SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the
                Securities Exchange Act of 1934

[ ] Transitional Report Under Section 13 or 15(d) of the
                Securities Exchange Act of 1934

                   For the fiscal year ended December 31, 1999

                          Commission File No. 000-24447

                                   MULLY CORP.
                                   -----------
                 (Name of small business issuer in its charter)

          Nevada                                                84-1381946
          ------                                                ----------
(State or other jurisdiction of                              (I.R.S. Employer
Incorporation or Organization)                            Identification Number)

                            12835 East Arapahoe Road,
                               Tower I, Penthouse
                            Englewood, Colorado 80112
                                 (303) 768-9221
                                 --------------
        (Address, including zip code and telephone number, including area
                    code, of registrant's executive offices)

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

                                      none

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

                                  Common Stock
                                  ------------
                                (Title of class)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Securities  Exchange  Act of 1934  during the  preceding  12
months (or for such  shorter  period that the Company was  required to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days.

                                 Yes  X   No
                                     ---     ----

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

Issuer's revenues for its most recent fiscal year: $ -0-
                          (Continued on Following Page)


<PAGE>



State the  aggregate  market value of the voting stock held by non-  affiliates,
computed by reference  to the price at which the stock was sold,  or the average
bid and asked  prices of such stock,  as of a specified  date within the past 60
days: As of December 31, 1999: $0.

State the number of shares outstanding of each of the issuer's classes of common
equity,  as of the latest  practicable  date: As of December 31, 1999 there were
500,000 shares of the Company's common stock issued and outstanding.

Documents Incorporated by Reference: None

                 This Form 10-KSB consists of Twenty Six Pages.
                 Exhibit Index is Located at Page Twenty Three.



                                                                               2


<PAGE>



                                TABLE OF CONTENTS

                            FORM 10-KSB ANNUAL REPORT

                                   MULLY CORP.

                                                                            PAGE
                                                                            ----

Facing Page
Index

PART I

Item 1.    Description of Business...................................         4
Item 2.    Description of Property...................................         6
Item 3.    Legal Proceedings.........................................         6
Item 4.    Submission of Matters to a Vote of
               Security Holders......................................         6

PART II

Item 5.    Market for the Registrant's Common Equity
               and Related Stockholder Matters.......................         6
Item 6.    Management's Discussion and Analysis of
               Financial Condition and Results of
               Operations............................................         7
Item 7     Financial Statements......................................         9
Item 8.    Changes in and Disagreements on Accounting
               and Financial Disclosure..............................        20


PART III

Item 9.    Directors, Executive Officers, Promoters
               and Control Persons, Compliance with
               Section 16(a) of the Exchange Act.....................        20
Item 10.   Executive Compensation....................................        21
Item 11.   Security Ownership of Certain Beneficial
               Owners and Management.................................        22
Item 12.   Certain Relationships and Related
               Transactions..........................................        23

PART IV

Item 13.   Exhibits and Reports of Form 8-K..........................        23


SIGNATURES...........................................................        24



                                                                               3


<PAGE>



                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS.

     Mully Corp. (the "Company") was  incorporated on November 4, 1996 under the
laws of the  State of Nevada to  engage  in any  lawful  corporate  undertaking,
including,  but not limited to, selected mergers and  acquisitions.  The Company
has been in the  developmental  stage since  inception  and has no operations to
date. Other than issuing shares to its original shareholders,  the Company never
commenced any operational  activities.  As such, the Company can be defined as a
"shell"  company,  whose sole purpose at this time is to locate and consummate a
merger or acquisition with a private entity.

     The proposed  business  activities  of the Company  classify it as a "blank
check"  company.  Many  states  have  enacted  statutes,  rules and  regulations
limiting the sale of securities of "blank check"  companies in their  respective
jurisdictions.  Management  does not intend to undertake  any efforts to cause a
market to develop in the Company's securities until such time as the Company has
successfully  implemented its business plan described herein.  Relevant thereto,
each  shareholder  of the Company has executed and delivered a "lock-up"  letter
agreement,  affirming  that they shall not sell their  respective  shares of the
Company's  common  stock  until  such  time  as  the  Company  has  successfully
consummated a merger or acquisition and the Company is no longer classified as a
"blank check" company.  In order to provide  further  assurances that no trading
will occur in the Company's  securities  until a merger or acquisition  has been
consummated,  each  shareholder  has  agreed  to place  their  respective  stock
certificate  with the  Company's  legal  counsel,  who will  not  release  these
respective  certificates  until such time as legal counsel has confirmed  that a
merger  or  acquisition  has  been  successfully  consummated.   However,  while
management believes that the procedures  established to preclude any sale of the
Company's  securities  prior to  closing  of a  merger  or  acquisition  will be
sufficient,  there can be no assurances that the procedures established relevant
herein  will  unequivocally  limit  any  shareholder's  ability  to  sell  their
respective securities before such closing.

