<PAGE>   1
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                 Form 10-KSB/A

Annual Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934,
                  for the fiscal year ended December 31, 2000.

                 Name of Small Business Issuer: Infotopia, Inc.

              State or Other Jurisdiction of Incorporation: Nevada

                   IRS Employer Identification No.:95-4685068
                            Commission No.: 000-25157

  Address of Principal Executive Offices: 218 Tearall Road, Raynham, MA 02767

         Issuer's Telephone Number, Including Area Code: (508) 884.9900

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

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

         Common Stock, par value $.001          NASD OTC Bulletin Board

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. [X] Yes [ ] No.

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/A. [ ]

Issuer's revenues for its most recent fiscal year were: $9,135,411.

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 on March 15, 2001, is $23,624,500.

The number of shares outstanding of Registrant's common stock, as of March 15,
2001, is 189,996,005
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Part I

Item 1. Description of Business

         Registrant was incorporated, under the name of Flex Marketing, Inc.,
under the laws of the State of Ohio on September 11, 1997. Registrant was
acquired by, and became a wholly owned subsidiary of, National Boston Medical,
Inc. pursuant to a share exchange agreement which was executed on November 21,
1998. Subsequently, on April 25, 2000, Dr. Abravanel's Forumulas, Inc., a
corporation organized under the laws of the state of Nevada, acquired 100% of
the outstanding stock of Registrant, in exchange for stock of Dr. Abravanel's
Forumulas, Inc. As a result of this transaction, Dr. Abravanel's Forumulas, Inc.
changed its name to Infotopia, Inc., and Flex Marketing, Inc. became a wholly
owned subsidiary of Registrant.

         Registrant is in the direct marketing/direct to retail marketing
business, which encompasses the sale of various products through commercials,
infomercials, print media, radio, and the Internet. In particular, Registrant
utilizes electronic retailing, in which electronic media, such as television,
radio and the Internet, is used to convey all the information a consumer needs
to make a buying decision, and to make a specific offer to the consumer, with an
appeal to make an immediate buying decision. Registrant receives and processes
almost all of its orders for directly marketed products through a customer
service call center or through direct online Internet orders. The orders are
routed to various "fulfillment centers" from which products are shipped directly
to the consumers. The call centers and fulfillment centers are contracted
entities.

         Registrant markets a variety of healthcare, fitness, recreation and
cooking aid products through direct marketing/direct to retail marketing.

         Registrant currently markets the Cooking Saddle (a cooking device which
allows meats, such as large turkeys, to be removed from an oven pan easily), the
Backstroke (a back massager), the Torso Tiger(an abdominal and upper body
workout machine), the Body Rocker (a machine that allows for strength training
and non-impact aerobics, developing various parts of the body), the Torso Tiger
II (a scaled down version of the Torso Tiger machine), the Body by Jake Bun and
Thigh Rocker (an exercise product that allows the user to trim and tone the hips
and thighs), the Medicus Dual 2000 (a golf-swing trainer), the Hot Mommies
System (a program designed to give mothers essential nutrients for health and
vitality) and the Total Tiger (an exercise product for upper and lower body).

         The exclusive marketing rights to the Torso Tiger, Torso Tiger II, and
Hot Mommies System properties (all of which are trademarks of Torso Tiger, Inc.)
were acquired by agreement with Torso Tiger on August 17, 2000.
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         On October 30, 2000, Registrant entered into another agreement with
Torso Tiger, Inc. and Total Tiger, Inc. for the rights to advertise, promote,
market, sell and distribute the Total Tiger product, described above.

         On October 30, 2000, Registrant entered into agreement with Modern
Health Services along with Natural Science Corporation of America, Inc. to
license the rights to market and sell two osteoporosis and prostate products.

         On November 16, 2000, Registrant entered into a joint venture agreement
with Infomercial Development Companies of San Diego, California for the
marketing of six new products, and a right of first refusal on all new products
under their development. The new products include: (i) Facial Spa (a hand held
home facial unit utilizing rechargeable batteries), (ii) the Fresh Start weight
loss program, the (iii) Rejuvicare skin care system, (iv) the Medicus Dual 2000
golf swing training device, (v) the Multiple Streams of Cash business
opportunity package (which includes workbooks, tapes, and telecoaching), and
(vi) Changes, a female menopausal and PMS herbal supplement.

         On November 30, 2000, Registrant entered into a licensing agreement
with Lohan Media LLC for the Body by Jake Bun & Thigh Rocker.

         Registrant develops new products based on ideas that come from a
variety of sources, including investors, suppliers, trade shows, industry
conferences, and strategic alliances with various manufacturing and consumer
products companies. As of the date of this Annual Report, Registrant has 16 new
products that are in various stages of development, and expects to be able to
market approximately eight products in the first and second quarters of 2001,
pending completion of the supporting infomercials.

         Registrant's industry is extremely competitive, with a number of
entities offering similar products and/or advertising through similar media.
Registrant estimates the number of competitors in the home fitness equipment
sector to be 75. Registrant is not aware of any competitors marketing products
similar to the Hot Mommies System or the Cooking Saddle through the same
marketing channels. Registrant's competitive position is affected by its ability
to develop attractive advertising campaigns for its products, and to acquire
and/or develop the rights to attractive products. Diminished consumer interest
in Registrant's products, including its Body Rocker and Torso Tiger products,
would adversely affect its business. Likewise, an inability to develop new and
attractive products would adversely affect Registrant's competitive position.
Registrant also competes on the basis of customer service and efficient
inventory control and product distribution, which includes allowing for product
returns and warranties. Many of Registrant's competitors possess greater
financial resources, wider brand name recognition, broader distribution networks
and other resources and characteristics that may give these competitors a
competitive advantage.

         With respect to Registrant's intellectual property, Registrant is
prosecuting a patent application with the United States Patent and Trademark
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Office for the Cooking Saddle product. Registrant cannot predict at this time
whether it will be ultimately successful in securing a patent for such product.
As noted above, Registrant has entered into a variety of marketing and license
agreements with respect to various products, with Torso Tiger, Inc., National
Science Corporation of America, Infomercial Development Companies, and Lohan
Media LLC, which allow the Registrant to utilize the patent and trademark rights
of these other entities with respect to the licensed products. Registrant has
the exclusive license rights to 5 issued patents, and 7 patents that are
pending, and non-exclusive rights to 1 issued patent. Registrant, in addition,
has the exclusive license rights to 6 federally registered trademarks, and 7
trademarks for which federal registration has been sought, and non-exclusive
rights to 1 federally registered trademark.

         Registrant's principal manufacturers and suppliers of the products it
distributes are: Pacnet Resources (People's Republic of China and Taiwan),
Classicor (Canada), VitaQuest (USA) and Lohan Media (USA). Registrant does not
depend on a few major customers as the products are marketed mainly to the
consumers through TV Infomercials and Internet.

Item 2. Description of Property

         Registrant's corporate offices are located at 218 Tearall Road,
Raynham, Massachusetts. The office space consists of 3,000 square feet, which
the Registrant rents for $2,700 per month, pursuant to a lease with David
Cuniff, dated May 19, 2000. Registrant has a one year lease which terminates on
June 30, 2001. Registrant anticipates moving to new office space in the near
future.

