
was 12 months for the remaining two employees who purchased an aggregate of
250,000 shares. Generally accepted accounting principles require that stock
issued in exchange for a non-recourse note be treated as a stock option and be
accounted for accordingly.

The shares subject to repurchase are as follows:
                          As of December 31, 2001                  1,875,000
                                             2002                  1,250,000
                                             2003                    625,000

                                       33

<PAGE>

                              WATTAGE MONITOR INC.
                          (A DEVELOPMENT STAGE COMPANY)

                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)

NOTE F - CONTINGENT MEMBERSHIP INTERESTS/STOCK OPTIONS

         Contingent membership interests in an LLC are similar to stock options
in a corporation. Pursuant to a formal plan, the Board granted various employees
and other individuals contributing to the success of the organization,
contingent membership interests. In conjunction with the recapitalization, all
such contingent membership interests were exchanged for stock options under
Wattage Monitor Inc.'s incentive stock option plan. The plan allows for
8,989,980 shares of common stock to be granted. In the three months prior to the
recapitalization, Wattage Monitor issued employee stock options totaling 370,000
exercisable at $1.00 per share. Compensation expense related thereto was
immaterial.

         The Company has adopted the disclosure-only provisions of SFAS No.123,
Accounting for Stock-Based Compensation, but applies Accounting Principles
Board Opinion No. 25 and related interpretations in accounting for stock
options.

         The fair value of the Company's stock options was estimated as of the
grant date using the Black-Scholes option pricing model with the following
weighted average assumptions for the years ended December 31, 2000 and 2001:
dividend yield of 0.0%, expected volatility of 150%, risk free interest rate of
6.0% and 2.2% respectively, and an expected holding period from three to four
years.

         The weighted-average fair value of options granted during the year
ended December 31, 2001 was $0.24. Options vest over either 36 or 48 months,
with certain board member options vesting immediately upon grant.

         Based on these assumptions and taking into account the related
compensation expense, the Company's results would have been as follows:

                                                       2001          2000
                                                  ----------------------------
                Net loss:
                    As reported                     4,013,346      4,641,329
                    Pro forma                       5,590,231      4,930,349
                Net loss per share:
                    As reported                          0.09           0.34
                    Pro forma                            0.13           0.36

                                       34

<PAGE>

                              WATTAGE MONITOR INC.
                          (A DEVELOPMENT STAGE COMPANY)

                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)

NOTE F - CONTINGENT MEMBERSHIP INTERESTS/STOCK OPTIONS - (CONTINUED)

         Presented below is a summary of the status of the stock options after
giving retroactive effect to the recapitalization.

                                                          Weighted
                                                          Average
                                                          Exercise
                                                           Price
                                                       -------------
Balance at December 31, 1997             225,000           $ 1.00
     Granted                             621,300             1.00
     Forfeited/expired                     (450)             1.00
Balance at December 31, 1998             845,850             1.00
     Granted                             214,600             3.49
     Forfeited/expired                  (66,200)             1.10
     Exercised                          (14,100)             1.00
Balance at December 31, 1999             980,150             1.54
     Granted                           4,892,050             0.36
     Forfeited/expired                  (89,500)             1.76
Balance at December 31, 2000           5,782,700             0.44
     Granted                           1,600,500             0.27
     Forfeited/expired                 (506,000)             0.99

Balance at December 31, 2001           6,877,200           $ 0.44
                                     -------------      ---------------

<TABLE>
<CAPTION>
                                                     Weighted                     Weighted
                       Range of                      Average                       Average
                       Exercise       Options      Contractual      Options        Exercise
                        Prices      Outstanding       Life        Exercisable       Price
                    ---------------------------------------------------------------------------
<S>                  <C>              <C>             <C>           <C>              <C>
December 31, 2000    Up to $1.00      5,430,600       9.62          655,469          0.50

                     1.22 - 2.50        215,600       9.20           44,748          1.78

                     3.13 - 3.78         40,000       8.75           16,667          3.50

                     3.79 - 4.50         62,500       8.74           60,833          4.47

                     6.13 - 7.87         34,000       8.23           15,250          6.23
                                  -------------------------------------------------------------
                                      5,782,700       9.58          792,967          0.44
                                  -------------------------------------------------------------
</TABLE>

                                       35

<PAGE>

                              WATTAGE MONITOR INC.
                          (A DEVELOPMENT STAGE COMPANY)

                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)

NOTE F - CONTINGENT MEMBERSHIP INTERESTS/STOCK OPTIONS - (CONTINUED)

<TABLE>
<CAPTION>
                                                        Weighted                            Weighted
                      Range of                           Average                            Average
                      Exercise          Options        Contractual        Options           Exercise
                       Prices         Outstanding         Life          Exercisable          Price
                   --------------------------------------------------------------------------------------
<S>                 <C>                 <C>               <C>             <C>                <C>
December 31, 2001   Up to $1.00         6,628,600         8.74            4,071,830          0.36