     During the  fiscal  year ended  December  31,  1999,  the  Company  filed a
registration statement with the Securities and Exchange Commission on Form 10-SB
pursuant to the rules and regulations included under the Securities Exchange Act
of 1934,  as amended,  wherein the Company  caused to be  registered  its common
stock.  This  registration  statement became effective on or about June 7, 1999.
The  purpose of the  registration  statement  was  management's  belief that the
primary  attraction of the Company as a merger  partner or  acquisition  vehicle
will be its status as a public company.  Any business combination or transaction
will likely result in a

                                                                               4


<PAGE>



significant  issuance of shares and substantial dilution to present stockholders
of the Company.

Subsequent Event

     Management  has  continued  to review  prospective  merger  or  acquisition
candidates during the past fiscal year, but as of the date of this report, there
is no definitive agreement between the Company and any third party providing for
the Company to merge or acquire  any assets.  However,  applicable  thereto,  on
February 4, 2000,  the Company  entered  into a letter of intent with the Baby's
Best Infant Formula, Inc. ("BBI"), a privately held Florida corporation, whereby
the Company has agreed in principle to acquire all of the issued and outstanding
shares of BBI, in exchange  for issuance by the Company of  previously  unissued
"restricted"  common  stock.  The  relevant  terms of the  proposed  transaction
require the Company to (i)  undertake a forward split whereby 4 shares of common
stock shall be issued in exchange for each share of common stock then issued and
outstanding,  in order to establish the number of issued and outstanding  common
shares  at  closing  to be  2,000,000;  and  (ii)  thereafter,  issue to the BBI
shareholders an aggregate of 18,000,000 "restricted" common shares, representing
90% of the Company's then  outstanding  common stock, in exchange for all of the
issued and outstanding shares of BBI.

     The  proposed  share  exchange  is  subject  to   satisfaction  of  certain
conditions,  including completion of due diligence  activities,  the approval of
the  transaction  by the BBI  shareholders  and  the  approval  of the  proposed
transaction by the shareholders of the Company. If the proposed transaction with
BBI is  consummated,  the  present  officers  and  directors  of the Company are
expected to resign their respective  positions with the Company,  to be replaced
by the present  management of BBI. If these  conditions  are met, it is expected
that the  proposed  transaction  with BBI will  close by the end of March  2000.
However, there are no assurances that the proposed transaction will close on the
aforesaid date, or that any unforeseen delay will occur.

Employees

     During the fiscal year ended  December  31,  1999,  the Company had no full
time employees.  The Company's President,  Secretary and Treasurer has agreed to
allocate  a  portion  of his  time to the  activities  of the  Company,  without
compensation. This officer anticipates that the business plan of the Company can
be implemented by his devoting  approximately 20 hours per month to the business
affairs of the Company and,  consequently,  conflicts of interest may arise with
respect to the limited time commitment by such officer.

                                                                               5


<PAGE>



ITEM 2.  DESCRIPTION OF PROPERTY

     Facilities.  During the fiscal year ended  December 31,  1999,  the Company
operated from its offices at 2851 South Parker Road, Suite 720, Aurora, Colorado
80014, which space was provided to the Company on a rent free basis by Andrew I.
Telsey,  a shareholder,  director and officer of the Company.  In February 2000,
the Company  moved to 12835 E. Arapahoe  Road,  Tower I,  Penthouse,  Englewood,
Colorado 80112,  which space is also provided by Mr. Telsey on a rent free basis
and it is anticipated  that this  arrangement will remain until such time as the
Company  successfully  consummates a merger or acquisition.  Management believes
that this space will meet the Company's needs for the foreseeable future.

     Other  Property.  The  Company  has no  properties  and at this time has no
agreements to acquire any properties.  The Company intends to attempt to acquire
assets or a business in exchange for its securities  which assets or business is
determined to be desirable for its objectives.

ITEM 3.   LEGAL PROCEEDINGS

     There are no  material  legal  proceedings  which are  pending or have been
threatened against the Company of which management is aware.

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

     None

                                     PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS

     (a) Market Information. There is presently no trading market for the common
equity of the Company.

     (b) Holders. There are eleven (11) holders of the Company's Common Stock.

     (c) Dividends.