Item 3. Legal Proceedings

         On September 20, 2000, an action was commenced in the District Court of
Clark County, Nevada by Dragons Forever, Ltd., a corporation organized under the
laws of the Bahamas, against the Registrant and other parties. The claims
against Registrant are being made in Registrant's capacity as the successor
corporation to Flex Marketing, Inc. Plaintiff alleges that Flex Marketing
breached a certain Media Funding Agreement entered into by Plaintiff and Flex
Marketing on or about April 23, 1999. Plaintiff alleges that Flex Marketing did
not pay plaintiff the monies due it under such Agreement, and seeks general
damages of $10,000 and compensatory damages of $10,000 against each defendant,
and reimbursement for all legal costs incurred by the plaintiff in this suit.
Registrant intends to vigorously defend against the claims asserted in the
matter. Registrant has asserted in a responsive pleading that the plaintiff
neither has, nor can it assert, claims against Registrant, because the
plaintiff's claims are based upon a contract with National Boston Medical, Inc.,
a debtor in bankruptcy and the former parent of Registrant, and the plaintiff
has filed a proof of claim in the bankruptcy proceedings of National Boston
Medical, Inc. Discovery is continuing in this matter. Registrant cannot predict
the ultimate resolution of this proceeding.
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         On December 11, 2000, a proceeding was commenced in the State Court of
Fulton County, Georgia by Jeff Freedman against Registrant and two of its
officers. Plaintiff claims he was not fully paid royalties under an agreement he
had entered into with National Boston Medical, Inc., a debtor in bankruptcy and
the former parent of Registrant. Plaintiff seeks to recover damages in contract
and in tort. Registrant intends to vigorously defend against the claims asserted
in the matter. It is Registrant's understanding that plaintiff and National
Boston Medical, Inc. have entered into an agreement settling this claim.
Registrant asserts that plaintiff's claim is properly asserted against National
Boston Medical, Inc., and will be handled as part of that entity's bankruptcy
proceedings. Registrant cannot predict the ultimate resolution of this
proceeding.

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

         During the fourth quarter of calendar year 2000, no matters were
submitted to a vote of the security holders of the Registrant.

Part II.

Item 5. Market for Common Equity and Related Stockholder Matters

         Registrant's Common Stock, par value $.001 per share, is currently
quoted on the OTC Bulletin Board, under the symbol IFTP. Prior to April, 2000,
the stock was traded under the symbol DABV, when the Registrant was known as Dr.
Abravanel's Formulas, Inc. Please refer to Item 1., above, for a discussion of
the corporate history of Registrant.

         The following table sets forth the range of high and low closing bid
prices per share of Registrant's Common Stock, during each of the calendar
quarters identified below. (Trading commenced on October 19, 1999, and the stock
symbol was DABV until the second quarter of 2000.) These bid prices were
obtained from the National Quotation Bureau, and do not necessarily reflect
actual transaction, retail markups, markdowns or commissions. Based on the very
limited public float and trading in Registrant's Common Stock, Registrant
believes that such data in anecdotal, and may bear no relation to the true value
of Registrant's Common Stock, or the range of prices that would prevail in a
liquid market.

Quarter Ended:                   High Bid:          Low Bid

March 31, 1999                   Securities Not Listed
June 30, 1999                    Securities Not Listed
September 30, 1999               Securities Not Listed
December 31, 1999
(After October 19, 1999)         $0.0625            $0.0625
March 31, 2000                   $0.0625            $0.0625
June 30, 2000                    $0.5000            $0.0625
September 30, 2000               $0.9900            $0.0900
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December 31, 2000                $0.4844            $0.0781

         As of March 15, 2001, there were 189,996,005 shares issued and
outstanding of Registrant's common stock, par value $.001 per share.

         As of March 15, 2001, there were 47 holders of record of Registrant's
common stock, par value $.001 per share.

         Registrant, since the date of its incorporation, has not paid any
dividends on its common stock, and is unlikely to do so in the future, based on
the Registrant's financial condition and need for capital for its business plan.

         With respect to the sales of unregistered securities within the past
three years, between April, 1998 and September, 1998, Dr. Abravanel's issued
common stock in several transactions:

         Pursuant to a Technology Transfer Agreement, on April 28, 1998, Dr.
Abravanel's issued to Dr. Elliot Abravanel and Mark Delott 10,000,000 shares of
Registrant's common stock that were restricted, as such term is defined in Rule
144 promulgated under the Securities Act of 1933, in a transaction under Section
4(2) of such Act. In consideration of the issuance of these shares, Dr.
Abravanel's Formulas, Inc. acquired 100% of the rights of all of the formulas
they marketed.

         On August 26, 1998, Dr. Abravanel's issued to Dr. Elliot Abravanel and
Mark Delott 1,500,000 shares of common stock (750,000 each) in a transaction
under Rule 701 promulgated under the Securities Act of 1933, for a consideration
of $.001 per share, for a total aggregate consideration of $1,500.

         Between May and September, 1998, Dr. Abravanel's sold an aggregate of
1,341,353 shares of common stock at prices ranging from $0.01 to $0.20 per
share, for an aggregate consideration of approximately $133,000, to 30
investors. Dr. Abravanel's used the aggregate proceeds for general working
capital. These investors purchased such securities pursuant to an exemption from
registration pursuant to Section 4(2) of the Securities Act of 1933 and Rule 504
under Regulation D promulgated under such Act. There were no underwriters in
such offering, and no commissions were paid, nor discounts given to any
individual. None of the officers, directors or affiliates of Dr. Abravanel's
participated in this transaction. All purchasers executed a subscription
agreement, indicating that they have such knowledge and experience in financial
and business matters that either alone or with a purchaser's representative,
they are capable of evaluating the merits and risks of the investment. No
purchaser used a purchaser representative.

Item 6. Management's Discussion and Analysis or Plan of Operation
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The following is a discussion of certain factors affecting Registrant's results
of operations, liquidity and capital resources. You should read the following
discussion and analysis in conjunction with the Registrant's consolidated
financial statements and related notes that are included herein under Item 7
below.

CAUTIONARY STATEMENTS FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995.

The statements contained in the section captioned Management's Discussion and
Analysis of Financial Condition and Results of Operations which are historical
are "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. These forward-looking statements represent the
Registrant's present expectations or beliefs concerning future events. The
Registrant cautions that such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Registrant to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such factors include, among other
things, the uncertainty as to the Registrant's future profitability; the
uncertainty as to the demand for prepaid telephone services; increasing
competition in the telecommunications market; the Registrant's ability to hire,
train and retain sufficient qualified personnel; the Registrant's ability to
obtain financing on acceptable terms to finance its growth strategy; and the
Registrant's ability to develop and implement operational and financial systems
to manage its growth.

OVERVIEW


Infotopia, Inc. ("Infotopia" or the "Registrant"), a Nevada corporation, is in
the direct marketing/direct to retail marketing business, which encompasses the
sale of various products through commercials, infomercials, print media, radio,
and the Internet. In particular, Registrant utilizes electronic retailing, in
which electronic media, such as television, radio and the Internet, is used to
convey all the information a consumer needs to make a buying decision, and to
make a specific offer to the consumer, with an appeal to make an immediate
buying decision. Registrant receives and processes almost all of its orders for
directly marketed products through a customer service call center or through
direct online Internet orders. The orders are routed to various "fulfillment
centers" from which products are shipped directly to the consumers. The call
centers and fulfillment centers are contracted entities. Registrant markets a
variety of healthcare, fitness, recreation and cooking aid products through
direct marketing/direct to retail marketing. The Registrant's securities are
quoted on the Over-the-Counter Bulletin Board ("OTCBB") under the symbol IFTP.OB

The Registrant's revenues originate from the sale of the healthcare, fitness,
recreation and cooking aid products, which are described in more detail in Item
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1 of this Annual Report on Form 10-KSB. During the past year, Registrant has
significantly increased the range of its product mix and has entered into
numerous agreements (which are also described in Item 1 of this Annual Report on
Form 10-KSB) to further broaden its product mix.

