U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
                [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                    FOR THE FISCAL YEAR ENDED MARCH 31, 2000

                                       or

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

                           COMMISSION FILE NO. 0-27633

                             INTERNET INFINITY, INC.
                 ----------------------------------------------
                 (Name of small business issuer in its charter)

          Delaware                       0-27633               95-4679342
-------------------------------       --------------      ----------------------
(State or other jurisdiction of       (SEC File No.)        (I.R.S.  Employer
 incorporation or organization)                           Identification Number)






                3303 Harbor Boulevard, K-5, Costa Mesa, CA 92626
                ------------------------------------------------
                    (Address of principal executive offices)

                                  310-318-2244
                           ---------------------------
                           (Issuer's Telephone Number)



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


     Title of each class                      Name of each exchange on which
     to be so registered                      each class is to be registered
     -------------------                      ------------------------------
           None                                            None


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

                         Common Stock, $0.001 par value
                         ------------------------------
                                (Title of Class)


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

<PAGE>

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

State issuer's revenues for its most recent fiscal year:  $1,424,525

        State the  aggregate  market value of the voting and  non-voting  common
equity held by  non-affiliates  computed by  reference to the price at which the
common  equity  was sold,  or the  average  bid and asked  price of such  common
equity,  as of a specified  date within the past 60 days:  $992,625  computed by
reference  to the  $0.375  average of the bid and asked  price of the  Company's
Common Stock on June 26, 2000.

        State the number of shares  outstanding of each of the issuer's  classes
of common equity, as of the latest practicable date: 10,373,196 shares of Common
Stock, $0.001 par value.

DOCUMENTS INCORPORATED BY REFERENCE

        If the  following  documents  are  incorporated  by  reference,  briefly
describe them and identify the part of the Form 10-KSB  (e.g.,  Part I, Part II,
etc.) into which the document is incorporated: (1) any annual report to security
holders;  (3) any proxy or information  statement;  and (3) any prospectus filed
pursuant to Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act").
The list  documents  should be clearly  described  for  identification  purposes
(e.g.,  annual  report to security  holders for fiscal year ended  December  24,
1990). None.

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


<PAGE>
                                TABLE OF CONTENTS

                                                                           Page
                                                                           ----

Item 1.  Description of Business ..........................................   1

Item 2.  Description of Properties ........................................   9

Item 3.  Legal Proceedings ................................................   9

Item 4.  Submission of Matters to a Vote of
               Security Holders ...........................................   9

Item 5.  Market for Common Equity and Related
               Stockholder Matters ........................................  10

Item 6.  Management's Discussion and Analysis .............................  12

Item 7.  Financial Statements .............................................  16

Item 9.  Directors, Executive Officers and Control Persons ................  17

Item 10.  Executive Compensation ..........................................  19

Item 11.  Security Ownership of Certain Beneficial Owners and
               Management .................................................  20

Item 12.  Certain Relationships and Related Transactions ..................  21

Item 13.  Exhibits and Reports on Form 8-K.................................  25

Signatures ................................................................  26



<PAGE>
ITEM 1. DESCRIPTION OF BUSINESS

        Internet Infinity,  Inc. (the "Company") was incorporated on October 27,
1995  in  the  State  of  Delaware.  We  raised  $375,000  under  Rule  504 in a
non-registered public offering of our common stock during the period August 1996
through July 1997. We conduct our business from our sales headquarters office in
Costa Mesa, California. We first had revenues from operations in 1996.

        Our initial focus was on selling  Internet  software.  However,  by late
1996 we began experiencing  significant product returns from our software sales.
Sam=s Club returned $237,000 of a $257,000 single order of a new Internet Access
program.  Sam=s Club=s reason for the return was a lack of retail sales for this
type of product caused by competitors'  low- or  free-of-cost  browser and other
Internet utility programs. By early 1997 our software sales were slipping toward
zero and Internet  Infinity had to find an  alternative  revenue  opportunity to
survive.

        We first turned our  attention and efforts to selling  electronic  media
duplication and packaging  services  offered by an unaffiliated  company,  Video
Magnetics,  LLC. Internet Infinity had experience with videotape duplication and
CD-ROM from prior sales of our special  interest  video  programs  and  Internet
software  programs.  In  addition,  the growing  digital  media  market  offered
compatible  alternative electronic media opportunities to Internet Infinity. One
of Internet  Infinity=s early software packages for the retail market included a
combination  of CD and access to the Internet.  The  70-year-old  owner of Video
Magnetics had primarily sold, to small local  companies,  video tape duplication
services,  CD-ROM  duplication  services,  new low  quality and used blank video
tapes, video tape packaging supplies and used video tape duplication  equipment.
In December 1996, the owner of Video  Magnetics said he wanted to get rid of the
business and retire as soon as possible.  He advised  Internet  Infinity that he
believed a new owner would not want to  continue  the  distribution  arrangement
Video Magnetics had with Internet Infinity. Therefore, the only way to guarantee
Internet  Infinity's  right to  distribute  the products and retain the existing
customer base that came from Video  Magnetics  was to acquire  Video  Magnetics.
Accordingly,  George Morris, our chief executive officer and a director with his
wife, Dawn Morris, the controlling  shareholders of our company, through another
company, L&M Media, Inc., in which they have had a 98 percent ownership for over
ten years,  bought Video Magnetics'  business in early 1997. If the Morrises had
not acquired Video  Magnetics,  the sales to existing Video Magnetics  customers
that had been  turned  over by Video  Magnetics  to  Internet  Infinity  and the
availability of Video Magnetics'  low-cost,  in-house  manufacturing  facilities
would probably have been lost to any other new owner of Video Magnetics.

        L&M Media, Inc., the acquirer of Video Magnetics' business, had produced
and created special interest video programs,  such as how-to sports,  home, auto
and business training.

        On December 1, 1998, Apple Media Corporation,  a wholly owned subsidiary
of L&M Media, Inc.,  assumed all  responsibility for business  operations of the
former  Video  Magnetics,  Inc.  Apple Media  focuses on the  manufacturing  and
duplication of video, CD and related  products.  Apple Media  Corporation,  as a
wholly-owned  subsidiary  of L&M Media,  Inc. is  indirectly 98 percent owned by
George and Dawn Morris since George and Dawn Morris own 98 percent of L&M Media,
Inc.

                                       1
<PAGE>
        Apple Media  Corporation  is the major  supplier of products to Internet
Infinity and its subsidiaries. It provides blank video, video packaging supplies
and  duplication  of video  and CD Media on credit  terms as needed by  Internet
Infinity and its subsidiaries.

        At the time we acquired  Video  Magnetics  we also added to the Internet
Infinity   business  the  distribution  of  better  quality  blank   videotapes,
recordable  compact discs ("CDRs") and  pre-recorded  video programs on numerous
subjects.   L&M  Media,  Inc.  and  its  wholly-owned   subsidiary  Apple  Media
Corporation,  source new suppliers of electronic  media materials and components
at the annual  industry  "Replitech  Exposition"  and through the industry trade
publication "Tape & Disk Business." In addition,  we continuously check supplier
prices and request price competition  between suppliers.  The business rationale
is to increase  Internet  Infinity  sales with more products and  services.  The
licensed,  pre-recorded  video  programs  are  owned  by  L&M  Media,  Inc.,  an
affiliated company 98 percent owned by George and Dawn Morris. Internet Infinity
contacts  school  distributors  by telephone to offer these  licensed  programs.
Program  subjects include  "how-to" for various sports,  cooking,  home and auto
repair,  lawn  and  garden,  crafts,  business  success  and  computer  software
training.

        In July  1997 we  started  to  accumulate  the  distribution  rights  to
twenty-five Health and Medical video programs owned by L&M Media, Inc., which is
98 percent owned by George and Dawn Morris,  the  controlling  shareholders  and
officers and directors of Internet Infinity.  Acquiring distribution rights from
L&M Media for the first  five  programs  in July 1997 was a  starting  point for
Internet  Infinity to work with the  business  possibilities  of  developing  an
on-line Internet health and medical library.  In order, to control the rights to
all the  programs  currently  available  from L&M Media and stop L&M Media  from
granting the distribution rights to another company. Internet Infinity agreed to
acquire  the  distribution  rights  from  L&M  Media  for the  remaining  twenty
completed  health  and  medical  programs  in  February  1998.  In early 1999 we
purchased,  from L&M Media and from Hollywood  Riviera Studio,  the distribution
rights to five video modules on Personal and Sales Skill Development.  Hollywood
Riviera Studios is the "dab" of Apple Realty,  Inc.,  which is 100 percent owned
by George and Dawn Morris,  the controlling  shareholders and principal officers
and directors of Internet Infinity.  We propose to commence the marketing of the
programs and the Personal and Sales Skill  Development  video modules at the end
of calendar  year 2000.  The  marketing of the Health and Medical video has been
delayed  until a suitable  and  profitable  use can be  located  with a partner.
Ideally,  a partner would have an interest in preparing and selling short one to
five minute video segments as content for traffic building on web sites. At this
time no such use or  partner  has been  identified  for the  programs.  However,
Internet  Infinity is retaining a part-time  consultant as of April 2000 to work
with the development of the Health and Medical library.  The five modules of the
Personal and Sales Skill  Development are: The  need/benefit  approach to making
friends and selling more, Identifying the problem,  Developing the need, Dealing
with doubts and objections, Closing for the order.

        The  first   "Internet   Infinity   Business  to   Business"   web  site
www.mlmhub.com  has been  launched  in March 2000 and it plans to begin sales of
our Personal and Sales Skill Development  product by December 2000. This new B2B
site focuses on persons with an interest in the direct  selling  profession.  It
includes  a "direct  selling"  store  with  business  success  books,  audiotape
programs, videotape programs, blank videotape and CD, and video tape duplication
services.  In addition,  the MLMHUB site plans to provide  information  gathered
from news media and research for the visitor interested in direct selling by the

                                       2
<PAGE>

December  2000.  The funding to expand  this site is coming  from the  operating
profit of Internet Infinity and from loans of approximately  $50,000 from George
Morris, the President of Internet Infinity.

Business of Internet Infinity

        Internet Infinity

        *   distributes  electronic  media duplication  services  and electronic
            blank media;

        *   distributes prerecorded special interest video programs;

        *   distributes  Internet  web  site services and CD authoring services;
            and

        *   operates  a business-to-business community web site for direct sales
            professionals.


        Products

        We have four principal products and services:

        *   electronic media duplication and packaging services of three types -

            *   mini-CD Business cards,

            *   CD - compact disks, and

            *   video tape;

        *   blank media of two types -

            *   video tape, and

            *   CDR B Recordable Compact Disc;

        *   pre-recorded special interest video programs of six types -

            *   personal development knowledge and skill development; and

            *   computer training,

            *   health and medical,

            *   sports and exercise training,

                                       3
<PAGE>

            *   children's crafts,

            *   home and auto repair, and

        *   Internet site development and marketing support in two areas -

            *   non-affiliated clients of Internet Infinity, and

            *   subsidiaries of Internet Infinity.

        Suppliers and Sub-Contractors
        -----------------------------

        Our duplication services and blank media product orders are manufactured
and fulfilled by an affiliated company, Apple Media Corporation, at a cost of 80
percent  of the  total  invoice  amount  billed  by us to a  customer  including
shipping.  Apple Media  Corporation is a  wholly-owned  subsidiary of L&M Media,
Inc.,  which is 98 percent  owned by George  and Dawn  Morris,  the  controlling
shareholders, officers and directors of Internet Infinity. Apple Media is solely
responsible for equipment leases,  raw materials and components,  manufacturing,
sub-contractors,  packaging and shipping  labor,  management  and physical plant
overhead.  We, through our  Electronic  Media Central  Corporation  wholly owned
subsidiary,  are  responsible  for sales force  compensation,  direct  sales and
accounting  clerical  support and executive  management out of our 20 percent of
the invoice discount amount. In addition, Apple Media Corporation also provides,
at a cost of $900 a month or  $10,800  for the  twelve-month  fiscal  year ended
March 31, 2000,  office  facilities,  telephone,  and utilities to our sales and
management staff. The $10,800 is an allowance  included in the 80% cost of goods
paid by Electronic Media Central to Apple Media Corporation.

        Our prerecorded video programs are manufactured,  duplicated and shipped
by Apple Media at a cost of 20 percent of the total invoice  amount billed by us
to a customer for all costs including  shipping.  There is a significantly lower
percentage  cost of goods and  higher  percentage  gross  profit  margin for the
pre-recorded  programs  versus  blank  media  or  duplications  services.   This
difference  allows our Morris & Associates wholly owned subsidiary to retain the
remaining 80 percent of the sales  revenue.  Morris & Associates is  responsible
for sales force  compensation,  direct sales and  accounting  clerical  support,
executive  management  and product  packaging  out of its 80  percent.  Morris &
Associates also pays a licensing royalty fee of between 10 percent to 20 percent
of the gross sales dollars to L&M Media, Inc. which owns the programs.  However,
the 80 percent gross margin after cost of goods less  royalties of 10 percent to
20  percent  generates  a net profit of 60 percent to 70 percent on sales of the
programs licensed from L&M Media.