     (1) The Company has not paid any dividends on its Common Stock. The Company
does not foresee that the Company will have the ability to pay a dividend on its
Common  Stock in the fiscal year ended  December  31,  2000,  unless the Company
successfully  consummates a merger or acquisition and the relevant candidate has
sufficient  assets  available  to  undertake  issuance  of such a  dividend  and
management elects to do so, of which there can be no assurance.

                                                                               6


<PAGE>




ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

     The following  discussion  should be read in conjunction with the Company's
audited  financial  statements and notes thereto included herein.  In connection
with, and because it desires to take advantage of, the "safe harbor"  provisions
of the Private  Securities  Litigation  Reform Act of 1995, the Company cautions
readers regarding certain forward looking statements in the following discussion
and  elsewhere  in this  report  and in any other  statement  made by, or on the
behalf of the Company,  whether or not in future filings with the Securities and
Exchange  Commission.  Forward  looking  statements  are statements not based on
historical  information  and  which  relate to  future  operations,  strategies,
financial  results  or  other  developments.   Forward  looking  statements  are
necessarily based upon estimates and assumptions that are inherently  subject to
significant business,  economic and competitive uncertainties and contingencies,
many of which are beyond the Company's  control and many of which,  with respect
to future business  decisions,  are subject to change.  These  uncertainties and
contingencies can affect actual results and could cause actual results to differ
materially from those expressed in any forward looking statements made by, or on
behalf of, the Company.  The Company  disclaims any obligation to update forward
looking statements.

     (a) Plan of Operation.
         -----------------

     The  Company  intends  to seek to  acquire  assets  or  shares of an entity
actively engaged in business, in exchange for its securities. Applicable thereto
and as of the date of this  report,  effective  February  7, 2000,  the  Company
entered into a letter of intent with the BBI,  whereby the Company has agreed in
principle  to  acquire  all of the  issued  and  outstanding  shares of BBI,  in
exchange for issuance by the Company of previously unissued  "restricted" common
stock. The relevant terms of the proposed transaction require the Company to (i)
undertake a forward split of its issued and outstanding common shares, whereby 4
shares of common  stock are  proposed to be issued in exchange for each share of
common stock then issued and outstanding;  and (ii) thereafter, issue to the BBI
shareholders an aggregate of 18,000,000 "restricted" common shares, representing
90% of the Company's then  outstanding  common stock, in exchange for all of the
issued and outstanding shares of BBI.

     The  proposed  share  exchange  is  subject  to   satisfaction  of  certain
conditions,  including completion of due diligence  activities,  the approval of
the  transaction  by the BBI  shareholders  and  the  approval  of the  proposed
transaction by the shareholders of the Company. If the proposed transaction with
BBI is  consummated,  the  present  officers  and  directors  of the Company are
expected to resign their respective positions with the Company, to be replaced

                                                                               7


<PAGE>



by the present  management of BBI. If these  conditions  are met, it is expected
that the  proposed  transaction  with BBI will  close by the end of March  2000.
However,  there are no assurances  that the proposed  transaction  will close or
that any unforeseen delay will occur.

     In the event the aforesaid  transaction  does not close,  management of the
Company  will  continue  to have  discussions  with  other  potential  merger or
acquisition  candidates.  In the event the Company  does enter into an agreement
with such a third party,  the Board of Directors  does intend to obtain  certain
assurances  of value of the target entity  assets prior to  consummating  such a
transaction,  with further assurances that an audited financial  statement would
be  provided  within  sixty days after  closing of such a  transaction.  Closing
documents  relative thereto will include  representations  that the value of the
assets conveyed to or otherwise so transferred  will not materially  differ from
the representations  included in such closing documents, or the transaction will
be voidable.

     The Company has no full time employees. The Company's President,  Secretary
and Treasurer has agreed to allocate a portion of his time to the  activities of
the Company,  without  compensation.  This officer anticipates that the business
plan of the Company can be  implemented by his devoting  approximately  20 hours
per month to the business affairs of the Company and, consequently, conflicts of
interest may arise with respect to the limited time commitment by such officer.

     Because  the Company  presently  has  nominal  overhead  or other  material
financial  obligations,  management  of the Company  believes that the Company's
short term cash requirements can be satisfied by management  injecting  whatever
nominal  amounts of cash into the  Company to cover these  incidental  expenses.
There  are no  assurances  whatsoever  that  any  additional  cash  will be made
available to the Company through any means.