The Registrant's objective is to be one of the leading direct marketing
companies in the United States. To achieve this, it will be necessary for
Registrant to expand the size of its revenues through marketing its current
products, acquiring new products to marketing, and continuing to generate
revenue through multiple revenue streams. The Registrant also needs to
capitalize on its early marketing success by continuing to expand the current
distribution channels and to maintain its focus on emerging trends while
continuing to retain its high level of expertise in this industry.

RESULTS OF OPERATION FOR THE TEN MONTHS ENDED DECEMBER 31, 2000 COMPARED TO THE
EIGHT MONTHS ENDED FEBRUARY 29, 2000 AND THE YEAR ENDED JUNE 30, 1999

REVENUES

During the ten months ended December 31, 2000 the Registrant's net sales were
$9,135,411, an increase of $6,769,394 in comparison to the eight-month period
ended February 29, 2000 (net sales of $2,366,017) and an increase of $6,876,501
in comparison to the year ended June 30, 1999 (net sales of $2,258,910). This
increase was primarily attributed to the success of the Registrant's Torso
Tiger product and reflects the Registrant's increased selling and marketing
efforts to expand its business. Revenues for the periods ended February 29,
2000 and June 30, 1999 were primarily attributed the Registrant's Backstroke
product.

COST OF SALES

The Registrant's cost of sales increased to $3,368,601 for the ten-month period
ended December 31, 2000, in comparison to $1,182,805 for the eight-month period
ended February 29, 2000 (an increase of $2,185,796) and $759,842 from the year
ended June 30, 1999 (an increase of $2,608,759). This increase in the
Registrant's cost of sales was principally associated with the increase in
sales, and a change in the cost structure of the product mix offered by the
Registrant.

OPERATING EXPENSES

Operating expenses for the ten months ended December 31, 2000, were $30,176,358
versus $7,192,885 for the eight-month period ended February 29, 2000 and
$6,408,664 for the year ended June 30, 1999. The increase in operating expenses
was primarily attributed to significant increases in general and administrative
expenses and selling and marketing expenses. In addition, operating expenses
for the ten-month period ended December 31, 2000 included an impairment charge
of $2,006,661.

General and administrative expenses for the ten-month period ended December
31, 2000 were $22,149,646 and represented an increase of $17,131,106 in
comparison to the eight-month period ended February 29, 2000 and an increase of
$18,379,014 in comparison to the year ended June 30, 1999. The significant
increase during the ten months ended December 31, 2000 primarily reflects the
costs incurred by the Registrant to commence operations as a public entity and
includes significant fees paid to accountants, attorneys and consultants for
SEC related matters and filings, patent and trademark services, product
development costs and capital acquisition costs (an aggregate amount of
approximately $16.7 million for the current period). In addition, current
period expenses include approximately $3.3 million for the settlement of
potential royalties that were assumed from National Boston Medical, Inc. in the
acquisition by Dr. Abravanel's Formula. Salary and benefit expense for the
current period was $937,010 compared to

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$1,127,624 for the eight months ended February 29, 2000 and $1,128,250 for the
year ended June 30, 1999.

For the ten-months ended December 31, 2000 selling and marketing expenses were
$5,803,977 compared to $1,923,185 for the period ended February 29, 2000 and
$2,402,304 for the year ended June 30, 1999. This increase was primarily due to
the Registrant's development of selling materials and increased sales efforts
primarily through the purchase of media time and the use infomercials. Media
expense for the current period was $3,736,476 versus $1,461,059 for the period
ended February 29, 2000 and $1,813,415 for the period ended June 30, 1999.

The Registrant recorded impairment expense of $2,006,661 in the current period
versus $0 for the other periods presented. The impairment loss recorded by the
Registrant was due to the write-off of $1,506,661 for certain capitalized
licensing rights and production costs and the write-off of a $500,000 loan
receivable from National Boston Medical, due the uncertainty of recoverability
given the borrower's filing for protection under Title 11 of the United States
Code.

LOSS FROM OPERATIONS

The Registrant had a loss from operations of $24,409,548 for the ten months
ended December 31, 2000 as compared with losses of $6,009,673 for the eight
months ended February 29, 2000 and $4,909,596 for the year ended June 30, 1999.
The increase in the Registrant's loss from operations was primarily attributable
to the increase in general and administrative expenses and the costs incurred to
begin operations as a public entity and the increase in selling and marketing
expenses. The Registrant expects its investment in building the infrastructure
of the business and the development of new products will result in the
improvement of results from operations.

OTHER INCOME AND (EXPENSE)

Other income and expense for the ten months ended December 31, 2000 was a net
expense of $2,325,685 compared to net expenses of $229,643 for the eight-month
period ended February 29, 2000 and $106,240 for the year ended June 30, 1999.
The significant increase from the prior periods was primarily due to interest
expense and impairment losses.

For the ten months ended December 31, 2000, the Registrant recorded interest
expense of $1,877,620. Of this amount, $1,778,689 was attributed to discount
expense that was recorded due to a beneficial conversion feature associated
with the conversion of convertible notes. Interest expense was $229,723 and
$106,240, for the eight months ended February 29, 2000 and for the year ended
June 30, 1999, respectively.

During the ten months ended December 31, 2000, the Registrant recorded an
impairment loss of $444,444 and a loss on the disposal of assets of $29,583. No
such items were recorded in the previous periods presented. The impairment loss
recorded by the

<PAGE>   10
Registrant was attributed to the write off of an investment in shares of
National Boston Medical common stock. Nation Boston Medical filed for
protection under Title 11 of the United States Code.

For the ten months ended December 30, 2000, the Registrant recorded interest
income of $9,205 and miscellaneous other income of $16,757. No such items were
recorded in the previous periods presented.

NET LOSS

For the ten months ended December 31, 2000, the Registrant had a net loss before
income taxes of $26,735,233 as compared with loses of $6,239,396 for the eight
months ended February 29, 2000 and $5,015,836 for the year ended June 30, 1999.
The increase in the Registrant's net loss was primarily attributed to the
significant expenses incurred to initiate operations as a public entity and
expand its product line and the marketing of its product line.

As described to Note 15 to the financial statements included in Item 7 of this
Annual Report on Form 10-K, the Registrant has available at December 31, 2000,
operating loss carryforwards of approximately $37,000,000, which may be applied
against future taxable income in years through 2019. The amount of and ultimate
realization of the benefits from the operating loss carryforward for income tax
purposes is dependent, in part, upon the tax laws in effect, the future earnings
of the Registrant, and other future events, the effects of which cannot be
determined. Because of the uncertainty surrounding the realization of the loss
carryforward the Registrant has established a valuation allowance equal to the
tax benefit for deferred taxes. The net deferred tax asset is approximately
$12,580,000 as of December 31, 2000, with an offsetting valuation allowance at
December 31, 2000 of the same amount.