        Internet  Infinity has a non-exclusive  distribution  license  Agreement
from L&M Media for  approximately  200  special  interest  video  programs  that
automatically  renews  each year on August 1 until  terminated  by either  party
without cause with thirty days written  notice.  Termination by either L&M Media
or Internet  Infinity  would  result in a loss of revenue to Internet  Infinity.
Sales for the  twelve-month  period  ended March 31, 2000 were $49,549 down 44.9
percent from $89,959 for the twelve-month  period ended March 31, 1999. Internet
Infinity is planning to  re-introduce  the 200 special  interest  video programs
through a partner  with a low cost  Abudget -  ($2.95-$3.95  retail)  line in an

                                       4
<PAGE>

attempt  to  increase  sales.  There is no way to  determine  when and if such a
partner  will be found.  Internet  Infinity  also holds  exclusive  distribution
licenses  from L&M Media for 25  programs  on Health and  Medicine  and from L&M
Media and Hollywood Riviera Studios for five modules of Personal and Sales Skill
Development programs.  Any royalties owed by Internet Infinity to L&M Media from
sales of the 200 special interest  programs may be applied to the balance due on
the stock  subscription  agreements  between  Internet  Infinity,  L&M Media and
Hollywood  Riviera  Studios that are associated with both the Health and Medical
and the Personal Sales Skills Development program rights obtained from L&M Media
and Hollywood Riviera Studios.  The Personal Sales Skills  Development  programs
were  originally  developed  by L&M  Media  but were  refined  and  improved  by
Hollywood Riviera Studios.  L&M Media and Hollywood Riviera Studios share in all
royalties  earned by the five Personal Sales Skills  Development  programs.  L&M
Media,  Inc.  is 98 percent  owned by George and Dawn  Morris,  the  controlling
shareholders  of Internet  Infinity and its  principal  officers and  directors.
Hollywood  Riviera  Studios  is 100  percent  owned by George  and Dawn  Morris.
Therefore,  with the  pooling of earned  royalties  owed to L&M Media,  Internet
Infinity is not required to use cash for royalty payments to L&M Media until all
the stock subscription agreements are completely paid by L&M Media and Hollywood
Riviera Studios.

        Our Internet design and marketing  services  delivered to  nonaffiliated
customers have declined since first  introduced in 1996 due to low cost and free
services  offered by  competitive  Internet  service  providers.  The  increased
competition  for the  creation of smaller Web sites that led to lower prices for
these services and the reduction of the Internet Infinity staff in this area due
to a cash shortage caused Internet  Infinity to reduce its offerings of Internet
design  services  in 1997,  1998 and 1999.  It  became  expedient  for  Internet
Infinity to focus on video and CD products and services  sales to generate  cash
and financially survive in 1997. Although revenues from Internet design services
have declined to zero in early 1999,  the  opportunity to provide these services
to the visitors of our new, under-construction,  Internet Infinity business site
will be pursued.  We are now  focusing our  Internet  site design and  marketing
services for our own Internet product sales  activities.  Our current mission is
to help market the  products  and  services  of our  subsidiaries  and  selected
clients with multimedia  promotion and financial and  transactional  services to
facilitate successful trade on the Internet.  Therefore, Internet Infinity plans
to utilize its experience and resources to launch successful Internet sites that
sell its products and  services.  Multimedia  promotion  with CD's and video can
communicate  a story to prospects  for products and services just as American On
Line has used CD's to  communicate  their  information  about their products and
services.  The Morris and  Associates,  Inc. and Electronic  Media Central Corp.
subsidiaries of Internet  Infinity have experience in creating,  duplicating and
distributing  electronic  media for clients that can be applied to its own sales
and prospecting efforts. In addition,  Internet Infinity is currently seeking an
agency  relationship  to enable it to offer Internet  merchant card services and
Internet  shopping cart services to clients and  subsidiaries.  If creating this
agency is successful,  Internet Infinity will offer these services in the fiscal
year ending 2001.

        Internet  Infinity is currently  working with past employees who are now
acting as lower cost independent  contractors to Internet  Infinity for Internet
site design and development and for the creation of mini-CD electronic  business
cards. We have launched a first business to business site at www.mlmhub.com that
will offer business productivity tools such as special books, training tapes and
electronics.  In addition,  a site is now complete and ready for improvement and
promotion for the sale of duplication services at (www.iiemc.com).  The Internet
Infinity  plan  calls for the  utilization  of CD's and  videos  like  NetScape,

                                       5
<PAGE>

American  On-line to promote  these  sites  since we have  experience  and a low
internal cost with this media in addition to telemarketing activities.

        Our newly  promoted blank video  Internet site  (www.blankvideo.com)  is
currently  generating  prospects  and  smaller  orders.  This  web site is being
promoted  to search  engines  through the  submit-it  service and we get a small
amount of inquiries  from  prospects  for blank  videotape.  The  inquiries  are
followed  up on the  telephone  or email by an  Internet  Infinity  salesperson.
Internet Infinity is making a marketing resource commitment to promote this site
with  telemarketing and on-line promotion  commencing through the fourth quarter
of calendar 2000.  Sales of blank  videotapes  over the last twelve months ended
March 31, 2000 were $58,094,  and Internet Infinity management believes there is
an  opportunity  to increase  sales though the  blankvideo  Internet  site.  The
management belief in the blankvideo tape opportunity must result in an undefined
substantial sales increase over the next fiscal year or the resource  commitment
to pursue this product area will be reduced or eliminated.

        The first "Internet  Infinity Business to Business" site  www.mlmhub.com
was launched in the first calendar  quarter of 2000. This new Internet  Infinity
business to business site will also provide new  opportunities to sell marketing
services to non-affiliated customers. The Internet Infinity marketing plan calls
for  offering  web  services  to members  as part of  belonging  to an  Internet
Infinity community of businesses with similar interests.  The client as a member
of the business community would purchase Internet page development  services and
promotion services such as banner  advertisements from Internet Infinity to help
sell their services to the community.  Providing sales  opportunities and market
research  information  about the member market to a client as part of the design
and promotion  bundle of services from Internet  Infinity  creates more value to
the client than a simple Internet site design service.  These extra client sales
opportunity  and  services  is how  Internet  Infinity  will  differentiate  its
Internet  and  marketing  services  from the many  competitors  that  offer only
Internet  site  design  services  on a low  price  basis.  There  are  too  many
competitors  to name for Internet  design  services,  as listed in the telephone
yellow  pages,  on  the  Internet,  in  all  newspapers  and  in  many  business
periodicals.  It is difficult  for Internet  Infinity to compete on a price only
basis.

        The functional relationship of our wholly owned subsidiaries, Electronic
Media Central  Corporation and Morris & Associates,  Inc., to Internet  Infinity
facilitates  the  focus of sales  activities  and  future  growth  on  different
markets. Electronic Media Central targets the business customer/user, and Morris
& Associates  targets the  retailer or reseller to the  consumer  and  education
markets.  Internet  Infinity uses  different  personnel and tactics to market to
these  different  markets.  However,  both  subsidiaries  share many of the same
Internet  Infinity  resources  to  prepare  and  fulfill  orders  and  to  avoid
duplication of fixed costs such as office, administration and shipping.

        Distribution Methods
        --------------------

        We distribute our products both through in-house  employee sales persons
and independent  contractors working the telephone,  fax, mail and the Internet.
Shipments are made throughout the United States with a majority in California.

        Our  sales  representative  employees  are  paid  on a  salary  plus  an
incentive bonus based on the gross profit  generated each month. The independent
contractor  sales  persons are paid on a  commission  basis with an advance draw
against  future  commission.  The  sales  representatives  are  responsible  for
managing their account orders and customer service.

                                       6
<PAGE>
        Competition
        -----------

        The  electronic   blank  media  and   duplication   industry  is  highly
competitive.  Large  competitors  such as Technicolor  Corporation  dominate the
large volume market from the movie  studios and  advertising  premium  business.
Numerous  small  regional  competitors  such as our  company  serve the  smaller
regional business and nonprofit organization markets. We have over 200 customers
that have purchased more than once, and that constitutes our core customer base.

        We compete with both price and customer  services.  Internet Infinity is
located close to competitive suppliers near the Pacific Coast ports of entry for
video  materials  from China and Korea and is  constantly  shopping for the best
price from competing suppliers. This allows us to compete better on price to our
customers.  Internet Infinity  management is constantly  shopping the market for
better supplier products, services and prices concerning shipping, packaging and
materials that allow Internet Infinity to offer more value to its customers.  In
addition,  Internet  Infinity  monitors offers from competitors on the Internet,
through direct mail and through comparison-shopping, to remain competitive. With
Internet  Infinity  competitive  prices and by offering special delivery service
with our truck in Southern  California,  special  design  consultation  and fast
order  fulfillment,  customers  are willing to leave their  masters  with us for
convenient repeat orders.  Internet  Infinity  management has the flexibility to
handle many  special  duplication  orders and  situations  at little or no extra
charge to the customer.  Special services can include conversion from one master
format like one-inch  videotape to a beta master before  duplicating VHS copies.
Internet  Infinity  can do the  conversion  with  Apple  Media  Corporation,  an
affiliated  company owned by George Morris,  the president of Internet Infinity,
versus  sending the  conversion to an outside  supplier at a higher cost.  Apple
Media's cost to do such a transfer is only an  insignificant  few  dollars,  and
this cost is absorbed in the total cost to do the job.  Internet  Infinity sales
and management personnel are able to provide advice and assistance to a customer
as they  prepare  their job for  duplication  with  Internet  Infinity.  Special
situations include handling special orders requiring faster turnaround time than
normal  delivery.  Internet  Infinity tries to maintain a high level of customer
service to be competitive.

        The pre-recorded video business of selling special interest programs for
the public has few  customers in the form of large  distributors  like Baker and
Taylor,  and there are many small  independent  production  companies.  "Special
interest" refers to how-to,  information and other  non-entertainment  programs.
Examples of Internet  Infinity  special  interest  programs are how-to  subjects
including  various  sports,  cooking,  home and auto  repair,  lawn and  garden,
crafts,   business  success  and  computer  software  training  tapes.  We  have
experienced a gradually  declining  sales over the past three years of our fully
priced line for  consumers to only $49,549 for the twelve months ended March 31,
2000.  We are  considering  new  opportunities  to sell these  programs as a low
priced  budget line for  impulse  purchases  in retail  stores at $2.95 to $3.95
retail. We have an existing trade relationships with GlobalVideo,  Miles Kimball
and Click Smart that have supported sales for our programs in the past. Internet
Infinity  currently sells prerecorded  video programs on a non-contract  limited
return basis. Our customers can return up to 20 percent of their total purchases
over the last twelve months for credit, not for cash, against future purchases.

        Internet  site   development  is  an  area  that  has  become  extremely
competitive over the past two years. Many services  originally offered by us are
now free or are  offered  at very low cost  from  competitive  Internet  service

                                       7
<PAGE>

providers.  However,  we will begin to promote  these  services to our  existing
customer base and to  non-affiliated  associates  of our new "Internet  Infinity
Business  to  Business"  web site as part of our  community  member  value added
services. The first of several planned addresses for the site is: www.mlmhub.com

        Advertising and Promotion
        -------------------------

        Our advertising and promotion is primarily  electronic-media focused. We
engage in  telephone  and fax  campaigns  to prospect  for new  customers in the
electronic  duplication and blank media business. In addition, we are attempting
to recruit straight-commission, independent-contractor sales representatives.

        Dependence on Major Customers
        -----------------------------

        We are not dependent on any single major customer.

        Patents, Trademarks and Licenses
        --------------------------------

        We plan to apply for an Internet Infinity trademark.

        Government Approval and Regulations
        -----------------------------------

        We need no  governmental  approval  for the design and  marketing of our
electronic media. We are not aware of any proposed governmental regulations that
would affect our operations.

        Year 2000 Computer Problems
        ---------------------------

        We have  determined  that we do not face  material  costs,  problems  or
uncertainties about the Year 2000 computer problems. We have purchased new sales
and accounting software and hardware that are Year 2000 compliant. We anticipate
any problems with integrated circuits will be minimal in effect on the remaining
office equipment.

        Research and Development
        ------------------------

        We are  budgeting  approximately  $50,000  in  Fiscal  Year 2001 for the
development of an "Internet  Infinity  Business to Business" site in addition to
using our internal non-cash company  resources for this  development.  Our chief
executive  officer,  George  Morris,  as a loan will  provide  cash to  Internet
Infinity to retain independent software and back-office  information  technology
sub-contractors for this development.

                                       8
<PAGE>
        Cost of Compliance with Environmental Laws
        ------------------------------------------

        There are no  environmental  laws that impact any of our  operations  of
marketing and distributing electronic duplication and blank media,  pre-recorded
video programs or Internet services.

        Seasonality
        -----------

        Our sales are almost  evenly  distributed  at this time across the year.
There are slight  variations  with the fall and winter  exceeding the spring and
summers seasons for a variety of factors including vacation,  school and holiday
cycles.

        Employees
        ---------

        We employ three full-time persons and three part-time persons.

        New Products & Services
        -----------------------

        We  have  launched  a  new  "Internet  Infinity  Business  to  Business"
eCommerce site www.mlmhub.com in March 2000 for the sale of business products to
help small businesses succeed.  Products currently include duplication  services
and blank video, audio, CD and packaging, books and will also ultimately include
software,  tapes and  electronics.  We have signed an agreement with Ingram Book
Company,  a national  book  distributor  that will  provide us with up to 38,000
business book titles.  A prior agreement with Ingram Micro, a national  computer
software  distributor,  has been  abandoned  at this  time  solely  by  Internet
Infinity due to a lack of resources to implement it in a timely manner.  We plan
to start offering the new products in the last quarter of 2000.