Year 2000 Disclosure

     Many existing  computer  programs use only two digits to identify a year in
the date field.  These programs were designed and developed without  considering
the  impact  of the  upcoming  change in the  century.  If not  corrected,  many
computer  applications  could fail or create erroneous results by or at the Year
2000. As a result,  many companies will be required to undertake  major projects
to address the Year 2000 issue. Because the Company has no assets, including any
personal property such as computers, it is not anticipated that the Company will
incur any negative impact as a result of this potential problem.  However, it is
possible  that this issue may have an impact on the  Company  after the  Company
successfully consummates a merger or acquisition.  Management intends to address
this potential problem with any prospective

                                                                               8


<PAGE>



merger or acquisition candidate.  There can be no assurances that new management
of the Company  will be able to avoid a problem in this regard after a merger or
acquisition is so consummated.

ITEM 7.  FINANCIAL STATEMENTS


<PAGE>












                                  MULLY CORP.

                         Audited Financial Statements

                 For the Years Ended December 31, 1999 and 1998
                   and the Period November 4, 1996 (Inception)
                            through December 31, 1999












                                                                              10


<PAGE>







                                 Mully Corp.


                              TABLE OF CONTENTS


                                                                          Page

                                                                          ----

Independent Auditors' Report                                              F-1

Financial Statements

     Balance Sheet                                                        F-2

     Statement of Operations                                              F-3

     Statement of Cash Flow                                               F-4

     Statement of Shareholders' Equity (Deficit)                          F-5

     Notes to the Financial Statements                             F-6 to F-8




                                                                              11


<PAGE>



HORTON & COMPANY
Certified Public Accountants and Business Consultants, L.L.C.





                        INDEPENDENT AUDITORS' REPORT


The Board of Directors
Mully Corp.
Aurora, Colorado

We have audited the accompanying  consolidated  balance sheets of Mully Corp. as
of  December  31,  1999 and 1998,  and the  related  statements  of  operations,
stockholders'  equity and cash flows for the years then ended and for the period
November  4,  1996  (inception)  through  December  31,  1999.  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  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits 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 Mully Corp. as of December 31,
1999 and 1998,  and the results of its  operations  and its cash flows for years
then ended, and for the period November 4, 1996 (inception) through December 31,
1999, in conformity with generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 5 to the
financial statements,  the Company has suffered losses from operations and has a
lack of net capital that raise  substantial  doubt about its ability to continue
as a going  concern.  Management's  plans in  regard to these  matters  are also
described in Note 5. The  financial  statements  do not include any  adjustments
that might result from the outcome of this uncertainty.

                                                  s/Horton & Company, LLC

                                                  HORTON & COMPANY, L.L.C.

March 2, 2000


1680 ROUTE 23, SUITE 110, WAYNE, NEW JERSEY  07470
TEL: 973-305-9800, FAX: 973-305-8213
                           A Member of the Division for CPA firms;
                           American Institute of Certified Public Accountants


                                      F-1

                                                                              12


<PAGE>

<TABLE>


Mully Corp.
(A Development Stage Company)
Balance Sheet
------------------------------------------------------------------------------

<CAPTION>
                                                                     December
                                                                     31, 1999
                                                                     --------
<S>                                                                  <C>
ASSETS                                                               $      0
                                                                     ========

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

LIABILITIES - Due to Shareholder                                          500
                                                                     --------
SHAREHOLDERS' EQUITY (DEFICIT)

Preferred Stock, .001 Par Value

Authorized 25,000,000 Shares; Issued                                        0
And Outstanding -0- Shares

Common Stock, $.0001 Par Value
Authorized 100,000,000 Shares; Issued

And Outstanding 500,000 Shares                                             50

Additional Paid In Capital On Common Stock                                450

Deficit Accumulated During The Development Stage                       (1,000)
                                                                     --------
TOTAL SHAREHOLDERS' EQUITY (DEFICIT)                                     (500)
                                                                     --------
TOTAL LIABILITIES AND SHAREHOLDERS'
 EQUITY (DEFICIT)                                                    $      0
                                                                     ========





















          The Accompanying Notes Are An Integral Part Of These Financial
Statements.

</TABLE>

                                       F-2

                                                                              13


<PAGE>

<TABLE>


Mully Corp.
(A Development Stage Company)
Statement Of Operations
------------------------------------------------------------------------------

<CAPTION>
                                                                   November
                                                                   4, 1996
                                                                 (Inception)
                                                                   Through
                                               December  December  December
                                               31, 1999  31, 1998  31, 1999
                                               --------  --------  --------
<S>                                            <C>       <C>       <C>
Revenue                                        $      0  $      0  $      0
                                               --------  --------  --------
Expenses:

Office                                                0         0       500
Legal and Accounting                                500         0       500
                                               --------  --------  --------
Total                                               500         0     1,000
                                               --------  --------  --------

Net (Loss)                                     $   (500) $      0  $ (1,000)
                                               ========  ========  ========

Basic (Loss) Per Common Share                  $   0.00  $   0.00  $  (0.00)
                                               ========  ========  ========

Basic Common Shares Outstanding                 500,000   500,000   500,000
                                               ========  ========  ========



























          The Accompanying Notes Are An Integral Part Of These Financial
Statements.