                    1.25 - 2.50           177,600         8.17               82,804          1.83

                    3.13 - 3.78            40,000         7.75               30,000          3.50

                       4.50                30,000         7.75               30,000          4.50

                    6.13 - 7.87             1,000         7.45                  646          7.87
                                    ---------------------------------------------------------------------

                                        6,877,200         8.71            4,215,280          0.44
                                    ---------------------------------------------------------------------
</TABLE>

NOTE G - EMPLOYEE BENEFIT PLANS

         The Company adopted a 401(k) retirement plan (the "plan") effective
January 1, 1998, which provides for employee salary deferrals limited to 25% of
a participant's compensation and for discretionary Company contributions. The
plan year ends on December 31st. The plan covers employees who have completed
one month of service and have attained the minimum age requirement, as defined
in the plan. The Company made no contributions in 2000 or 2001.

NOTE H - LEASE COMMITMENTS

         The Company leases its office space and certain computer equipment
under non-cancelable operating leases, which expire through 2004. The Company
has options to extend the leases for additional lease periods. Total rent
expense for the years ended December 31, 2000 and 2001 was $128,772 and
$178,087, respectively.

         The following is a schedule of the future minimum lease payments under
the operating leases, as of December 31, 2001:

                         2002                               $ 166,900
                         2003                                 186,850
                         2004                                  47,800
                                                         -------------

        Net minimum lease payments                          $ 401,550
                                                         =============

                                       36

<PAGE>

                              WATTAGE MONITOR INC.
                          (A DEVELOPMENT STAGE COMPANY)

                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)

NOTE I - INCOME TAXES

         No provision for federal and state income taxes has been recorded as
the Company has incurred net operating losses through December 31, 2001.

         The following table sets forth the primary components of deferred tax
assets:

                  Net operating loss carryforwards                 $  4,389,500
                  Difference between book and tax basis
                      of property                                       150,000
                  Nondeductible reserves                                 10,500
                                                                  -------------
                  Gross deferred tax assets                           4,550,000
                  Valuation allowance                              (  4,550,000)
                                                                  -------------

                                                                   $          -
                                                                  -------------

         At December 31, 2001, the Company fully reserved its deferred tax
assets. The Company believes sufficient uncertainty exists regarding the
realizability of the deferred tax assets such that a full valuation allowance is
required. At December 31, 2001, the Company had approximately $13 million of
federal net operating loss carryforwards for tax reporting purposes available to
offset future taxable income; such carryforwards will expire beginning in 2012.
The utilization of the net operating loss carryforwards may be subject to
certain limitations under Section 382 of the Internal Revenue Code of 1986, as
amended.

NOTE J - EMPLOYMENT CONTRACT

         The Company has an employment contract with its President. The
agreement continues until terminated by the individual or the Company, and
provides for severance payments under certain circumstances. Effective January
1, 2002, Mr. Alderson's base salary was reduced to $100,000 per year from
$150,000 per year, and is subject to an annual adjustment at the discretion of
our board of directors. Under the terms of the agreement, Mr. Alderson is
eligible to receive a bonus for services rendered, subject to the discretion of
our board of directors. In the event we terminate Mr. Alderson's employment for
any reason other than "for cause", then Mr. Alderson will be entitled to receive
a lump sum termination payment equal to two years' base salary. In conjunction
with the agreement to reduce his compensation to $100,000 per year, the $200,000
severance payment to Mr. Alderson was funded. The funds are under his control.
The $200,000 severance payment was expensed in the first quarter of 2002.

                                       37

<PAGE>

ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

         None.

                                       38

<PAGE>

                                    PART III

ITEM  9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
          COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

         The following table sets forth certain information with respect to our
directors and executive officers as of December 31, 2001:

<TABLE>
<CAPTION>
Name                              Age       Company Position and Offices Held
---------------------------       ---       -----------------------------------------------------
<S>                                <C>      <C>
Stephen D. Klein                   42       Chairman of the Board of Directors
Gerald R. Alderson                 55       President,   Chief  Executive   Officer  and Director
Alexander Ellis III                52       Secretary and Director
Jeffrey I. Halpern                 37       Vice President - Marketing
Christopher M. Hardage             34       Vice President - Technology
</TABLE>

         Stephen D. Klein, age 42, is the Chairman of the Board and a founder
of Wattage Monitor.  He is not an employee.  Presently, Mr. Klein serves as
Chief Executive Officer and Director of ActiveBuddy, Inc., a software firm
developing technology for the creation and deployment of interactive agents.
Since 1987, he has served as founder/chairman of iballs internet media,
presently Avenue A/NYC, which he sold to Avenue A Inc. (NASDAQ: AVEA) in
September 1999.  From 1987-1999, he served as a Managing Partner and Director
of Media and Interactive Services of Kirshenbaum Bond & Partners, one of the
country's most successful independent advertising agencies.  Mr. Klein has a
B.A. in English from Columbia University.