ITEM 2.   DESCRIPTION OF PROPERTIES

        Apple Media Corporation  ("AMC"),  controlled by George and Dawn Morris,
provides Internet Infinity with approximately 800 square feet of office space in
Costa Mesa,  California,  and George Morris, chief executive officer of Internet
Infinity,   provides  it  approximately   600  square  feet  in  Redondo  Beach,
California.  Both locations with telephone and utilities are at a cost of $900 a
month total to Internet Infinity.  However, the $900 per month is included as an
allowance  in the 80% cost of goods  Electronic  Media  Central pays Apple Media
Corporation.  The space provided is part of Internet Infinity's  distributorship
arrangement  with AMC, and AMC may terminate the  arrangement  for free space at
any time with a 30-days notice to Internet Infinity.  There is a large amount of
office space  available  for less than $2.00 a square foot within three miles of
the existing office. Internet Infinity reserves the right to move at any time.

ITEM 3.  LEGAL PROCEEDINGS

        Neither  Internet  Infinity  nor its  property is a party to any pending
legal  proceeding  or any known  proceeding  that a  governmental  authority  is
contemplating.

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

   None

                                       9
<PAGE>

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

        Internet Infinity's  Common  Stock  is  quoted  on  the  Electronic  OTC
Bulletin Board. Its symbol is "ITNF."

        During the last two fiscal years and the  subsequent  interim period for
which  financial  statements  are  provided,  the  range  of  high  and  low bid
information  for our  common  stock  is set  forth  below.  The  source  of this
information is the OTC Bulletin Board.

        The quotations reflect the inter-dealer prices without markup,  markdown
or commissions and may not represent actual transactions.
<TABLE>
<CAPTION>

                                            High                        Low
                                            ----                        ---

        1997
        ----
<S>                                         <C>                         <C>
               1st Qtr.                     2.5000                      1.25
               2nd Qtr.                     1.5000                      0.5625
               3rd Qtr.                     0.8750                      0.4375
               4th Qtr.                     0.5625                      0.25

        1998
        ----
               1st Qtr.                     0.3125                      0.1875
               2nd Qtr.                     1.3125                      0.2300
               3rd Qtr.                     0.96875                     0.5625
               4th Qtr.                     1.1200                      0.4000

        1999
        ----
               1st Qtr.                     1.7188                      0.3750
               2nd Qtr.                     2.0625                      0.3750
               3rd Qtr.                     0.6875                      0.4800
               4th Qtr.                     0.53125                     0.3500

        2000
        ----
               1st Qtr.                     0.6000                      0.3500
</TABLE>


        On  March  31,  2000  there  were  10,373,196  shares  of  common  stock
outstanding.  There are 1,672,242  shares  subject to  outstanding  options.  No
shares are subject to securities convertible into such shares of stock.

Holders

        As of March 31,  2000 there were  approximately  45 holders of record of
our common stock.  Some  1,483,280  shares of common stock are held in brokerage
accounts under the record name of "Cede & Co."

                                       10
<PAGE>

Dividends

        We have paid no cash  dividends to our  stockholders  and do not plan to
pay dividends on our Common Stock in the foreseeable future. We currently intend
to retain any earnings to finance future growth.

Recent Sales of Unregistered Securities

        During the past three years,  Internet Infinity sold 3,598,138 shares of
our common stock in eight transactions exempt from registration  pursuant to the
provisions of Regulation D, Rule 506 of the Securities and Exchange  Commission.
No  underwriters  were used to effect the sales.  The names of the  persons  who
bought the  shares of stock,  the dates the  shares  sold,  the number of shares
issued, the prices paid in cash or services for the shares and the nature of the
consideration received by Internet Infinity are as follows.
<TABLE>
<CAPTION>

                                           No. of
                                           Shares    Price per      Nature of
Person                       Date          Issued     Share       Consideration
------                       ----          ------     -----       -------------
<S>                          <C>         <C>           <C>        <C>
L&M Media, Inc.              07-30-97      125,000     $0.60      (1)
L&M Media, Inc.              02-27-98    2,142,897     $0.14      (1)
Kiowa Oil                    03-24-98      100,000     $0.25      Cash
Newport Underwriters         03-24-98      100,000     $0.25      Cash
Thomas J. Kenan              03-24-98       50,000     $0.14      Legal Services
Gary Bryant                  08-28-98       50,000     $0.50      Cash
Hollywood Riviera Studios    01-04-99      517,241     $0.29      (2)
George Morris                02-25-99       75,000     $0.25      (3)
Dawn Morris                  02-25-99       75,000     $0.25      (3)
Thomas J. Kenan              03-28-00       60,000     $0.25      Legal Services
David G VanHorn              03-28-00      120,000     $0.25      (4)
Anna Moras                   03-28-00      160,000     $0.25      (4)
Minh Nguyen                  03-28-00        2,000     $0.25      (5)
Pac-Max Inc.                 03-28-00        1,000     $0.25      (5)
Roger Casas                  03-28-00       10,000     $0.125     (6)
Shirlene Bradshaw            03-28-00       10,000     $0.125     (6)
</TABLE>

(1)  Assignment of distribution rights to 25 Health and Medical video programs.

(2)  Assignment of  distribution  rights to five Personal  Development and Sales
     Skill Development training programs.

                                       11
<PAGE>

(3)  Reduction  of debt  owed by  Internet  Infinity  to this  person  upon this
     person's exercise of a stock option.

(4)  Reduction of debt owed by Internet Infinity to this person by conversion to
     shares of stock.

(5)  Suppliers consulting services paid with shares of stock rather than cash.

(6)  Employee exercise of stock option.

  Internet Infinity's Common Stock presently trades on the OTC Bulletin Board.


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS

Results of Operations

        The following table presents, as a percentage of sales, certain selected
financial data for the two fiscal years ended March 31, 1999 and March 31, 2000.
<TABLE>
<CAPTION>
                                 Year Ended 3-31
                              2000             1999
                             ------           ------

<S>                          <C>              <C>
Sales                        100.0%           100.0%
Cost of sales                 78.8             74.1
                             -----            -----
Gross margin                  21.2             25.9
Selling, general and
    administrative
    expenses                  20.1             19.3
Interest Income                 .8              ---
                             -----            -----
Net income (loss) before
    income taxes               1.9              6.6
</TABLE>

        Sales
        -----

        Sales  increased by $112,073  from  $1,312,452  in the fiscal year ended
March 31,  1999 to  $1,424,525  in the fiscal  year  ended  March 31,  2000,  an
increase of 8.5 percent. The increase in sales was attributable  primarily to an
increase of $152,523 in sales of  Electronic  Media  Central from  $1,222,453 in
1999 to  $1,374,976  in 2000,  an  increase of 12.5  percent,  and a decrease of
$40,410 in sales of Morris & Associates, Inc. from $89,959 in 1999 to $49,549 in
2000, a decrease of 44.9  percent.  These  changes  were due, we believe,  to an
increased effort by the sales  representatives and the resulting increase in the
number of customers for Electronic Media Central  products.  The industry growth
for electronic media  duplication has helped Internet Infinity sales. This trend
should continue with the  proliferation  of CD drives in computers,  DVD players
and large  installed  base of  videocassette  recorders.  In  addition,  the new

                                       12
<PAGE>

management  focus on blank  videotape  sales  and  www.mlmhub.com  for  Internet
Infinity is expected to continue  with the  management  commitment of additional
resources.  Internet Infinity is also expanding its telemarketing sales force to
prospect for sales of duplication  services,  blank media and accessory  product
such as packaging  materials.  On the other hand, we have experienced  gradually
declining sales over the past three years of our fully priced, special interest,
video line for consumers sold by Morris & Associates.

        Gross Margin
        ------------

        Gross  margin  decreased by $37,872  from  $339,547,  or 25.9 percent of
sales, in fiscal year 1999 to $301,675, or 21.2 percent of sales, in fiscal year
2000,  a decrease in gross  margin of 4.7  percent.  This  decrease is primarily
attributed to a cost of goods increase from an obsolete  inventory  markdown and
use for Morris &  Associates.  The Morris & Associates  inventory was reduced by
$20,879. The decrease in gross margin was also attributable to a $1,365 increase
in gross margin of our Electronic Media Central subsidiary from $274,988 in 1999
to $276,353 in 2000, an increase of .5 percent,  and a $39,237 decrease in gross
margin of Morris &  Associates,  Inc. from $64,559 in 1999 to $25,322 in 2000, a
decrease  of  60.8  percent.   There  was  an  increased  effort  by  the  sales
representatives  that  resulted in an increase  in the number of  customers  for
Electronic  Media  Central  products.  The  increasing  age of the  original 200
special interest video programs  licensed by Internet Infinity with gross profit
margins as high as 70 percent is leading to a gradual  decrease  in the sales of
these programs at their intended full retail price range of $9.95 to $19.95.  In
addition,  the increase in higher volume,  lower 20 percent margin,  duplication
sales  reflects  the  increasing  marketing  opportunity  for this  product  for
Internet Infinity. Therefore, the proportion of pre-recorded video program sales
to total sales  should  continue to decrease  versus  duplication.  Reducing the
retail  price of the  pre-recorded  video  to a range  of  $2.95  to $3.95  will
increase  unit sales,  but it cannot be  determined  at this time whether  total
revenue will increase enough to offset the trend in product sales.


        Selling, General and Administrative Expense
        -------------------------------------------

        Selling,  general and administrative  expenses increased by $32,459 from
$253,866,  or 19.3 percent of sales in fiscal year 1999,  to  $286,325,  or 20.1
percent of sales in fiscal year 2000,  an  increase of 12.8  percent or only 0.8
percent if measured as a percent of sales.  Morris &  Associates  had a bad debt
expense of $14,295 or 28.9 percent of sales to clean up accounts  receivable  in
fiscal year 2000  versus no  write-off  in 1999.  Electronic  Media  Central had
$6,300 bad debt  expense  or .5% of  $1,374,976  sales in the fiscal  year 2000.
Insurance  increased to $10,655 or .8 percent of sales for insurance  expense in
fiscal year 2000 versus $5,532 or .4 percent in fiscal year 1999  primarily from
the new director and officer insurance premiums.  Professional fees increased to
$48,685  or 3.4  percent  of sales for fiscal  year 2000  versus  $21,959 or 1.7
percent of sales in fiscal year 1999. The higher  accounting and legal fees were
the result of a Form 10-SB filing with the United States Securities and Exchange
Commission.  Although  the sale of Morris & Associates  products is  decreasing,
they still have low overhead before non-recurring bad debt expense. Essentially,
Morris &  Associates  sales are little more than simple  order  taking.  Because
sales are increasing  for  Electronic  Media Central and decreasing for Morris &
Associates,  the operating expense increases are almost totally  associated with
the Electronic Media Central operations.

                                       13
<PAGE>

        Royalties Expense
        -----------------

        Our distribution  rights to both the health and medical programs and the
personal  development  and  sales  training  programs  require  the  payment  of
royalties  equal to fifteen  percent of gross  sales for the health and  medical
programs and twenty percent of the gross sales of the personal  development  and
sales  training  programs.  The  royalties  are owed to L&M Media and  Hollywood
Riviera  Studios,  both of which  are  controlled  by  George  and Dawn  Morris,
controlling  shareholders  and  principal  officers  and  directors  of Internet
Infinity.  The  three-year  exclusive  distribution  rights  granted to Internet
Infinity  for  these   programs  allow  the  royalties  to  be  applied  to  the
extinguishment  of the stock  subscription  agreement  payments owed to Internet
Infinity by L&M Media and Hollywood  Riviera  Studios before any cash payment is
made to Internet  Infinity.  In  addition,  Internet  Infinity has a similar but
non-exclusive   distribution  license  from  L&M  Media  for  approximately  200
special-interest video programs for which it owes royalties equal to ten percent
of gross  sales.  Royalties  owed to L&M from the sales of these L&M programs by
Internet  Infinity are also applied to the  subscription  agreement  balance due
from L&M Media.

        The benefits to Internet Infinity in dealing with L&M Media programs can
be measured by the positive cash flow  generated over the past two fiscal years.
Sales of these  products  have a high 80 percent  gross margin  before  dilution
caused by the payment of  royalties.  For the year ended March 31,  1999,  these
royalties  accounted  for $7,368 of the $64,519  gross margin  obtained from the
sale of these  products.  For the year ended  March 31,  2000,  these  royalties
accounted for $7,582 of the $24,277 gross margin obtained from the sale of these
products.

        Net Profit (Loss)
        -----------------

        We had a net profit from operations, after a provision for income taxes,
in the fiscal  year ended March 31,  1999 of  $121,495,  or $0.01 a share of our
common  stock.  In the fiscal year ended March 31, 2000 we had a net profit from
operations, after a provision for income taxes, of $16,937, or $0.002 a share of
common stock. The profit of 1.9 percent of sales for fiscal year 2000 versus the
9.2 percent for the fiscal year ended 1999 is due to the 7.8 percent increase in
sales in fiscal year 2000 of $1,424,525 over fiscal year 1999's $1,312,452 while
operating  expenses increased by 12.8 percent from $253,666 for fiscal year 1999
to $286,325 for fiscal year 2000.

