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

                                   FORM 10-KSB

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

                    FOR THE FISCAL YEAR ENDED MARCH 31, 2000

                         COMMISSION FILE NUMBER 0-21725

                           THE TRANSLATION GROUP, LTD.
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                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

          DELAWARE                                           23-3382869
          --------                                           ----------
(State or other jurisdiction of                      (I.R.S. Employ. Ident. No.)
incorporation or organization)

                              30 WASHINGTON AVENUE
                              HADDONFIELD, NJ 08033
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               (Address of principal executive offices) (Zip Code)

                    ISSUER'S TELEPHONE NUMBER: (856) 795-8669
                       ISSUER'S FAX NUMBER: (856) 795-8737

         SECURITIES REGISTERED UNDER SECTION 12(B) OF THE EXCHANGE ACT:

                                      NONE

         SECURITIES REGISTERED UNDER SECTION 12(G) OF THE EXCHANGE ACT:

                          Common Stock, $.001 per value

                         COMMON STOCK PURCHASE WARRANTS
                               (Titles of classes)

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

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

         Issuer's revenues for its most recent fiscal year:  $ 13,874,289

         Aggregate  market value of the voting stock held by  non-affiliates  of
registrant on July 12, 2000,  based on average of the high and low price on that
date, was $22,205,639 million. Exclusion of shares in this calculation shall not
be deemed an admission that such person is an affiliate and inclusion  shall not
be deemed an admission that such person is not an affiliate. This information is
provided  solely for record  keeping  purposes of the  Securities  and  Exchange
Commission.

         The number of shares  outstanding  of each of the  issuer's  classes of
common equity,  as of the latest  practicable  date:  4,737,203 shares of common
stock,  par value $ .001 per share,  as of July 12, 2000,  which  includes up to
103,000 shares to be issued pursuant to an agreement with a former  executive of
a wholly owned  subsidiary  and TBD shares  issued in  connection  with a recent
acquisition.

         Transitional Small Business Disclosure Format:  Yes       ; No  X
                                                             ---        ---
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<PAGE>

                                     PART I

         PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT

         When used in this  Annual  Report on Form  10-KSB  and in other  public
statements by the Company and Company officers, the words "expect",  "estimate",
"project",   "intend",   and  similar   expressions  are  intended  to  identify
forward-looking  statements  regarding  events and  financial  trends  which may
affect the Company's  future  operating  results and financial  condition.  Such
statements are subject to risks and uncertainties that could cause the Company's
actual  results and  financial  condition  to differ  materially.  Such  factors
include,  among others,  the risk factors  described under Item 1 in this Annual
Report.  Additional  factors are described in the Company's other public reports
filed with the Securities and Exchange Commission.  Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
the date made.  The Company  undertakes no  obligation  to publicly  release the
result of any revision of these forward-looking  statements to reflect events or
circumstances  after  the date they are made or to  reflect  the  occurrence  of
unanticipated events.

ITEM 1.  DESCRIPTION OF BUSINESS

HISTORY AND BACKGROUND

         The  Company  was  incorporated  under the laws of  Delaware on July 6,
1995. On January 17, 1996, the Company  consummated its first  acquisition  when
the  shareholders  of Bureau  of  Translation  Services,  Inc.,  a  Pennsylvania
corporation ("BTS"), exchanged their shares of BTS, for shares of the Company so
that BTS became a wholly owned  subsidiary of the Company.  BTS had been engaged
in providing translation services since 1984.

         The Company  completed its initial public offering on December 6, 1996.
Its common stock is reported on the NASDAQ OTC  Bulletin  Board market under the
symbol THEO for its common stock,  and THEOW for Warrants  which were  initially
issued in connection with its initial public offering.

         On June 30, 1997, the Company  acquired all the issued and  outstanding
common stock of the companies  that comprise the Word House Group ("Word House")
in exchange  for  185,000 of its common  shares and  200,000  additional  common
shares  contingent on future earnings  levels.  Word House has been in operation
since 1984, and currently has offices in The Netherlands, France, and China.

         In May of 1999, the Company  acquired all of the issued and outstanding
stock of Planet Access Networks,  Inc., an Internet engineering firm, in a stock
and cash  transaction.  Management  believes  that Planet Access will enable the
Company's  translation  solutions to be  delivered  through  secure  Intranet or
Internet services.  The Translation Group, Ltd. ("TTGL"),  Bureau of Translation
Services,  Inc. ("BTS"), Planet Access Networks, Inc. ("PAN") and Word House are
referred to herein collectively as the "Company."

                                       2
<PAGE>

The following diagram provides a summary of the Company's current organizational
structure  and the number of  employees  working for each as of the date of this
report:
                           The Translation Group, Ltd.
                                 Haddonfield, NJ
                                  9 Employees

BTS-Wordhouse                 Wordhouse           Planet Access Networks
Haddonfield, NJ               Amsterdam           Flanders, NJ
33 Employees                  45 Employees        75 Employees
1 Location                    3 Locations         2 Locations

OVERVIEW AND STRATEGY

         The  Company  is  positioning  itself to become a leading  supplier  of
multilingual  products and  solutions  via the Internet.  Since  inception,  the
Company has acquired two translation companies,  an Internet solutions provider,
and has  licensed  two  unique,  advanced  translation  systems.  The goal is to
completely integrate the existing services of each business unit while expanding
the globalization capabilities in targeted market segments.

         The  Company  has  been  supplying   translation,   localization,   and
localization engineering services to the software,  telecommunications and other
technical publication  customers.  The customer list for these services includes
Microsoft(R), Oracle, Minitab, ADP, SAP, INSO, PSDI, HP, and others. Through the
acquisition of Planet Access, the Company is also supplying Internet,  Intranet,
and Extranet website development, hosting and other solutions for informational,
interactive,  and  e-commerce  clients.  The customer  lists for these  services
includes Avis, Novartis, Microsoft, Alta Vista, Lockheed Martin, and others.

         The Company has linked its language  technologies and services with Web
development  and e-commerce  enabling  capabilities  through its  acquisition of
Planet  Access.  Planet  Access is a nationally  known  website  developer,  who
through  this  linkage is expanding  its  services to deliver  multilingual  web
technologies and services to owners of complex,  dynamically  updated Web sites.
Based on internal research as well as external sources,  there appear to be very
few competitors with similar capabilities in combining multilingual technologies
and web development.

         The Company is developing unique  computer-based  language  translation
systems and  language  tools with  Gedanken,  Inc.  and ESTeam AB, with whom the
Company has  exclusive  and  worldwide  distribution  rights,.  These  automated
language systems are specifically designed to provide significant  advantages in
terms of speed and cost.  Management  believes  that its  systems are capable of
performing  language  translations with very high  "first-pass"  accuracy within
specified domains of texts, unlike the majority of its competitors.

         The Internet has  significantly  improved the  distribution of software
and other products,  and  information  and products are now instantly  available
globally.  This capability for many different industries has created the need to
have  products  and product  information  translated  into local  languages.  To
satisfy  this  growing  need for  multilingual  web  solution,  the  Company has
accelerated  its integration  efforts and development of enhanced  technology to
enable timely and effective solutions.

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LANGUAGE TECHNOLOGY

         The  Company has  invested in two  licenses  that  management  believes
should offer new abilities within language technologies.  These licensed systems
could  provide the Company  with the ability to process  significant  volumes of
written text in electronic form. Further capabilities  include  preprocessing to
enhance meaning,  building language reference databases,  pre-translation,  and,
depending on the domain or topic, actual translation of the text in an automated
fashion.

MANUAL TRANSLATIONS

         Historically,  the  translation  process  has been  nearly a 100% human
exercise.  For precise  translations to occur, the translator and editor need to
not only be fluent in both the source and target languages,  but,  especially in
the case of highly technical materials,  also `fluent' in the topic which is the
subject of the translation.  In addition,  manual  translation is generally very
time-intensive  and costly with fully burdened  pricing running between $.25 and
$1.00  per  word.  As  such,  manual  translations  have,  and  continue  to be,
characterized by:

o    High costs
o    Long completion times
o    A high quality "first-pass" that is very slow and expensive to attain.

TRADITIONAL LINGUISTIC RULE-BASED MACHINE TRANSLATION SYSTEMS

         In a manual translation,  the cost of the human translator accounts for
35% to 80% of the  total  job cost.  In an  effort  to  reduce  the high  "human
component" cost of translation,  several machine  translation  systems have been
developed over the past several  decades.  Unfortunately,  according to industry
sources, these systems have proven largely ineffective, providing at best only a
45-65% correct "first pass"  translation.  This kind of "first pass" translation
provides a reader with,  at best,  the "gist" of a topic,  and requires that the
remaining 35% - 55% of the source  document be translated  manually,  which,  as
noted above, is both time consuming and expensive, especially when large volumes
of material are involved.

         In short,  the use of these  systems  has yielded  little  productivity
improvements for the industry. Implementation of these systems has had little or
no impact on either the input or actual  translation  time,  although  they have
somewhat shortened printing times.

         Traditional  machine  translation  applications  utilize  three sets of
data: the input text, the translation  program and permanent  knowledge sources.
Permanent  knowledge  sources  contain a dictionary  of words and phrases in the
source  language  along  with  information  about  the  concepts  evoked  by the
dictionary and rules for sentence  development.  The methodology  employed is in
the form of  linguistic  rules for syntax and grammar,  and some are  algorithms
governing verb conjugation,  syntax adjustment,  gender and number agreement and
word re-ordering.

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         Once the user has  selected the source text and  initiated  the machine
translation  process, the program begins to match words from the input text with
those stored in its dictionary.  Upon finding a match, the application brings up
a complete record that includes information on possible meanings of the word and
its contextual  relationship to other words that occur in the same sentence. The
time  required  for the  translation  depends  on the length of the text and the
system running the software.

MATHEMATICAL AND STATISTICALLY-BASED TRANSLATION SYSTEMS AND TOOLS

         The  Company   believes  that  the  common   structural   flaw  of  its
competitors'  traditional  translation  systems  has been  their  reliance  upon
software  programs driven by linguistic  rules.  These rules have been generally
developed  by  academic  linguists  to address  specific  items such as grammar,
syntax,  lexical usage, context, and sentence structure.  The primary impediment
to the success of the traditional linguistic rule-based systems has been that it
is  virtually  impossible  for the system  designers  to  include  the myriad of
exceptions to all the various  linguistic rules in the systems.  This ultimately
leads to consistently faulty translations.

         Recognizing   the   limitations   inherent  in  linguistic   rule-based
translation  systems,  the  Company  has  acquired  the  license  rights  to two
automated translation systems that utilize a fundamentally different approach to
the problem.  The Gedanken system and the BTR system,  developed by ESTeam, rely
upon  mathematical  and  statistical  evaluations  of  dual  language  texts  in
particular topics. By statistically analyzing substantial amounts of legacy text
in two  languages,  patterns  of word  matches,  as well as phrase and  sentence
matches become apparent and remembered in such a way as to allow the translation
of newly inputted text with close to manual "first pass" translation accuracy.

         Furthermore,  the systems  "learn"  from post edit  corrections,  which
means that the next  translation  of each new version  should be better than the
last.  By  utilizing  statistical  matching and pattern  recognition,  so-called
language rules become apparent in the translated text.

THE BTR SYSTEM

         In April  1999,  the Company  entered  into a  development  and license
agreement  with ESTeam AB ("EST"),  a Swedish  corporation  specializing  in the
development of a  computer-automated  language system known as the "BTR System",
and customized this system for specific market applications. The BTR System is a
reference  based  translation  system  comprising  large  amounts of legacy text
(pre-translated  text) arranged and coded at the sentence and sub-sentence level
and then broken down into a topical  sub-section.  This system is designed to be
particularly   effective  for  the  automated   translation   of  content  in  a
well-defined topic.

         The BTR system, its modifications,  improvements,  and adaptations, are
used to perform machine  translations of specific text documents in a particular
domain,  and is  designed  to accept and  analyze  very  large  amounts of data;
namely,  words,  word  phrases,  sentence  segments and whole  sentences in both
source and target  languages.  One particular  application  already perfected by
ESTeam was developed for the automated  translation of trademark information for
the customer,  Compu-Mark, S.A. (a Thompson Group Company) which holds a license

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<PAGE>

to use the system for patent and trademark registrations.  This custom system is
now  available  in  11  different  languages  and  it  performs   understandable
translations automatically with no human intervention.

         As with other machine translation  systems, the BTR System is comprised
of  sub-routines,  or modules,  which  perform  specific  tasks.  These  modules
interrelate via a master control program. Sub-routines include such functions as
topic delineator, bilingual dictionary matches, large capacity databases, target
language   verification,   and  statistical   word  matches.   One  of  the  key
differentiating  features  of the BTR System is its  ability to analyze and find
language matches at the sub-sentence level,  namely,  sentence segments and word
phrase levels.

         The BTR System was designed to excel in automated  translation within a
defined  market or topic.  Examples of these include  financial,  chemical,  and
environmental,  for which the Company is developing "products" or "applications"
using the BTR System.  With the financial support of the Company,  ESTeam is the
development  group that will  complete  these  products.  The first  application
commenced  development  in May 1999  and has been  delivered  by  ESTeam  to the
Company for commercialization.

         Specific BTR System applications have been exclusively  licensed by the
Company for a period of fifteen years.  In  consideration  for the license,  the
Company has agreed to pay royalties on sales for the use of the application,  to
pay EST's development costs for perfecting each of the named  applications,  and
to provide additional development funding under certain conditions.

         The license  entails  certain risks.  While the Company firmly believes
the BTR System could add significant value in the future,  there is no assurance
that any applications will be successfully  developed.  In addition, the license
represents  a  substantial  financial  commitment  by the  Company  without  any
guarantee of successful development of commercially exploitable applications.

THE GEDANKEN SYSTEMS

         On November 1, 1996,  the Company  entered  into a licensing  agreement
with Gedanken, Inc. ("Gedanken") to develop an automated translation system. The
agreement is broken up into three  phases.  Phases I and II call for the Company
to   pay   Gedanken    $750,000   for   the    development    of   an   improved
translation/localization system. Phase III is optional and calls for the Company
to pay Gedanken $4.0 million to develop a real-time  voice  translation  system.
The  agreement  also states the Company is  obligated  to pay  royalties  on all
revenues  generated  that use in whole or in part the patent rights and know-how
of Gedanken.  To date, the Company has invested  $750,000 in system research and
development  relating to phases I and II.  Further  research and  development is
required to produce commercially salable  applications,  and no assurance can be
given that such applications will be successfully developed.

         In evaluating  the potential  opportunity to  commercially  exploit and
monetize the Gedanken system,  and given the remaining funding  requirements and
future  royalties  payable to Gedanken,  the Company  determined that purchasing
Gedanken, Inc. would be in the Company's best financial interest. Therefore, the
Company is currently negotiating the purchase of all of the outstanding stock of

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Gedanken.  The proposed terms call for purchase of all of the outstanding  stock
of Gedanken for  consideration  consisting of: (i) 800,000 shares of TTGL common
stock,  and (ii) 3-year  options to purchase up to 200,000 shares of TTGL common
stock at an exercise  price of $5.00 per share.  If the  purchase of Gedanken is
completed,  TTGL will  become  the owner of the  technology  licensed  under the
Gedanken License.

         In  addition,  the Company  plans to retain key  employees  of Gedanken
through  standard  employment and non-compete  agreements.  Management  plans to
close this transaction by the end of July 2000.

         While  the  Company  firmly  believes  the  Gedanken  system  could add
significant  value in the future,  there is no assurance  that any  commercially
exploitable   applications  will  be  developed.  In  addition,  both  scenarios
represent  a  substantial  financial  commitment  by  the  Company  without  any
guaranteed results or products.

         The Gedanken  system  addresses the added  complexities  of translating
information from  free-flowing  texts of any kind. The Gedanken system is rooted
in statistical analysis of large amounts of language data, and is constructed of
modules that perform different functions. These modules are designed to make the
system a single  comprehensive  automated  translation system. There are several
important  differentiating  features of the Gedanken system, one of which is the
"Precision English" module. The system also includes a sophisticated parser that
dissects  sentences and bilingual  dictionaries.  By eliminating the bulk of the
ambiguous words and phrases and substituting more accurate words, the "Precision
English" module should raise the level of correct translation.

PRODUCTS AND SERVICES BASED ON THE GEDANKEN AND BTR SYSTEMS

         Faced  with a very wide range of  potential  translation  products  the
Company  has  set  specific  criteria  to  narrow  the  possibilities.  Computer
translation  systems  perform better on texts,  which include high repetition of
known  terms,  than on texts with  intentional  ambiguity,  slang,  idioms,  and
emotive  terms  such as are found in  poetry,  novels,  and  general  readership
magazines.