</TABLE>
                                       F-3

                                                                              14


<PAGE>

<TABLE>


Mully Corp.
(A Development Stage Company)
Statement Of Cash Flows
------------------------------------------------------------------------------

<CAPTION>
                                                                   November
                                                                   4, 1996
                                                                  (Inception)
                                                                   Through
                                               December  December  December
                                               31, 1999  31, 1998  31, 1999
                                               --------  --------  --------
<S>                                            <C>       <C>       <C>
Net (Loss) Accumulated During

 The Development Stage                         $   (500) $      0  $ (1,000)
                                               --------  --------  --------
Issuance of Common Stock for
  Cash Advances & Services                            0         0       500
Expenses Paid by Shareholder                        500         0       500
                                               --------  --------  --------

Net Cash Flows From Operations                        0         0         0
                                               --------  --------  --------

Cash Flows From Financing
Activities:

                                                      0         0         0
                                               --------  --------  --------

Net Cash Flows From Financing                         0         0         0
                                               --------  --------  --------

Net Increase In Cash                                  0         0         0
Cash At Beginning Of Period                           0         0         0
                                               --------  --------  --------

Cash At End Of Period                          $      0  $      0  $      0
                                               ========  ========  ========




Non - Cash Activities:

Stock Issued For Cash Advances & Services      $      0  $      0  $    500
                                               ========  ========  ========
Expenses Paid by Shareholder                   $    500  $      0  $    500
                                               ========  ========  ========







          The Accompanying Notes Are An Integral Part Of These Financial
Statements.

</TABLE>

                                       F-4

                                                                              15

<PAGE>

<TABLE>

Mully Corp.
(A Development Stage Company)
Statement Of Shareholders' Equity
-----------------------------------------------------------------------------------------------

<CAPTION>
                                                                              Deficit
                                                                            Accumulated
                          Number Of Number Of                    Additional During The
                           Common  Preferred   Common  Preferred  Paid-In   Development
                           Shares    Shares    Stock     Stock    Capital      Stage      Total
                          -------    ------    ------    -----    -------     -------     -----
<S>                       <C>        <C>       <C>       <C>      <C>         <C>         <C>
Balance At
  November 4, 1996              0         0    $    0    $   0    $     0      $    0     $   0

Issuance Of Common Stock:
November 4, 1996 for Cash
  Advances Made on Behalf
  of the Company &
  Services at $.001
  Per Share               500,000         0        50        0        450           0       500

Net (Loss)                                                                       (500)     (500)
                          -------    ------    ------    -----    -------     -------     -----

Balance At December 31,
  1996, 1997, and 1998    500,000         0    $   50    $   0    $   450     $  (500)    $   0

Net (Loss)                                                                       (500)     (500)
                          -------    ------    ------    -----    -------     -------     -----

Balance At December 31,
  1999                    500,000         0    $   50    $   0    $   450     $(1,000)    $(500)
                          =======    ======    ======    =====    =======     =======     =====






























     The Accompanying Notes Are An Integral Part Of These Financial Statements.

</TABLE>

                                        F-5


                                                                              16


<PAGE>



Mully Corp.
(A Development Stage Company)
Notes to Financial Statements
For The Fiscal Years Ended December 31, 1999 and 1998
-----------------------------------------------------


Note 1 - Organization and Summary of Significant Accounting Policies
--------------------------------------------------------------------

Organization:

On November 4, 1996, Mully Corp. (the "Company") was incorporated under the laws
of Nevada to engage in any lawful  business or activity  for which  corporations
may be organized under the laws of the State of Nevada.

Development Stage:

The  Company  entered the  Development  stage in  accordance  with SFAS No. 7 on
November 4, 1996.  Its purpose is to evaluate,  structure  and complete a merger
with, or acquisition a privately owned corporation.

Statement of Cash Flows:

For the purpose of the  statement of cash flows,  the Company  considers  demand
deposits and highly liquid-debt  instruments  purchased with a maturity of three
months or less to be cash equivalents.

Cash paid for  interest  in fiscal  years ended  December  31, 1999 and 1998 was
$-0-.  Cash paid for income  taxes in fiscal  years ended  December 31, 1999 and
1998 was $-0-.