        Balance Sheet Items
        -------------------

        Net income  from  operations  of $16,937 for the fiscal year ended March
31, 2000 reduced the retained  earnings  deficit from $445,886 on March 31, 1999
to $428,949 on March 31, 2000.  In addition,  the  conversion of $70,000 of note
debt to 280,000  shares of common  stock and the  exercise  of 20,000  shares of
employee stock options for $2,500, the payment of $15,000 legal fees with 60,000
shares  and $750 in  consulting  fees  with  3,000  shares  in  fiscal  2000 all
increased  the paid in capital to $997,546 at March 31, 2000.  Our cash position
decreased  from  $64,458 for the fiscal year ended March 31, 1999 to $20,049 for
the fiscal year ended March 31, 2000.  Accounts  receivable  from non affiliates
decreased from $129,537 at the end of fiscal year 1999 to $116,780 at the end of
fiscal year 2000,  while inventory  decreased from $59,918 to $39,039 at the end
of fiscal year 2000.

                                       14
<PAGE>

        Liquidity and Outlook
        ---------------------

        We have  been  able to stay in  operation  only (1)  with  the  services
provided by Apple Media  Corporation,  a  wholly-owned  subsidiary of L&M Media,
Inc., a supplier of electronic media  duplication  services and blank electronic
media,  which is under the control of George and Dawn  Morris,  the  controlling
shareholders and principal  officers of Internet  Infinity and (2) from the cash
flow  generated  for  Internet  Infinity  from  the sale of high  gross  margin,
pre-recorded  video licensed from L&M Media, Inc. and Hollywood Riviera Studios,
a d/b/a of Apple  Realty,  Inc.,  which is 100 percent  owned by George and Dawn
Morris.  With  both the lack of  sales  and the  returns  of  Internet  Infinity
software from retail customers in early 1997,  Internet Infinity was in jeopardy
of failing  with large  accounts  payable  balances  and little cash or accounts
receivable  available to pay debts.  George and Dawn Morris personally  advanced
funds to Internet  Infinity.  They also acquired Video  Magnetics,  an insolvent
electronic media  duplication  company with their personal cash and proceeded to
turn around the  situation  for the benefit of Internet  Infinity,  Inc. and its
sales and  survival.  Since early 1997,  sales from  electronic  blank media and
duplication  services  have  continued  to grow and  provide the funds to reduce
Internet  Infinity  debt and to create a new Internet  product and service line.

Internet  Infinity has been  developing  for over one year a small business site
called www.mlmhub.com, an "Internet Infinity Business to Business" site launched
in March  2000.  The site  will be used  for the sale of  business  productivity
books, software, tapes, electronics and supplies. George Morris has loaned funds
to Internet  Infinity to aid in the  development  of the site and is providing a
personal  development  and sales training  program in exchange for company stock
granted to Hollywood Riviera Studios, a company he controls.

        Internet Infinity  management  believes that we will generate sufficient
cash flow to support  operations  during the twelve months ended March 31, 2001.
Sales continue to grow, and Internet Infinity continues to generate a net profit
and positive cash flow from operations.

        In  addition  to  cash  provided  from  operations,  stock  subscription
payments  from L&M Media and  Hollywood  Riviera  Studios - both  controlled  by
George  Morris - and  additional  loans from George  Morris,  the  president  of
Internet  Infinity,  for  the  further  development  of  the  Internet  Infinity
eCommerce sites will provide additional cash to Internet Infinity. A credit line
for $25,000 from George Morris as well as a trade credit from Apple Media, Corp.
will support the cash flow needs of Internet Infinity.

        The $93,492  notes  payable owed to a group of  investors  could be paid
from additional lines of credit,  operations'  cash flow and additional  officer
loans.  Internet Infinity carries an accounts  receivable  insurance policy with
CNA Insurance to indemnify it against any large bad debts.

        The most serious factors affecting the liquidity of Internet Infinity in
the fiscal year ending March 31, 2000 have been slow-pay accounts receivable and
returns from retailer  customers that bought special interest video programs and
computer  software  products  from Morris &  Associates.  Internet  Infinity has
stopped doing business with these "slow paying" accounts.  The payment record of
our existing customers has been good with low bad debt losses for over two years
from duplication services customers.  Accordingly,  management believes the risk
of non-payment in the future has been reduced.  In addition,  Internet  Infinity
accounts receivable are insured against loss by CNA Insurance to further protect
Internet Infinity from loss.

                                       15
<PAGE>

        The trade relationship between Internet Infinity and L&M Media, which is
owned 98 percent by George Morris,  president of Internet Infinity, has resulted
in a $245,560 note receivable to Internet  Infinity from L&M Media.  The current
amount of  $30,000  is due and  payable  at the rate of $3,000 or more per month
plus six percent simple interest  commencing June 30, 2000. This is an extension
from the original  March 31,  2000,  plus 6 percent  interest,  due date for the
entire  balance.  This note  receivable  from L&M Media is partially  secured by
George  Morris using the $147,141  notes due to him by Internet  Infinity,  Inc.
Payment of the note will generate  additional cash flow.  Internet  Infinity has
received an extension on note  payments due to George  Morris now payable at the
rate of $3,000 or more per month plus six- percent  simple  interest  commencing
June 30, 2000 to match the cash flows.


ITEM 7.  FINANCIAL STATEMENTS

There appears below the following financial statements of Internet Infinity:

Report of Independent Auditor .........................................    F-1

Consolidated Balance Sheet at March 31, 2000...........................    F-2

Consolidated Statements of Operations for the Years Ended
     March 31, 2000 and March 31, 1999 ................................    F-3

Statements of Changes in Stockholders' Equity
        for the Years Ended March 31, 2000 and
     March 31, 1999 ...................................................    F-5

Consolidated Statements of Cash Flows for the Years Ended
     March 31, 2000 and March 31, 1999 ................................    F-6

Notes to Consolidated Financial Statements
     March 31, 2000 ...................................................    F-8

                                       16

<PAGE>

                          INDEPENDENT AUDITORS' REPORT




To the Board of Directors and Stockholders
Internet Infinity, Inc. and Subsidiaries

We  have  audited  the  accompanying  consolidated  balance  sheet  of  Internet
Infinity,  Inc.  (a  Delaware  Corporation)  and  its  Subsidiaries  (California
Corporations) as of March 31, 2000, and the related  consolidated  statements of
operations,  stockholders'  equity, and cash flows for the two years 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 consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial position of Internet Infinity,
Inc. and  Subsidiaries as of March 31, 2000, and the results of their operations
and their cash flows for the two years ended March 31, 2000 in  conformity  with
generally accepted accounting principles.




/s/ Caldwell, Becker, Dervin, Petrick & Co.
-----------------------------------------------
CALDWELL, BECKER, DERVIN, PETRICK & CO., L.L.P.
Woodland Hills, California





July 6, 2000

                                      F-1

<PAGE>


                    INTERNET INFINITY, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                 MARCH 31, 2000


                                     ASSETS

<TABLE>
CURRENT ASSETS
<S>                                                                <C>
      Cash                                                         $     20,049
      Accounts receivable, net of allowance for
       doubtful accounts of  $6,500 (Notes 2 and 9)                     116,780
      Inventory (Note 2)                                                 39,039
      Note receivable - related companies - current (Note 7)             31,500
      Net current deferred tax asset (Note 10)                           28,577
      Prepaid expenses                                                    1,516
                                                                    -----------

                 Total Current Assets                                   237,461
                                                                    -----------

PROPERTY AND EQUIPMENT, AT COST (Note 2)
      Office equipment                                                   16,955
      Office furniture                                                   15,366
                                                                    -----------
                                                                         32,321
                 Less Accumulated Depreciation                          (32,321)
                                                                    -----------

                 Net Property and Equipment                                  --
                                                                    -----------

OTHER ASSETS
      Note receivable - related company (Note 7)                        215,560
      Programming costs, net (Note 5)                                     7,617
                                                                    -----------

                 Total Other Assets                                     223,177
                                                                    -----------

                 Total Assets                                      $    460,638
                                                                    ===========
</TABLE>



                  The Accompanying Notes are an Integral Part
                    of the Consolidated Financial Statements

                                      F-2
<PAGE>


                    INTERNET INFINITY, INC. AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEET (CONTINUED)
                                 MARCH 31, 2000


                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>

CURRENT LIABILITIES
<S>                                                                <C>
      Notes payable (Note 6)                                       $     93,492
      Accounts payable and accrued expenses                              48,960
      Accounts payable - related company (Note 7)                        84,689
      Accrued payroll                                                     3,212
      Interest payable                                                    1,125
      Income tax payable                                                  1,600
      Due to officer - current (Note 8)                                  30,000
      Due to related company (Note 7)                                     2,000
                                                                    -----------

                 Total Current Liabilities                              265,078

LONG-TERM LIABILITIES
      Due to officer - non-current (Note 8)                             117,141
                                                                    -----------

                 Total Liabilities                                      382,219
                                                                    -----------

STOCKHOLDERS' EQUITY (Page F-6)
      Preferred stock, par value $.001;
       authorized 1,000,000 shares; issued
       and outstanding  0 shares                                             --
      Common stock, par value $.001;
       authorized 20,000,000 shares; issued
       and outstanding 10,373,196 shares                                 10,373
      Paid-in capital                                                   997,546
      Retained earnings (deficit)                                      (428,949)
      Unpaid stock subscription                                        (500,551)
                                                                    -----------

                 Total Stockholders' Equity                              78,419
                                                                    -----------

                 Total Liabilities and Stockholders' Equity        $    460,638
                                                                    ===========
</TABLE>

                   The Accompanying Notes are an Integral Part
                    of the Consolidated Financial Statements

                                       F-3




<PAGE>


                    INTERNET INFINITY, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                   FOR THE YEARS ENDED MARCH 31, 2000 AND 1999

<TABLE>
<CAPTION>
                                                       2000           1999
                                                  -------------- --------------

<S>                                                <C>            <C>
REVENUE (NET)                                      $  1,424,525   $  1,312,452
                                                  -------------- --------------

COST OF SALES
      Beginning inventory                                59,918         65,175
      Purchases (Note 9)                              1,099,836        961,923
      Labor and video costs                               2,135          5,725
                                                  -------------- --------------
                                                      1,161,889      1,032,823
      Less ending inventory                              39,039         59,918
                                                  -------------- --------------

                 Total Cost of Sales                  1,122,850        972,905
                                                  -------------- --------------

                 Gross Profit                           301,675        339,547

OPERATING EXPENSES (Page F-21)                          286,325        253,666
                                                  -------------- --------------

                 Net Income Before Other
                   Income (Expense)                      15,350         85,881

OTHER INCOME (EXPENSE)
      Interest income (Note 7)                           11,024             --
                                                  -------------- --------------

             Net Income Before Income Taxes              26,374         85,881

(PROVISION) BENEFIT FOR INCOME TAXES  (Note 11)
      Current                                            (1,600)          (800)
      Deferred                                           (7,837)        36,414
                                                  -------------- --------------

                 Net Income                        $     16,937   $    121,495
                                                  ============== ==============

Basic net income per share (Note 12)               $         .00  $         .01
                                                  ============== ==============

Diluted net income per share (Note 12)             $        .00   $        .01
                                                  ============== ==============
</TABLE>

                   The Accompanying Notes are an Integral Part
                    of the Consolidated Financial Statements

                                       F-4
<PAGE>


                    INTERNET INFINITY, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                   FOR THE YEARS ENDED MARCH 31, 2000 AND 1999

<TABLE>
<CAPTION>
                                                 Additional                Unpaid        Total
                                                  Paid-In   Accumulated     Stock     Stockholders'
                             Shares     Amount    Capital    (Deficit)   Subscription    Equity
                           -----------  -------  ---------- ------------ ------------ -------------

<S>                         <C>        <C>       <C>        <C>           <C>          <C>
Balance at March 31, 1998   8,575,714  $ 8,576   $ 795,924  $  (567,381)  $      --    $   237,119

Reclassification of
unpaid
  portion of stock
subscriptions
  (Note 3)                         --       --          --           --    (356,883)     (356,883)

Issued in consideration
  for note conversion         300,000      300      37,200           --          --        37,500

Issued in consideration
  for prepaid royalties     1,034,482    1,034     148,966           --    (150,000)           --
(Note 3)

Common stock for cash         100,000      100      24,900           --          --        25,000

Non cash dividend (Note 4)         --       --    (108,131)          --          --      (108,131)

Fair market value for
expenses                           --       --      10,800           --          --        10,800
  (Note 7)

Net Income at March 31,            --       --          --      121,495          --       121,495
1999
                           -----------  -------  ---------- ---------------------------------------

Balance at March 31, 1999  10,010,196   10,010     909,659     (445,886)   (506,883)      (33,100)

Issued in consideration
  for notes conversion
  (Note 14)                   280,000      280      69,720           --          --        70,000

Issued in consideration
for
  professional services
  (Note 15)                    63,000       63      15,687           --          --        15,750

Issued in consideration
with                           20,000       20       2,480           --          --         2,500
  exercise of options
(Note 13)

Issued in consideration of
  employee loan receivable
  (Note 13)                        --       --          --           --      (1,250)       (1,250)

Royalties earned (Note 3)          --       --          --           --       7,582         7,582

Net Income at March 31,            --       --          --       16,937          --        16,937
2000
                           -----------  -------  ---------- ------------ ------------ -------------

Balance at March 31, 2000  10,373,196 $ 10,373   $ 997,546  $  (428,949)  $(500,551)   $   78,419
                           ===========  =======  ========== ============ ============  ============