LIQUIDITY AND CAPITAL RESOURCES

Historically, the Registrant has financed its working capital requirements
through internally generated funds, the sale of shares of its common stock, and
proceeds from short-term bank borrowings, convertible debentures, and notes
payable. As of December 31, 2000, the Registrant had working capital (current
assets less current liabilities) of $652,262. The Registrant may seek to issue
corporate debt or equity securities in order to satisfy its cash needs for the
coming year. Any debt incurred or issued by the Registrant may be secured or
unsecured, at fixed or variable rate interest and may be subject to such terms
as the board of directors of the Registrant deem prudent. Sales of equity
securities may be at or below current market rates for the Registrant's common
stock. The Registrant expects any proceeds from such additional credit or sale
of securities to be used primarily  in the marketing and development of its
product line. No assurance can be given that the Registrant will be successful
in generating sufficient capital from new borrowings or from the sale of its
securities to adequately fund its liquidity needs.

The Registrant does not believe that its business is subject to seasonal trends.

The Registrant does not believe that inflation had a significant impact on the
results of operations for the periods presented. On an ongoing basis, the
Registant attempts to minimize any effects of inflation on its operating
results by controlling operating costs, and, whenever possible, seeking to
insure that product price rates reflect increases in costs due to inflation.

NEW ACCOUNTING PRONOUNCEMENTS

No new pronouncement issued by the Financial Accounting standards board, the
American Institute of Certified Public Accountants or the Securities and
Exchange Commission is expected to have a material impact on the Registrant's
financial position or reported results of operations.

Item 7.  Financial Statements

         Reference is made to which contains the financial statements


Item 8.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

         Subsequent to the Plan of Exchange dated April 25, 2000 (in which Dr.
Abravanel's Formulas, Inc. acquired the Registrant), Balmer & Nelson resigned
<PAGE>   11
as the independent accountants for Dr. Abravanel's. Balmer & Nelson had
previously audited the balance sheet of Dr. Abravanel's as of February 28, 1999
and the related statements of operations, stockholders' equity, and cash flows
for the period from April 28, 1998 (the inception of Dr. Abravanel's) through
the fiscal year ended February 28, 1999. Balmer & Nelson has not issued an
adverse opinion or a disclaimer of opinion, nor has any report during the past
year been qualified or modified as to uncertainty, audit scope, or accounting
principles.

         During Dr. Abravanel's most recent fiscal year, and any subsequent
interim period preceding the resignation of Balmer & Nelson, there were no
disagreements with Balmer & nelson on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure.

         During Dr. Abravanel's most recent fiscal year, and any subsequent
interim period preceding this change in certified accountants, Balmer & Nelson
did not advise Dr. Abravenel's that: (i) the internal controls necessary to
develop reliable financial statements did not exist, (ii) that information had
come to the accountant's attention that led it to no longer be able to rely on
management's representations, or that made it unwilling to be associated with
the financial statements prepared by management, (iii) there was a need to
expand significantly the scope of its audit, or that information had come to the
attention of Balmer & Nelson during said time period, that, if further
investigated, may (a) materially impact the fairness or reliability of either a
previously issued audit report or the underlying financial statements, or the
financial statements issued or to be issued covering the fiscal period(s)
subsequent to the date of the most recent financial statements covered by an
audit report (including information that may prevent it from rendering an
unqualified audit report on those financial statements) or (b) cause it to be
unwilling to rely on management's representations or be associated with Dr.
Abravanel's financial statements, and (iv) information had come to the
accountant's attention that it had concluded materially impacted the fairness or
reliability of either (a) a previously issued audit report or the underlying
financial statements, or (b) the financial statements issued or to be issued
covering the fiscal period(s) subsequent to the date of the most recent
financial statements covered by an audit report (including information that,
unless resolved to the accountant's satisfaction, would prevent it from
rendering an unqualified audit report on those financial statements).

         On April 14, 2000, Dr. Abravanel's engaged Randy R. Simpson, CPA, P.C.,
as the new independent accountant engaged as the principal accountant to audit
Dr. Abravanel's financial statements. During Dr. Abravanel's two most recent
fiscal years, and any subsequent interim period prior to engaging Randy R.
Simpson, neither Dr. Abravanel's nor anyone on its behalf consulted Randy R.
Simpson regarding either: (i) the application of accounting principles to a
specified transaction, either completed or proposed, or (ii) the type of audit
opinon that might be rendered on Dr. Abravanel's financial statements, or (iii)
any matter which was either the subject of a disagreement (there were no
disagreements, as stated above) or a reportable event (as described in Item

<PAGE>   12
304(a)(1)(V) of Regulation S-K). The decision to engage Randy R. Simpson as Dr.
Abravanel's new accountant was recommended and approved by the board of
directors of Dr. Abravanel.

Part III

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


         The following Table sets forth certain information regarding the
executive officers and directors of Infotopia as of June 30, 2000:


Name                  Age               Title

Daniel Hyong          38                Director, Chairman, and Chief
                                        Executive Officer

Ernest Zavoral        44                Director and President

Marek Lozowicki       38                Acting CFO, Exec. V.P., Secretary

Clinton Smith         41                Director

Lisa Ulshafer         36                Vice President

Robert Tilton         33                Vice President

Alan Ricks            47                Vice President

William Gross         46                Vice President

Douglas Blattner      42                Vice President


         A brief description of the backgrounds of the current Executive
Officers and Directors are set forth below:

EXECUTIVE OFFICERS AND DIRECTORS

         DANIEL HOYNG, Chairman of the Board and CEO is an accomplished leader
with over eight years of experience as an executive in a public company. Mr.
Hoyng has served as the CEO and Chairman of Infotopia, Inc. since April 26, 2000
and previously served as Chairman and CEO of National Boston Medical, Inc. and
came with other key executives when Infotopia was acquired by Dr. Abravenals's
Formula from National Boston Medical, Inc. Previously, Mr. Hoyng excelled as a
Divisional Director for Healthcare Services Group, Inc., a publicly traded
company specializing in housekeeping and laundry services to the long-term care
industry. Prior to his work with Healthcare Services Group, Inc., Mr. Hoyng
served as a Sales Manager and then General Manager for ARA/Cory Refreshment
Services. Mr. Hoyng has established a solid track record of building sales and
profits for each of the Companies he has served. He was awarded his Bachelors in
Communications Degree from Saint Joseph's College in 1985.

         ERNEST ZAVORAL, Director and President, brings to the Registrant over
20 years of marketing and managerial experience. After attending Grove City
College, Mr. Zavoral spent 15 years as a marketer and project manager for
companies providing environmental solutions. His highly developed communication,
presentation and management skills led him to enter the product development
field, where he was responsible for bringing new and innovative products from
the drawing-board to retail success. Mr. Zavoral is credited for developing
"Why-Tie Shoelaces" and positioning that product to be a national success, with
Wal-Mart as a primary customer. As President of Infotopia, Mr. Zavoral is
responsible for the day to day operations along with developing and marketing
heath related new products such as INFOTOPIA's highly acclaimed Backstroke(r),
through television infomercials and into retail distribution.
<PAGE>   13
      MAREK  LOZOWICKI,  Secretary and Vice President has several years of
managerial and technology experience in the field of portrait photography in
the retail sector. His management positions with PCA, Inc., AFP, Inc. and
Portraits International, Inc. consisted of overseeing regional high volume
retail consumer portrait photography operations contracted with several
national retailers such as K-Mart, Wal-Mart, Ames, Bradlees and others. While
with AFP, Inc. Mr. Lozowicki was managing one of the largest regions in the
country and was responsible for implementing new digital photography
technologies that allowed for more efficient operations. Mr. Lozowicki most
recently served as the Vice President and Secretary of NBM, Inc., the parent
company of Infotopia, Inc. and remained with Infotopia, Inc. after Dr.
Abravanel's Formulas, Inc. acquired Infotopia in April 26, 2000. Mr. Lozowicki
had completed his college education in Poland and continued graduate studies at
the Athenaeum of Ohio in Cincinnati.