         Possible target markets include nearly all professional,  technical and
industrial  applications such as financial,  medical, legal, trade publications,
software,  patents,  technical  abstracts,  equipment  and  instrument  manuals,
environmental regulations and various other governmental regulations, aerospace,
telecommunications,  automotive and many others.  Both systems allow the Company
the  possibility  to move  effectively  into  varying  market  segments and meet
specific language requirements within a given industry.

         The BTR systems will be focused on use within  industries  that require
accurate  translations  but not as  accurate  as human  translation.  These  are
industries  where  text  is  primarily  used  for  reference  or  as  qualifying
information. It has been proven that existing machine translation systems do not
meet the requirements necessary.  Currently,  the Company is targeting financial
content and will be continually expanding into additional topic areas.

         The Gedanken  systems  should offer a broader range of  usefulness  for
critical  or  technical  text  where the  translated  text needs to be clear and

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concise.  The Gedanken  systems also have marketable  usage during the authoring
stage of the text where extreme costs are incurred for editing and reviewing the
final version of the source material.

INTERNET TECHNOLOGY

INTERNET APPLICATION DEVELOPMENT

         In May 1999, the Company  acquired  Planet Access  Networks,  Inc. in a
stock and cash  transaction.  The "fit"  with the  Company's  existing  business
relates to the fact that virtually every new translation application the Company
is  developing  requires  that the source text be in digital form for input into
the translation software,  processing, and subsequent transportation.  Depending
on the  particular  market  application,  the  customer  may  access  the system
remotely via private subscriber Intranet,  public Internet, or dedicated service
lines.  Virtually all of the Company's  future products  including IT, financial
translations,  medical device labels,  etc., will offer  remote-user  electronic
interfaces to further speed  translation  time, giving the Company an additional
advantage over its competitors.

         In  addition to  providing  the Company  with an  electronic  interface
option for both its existing and  developmental  products,  its  acquisition  of
Planet Access  provides the Company with new  opportunities  in the exciting and
high-margin  technology field of Internet service  provision,  including website
development and management services.

NETWORKING TECHNOLOGIES

         Planet  Access also  provides  outstanding  custom  network  solutions,
hosting and engineering services such as Internet design and security, dedicated
high-speed corporate Internet access and many other custom applications. Clients
for  the  above  activities  include  AVIS,   Novartis,   Lucent   Technologies,
Lockheed-Martin, ABN AMRO, Knoll Pharma.

INTERNET/E-BUSINESS TECHNOLOGIES

         Planet Access is fully capable of comprehensive  Internet  engineering,
including  site design,  security,  security  pass access,  secured  credit card
transactions, secure private access and hosting among many other services. Based
upon the  advanced  nature of its  capabilities,  Company  management  considers
Planet Access among the top 50 Internet engineering firms in the United States.

MULTILINGUAL WEB AND INTERNET TECHNOLOGIES

         The  linkage  of  language  with  the  Web  creates  a  synergy  of two
technologies  that the Company believes is an absolute  necessity today with the
growing popularity of the Internet and Internet based applications.  The Company
is currently developing automated translation  management systems that interface
directly with the server and the  translation  process.  These  systems  provide
client  cost  reduction  as well as solve "time to market"  problems  due to the
labor intensive site maintenance  required in order to keep a multilingual  site
"live".


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<PAGE>

PRODUCTS AND SERVICES

TRANSLATION AND LOCALIZATION

         The Company offers its clients a comprehensive  solutions-based menu of
value-added   products  and  services,   from  development  to  localization  to
in-country  service  and  support.  The  Company  specializes  in  managing  and
producing high volume,  technical translations and localization for its clients.
All of the  Company's  products and services can be  customized  to the client's
specific  requirements.  The primary products and services the Company currently
provides  to  translate  software  manuals  and other  technical  content are as
follows:

     1.  Multilingual Localization and Translation services that include:
         o All levels of product management
         o Terminology development
         o Re-use of previously translated materials using the latest technology
           tools
         o Translation and technical editing of text
         o Software engineering, including resizing and compiling
         o On-line help compiling and formatting
         o Linguistic, functionality, and QA testing
         o Desktop publishing, graphic layout, editing, and proofreading
         o Coordination of in-country review
         o Production of publishable  materials and electronic media,  including
           CD ROM
         o Multimedia localization and production
         o Web site and on-line publishing localization and production
     2. Internationalization and Development Consulting
     3. Technical Writing of Documentation, including editing and evaluation
     4. In-Country Training, Support, and Service Centers
     5. Facilities Management and Resource On-Site Placement Services

         Historically,   the  process  of  Multilingual   Localization  for  the
information technology (IT) market has been highly labor intensive, with much of
the hands-on work being done principally by independent  translators and editors
retained by the  Company,  as well as Company  employees.  The Company  utilizes
various machine  translation tools to reduce the high cost associated with human
translators, decrease the completion time and to enhance consistency.

         The  Company  utilizes  several  translation  software  tools for:  (i)
extracting and storing data; (ii) preserving  formatting  during the translation
process; (iii) online dictionaries;  (iv) presentation of text (e.g., pre-press)
and (v) use of previous translations.

         The Company considers its highly detailed project management,  tracking
and  costing  procedures  to be at the heart of its  specialized  services.  The
Company  places a strong  emphasis on efficient  processes,  and  believes  that

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centralized  project management is essential to efficiency.  To better implement
this policy,  a project  manager is assigned to each project.  Thus, even when a
project  may  have  team  members  in many  different  locations,  most  work is
coordinated  centrally in the Company's United States and European  headquarters
via   electronic   communication.   Certain  core  functions  such  as  editing,
proofreading,  desktop  publishing and client  coordination  are part of central
project management.  In preparing work for translation into multiple languages a
project  editor may  identify  problems or issues that are  relevant  across the
entire  project.  Similarly,  in a  multiple-language  project,  problems may be
picked  up by the  translators  in one or two  languages  that are  relevant  to
others. The Company believes that central control of the process is the only way
certain problems can be adequately handled.

         All of the independent  translators  utilized by the Company are native
speaking  professionals  in the target  language,  and are  required to know the
subject matter of the area in which they translate.  In addition, a project must
have  technically  knowledgeable  staff in the  source  language,  preferably  a
specialist  in  that  area.   The  Company   provides  an  extensive   range  of
communications  facilities  by utilizing  its own internal  systems  integration
group  that  maintains  the  Company's   Internet/Extranet/Intranet  and  E-mail
Systems. Files are prepared for translation by the Company's technical staff and
are  distributed   electronically  to  translators  either  locally  or  in  the
applicable  country.  Translated  versions are returned to the Company's central
project management for checking and proofing (and also compilation,  if software
is involved) and the target  language  versions are  distributed  to appropriate
client locations, which may be multiple locations or a central site.

         In terms of process,  the Company  considers itself an extension of the
client's  documentation  and  software  development  departments.   All  project
activities   are  closely   tracked   using   custom  and   commercial   project
management/tracking  applications  where  the  data is  fully  available  to the
client. Thus, the client always knows the status of the project.

         The Company  realizes  that many of its customers do not possess all of
the expertise needed to manage the localization process. The Company, therefore,
expanded its service  offerings  to include  management  consulting  and on-site
management.  Systems  development  and consulting  services also include product
planning and redesign for local markets.  The Company understands the changes in
technology,  and that  taking a product to a global  market  can be a  difficult
proposition.  In order to offset the technical  difficulties  for its customers,
the Company has taken an active role in the development and modifications of its
customers'  products to support local  specifications and character encoding for
different  regions of the world.  These services allow the Company to manage the
localization  and the  customer  to manage  the  product.  Therefore,  costs are
reduced while quality is maintained.

INTERNET WEBSITE DESIGN AND APPLICATION DEVELOPMENT

         The Company offers its customers a comprehensive  solutions-based  menu
of value-added  products and services,  from basic  billboard web development to
highly complicated transactional e-commerce sites. All of the Company's products
and services can be  customized to the  customer's  specific  requirements.  The
primary products and services the Company currently provides are as follows:

                                       10
<PAGE>

     1. Web Design and Development
         o All levels of product management
         o Design and layout
         o Graphics design and creation
         o Interactive scripting and application design and development
         o Database design and development
         o Backend application design and development
         o On-line publishing and production
         o All of these services in multiple languages
     2. Solution Consulting
     3. Technical Writing of Documentation, including editing and evaluation
     4. Network design and implementation
     5. Off-site/On-site systems administration and hosting .....

         Planet  Access is  completely  integrated  in  offering an "end to end"
service to web customers. The Company employs senior,  experienced professionals
in each key  discipline  of web design and  implementation,  including  graphics
design,  HTML  coding,  master  program  architecture,  web  analysis,  testing,
equipment platform specification, installation and hosting.



                                       11
<PAGE>

MARKETING

TRANSLATION/LOCALIZATION

CURRENT

         The Company  markets its  products  and  services  primarily  through a
dedicated  six-person  sales force.  In addition,  the Company  participates  in
several trade shows annually and conducts  limited print  advertising in several
trade  publications.  The Company is an active  member in the STC  (Society  for
Technical  Communications),  the  ATA  (American  Translators  Association)  and
several regional chapters of the Chamber of Commerce. An extensive marketing and
PR program will commence in July 2000 focusing on multi-lingual  web development
customers.

CLIENTS

         The Company provides  translation and localization  services to a range
of industries and sectors, with an emphasis on IT companies.  During fiscal 1999
and 2000,  approximately  36% of the Company's  revenues came from  localization
projects for software publishers,  computer hardware  manufacturers and computer
and peripherals vendors.

         The  Company  has  a  large  number  of  IT-based  clients,   including
Microsoft,  Oracle,  Okidata,  Bentley Systems,  HP, Cannon,  Creative Labs, Bay
Networks, PSDI, INSO, ADP, General Instruments,  Fisher Rosemont,  Minitab along
with many others. The strong relationships the Company has developed with its IT
clients have also generated a volume of more  conventional  translation work. As
an example of these services, the Company is translating and localizing software
messages,   software  dialogue  boxes,   software  help,  related  documentation
including user manuals, product literature and websites.

         At present, key markets for the Company's solutions are clients located
in Japan,  Europe,  and the  Americas,  which  include the  dialects of Canadian
French, Latin American Spanish, and Brazilian  Portuguese.  The Company provides
translation in 36 languages.

         The  Company's  business  consists  of  translation  for  suppliers  of
applications software,  including a substantial volume of Unix-based systems and
customized   implementations.   Principal   applications   are   financial   and
manufacturing,   with  systems  encompassing  everything  from  order  entry  to
distribution.

MARKET SIZE

         According  to  OVUM,  Inc.,  a  market  research   company,   and  LISA
(Localization   Industrial   Standards   Association),   the   translation   and
localization market currently  approximates $20 billion annually and is expected
to grow 10% to 15% annually.  In addition,  OVUM  forecasts a higher growth rate
over the next five years as the demand for translation  and  localization in the
IT related market increases.

                                       12
<PAGE>

         The Company  believes  that OVUM's  estimate of $20 billion  includes a
substantial amount of casual translation,  which is unlikely to be subject to an
automated solution. In addition, this estimate includes an unknown percentage of
language  translation  performed by the in-house  translation  staffs of certain
medium and large sized multinational companies with product offerings in various
languages, including Caterpillar, Boeing, IBM, Bloomberg, and XEROX.

         By adding total estimated revenues of translation firms to estimates of
"in-house" translation  activities of medium to large multi-national  companies,
the  Company is  estimating  a current  market for its  translation/localization
solutions of approximately $5 billion.

THE TRANSLATION AND LOCALIZATION SERVICES MARKET

         The    translation/localization    industry    is   highly    volatile.
Traditionally,  translation  has been a production  "afterthought".  In general,
products and  documentation  are first  completed for the home market,  and then
companies face the painful hurdle of  localization  before shipping the products
to  their  customers.  As a  result,  translation  requirements  arise  somewhat
unpredictably and with much urgency.

         The   translation/localization   market  breaks  down  into  two  broad
categories,  namely "retail" and  "professional/technical." The Company plans to
compete almost exclusively in the high volume professional/technical market.

RETAIL: The retail  translation  segment includes a variety of applications such
as general  business  correspondence,  consumer product  marketing,  newspapers,
magazines,  literary works,  chat room  conversations,  TV shows, news programs,
personal letters and the like.

PROFESSIONAL/TECHNICAL:  The professional/technical  translation market consists
primarily of high volume  translation  items, and includes all types of business
products and services as well as government  publications requiring translation.
Virtually all businesses  which export  products or services  require that their
products  be  tailored  to the  local  target  market or  country.  The types of
businesses  included in the  professional/technical  segment include automotive,
aerospace   telecommunications,   pharmaceutical,   medical  device,   software,
transportation  equipment,  chemicals,  industrial tools,  accounting standards,
investment data and research reports, patents, government regulations, financial
data, computers,  educational materials,  foods, scientific instruments and many
others.

         The   level   of   precision    required   of    translators   in   the
professional/technical  market is significantly  greater than that of the retail
translation  market. Not only is fluency in both the source and target languages
required, but also fluency in the topic which is the subject of the translation.
Examples  of  professional/technical  translations  requiring  a high  degree of
precision include automotive, aircraft engine repair manuals, and pharmaceutical
labeling.

         The intensity of global competition places pressure on organizations to
utilize simultaneous market release  opportunities in order to be competitive on
a global basis.  This means that  information must be enabled for global markets
so that the localization process is easier to manage. Consequently,  the need to
localize  products  for  foreign  markets  is  increasing.  A lack  of  internal
resources has forced many companies to outsource their  translation/localization
needs,  and the movement  toward  outsourcing is, in turn,  revolutionizing  the
translation/localization industry.


                                       13
<PAGE>

         Translation  Services are evolving  into Global  Information  Services.
Some of the key market drivers of the global  information  services industry are
described as follows:

COMPETITION

         The  translation  and   localization   industry  is   characterized  by
volatility and is highly competitive. Traditionally,  translation companies have
competed  primarily  on a mixture  of price and  completion  time,  often at the
expense of quality.  Competition in the translation  market is  characterized by
widely differing  elements,  reflecting the diverse needs of clients. At one end
of the spectrum,  there are small agencies with a generalist approach that offer
services  typically  limited to  translation.  At the other end of the spectrum,
there are a few large companies that offer machine  translation  software and/or
turnkey   services  (more  than   translation   only),   focusing  on  providing
industry-specific "solutions".

         As translation and localization  contracts  become larger,  the Company
believes  that large  corporate  IT  customers  will  continue to migrate to the
solution-based  models offered by large capacity service  providers.  Currently,
the  Company's   competitors  can  be  divided  into  two  main   subcategories,
traditional  translation companies and companies offering large capacity machine
translation products and/or solution-based models. However, the Company believes
that within a relatively  short period of time,  it will be competing  primarily
with companies in the second subcategory.

         Companies that perform translation as a business tend to be small, `mom
and pop' type firms with annual  revenues of $300,000 to $700,000.  In fact, the
Company  estimates  that 95% of the 3000+ U.S. based  translation  agencies have
annual revenues of less than $1.5 million.  The same fragmented market structure
of  thousands  of small  firms  prevails  overseas,  where  there  are many more
companies performing  translations than in the US. The Company believes that the
key competitive  factors in the market for translation  services are: (i) price;
(ii) delivery time, and (iii) quality.  Worldwide, fewer than 10 translation and
localization companies have annual translation revenues of over $50 million.

                 Alpnet (NL)                       $55 million
                 Lernout & Hauspie (BE)            $60 million
                 Bowne Trans. Div. (US)            $65 million
                 Berlitz (US)                      $85 million
                 Lionbridge (US)                   $90 million

         A wide range of Web development  firms exist in the marketplace.  Small
mom and pop firms  typically  tend to develop and host small  static sites where
content remains constant and the main purpose for the site is visibility. Medium
to large size firms with a staff that has expertise to handle the  complexity of
the primary  components  of a dynamic web site (User  Interface,  Graphics,  and
back-office application  development) produce most of today's e-commerce enabled
sites,  (i.e.  CDNow,  Amazon.com,  Priceline.com).  The major  web  development
players today are the independent web development companies,  and the consulting
arms  of the Big 5  accounting  firms  and  global  IT  integration  firms  (IBM
e-commerce division).  Despite all the development talent available to the firms
mentioned above, no one has created a single solution for the integration of web
and automated translation technologies.


                                       14
<PAGE>

EMPLOYEES

         The Company presently employs 147 full-time people,  comprised of 11 in
management  positions,  10 in administration,  7 in sales and marketing,  119 in
production and engineering.  In addition,  the Company also uses the services of
about 450 freelance and/or  independent  translators and editors on an as-needed
basis from a roster of several thousand worldwide.

         All of the Company's  translators are native-speaking  professionals in
the target language,  and are required to know the subject matter of the area in
which they translate. In addition, a project must have technically knowledgeable
staff in the source language, preferably a specialist in that area.