</TABLE>
                  The Accompanying Notes are an Integral Part
                    of the Consolidated Financial Statements

                                      F-5
<PAGE>


                    INTERNET INFINITY, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                   FOR THE YEARS ENDED MARCH 31, 2000 AND 1999


<TABLE>
<CAPTION>
                                                              2000      1999
                                                           ---------  ---------
CASH FLOWS PROVIDED (USED ) BY OPERATING
  ACTIVITIES:
<S>                                                        <C>        <C>
    Net income (loss)                                      $  16,937  $ 121,495
    Adjustment to reconcile net income to
      cash provided (used) by operating activities:
      Rent, telephone and utilities related to paid
      in capital increase                                         --     10,800
      Professional fees related to stock issued               15,750         --
      Amortization of programming costs                        9,778      5,970
      Royalty expense used against unpaid stock                7,582      7,368
        subscription
      (Increase) decrease in accounts receivable              16,257    (36,076)
      (Decrease) in allowance for doubtful accounts           (3,500)   (15,000)
      Decrease in inventory                                   20,879      5,257
      Increase (decrease) in accrued payroll                    (915)     4,127
      (Increase) in prepaid expense                           (1,516)        --
      Increase (decrease) in interest payable                 (2,065)     3,190
      (Decrease) in accounts payable                          (2,163)   (68,863)
      Increase (decrease) in accounts payable -              (63,026)   147,715
        related company
      Increase in income taxes payable                         1,600         --
      (Increase) decrease in deferred tax asset                7,837    (36,414)
                                                           ---------  ---------

        Net Cash Flows Provided by
          Operating Activities                                23,435    149,569
                                                           ---------  ---------

CASH FLOWS PROVIDED (USED) BY INVESTING
  ACTIVITIES:
    (Increase) in programming costs                          (11,426)        --
    Deposit                                                       --        600
                                                           ---------  ---------

                 Net Cash Flows (Used) by
                   Investing Activities                      (11,426)       600
                                                           ---------  ---------

CASH FLOWS PROVIDED (USED) BY FINANCING
 ACTIVITIES:
      Increase (decrease) in note receivable -
        related companies                                    (59,351)  (115,809)
      Increase (decrease) in due to officer                      577     (4,929)
      Decrease (increase) in note payable                      1,106       (583)
      Common stock issued                                      1,250     25,000
                                                            --------  ---------

                 Net Cash Flows (Used) by Financing          (56,418)   (96,321)
Activities
                                                            --------  ---------

NET INCREASE (DECREASE) IN CASH                              (44,409)    53,848

CASH - BEGINNING OF THE YEAR                                  64,458     10,610
                                                            --------  ---------

CASH - END OF THE YEAR                                      $ 20,049  $  64,458
                                                            ========  =========
</TABLE>

                  The Accompanying Notes are an Integral Part
                    of the Consolidated Financial Statements

                                      F-6
<PAGE>


                    INTERNET INFINITY, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                   FOR THE YEARS ENDED MARCH 31, 2000 AND 1999

<TABLE>
<CAPTION>

                                                              2000      1999
                                                           ---------  ---------

ADDITIONAL DISCLOSURES:
<S>                                                        <C>        <C>
      Interest paid                                        $  4,875   $  5,000
                                                           =========  =========

      Taxes paid                                           $     --   $    800
                                                           =========  =========

NON-CASH INVESTING AND FINANCING ACTIVITIES:

  Unpaid stock subscription issued for prepaid
    royalties (Note 3)                                     $  7,582  $ 150,000
(Note 3)
                                                           ========= ==========

  Notes payable converted to stock                         $ 70,000  $  37,500
                                                           ========= ==========

  Non-cash dividend (Note 4)                               $     --  $ 108,131
                                                           ========= ==========

</TABLE>

                  The Accompanying Notes are an Integral Part
                    of the Consolidated Financial Statements

                                      F-7

<PAGE>

                    INTERNET INFINITY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000


NOTE 1 - ORGANIZATION AND PRESENTATION

Organization

Internet Infinity, Inc. (III)  was  incorporated  in  the  State of Delaware  on
October 27, 1995.

On April 1,  1998,  Morris  and  Associates,  Inc.,  (M&A) was  incorporated  in
California.  Morris  and  Associates  Inc.  (formerly  a  division  of  Internet
Infinity,  Inc.) is owned 100% by III.  M&A is  licensed to  distribute  special
interest video  programming to educational and consumer  distributors for health
and  medical  titles,   and  computer  software  training   including   internet
information, golf, sports, home and garden titles.

On April 1, 1998, Electronic Media Central Corporation (EMC) was incorporated in
California. Electronic Media Central Corporation (formerly a division of III) is
owned 100% by III. EMC is engaged in the sale of blank  electronic media such as
video tapes and the duplication, replication and packaging of DVD's, CD's, video
tapes and audio tapes.

The Company has registered the web address:  www.ib2b.com  for its new eCommerce
trade  center.  The new  "ib2b.com"  site will offer a variety  of  productivity
increasing  products  and  services  for  business.  The site will  support both
distributors  and  manufacturers  offering  services in a cooperative  marketing
eCommerce environment.

The Company  declared a 2 for 1 stock split on March 17, 1999 to shareholders of
record on that date. The number of shares  increased by 5,005,098 to 10,010,196.
This split has been shown retroactively.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of Internet Infinity,
Inc. and its wholly owned subsidiaries, Morris & Associates, Inc. and Electronic
Media  Central  Corporation.   All  significant  inter-company  transactions and
balances have been eliminated in the consolidation.

Reclassifications

Certain prior year balances have been  reclassified  to conform with the current
year presentation.

Inventory

The  Company's  inventory  (all  on  the  books  of "M &  A"),  consists  of the
following:

     Duplicated tapes and display boxes                           $     39,039
                                                                  ============

Duplicate  tapes and  display  boxes  are  valued at the lower of cost or market
(first-in,  first-out  basis).  Inventory  has been  written down by $20,879 for
possible obsolescence for the year ended March 31, 2000.

                                      F-8
<PAGE>

                    INTERNET INFINITY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Depreciation

The  Company's  equipment and  furniture  are carried at cost.  Depreciation  is
provided  over  the  estimated  useful  lives of the  assets,  which  are  fully
depreciated.

Long-Lived Assets

In 1999,  the  Company  adopted  SFAS 121,  "Accounting  for the  Impairment  of
Long-Lived  Assets and for  Long-Lived  Assets to be Disposed of." In accordance
with SFAS 121,  long-lived  assets held and used by the Company are reviewed for
impairment  whenever  events or  changes  in  circumstances  indicated  that the
carrying  amount  of an asset  may not be fully  recoverable.  For  purposes  of
evaluating the  recoverability of long-lived  assets,  the estimated future cash
flows associated with the asset would be compared to the asset's carrying amount
to determine if a write-down  to market value or  discounted  cash flow value is
required.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers cash and cash
equivalents to include cash on hand,  bank balances and  short-term  investments
with a maturity of three months or less.

Deferred Income Tax Accounts

Deferred tax  provisions/benefits  are calculated for certain  transactions  and
events  because of differing  treatments  under  generally  accepted  accounting
principles  and the currently  enacted tax laws of the federal  government.  The
results  of  these  differences  on  a  cumulative  basis,  known  as  temporary
differences,  result in the  recognition  and measurement of deferred tax assets
and liabilities in the  accompanying  balance sheet.  The liability method (FASB
109) is used to account for these temporary differences.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect reported amounts of assets and liabilities,  and disclosure of contingent
assets and liabilities at the date of the financial  statements and the reported
amounts of revenues  and  expenses  during the  reporting  period.  Accordingly,
actual results could differ from those estimates.

Year 2000 Compliance

Management  does not believe any material  year 2000 problems with the Company's
vendors,  service  providers,  or other third  parties will affect the Company's
financial  information.  As of the  date of this  report,  the  Company  has not
experienced any year 2000 problems.

Stock-Based Compensation

The Company has elected to follow Accounting Principles Board Opinion (APBO) No.
25,  Accounting for Stock Issued to Employees,  and related  interpretations  in
accounting  for its  stock-based  compensation  and to provide  the  disclosures
required under Statement of Financial Standards (SFAS) No. 123,  "Accounting for
Stock-Based  Compensation."

                                      F-9
<PAGE>

                    INTERNET INFINITY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000


NOTE 2 - SUMMARY OF SIGNIFICANT  ACCOUNTING POLICIES (CONTINUED)

Stock-Based Compensation (Continued)

APBO No. 25  requires no  recognition  of  compensation  expense for most of the
stock-based  compensation  agreements provided by the Company where the exercise
price is equal to the market  value at the date of grant.  However,  APBO No. 25
requires  recognition of compensation  expense for variable award plans over the
vesting periods of such plans, based upon the then-current  market values of the
underlying stock.

In  contrast,  SFAS No. 123 requires  recognition  of  compensation  expense for
grants of stock,  stock options,  and other equity  instruments over the vesting
periods of such grants,  based on the estimated  grant-date fair values of those
grants.  See  Note  14 for  pro  forma  disclosures  required  by FAS  123  plus
additional information on the Company's stock options.

Accounts Receivable

Uncollectible accounts receivable are written off as bad debt expense at the end
of each year. For the fiscal year ended March 31, 2000, bad debt expense totaled
$32,565.  Allowance  for bad debts are  recorded at 5% of  accounts  receivable.
Increase or decrease in the allowance  for bad debts is offset  against bad debt
expense.  For the fiscal year ended March 31, 2000, allowance for bad debts were
reduced by $3,500 bringing its balance to $6,500.

Revenue Recognition

Income and expenses are recorded on the accrual basis of accounting.  Revenue is
recognized from sales when a product is shipped,  collection is probable and the
fee is fixed and determinable. Expenses are recognized when incurred.

Segment Reporting

The Company is a single segment  reporting entity. At the current time all sales
and related  expenses are from video media  programs,  which  includes tapes and
CD's.

Earnings Per Share of Common Stock

The  Company  adopted  Statement  of  Financial  Accounting  Standards No. 128 -
Earnings Per Share (SFAS No. 128) in the fourth quarter of fiscal 1999. SFAS No.
128 is  intended  to  simplify  the  earnings  per  share computations  and make
them more comparable from  company to company. All prior year earnings per share
amounts  have  been  recalculated  in  accordance  with  the  earnings per share
requirements  under SFAS No. 128;  however,  such  recalculation  did not result
in any change to the Company's  previously  reported earnings per  share for all
years presented.

NOTE 3 - SUBSCRIPTION AND ROYALTY AGREEMENTS

The Company has royalty  agreements with two separate related entities.  In July
1997, the Company entered into an agreement with L&M Media,  Inc. for the rights
to market pre-recorded health and medical programs. The agreement specifies that
the Company shall pay a 15% royalty to L&M Media, Inc. on gross sales for all of
these  programs sold between April 1, 1998 and March 31, 2001. In  consideration
for these rights,  the Company entered into a stock  subscription  agreement for
2,267,857  shares of common stock,  with a trading value of $375,000.  Royalties
earned will go toward the reduction of the stock subscription obligation. George
Morris, President of Internet Infinity, Inc. owns 98% of the stock of L&M Media,
Inc.

                                      F-10
<PAGE>

                    INTERNET INFINITY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000


NOTE 3 - SUBSCRIPTION AND ROYALTY AGREEMENTS (CONTINUED)

In January 2000 the Company  entered into an agreement  with Apple Realty,  Inc.
(DBA Hollywood Riviera Studios),  for the rights to market pre-recorded personal
and sales development  multimedia success programs. The agreement specifies that
the Company shall pay a 20% royalty to Apple Realty, Inc. on gross sales for all
of  these   programs  sold  between  April  1,  1999  and  March  31,  2001.  In
consideration  for these rights,  the Company entered into a stock  subscription
agreement for 517,241 shares of common stock,  with a trading value of $150,000.
In addition the Company issued  517,241  options at a market price of $.3135 per
share (See Note 13).  Royalties earned will go toward the reduction of the stock
subscription  obligation.  George Morris owns 100% of the stock of Apple Realty,
Inc.

Currently,  the royalty  agreement  amounts of $375,000 and  $150,000,  less the
royalties  earned of  $25,699  are  included  in the  equity  section  as unpaid
subscription receivable.  During the fiscal year ended March 31, 2000, royalties
earned were $7,582.

In addition, the Company has a non-exclusive distribution license from L&M Media
Inc. for  approximately 200 special interest video programs for which it has not
prepaid any royalties.  Royalties owed to L&M Media Inc.,  from the sales of any
special interest programs,  are applied to the prepaid royalties associated with
the health, medical and sales development training programs.

NOTE 4 - NON CASH DIVIDEND

At March 31, 1998,  the Company had an  investment of $108,131 in a wholly owned
subsidiary,  More Media, Inc. In 1999, the Company distributed its stock in More
Media, Inc. to the Company's stockholders as a noncash dividend.

NOTE 5 - PROGRAMMING COSTS

Programming  costs,  consisting of video  production  and editing,  and web site
development  costs  which  are  capitalized  and  amortized  over  three  years.
Accumulated  amortization  was  $21,716 at March 31,  2000.  Additional  program
development  costs incurred  during the fiscal year ended March 31, 2000 totaled
$11,426.  For the fiscal year ended March 31,  2000 and 1999,  the  amortization
expense was $9,778 and $5,970, respectively.