         Gerald R.  Alderson, age 55, is a founder and President of Wattage
Monitor.  Between 1982 and the founding of Wattage Monitor in mid-1997, Mr.
Alderson held a variety of positions with Kenetech Corporation, including as
its President and Chief Executive Officer.  He received his B.A.  from
Occidental College and his M.B.A. from Harvard University Graduate School of
Business Administration.

         Alexander Ellis III, age 52, has served as a Vice President for the
Company since it was founded in mid-1997, and is currently the Company's
Secretary. From 1990 until joining the Company, he held a number of management
positions at Kenetech Corporation, including as its Vice President of Marketing.
Between 1989 and 1990, he was Vice President Corporate Accounts at Knoll
International, Inc. Mr. Ellis is a member of RockPort Partners, LLC, a small
merchant banking firm and RockPort Capital Partners, LLC, a private equity fund
focused on energy and environmental technologies. Mr. Ellis received his B.A.
from Colorado College and his Masters in Public and Private Management from the
Yale School of Organization and Management.

         Jeffrey I. Halpern, age 37, has served as Vice President of Marketing
for the Company since March of 2001. From February 1999 until joining the
Company, Mr. Halpern was Director of Marketing for the Archway-Mother's Cookie
Companies, the third largest cookie company in the U.S. For two years prior to
that, Mr. Halpern was Vice President of Swinglab LLC, maker of the world's first
automated golf training system. From September of 1995 through September of
1997, Mr. Halpern managed retail market launches for Pacific Bell Mobile
Services. Throughout his career, he has held a variety of marketing and finance
positions with major consulting, technology and consumer packaged goods
companies. Mr. Halpern received his A.B. from Brown University and his M.B.A.
from the Stanford University Graduate School of Business.

                                       39

<PAGE>

         Christopher M.  Hardage, age 34, has served as Vice President -
Technology for Wattage Monitor since December of 2001, and before that served
as a Senior Web Developer since joining Wattage Monitor in April of 2000.  As a
Principal Consultant for Oracle Corporation from February of 1995 until joining
the Company, Mr.  Hardage focused on the creation and implementation of
web-based business solutions.  Prior to serving with Oracle Corporation, Mr.
Hardage was a Systems Engineer for Electronic Data Systems.  Mr. Hardage
received his B.S. in Physics from Texas Christian University.

         All directors hold office until the next annual meeting of shareholders
and until their successors are duly elected and qualified. All directors have
held office since the Company's merger with WattMonitor LLC on February 26,
1999. Officers are elected on an annual basis by the Board of Directors and
serve at the discretion of the Board.

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS.

         During the last five years, none of the directors, executive officers
or control persons of Wattage Monitor have been:

         .  A party to a bankruptcy proceeding;

         .  Convicted in a criminal proceeding;

         .  Subject to any order, judgment or decree permanently or temporarily
            enjoining, barring, suspending or otherwise limiting his
            involvement in any type of business, securities or banking
            activities; or

         .  Found to have violated a federal or state securities or commodities
            law.
                                       40

<PAGE>

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES ACT.

         Section 16 of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers, and beneficial owners of more than 10%
of any class of the Company's registered equity securities to file with the
Securities and Exchange Commission initial reports of beneficial ownership
(Form 3) and reports of changes in beneficial ownership (Forms 4 and 5) of the
Company's common stock and other equity securities of the Company. Officers,
directors and greater than 10% beneficial owners are required by Securities and
Exchange Commission regulation to furnish the Company with copies of all
Section 16(a) reports they file.

         To the Company's knowledge, all directors, officers and beneficial
owners of more than 10% of any class of the Company's registered equity
securities, filed all reports required of Section 16(a) of the Securities
Exchange Act of 1934 during the fiscal year ending December 31, 2001, with the
exception of the following:

<TABLE>
<CAPTION>

                                     Number of        Number of Transactions Not
Name                              Late Reports        Reported on a Timely Basis
---------------------------------------------------------------------------------

<S>                                          <C>                               <C>
Gerald R. Alderson (1), (2)                  4                                 5

Stephen D. Klein (1)                         3                                 4

Alexander Ellis, III (1)                     3                                 3

Vicki L. Center (1), (3)                     2                                 5

John D. Westfield (1), (3)                   2                                 2

Robert E. Forrest (1)                        1                                 2

Jeffrey I. Halpern (3)                       1                                 2

</TABLE>

         (1)  The named officer, director or greater than 10% shareholder, as
              applicable, did not file a Form 4 (Statement of Changes in
              Beneficial Ownership) with respect to stock options and or
              warrants received. However, the named individual subsequently late
              filed a Form 5 (Annual Statement of Changes in Beneficial
              Ownership) in January of 2002.

         (2)  Mr. Alderson did not file a Form 4 (Statement of Changes in
              Beneficial Ownership) with respect to his transfer of 150,000
              shares of his restricted common stock to settle a Placement Agent
              dispute on behalf of the company. However, Mr. Alderson
              subsequently late filed a Form 5 (Annual Statement of Changes in
              Beneficial Ownership) in January of 2002.