         Even  with  machine   translation,   there  is  a  need  for  qualified
individuals as in-house quality-control  personnel and as translators of subject
areas that have not been mechanized. The Company expects that the available pool
of  qualified  translators  will  not  grow  as  rapidly  as the  growth  in the
translation and localization market as a whole.

INTELLECTUAL PROPERTY, PROPRIETARY RIGHTS, LICENSES AND SOFTWARE PROTECTION

         On November 1, 1996 the Company  entered into a development and license
agreement to use and sell know-how,  apparatus,  and methods pertaining to tools
and systems  developments  made by the  Gedanken  Corporation,  an  unaffiliated
development company  ("Gedanken").  Gedanken has filed and received an allowance
for a United States Patent that describes  apparatus and methods for translating
words,  phrases,  and sentences from a source language to other target languages
using advanced  telecommunications  and computer  technologies.  Currently,  the
Company is negotiating the purchase of Gedanken, Inc.

         In April  1999,  the Company  entered  into a  development  and license
agreement  with ESTeam AB ("EST"),  a Swedish  corporation  specializing  in the
development of a  computer-automated  language system known as the "BTR System",
and the customization of this system for specific market  applications.  The BTR
system, its modifications,  improvements,  and adaptations,  are used to perform
machine  translations of specific text documents in a particular  domain, and is
designed to accept and analyze very large amounts of data;  namely,  words, word
phrases,  sentence  segments  and whole  sentences  in both  source  and  target
languages.

         The Company  entered  into an exclusive  worldwide  license for certain
applications,  chosen  by  the  Company,  for a  period  of  fifteen  years.  In
consideration for the worldwide license, the Company has agreed to pay royalties
on sales of any application,  to pay EST's development costs for perfecting each
of the named applications,  and to provide additional  development funding under
certain conditions.

         The  Company  regards  certain  features  of its  internal  operations,
software  and  documentation  as  proprietary,  and relies on a  combination  of
contract,  copyright,  trademark  and trade  secret  laws and other  measures to
protect this proprietary information. The Company holds no patents, and existing
copyright  laws afford only  limited  protection.  The  Company  believes  that,
because  of the rapid  pace of  technological  change in the  computer  software
industry,  trade  secret and  copyright  protection  are less  significant  than
factors  such  as  the  knowledge,  ability  and  experience  of  the  Company's
employees,  frequent  product  enhancements  and the  timeliness  and quality of
support services.


                                       15
<PAGE>

RISK FACTORS

         AN  INVESTMENT  IN THE COMPANY  INVOLVES  NUMEROUS  SIGNIFICANT  RISKS,
INCLUDING THOSE SET FORTH BELOW. THE FOLLOWING RISKS, AMONG OTHERS NOTED IN THIS
REPORT,  SHOULD BE CAREFULLY  CONSIDERED IN EVALUATING THE COMPANY.  THIS REPORT
CONTAINS CERTAIN  FORWARD-LOOKING  STATEMENTS BASED ON CURRENT EXPECTATIONS THAT
INVOLVE RISKS AND  UNCERTAINTIES.  ACTUAL RESULTS COULD DIFFER  MATERIALLY  FROM
THOSE  ANTICIPATED  IN THESE  FORWARD-LOOKING  STATEMENTS  AS A  RESULT  OF MANY
FACTORS,  INCLUDING  THE RISK  FACTORS  SET FORTH  BELOW AND  ELSEWHERE  IN THIS
REPORT.  THE CAUTIONARY  STATEMENTS  MADE IN THIS REPORT SHOULD BE READ AS BEING
APPLICABLE  TO ALL  FORWARD-LOOKING  STATEMENTS  WHEREVER  THEY  APPEAR  IN THIS
REPORT..

FUTURE  PROFITABILITY  AND THE VALUE OF YOUR  INVESTMENT  WILL  DEPEND  UPON THE
COMPANY'S SUCCESS GROWTH STRATEGY

         The Company has reflected only modest net income from operations during
fiscal 1997, a net loss during fiscal 1998,  1999,  and 2000.  As a result,  the
Company's  successful  implementation  of  its  business  strategy  will  likely
determine:

o   future profitability

o   ability to effectively compete in the translation and localization industry;
    and

o   The ultimate value of an investment in the Company

         The Company's  business plan relies  primarily on the  development  and
implementation of computer-aided  translation and localization  products and the
integration of existing translation and Web development services.

THE  COMPANY  HAS  COMMITTED A  SIGNIFICANT  PORTION OF ITS  WORKING  CAPITAL TO
RESEARCH AND DEVELOPMENT,  AND THE FAILURE TO  COMMERCIALIZE  THE COMPUTER AIDED
TRANSLATION AND LOCALIZATION  PRODUCTS AND SERVICES WILL HAVE A MATERIAL ADVERSE
IMPACT ON THE COMPANY'S FINANCIAL CONDITION

         Over the past three years the Company has invested  approximately  $1.7
million  on the  development  of the  Gedanken  and  BTR  systems.  The  Company
anticipates  providing  additional  funding  during  fiscal  2001 and  beyond to
complete production models and commence  commercialization  of the systems.  The
inability to commercialize  either one or both of these projects may well affect
their competitive position in the industry and impact profitability.

LIMITED MARKET FOR THE COMPANY'S COMMON STOCK INCREASES THE POSSIBLE  VOLATILITY
OF STOCK PRICES AND THE VALUE OF ANY INVESTMENT IN EQUITY MAY BE REDUCED

         The public trading  market for the Company's  shares of common stock is
limited on the OTC Bulletin  Board.  There can be no  assurances  that a regular
trading  market for the  common  stock will be  sustained.  By its very  nature,
trading on the OTC Bulletin  Board provides only limited  market  liquidity.  In
addition,  the  stock  markets  generally  have  experienced,  and  continue  to
experience, extreme price and volume fluctuations which have affected the market
price of many small cap  companies  and which have often been  unrelated  to the

                                       16
<PAGE>

operating  performance of these companies.  These broad market fluctuations,  as
well as general  economic and political  conditions,  may  adversely  affect the
market price of the Company's common stock.

IF THE COMPANY USES ITS COMMON  STOCK TO CARRY OUT  ADDITIONAL  ACQUISITIONS  OR
ISSUE  MORE  COMMON  STOCK IN A PUBLIC  OFFERING,  ADDITIONAL  DILUTION  TO YOUR
INVESTMENT WILL OCCUR

         The Company may grow the  business  through  acquisitions.  The Company
could accomplish this through the issuance of additional shares of common stock.
This would have the effect of  increasing  the number of shares of common  stock
outstanding. In addition, in order to accomplish the Company's business strategy
on a longer-term basis, they are likely to require additional  financing,  which
may entail the issuance of additional shares of common stock, preferred stock or
common stock equivalents,  which would have the further effect of increasing the
number of shares outstanding. This may be done in order to, among other things:

o   Facilitate a business combination

o   Acquire assets or stock of another business

o   Compensate employees or consultants; and

o   For other valid business reasons in the discretion of the Board of Directors

THE COMPANY OPERATES IN HIGHLY COMPETITIVE  MARKETS,  WHICH COULD RESULT IN LOSS
OF MARKET SHARE OR REDUCED MARGINS

         The Company faces intense competition from multinational,  regional and
local companies in every market in which they operate. The principal competitive
factors within the translation and localization industry include:

o   Price

o   Technological capability

o   Accuracy

o   Extent of geographic coverage; and

o   Ability to deliver services in a timely manner

         Many of the Company's competitors have well-established reputations and
significantly greater financial,  marketing,  personnel and other resources. The
Company's principal competitors are:

        o   Berlitz                                 o   Lernout & Hauspie, N.V.
        o   Bowne Translation Division              o   Logos
        o   Alpnet                                  o   Systran
        o   Lionbridge                              o   LMI


                                       17
<PAGE>

Some of these  competitors are  multinational,  highly visible and well-regarded
enterprises.  There can be no assurance that the Company will be able to compete
effectively against these or any other competitors.

SENIOR MANAGEMENT  BENEFICIALLY  OWNS A SIGNIFICANT  PERCENTAGE OF THE COMPANY'S
COMMON  STOCK AND  THEREFORE  HAS  SIGNIFICANT  INFLUENCE  OVER THE  ELECTION OF
DIRECTORS

         The officers,  directors and principal  stockholders own  approximately
[30.4%] of the Company's  common stock on a fully diluted  basis.  Consequently,
upon  exercise of their  vested  options and  warrants and by virtue of Delaware
law, these  stockholders could be in a position to influence the election of all
the  directors  and  possibly  control  the outcome of other  corporate  matters
without the approval of other stockholders.  In addition,  applicable  statutory
provisions and the ability of the Board of Directors to issue one or more series
of preferred stock without stockholder approval could deter or delay unsolicited
changes in control by discouraging open market purchases of the Company's common
stock or a  non-negotiated  tender or  exchange  offer for  stock,  which may be
disadvantageous  to stockholders who may otherwise desire to participate in such
a transaction and receive a premium for their shares.

THE SUCCESSFUL  IMPLEMENTATION  OF THE COMPANY'S  BUSINESS STRATEGY IS DEPENDENT
UPON MANAGEMENT PERSONNEL AND EXECUTIVE OFFICERS

         Operations  are  dependent  upon  the  continued   services  of  senior
management  and  upon  the  Company's  ability  to  hire  and  retain  qualified
management  and  technical  personnel.  The  loss of  services  of any of  those
executive  officers or other  management  or  personnel,  whether as a result of
death,  disability or  otherwise,  may have a material  adverse  effect upon the
Company's business.

A SIGNIFICANT PORTION OF REVENUES ARE DERIVED FROM INTERNATIONAL OPERATIONS, AND
A DOWNTURN IN INTERNATIONAL COMMERCE COULD SEVERELY IMPACT RESULTS OF OPERATIONS

         A significant  portion of the Company's  business is conducted  outside
the United States.  International trade is influenced by many factors, including
economic and political conditions,  employment issues, currency fluctuations and
laws relating to tariffs, trade restrictions,  foreign investments and taxation.
As a result, the Company's operations are subject to various risks such as:

o    Loss of revenue due to the instability of foreign economies

o    Currency fluctuations and devaluations

o    Adverse tax policies; and

o    Governmental  activities  that  may  limit  or  disrupt  markets,  restrict
     payments or the movement of funds or result in the  deprivation of contract
     rights

         The Company is subject to taxation  in a number of  jurisdictions,  and
the final  determination of tax liabilities  involves the  interpretation of the
statutes and  requirements of various  domestic and foreign taxing  authorities.
Moreover,  many of the countries where the Company operates and plans to operate
have legal  systems  that differ  from the United  States  legal  system and may
provide substantially less protection for foreign investors.  A reduction in the
level of international  trade,  material  restrictions on trade or a downturn in
the economies of countries in which the Company currently  operates could have a
material adverse effect on the results of operations.

                                       18
<PAGE>

ITEM 2.  DESCRIPTION OF PROPERTY

         The   Company's   principal   operating   facilities   are  located  in
Haddonfield,  New Jersey, USA: Amsterdam, The Netherlands, and Lyon, France. The
New Jersey  production  facility occupies  approximately  6,000 square feet at a
monthly rate of $8,300 pursuant to a lease that extends until February 28, 2003.
In May 1997 Word House moved its principal  location to Amsterdam.  Its lease is
for approximately 5,500 square feet, and is for a period of five years at a rent
of $7,500 per month. A French  subsidiary owns a condominium floor in Lyon, with
approximately  3,000 square feet of space.  Estimated  annual costs  approximate
$43,000.  The Company also has an office in Beijing,  China, with an annual rent
of $21,000 for approximately 800 square feet.

         Planet  Access  leases  approximately  2,500  square feet of office and
production  space in Stanhope,  New Jersey with an annual rent of $32,400.  This
lease expired on June 30, 1998.  Since the  expiration  date,  Planet Access has
been on a  month-to-month  extension.  Planet Access has recently entered into a
lease for 8,500  square feet of office and  production  space in  Flanders,  New
Jersey with an annual rent of $127,500. This lease expires on July 15, 2004.

         The Company believes that all of its facilities are currently  adequate
and further believes that, if necessary, adequate facilities could be located in
the event the Company needs to replace or expand its current facilities.

ITEM 3.  LEGAL PROCEEDINGS

         The  Company  has been sued by a  stockholder  who is seeking  monetary
damages,  specific  performance,  equitable  relief  and costs in the  amount of
$3,000,000.  The Company and its special  litigation  counsel  believe that this
suit is completely without merit and will vigorously defend it. On September 15,
1997 the Company was served with a summons which was  subsequently  filed in the
New York State  Supreme  Court,  Kings  County,  alleging  various acts of fraud
associated with the Company's reverse stock split which occurred on November 21,
1996.  The  plaintiff,  Lee Dan Ltd., a shareholder  of the Company,  is seeking
monetary damages, specific performance, equitable relief and costs in the amount
of  $3,000,000.  Based on a review  of the file  and  discussions  with  Company
management,  counsel  for the  Company  believes  that  there  is a  substantial
likelihood that the Company will prevail in this matter.

         The Company is not a party to, or involved in, any other material legal
proceedings.  In the ordinary  course of business the Company may become subject
to certain legal  proceedings and there can be no assurances that the results of
such  proceedings  will not have a  material  adverse  affect  on the  Company's
results of operations.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS     Not applicable.

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         The Company  completed its initial public offering on December 6, 1996.
Since that date its common  stock has been  reported on the NASDAQ OTC  Bulletin
Board under the symbol  THEO.  The  following  table sets forth the range of the
high and low bid  prices  for the  common  stock  as  reported  by the  National
Quotation  Bureau  for the  periods  indicated  and  represents  prices  between
broker-dealers,  which do not include  retail  mark-ups and  mark-downs,  or any
commission to the broker-dealer.  The bid prices do not reflect prices of actual
transactions.

                                       19
<PAGE>

      1998                                           High               Low
      ----

      Quarter ended March 31, 1998                  $ 4.75             $ 3.75
      Quarter ended June 30, 1998                     6.50               4.00
      Quarter ended September 30, 1998                7.5625             5.25
      Quarter ended December 31, 1998                 6.25               4.50

      1999

      Quarter ended March 31, 1999                   $5.00              $3.00
      Quarter ended June 30, 1999                     6.125              3.00
      Quarter ended September 30, 1999                3.75               2.00
      Quarter ended December 31, 1999                 5.3125             1.5625

      2000

      Quarter ended March 31, 2000                   10.50               3.25

         On July 12, 2000 the closing bid price for the  Company's  common stock
was $4.6875. The approximate number of record holders of common stock as of July
12,  2000 was 66.  The  approximate  number of  beneficial  owners was 675 as of
July12, 2000.

         The Company also issued  common stock  purchase  warrants in connection
with its initial public  offering which are now  exercisable  until December 31,
2000 for a share of common stock upon payment of the exercise price of $4.35.

DIVIDEND POLICY

         The Company has not declared or paid any  dividends  nor does it expect
to pay  dividends on its common  stock in the  foreseeable  future  intending to
retain earnings to finance the growth of its operations.

TRANSFER AGENT

         The Company  uses  American  Stock  Transfer & Trust  Company,  40 Wall
Street,  New York,  New York 10005,  to act as Transfer  Agent for the Company's
common stock.

                                       20
<PAGE>

ITEM 6.  MANAGEMENT'S  DISCUSSION  &  ANALYSIS  OF  RESULTS  OF  OPERATIONS  AND
         FINANCIAL CREDIT (000'S)

YEAR ENDED MARCH 31, 2000, 1999 & 1998

<TABLE>
<CAPTION>

OPERATIONS                         2000*       %       1999**        %       CHANGE       1998        %         CHANGE
----------                         -----       -       ------        -       ------       ----        -         ------
<S>                             <C>         <C>     <C>            <C>       <C>        <C>         <C>       <C>
Sales.........................   $13,347     100.0   $  5,987       100.0   $ 7,360      $ 6,421     100.0     ($ 432)
Operating Costs &
EXPENSES
Cost of Sales.................     8,715      65.3      4,833        80.6     3,882        4,189      65.3        643
Selling & Admin...............     2,724      20.4      1,865        31.1       859        1,309      20.3        556
Research & Develop............                            147         2.4      (147)         244       3.8      (  97)
Special & Other...............                            979        16.3      (979)                   --         979
Corporate Admin...............     1,244       9.3        736        12.2       508          774      12.0       ( 38)
Amort. of excess..............       340       2.6         97         1.6       243           73       1.1         24
                                 --------  ---------  ---------  ----------  ---------  ---------  ---------  ---------

Total.........................    13,023      97.6      8,657     1,442.2     4,366        6,589     102.5      2,068

Operating profit (loss)
before other income...........       324       2.4     (2,670)      (44.2)    2,994         (168)     (2.5)    (2,502)
Other income (expense), net...
                                    (344)     (2.6)       125         2.1      (469)         178       2.7       ( 53)
                                --------  ---------  ---------  ----------  ---------  ---------  ---------  ---------

(Loss) income before taxes....
                                     (20)      (.2)    (2,545)      (42.1)    2,525           10        .2     (2,555)

Income taxes (benefit)........       168       1.2       (396)        6.5       564           24        .4        420
                                --------  ---------  ---------  ----------  ---------  ---------  ---------  ---------
Net Income (Loss).............    $ (188)     (1.4)   $(2,149)      (35.6)   $1,961     $    (14)      (.2)   $(2,135)
                                ========  =========  =========  ==========  =========  ========== =========  =========

Average shares outstanding....
                                   2,966                2,278                              2,124
Primary earnings (loss)
per share.....................
                                    (.06)            $   (.94)                          $   (.01)

</TABLE>

*    Includes sales and costs of acquired subsidiary for the eleven months ended
     March 31, 1999

**   Includes  sales and costs of acquired  subsidiary for the nine months ended
     March 1, 1998

 Reflects reclassifications for consistency of comparisons.