NOTE 6 - NOTES PAYABLE

The Company has nine notes payable with various unrelated individuals,  totaling
$93,492. The notes are due upon 90 days written notice from the individuals. The
notes are unsecured, with interest ranging from 6% to 12% payable quarterly. The
notes have been outstanding since 1990.  Interest expense related to these notes
totaled $9,220 for the fiscal year ended March 31, 2000.

                                      F-11
<PAGE>
                    INTERNET INFINITY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000



NOTE 7 - RELATED COMPANIES TRANSACTIONS
<TABLE>
<CAPTION>

                                                             2000        1999
                                                          ----------  ---------
Note receivable from L&M Media, Inc., payable
  at $36,526 per year, plus interest
  at 6% per annum. Monthly installments of
  $3,000, due beginning June 30, 2000.
  L&M  Media, Inc. is 98% owned by George Morris,
<S>                                                       <C>         <C>
  President of Internet Infinity, Inc.                    $ 245,560   $ 187,710

     Less Current Portion                                    30,000      36,526
                                                          ----------  ----------

     Long-Term Portion                                    $ 215,560   $ 151,184
                                                          ==========  ==========


Trade accounts payable to Apple Media Corporation.
  Apple Media Corporation is owned 98% by George
  Morris.  As of the fiscal year ended March 31,
  2000, Apple Media became a subsidiary of L&M Media,
  Inc. (See Note 9)                                       $ (84,689)  $(147,715)
                                                          ==========  ==========

Loan receivable from Apple Realties, Inc., without
  interest.  There are no specific terms of repayment.    $   1,500   $      --
                                                          ==========  ==========

Loan payable to Morris Financial, without interest.
  Loan was paid subsequent to year end. Morris
  Financial is owned 100% by George Morris.               $  (2,000)  $  (2,000)
                                                          ==========  ==========
</TABLE>

Interest income accrued for note receivable from L&M Media, Inc. totaled $11,024
for the year ended March 31, 2000.  L&M Media's  note  receivable  is secured by
George  Morris,  President of the Company.  Mr. Morris is using the notes due to
him  by Internet Infinity, Inc. (see Note 8) as  the collateral. L&M Media, Inc.
owns 45.3% of the outstanding stock of Internet Infinity, Inc.

Future  minimum note receivable from L&M Media, Inc. as of March 31, 2000 are as
follows:

<TABLE>
<CAPTION>

                         March 31,
                        -------------
<S>                                                              <C>
                            2001                                 $     30,000
                            2002                                       36,000
                            2003                                       36,000
                            2004                                       36,000
                            2005                                       36,000
                         Thereafter                                    71,560
                                                                 -------------

                                                                 $    245,560
                                                                 =============
</TABLE>
                                      F-12
<PAGE>
                    INTERNET INFINITY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000


NOTE 7 - RELATED COMPANIES TRANSACTIONS (CONTINUED)

The Company  utilizes  office space,  telephone and utilities  provided by Apple
Media Corporation (AMC) at an estimated fair market values are as follows:
<TABLE>
<CAPTION>
                                                       Monthly       Annually
                                                   -------------- --------------
<S>                                                 <C>            <C>
   Rent                                             $        300   $      3,600
   Telephone                                                 300          3,600
   Utilities                                                 300          3,600
                                                   -------------- --------------

                                                    $        900   $     10,800
                                                   ============== ==============
</TABLE>

Prior year expenses were charged against paid in capital. During the fiscal year
ended March 31, 2000, the Company entered in a month to month agreement with AMC
for a  total  monthly  fee of  $900.  George  Morris  owns  98% of  Apple  Media
Corporation.

NOTE 8 - DUE TO OFFICER
<TABLE>

Unsecured note payable to George Morris,
  with interest at 6% per annum, with monthly
  installments of $3,000 beginning June 30, 2000.
  George Morris is the President of Internet
<S>                                                                <C>
  Infinity, Inc. (See Note 7).                                     $    147,141
                                                                  --------------

     Less Current Portion                                                30,000
                                                                  --------------

     Long-Term Portion                                             $    117,141
                                                                  ==============

Maturities of due to officer are as follows:

            March 31,
              2001                                                $      30,000
              2002                                                       36,000
              2003                                                       36,000
              2004                                                       36,000
              2005                                                        9,141
                                                                  --------------

                                                                  $     147,141
                                                                  ==============
</TABLE>

Interest charged to expense for the year ended March 31, 2000 on the above notes
was $8,683.

                                      F-13
<PAGE>
                    INTERNET INFINITY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000



NOTE 9 - CONCENTRATION OF CREDIT RISK

For the fiscal year ended March 31, 2000, revenue from two customers  represents
30% of the  Company's  total  revenue,  and  46%  of the  Company's  outstanding
accounts receivable.

The  Company's  only  supplier  of  products  is Apple  Media  Corporation.  The
Company's cost for the product is approximately 80% of the selling price, net of
sales tax. Apple Media  Corporation  is owned 98% by George  Morris.  During the
fiscal year ended March 31, 2000,  Apple Media became a subsidiary of L&M Media,
Inc., which is 98% owned by George Morris, President of Internet Infinity, Inc.

NOTE 10 - DEFERRRED INCOME TAXES

The net deferred tax amounts included in the accompanying  balance sheet include
the following amounts of deferred tax assets and liabilities:
<TABLE>
<S>                                                                <C>
   Deferred tax asset - current                                    $     28,577
   Deferred tax liability - current                                          --
                                                                  --------------

     Net Asset - Current                                           $     28,577
                                                                  ==============

   Deferred tax asset - non-current                                $    103,335
   Deferred tax liability - non-current                                      --
   Less valuation allowance                                            (103,335)
                                                                  --------------

     Net Asset - Non-current                                       $         --
                                                                  ==============
</TABLE>

The deferred tax asset results from  reserves for bad debts that are  deductible
when the accounts receivable is written off as an impairment of assets, which is
not  currently  deductible  for tax  purposes,  and  from a net  operating  loss
carryforward for federal and state income tax purposes.

The Company has recorded a valuation  allowance to reflect the estimated  amount
of deferred  tax asset which may not be  realized.  For the year ended March 31,
2000 valuation allowance decreased by $218,758.

NOTE 11 - (PROVISION) BENEFIT FOR INCOME TAXES

The components of the (provision) benefit for income taxes are as follows:
<TABLE>
<CAPTION>
                                                      2000              1999
                                                  ------------      ------------
Current (Provision) Benefit
<S>                                              <C>               <C>
   Federal                                       $         --      $         --
   State                                               (1,600)             (800)
                                                 -------------     -------------

                                                 $     (1,600)     $       (800)
                                                 =============     =============
</TABLE>
                                      F-14
<PAGE>

                    INTERNET INFINITY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000


NOTE 11 - (PROVISION) BENEFIT FOR INCOME TAXES (CONTINUED)
<TABLE>
<CAPTION>
                                                         2000           1999
                                                     ------------   ------------
Deferred (Provision) Benefit
<S>                                                  <C>            <C>
   Federal                                           $    (4,931)   $    28,900
   State                                                  (2,906)         7,514
                                                     ------------   ------------

                                                     $    (7,837)   $    36,414
                                                     ============   ============
</TABLE>

The Company has a net operating loss carryforward of approximately  $401,000 for
tax  purposes.   For  federal  income  tax  purposes,  the  net  operating  loss
carryforwards expire through 2012.

NOTE 12 - NET INCOME (LOSS) PER SHARE

Following is a  reconciliation  of net income and weighted average common shares
outstanding for purposes calculating basic and diluted net income per share:
<TABLE>
<CAPTION>
                                                         2000           1999
                                                     -------------  ------------

<S>                                                  <C>            <C>
Basic net income (loss) per share                    $     16,937   $   121,495
                                                     =============  ============

Weighted average common shares outstanding             10,020,141     8,910,234
                                                     -------------  ------------

Basic net income (loss) per share                    $        .00   $       .01
                                                     =============  ============

Weighted average common shares outstanding             10,020,141     8,910,234

Dilutive stock options                                    413,452        53,424
                                                     -------------  ------------

Weighted average common shares outstanding for
  purposes of computing diluted net income per share   10,433,593     8,963,658
                                                     =============  ============

Diluted net income per share                         $        .00   $       .01
                                                     =============  ============
</TABLE>

NOTE 13 - STOCK OPTIONS

The Company's 1996 stock option plans provides that incentive  stock options and
nonqualified stock options to purchase common stock may be granted to directors,
officers, key employees,  consultants, and subsidiaries with a exercise price of
up to 110%  of  market  price  at the  date of  grant.  Generally,  options  are
exercisable  one or two  years  from the date of grant and  expire  three to ten
years from the date of grant.  As of March 31,  2000,  the  maximum of 4 million
shares were approved for issuance  under the plan, of which 2.33 million  shares
were available for future grants.

For the years  ended March 31, 2000 and 1999,  the Company  granted  275,000 and
1,017,241 shares to various  individuals at the average exercise price of $0.400
and  $.311,   including   its  officers   who  received   200,000  and  450,000,
respectively.  All options and  exercise  prices for 1999 have been  adjusted to
reflect a 2 for 1 stock split effective March 17, 1999.

                                      F-15
<PAGE>

                    INTERNET INFINITY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000


NOTE 13 - STOCK OPTIONS (CONTINUED)

In  electing  to follow  Accounting  Principles  Board  Opinion  (APBO)  No. 25,
Accounting for Stock Issued to Employees, the Company recognizes no compensation
expense  related to employee  stock  options for the fiscal year ended March 31,
2000 and 1999,  as no options are  granted at a price below the market  price on
the date of grant.

Of the 1,017,241  options  granted in the fiscal year ending March 31, 1999, the
Company granted 517,241 options to an affiliate  entity, in conjunction with the
stock issued (see Note 3).

On March 22, 2000,  20,000  options were exercised by two employees at the price
of $.125 per share for the total  value of $2,500.  The Company set up an unpaid
stock subscription  account of $1,250 for the 10,000 shares, which have not been
paid for by the  employee.  A note payable to an employee in an amount of $1,250
was used to offset against the issuance of the remaining 10,000 shares.

Presented below is a summary of stock option plans activity for the year shown:
<TABLE>
<CAPTION>
                                                                      Weight-
                                                                      Average
                                                      Stock          Exercise
                                                     Options           Price
                                                  -------------   --------------
<S>                                                  <C>          <C>
Outstanding at March 31, 1998                          720,000    $       0.125
  Granted                                            1,017,241            0.308
  Exercised                                           (300,000)           0.125
  Forfeited                                                 --               --
  Expired                                                   --               --
                                                  -------------   --------------
Outstanding at March 31, 1999                        1,437,241            0.219
  Granted                                              275,000            0.400
  Exercised                                            (20,000)           0.125
  Forfeited                                            (20,000)           0.253
  Expired                                                   --               --
                                                  -------------   --------------

Outstanding at March 31, 2000                        1,672,242    $       0.282
                                                  =============   ==============

Shares exercisable at March 31, 1998                   720,000    $       0.125
                                                  =============   ==============

Shares exercisable at March 31, 1999                   420,000    $       0.125
                                                  =============   ==============

Shares exercisable at March 31, 2000                   394,000    $       0.125
                                                  =============   ==============

</TABLE>
                                      F-16
<PAGE>
                    INTERNET INFINITY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000


NOTE 13 - STOCK OPTIONS (CONTINUED)

Exercise  prices for options  outstanding as of March 31, 2000 range from $0.125
to $0.480.  The following table summarizes  information for options  outstanding
and exercisable at March 3, 2000:
<TABLE>
<CAPTION>
                              Options Outstanding           Options Exercisable
                       ----------------------------------  ---------------------
                                    Weighted
                                    Weight-    Average                   Weight-
                       Stock        Average    Remaining      Stock      Average
     Exercise          Options    Exercise    Contractual   Options     Exercise
     Prices           Outstanding   Price        Life      Exercisable    Price
     ---------------------------- ----------- -----------  -----------  --------
<S>                    <C>           <C>           <C>       <C>        <C>
     $0.125              394,000     $0.1250        .9       394,000    $0.125
     $3.3080-0,3135    1,003,242     $0.3080       1.8            --        --
     $0.4000             275,000     $0.4000       3.0            --        --
                       ---------                             --------

                       1,672,242                             394,000
                       ---------                             --------
</TABLE>

In electing to continue to follow APBO No. 25 for expense recognition  purposes,
the Company is obliged to provide the expanded  disclosures  required under SFAS
No. 123 for stock-based compensation granted since 1996, including if materially
different from reported results, disclosure of pro forma net income and earnings
per share had  compensation  expense relating to the fiscal year ended March 31,
2000 and 1999 grants been measured under the fair value  recognition  provisions
of SFAS No. 123.

The weighted-average fair values at the date of grant for options granted during
the  fiscal  year  ended  March 31,  2000 and 1999  were  $0.3600  and  $0.2825,
respectively and were estimated using the  Black-Scholes  option valuation model
with the following weighted-average assumptions:
<TABLE>
<CAPTION>
                                                March 31, 2000    March 31, 1999
                                                --------------    --------------
<S>                                                  <C>               <C>
      Expected life in years                          3.00              3.00
      Interest Rate                                   5.91%             5.00%
      Volatility                                     78.26%            110.2%
      Dividend Yield                                     0%                0%
</TABLE>

The  weighted-average  fair values,  at date of grant for options granted,  were
either the same or higher  than the market  values  during the fiscal year ended
March 31, 2000 and 1999. The Company's net income and earnings per share will be
the same as the pro forma net income and  earnings  per  share;  therefore,  the
Company's pro forma information had not been presented.