         CLINTON SMITH, ESQ., director, received a baccalaureate degree at
Morehouse College of Atlanta, Georgia where he majored in history and business
administration. Mr. Smith completed the Juris Doctor degree in law at the Tulane
University School of Law where he also received the 1987 Merit Award Recipient
for the Law League of Louisiana. Mr. Smith is a member of the Louisiana Bar and
is co-owner and General Partner of Roby & Smith, a full service law firm with a
concentration in litigation.  Mr. Smith is also a partner in the law firm of
Bryan & Jupiter whose practice focuses on education/school  law, commercial law,
workers' compensation and tort defense.

         LISA ULSHAFER, Vice President, is Infotopia's Manager of Information
Technology. Ms. Ulshafer has an extensive background in graphic and website
design. Prior to joining Infotopia, Ms. Ulshafer owned and operated her own
independent website and design businesses for over seven years, including Design
Concepts from 1993-1998, Your Way Website Services from 1998 through currently
and Webs on Wall Street from October 2000 through currently. One of Ms.
Ulshafer's primary areas of responsibility will be Infotopia's website as she
will focus on assisting Infotopia in the development of its strategic goal of
having a strong Internet presence. Ms. Ulshafter is a graduate of Michigan State
University where she earned a baccalaureate degree in 1986.

         ROBERT TILTON, Vice President, is Infotopia's Manager of Investor
Relations. Mr. Tilton's primary experience is in the retail sector, having owned
several companies in both the retail and wholesale markets. Upon graduating High
School in 1985, Mr. Tilton went into a private retail and wholesale business
manufacturing and distributing novelty gift products which he did for seven
years. His responsibilities were to design, manufacture and distribute the
products as well as general business maintenance. In 1992 Mr. Tilton joined his
family's gourmet baking company that specialized in retail and wholesale gourmet
products. This business catered to the hotel chains of Marriott, Hyatt, Holiday
Inn and several upscale country clubs in the northeast. Some of Mr. Tilton's
responsibilities were the corporation's finance along with all business
developments and the production done in the facility. In his financial capacity,
Mr. Tilton became more involved with the public trading company sector. In
October of 2000 he formed OTC Relations LLC, an investor relations firm that
caters to dealing with shareholders needs on a more personal level. At this time
he was hired as a consultant to Infotopia, handling the daily responsibilities
of shareholder requests and phone calls as well as briefing the company on the
current status of Infotopia in the marketplace. On January 7th, 2001 Mr. Tilton
joined Infotopia as Vice President of Investor Relations as a full-time
employee.

         ALAN RICKS, Vice President, is the executive head of operations for
Infotopia. Mr. Ricks's background consists of 22 years of managerial experience
in marketing, project management, operations, planning, and business
development. Mr. Ricks has spent the last six years as a consultant to retailers
in marketing and development. Prior to that he was a Projects Director for the
Edward J. DeBartolo Corp., and a Development Officer for JMB/Federated Realty
for six years. Mr. Ricks also held various positions in regional and local
economic development as Vice President - Business Development for the Dayton
Development Council and Director of Development and Planning for a local
municipality. He has also held various managerial positions, including
Administrator, for two municipal operations. Mr. Ricks holds a Masters Degree in
Administration, and a Bachelor of Arts Degree.

         WILLIAM GROSS, Vice President, is Infotopia's Manager of Internet
Direct Marketing. Mr. Gross was a co-founder and partner of an international
apparel company between 1984 and 1995. Mr. Gross also founded a retail and
advertising specialty products company and from 1996 until 2000, Mr. Gross was
responsible for taking new products from concept through manufacturing to
market. Most recently Mr. Gross was responsible for the initial business
development activities of Big Media, Inc., an Internet network advertising firm,
and assisted in company funding. Mr. Gross's educational background includes a
Bachelor of Science degree in Business Administration which was awarded to him
by the University of Illinois.

<PAGE>   14
         DOUGLAS BLATTNER, is Vice President and Chief Information Officer of
Infotopia. Mr. Blattner has a diverse background in technology systems
development and deployment. Most recently, Mr. Blattner was Director of
Information Systems for a multinational semiconductor manufacturer, leading the
development of computing systems technologies for that firm, which were
subsequently used by other international semiconductor firms, and leading the
development of a major manufacturing facility for his firm. Subsequently, Mr.
Blattner founded a technology consultancy firm, involved in on-line marketing
promotions, telecommunications and process control development for a number of
significant high technology companies, and was the founder and CTO of Community
Vision, Inc. In addition, Mr. Blattner served as the CTO of Big Media, Inc.
which is an Internet marketer. Mr. Blattner is named on numerous technology
patents in the field of Internet advertising and home automation.

         Reference is made to Item 3., above, for a description of the legal
proceedings commenced by Jeff Freedman against the Registrant; Messrs. Hoyng and
Zavoral are also named as defendants in this proceeding. Messrs. Hoyng, Zavoral,
and Lozowicki were executive officers of National Boston Medical, Inc. during
the two-year period prior to the filing of a petition in bankruptcy by such
entity. Mr. Smith served as a director of National Boston Medical, Inc. during
the two-year period prior to the filing of a petition in bankruptcy by such
entity.

         During the fiscal year ended December 31, 2000, the officers and
directors of Registrant failed to be in timely compliance with their reporting
requirements under Section 16 of the Securities Exchange Act of 1934. The
required filings will be made by Registrant within 60 days of the date of this
Report.



Item 10. Executive Compensation

Summary Compensation Table

         The following table shows the compensation received by the Chief
Executive Officer and all officers of Registrant who received more than $100,000
in salary. All figures in this table are for the year ended December 31, 2000.

<PAGE>   15

Name               Title         Annual Salary    Bonus        Grants of options

Daniel Hoyng       Chmn/CEO      $175,000         $5,000           (see note)
Ernest Zavoral     Pres.         $165,000         $5,000           (see note)
Marek Lozowicki    Vice-Pres.    $100,000         $3,000           (see note)


Note: Each of the named executive officers received 1/3 of their annual salary,
as noted in the third column above, in the form of stock options, exercisable at
$0.0625 per share, expiring December 15, 2001, as set forth below.

Name               Title        Amount of Salary     Price Per Option  # of
                                                                       options

Daniel Hoyng       Chmn/CEO     $58,000              $0.0625           928,000
Ernest Zavoral     Pres.        $55,000              $0.0625           880,000
Marek Lozowicki    Vice-Pres.   $33,333              $0.0625           533,320



Option Grants in Last Fiscal Year

         The following table shows the options granted to the individuals named
in the Summary Compensation Table, above, during the year ended December 31,
2000 (including the options referred to in the immediately preceding
table):


Name               ## of shares     % of total       Exercise      Expiration
                                  employee options   Price         Date
                                   granted in 2000

Daniel Hoyng       11,845,000       39.69%           $0.0625       12/15/01
Ernest Zavoral     10,047,000       33.67%           $0.0625       12/15/01
Marek Lozowicki    7,950,320        26.64%           $0.0625       12/15/01



         In addition, Clinton Smith, a director of Registrant, was granted
options to purchase 2,167,000 shares of Registrant's common stock, at an
exercise price of $0.0625, expiring on 12/15/01.