                                            3/31/00        3/31/99
FINANCIAL CONDITION                               (IN 000'S)             CHANGE

Cash and short term investments..........      1,700     $  1,896          (196)
Other current assets.....................      3,072        1,697         1,375
                                          ------------ ------------- -----------
Total Current Assets.....................      4,772        3,593         1,179
Total Current Liabilities................      1,672        1,452           220
                                          ------------ ------------- -----------
Working Capital..........................      3,100        2,141           959
                                          ------------ ------------- -----------
Current Ratio............................      2.9:1        2.5:1
Total Assets.............................     11,933        6,161         5,772
Total Liabilities........................      2,166        1,639           527
                                          ------------ ------------- -----------
Stockholders' equity.....................      9,767        4,522         5,245
                                          ------------ ------------- -----------
Book value per share.....................
                                             $  3.29     $   2.00     $    1.29
                                          ============ ============= ===========

                                       21
<PAGE>


RESULTS OF OPERATIONS FOR THE
FISCAL YEAR ENDED MARCH 31, 2000 (THE "CURRENT YEAR")
COMPARED TO THE FISCAL YEAR ENDED MARCH 31, 1999 ("COMPARABLE YEAR")

GENERAL

         During the Current Year, the Company  purchased all of the  outstanding
shares of Planet Access Networks,  Inc.  ("Planet  Access"),  a New-Jersey based
web-site design and hosting company.  The Company also continued  development of
computer-based  translation tools licensed from Gedanken,  Inc.  (Gedanken") and
ESTeam AB  ("ESTeam"),  although  launch of services based on these tools is not
anticipated  until  later in Fiscal  Year 2001.  During the  Current  Year,  the
Company continued the historic operations of the Bureau of Translation  Services
("BTS") and the WordHouse Group of Companies ("WordHouse").


SALES

         During the Current  Year,  consolidated  sales  increased by $7,360,000
from the Comparable Year to $13,347,000,  an increase of 123%. Of this increase,
the  acquisition  of Planet  Access  accounted for  $9,006,000,  or 67% of total
sales.  Sales at BTS and WordHouse were lower than during the  Comparable  Year.
BTS and WordHouse  continue to be affected by intense  competition in the market
for  translation  and  localization  services.  As  a  result,  the  Company  is
repositioning  itself as a technology  company that will use the tools  licensed
from  Gedanken  and ESTeam to offer  quicker  services at lower cost and greater
margins.

         During the Current Year, Brandwise LLC ("Brandwise")  accounted for 74%
of Planet  Access'  revenues.  During the fourth  quarter of the  Current  Year,
Brandwise  encountered  financial  difficulties  and  reduced  operations.  As a
result, Planet Access and Brandwise terminated their relationship.  Furthermore,
during the fiscal  year  ending  March 31,  2001,  Planet  Access  will not have
Brandwise  as a client.  Accordingly,  it can be expected  that unless and until
Planet Access can replace the revenues  generated by Brandwise,  Planet  Access'
revenues will decline.


COST OF SALES AND GROSS MARGIN

         During  the  Current  Year,  cost of  sales  increased  by 80% over the
Comparable Year to $8,715,000.00,  principally as a result of higher sales. As a
percentage of sales,  cost of sales decreased from 80.6% to 65.3%. This decrease
is attributable to the inclusion of Planet Access, with its higher gross margins
when  compared to BTS and  WordHouse.  Due to the  competitive  pressures in the
translation and localization  market,  BTS and WordHouse continue to suffer from
low margins. Management believes that the commercialization of products based on
the  Gedanken  and  ESTeam   technologies   will  allow  the  Company  to  offer
satisfactory margins notwithstanding competitive pressures in the industry.

GENERAL AND ADMINISTRATIVE

         General and administrative  expenses increased from the Comparable Year
by $859,000 or 46% to $2,724,000 in the Current Year,  principally as the result
of the  acquisition  of Planet  Access  and  increased  administrative  salaries
associated  with  the  expected  launch  of  translation  services  based on the

                                       22
<PAGE>

technologies  licensed  from  Gedanken  and ESTeam.  As a  percentage  of sales,
general administrative expenses decreased from 31.1% to 20.4%.

NET INCOME

         Net loss decreased from the Comparable  Year by $1,961,000 to $188,000,
or 91% in the Current Year, principally as a result of the acquisition of Planet
Access which added approximately $9,006,000 to revenues, $1,602,000 to operating
profit  and  $1,541,000  to net  income.  The  reduction  in net  loss  is  also
attributable  to the fact that  Planet  Access had  higher  gross  margins  when
compared to BTS and WordHouse.  Additionally, losses at WordHouse were 25% lower
than the Comparable  Year due to increased  sales in the 3rd and 4th quarters of
the Current year, resulting in break-even in the 3rd quarter and a profit in the
4th quarter.

         The Company  increased the number of outstanding  shares from 2,270,000
shares in the  Comparable  Year to  3,788,000  shares in the Current  Year.  The
increased number of outstanding  shares along with a decrease in net loss caused
net loss per share to  decrease  from $.94 per share in the  Comparable  Year to
$.06 per share in the Current Year.

FISCAL YEAR ENDED MARCH 31, 1999 AS COMPARED TO FISCAL YEAR ENDED MARCH 31, 1998

         As presented in the above  summaries,  the Company lost  $2,149,000 for
the year ended March 31, 1999 in  comparison  to a loss of $14,000 for the prior
fiscal year. The primary reasons for the increased loss were: a 6.7% decrease in
sales from $6,421,000 in 1998 to $5,987,000 in 1999 and a 15.3% increase of cost
of sales from  $4,189,000  to $4,832,000  during the same period;  the Company's
expenses  for  special  projects  and other  costs not  directly  related to the
current  production-sales  cycle of  $979,000;  and an  increase  in selling and
administration  of $556,000,  which was only partially offset by other decreases
of $55,000 and an income tax recovery  change of $402,000,  also  contributed to
the loss.

         A reduction in the Company's  gross margin of $1,075,000 was the result
of a decrease in sales of $432,000  and  increase of cost of sales of  $643,000.
The increased costs were primarily the result of the Company's  expansion of its
capacity.  The Company moved to larger  quarters and increased its  engineering,
production and support personnel. During this fiscal year, the Company's results
from operations were  negatively  affected by the economic  downturn in Asia. At
the  same  time,  the  Company  was  in the  beginning  of a  transition  from a
translation  service  bureau  utilizing  tools and memory  translation to a more
technologically   based   products   enterprise   developing  its  own  computer
translation system.

         Management  believed  that most of the causes of the  significant  loss
were eliminated or their effects  reduced.  The Company took the following steps
to  mitigate  further  losses  and to  return  to  profitability:  International
operations in Europe and Canada lost  approximately  $500,000 in the last fiscal
year.  The  Canadian  entity was  closed in March,  1999.  Personnel  costs were
reduced. Such changes will reduce costs by approximately  $350,000.  The general
advertising  campaign  has  been  terminated  and  marketing  costs  reduced  by
approximately  $200,000.  The  Company  achieved   "technological   feasibility"
relative  to  its  research  and  development   efforts  to  design  a  computer
translation  system. It has also acquired under a license,  exclusive rights for
computer based  translations for certain of the products (see  "Business").  The
Company  acquired a Web site and internet  management  services  operation  (see
"Business") which became immediately accretive to earnings.

                                       23
<PAGE>

LIQUIDITY AND WORKING CAPITAL

         As of March 31, 2000, the Company had a cash balance of $1,700,000 down
from  $1,896,000 at March 31, 1999.  Also, as of March 31, 2000, the Company had
working capital of $3,100,000, up from $2,141,000 at March 31, 1999.

         The increase in working  capital was as a result of cash raised through
several  private  placements of securities  during the Current Year.  During the
Current Year, the Company  completed a common stock and warrant offering through
Pennsylvania  Merchant Group, which raised $1.0 million. In addition the Company
completed a $1.0  million  offering  of Series A  Convertible  Preferred  Stock.
Finally,  during the Current Year the Company  received  $1,478,112  in proceeds
from the exercise of outstanding common stock purchase warrants.  These proceeds
were used to pay the deferred  purchase price associated with the acquisition of
Planet Access.

         Subsequent  to  year-end,   the  Company  raised  additional   proceeds
$2,500,000 in a private placement of common stock with a venture capital fund.

         Management believes that the existing cash balance,  together with cash
generated  from  operations,  will be  adequate  to meet the  Company's  working
capital  needs for the fiscal year ending  March 31, 2001 at existing  levels of
operations.  However,  the Company anticipates  incurring additional expenses in
connection with its launch of products  incorporating the licensed  technologies
from Gedanken and ESTeam.  The Company  believes that it will be able to finance
its growth from the issuance of securities and has had  preliminary  discussions
with a number of  potential  financing  sources.  However,  the  Company has not
received  any  commitments  with respect to such  financing  and there can be no
assurance that the Company will be able to finance its planned growth.  If it is
unable to do so, the Company may be required to slow its projected launch of its
new  translation  products or may be required to seek joint venture  partners or
license its technologies to others with better  resources to  commercialize  the
technologies.



FOREIGN CURRENCY FLUCTUATIONS

         The Company bills its customers in US Dollars and in foreign currencies
at agreed  upon  amounts of  exchange.  The  Company's  operations  impacted  by
exchange rate fluctuations have been immaterial.

THE EURO

         On January 1, 1999 a new currency was  launched,  the Euro,  which is a
significant step towards full European Monetary Union (EMU) whereby the national
currencies of certain  European  sovereign  states will be replaced by a single,
supra-national currency in July 2002.

         Currently,  the Euro  co-exists at fixed  exchange  rates with existing
national  currencies  of the  eleven  participating  European  countries.  It is
planned  that the Euro will  stimulate  the  economies  of the EMU  countries by
introducing  transparent pricing between countries,  lower transaction costs and
greater certainty of investment and trade within Europe.

         Approximately  22% of the  Company's  revenue for the fiscal year ended
March 31, 2000 is located within countries adopting the Euro (Ireland,  Germany,
France,  Spain,  the  Netherlands  and  Belgium).   The  impact  of  the  Euro's
introduction and future  implementation is not expected to be significant to the
revenue and net income of the Company.

                                       24
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS

         The  information  called  for by Item 7 is  included  in the  Financial
Statements contained in this Annual Report on Form 10-KSB found on pages  F-1 to
F-19

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

         Not applicable.

                                    PART III

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

         During the fiscal  year ended  March 31,  1999,  the  directors  and/or
executive officers of The Translation Group were as follows:

     NAME                     AGE    POSITION
     Randy G. Morris          42     President, Chief Executive Officer/Director
     Charles D. Cascio        63     Director
     John Toedtman            55     Director
     Fred LaParo              45     Director/Chief Executive Officer of Planet
                                     Access Network, Inc.
     Gary M. Schlosser        49     Director
     Theodora Landgren        55     Director
     Richard J. L. Herson     81     Director
     Kenneth A. Mack          56     Chief Financial Officer


         RANDY G. MORRIS, President, Chief Executive Officer and a Director. Mr.
Morris joined the Company as Chief Executive  officer in December 1999. Prior to
the  Company,  Mr.  Morris  served as a Senior  Product  Manager  for  Lernout &
Hauspie, S.V. from April 1998 until November 1999. From 1994 to 1998, Mr. Morris
was a Director of  Engineering  in the Advanced  Technology  Division of Novell,
Inc. during 1993 and 1994 Mr. Morris served as an Adjunct  Professor of Computer
Science for Weber State  University  and operated as an  independent  consultant
where  he  wrote  and  taught  courses  on  OOA,  OOD and  Software  Engineering
Management.  Mr. Morris was a Software  Engineer from 1985 to 1993 working first
for Unisys Corporation and finishing with Libra  Corporation.  From 1982 to 1985
Mr. Morris served as a Programmer for two Salt Lake City based corporations. Mr.
Morris  received  his  Bachelor of Science in Business  Management  from Brigham
Young University in 1982.

         CHARLES D. CASCIO became a Director,  of the Company in May of 1996. He
had previously been engaged by the Company,  from its inception,  as a financial
consultant.  From late 1992 until July 1996 he was  Chairman  and  President  of
Electro-Kinetic  Systems, Inc., a publicly held company. From 1990 to late 1992,
Mr. Cascio was employed as a full time  marketing  and  financial  consultant to
John  B.  Canuso,  Inc.,  a  large  privately  held  development,  building  and
entertainment  company  located in New Jersey.  From 1987 to 1990, he was a full

                                       25
<PAGE>

time  financial and  marketing  consultant to Drug  Screening  Systems,  Inc., a
publicly held  manufacturer of drug screening  systems to detect the presence of
"drugs of  abuse."  From 1984 to 1987,  Mr.  Cascio  managed a wholly and family
owned sporting,  entertainment and recreational facility, known as the Coliseum,
located in Voorhees,  NJ. Mr. Cascio holds a Bachelors  Degree in Economics from
Iona College.

         FRED LAPARO is a Director and Chief Executive  Officer of Planet Access
Network,  Inc.  Mr.  LaParo was one of the  original  founders of Planet  Access
Networks,  Inc.  For  approximately  10 years  prior to founding  Planet  Access
Networks,  Inc., Mr. LaParo was a senior officer of ATI which provided technical
training to Fortune 500  companies in data  handling.  Mr.  LaParo  received his
Bachelor  of Fine  Arts  from New York  University  in 1980  with  post-graduate
studies in interactive telecommunications.

         JOHN  TOEDTMAN has been  employed by the Company since October 1998 and
was appointed as a Director in February 1999. From 1996 to 1998 Mr. Toedtman was
employed  as  Managing  Director  of  Blue  Stone  Capital  Partners,  L.P.,  an
investment  banking  firm.  From 1990 to 1996 Mr.  Toedtman  was  President  and
Director  of  Gen/Rx,  Inc.,  a  pharmaceutical  firm;  from 1980 to 1986 he was
President and Director of Personal Diagnostics,  Inc., a medical device company;
and from  1976 to 1980 he was  President  and  Director  of  Princeton  Chemical
Research, Inc., a process technology company; and from 1970 to 1976 he was Group
Vice President of Englehard  Industries,  a large precious metals  company.  Mr.
Toedtman has a B.A. in economics from Georgetown University.

         KENNETH A. MACK became  Chief  Financial  Officer in December 29, 1999.
Prior to joining the Company,  Mr. Mack was the managing  partner in the firm of
Metsky,  Mack & Associates,  CPA's.  Mr. Mack  currently  serves on the Board of
Directors of Project Acorn as well as the Special Council  Commission on Revenue
and Expenditure for the township of West Orange, New Jersey. He holds a Bachelor
of Science  Degree in  Business  Administration  with an  Accounting  Major from
Bryant College. He has also authored numerous articles on accounting.

         GARY M. SCHLOSSER was elected a Director in August 1996. From August 1,
1994 until May 2000, Mr. Schlosser was the President and a director of Jefferson
Bank of New Jersey.  In May 2000 Mr.  Schlosser  became Senior Vice President at
Commerce  Bank,  N.A. From October 1989 through July 1994 he was Executive  Vice
President of Glendale  National Bank of New Jersey and prior thereto,  from July
1988, he was President of Glendale Mortgage Services  Corporation,  a subsidiary
of Atlantic Bancorporation.  Mr. Schlosser received a Bachelor of Arts degree in
history and business from the University of Colorado at Denver. Mr. Schlosser is
a member of the Camden County Bankers  Association and the South Jersey Security
Bankers Association.

         THEODORA  LANDGREN  currently  is a  Director  and  resides  in London,
England.  She was the  Chairperson of the Board of Directors and Chief Operating
Officer of the Company from January 1996, to April 1998 and she was the Chairman
and  President of BTS since  founding the firm in 1984 until  September 2, 1997.
Prior to starting  BTS she  studied  linguistics  and  computer  programming  at
several  universities  including  Universities of Denver and Innsbruck (Austria)
and  USC  College  of  Continuing  Education,  as well as  teaching  English  to
non-English  speaking  students at the  University  of  Stockholm,  Sweden.  Ms.
Landgren  is  active  in the  American  Translator's  Association  (ATA) and the
Society of Technical Communication (STC).