Basic (Loss) per Common Share:

Basic (Loss) per common share is computed by dividing the net loss for the
period by the weighted average number of shares outstanding at December 31,
1999 and December 31, 1998. (See Note 6)

Use of Estimates:

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

                                       F-6

                                                                              17


<PAGE>



Mully Corp.
(A Development Stage Company)
Notes to Financial Statements
For The Fiscal Years Ended December 31, 1999 and 1998
-----------------------------------------------------


Note 2 - Capital Stock and Capital in Excess of Par Value
---------------------------------------------------------

The Company initially  authorized  100,000,000 shares of $.0001 par value common
stock and 25,000,000  shares of $.001 par value preferred  stock. On November 4,
1996, the Company  issued 500,000 shares of common stock for services  valued at
$350, and for cash advances paid on behalf of the Company of $150,  for  a total
of $500.

Note 3 - Related Party Events

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

The Company maintains a mailing address at an officer's place of business.  This
address is located at 12835 E. Arapahoe  Road,  Tower I,  Penthouse,  Englewood,
Colorado  80112.  At this  time the  Company  has no need for an  office.  As of
December 31, 1999  management  has incurred a minimal amount of time and expense
on behalf of the Company.

Also,  during the fiscal year ended  December  31,  1999,  Andrew I.  Telsey,  a
shareholder  and officer of the  Company,  advanced  the  Company the  principal
amount of $500 to cover expenses. This loan is non-interest bearing and due upon
demand.  It is  anticipated  that Mr.  Telsey  will  forgive  this loan upon the
closing of a merger or acquisition, or the balance will be paid by the surviving
company.

Note 4 - Income Taxes

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

At December 31, 1999, the Company had net operating loss carryforwards available
for financial statement and Federal income tax purposes of approximately  $1,000
which, if not used, will expire in the years 2011 through 2019.

The Company  follows  Financial  Accounting  Standards  Board Statement No. 109,
"Accounting for Income Taxes" (SFAS #109),  which requires,  among other things,
an asset and liability  approach to  calculating  deferred  income taxes.  As of
December 31, 1999, the Company has a deferred tax asset of $10 primarily for its
net  operating  loss  carryforward  which  has been  fully  reserved  through  a
valuation allowance. The increase in the valuation allowance for 1999 is $150.

Note 5 - Basis of Presentation

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

In the course of its development activities the Company has sustained continuing
losses and expects  such  losses to continue  for the  foreseeable  future.  The
Company's  management  plans on advancing funds on an as needed basis and in the
longer term,  revenues from the operations of a merger candidate,  if found. The
Company's  ability  to  continue  as a  going  concern  is  dependent  on  these
additional  management  advances,  and,  ultimately,  upon achieving  profitable
operations through a merger candidate.

                                       F-7

                                                                              18


<PAGE>



Mully Corp.
(A Development Stage Company)
Notes to Financial Statements
For The Fiscal Years Ended December 31, 1999 and 1998
-----------------------------------------------------

Note 6 - New Accounting Pronouncement

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

In February 1997, the Financial  Accounting  Standards Board issued Statement of
Financial  Accounting  Standards  No. 128,  Earnings Per Share ("SFAS No. 128").
SFAS  No.  128  specifies  the   computation,   presentation,   and   disclosure
requirements of earnings per share and supersedes  Accounting  Principles  Board
Opinion No. 15, Earnings Per Share.  SFAS No. 128 requires dual  presentation of
basic and diluted earnings per share.  Basic earnings per share,  which excludes
the impact of common stock  equivalents,  replaces  primary  earnings per share.
Diluted earnings per share, which utilizes the average market price per share as
opposed to the greater of the average  market  price per share or ending  market
price per share when applying the treasury  stock method in  determining  common
stock equivalents,  replaces  fully-diluted  earnings per share. SFAS No. 128 is
effective for the Company for periods ending after  December 15, 1997.  However,
the  Company  has a simple  capital  structure  for the  periods  presented  and
therefore,  there is no effect on the  earnings per share  presented  due to the
Company's adoption of SFAS No. 128.

Note 7 - Subsequent Events

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

Effective February 7, 2000, the Company entered into a letter of intent with the
Baby's Best Infant Formula,  Inc. ("BBI"), a privately held Florida corporation,
whereby  the Company  has agreed in  principle  to acquire all of the issued and
outstanding shares of BBI, in exchange for issuance by the Company of previously
unissued   "restricted"  common  stock.  The  relevant  terms  of  the  proposed
transaction  require the  Company to (i)  undertake  a forward  split  whereby 4
shares of common  stock  shall be issued in  exchange  for each  share of common
stock then issued and  outstanding,  in order to establish  the number of issued
and outstanding  common shares at closing to be 2,000,000;  and (ii) thereafter,
issue to the BBI  shareholders  an aggregate of 18,000,000  "restricted"  common
shares,  representing  90% of the Company's then  outstanding  common stock,  in
exchange for all of the issued and outstanding shares of BBI.