         (3)  The named officer, director or greater than 10%
              shareholder, as applicable, did not file a Form 3 (Initial
              Statement of Beneficial Ownership). However, the named
              individual subsequently late filed a Form 5 (Annual Statement of
              Changes in Beneficial Ownership) in January of 2002.

                                       41

<PAGE>

ITEM 10 - EXECUTIVE COMPENSATION.

SUMMARY COMPENSATION TABLE.

         The following table sets forth all compensation awarded to our Chief
Executive Officer and our other executive officers in fiscal years 2001, 2000
and 1999:

<TABLE>
<CAPTION>

                                                               Annual                       Long Term
                                                            Compensation               Compensation Awards
                                                            ------------               -------------------
Name and Principal Position                 Year               Salary             Securities Underlying Options
--------------------------------------      ----               ------             -----------------------------
<S>                                         <C>               <C>                          <C>
Gerald R. Alderson....................      2001              $ 150,000                       10,000
    President, Chief Executive              2000              $ 150,000                       10,000
    Officer and Director                    1999              $ 150,000                       10,000

Vicki L. Center (1)...................      2001              $ 136,550                          ---
    Vice President - Marketing              2000              $ 140,000                      375,000
                                            1999              $ 140,000                          ---

Alexander Ellis, III..................      2001              $  96,750                       10,000
    Vice President - Strategic              2000              $ 125,000                      210,000
    Development                             1999              $ 125,000                       10,000

Robert E. Forrest (2).................      2001              $ 135,000                          ---
    Vice President - Operations             2000              $ 100,000                      375,000
                                            1999              $  90,000                          ---

Jeffrey I. Halpern....................      2001              $ 144,600                    1,500,000
    Vice President - Marketing

</TABLE>

     (1)  Ms. Center was not reappointed as an executive officer for 2002.
     (2)  Mr. Forrest resigned his position as an executive officer and employee
          of the Company on March 14, 2002.

                                       42

<PAGE>

OPTION GRANTS IN 2001.

         Set forth below is information on grants of stock options for our
executive officers for the fiscal year ended December 31, 2001.

<TABLE>
<CAPTION>

                                                           Individual Grants
                                   ------------------------------------------------------------------
                                       Number of        % of Total
                                      Securities      Options Granted
                                       Underlying      to Employees        Exercise        Expiration
Name                                 Options Granted      in 2000       Price per Share       Date
-------------------------------    -----------------  ---------------   ---------------    ----------

<S>                                      <C>               <C>              <C>             <C>
Gerald R. Alderson
    Granted Dec. 2001 (1)......          10,000            10.0%            $ 0.05          12/03/11

Alexander Ellis, III
    Granted Dec. 2001 (1)......          10,000            10.0%            $ 0.05          12/03/11

</TABLE>

     (1)  Options were granted on December 3, 2001 and were fully exercisable
          on December 4, 2001.

AGGREGATED OPTION EXERCISES IN 2001 AND YEAR END OPTION VALUES.

         Set forth below is information with respect to the stock options held
by our executive officers at December 31, 2001.

<TABLE>
<CAPTION>

                                                                    Number of                    Value of
                                                              Securities Underlying             Unexercised
                                 Shares                        Unexercised Options         In-The-Money Options
                                Acquired        Value         at December 31, 2001         at December 31, 2001
Name                           on Exercise     Realized      Exercisable/Unexercisable    Exercisable/Unexercisable
---------------------------    -----------     --------      ------------------------------------------------------

<S>                                <C>           <C>           <C>                               <C>
Gerald R. Alderson.........        ---           ---               30,000 / 0                    $ 0 / $ 0

Vicki L. Center............        ---           ---            193,750 / 306,250                $ 0 / $ 0

Alexander Ellis, III.......        ---           ---            342,500 / 187,500                $ 0 / $ 0

Robert E. Forrest..........        ---           ---            193,750 / 306,250                $ 0 / $ 0

Jeffrey I. Halpern.........        ---           ---           367,500 / 1,132,500               $ 0 / $ 0

</TABLE>

                                       43

<PAGE>

DIRECTOR COMPENSATION.

         Compensation of directors consists solely of reimbursement of their
expenses for attending meetings. Additionally, each director receives
immediately exercisable stock options to purchase 10,000 shares of our common
stock on the date of the annual meeting of our shareholders except that in 1999
the grant occurred on September 30, 1999.

EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS.

         On January 1, 1998, WattMonitor LLC, as our predecessor, entered into
an Employment Agreement with Mr. Alderson. On February 26, 1999, we assumed Mr.
Alderson's employment agreement. Mr. Alderson's initial employment term expired
on December 31, 2000, but automatically renewed for a one-year period expiring
on December 31, 2001. The Agreement will be automatically renewed for an
unlimited series of one-year periods unless either party notifies the other.