Option Exercises in Last Fiscal Year

         During Registrant's last fiscal year, there were no exercises of
options that had been granted to Registrant's named executive officers.


Item 11.  Security Ownership of Certain Beneficial Owners and
          Management

         To the best of Registrant's knowledge, there were no holders of more
than 5% of Registrant's common stock as of December 31, 2000 and as of the date
<PAGE>   16
hereof.

         The following table sets forth the ownership of Registrant's common
stock, by the executive officers referred to in the Summary Compensation Table
in Item 10 of this Annual Report on Form 10-KSB, and by Registrant's directors,
and by Registrant's directors and officers as a group. The percentage figures
assume 189,996,005 shares issued and outstanding. Because Registrant has
insufficient common shares authorized to issue shares of common stock upon the
exercise of certain options (referred to in Item 10, above), the figures
presented in the following table do not include such shares. The addresses for
all persons listed herein is c/o the Company, at its address set forth on the
first page of this Report:

Name                      Position             # shares common,%

Daniel Hoyng              Chairman/CEO         0/0
                          Director
Ernest Zavoral            President            0/0
                          Director
Marek Lozowicki           Vice-President       0/0

Clinton Smith              Director            1,000,000, .53%

All executive officers and
Directors as a group (9 persons)               1,524,000, .80%

Item 12. Certain Relationships and Related Transactions

         During the year ended December 31, 2000, there were no transactions
between the officers and/or directors of the Registrant reportable pursuant to
Item 404 of Regulation S-B.


Item 13. Exhibits and Reports on Form 8-K

         There were no Current Reports on Form 8-K filed by the Registrant
during the fourth quarter of the calendar year ended December 31, 2000.

Exhibits

(3)(i) (1) Registrant's Articles of Incorporation, as amended. (5)

(3)(ii)(1) Registant's Bylaws (1)

(4)(i)(1) Specimen Stock Certificate (2)

(4)(i)(2) Secured Convertible Debenture (5)

(4)(i)(3) Securities Purchase Agreement (5)

(4)(i)(4) Stock Purchase Warrant (5)

(10)(i)(1) Acquisition Agreement by and between Registrant and Torso
           Tiger, Inc. (3)

(10)(i)(2) License Agreement (3)

(10)(i)(3) Mutual Release and Settlement Agreement with Greenwood
           And Hall (3)


<PAGE>   17
(10)(i)(4) Settlement Agreement and Full Release with David M. Vitko,
           D.V. Back Products, Inc., General Partner, Backstroke, Ltd. (3)

(10)(i)(5) Addendum Manufacturing, Marketing and Distribution
           Agreement with Dean Tornabene (3)

(10)(i)(6) Settlement Agreement and Full Release with Cactus Jack (5)

(10)(i)(7) Letter of Understanding with First Equity Capital (3)

(10)(i)(8) Lease with David Cuniff, dated May 19, 2000 (4)

(10)(i)(9) License Agreement by and between Registrant and Lohan Media, LLC (5)

(10)(i)(10) Vision Publishing Inc./Technical Analysis Agreement (5)

(10)(i)(11) Infomercial Marketing and Distribution Agreement (5)

(10)(ii)(1) Executive Employment Agreement between Registrant and
            Daniel Hoyng (5)

(10)(ii)(2) Executive Employment Agreement between Registrant and
            Ernest Zavoral (5)

(10)(ii)(3) Executive Employment Agreement between Registrant and
            Marek Lozowicki(5)

(10)(ii)(4) Executive Employment Agreement between Registrant and
            Lisa Ulshafer (5)

(10)(ii)(5) Executive Employment Agreement between Registrant and
            Robert Tilton (5)

(10)(ii)(6) Executive Employment Agreement between Registrant and
            Alan E. Ricks (5)

(10)(ii)(7) Executive Employment Agreement between Registrant and
            William F. Gross (5)

(10)(ii)(8) Executive Employment Agreement between Registrant and
            Douglas Blattner (6)


(1) Registration Statement on Form 10-SB of Registrant (f/k/a Dr. Abravanel's
Formulas, Inc.)

(2) Registration Statement on Form S-8 of Registrant, No. 333-49642

(3) Quarterly Report of Registrant on Form 10-QSB for the quarter
ended May 31, 2000

(4) Registration Statement on Form SB-2 of Registrant, Amendment No. 1 thereto,
filed November 3, 2000

(5) Registration Statement on Form SB-2 of Registrant, filed January 11, 2001

(6) Previously Filed
<PAGE>   18
                                   SIGNATURES



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

Infotopia, Inc.

Dated: October 2, 2001

Daniel Hoyng, CEO and Chairman                           /s/ Daniel Hoyng
(principal executive officer)                         ________________________

Ernest Zavoral, President
(principal executive                                    /s/ Ernest Zavoral
officer) and Director                                 ________________________

Marek Lozowicki, Acting Chief
Financial Officer and
principal accounting officer,
Executive Vice President and                            /s/ Marek Lozowicki
Secretary                                             ________________________


                                                         /s/ Clinton Smith
Clinton Smith, Director                               ________________________




<PAGE>   19

















                         INFOTOPIA, INC. AND SUBSIDIARY

                        CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2000
<PAGE>   20
                         INFOTOPIA, INC. AND SUBSIDIARY
                        CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000






                                 C O N T E N T S

<TABLE>
<CAPTION>
                                                                   PAGE
                                                                   ----
<S>                                                                <C>
INDEPENDENT AUDITORS' REPORT                                         1


CONSOLIDATED BALANCE SHEET                                           2


CONSOLIDATED STATEMENTS OF OPERATIONS                                3


CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS                        4


CONSOLIDATED STATEMENTS OF CASH FLOWS                              5 - 7


CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY                       8


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                         9 - 26
</TABLE>
<PAGE>   21
                          INDEPENDENT AUDITORS' REPORT


TO THE STOCKHOLDERS AND BOARD OF DIRECTORS OF
 INFOTOPIA, INC. AND SUBSIDIARY


We have audited the accompanying consolidated balance sheet of INFOTOPIA, INC.
AND SUBSIDIARY as of December 31, 2000, and the consolidated statements of
operations, comprehensive loss, cash flows and stockholders' equity for the ten
months ended December 31, 2000, the eight months ended February 29, 2000 and the
year ended June 30, 1999. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
INFOTOPIA, INC. AND SUBSIDIARY as of December 31, 2000, and the consolidated
results of its operations and cash flows for the ten months ended December 31,
2000, the eight months ended February 29, 2000 and the year ended June 30, 1999,
in conformity with accounting principles generally accepted in the United States
of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 16 to
the financial statements, the Company has suffered recurring losses from
operations and its limited capital resources raise substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 16. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.