         The  proposed  share  exchange  is subject to  satisfaction  of certain
conditions,  including completion of due diligence  activities,  the approval of
the  transaction  by the BBI  shareholders  and  the  approval  of the  proposed
transaction by the shareholders of the Company. If the proposed transaction with
BBI is  consummated,  the  present  officers  and  directors  of the Company are
expected to resign their respective  positions with the Company,  to be replaced
by the present  management of BBI. If these  conditions  are met, it is expected
that the  proposed  transaction  with BBI will  close by the end of March  2000.
However, there are no assurances that the proposed transaction will close on the
aforesaid date, or that any unforeseen delay will occur.

                                       F-8

                                                                              19


<PAGE>



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

     None

                                    PART III

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

     Directors are elected for one-year  terms or until the next annual  meeting
of  shareholders  and until their  successors  are duly  elected and  qualified.
Officers continue in office at the pleasure of the Board of Directors.

     The Directors and Officers of the Company as of the date of this report are
as follows:

Name                       Age          Position
----------------           ---          -------------------------

Andrew I. Telsey            46          President, Secretary,
                                        Treasurer and Director

     All Directors of the Company will hold office until the next annual meeting
of the  shareholders  and until  successors  have been  elected  and  qualified.
Officers of the Company  are elected by the Board of  Directors  and hold office
until their death or until they resign or are removed from office.

     There are no family  relationships among the officers and directors.  There
is no arrangement or understanding  between the Company (or any of its directors
or officers) and any other person  pursuant to which such person was or is to be
selected as a director or officer.

     (b) Resumes:

     Andrew I.  Telsey,  President,  Secretary,  Treasurer  and a director.  Mr.
Telsey has held his positions  with the Company since its  inception.  From 1984
through the present,  Mr.  Telsey has been  employed by Andrew I. Telsey,  P.C.,
Aurora,  Colorado,  a professional  corporation  engaged in the practice of law,
emphasizing securities law, mergers,  acquisitions and general business matters.
This firm is legal  counsel to the Company.  Also,  Mr.  Telsey is a director of
Cavion Technologies,  Inc., a publicly held Colorado corporation which completed
its initial public offering in November 1999. Mr. Telsey received a Juris Doctor
degree from  Syracuse  University  College of Law in 1979 and a Bachelor of Arts
degree from Ithaca College in 1975. He devotes

                                                                              20


<PAGE>



only  such  time as  necessary  to the  business  of the  Company,  which is not
expected to exceed 20 hours per month.

     Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers,  directors  and person who own more than 10% of the  Company's  Common
Stock to file reports of ownership and changes in ownership  with the Securities
and Exchange  Commission,  provided  that there were any changes to such persons
respective  stock holdings in the Company during the previous fiscal year. Based
upon  information  provided  to the  Company,  there have been no changes in the
securities holdings of any person during the past fiscal year.

ITEM 10.  EXECUTIVE COMPENSATION.

Remuneration

     The following table reflects all forms of compensation  for services to the
Company  for the fiscal  years  ended  December  31,  1999 and 1998 of the chief
executive officer of the Company.

<TABLE>
                           SUMMARY COMPENSATION TABLE

<CAPTION>
                                             Long Term Compensation
                                          ----------------------------

                   Annual Compensation          Awards         Payouts
                  ---------------------   -------------------- -------
                                                    Securities
                                 Other                Under-              All
Name                             Annual   Restricted   lying             Other
and                              Compen-     Stock    Options/    LTIP  Compen-
Principal         Salary  Bonus  sation     Award(s)    SARs    Payouts  sation
Position    Year   ($)     ($)    ($)         ($)       (#)       ($)     ($)
----------  ----  ------  -----  ------    --------   -------   -------  ------
<S>         <C>   <C>     <C>    <C>       <C>        <C>       <C>      <C>
Andrew I.
Telsey,
President &       (1)(2)
Director    1999  $    0  $   0  $    0    $      0         0  $     0  $    0
            1998       0      0       0           0         0        0       0
-------------------------
<F1>

(1)      Mr. Telsey did not receive any salary during the fiscal years ended December
         31, 1999 and 1998 from the Company.
<F2>

(2)      It is not  anticipated  that any executive  officer of the Company will
         receive  compensation  exceeding  $100,000 during the fiscal year ended
         December  31,  2000,  except  in the  event  the  Company  successfully
         consummates a business combination.