         Effective January 1, 2002, Mr. Alderson's base salary was reduced to
$100,000 per year from $150,000 per year, and is subject to an annual
adjustment at the discretion of our board of directors. Under the terms of the
agreement, Mr. Alderson is eligible to receive a bonus for services rendered,
subject to the discretion of our board of directors. In the event we terminate
Mr.  Alderson's employment for any reason other than "for cause", then Mr.
Alderson will be entitled to receive a lump sum termination payment equal to
two years' base salary. In conjunction with the agreement to reduce his
compensation to $100,000 per year, the $200,000 severance payment to Mr.
Alderson was funded.  The funds are under his control. The $200,000 severance
payment was expensed in the first quarter of 2002.

         In the event we experience a change in control and Mr. Alderson
resigns, or is terminated, within six months of the change in control Mr.
Alderson will be entitled to receive two years base salary, payable in one lump
sum. He will also be entitled to receive a payment equal to the greater of his
bonuses for the three years prior to the termination or eighteen months base
salary. In no event will this termination payment exceed 2.99 times Mr.
Alderson's average annual cash compensation during the five years prior to his
termination.

         Effective upon his joining the Company in March of 2001, the Company
entered into a severance arrangement with Mr. Halpern. All provisions of the
agreement are contingent upon the Company's first achieving a total
stockholders' equity of $25 million or greater. Under the terms of the
arrangement, Mr. Halpern is entitled to receive his then salary and benefits
for a maximum of six months from the date he is either terminated without cause
or terminates his own employment within ninety days of the Company experiencing
a change in control.

ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The following table sets forth certain information regarding
beneficial ownership of our common stock as of March 11, 2002 as follows:

         .  By each person who is known by Wattage Monitor to beneficially own
            more than 5% of Wattage Monitor's common stock, fully diluted;
         .  By each of Wattage Monitor's directors;
         .  By each officer named under "Directors, Executive Officers,
            Promoters and Control Persons"; and
         .  By all officers and directors
            as a group.

                                       44

<PAGE>

         Beneficial ownership is determined in accordance with the rules
promulgated by the SEC and the information is not necessarily indicative of
beneficial ownership for any other purpose. This table is based upon
information supplied to us by officers, directors and principal stockholders.
Except as otherwise indicated, we believe that the persons or entities named in
the table have sole voting power with respect to all shares of our common stock
shown as beneficially owned by them, subject to community property laws where
applicable.

         The table should be read in conjunction with the information that
immediately follows it. The percentages set forth in the table assume
44,396,520 shares of common stock outstanding as of March 11, 2002.

<TABLE>
<CAPTION>

                                            Number of Shares of
                                               Common Stock             Percentage of
Name and Address of Beneficial Owner        Beneficially Owned       Beneficial Ownership
------------------------------------        ------------------       --------------------

<S>                                              <C>                          <C>
WPG Raytheon Software Fund, L.P.                 9,202,838                    20.7%
c/o Weiss, Pecks & Greer, LLC
565 Fifth Avenue, 14th Floor
New York, NY  10017

WPG Institutional Software Fund, L.P.            7,484,961                    16.9%
c/o Weiss, Pecks & Greer, LLC
565 Fifth Avenue, 14th Floor
New York, NY  10017

WPG Software Fund, L.P.                          5,235,730                    11.8%
c/o Weiss, Pecks & Greer, LLC
565 Fifth Avenue, 14th Floor
New York, NY  10017

Gerald R. Alderson (1)                           4,041,332                     9.1%
c/o Wattage Monitor
1475 Terminal Way, Suite B
Reno, NV 89502

Robert H. Lessin (2)                             3,734,120                     8.3%
c/o Wit Capital
826 Broadway, 6th Floor
New York, NY 10003

PurchasePro.com, Inc.                            3,676,471                     8.3%
3291 N. Buffalo Drive
Las Vegas, NV  89129

Stephen D. Klein (3)                             1,385,391                     3.1%
c/o ActiveBuddy, Inc.
24 West 25th Street
New York, NY 10010

</TABLE>

                                       45

<PAGE>

<TABLE>
<CAPTION>

                                           Number of Shares of
                                              Common Stock              Percentage of
Name and Address of Beneficial Owner       Beneficially Owned       Beneficial Ownership
------------------------------------       ------------------       --------------------

<S>                                             <C>                          <C>
Jeffrey I. Halpern (4)                            368,500                        *
c/o Wattage Monitor
1475 Terminal Way, Suite B
Reno, NV 89502

Alexander Ellis, III (5)                          342,500                        *
c/o Wattage Monitor
1475 Terminal Way, Suite B
Reno, NV 89502

Christopher M. Hardage (6)                         10,320                        *
c/o Wattage Monitor
1475 Terminal Way, Suite B
Reno, NV 89502

All Officers and Directors (5 persons)          6,148,047                    13.5%

     *  Less than one percent (1.0%)

</TABLE>

     (1)  Includes an aggregate of 211,421 shares of our common stock
          underlying outstanding options and warrants.