                                       26
<PAGE>

         RICHARD  J.  L.  HERSON  is a  Director  and  former  employee  of  The
Translation Group. Mr. Herson served as the Chief Financial Officer from July 6,
1995,  until August 31, 1997. From 1945 to 1974 Mr. Herson was a general partner
in the firm of Hertz,  Herson and Company,  CPA's with offices in New York,  and
Charlotte. He is currently Secretary of the Bruner Foundation,  where he directs
its  investment  portfolio.  He is also  secretary/treasury  of  Electro-Kinetic
Systems,  Inc., a publicly held company.  He holds a Bachelor's  Degree from the
City College of New York and a M.S. in Accounting from Columbia  University.  He
has also authored numerous articles and a book on accounting. Mr. Herson retired
as an employee in July 1999.

ITEM 10.  EXECUTIVE COMPENSATION

         The following  table  summarizes  the total  compensation  of the chief
executive officer and the other most highly compensated officers whose salary is
in excess of $100,000 for the fiscal year ending March 31, 2000.

<TABLE>
<CAPTION>
                                                 SUMMARY COMPENSATION TABLE
==================== =========== ================= ============ ============== =====================================================
                                                                                                    Long Term Compensation
                                                                               -----------------------------------------------------
                                             Annual Compensation                          Awards                          Payouts
-------------------- ----------- --------------------------------------------- ----------------------------- -----------------------
                                                                Other       Restricted
Name and Principal                                             Annual          Stock          Stock      LTIP           All Other
Position                              Salary      Bonus        Compen-       Award(s)       Options/    Payouts     Compen-sation($)
                     Year(s)           ($)         ($)        Sation($)         ($)          SARS(#)      ($)
                     -----------  -----------  ----------- -------------   ----------- -------------- ----------    ----------------
<S>                 <C>         <C>               <C>         <C>                          <C>
Randy G. Morris -    2000(ii)     $ 44,387         -0-         -0-                          200,000
President and CEO    1999            N/A           N/A         N/A
                     1998            N/A           N/A         N/A
--------------------             -------------              -------------                                              -------------
Charles D. Cascio    2000         $110,877         -0-       $27,955(i)                     100,000
President and        1999         $108,058         -0-       $24,955
   CEO               1998         $106,775         -0-       $19,188
-------------------- ----------- ------------- ------------ ------------- -------------- -------------- -------------- -------------
John R. Toedtman
Chief Operating      2000         $103,861         -0-       $13,146(iv)                    100,000
Officer              1999(iii)    $ 46,154         -0-       $ 4,216
                     1998            N/A           N/A         N/A
-------------------- ----------- ------------- ------------ ------------- -------------- -------------- -------------- -------------
Fred LaParo          2000         $144,231         -0-        15,130(ix)                    244,000
CEO of Planet
Access Networks
-------------------- ----------- ------------- ------------ ------------- -------------- -------------- -------------- -------------
Jeffrey Cartwright   2000         $144,231         -0-        17,267(x)                     244,000
Vice President of
Planet Access
Networks
-------------------- ----------- ------------- ------------ ------------- -------------- -------------- -------------- -------------
Kenneth A. Mack      2000(v)      $ 32,700         -0-        $2,500(vi)                    157,500
   Chief             1999            N/A           N/A          N/A
   Financial         1998            N/A           N/A          N/A
   Officer

Theodora             2000         $133,843(vii)    -0-        $3,655(viii)                  100,000
Landgren             1999         $126,748(vii)    -0-        $5,309
   Chief             1998         $106,775         -0-        $9,000
   Operating Officer
==================== =========== ============= ============ ============= ============== ============== ============== =============
</TABLE>

                                       27
<PAGE>

      (i)    Consists of car allowance and related  expenses  totaling  $10,608,
             medical  reimbursement  of $4,303,  health  insurance  premiums  of
             $5,522 and life insurance premiums of $6,655.
      (ii)   For the period from December 20, 1999 to March 31, 2000.
      (iii)  For the period October 1, 1998 to March 31, 1999.
      (iv)   Consists of car allowance  and related  expenses  totaling  $5,824,
             health Insurance  premiums of $5,522 and life insurance premiums or
             $1,800.
      (v)    For the period from August 29, 1999 to March 31, 2000.
      (vi)   Consists of car allowance of $2,500.
      (vii)  Consists of settlement agreement payments in lieu of salary.
      (viii) Consists of health insurance  premiums of $2,655 and life insurance
             premiums of $1,000.
      (ix)   Consists of car  allowance and related  expenses of $5,326,  health
             insurance premiums of $6,125 and life insurance premium of $3,679.
      (x)    Consists of car allowance of $7,463,  health insurance  premiums of
             $6,125 and life insurance premiums of $3,679.


EMPLOYMENT AGREEMENTS

         The Company entered into one-year  employment  agreement as of December
20,  1999 with its  President  and Chief  Executive  Officer,  Randy G.  Morris.
Pursuant  to the  employment  agreement,  Mr.  Morris  receives a base salary of
$150,000  per year.  In  addition,  Mr.  Morris  received  five-year  options to
purchase 200,000 shares of common stock exercisable at $2.00 per share which was
fair  market  value on the date of  grant,  and a life  insurance  policy in the
amount of  $500,000  payable to the  beneficiary  of his  choice.  Finally,  the
Company  agreed to reimburse Mr. Morris for the expense of relocating and agreed
to make a  $100,000  loan for a down  payment  on a  house.  The loan is due and
payable  upon  the  sale  of his New  Jersey  home  or  employment  termination,
whichever occurs earlier.

         In April 2000 the  Company  and  Charles  Cascio  terminated  his prior
employment agreement and entered into a new three-year employment agreement as a
consultant  to the Company's  chief  executive  officer.  The  agreement,  which
provides for base  compensation  of $125,000 per year, will be extended upon the
Company  achieving  cumulative gross financing of $4,000,000.  In addition,  Mr.
Cascio will receive incentive compensation equal to 50% of his base compensation
upon the  Company  meeting its  operating  goals,  and a  five-year  options and
warrants to purchase 200,000 shares, of which 100,000 will vest upon the Company
achieving cumulative gross financing of $4,000,000.

         The Company has a three-year  written  employment  contract dated as of
October 1, 1998 with John Toedtman, for an annual base salary of $100,000 during
each of the three years  thereof,  plus annual cost of living  adjustments.  Mr.
Toedtman was also granted  options to purchase  100,000  shares of the Company's
common stock.

                                       28
<PAGE>

         The Company has four-year written employment  contracts dated as of May
1, 1999  with  Fred  LaParo  and  Jeffrey  Cartwright,  the  President  and Vice
President  of  Planet  Access  Networks,  Inc.  respectively.  Pursuant  to  the
employment  agreement,  Messrs.  LaParo and Cratwright  receive a base salary of
$150,000 plus annual cost of living adjustments.

STOCK OPTION PLAN

         In October of 1996,  the Board of  Directors  and  stockholders  of the
Company adopted a Stock Option Plan (the "Option Plan") as an incentive for, and
to encourage share ownership by, the Company's officers, directors and other key
employees  and/or  consultants  and  potential  management  of  possible  future
acquired companies.  The Option Plan provides that options to purchase a maximum
of  2,500,000  shares  of  common  stock,   subject  to  adjustment  in  certain
circumstances may be granted under the Option Plan. Both incentive stock options
within the  meaning of Section  422 of the  Internal  Revenue  Code of 1986,  as
amended (the "Code") and non-qualified  options are provided for under the Plan.
The  Option  Plan also  allows for the  granting  of stock  appreciation  rights
("SARs") in tandem with, or  independently  of, stock options.  Any SARs granted
will not be counted against the 2,500,000 share limit.

         The purpose of the Option Plan is to make options and SARS available to
certain  officers,  directors and other key employees and/or  consultants of the
Company in order to give such  individuals  a greater  personal  interest in the
success of the Company  and, in the case of  employees,  an added  incentive  to
continue and advance in their employment.

         The Plan is currently  administered by the majority vote of a committee
(the "Committee")  appointed by the Board of Directors and comprised of at least
two members of the Board who, in the case of the Option  Plan,  are not eligible
to receive  options,  other than pursuant to a formula,  it being  intended that
such  plan  shall  qualify  under  Rule  16b-3 as  promulgated  pursuant  to the
Securities  Exchange Act of 1934,  as amended.  The Committee  designates  those
persons to receive grants under the Plan and determines the number of options to
be granted and the price payable for the shares of Common stock thereunder.  The
price  payable for the shares of Common  stock under each option is fixed by the
Committee at the time of the grant,  but, for incentive  stock options,  must be
not less than 100% (110% if the person granted such option owns more than 10% of
the outstanding shares of Common stock) of the fair market value of Common stock
at the time the option is granted, and 85% of such price for non-qualified stock
options.  The above  notwithstanding,  the Company  intends shortly to amend the
Option Plan so it will conform to the recent revisions of Rule 16b-3.

         See Note 8-Stock Options and Warrants,  Notes to Consolidated Financial
Statements, relative to the granting of options during the years ended March 31,
1999, and March 31, 1998,  unexercised  options held as of the end of the fiscal
year, options exercised and options forfeited during the years.

SECTION 16(A)  BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Based solely upon information supplied to the Company by its directors,
officers and beneficial  owners of at last 10% of the common stock,  the Company
believes  that  during  the  fiscal  year  ended  March  31,  1999,  all  filing
requirements  under  Section  16(a)  applicable  to its  directors and executive
officers were met except  provide that Mr. Herson failed to file Form 4 relative
to the  disposition  of  certain of his shares to members of his family and to a
foundation of which he is president.

                                       29
<PAGE>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following  table sets forth  information  regarding the  beneficial
ownership of the Company's common stock, as of June 15, 2000, by (a) each person
known by the Company to own beneficially more than five percent of the Company's
outstanding  shares of common stock, (b) each director and executive  officer of
the Company who owns shares and (c) all directors and executive  officers of the
Company as a group. Unless otherwise  indicated,  all shares of common stock are
owned by the individual named as sole record and beneficial owner with exclusive
power to vote and dispose of such shares.  The reported  numbers and percentages
include  stock  options  and  warrants   which  are  currently   exercisable  or
exercisable  within  60  days of  June  15,  2000  as  required  by Item  403 of
Regulation S-B under the Security Exchange Act.

                                            COMMON STOCK            PERCENTAGE
NAME AND ADDRESS                        OWNED BENEFICIALLY           OF CLASS
----------------                        ------------------          ----------

Charles D. Cascio (1) (2)                   365,000                    9.1%
30 Washington Avenue
Haddonfield, NJ  08033

Theodora Landgren (3)                       477,000                    11.9%
1901 Walnut Street, Apt. 20E
Philadelphia, PA  19103

Richard J.L. Herson (4)                     133,500                    3.4%
270 Rocky Run Road
Glen Gardner, NJ  08826

Gary M. Schlosser (5)                       100,000                    2.6%
6 Ridgeview Court
Voorhees, NJ  08043

John R. Toedtman (6)                        150,00                      3.9%
3 Gold Mine Road
Flanders, NJ  07836

Frederick LaParo (7)                        581,666                    14.2%
3 Gold Mine Road
Flanders, NJ  07836

Jeff Cartwright (7)                         581,666                    14.2%
3 Gold Mine Road
Flanders, NJ  07836

Randy G. Morris (8)                          50,000                    1.3%
3 Gold Mine Road
Flanders, NJ  07836

                                       30
<PAGE>

Kenneth A. Mack (9)                         157,500                    4.0%
3 Gold Mine Road
Flanders, NJ  07836

Julius Cherny (10)                          300,000                    7.3%
4 Carter Lane
Monsey, NY  10952

Edouard Prisse (11)                         253,000                    6.6%
Rijksstraatweg 121B
1396 J J Baambruggle Netherlands

All Executive Officers and Directors
As a Group (12)                           2,596,332                    48.5%

         (1) Includes  100,000  currently   exercisable   warrants  and  100,000
             currently vested Stock options.
         (2) Does not include an aggregate of 144,000  shares owned by his adult
             independent Children.  Mr. Cascio disclaims beneficial ownership of
             such shares.
         (3) Includes  100,000  currently   exercisable   warrants  and  100,000
             currently vested Stock options.
         (4) Includes 100,000 currently vested stock options.
         (5) Includes 100,000 currently vested stock options.
         (6) Includes 100,000 currently vested stock options.
         (7) Includes  46,000   currently   exercisable   warrants  and  244,000
             currently vested Stock options.
         (8) Includes 50,000 currently vested stock options.
         (9) Includes 157,500 currently vested stock options.
         (10) Includes 300,000 currently vested stock options.
         (11) Includes 50,000 currently vested stock options.
         (12)Includes 1,108,832 shares,  292,000 currently exercisable warrants,
             and 1,195,500 currently vested stock options owned by all executive
             officers and directors.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The Company has an exclusive license agreement with Gedanken, a company
controlled  by Dr.  Julius  Cherny,  for the  worldwide  rights to an  automated
machine  translation  system.  Dr.  Cherny  owns a  United  States  Patent  that
describes  apparatus  and  methods  for  translating  languages  using  advanced
telecommunications and computer technologies. The Company is obligated under the
agreement to pay  royalties on all revenues  generated  that use, in whole or in
part, the patent rights and know-how.

         Michael  Cascio,  Esquire,  the son of  Charles  Cascio,  Director  and
Consultant of The Translation Group,  provided legal services to the Company for
the fiscal  years  ended  March 31,  2000 and 1999 valued at $44,100 and 49,000,
respectively.

         The Company has entered into written employment agreements with certain
of its officers. See "Executive Compensation."

                                       31
<PAGE>

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      EXHIBITS

         The  following  exhibits  are  filed  as a part of this  Report  or are
incorporated herein by recipient.

<TABLE>
<CAPTION>

EXHIBIT NO.           DESCRIPTION                                                                METHOD OF FILING
<S>                  <C>                                                                        <C>
2.1                   Stock Purchase Agreement between the Stockholders of Planet Access         (1)
                      Networks, Inc., Planet Access Networks, Inc. and the Company, as
                      amended dated April 27, 1999 (the PAN "Stock Purchase Agreement")

2.2                   Amendment dated September 2, 1999 to the PAN Stock Purchase                Filed herewith
                      Agreement
2.3                   Amendment dated March 8, 2000 to the PAN Stock Purchase Agreement          Filed herewith

3.1                   Restated Certificate of Incorporation of the Company                       (2)

3.2                   By-laws of the Company                                                     (2)

3.3                   Certificate of Designation for Series A Preferred Stock                    Filed herewith

4.2                   Specimen Warrant Certificate                                               (4)

4.4                   Revised Form of Warrant Agreement                                          (5)

4.5                   Form of Revised Representative's Warrant Agreement                         (5)

4.6                   Form of Revised Representative's Warrant                                   (5)

10.1                  Lease Agreement between Bureau of Translation Services, Inc. and           (2)
                      J.C.G. Partnership dated January 18, 1995

10.2                  Employment Agreement between the Company and Charles D. Cascio             Filed herewith
                      dated as of April 10, 2000

10.3                  Employment Agreement between the Company and Randy G. Morris dated         Filed herewith
                      as of December 20, 1999

10.4                  The Translation Group, Ltd. 1995 Stock Option Plan                         (1)

10.9                  Employment Agreement between the Company and Jeffrey Cartwright            (1)
                      dated May 18, 1999

10.10                 Employment Agreement between the Company and Frederick LaParo              (1)
                      dated May 18, 1999
</TABLE>

                                       32
<PAGE>

<TABLE>

<S>                  <C>                                                                        <C>
10.11                 Employment Agreement between the Company and John Toedtman dated           (1)
                      October 1, 1998

10.12                 Stock Pledge Agreement between the Company and various former              (1)
                      stockholders of Planet Access Network, Inc. dated May 18, 1999

10.13                 License Agreement between the Company and ESTeam AB dated April            (1)
                      15, 1999*
</TABLE>

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

o Subject  to  confidential  treatment  request  pursuant  to Rule  24b-2 of the
Exchange Act of 1934.

(1) Incorporated by reference to the Form 10-KSB for the fiscal year ended March
    31, 1999.
(2) Incorporated by reference to the Company's Registration Statement on
    Form SB-2 dated July 25, 1996 (Registration No. 333-8857) (the "Form SB-2").
(3) Incorporated by reference to Amendment No. 1 to the Company's Form SB-2
(4) Incorporated by reference to Amendment No. 2 to the Company's Form SB-2
(5) Incorporated by reference to Amendment No. 3 to the Company's Form SB-2

 (b)     REPORTS ON FORM 8-K.