</TABLE>
                                                                              21


<PAGE>



     The Company  maintains a policy whereby the directors of the Company may be
compensated  for  out of  pocket  expenses  incurred  by  each  of  them  in the
performance of their relevant duties. The Company did not reimburse any director
for such expenses during the fiscal year ended December 31, 1999.

     In  addition  to  the  cash  compensation  set  forth  above,  the  Company
reimburses each executive officer for expenses incurred on behalf of the Company
on an out-of-pocket basis. The Company cannot determine,  without undue expense,
the exact amount of such expense  reimbursement.  However,  the Company believes
that such reimbursements did not exceed, in the aggregate,  $1,000 during fiscal
year 1999.

     There  are no bonus  or  incentive  plans  in  effect,  nor are  there  any
understandings  in place  concerning  additional  compensation  to the Company's
officers.

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

     (a) and (b) Security Ownership of Certain Beneficial Owners and Management.

     The table below lists the  beneficial  ownership  of the  Company's  voting
securities  by each person  known by the Company to be the  beneficial  owner of
more than 5% of such securities, as well as by all directors and officers of the
issuer. Unless otherwise indicated,  the shareholders listed possess sole voting
and investment power with respect to the shares shown.

                    Name and           Amount and
                   Address of           Nature of
Title              Beneficial           Beneficial     Percent of
of Class              Owner               Owner           Class
--------    -------------------------   ----------     ----------

Common      Andrew I. Telsey             260,000           52%
            2851 South Parker Road
            Suite 720
            Aurora, CO  80014

Common      All Officers and             260,000           52%
            Directors as a
            Group (1 person)



     The  balance  of the  Company's  outstanding  Common  Shares are held by 10
persons.

                                                                              22


<PAGE>



ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The Company currently  operates from its offices at 12835 E. Arapahoe Road,
Tower I, Penthouse,  Englewood, Colorado 80112. This space, as well as the space
utilized by the Company  during the fiscal year ended  December 31, 1999, is and
was provided to the Company on a rent free basis by Andrew I. Telsey, an officer
and director of the Company,  and it is anticipated  that this  arrangement will
remain  until  such time as the  Company  successfully  consummates  a merger or
acquisition.

     Also, during the fiscal year ended December 31, 1999, Mr. Telsey loaned the
Company  the  principal  balance  of  $500  to  cover  expenses.  This  loan  is
non-interest bearing and due upon demand. It is anticipated that Mr. Telsey will
forgive  this loan upon the closing of a merger or  acquisition,  or the balance
will be paid by the surviving company.

     There  have  been  no  other  related  party  transactions,  or  any  other
transactions or relationships  required to be disclosed  pursuant to Item 404 of
Regulation S-B.

                                     PART IV

Item 13.  EXHIBITS AND REPORTS ON FORM 8-K.

(a)   Exhibits

      3.1* Certificate and Articles of Incorporation

     3.2* Bylaws

     EX-27 Financial Data Schedule

* Filed with the  Securities  and  Exchange  Commission  in the Exhibits to Form
10-SB, filed on March 19, 1999, and are incorporated by reference herein.

(b)  Reports on Form 8-K

     The Company  filed a report on Form 8-K dated  February  7, 2000,  advising
that the Company  entered  into a letter of intent  with BBI, a  privately  held
Florida corporation,  whereby the Company has agreed in principle to acquire all
of the issued and  outstanding  shares of BBI, in exchange  for  issuance by the
Company of previously unissued  "restricted" common stock. The relevant terms of
the proposed  transaction are described  elsewhere herein.  The contents of this
Form 8-K are  incorporated  herein as if set forth. The Company did not file any
other  reports  on Form 8-K during  the last  quarter  of the fiscal  year ended
December 31, 1999.

                                                                              23


<PAGE>



                                   SIGNATURES

     In accordance  with Section 13 or 15(d) of the  Securities  Exchange Act of
1934,  the  Company  caused  this  report  to be  signed  on its  behalf  by the
undersigned, thereunto duly authorized, on March 2, 2000.

                                       MULLY CORP.
                                       (Registrant)


                                       By: s/Andrew I. Telsey
                                         -------------------
                                         Andrew I. Telsey, President
                                         Secretary and Treasurer


     In  accordance  with the Exchange Act, this report has been signed below by
the  following  persons  on  behalf  of the  registrant  and  in the  capacities
indicated on March 2, 2000.

 s/Andrew I. Telsey
--------------------
Andrew I. Telsey,
President, Secretary,
Treasurer and Director








                                                                              24


<PAGE>


                                   MULLY CORP.

                  EXHIBIT INDEX TO ANNUAL REPORT ON FORM 10-KSB
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

EXHIBITS                                                                Page No.

  EX-27  Financial Data Schedule.............................................26



                                                                              25