     (2)  Includes 2,216,909 shares of common stock owned directly and
          889,760 shares of common stock beneficially owned through RHL
          Ventures LLC. Also includes 627,451 shares of our common stock
          underlying outstanding warrants beneficially owned through RHL
          Ventures LLC. Mr. Lessin is the President and Chief Executive
          Officer of RHL Ventures.

     (3)  Includes an aggregate of 75,392 shares of our common stock
          underlying outstanding options and warrants owned directly and
          29,412 shares of our common stock underlying outstanding warrants
          beneficially owned through SDK Investments LLC. Mr. Klein is the
          managing member and the majority investor in SDK Investments LLC.

     (4)  Includes 367,500 shares of our common stock underlying outstanding
          options.

     (5)  Includes 342,500 shares of our common stock underlying outstanding
          options.

     (6)  Includes 8,700 shares of our common stock underlying outstanding
          options.

                                       46

<PAGE>

ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         Between October 26, 2000 and December 7, 2000, RHL Ventures loaned us
an aggregate amount of $332,000, with interest at 12% per annum. The note was
repaid in December of 2000. In connection with the note, on December 7, 2000,
we issued a warrant to RHL Ventures exercisable through November 30, 2003, to
purchase 244,118 shares of our common stock at an exercise price of $0.272 per
share. The warrant was exercisable immediately. Mr. Lessin, one of our
shareholders, is the President and Chief Executive Officer of RHL Ventures.

         Between October 26, 2000 and December 13, 2000, Gerald R. Alderson
loaned us an aggregate amount of $215,000, with interest at 12% per annum. The
note was repaid in December of 2000. In connection with the note, on December
13, 2000, we issued a warrant to Mr. Alderson exercisable through November 30,
2003, to purchase 158,088 shares of our common stock at an exercise price of
$0.272 per share. The warrant was exercisable immediately. Mr. Alderson is our
President and Chief Executive Officer, a director and a shareholder.

         Between October 26, 2000 and November 9, 2000, Stephen D. Klein loaned
us an aggregate amount of $30,000, with interest at 12% per annum. The note was
repaid in December of 2000. In connection with the note, on November 30, 2000,
we issued a warrant to Mr. Klein exercisable through November 30, 2003, to
purchase 22,059 shares of our common stock at an exercise price of $0.272 per
share. The warrant was exercisable immediately. Mr. Klein is the Chairman of
our Board of Directors and a shareholder.

         On November 15, 2000, SDK Investments LLC loaned us $40,000, with
interest at 12% per annum. The note was repaid in December of 2000. In
connection with the note, on November 30, 2000, we issued a warrant to SDK
Investments LLC exercisable through November 30, 2003, to purchase 29,412
shares of our common stock at an exercise price of $0.272 per share. The
warrant was exercisable immediately. Mr. Klein, the Chairman of our Board of
Directors and a shareholder, is the managing member and the majority investor
in SDK Investments LLC.

         On October 26, 2000, Verus Group loaned us $60,000, with interest at
12% per annum. The note was repaid in December of 2000. In connection with the
note, on November 30, 2000, we issued a warrant to Verus Group exercisable
through November 30, 2003, to purchase 44,118 shares of our common stock at an
exercise price of $0.272 per share. The warrant was exercisable immediately.
Ajmal Khan is the President of Verus Group and is a former director of our
company.

ITEM 13 - EXHIBITS, LIST AND REPORTS ON FORM 8-K.

     (a)  1.  Financial Statements - See Financial Statements included herein.

          2.  Exhibits - Incorporated by reference to the Exhibit Index at the
              end of this Report.

     (b)      Reports on Form 8-K - None.

                                       47

<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on March 25, 2002.

                              WATTAGE MONITOR INC.

                By:     /s/ Gerald R. Alderson
                        ----------------------
                            Gerald R. Alderson
                            President, Chief Executive Officer and
                                Principal Financial Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

                        /s/ Gerald R. Alderson                  March 25, 2002
                        -------------------------------
                        Gerald R. Alderson, Director, President,
                            Chief Executive Officer and
                            Principal Financial Officer

                        /s/ Stephen D. Klein                    March 25, 2002
                        -------------------------------
                        Stephen D. Klein, Director

                        /s/ Alexander Ellis III                 March 25, 2002
                        -------------------------------
                        Alexander Ellis III, Director

                                       48

<PAGE>

                                  EXHIBIT INDEX

Exhibit
  No.      Description Page
--------   ----------------

  2.1*     Agreement and Plan of Merger by and between WattMonitor LLC and
           Wattage Monitor, dated as of February 26, 1999 (filed without
           exhibits or schedules) (filed as Exhibit 2.1 to Amendment No.
           4 to Form SB-2 Registration Statement, filed October 13, 1999).

  3.1*     Amended and Restated Articles of Incorporation of Wattage Monitor
           as filed with the Secretary of State of the State of Nevada on
           February 24, 1999 (filed as Exhibit 3.1 to Amendment No. 4 to Form
           SB-2 Registration Statement, filed October 13, 1999).