         During the quarter ended March 31, 2000 the Company filed the following
Reports on Form 8-K

                                       33
<PAGE>
                                   SIGNATURES

         In accordance  with 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.

                                             THE TRANSLATION GROUP, LTD.


                                             By:   /S/ RANDY G. MORRIS
                                                --------------------------------
                                                Randy G. Morris, President


                                             Dated:  July 13, 2000


                                             By: /S/ KENNETH A. MACK
                                                --------------------------------
                                                Kenneth A. Mack, Chief Financial
                                                Officer


                                             Dated: July 13, 2000


         In accordance with 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:


Signature                       Title                              Date

/s/  Randy G. Morris            President, Chief Executive         July 13, 2000
---------------------------     Officer and Director
RANDY G. MORRIS

/s/ Charles D. Cascio           Director                           July 13, 2000
---------------------------
CHARLES D. CASCIO

/s/  Theodora Landgren          Director                           July 13, 2000
---------------------------
THEODORA LANDGREN

/s/  Richard J.L. Herson        Director                           July 13, 2000
---------------------------
RICHARD J.L. HERSON

/s/  Gary M. Schlosser          Director                           July 13, 2000
---------------------------
GARY M. SCHLOSSER

/s/  Fred LaParo                Director                           July 13, 2000
---------------------------
FRED LAPARO

/s/  John Toedtman              Director                           July 13, 2000
---------------------------
JOHN TOEDTMAN


                                       34
<PAGE>

                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders
The Translation Group, Ltd.

We have audited the accompanying  consolidated  balance sheet of The Translation
Group, Ltd. and subsidiaries as of March 31, 2000, and the related  consolidated
statements of operations,  comprehensive  operations,  stockholders'  equity and
cash  flows for each of the years in the  period  ended  March 31,  2000.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance  about  whether  the  consolidated  financial  statements  are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting the amounts and disclosures in the consolidated 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 audit provides a reasonable  basis
for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all materials respects,  the consolidated  financial position of The Translation
Group, Ltd. and subsidiaries as of March 31, 2000, and the consolidated  results
of their  operations and their  consolidated  cash flows for the two years ended
March 31, 2000, in conformity with generally accepted accounting principles.



                                                             WISS & COMPANY, LLP


Livingston, New Jersey
June 26, 2000


                                      F-1
<PAGE>

                           THE TRANSLATION GROUP, LTD.
                                and Subsidiaries
                           Consolidated Balance Sheet
                                 March 31, 2000
<TABLE>

<S>                                                                                <C>
 ASSETS
 Current assets:
   Cash and cash equivalents                                                        $ 1,700,080
   Accounts receivable, net of allowance for doubtful accounts of $27,000             2,429,155
   Work in process                                                                      319,823
   Loans and receivables from officers                                                   87,740
   Other current assets                                                                 235,622
                                                                                  -------------
 Total current assets                                                                 4,772,420

 Property and equipment, net of accumulated depreciation and
   amortization of $1,359,497                                                         2,666,185

 Excess of purchase price over fair value of net assets acquired, net of
   accumulated amortization of $509,964                                               3,937,586
 Loans and receivables from officers                                                    414,980
 Other assets                                                                           141,452
                                                                                  -------------

 TOTAL ASSETS                                                                      $ 11,932,623
                                                                                  =============

 LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities:
   Accounts payable                                                                $    626,750
   Notes payable                                                                          4,268
   Current maturities of long-term obligations                                           80,748
   Obligations under capital leases                                                       4,200
   Accrued liabilities                                                                  274,803
   Deferred income                                                                      492,196
   Deferred income taxes                                                                189,000
                                                                                  -------------
 TOTAL LIABILITIES                                                                    1,671,965

 Commitments and contingencies

 Preferred  stock  redeemable  at the  option of  purchasers,  $.001 par  value,
   1,000,000 authorized, 250,000 shares issued and outstanding, less
   subscriptions receivable of $500,000                                                 493,622

 Stockholders' equity:
   Common stock, $.001 par value, 15,000,000 shares authorized, 3,787,902
      shares outstanding, and 3,795,902 shares issued and to be issued                    3,796
   Additional paid-in capital                                                        11,473,011
   Retained earnings (deficit)                                                       (1,655,434)
   Common stock in treasury, 8,000 shares                                               (68,032)
   Accumulated other comprehensive income                                                13,695
                                                                                  --------------
 Total stockholders' equity                                                           9,767,036
                                                                                  --------------

 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                        $ 11,932,623
                                                                                  =============
</TABLE>

          SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                      F-2
<PAGE>
                           THE TRANSLATION GROUP, LTD.
                                AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                   FOR THE YEARS ENDED MARCH 31, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                                         MARCH 31,        MARCH 31,
                                                                                           2000             1999
                                                                                           ----             ----
<S>                                                                                   <C>              <C>
 Revenue                                                                               $   13,346,774   $   5,987,002
 Cost of revenue                                                                            8,714,821       4,832,359
                                                                                       --------------   --------------

 Gross profit                                                                               4,631,953       1,154,643

 Cost and expenses:
   Selling, general and administration                                                      2,724,005       1,864,721
   Research and development                                                                                   147,320
   Special projects and other costs                                                                           979,357
   Corporate administration                                                                 1,243,594         736,184
   Amortization of excess of purchase price over
    fair value of net assets acquired                                                         340,417          96,884
                                                                                              -------          ------
 Total                                                                                      4,308,016       3,824,466
                                                                                            ---------       ---------
 Income (loss) before other income (expense)                                                  323,937      (2,669,823)

 Other income (expense):
   Interest income                                                                             47,111         185,212
   Interest expense                                                                           (75,907)        (45,461)
   Amortization of compensatory warrants and finance charges (1)(2)                          (315,987)
   Foreign currency gains (losses)                                                                815         (14,774)
                                                                                                  ---         --------
                                                                                             (343,968)        124,977

 (Loss) income before provision for income taxes                                              (20,031)     (2,544,846)

 Provision (benefit) for income taxes                                                         168,378        (396,160)
                                                                                              -------        ---------
 Net (loss) income                                                                         $ (188,409)   $ (2,148,686)
                                                                                           ===========   =============


 Net (loss) income per common share outstanding (basic and diluted)                          $ (0.06)         $ (0.94)
                                                                                             ========         ========
 Weighted average shares outstanding                                                       2,965,805        2,278,340
                                                                                           =========        =========
</TABLE>

[FN]
 (1) Includes $266,136 of amortization of deferred stock based interest expense
 (2) Includes $49,851 of amortization of deferred stock based public relations
     expense
</FN>

          SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                      F-3
<PAGE>
                           THE TRANSLATION GROUP, LTD.
                                AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                   FOR THE YEARS ENDED MARCH 31, 2000 AND 1999
<TABLE>
<CAPTION>
                                                                             UNEARNED                       ACCUMILATED
                                                                  ADDITIONAL PORTION OF                      OTHER         TOTAL
                                                    COMMON COMMON  PAID-IN COMPENSATORY RETAINED TREASURY COMPREHENSIVESTOCKHOLDERS'
                                                     SHARES  STOCK   CAPITAL   WARRANTS    EARNINGS   STOCK   INCOME      EQUITY
<S>                                              <C>        <C>     <C>         <C>         <C>        <C>    <C>       <C>
BALANCE AT MARCH 31, 1998                         2,278,340  $2,278  $6,051,985  $(225,000)  $ 681,661  $ -    $ 9,769   $6,520,693

  Amortization of unearned compensation                                            180,000                                  180,000

  Purchase of treasury stock, 8,000 shares                                                            (68,032)              (68,032)

  Foreign currency translation adjustment                                                                       12,157       12,157

  Net loss                                                -       -           -          -  (2,148,686)    -         -   (2,148,686)
                                                         --      --          --         --  -----------   --        --   -----------

BALANCE AT MARCH 31, 1999                         2,278,340   2,278   6,051,985    (45,000) (1,467,025)(68,032) 21,926    4,496,132

  Warrants issued in connection with financing
   arrangements and consulting agreement                                264,000   (264,000)

  Amortization of unearned compensation                                            309,000                                  309,000

  Shares issued in satisfaction of debt              25,000      25      74,975                                              75,000

  Adjustment of shares for acquisition of
    Word House                                      (35,000)    (35)   (209,965)                                           (210,000)

  Shares issued in connection with private
    placements                                      550,000     550   1,000,753                                           1,001,303

  Shares issued and issuable and warrants
    issued in connection with the acquisition
    of Planet Access Networks, Inc.                 634,668     635   2,813,494                                           2,814,129

  Shares issued with the exercise of warrants       342,894     343   1,477,769                                           1,478,112

  Foreign currency translation adjustment                                                                       (8,231)      (8,231)

  Net loss                                                -        -           -      -    (188,409)        -        -     (188,409)
                                                         --       --          --     --    ---------       --       --     ---------

BALANCE AT MARCH 31, 2000                        3,795,902  $ 3,796 $11,473,011    $ - ($1,655,434)  $(68,032) $ 13,695  $ 9,767,036
                                                 =========  ======= ===========   ==== ============  ========= ========= ===========

</TABLE>

          SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                      F-4
<PAGE>
                           THE TRANSLATION GROUP, LTD.
                                AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
                   FOR THE YEARS ENDED MARCH 31, 2000 AND 1999



                                                  MARCH 31,         MARCH 31,
                                                   2000              1999
                                                   ----              ----

 Net loss                                       $ (188,409)     $ (2,148,686)

 Other comprehensive income (loss):
   Currency translation adjustment                  (8,231)           12,157
                                                -----------     ------------

 Comprehensive loss                             $ (196,640)     $ (2,136,529)
                                                ===========     =============



          SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                      F-5
<PAGE>
                           THE TRANSLATION GROUP, LTD.
                                and Subsidiaries
                      Consolidated Statements of Cash Flow
                   For the years ended March 31, 2000 and 1999
<TABLE>
<CAPTION>
                                                                                              MARCH 31,           MARCH 31,
                                                                                                2000                1999
                                                                                                ----                ----
<S>                                                                                        <C>                 <C>
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
  Net loss                                                                                   $ (188,409)         $ (2,148,686)
  Adjustments to reconcile net loss to net cash
   provided by (used in) operating activities:
     Depreciation and amortization                                                              451,169               325,382
     Amortization of excess purchase price over fair value of net assets acquired               340,417               130,882
     Amortization of compensatory warrants                                                      309,657               180,000
     Foreign currency translation adjustment                                                     (8,231)               12,157
     Deferred income taxes                                                                       78,700              (218,172)
     Settlement agreement, net of payments                                                                            270,251
  Changes in operating assets and liabilities:
     Accounts receivable                                                                       (824,315)              326,779
     Work in process                                                                             70,957               346,917
     Other current assets                                                                       116,715              (205,962)
     Other assets                                                                               (44,143)              (22,261)
     Accounts payable                                                                            72,119               108,828
     Accrued liabilities and deferred income                                                    (93,365)               (3,034)
     Accrued income taxes                                                                             -               (31,954)
                                                                                      ------------------  --------------------

Net cash provided by (used in) operating activities                                             281,271              (928,873)

CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
  Purchase of subsidiary, net of cash acquired                                                 (895,567)
  Purchase of property and equipment                                                         (1,725,049)             (404,851)
  Investment in certificate of deposit                                                          106,540                (6,540)
  Loans and advances to officers                                                               (522,148)              (12,000)
  Investment in US Government obligations                                                            -              2,000,000
                                                                                      ------------------  --------------------

Net cash provided by (used for) investing activities                                         (3,036,224)            1,576,609

CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
  Net proceeds from issuance of common stock                                                  1,001,303
  Net proceeds from exercise of common stock warrants                                         1,478,112
  Net proceeds from notes payable                                                               475,000                46,672
  Financing costs                                                                                (6,378)
  Payments on long-term obligations                                                            (388,974)              (95,477)
                                                                                               ---------              --------

Net cash provided by (used in) financing activities                                           2,559,063               (48,805)

Net change in cash and cash equivalents                                                        (195,890)              598,931

Cash and cash equivalents, beginning of year                                                  1,895,970             1,297,039
                                                                                      ------------------  --------------------

Cash and cash equivalents, end of year                                                     $ 1,700,080           $ 1,895,970
                                                                                      ==================  ====================

SUPPLEMENTAL  DISCLOSURE  OF  NON-CASH  INVESTING  ACTIVITIES:   Acquisition  of
  subsidiary on May 1, 1999:
     Fair value of assets acquired (other than cash)                                       $ 4,469,510
     Liabilities assumed                                                                       759,814
                                                                                               -------
                                                                                             3,709,696
     Less: common stock issued in connection with the acquisition                           (2,814,129)
                                                                                            -----------
     Net cash paid for acquisition                                                           $ 895,567
                                                                                             =========


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the year for:
     Interest                                                                          $       75,907      $       45,461
                                                                                      ==================  ====================
     Income taxes                                                                      $          500      $          359
                                                                                      ==================  ====================
</TABLE>

          SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                      F-6
<PAGE>


                  THE TRANSLATION GROUP, LTD. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--THE COMPANY

The Translation  Group, Ltd. and Subsidiaries  (TTGL or the Company)  translates
and  localizes  documents  and  software  into various  languages.  Services are
provided to many  industries  with a  concentration  in  information  technology
companies.  The  Company has  launched a research  program  directed  toward the
development of computer-based  translation  systems. The basic business model is
to accelerate technical developments together with product marketing and sales.

 TTGL was  incorporated  in the State of Delaware on July 6, 1995, and under the
terms of an agreement  and plan of  reorganization,  acquired 100% of the issued
and  outstanding  shares of the Bureau of  Translation  Services,  Inc. (BTS) on
January 17, 1996. BTS was incorporated in 1984 in the State of Pennsylvania.  On
December 2, 1996, the Company  completed its initial  public  offering (IPO) and
sold  705,000  shares  of its  common  stock at a price of $6.00  per  share and
1,840,000 warrants at a price of $.20 per warrant.  The net proceeds amounted to
approximately $3.5 million.

In February 1997, the Company obtained an exclusive worldwide license and rights
to use and sell know-how, apparatus, and methods pertaining to tools and systems
developments  based  on  a  patent  application  by  the  Gedanken   Corporation
("Gedanken").  Gedanken has been granted a United States  Patent that  describes
apparatus and methods for  translating  words,  phrases,  and  sentences  from a
source language to other target languages using advanced  telecommunications and
computer technologies.  The original agreement has been modified as described in
Note 4.

Effective June 30, 1997, and as later amended,  TTGL acquired all the issued and
outstanding  common stock of the  companies  that  comprise the Word House Group
(Word House) in exchange  for 185,000 of its common  shares,  later  adjusted to
150,000 common shares, and 200,000 additional common shares contingent on future
earnings levels, of which 100,000 shares were issuable as of March 31, 2000.

On April 15, 1999, the Company entered into a development and license  agreement
with ESTEAM AB (EST), a corporation organized under the laws of Sweden. EST is a
software-development    company   specializing   in   the   development   of   a
computer-automated  language translation system, known as the "BTR System," that
tailors such system to specific  applications.  The BTR System,  when applied to
appropriate hardware,  automatically  performs language translations without any
human  intervention.  TTGL has received an exclusive  worldwide license for four
identified  applications  and for four additional  applications  for a period of
fifteen years. For royalties, development costs, and other information, see Note
11.

As of May 1, 1999, the Company acquired all the issued and outstanding shares of
Planet Access Networks, Inc. (Planet) for 416,668 shares of its common stock and
cash in the  amount of  $900,000.  In order to  complete  the  transaction,  the
Company  issued  warrants  to  purchase  100,000  shares of its common  stock on
December  15,  1999,  and 218,000  shares of its common  stock on March 8, 2000.
Planet  is a digital  communications  solutions  provider.  Planet  provides  an
integrated  service  offering  consisting  of  strategic  consulting,  design of
information  architectures and user-interfaces and creation and customization of
software  necessary  to  implement  digital  communications  solutions.   Planet
primarily uses  Internet-based  technologies  to create  digital  communications
solutions for the World Wide Web.

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

FISCAL YEARS

The Company's  reporting  year ends March 31. For purposes of reporting,  fiscal
year ended March 31,  2000 will also be  referred  to as the 2000  fiscal  year;
fiscal  year ended  March 31,  1999 will also be  referred to as the 1999 fiscal
year;  and any  reference  to fiscal  year  ended  March  31,  1998 will also be
referred to as the 1998 fiscal year.

PRINCIPLES OF CONSOLIDATION

The consolidated  financial  statements  include the accounts of TTGL, BTS, Word
House,  and  Planet.  Planet's  accounts  are  included  from  the  date  of its
acquisition  on  May  1,  1999.  All  significant   inter-company  accounts  and
transactions  have been  eliminated.  Accordingly,  the  consolidated  financial
statements  for the year ended  March 31,  2000 and 1999  reflect the results of
activities of all of these companies.