NOTE 14 - COMMON STOCK ISSUED FOR NOTES CONVERSION

On October 22, 1999,  the Company  issued  280,000  restricted  common shares in
consideration  for $70,000 of notes payable at the value of $0.25 per shares. In
addition,  the Company  issued to the note holders  70,000 stock  options at the
average exercise price of $0.40 per share (See Note 13).

                                      F-17
<PAGE>

                    INTERNET INFINITY, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000



NOTE 15 - STOCK ISSUED FOR SERVICES

On March 22, 2000, the Company issued 60,000  restricted common shares for legal
expenses at the value of $0.25 per share for the total amount of $15,000.

In addition,  the Company issued 3,000 restricted shares for various  consulting
services that have a fair market value of $750.

NOTE 16 - COMMITMENT

During the  fiscal  year ended  March 31,  2000,  the  Company  entered  into an
agreement with an outside sales  representative,  Lexington Media, Inc., to sell
the Company's  product for a minimum  weekly fee of $450.  An additional  10% of
commissions will be accrued and paid for sales that exceed $6,000 during a given
month.  The agreement  may be cancelled by either  party.  Payments to Lexington
during the current fiscal year totaled $3,835.  Annual minimum  commitment as of
March 31, 2000 is $23,400.


                                      F-18
<PAGE>



ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS AND CONTROL PERSONS

        Internet  Infinity's  directors,   officers  and  significant  employees
occupying executive officer positions,  their ages as of September 30, 1999, the
directors' terms of office and the period each director has served are set forth
in the following table:

Person                  Positions and Officers                  Since    Expires

George Morris, 61       Chairman of the Board of Directors -    1996       2000
                        Acting President/CEO
                        Vice President Marketing
Roger Casas, 51         Director                                1999       2000
                        Vice President Operations
Dawn Morris, 44         Member of the Board of Directors        1996       2000
                        Vice President Internet Sales
Kathy Boag, 46          Vice President Traditional Sales        1999       2000
Shirlene Bradshaw, 61   Member of the Board of Directors        1999       2000
                        Business Manager

        GEORGE  MORRIS,  Ph.D. Dr. Morris has been the full time Chairman of the
        ----------------------
Board  of   Directors,   principal   shareholder,   Vice   President  or  Acting
President/Chief  Executive  Officer and  Secretary  of Internet  Infinity  since
Internet  Infinity went public in 1996. George Morris has also been the Chairman
and Vice President of Apple Realty,  Inc.  doing  business as Hollywood  Riviera
Studios since 1974 and the Chairman of the Board of Directors of L&M Media, Inc.
since 1990. Dr. Morris is also the Founder and has been the President,  Chairman
of the Board of Directors and principal of Morris Financial, Inc., a NASD member
broker-dealer  firm,  since  its  inception  in  1987.  He has  been  active  in
designing,  negotiation and acquiring all equipment,  facilities and systems for
manufacturing,   accounting  and   operations  of  Internet   Infinity  and  its

                                       17
<PAGE>

affiliates.  Morris has produced over 20 computer training programs in video and
interactive  hypertext  multimedia  CD-ROM  versions,  as  well  as  negotiating
Internet Infinity's and its affiliate distribution and licensing agreements. Dr.
Morris  earned a Bachelor  of  Business  Administration  and Masters of Business
Administration  from  the  University  of  Toledo,  and a Ph.D.  (Doctorate)  in
Marketing and Finance and  Educational  Psychology from the University of Texas.
Prior to founding Internet Infinity and its Affiliates,  Dr. Morris had 20 years
of academic experience as a professor of Management, Marketing, Finance and Real
Estate at the University of Southern California (1969 - 1971) and the California
State  University  (1971 -  1999).  During  this  period  Dr.  Morris  served  a
Department  Chairman for the  Management and Marketing  Departments.  Morris has
since retired from full time teaching at the University. Dr. Morris was the West
Coast Regional Director of the American Society for Training and Development,  a
Director  of the  South Bay  Business  Roundtable  and a speaker  on a number of
topics relating to business,  training and education. Morris has created or been
directly  involved in the design,  writing and development of numerous  Internet
web  sites  for  Internet  Infinity,  blank  video,  Greg  Norman,  Northwestern
University,  etc. He most recently  taught  University  courses  about  Internet
Marketing for domestic and foreign markets and Sales Force Management.

        ROGER CASAS. Mr. Casas has been a Member of the Board of Directors since
        ------------
1998 and the Vice President of Operations since Internet Infinity went public in
1996.  Roger has managed  production,  personnel,  helped  coordinate  marketing
efforts and managed packaging,  printing and shipping on a daily basis. Prior to
joining Internet  Infinity,  Mr. Casas was a computer software marketing manager
at More Media and a Financial  Consultant  for  Stonehill  Financial in Bel Air,
California an Account  Executive for Shearson  Lehman Brothers in Rolling Hills,
California and Dean Witter Reynolds in Torrance,  California,  and the owner and
operator of the Hillside restaurant in Torrance,  California. Mr. Casas earned a
Bachelor of Science in  Business  Administration,  from  Ashland  University  in
Ashland,  Oregon, along with a Bachelor of Art in Marketing and Psychology.  Mr.
Casas holds Series 22 and 7 licenses with the National Association of Securities
Dealers, Inc. and is a registered representative with Morris Financial.

    KATHY BOAG.  Ms. Boag has been the Sales  Manager  and/or Vice  President of
    -----------
Sales  since  joining  Internet  Infinity  in 1997 where she has  developed  and
managed major accounts. Ms. Boag manages sales and coordinates the production of
her large orders.  Prior to joining Internet Infinity,  she was the President of
the International Television Association of Orange County. She has also been the
co-owner of a marketing and distribution company for Special Interest video. She
also handled the marketing, distribution and promotion for Jack LaLanne exercise
programs.  Ms Boag has over 20 years experience in the electronic media industry
as a Sales  Manager  and Vice  President  for  numerous  companies.  Her clients
include  major  corporations  like  Yamaha,  Olivetti,   Sprint  and  the  major
automobile companies.

        DAWN  MORRIS.  Ms.  Morris has been the  President,  Vice  President,  a
        -------------
principal  shareholder and a Director of Internet  Infinity since it went public
in 1996. She has also been the Vice President of L&M Media, Inc. since 1990, now
an  affiliate  of  Internet  Infinity.  Ms.  Morris has also been the Manager of
Corporate  Finance/Mergers and Acquisitions and a registered representative with
Morris Financial,  Inc., a NASD member  broker-dealer  firm, since 1994. She has
been responsible for the development of educational and computer  training video
programs,  some of which have  been,  produced  in CD-ROM  and other  multimedia
versions. Ms. Morris has produced finance and investment,  as well as commercial

                                       18
<PAGE>

and infomercial programs.  Prior to joining the predecessor company in 1984, Ms.
Morris was a Senior Account  Representative  in the Office Products  Division of
Xerox Corporation, and a Sales Manager at Joseph Magnin Stores. Ms Morris earned
a Bachelor  of  Business  Administration  in  Marketing  from  California  State
University  and  studied  television   production  and  directing  at  UCLA  and
California State University. Dawn Morris was nominated for Woman Graduate of the
Year in the California State University System.

        SHIRLENE  BRADSHAW.  Ms.  Bradshaw  has  been a Member  of the  Board of
        ------------------
Directors since 1999 and Internet  Infinity Business Manager since 1997. She has
managed  accounting  including,  receivable  and payable  processing  and helped
coordinate the supplier  relationship with the Apple Media Corporation supplier.
She was the Business  Manager for More Media, a predecessor  company of Morris &
Associates,  Inc. for over six years.  She had  extensive  experience  in office
management and accounting before joining Internet Infinity.

ITEM 10. EXECUTIVE COMPENSATION

        Set forth below is the aggregate  compensation during fiscal years 1998,
1999 and 2000 of the  chief  executive  officer  of  Internet  Infinity  and his
spouse.

Salaries
<TABLE>
<CAPTION>
                             Fiscal Year           Annual Compensation
                             -----------           -------------------

<S>                          <C>                   <C>
        George Morris(1)     2000                  31,000
                             1999                  37,700
                             1998                  38,400

        Dawn Morris(1)       2000                   9,960
                             1999                   1,000
                             1998                       0
</TABLE>

    George  Morris  received  a  salary  of  $31,000  for  internet   management
activities,  and Dawn  Morris  received  $9,960  for only a  limited  amount  of
consulting to Internet Infinity.  George and Dawn Morris will each draw a salary
of $500 per week  commencing  January 1, 2000 for their  management  of Internet
Infinity.

Stock Options

        Set forth  below are the  stock  options  granted  to the  officers  and
directors of Internet Infinity.

                                       19
<PAGE>

        During the last three  fiscal  years,  the  officers  and  directors  of
Internet Infinity have received the following Stock Options:
<TABLE>
<CAPTION>
                 Fiscal Year   No. of Shares   Exercise Price   Expiration Date
                 -----------   -------------   --------------   ---------------

<S>                  <C>           <C>            <C>               <C>
George Morris        2000          100,000        $0.360            9/30/04
                     1999          200,000        $0.308            1/24/04
                     1998          150,000        $0.125            3/29/03

Dawn Morris          2000          100,000        $0.360            9/30/04
                     1999          200,000        $0.308            1/24/04
                     1998          150,000        $0.125            3/29/03

Kathy Boag           1999           20,000        $0.308            (2)
                     1998            5,000        $0.125            9/30/01

Roger Casas          1999           30,000        $0.308            (3)
                     1998           10,000        $0.125            9/30/01

Shirlene Bradshaw    1999           20,000        $0.308            (4)
                     1998           10,000        $0.125            9/30/01

Hollywood Riviera
Studios(1)           1999          517,242        $0.314            1/3/04
------------------------
</TABLE>

(1)  These  options  are under the  control of George  Morris,  chief  executive
     officer of Internet Infinity.

(2)  10,000 of these  options  expire on 3/30/03 and 10,000 expire on 3/30/04

(3)  10,000 of  these options  expire  on 3/30/03,  10,000 expire on 3/30/04 and
     10,000 expire on 1/24/04

(4)  10,000 of these  options  expire on  3/30/03 and 10,000 expire on 3/30/04

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        The table below sets forth, as of March 31, 2000 the number of shares of
common  stock  of  Internet  Infinity  beneficially  owned by each  officer  and
director of Internet Infinity  individually and as a group, and by each owner of
more than five percent of the common stock.
<TABLE>
<CAPTION>
                                                                  Percent of
                                                    Number       Outstanding
        Name and Address                           of Shares       Shares
        --------------------------------           ---------     -----------

<S>                                                <C>              <C>
        L&M Media, Inc. (1)                        4,535,714        43.73
        663 the Village
        Redondo Beach, CA  90277

        Dawn Morris                                1,238,000        11.93
        663 the Village
        Redondo Beach, CA  90277

        Apple Realty, Inc. d/b/a
        Hollywood Riviera Studios  (1)             1,034,482         9.97
        663 the Village
        Redondo Beach, CA  90277

        George Morris, Chairman/CEO                  938,000        9.04
        663 the Village
        Redondo Beach, CA  90277

        Kathy Boag, Vice President                       500         .01
        16548 Bolsa Chica St  #154
        Huntington Beach,  CA 92649

        Roger Casas, Vice President                   12,000         .12
        108 E. 228th St
        Carson, CA 90745

                                       20
<PAGE>

        Shirlene Bradshaw, Director                   10,000        .10
        1900 W. Artesia #38
        Gardena, Ca 90745

        Officers and Directors
        as a group (5 persons)(2)                   7,769,196     74.90
        ------------------------
</TABLE>

        (1) The shares owned of record by L&M Media,  Inc. and Hollywood Riviera
            Studios are under the control of George Morris.

        (2) These officers and directors are George Morris and Dawn Morris,  his
            spouse.

Changes in Control

        There are no  arrangements,  which may  result in a change in control of
Internet Infinity.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        Our company is under the control of George and Dawn Morris,  husband and
wife, who  beneficially  own 74.7 percent of all  outstanding  stock of Internet
Infinity,  Inc.  The  basis  of  their  control,  and  the  relationship  of all
affiliates of Internet Infinity, are depicted in the following chart:

        1.     George and Dawn Morris
               ----------------------

               a.     They own 98 percent of L&M Media, Inc.
                                             ---------------

                      i.     It owns 100 percent of Apple Media Corporation
                                                    -----------------------

                      ii. It owns 43.73 percent of Internet Infinity, Inc.
                                                   -----------------------

               b.     They  own  100  percent  of  Apple  Realty,  Inc.,   d/b/a
                                                   -----------------------------
                      Hollywood Riviera  Studios
                      --------------------------

                      i.     It owns 9.97 percent of Internet Infinity, Inc.
                                                     -----------------------

                                       21
<PAGE>

               c.     They own 20.97 percent of Internet Infinity, Inc.
                                                -----------------------

                      i.     It  owns  100 percent  of Electronic  Media Central
                                                       -------------------------
                             Corp.
                             -----

                      ii.    It owns 100 percent of Morris & Associates, Inc.
                                                    -------------------------

        Summary
        -------
<TABLE>

<S>     <C>           <C>           <C>
         .98   x      .453   =      .4373
        1.00   x      .103   =      .0997
                      .218   =      .2097
</TABLE>


        George and Dawn Morris
           beneficially own         .7467 of Internet Infinity, Inc.