  3.2*     Amended and Restated By-Laws of Wattage Monitor, adopted as of
           February 19, 1999 (filed as Exhibit 3.2 to Amendment No. 4 to Form
           SB-2 Registration Statement, filed October 13, 1999).

  3.3*     Certificate of Amendment to Amended and Restated Articles of
           Incorporation of Wattage Monitor as filed with the Secretary of
           State of the State of Nevada on October 11, 2000 (filed as Exhibit
           3.3 to Form S-3, filed November 30, 2000).

  3.4*     Certificate of Amendment to Amended and Restated Articles of
           Incorporation of Wattage Monitor as filed with the Secretary of
           State of the State of Nevada on December 22, 2000 (filed as
           Exhibit 3.4 to Form 10-KSB, filed March 23, 2001).

  4.1*     Specimen  Common  Stock  certificate  (filed  as  Exhibit  4.1
           to  Amendment  No.  4  to  Form  SB-2
           Registration Statement, filed October 13, 1999).

  4.2*     Certificate of Designation of Series A Preferred Stock, as filed
           with the Secretary of State of the State of Nevada on February 24,
           1999 (filed as Exhibit 4.2 to Amendment No. 4 to Form SB-2
           Registration Statement, filed October 13, 1999).

  4.3*     Certificate of Amendment of Certificate of Designation of Series A
           Preferred Stock, as filed with the Secretary of State of the State
           of Nevada on February 26, 1999 (filed as Exhibit 4.3 to Amendment
           No. 4 to Form SB-2 Registration Statement, filed October 13,
           1999).

  4.4*     Certificate of Designation of Series B Preferred  Stock,  as
           filed with the Secretary of State of the State of  Nevada on
           September  9,  1999  (filed as  Exhibit  4.4.  to  Amendment  No.
           4 to Form SB-2 Registration Statement, filed October 13, 1999).

  10.1*    Stock Purchase Agreement by and among Knowledge Networks
           Acquisitions,  Inc., Intrepid International S.A. and Certain
           Purchasers,  dated  February 5, 1999 (filed as Exhibit  10.1 to
           Amendment  No. 4 to Form SB-2 Registration Statement, filed
           October 13, 1999).

  10.2*    Registration Rights Agreement by and among Wattage Monitor and
           Certain Shareholders, dated as of February 26, 1999 (filed as
           Exhibit 10.3 to Amendment No. 4 to Form SB-2 Registration
           Statement, filed October 13, 1999).

                                       49

<PAGE>

                                  EXHIBIT INDEX

Exhibit
  No.      Description Page
--------   ----------------

  10.3*    Employment Agreement by and between WattMonitor LLC and Gerald R.
           Alderson, dated January 1, 1998, as assumed by Wattage Monitor on
           February 26, 1999 (filed as Exhibit 10.4 to Amendment No. 4 to
           Form SB-2 Registration Statement, filed October 13, 1999).

  10.4*    Warrant to Stephen D. Klein to purchase 33,333 Class II Membership
           Units of WattMonitor LLC, dated December 29, 1998 (filed as
           Exhibit 10.5 to Amendment No. 4 to Form SB-2 Registration
           Statement, filed October 13, 1999).

  10.5*    Warrant to RHL Ventures LLC to purchase 100,000 Class II
           Membership Units of WattMonitor LLC, dated December 29, 1998
           (filed as Exhibit 10.6 to Amendment No. 4 to Form SB-2
           Registration Statement, filed October 13, 1999).

  10.6*    Warrant to Gerald R. Alderson to purchase 33,333 Class II
           Membership Units of WattMonitor LLC, dated December 29, 1998
           (filed as Exhibit 10.7 to Amendment No. 4 to Form SB-2
           Registration Statement, filed October 13, 1999).

  10.7*    Warrant to RHL Ventures LLC to purchase 283,333 Class II
           Membership Units of WattMonitor LLC, dated August 14, 1998 (filed
           as Exhibit 10.8 to Amendment No. 4 to Form SB-2 Registration
           Statement, filed October 13, 1999).

  10.8**   Wattage Monitor 1999 Incentive Compensation Plan, as amended.

  10.9*    Stock Purchase  Agreement by and among Wattage  Monitor Inc.,
           WPG Software Fund,  L.P., WPG Raytheon Software  Fund,  L.P.,  WPG
           Institutional  Software  Fund,  L.P. and  PurchasePro.com,  Inc.,
           dated November 28, 2000 (filed as Exhibit 10.1 to Form S-3, filed
           November 30, 2000).

  10.10*   Stock Purchase  Agreement by and among Wattage Monitor Inc.,
           Gerald R. Alderson,  Vicki L. Center and Robert E.  Forrest,
           dated  December  22, 2000 (filed as Exhibit 10.2 to Form 8-K,
           filed  January 5, 2001).

  10.11*   Secured  Promissory  Note,  dated  December 22, 2000,  between
           Vicki L. Center as "Maker" and Wattage Monitor Inc. as "Payee"
           (filed as Exhibit 10.3 to Form 8-K, filed January 5, 2001).