                                      F-7
<PAGE>

The Company has accounted for its  acquisition of the Word House Companies under
the purchase  method of  accounting,  wherein the purchase price is allocated to
the  assets  and  liabilities  as of the  acquisition  date  based on  estimated
respective  fair  values.  The excess of purchase  price over fair values of net
assets acquired is being amortized over fifteen years.  Stockholders'  equity as
of March 31, 2000 includes issuable shares (see Note 11).

The Company has accounted for its  acquisition  of Planet Access  Networks under
the purchase  method of accounting,  where in the purchase price is allocated to
the  assets  and  liabilities  as of the  acquisition  date  based on  estimated
respective  fair  values.  The excess of  purchase  price over fair value of net
assets acquire is being amortized over ten years.

REVENUE RECOGNITION

Revenue  is  accounted  for  under  the  percentage  of  completion   method  of
accounting,  whereby  sales  and  costs  are  recognized  as work  on  contracts
progresses.  Changes in estimates for revenue,  costs and profits are recognized
in the period in which they are  determinable.  Work in progress  represents the
excess of revenue  recognized  for  financial  reporting  purposes  over amounts
contractually  permitted to be billed to customers.  Deferred revenue represents
excess of  amounts  billed  over  revenue  recognized  for  financial  reporting
purposes. Invoices are rendered based upon terms of the contract.

RESEARCH AND DEVELOPMENT

Research and development  costs are expensed as incurred.  Systems  acquisitions
and specialized  tools,  together with related  software,  are expensed while in
development until technological feasibility has been established.

CAPITALIZED COMPUTER SOFTWARE COSTS

AcSEC  SOP98-1  requires  companies to  capitalize  and amortize  certain  costs
associated  with  developing  software for internal use. There are three stages:
the  preliminary  project stage;  the  application  development  stage;  and the
post-implementation/operation  stage.  After the  preliminary  project  stage is
completed and management has committed to funding a probable successful software
project,  such costs  should be  capitalized.  Once the  software is placed into
service,  the  capitalized  cost should be amortized over the period of expected
benefit in a systematic and rational manner.

SFAS No. 2, together with FASB No. 86,  accounting for research and  development
(R&D)  costs,  require  that  companies  expense  R & D until the  research  and
development project has reached technological feasibility.  The Company believes
that these releases apply to its  development  of  machine-translation  computer
systems and that such  technological  feasibility  was  achieved as at August 1,
1998. Accordingly, all expenditures to that point have been expensed as research
and development  and  capitalized  after that date (see Note 4). In this regard,
the Company  expensed  $149,000 in fiscal 1999 and  capitalized  $1,199,027  and
$180,000 for the years ended March 31, 2000 and 1999, respectively.

FOREIGN CURRENCY TRANSLATION

Statement of operations  amounts have been translated using the average exchange
rates in  effect  for each  period.  Gains  and  losses  from  foreign  exchange
transactions  have been included in the Statements of Operations.  Balance sheet
amounts have been translated using exchange rates in effect at the balance sheet
dates and the translation  adjustment has been included in the foreign  currency
translation adjustment, as accumulated other comprehensive income.

EARNINGS PER COMMON SHARE

The Company has adopted Statement of Financial  Accounting  Standards (SFAS) No.
128,  "Earnings Per Share" (EPS) which requires dual  presentation  of basic and
diluted EPS for all entities  with complex  capital  structures on a retroactive
basis. Basic (loss) per share is computed based upon the weighted average number
of common shares  outstanding  during each year,  shares  contingently  issuable
under the Word House  acquisition  as described  in Note 1, have been  included.
Diluted EPS gives effect to outstanding  warrants and options using the treasury
stock  method.  For fiscal  2000 and fiscal  1999,  options  and  warrants  were
considered anti-dilutive and were excluded from the calculation of diluted EPS.

                                      F-8
<PAGE>

CASH AND CASH EQUIVALENTS

The Company  considers  highly liquid debt  instruments  when  purchased  with a
maturity of three months or less to be cash equivalents.

FINANCIAL INSTRUMENTS

Financial instruments include cash and equivalents,  accounts receivable,  other
assets, loan receivable,  notes and accounts payable, accrued expenses, deferred
income,  and long-term debt. The amounts reported for financial  instruments are
considered to be reasonable approximations of their fair values, based on market
information  available to management.  The use of different  market  assumptions
and/or  estimation  methodologies  could have a material effect on the estimated
fair value amounts.

CONCENTRATION OF CREDIT RISK

 Financial  instruments that potentially subject the Company to concentration of
credit risk  consist  primarily of cash and  unsecured  trade  receivables.  The
Company maintains its cash balances in financial  institutions some of which are
insured by the Federal Deposit Insurance  Corporation up to $100,000.  Uninsured
balances at March 31, 2000 totaled approximately $1,396,000.

The Company grants unsecured credit to virtually all of its customers,  with one
individual  customer  comprising  a  concentrated  risk  (see  Note  3 and  12).
Management  believes that credit risk  associated  with  accounts  receivable is
limited due to the Company's  long standing  relationships  with the majority of
its customers.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost net of depreciation and  amortization.
Depreciation and amortization are computed using  straight-line  and accelerated
methods over the estimated useful lives of the assets in place.  Amortization of
leasehold  improvements  is  provided  over the shorter of the lease term or the
estimated useful life of the asset.  Capitalized  software  included in property
and equipment will be amortized when placed in service.

STOCK OPTIONS

The Company has adopted the disclosure  provisions of SFAS No. 123,  "Accounting
for Stock-Based Compensation," which requires pro-forma disclosure of net income
as if the SFAS No. 123 fair-value method had been applied.  The Company measures
and recognizes  compensation costs under the provisions of Accounting  Princples
Board Opinion No. 25,  "Accounting  for Stock Issued to Employees"  (by SFAS No.
123) which permits that when the exercised price of the Company's employee stock
option  equals or is more than the market price of the  underlying  stock on the
date of grant, no compensation expense is recognized.

MARKETING AND ADVERTISING

Marketing  and  advertising  costs  are  expensed  as  incurred.  Such  expenses
approximated  $54,600 and  $223,000 for the years ended March 31, 2000 and 1999,
respectively.

INCOME TAXES

The Company  accounts  for its income  taxes using the  liability  method  which
measures  deferred income taxes by applying enacted statutory rates in effect at
the  balance  sheet  date to  differences  between  the tax bases of assets  and
liabilities and their reported  amounts in the financial  statements.  The asset
arising from the net operating  loss carry forwards was fully reserved since the
realization of the benefits is uncertain.

USE OF ESTIMATES

The  preparation of the  consolidated  financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of contingent  assets and  liabilities  at the dates of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting periods.  Certain of the Company's subsidiaries were previously a part
of a consolidated group in the Netherlands. Such subsidiaries may be jointly and
severally  liable for any tax assessments  resulting from the group.  Management
estimates that no provision for such  contingency  is necessary.  Actual results
could differ from these estimates.

                                      F-9
<PAGE>

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

The Company has implemented: SFAS No. 130 "Reporting Comprehensive Income" which
establishes standards for reporting and displaying  comprehensive income and its
components  in  financial  statements;  and SFAS  No.  131,  "Disclosures  About
Segments of an Enterprise and Related  Information" which establishes  standards
for the way public  business  enterprises  report  information  about  operating
segments in annual and interim financial statements.  The Company considers that
it operates in two industry segments and is reporting segment data in accordance
with markets.

FACTORS AFFECTING FUTURE OPERATING RESULTS
The Annual Report to Stockholders contains forward-looking  statements. To date,
the  Company has not  completed  the  commercialization  of products or services
based on its  technological  approaches,  and there can be no assurance that the
approaches will enable the Company to commercially  exploit such technology.  In
addition, the Company faces competition from other companies,  many of which are
larger and better financed.

Other factors may affect the Company's future operations,  including the ability
to attract  and  retain  qualified  management,  to  exploit  current  marketing
efforts, and to compete successfully in the market.

NOTE 3-SIGNIFICANT CUSTOMERS

For the year ended March 31, 2000,  one customer  accounted for 50% of revenues,
in comparison to two customers that  represented 20% and 11% of revenues for the
year ended March 31, 1999.

The  Company  has  experienced  concentration  of credit risk with regard to its
accounts receivable as of March 31, 2000. One customer represented approximately
69% of the total accounts receivable (see Note 12).

NOTE 4-RESEARCH AND DEVELOPMENT

The  Company   expensed   approximately   $147,000  for  the  development  of  a
machine-translation  system  during the year ended March 31, 1999.  The goal for
the   design   of   machine   tools,    or   systems,    is   to   enhance   the
translation/localization   (production)  process.  The  Company  considers  that
technological  feasibility  was  achieved as at August 1, 1998,  and  subsequent
payments to the  Gedanken  Corporation,  in the amount of $324,591  and $180,000
were capitalized for the years ended March 31, 2000 and 1999, respectively.

In February 1997, the Company obtained an exclusive worldwide license and rights
to use and sell know-how, apparatus, and methods pertaining to tools and systems
developments based on a patent  application by Gedanken.  By assignment from Dr.
Julius  Cherny,  Gedanken  applied for a United  States  Patent  that  describes
apparatus and methods for  translating  words,  phrases,  and  sentences  from a
source language to other target languages using advanced  telecommunications and
computer technologies. The Company is obligated to pay royalties on all revenues
generated that use in whole or part the patent rights and know-how.  The Company
has the right to stop funding at specified times or accomplishment  periods. The
Company has agreed to pay  Gedanken  $750,000  for a  translation/  localization
system  (that  includes a specific  topic  builder,  general  topic  dictionary,
quality  control,  and  alignment  tools) at the rate of $20,000 a month through
December 15, 1998, and at the rate of $40,000 a month  thereafter;  the original
arrangement of $20,000 per month has been verbally  extended  through  September
30, 2000.

Under the 1997 license agreement,  the Company also has the option from Gedanken
for the rights to the development of a Real Time Voice Translation  System based
on providing the necessary funding estimated at $4,000,000.

Dr. Cherny  resigned his positions as the president of BTS and a director of the
Company in November, 1998. Since that time, he has devoted full time to research
and  development  on behalf of the Company.  Dr.  Cherny  remains  president and
principal shareholder of Gedanken.

                                      F-10
<PAGE>

On April 15, 1999, the Company entered into a development and license  agreement
with ESTEAM AB (EST), a corporation organized under the laws of Sweden. EST is a
software-development    company   specializing   in   the   development   of   a
computer-automated  language translation system, known as the "BTR System," that
tailors such system to specific applications. The BTR System, its modifications,
improvements, and adaptations, are used to perform translations of specific text
documents in a particular  domain.  The BTR System,  when applied to appropriate
hardware,   automatically  performs  language  translations  without  any  human
intervention.   The  computer  software  utilized  in  the  BTR  System  may  be
"off-the-shelf" or proprietary,  that is, created for a specific purpose and not
commercially  available.  TTGL has received an exclusive  worldwide  license for
four identified  applications and for four additional  applications for a period
of fifteen years, with an option,  under certain conditions and  considerations,
to extend the agreement for an additional three years.

In consideration of the worldwide license,  TTGL has agreed: to pay royalties on
sales of any  application;  to pay EST a minimum  of $50,000  per month  towards
EST's operating  expenses for two years;  and will provide  certain  development
funding in  addition  to the  $50,000  minimum.  During the year ended March 31,
2000, payments in the amount of $874,436 were capitalized by the Company.

In addition, TTGL will grant stock options to four employees of EST, aggregating
102,000  shares of its common stock at a price of $3.50 per share,  when certain
levels of sales are  reached.  Such  options  are subject to the  provisions  of
TTGL's  1995 Stock  Option Plan and will vest with the  grantees  based upon the
achievement of revenues by TTGL from the development work of EST.

NOTE 5-PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

                                                  MARCH 31, 2000  AVERAGE USEFUL
                                                                    LIFE(Years)
Equipment (includes $520,000 pledged as
           collateral for bank notes payable)         $1,582,306         5
Software                                                 481,130         5
Equipment and software under license                   1,540,701         5
Office condominium                                       245,182        20
Furniture & fixtures                                     111,986         5
Vehicles                                                  23,269         3
Leasehold improvements                                    41,108         5
                                                      ----------
Total                                                  4,025,682
Less: accumulated depreciation and amortization        1,359,497
                                                       ---------
Net property and equipment                            $2,666,185
                                                      ==========



For the years  ended  March 31,  2000 and 1999,  depreciation  and  amortization
expenses were $420,461 and $258,880, respectively.


NOTE 6-RELATED PARTY TRANSACTIONS

Due from the Company's chief executive officer (CEO) is a loan of $31,000.  This
represents the first  installment of a $100,000 interest free loan in connection
with his relocation. The loan is due and payable upon the sale of his New Jersey
home or employment termination, whichever occurs earlier.

Due  from  the  Company's  former  chief  executive  officer  (CEO) is a loan of
$170,220 (which includes  accrued  interest at the rate of 6% per annum) that is
collateralized  by 20,000 of such  individual's  shares of the Company's  common
stock.

Due from the chief executive officer (CEO) of Planet is a loan of $150,000 dated
March 31, 2000 at an interest rate of 6% per annum.

Due from a vice  president of Planet is a loan of $150,000  dated March 31, 2000
at an interest rate of 6% per annum.

                                      F-11
<PAGE>

In April, 1998, the Company settled the outstanding employment contract and loan
account  with  its  former   chairperson   and  chief   operating   officer  for
approximately  $360,000  (which  includes  legal  fees) and the  return of 8,000
shares of its common stock.  It was deemed that $275,000 of the settlement was a
period expense and the balance a deferred consulting fee.

The  Company  has  retained a former  officer  and son of the  Company's  CEO as
outside  legal  counsel;  fees were $44,100 in fiscal 2000 and $49,000 in fiscal
1999. A former officer and a current director received $26,851 in fiscal 1999.

Gedanken,  a company  controlled by Dr. Julius Cherny,  was paid $240,000 by the
Company  during both fiscal  2000 and fiscal 1999 for the  computer  translation
system that Gedanken is developing  (see Note 4 relative to the  accounting  for
such payments).

NOTE 7-DEBT

Word  House  has a bank  net  overdraft  facility  of up to  $150,000,  which is
collateralized by cash, accounts  receivable,  and equipment.  The bank has also
issued a letter of credit for the account of Word House in the amount of $50,000
as a security deposit.

NOTE 8-INCOME TAXES

As of March 31, 2000 and 1999 other current assets include approximately $22,000
and $112,000  respectively of claims for income taxes paid in prior periods as a
result of carry back of operating losses.

The  provision  (benefits)  for taxes on earnings  for the years ended March 31,
consist of:

                                       2000                  1999
                                       ----                  ----

          Current
               Federal                 $     -           $(112,000)
               State                         -                  -
               Foreign                       -                  -
                                        -------           --------
                                             -            (112,000)
                                        =======          =========
          Deferred
               Federal                   36,000           (224,000)
               State                    133,000                  -
               Foreign                        -            (60,000)
                                       --------           --------
                                       $169,000          $(396,000)

The provision for income taxes is different from that which would be obtained by
applying the  statutory  Federal  income tax rate to income (loss) before income
taxes. The items causing this difference are as follows:

                                                          2000           1999
                                                          ----           ----

  Tax expense (benefit) at U.S. statutory rate         $(100,000)     $(865,000)
  Non-deductible expenses:
       Amortization of goodwill                          116,000         33,000
       Amortization of stock based expenses              107,000
       Other                                              10,000         29,000
  State income taxes net of federal  benefit              88,000
  Change in valuation allowance for:
       Use of prior year net operating loss             (233,000)
       Unavailibility of foreign loss for carryback      181,000         75,000
       Unavailibility of U.S. net operating loss
                                   for carryback               -        332,000
                                                       ---------      ---------
                                                       $ 169,000      $(396,000)

                                      F-12
<PAGE>

The tax effect of temporary  differences that give rise to significant  portions
of the  deferred tax assets and  deferred  tax  liabilities  at March 31, are as
follows:
                                                            2000          1999
                                                            ----          ----

 Deferred tax assets:
      Net operating tax loss carry forward               $(388,000)   $(366,000)
      Less:  valuation allowance                                 -      100,000

 Deferred tax liability:
      Difference in basis of assets due to use of the
                  cash method for income tax purposes      463,000      266,000
      State deferred tax net of federal benefit            114,000         -
                                                          ---------    --------
                                                         $ 189,000     $   -
                                                         ==========    ========

Net operating loss carry-forwards:

The Company has US Federal and State  operating loss carry forwards and deferred
tax assets of  approximately  $900,000  that expire  over the ensuing  period of
twenty years.