                              MERDINGER, FRUCHTER, ROSEN & CORSO, P.C.
                              Certified Public Accountants

New York, New York
February 20, 2001
<PAGE>   22
                         INFOTOPIA, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2000


<TABLE>
<S>                                                                <C>
  ASSETS
CURRENT ASSETS
  Cash and cash equivalents                                        $    787,150
  Accounts receivable, net of allowance for
    doubtful accounts and customer returns of $218,254                  934,392
  Inventory                                                             418,689
  Prepaid expenses and other current assets                             268,051
  Employee advances                                                      65,485
  Investments in marketable securities, at fair value                   174,000
                                                                   ------------
      Total current assets                                            2,647,767

PROPERTY AND EQUIPMENT, less
  accumulated depreciation of $255,383                                  239,773

CAPITALIZED PRODUCTION COSTS, less
  accumulated amortization of $-0-                                      690,475

OTHER ASSETS
  Licenses and other intangibles, less
    accumulated amortization of $318,970                              2,415,307
  Deposits                                                              212,143
                                                                   ------------

  TOTAL ASSETS                                                     $  6,205,465
                                                                   ============

  LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
  Accounts payable and accrued expenses                            $  1,798,620
  Due to employees                                                      108,723
  Convertible debenture                                                  50,000
  Deferred revenue                                                       38,162
                                                                   ------------
   Total current liabilities                                          1,995,505

LONG-TERM LIABILITIES
  Convertible debenture                                                 600,000
                                                                   ------------

     TOTAL LIABILITIES                                                2,595,505
                                                                   ------------

COMMITMENTS AND CONTINGENCIES                                                --

STOCKHOLDERS' EQUITY
  Common stock, $.001 par value, 190,000,000 shares
    authorized; 172,236,005 shares issued and outstanding               172,236
  Additional paid-in-capital                                         41,440,254
  Accumulated deficit                                               (38,026,530)
  Unrealized gain on marketable securities                               24,000
                                                                   ------------
     Total stockholders' equity                                       3,609,960
                                                                   ------------

  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                       $  6,205,465
                                                                   ============
</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements.


                                     - 2 -
<PAGE>   23
                         INFOTOPIA, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                        Ten Months            Eight Months             Year
                                                           Ended                 Ended                 Ended
                                                        December 31,           February 29,           June 30,
                                                            2000                  2000                  1999
                                                       -------------           -----------           -----------
<S>                                                    <C>                     <C>                   <C>
REVENUE
  Sales, net of returns and allowances
   of $64,889, $345,205 and $185,715                   $   9,135,411           $ 2,366,017           $ 2,258,910

COST OF SALES                                              3,368,601             1,182,805               759,842
                                                       -------------           -----------           -----------

GROSS PROFIT                                               5,766,810             1,183,212             1,499,068
                                                       -------------           -----------           -----------


OPERATING EXPENSES
  Selling and marketing                                    5,803,977             1,923,185             2,402,304
  General and administrative                              22,149,646             5,018,540             3,770,632
  Impairment expense                                       2,006,661                    --                    --
  Depreciation and amortization                              216,074               251,160               235,728
                                                       -------------           -----------           -----------
   Total operating expenses                               30,176,358             7,192,885             6,408,664
                                                       -------------           -----------           -----------

LOSS FROM OPERATIONS                                     (24,409,548)           (6,009,673)           (4,909,596)
                                                       -------------           -----------           -----------

OTHER INCOME (EXPENSE)
  Interest income                                              9,205                    --                    --
  Other income                                                16,757                    --                    --
  Interest expense                                        (1,877,620)             (229,723)             (106,240)
  Impairment of available-for-sale securities               (444,444)                   --                    --
  Loss on disposal of assets                                 (29,583)                   --                    --
                                                       -------------           -----------           -----------
   Total other income (expense)                           (2,325,685)             (229,673)             (106,240)
                                                       -------------           -----------           -----------

LOSS FROM OPERATIONS BEFORE
 INCOME TAXES                                            (26,735,233)           (6,239,396)           (5,015,836)

INCOME TAXES                                                      --                    --                    --
                                                       -------------           -----------           -----------

NET LOSS                                               $ (26,735,233)          $(6,239,396)          $(5,015,836)
                                                       =============           ===========           ===========

LOSS PER SHARE:
      Basic and diluted                                $        (.25)          $      (.76)          $      (.61)
                                                       =============           ===========           ===========

WEIGHTED AVERAGE COMMON SHARES:
      Basic and diluted                                  105,490,686             8,167,387             8,167,387
                                                       =============           ===========           ===========
</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements.


                                      - 3 -
<PAGE>   24
                             INFOTOPIA, INC. AND SUBSIDIARY
                     CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS



<TABLE>
<CAPTION>
                                                        Ten Months            Eight Months             Year
                                                           Ended                 Ended                 Ended
                                                        December 31,           February 29,           June 30,
                                                            2000                  2000                  1999
                                                       -------------           -----------           -----------
<S>                                                    <C>                     <C>                   <C>
NET LOSS                                                $(26,735,233)          $(6,239,396)          $(5,015,836)

OTHER COMPREHENSIVE LOSS
Unrealized gain on marketable securities                      24,000                    --                    --
                                                       -------------           -----------           -----------
COMPREHENSIVE LOSS                                     $ (26,711,233)          $(6,239,396)          $(5,015,836)
                                                       =============           ===========           ===========

</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements.


                                      - 4 -
<PAGE>   25
                         INFOTOPIA, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                Ten Months            Eight Months              Year
                                                                  Ended                  Ended                  Ended
                                                                December 31,           February 29,           June 30,
                                                                    2000                  2000                  1999
                                                                ------------           -----------           -----------
<S>                                                            <C>                    <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                                     $(26,735,233)          $(6,239,396)          $(5,015,836)
      Adjustments to reconcile net loss to net cash
        used in operating activities
        Bad debt and sales returns                                   218,254                    --                    --
        Loss on sale of assets                                        29,583                    --                    --
        Unrealized loss on marketable securities                     444,444                    --                    --
        Settlement expenses                                        3,382,428                    --                    --
        Depreciation and amortization                                216,074               251,160               235,728
        Asset impairment loss                                      2,006,661                    --                    --
        Issuance of stock for compensation                             4,318                    --                    --
        Issuance of stock options, less
         deferred compensation                                       462,049                    --                    --
        Stock issued for consulting and legal services            16,209,236                    --                    --
   Changes in assets and liabilities
        Accounts receivable -- trade                              (1,121,856)              (30,790)                   --
        Inventory                                                   (223,158)             (195,530)                   --
        Prepaid expenses                                             456,180              (724,231)                   --
        Other assets                                                (212,143)                   --                    --
        Accounts payable and accrued expenses                     (1,588,216)            3,395,994                    --
        Due to employees                                             (16,714)                   --                    --
        Deferred revenue                                            (593,139)              631,301                    --
        Other                                                        263,613                                          --
                                                                ------------           -----------           -----------
Net cash used in operating activities                             (6,797,619)           (2,911,492)           (4,780,108)
                                                                ------------           -----------           -----------

CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of property and equipment                               (158,001)             (295,564)              (91,020)
   Marketable securities                                            (250,000)                   --                    --
   Note receivable, affiliate                                       (500,000)                   --                    --
   Capitalized production cost                                            --              (711,903)                   --
   Licenses and other intangibles                                         --            (1,235,569)             (144,708)
                                                                ------------           -----------           -----------
Net cash used in investing activities                               (908,001)           (2,243,036)             (235,728)
                                                                ------------           -----------           -----------

CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from issuance of notes payable                         2,475,500             1,292,735                    --
   Payments on notes payable                                              --              (152,526)                   --
   Sale of common stock                                            6,012,691                    --                    --
   Paid-in capital                                                        --             4,018,898             5,015,836
                                                                ------------           -----------           -----------
Net cash provided by financing activities                          8,488,191             5,159,107             5,015,836
                                                                ------------           -----------           -----------

NET INCREASE IN CASH AND
 CASH EQUIVALENTS                                                    782,571                 4,579                    --

CASH AND CASH EQUIVALENTS
 -- BEGINNING OF YEAR                                                  4,579                    --                    --
                                                                ------------           -----------           -----------

CASH AND CASH EQUIVALENTS
 -- END OF YEAR                                                 $    787,150           $     4,579           $        --
                                                                ============           ===========           ===========

SUPPLEMENTAL INFORMATION:
      Interest paid                                             $         --           $    88,579           $    56,240
                                                                ============           ===========           ===========
      Income taxes paid                                         $      5,000           $        --           $        --
                                                                ============           ===========           ===========
</TABLE>













The accompanying notes are an integral part of these consolidated financial
statements.