  10.12*   Secured  Promissory Note,  dated December 22, 2000,  between
           Robert E. Forrest as "Maker" and Wattage Monitor Inc. as "Payee"
           (filed as Exhibit 10.4 to Form 8-K, filed January 5, 2001).

  10.13*   Secured  Promissory Note, dated December 22, 2000,  between Gerald
           R. Alderson as "Maker" and Wattage Monitor Inc. as "Payee" (filed
           as Exhibit 10.5 to Form 8-K, filed January 5, 2001).

  10.14*   Form of Stock Pledge  Agreement,  dated  December 22, 2000 (filed
           as Exhibit 10.6 to Form 8-K,  filed January 5, 2001).

                                       50

<PAGE>

                                  EXHIBIT INDEX

Exhibit
  No.      Description Page
--------   ----------------
  10.15*   Warrant to RHL Ventures LLC to purchase 244,118 shares of common
           stock of Wattage Monitor Inc, dated December 7, 2000 (filed as
           Exhibit 10.16 to Form 10-KSB, filed March 23, 2001).

  10.16*   Warrant to Gerald Alderson to purchase 158,088 shares of common
           stock of Wattage Monitor Inc, dated December 13, 2000 (filed as
           Exhibit 10.17 to Form 10-KSB, filed March 23, 2001).

  10.17*   Warrant to Verus Group to purchase 44,118 shares of common stock
           of Wattage Monitor Inc, dated November 30, 2000 (filed as Exhibit
           10.18 to Form 10-KSB, filed March 23, 2001).

  10.18*   Warrant to SDK Investments LLC to purchase 29,412 shares of common
           stock of Wattage Monitor Inc, dated November 30, 2000 (filed as
           Exhibit 10.19 to Form 10-KSB, filed March 23, 2001).

  10.19*   Warrant to Stephen Klein to purchase 22,059 shares of common stock
           of Wattage Monitor Inc, dated November 30, 2000 (filed as Exhibit
           10.20 to Form 10-KSB, filed March 23, 2001).

  10.20*   Warrant to Marousa Dumaresq to purchase 14,706 shares of common
           stock of Wattage Monitor Inc, dated November 30, 2000 (filed as
           Exhibit 10.21 to Form 10-KSB, filed March 23, 2001).

  10.21*   Warrant to  Stratosphere  International  Ltd. to  purchase  7,353
           shares of common  stock of Wattage Monitor Inc, dated November
           30, 2000 (filed as Exhibit 10.22 to Form 10-KSB, filed March 23,
           2001).

  10.22*   Warrant to Jonathan Cohen to purchase 36,765 shares of common
           stock of Wattage Monitor Inc, dated December 8, 2000 (filed as
           Exhibit 10.23 to Form 10-KSB, filed March 23, 2001).

  10.23*   Loan Agreement by and among Wattage Monitor Inc. "Borrower" and
           RHL Ventures LLC, Gerald Alderson, Verus Group, SDK Investments
           LLC, Stephen Klein, Marousa Dumaresq, Stratosphere International
           Ltd. and Jonathan Cohen, collectively "Lenders" dated November 30,
           2000 (filed as Exhibit 10.29 to Form 10-KSB, filed March 23,
           2001).

  10.24*   Security Agreement by and among Wattage Monitor Inc. "Debtor" and
           RHL Ventures LLC, Gerald Alderson, Verus Group, SDK Investments
           LLC, Stephen Klein, Marousa Dumaresq, Stratosphere International
           Ltd. and Jonathan Cohen, collectively "Secured Parties" dated
           November 30, 2000 (filed as Exhibit 10.30 to Form 10-KSB, filed
           March 23, 2001).

  10.25*   Warrant Agreement by and among Wattage Monitor Inc. "Company" and
           RHL Ventures LLC, Gerald Alderson, Verus Group, SDK Investments
           LLC, Stephen Klein, Marousa Dumaresq, Stratosphere International
           Ltd. and Jonathan Cohen, collectively "Lenders" dated November 30,
           2000 (filed as Exhibit 10.31 to Form 10-KSB, filed March 23,
           2001).

                                       51

<PAGE>

                                  EXHIBIT INDEX

Exhibit
  No.      Description Page
--------   ----------------

  10.26*   Promissory Note between Wattage Monitor Inc. "Borrower" and RHL
           Ventures LLC, Gerald Alderson, Verus Group, SDK Investments LLC,
           Stephen Klein, Marousa Dumaresq, Stratosphere International Ltd.
           and Jonathan Cohen, collectively "Lenders" dated November 30, 2000
           (filed as Exhibit 10.32 to Form 10-KSB, filed March 23, 2001).

  10.27**  Severance agreement by and between Wattage Monitor Inc. and Jeffrey
           I. Halpern, dated December 22, 2000.
------------------------------

        *  Exhibits designated with an asterisk (*) have previously been
           filed with the Commission and are incorporated herein by reference
           to the document referenced in parentheticals following the
           descriptions of such exhibits.

        ** Filed herewith.

                                       52