The Company  has foreign net  operating  loss  carry-forwards  of  approximately
$473,000 that expire as follows:

             Year Ending
               MARCH 31,                                AMOUNT
               ---------                                ------
                  2001                                $ 10,000
                  2003                                  67,000
                  2004                                 226,000
                                                       -------
                                                       303,000
           Net operating losses that do not expire     170,000
                                                       -------
           Total                                      $473,000
                                                      ========

The  deferred  tax asset of  approximately  $600,000  has been  offset by a 100%
valuation allowance because of the uncertainty of its realization.

NOTE 9-PREFERRED STOCK

The Company is authorized to issue  1,000,000  shares of preferred stock and has
issued 250,000 shares of convertible  preferred stock at March 31, 2000. Holders
of the preferred shares are entitled to receive cumulative cash dividends at the
annual  rate of 8% payable  quarterly.  The shares are  convertible  at any time
during the five year  period  ending  March 31,  2005,  in whole or in part at a
price of $4.00 per share.  The preferred  stock can be redeemed by the holder at
face value, at the end of five years.


NOTE 10-STOCK OPTIONS AND WARRANTS

STOCK OPTIONS

In October  1996,  the Company  adopted a Stock  Option Plan (the  "Plan")  that
provides  for a maximum  of  2,500,000  shares  of common  stock to be issued in
connection  with such  plan.  The Plan was  amended  at the  annual  meeting  of
stockholders  on September 28, 1999.  The price payable for the shares of common
stock  under  incentive  stock  options  must be not less  that 100% of the fair
market value at the time the option is granted  (and 110% if the person  granted
such option owns more than 10% of the  outstanding  shares of the common stock).
Additionally,  under the Plan,  participants  may be granted stock  appreciation
rights (SAR).  SARs consist of rights to receive either cash or shares of common
stock equal to the amount by which the value of such  shares of common  stock on
the date the SAR is exercised  exceeds the per share option price.  No SARs have
been  granted.  Options  granted  under this Plan  expire ten years from date of
grant, for non-affiliated persons and five years for a 10% owner.

                                      F-13
<PAGE>

The Company follows Accounting  Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" ("APB 25") and related  interpretations in accounting
for its employee  stock  options.  Under APB 25, when the exercise  price of the
Company's  employee stock options equals or is more than the market price of the
underlying  stock on the date of grant, no  compensation  expense is recognized.
The alternative  fair value  accounting is disclosed only for pro forma purposes
as provided for under SFAS No. 123,  "Accounting for Stock-Based  Compensation",
which  requires  the  use  of  option  valuation  models.   Options  granted  to
non-employees are valued at their fair value at the date of grant.

The following is a schedule of the status of options granted under the Company's
stock option plan:

                                                                Weighted Average
                                                                 Exercise Price
                                               OPTIONS             PER SHARE

    Outstanding at March 31,1996                  -0-
        Granted                                  700,000              $6.17
                                               ---------              -----

    Outstanding at March 31, 1997                700,000               6.17
        Granted                                  599,000               4.75
        Exercised                                 (2,000)              6.00
        Cancelled                               (100,000)              6.00
                                               ----------              ----

    Outstanding at March 31, 1998              1,197,000              $5.47
                                               ----------             -----

        Granted                                  495,000               4.99
        Cancelled                               (263,000)              5.75
                                                ---------              ----

    Outstanding at March 31, 1999              1,429,000              $5.25
                                               ---------              -----

        Granted                                1,627,500               3.15
        Cancelled                               (599,500)              4.69
                                                --------               ----

    Outstanding at March 31, 2000              2,457,000              $4.00
                                               =========              =====




Exercisable at March 31, 2000                    403,750              $5.41
                                                 =======              =====
Exercisable at March 31, 1999                    852,300              $5.37
                                                 =======              =====
Exercisable at March 31, 1998                    409,200              $5.12
                                                 =======              =====

As of March 31, 2000,  the Company has 41,000  options  available to grant under
the Plan.

As of March 31, 2000 for each of the following  classes of options as determined
by  the  range  of  exercise   price,   the  following   information   regarding
weighted-average  exercise  prices and  weighted-average  remaining  contractual
lives of each class is as follows:

<TABLE>
<CAPTION>
                                        Weighted Average          Number of       Weighted Average
  Number           Weighted Average     Remaining Contract Life   Options         Exercise Price of
  Of               Exercise Price Of    of Outstanding Options    Currently       Options Currently
  OPTIONS          Options              (YEARS)                   Exercisable     Exercisable
 --------          -----------------    -----------------------   ------------    -----------------
<S>                <C>                 <C>                         <C>              <C>
  125,000           $2.22               9.67
   15,000            2.25               9.44
  397,500            2.31               8.45
    5,000            2.54               9.71
   10,000            2.75               9.53
  607,500            3.00               9.52
   10,000            4.00               8.75                          2,500           $4.00
  100,000            4.06               4.25
  420,000            4.50               7.95                        155,000            4.50
  335,000            5.00               9.32                         62,500            5.00
  222,000            6.00               3.21                         81,250            6.00
  210,000            6.60               6.78                        102,500            6.60
  -------          ------               ----                        -------            ----
2,457,000           $4.00               8.03                        403,750           $5.41
=========           =====               ====                        =======           =====

</TABLE>

                                      F-14
<PAGE>

The pro forma information  regarding net (loss) and (loss) per share as required
by SFAS No. 123, has been  determined as if the Company had been  accounting for
its employee  stock options under the fair value method of that  statement.  The
fair  value  of  these  options  was  estimated  at the  date of  grant  using a
Black-Scholes   option   pricing  model  with  the  following   weighted-average
assumptions:

                                                        MARCH 31,
                                               1999     ---------       2000
                                               ----                     ----

Range of risk free interest rates           6.10% - 6.30%          6.10% - 6.30%
Dividend yield                              0%                     0%
Volatility factor                           158%                   64%
Expected life of options (in years)         8                      8


The weighted  average fair value of options granted was $2.57 for the year ended
March 31, 2000 and $4.91 for the year ended March 31,  1999.  The  Black-Scholes
option  valuation  model was developed  for use in estimating  the fair value of
traded options which have no vesting restrictions and are fully transferable. In
addition, for traded shares, option valuation models require the input of highly
subjective  assumptions  including  the  expected  stock price  volatility.  For
purposes  of pro forma  disclosures,  the  estimated  fair value of the  options
granted in fiscals  2000 and 1999 is  amortized  to  expense  over the  options'
average vesting period. The Company's pro forma information follows:

                                                     YEAR ENDED MARCH 31
                                                 2000                  1999
                                                 ----                  ----

          Pro forma loss                    $(2,649,411)            $(3,063,591)
                                            ============            ============

          Pro forma loss per share          $ (.89)                 $  (1.35)
                                            ========                =========


The  pro  forma   disclosures   presented  above  for  fiscals  2000  and  1999,
respectively,  reflect  compensation expense only for options granted in fiscals
2000 and 1999.  These amounts may not necessarily be indicative of the pro forma
effect of SFAS No. 123 for future periods in which options may be granted.

WARRANTS

Pursuant to its Initial  Public  Offering  ("IPO") in December 1996, the Company
sold  1,840,000  warrants.  There  were also  300,000  warrants  outstanding  to
shareholders  given in  consideration of their give-back of common shares to the
Company  in  connection  with the IPO.  Each  warrant  entitled  the  registered
shareholder  to purchase one share of common stock at an exercise price of $6.20
per  share for a period  of three  years  beginning  December  1996.  There is a
current  registration  statement  in  effect  covering  the  exercise  of  these
warrants.

The Company also granted the underwriters, of its IPO, rights to purchase 60,000
shares of the Company's common stock at an exercise price of $7.80 per share and
160,000  warrants  at an  exercise  price of $.26 per  warrant  and in turn,  an
exercise price for the stock of $7.80 per share,  the former of which expires on
December  2, 2001,  and the later of which  expired  on  December  2,  1999.  In
connection  with the  Company's  earlier  private  placement,  additional  stock
warrants were issued to purchase 40,000 shares of the Company's  common stock at
a price of $1.50 per share that expires on January 17, 2001.

During the year ended March 31, 2000, the Company issued 598,250 warrants,  with
exercise  prices  ranging  from $2.00 to $6.00 that expire over the next 5 years
valued at $315,987 for financing  arrangements and a consulting  agreement.  The
Company also issued  100,000  warrants at an exercise price of $2.39 on December
15, 1999 in connection with the purchase of Planet Access Networks, Inc.

                                      F-15
<PAGE>

During the year ended March 31,1998,  the Company issued 20,000  warrants valued
at $40,000 for consulting fees and also gave an option to a consultant for three
years and an additional  three years by mutual  consent for 100,000  warrants at
the then market price of $.80 per warrant and a price of $4.50 per common share.
The term of the warrant  overlays  the option  period.  The  Company  valued the
warrants at $225,000 and services are to be provided  from April 1, 1998 to June
30, 1999; the costs are being amortized over the period of fifteen months during
which the services were to be performed.

Effective  December 2, 1999,  the Company  extended the  warrants  until July 2,
2000,  with a  concomitant  reduction in the  exercise  price to $5.12 and again
extended the warrants,  effective July 2, 2000 to December 31, 2000. The current
exercise price is $4.35 per warrant.


     Outstanding warrants consist of the following:

          Issued in connection with the Initial
          Public Offering                                       2,140,000
                                                                ---------
               Balance at March 31, 1997                        2,140,000
                  Granted                                          20,000
                  Exercised                                       (13,340)
                                                                ---------
               Balance at March 31, 1998                        2,146,660
                                                                ---------
               Balance at March 31, 1999                        2,146,660
                                                                ---------
                  Granted
                  Exercised                                      (292,600)
                                                                ----------
            Balance at March 31, 2000                           1,854,060
                                                                =========

The above  outstanding  warrants  do not include the  warrants  described  above
relating to the Company's  underwriters' options to acquire 260,000 warrants and
for the option to acquire 100,000 warrants issued to the consultant.

NOTE 11-COMMITMENTS AND CONTINGENCIES

(A) Employment Contracts

The Company has employment  contracts with its chief executive  officer,  former
chief executive officer, its chief operating officer, and the president and vice
president of one of its  subsidiaries  that expire  December  2000,  April 2003,
September  2001and April 2003.  Aggregate  remaining  compensation  and benefits
under such contracts approximate $1,508,000.

(B) Rent

The Company has operating leases for its production facilities and office space.
Aggregate minimum future annual rental payments are as follows:

                     Year Ending
                      MARCH 31,                    TOTAL
                      --------                     -----


                        2001                    $   452,000
                        2002                        388,674
                        2003                        291,915
                        2004                        195,564
                        2005                         65,188
                                                 ----------
                       Total                     $1,393,341
                                                 ==========


Rent  expenses  from  fiscal  years  2000 and 1999 were  $324,908  and  $196,707
respectively.


                                      F-16
<PAGE>

(C) Other matters and Litigation

The  Company has been sued by a  stockholder  who is seeking  monetary  damages,
specific  performance,  equitable  relief and costs in the amount of $3,000,000.
The Company and its counsel believe that there is a substantial  likeliness that
the defendants will prevail in this matter.

NOTE 12-ACQUISITIONS AND RECENT AGREEMENTS

ACQUISITION OF PLANET ACCESS NETWORKS, INC.

As of May 1, 1999, the Company acquired all the issued and outstanding shares of
Planet  for  634,668  shares  of its  common  stock  and cash in the  amount  of
$900,000.  The transaction  has been accounted for as a purchase.  The excess of
the estimated  fair value of common shares,  over the underlying  fair values of
the net assets  acquired,  together with the costs of the transaction  have been
recorded  as excess of  purchase  price over fair  value of net assets  acquired
(Excess), and is being amortized over a 10 year period.

The purchase price was recorded as follows:

            Current assets                                           $  817,501
            Property and equipment (net)                                353,878
            Excess of cost over fair value of assets acquired         3,366,053
                                                                      ---------
                     Total assets                                     4,537,432
            Liabilities                                                (759,814)
                                                                     -----------
                     Total cost of acquisition                       $3,777,618
                                                                     ==========

   Stock issued - 634,668 shares                                     $3,689,829
   Acquisition costs                                                     89,789
                                                                        -------
   Purchase price                                                    $3,777,618
                                                                     ==========

The condensed unaudited pro forma information of the Company for the years ended
March 31, 2000 and 1999 are  presented  as if the  acquisition  had  occurred on
April 1, 1998 and 1999. The pro forma information is not necessarily  indicative
of the results  that would be  recorded  had the  acquisition  occurred on these
dates, nor is it indicative of the Company's future results:

                                                           PRO FORMA
                                                       YEAR ENDED MARCH 31,
                                                     1999               2000

              Revenue                            $13,874,289         $8,986,203
              Net loss                              (190,363)        (1,903,957)
              Loss per share                            (.06)              (.65)
              Weighted average shares              2,965,805          2,913,008


BRANDWISE, LLC AGREEMENT

On June 29, 2000,  Planet Access Networks,  Inc. and Brandwise,  LLC (Brandwise)
executed an agreement to satisfy the outstanding accounts receivable balance due
Planet from  Brandwise in the amount of  $1,042,349  as of March 31,  2000.  The
agreement  called for a cash  payment of $32,000  which was received on June 29,
2000. Additionally, the agreement called for the title transfer of equipment and
software  from  Brandwise to Planet.  The  equipment  and software was valued in
excess of the  receivable  and was owned by  Brandwise,  but was  already in the
possession of Planet.

SEASIDE PARTNERS, L.P. AGREEMENT

On May 29, 2000,  the Company sold 909,091  shares of its common stock for $2.75
per share for a total of  $2,500,000  through a private  placement  with Seaside
Partners,  L.P.  The  $2,500,000  consideration  given to the Company by Seaside
Partners,  L.P was $300,000 in cash, a $500,000  promissory  note due in 90 days
with interest at the rate of 8% per annum and 433,783  shares of common stock of
Sedona  Corp.  with a fair  market  value  of at  least  $1,700,000  on the date
thereof.  The  agreement  provides for an adjustment to the fair market value of

                                      F-17
<PAGE>

the Sedona Corp.  common stock should it not equal the  $1,700,000.  The Company
would  liquidate the said shares in open market  transactions  in a commercially
reasonable  fashion.  To the  extent  that the  proceeds  from  the sale  exceed
$1,700,000,  the  Company  will  promptly  remit the excess  proceeds to Seaside
Partners,  L.P. To the extent that the  proceeds are less than  $1,700,000,  the
investor will promptly remit the difference to the Company.

NOTE 13-SEGMENT OPERATIONS

The following  summarizes  information  about the Company's  business  segments.
Translation/localization  is in Japanese,  Chinese,  and other  languages of the
Asian rim, as well as European  languages and Canadian French.  The sales of BTS
originate in the United States to domestic and foreign  customers.  The sales of
Word House  originate  in Europe and are almost  entirely  in Dutch,  French and
other European languages.

Financial  information  that can be classified by the segments of the Company is
as follows (stated in thousands):


                                                             2000        1999
                                                             ----        ----
         Translation/localization (United States):
                  Revenue                                  $1,348       $3,115
                  Intercompany revenue                          -            -
                  Interest income                               1            6
                  Interest expense                             (3)         (11)
                  Intercompany interest

                  Depreciation and amortization                144         132
                  Provision for income taxes                     1        (339)
                  Total assets                                 589       1,195

         Translation/localization (Europe):
                  Revenue                                  $3,096       $3,029
                  Intercompany revenue                        (92)        (158)
                  Interest income                                           20
                  Interest expense                            (51)         (52)
                  Intercompany interest                       (31)         (18)
                  Depreciation and amortization                93          117
                  Provision for income taxes                               (57)
                  Total assets                              1,051        1,234

         Internet and web-site development:
                  Revenue                                  $9,006
                  Intercompany revenue                        (11)
                  Interest income                               1
                  Interest expense                             (1)
                  Depreciation and amortization               193
                  Provision for income taxes                  168
                  Total assets                              3,440

         Parent:
                  Revenue                                  $1,283       $  540
                  Intercompany revenue                     (1,283)        (540)
                  Interest income                              76          177
                  Intercompany interest                        31           18
                  Interest expense                            (53)
                  Depreciation and amortization               316           93
                  Provision for income taxes
                  Total assets                              6,853        3,707


                                      F-18
<PAGE>

NOTE 13- NEW PRONOUNCEMENT

In  June  1998,  the  Financial  Accounting  Standards  Board  issued  Financial
Accounting   Standards  Board  Statement  No.  133  "Accounting  for  Derivative
Instruments and hedging  activities"  (FAS 133). FAS 133 is effective for fiscal
quarters of fiscal  years  begining  after June 15,  2000.  FAS 133  establishes
accounting and reporting  standards for derivative  instruments  and for hedging
activities and requires,  among other things, that all derivatives be recognized
as either assets or liabilities in the statement of financial  position and that
those  instruments  be measured at fair value.  The Company  does not expect the
implementation  of  this   pronouncement  to  have  a  material  effect  on  its
consolidated financial statements.




                                      F-19