        The Fiscal Year 1998 L&M Media, Inc. Transactions
        -------------------------------------------------

        On July 30, 1997, L&M Media, Inc.  subscribed to purchase 125,000 shares
of Internet  Infinity  Common  Stock,  valued at $0.60 a share,  $0.02 below the
closing  price and $0.10 more than the bid price for  Internet  Infinity  common
shares  on  August 1,  1997.  In  addition  to its  obligation  to pay for these
subscribed  shares,  L&M  Media  assigned  to  Internet  Infinity  a  three-year
exclusive  distribution  right for five health and medical video  programs.  L&M
Media is 98 percent owned by George and Dawn Morris,  husband and wife, and they
are directors and executive officers of Internet Infinity.

        On February 27, 1998, L&M Media, Inc.  subscribed to purchase  2,142,897
restricted  shares of Internet  Infinity  Common  Stock at $0.14 a share,  or 50
percent of the lowest closing price of $0.28 for Internet  Infinity Common Stock
within last sixty days prior to February 27, 1998. In addition to its obligation
to pay for these subscribed  shares,  L&M Media assigned to Internet  Infinity a
three-year  exclusive  distribution  right for 20 additional  health and medical
video programs.

        The 50 percent value of the  "free-trading"  stock price assigned to the
February  27, 1998 stock  subscription  for  licensing  rights to 20  additional
health and medical  programs is deemed  reasonable  considering the inability of
L&M Media to  dispose  of the  restricted  stock for a long  period of time.  In
addition,  standard  media  industry  practice  usually  requires  cash  advance
payments for the acquisition of distribution rights of programs.

        To  summarize,  L&M Media  subscribed  to purchase  2,267,897  shares of
Internet Infinity's Common Stock in exchange for:

        *   a  subscription  agreement  obligation  to  pay $375,000 to Internet
            Infinity,

        *   the  exclusive distribution rights to twenty-five health and medical
            video programs, and

        *   royalties  set at  fifteen  percent of sales,  the  payment of which
            royalties  will  go to  the  reduction  of  the  stock  subscription
            obligation until the stock subscriptions are paid in full.

                                       22
<PAGE>

        The Fiscal Year 1999 Hollywood Riviera Studios Transaction.
        -----------------------------------------------------------

        On January 4, 1999, Apple Realty,  Inc., d/b/a Hollywood Riviera Studios
subscribed to purchase  517,241  restricted  shares of Internet  Infinity Common
Stock at $0.29 a share, or 50 percent of the closing price of $0.57 for Internet
Infinity  Common Stock on January 4, 1999. In addition to its  obligation to pay
for the subscribed  shares,  Apple Realty,  Inc. assigned to Internet Infinity a
three-year  licensing  distribution  right for five training modules on Personal
and Sales  Skill  Development.  Apple  Realty,  Inc.,  d/b/a  Hollywood  Riviera
Studios, is a company 100 percent owned by George Morris.

        The 50 percent value of the  "free-trading"  stock price assigned to the
January 4, 1999 stock  subscription for licensing  distribution  rights for five
training  modules on Personal and Sales Skill  Development is deemed  reasonable
considering  the  inability  of  Hollywood  Riviera  Studios  to  dispose of the
restricted stock for a long period of time. In addition, standard media industry
practice   usually  requires  cash  advance  payments  for  the  acquisition  of
distribution rights of programs.

        Also, as part of the same transaction,  Internet Infinity issued 258,621
stock options to Hollywood  Riviera Studios  exercisable at $0.627 a share.  The
options were priced at 110 percent of the $0.57 Common  Stock  closing  price on
January 4, 1999.  The Hollywood  Riviera stock  options,  after the  two-for-one
stock  split of  February  25,  1999,  are now for  517,241  shares at a $0.3135
exercise price.

        To summarize, Apple Media, d/b/a Hollywood Riviera Studios subscribed to
purchase 517,241 shares of Internet  Infinity's  Common Stock and obtained stock
options to  purchase  517,241  shares of our Common  Stock at $0.3135 a share in
exchange for:

        *   a  subscription  agreement  obligation  to  pay $150,000 to Internet
            Infinity,

        *   the exclusive  distribution  rights to five training program modules
            on Personal and Sales Skill Development,

        *   royalties  set at twenty  percent  of sales,  the  payment  of which
            royalties  will  go to  the  reduction  of  the  stock  subscription
            obligation until the stock subscription is paid in full.

        As of March 31,  2000 there have been no sales by  Internet  Infinity or
its affiliates of any of the  twenty-five  video programs on Health and Medicine
or of any of the five video  modules on Personal  and Sales  Skill  Development.
However,  no resources  were  available to promote sales of these  products.  We
project that sales will  commence of the  Personal  and Sales Skill  Development
modules  during the third  quarter of the fiscal year to commence  April 1, 2000
and that sales will  commence  of the Health and  Medicine  programs  during the
fourth quarter of the fiscal year to commence April 1, 2000.  However,  Internet
Infinity cannot guarantee any sales of these programs.

        Internet  Infinity also sells special  interest  video programs on other
subjects,  which video programs are owned by L&M Media.  There are approximately
200 of these  programs.  Internet  Infinity pays a ten-percent  royalty on these
sales to L&M Media.  L&M Media's cost of goods is set at twenty percent of sales
with its cost of goods to cover all its manufacturing and assembly costs as well
as the shipping costs to our customers'  doors. L&M Media agreed to purchase the
Health and Medicine  program  library in 1986 for  $400,000.  It consists of 400
hours of video  footage and  partially or fully edited  titles.  We estimate the
replacement  cost  of  each  of  the  completed   twenty-five   programs  to  be
approximately $62,500 or a total value in excess of $1,500,000.


                                       23
<PAGE>

        L&M Media developed the Personal and Sales Skill Development modules and
has sold them over the last ten years. Hollywood Riviera Studios is revising and
expanding the multimedia  delivery of the programs.  We estimate the replacement
cost of each module to be $150,000 or $750,000 for the set of five.

        We buy all of our duplication and blank video products and services from
Apple Media Corporation  ("AMC"),  a manufacturing  company under the control of
and owned by George and Dawn  Morris,  directors,  executive  officers and major
shareholders of Internet Infinity. Due to a lack of working capital available to
Internet Infinity, George and Dawn Morris acquired the predecessor to AMC, known
as Video  Magnetic,  LLC,  in order  that it would  continue  to provide a sales
distribution  opportunity for Internet  Infinity.  Internet Infinity had earlier
established a distribution  arrangement with Video Magnetics,  LLC in 1996. When
the previous  owner  indicated he would sell Video  Magnetics  and terminate the
distribution  arrangement with our company,  the Morrises bought Video Magnetics
to maintain the product source.  Video Magnetics was an insolvent company at the
time of the  Morris'  acquisition.  However,  the  successor  company  to  Video
Magnetics,  Apple Media Corporation,  is solvent. George and Dawn Morris finally
settled the purchase  transaction for Video Magnetics  through mediation and are
paying the purchase notes over the next four years.

        Internet  Infinity  takes title to the products it purchases  from Apple
Media  Corporation,  which is 98 percent  owned by George  Morris,  president of
Internet Infinity, just as it did under the original  distributorship  agreement
with independently owned Video Magnetics, LLC. Internet Infinity will take title
to products  under the  independent  distributorship  agreement with Ingram Book
Company.  This  distributorship  model for taking  title is  planned  for other,
future distributorship arrangements.

Internet Infinity, Inc. and L&M Media, Inc. Operating Structure
---------------------------------------------------------------

        Under this  distributorship  arrangement,  Internet  Infinity,  Inc.  is
responsible  for the collection of accounts  receivable and must collect them or
take a bad debt loss. However, Internet Infinity carries CNA accounts receivable
loss insurance.  As is standard business practice with a drop-ship  arrangement,
Electronic Media Central, the 100 percent owned subsidiary of Internet Infinity,
does not carry an inventory.  However,  Morris & Associates  does carry a small,
finished  goods  inventory  of special  interest  videos from time to time and a
$39,039  packaging  inventory as of March 31, 2000 to prepare orders for the 200
special interest videos. An Internet hosting service handles the server computer
equipment for the Internet.  By these means the management of Internet  Infinity
attempts to minimize the risk of loss from inventory and accounts  receivable as
well as technology obsolescence.

        The process for taking  orders,  shipping,  billing and collection is as
follows:  When Internet  Infinity sells  Electronic  Media Central  products and
services to an independent  customer,  we first determine the sales credit terms
that will be given to the customer based on a credit  worthiness  review. If the
order will be shipped on an open account basis and is over approximately $5,000,
we contact our accounts receivable insurance company,  CNA, for credit insurance
approval. After credit terms and freight are determined by Internet Infinity, we
issue a purchase order to Apple Media Corporation,  which is 98 percent owned by
George Morris, the president of Internet Infinity, for the products and services
ordered  including  shipping.  Apple Media  sources  materials  and  components,
manufactures  or  assembles  and drop ships the order to the  Internet  Infinity
customer.  Internet Infinity invoices the customer for the products and services

                                       24
<PAGE>

delivered  and credits  its sales  account  and debits the  accounts  receivable
account  in  Internet  Infinity's  general  ledger at the time of  shipment  and
invoicing.   Internet  Infinity  is  responsible  for  collecting  the  accounts
receivable from the customers.  Apple Media grants a 20 percent  wholesale trade
discount to Internet  Infinity on the order amount and charges Internet Infinity
at the time of shipping. Internet Infinity is solely responsible for the payment
of its accounts  payable to Apple Media,  Inc. The CNA accounts  receivable loss
insurance  does not cover  losses  under  $5,000  and the  policy  has a $10,000
deductible.

        The major risk for  Internet  Infinity  is the  non-payment  of accounts
receivable from an order.  Internet Infinity remains  responsible for payment of
the wholesale  cost of the order to Apple Media even if a customer  doesn't pay.
Internet Infinity  maintains a $39,039  packaging  inventory and thereby reduces
potential losses on inventory shrinkage and obsolescence.  However,  the absence
of a complete Internet Infinity  inventory and the control of any inventory by a
supplier  to Internet  Infinity  has  operated  to reduce our  control  over the
shipping priority of orders.

        When we sell pre-recorded video programs to media retailers, wholesalers
and school  suppliers,  we place an order with Apple Media for the  products and
services,  including shipping.  Apple Media sources,  manufactures or assembles,
with Morris & Associates' packaging, and drop ships the product to our customer.
Apple Media gives Internet  Infinity an 80 percent  discount off the total order
amount  including  freight.  The 80 percent  gross margin  before  packaging and
royalties  remaining  for  Internet  Infinity  gives  Internet  Infinity  a very
profitable,  low volume,  distribution opportunity.  The 80 percent gross profit
margin for Internet Infinity from pre-recorded video sales versus the 20 percent
for  duplication  and blank media sales to  independent  customers  reflects the
significantly  higher price and profit  margin  associated  with selling a video
tape  with a  program  on it  versus  a  blank  tape  or the  lower  margin  for
duplicating an independent  customer tape or CD. During fiscal year 2000, the 80
percent of these sales amounted to $39,639.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

     The following exhibits are filed, by incorporation by reference, as part of
     this form 10-KSB.



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

           2          -     Certificate of Ownership   and  Merger  of  Morris &
                              Associates, Inc., a California corporation,   into
                              Internet Infinity, Inc., a Delaware corporation*

           3          -      Articles  of  Incorporation  of  Internet Infinity,
                               Inc.*

           3.1        -      Amended Certificate of  Incorporation  of  Internet
                               Infinity, Inc.*

           3.2        -      Bylaws of Internet Infinity, Inc.*

          10.1        -      Master License  and  non-exclusive    Distribution
                               Agreement between  Internet Infinity,  Inc.   and
                               Lord & Morris Productions, Inc.*

          10.2        -      Master License and Exclusive Distribution Agreement
                               between  L&M Media,  Inc.  and Internet Infinity,
                               Inc.*

          10.3        -      Master License and Exclusive Distribution Agreement
                               between  Hollywood  Riviera  Studios and Internet
                               Infinity, Inc.*

          10.4        -      Fulfillment  Supply  Agreement   between   Internet
                               Infinity, Inc. and Ingram Book Company*


        *Previously filed and incorporated herein by reference.

(b)  Reports on form 8-K

        None

                                       25
<PAGE>
                                   SIGNATURES


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

                                       INTERNET INFINITY, INC.



Date:  July 10, 2000                   By /s/ George Morris
                                          --------------------------------------
                                          George Morris, Chief Executive Officer

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



Date:  July 10, 2000                       By /s/ George Morris
                                              ----------------------------------
                                              George Morris, Chief Financial
                                                   Officer, Chief Accounting
                                                   Officer and Director



Date:  July 10, 2000                        By /s/ Roger Casas
                                               ---------------------------------
                                               Roger Casas, Vice President and
                                                   Director



Date:  July 10, 2000                        By /s/ Dawn Morris
                                               ---------------------------------
                                               Dawn Morris, Vice President and
                                                   Director



Date:  July 10, 2000                        By /s/ Shirlene Bradshaw
                                               ---------------------------------
                                               Shirlene Bradshaw, Director