                                     - 5 -
<PAGE>   26
                         INFOTOPIA, INC. AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)




SUPPLEMENTAL SCHEDULE OF NON-CASH ACTIVITIES:

During the fiscal year ended June 30, 1999, National Boston Medical, Inc. former
Parent of Infotopia, Inc.:

-     Issued stock to acquire licenses that amounted to $248,000;

-     Issued stock towards the conversion of debt for $1,381,834;

-     Issued stock for services rendered that amounted to $892,353.

During the eight months ended February 29 2000, National Boston Medical,
Inc. former Parent of Infotopia, Inc.:

-     Issued stock for the acquisition of fixed assets and proposed acquisitions
      that were not consummated and expensed in the amount of $1,617,375;

-     Issued stock to retire notes due for $753,288;

-     Issued stock to lenders for $2,786,175 as collateral;

-     Issued stock for services rendered totaling $2,833,296.

During the ten months ended December 31, 2000, the Company:

-     Issued 46,239,400 shares of the Company's common stock at a value of
      $12,588,426 as compensation for services rendered by various consultants
      and others;

-     Issued 18,799,885 shares of the Company's common stock at a value of
      $3,520,810 as compensation for services rendered by attorneys;

-     Issued 4,317,988 shares of the Company's common stock at a value of $4,318
      as compensation to officers and other employees of the Company;

-     Issued 10,251,590 shares of the Company's common stock at a value of
      $3,753,878, settlement for debt reduction and conversions;

-     Issued 8,193,500 shares of the Company's common stock at a value of
      $928,392 for infomercial management and consultation for production, and
      500,000 shares of National Boston Medical, Inc. valued at $151,112;

















The accompanying notes are an integral part of these consolidated financial
statements.


                                      - 6 -
<PAGE>   27
                         INFOTOPIA, INC. AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)


-     Issued 17,200,000 shares of the Company's common stock at a value of
      $2,066,000 for license rights;

-     Issued 13,678,125 shares of the Company's common stock at $1,975,500, plus
      accrued interest in exchange for 1,767,500 convertible promissory notes
      that were discounted at $1,778,589 for beneficial conversion features;

-     Issued 3,203,130 shares of the Company's common stock at $3,203 in
      connection with the share exchange of Dr. Abravanel's Formula, Inc;

-     Issued 8,167,387 shares of the Company's common stock at $8,167 in the
      spin-off agreement with the Company's former Parent, National Boston
      Medical, Inc;

-     Issued 180,000 shares of the Company's common stock at a value of $41,400
      for offering costs;

-     Exchanged 400,000 shares of Millennium common stock, valued at $100,000
      for consulting services;

-     Received 1,000,000 shares of National Boston Medical, Inc. common stock,
      valued at $293,332 in a settlement agreement with Cactus Jack;

-     Issued options valued at $200,278 for consulting services.


















The accompanying notes are an integral part of these consolidated financial
statements.


                                      - 7 -
<PAGE>   28
                         INFOTOPIA, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>

                                                       Common Stock          Additional                   Unrealized
                                                   ----------------------     Paid-in      Accumulated     Gain  on    Stockholders'
                                                      Shares      Amount      Capital         Deficit     Investments     Equity
                                                   -----------   --------   ------------    ------------    -------    ------------
<S>                                                <C>           <C>        <C>             <C>             <C>        <C>
Balance at June 30, 1998                             8,167,387   $  8,167   $         --    $    (36,065)   $    --    $    (27,898)

   Capital contribution                                     --         --      5,015,836              --         --       5,015,836
   Net loss for the year ended June 30, 1999                --         --             --      (5,015,836)        --      (5,015,836)
                                                    -----------   --------   ------------    ------------    -------    ------------
Balance at June 30, 1999                             8,197,387      8,167      5,015,836      (5,051,901)        --         (27,898)

   Capital contribution                                     --         --      4,018,898              --         --       4,018,898
   Net loss for the eight months ended
     February 29, 2000                                      --         --             --      (6,239,396)        --      (6,239,396)
                                                   -----------   --------   ------------    ------------    -------    ------------
Balance at February 29, 2000                         8,167,387      8,167      9,034,734     (11,291,297)        --      (2,248,396)

   Net loss for the ten months ended
     December 31, 2000                                      --         --             --     (26,735,233)        --     (26,735,233)
   Unrealized gain on marketable securities                 --         --             --              --     24,000          24,000
   Shares issued in lieu of compensation             4,317,988      4,318             --              --         --           4,318
   Shares issued for legal and consulting services  65,469,285     65,469     16,043,767              --         --      16,109,236
   Shares issued for infomercial production          8,193,500      8,194        920,198              --         --         928,392
   Shares issued for product licenses               17,200,000     17,200      2,048,800              --         --       2,066,000
   Shares issued for debt conversion
     and reduction                                  23,001,590     23,002      5,599,454              --         --       5,622,456
   Shares issued in exchange agreement
     Dr. Abravanol                                   3,203,130      3,203         23,225              --         --          26,428
   Debentures converted to common stock             13,678,125     13,678      3,763,306              --         --       3,776,984
   Issuance of common stock                         29,005,000     29,005      4,557,900              --         --       4,586,905
   Offering costs                                           --         --       (746,309)             --         --        (746,309)
   Stock options issued as compensation                     --         --        583,999              --         --         583,999
   Common stock subscribed                                  --         --       (266,870)             --         --        (266,870)
   Deferred compensation                                    --         --       (121,950)             --         --        (121,950)
                                                   -----------   --------   ------------    ------------    -------    ------------
Balance at December 31, 2000                       172,236,005   $172,236   $ 41,440,254    $(38,026,530)   $24,000    $  3,609,960
                                                   ===========   ========   ============    ============    =======    ============
</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements.


                                      - 8 -

<PAGE>   29
                         INFOTOPIA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000



NOTE 1 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        a)  Organization and Basis of Presentation

            On April 25, 2000, Dr. Abravanel's Formula, Inc. ("Abravanel") and
            Infotopia, Inc. ("Infotopia") executed an Acquisition Agreement (the
            "Agreement"), that provided for Abravanel acquiring all of the
            issued and outstanding common stock of Infotopia from National
            Boston Medical, Inc. ("NBM") and changing its name to Infotopia,
            Inc. NBM distributed the shares of Abravanel to its shareholders
            ("the shareholders"). In connection with the transaction, the
            shareholders received 8,167,387 shares of Abravanel common stock for
            their 100 shares of Infotopia, which represented 72% of the Company.
            As a result of this transaction, the former shareholders of
            Infotopia acquired or exercised control over a majority of the
            shares of Abravanel. Accordingly, for accounting purposes, the
            transaction has been treated as a recapitalization of Infotopia and,
            therefore, the financial statements represent a continuation of the
            accounting acquirer, Infotopia, not Abravanel, the legal acquirer.
            In accounting for the transaction:


            i)    Infotopia is deemed to be the purchaser and surviving company
                  for accounting purposes. Accordingly, its net assets are
                  included in the balance sheet at their historical book values.

            ii)   Control of the net assets and business of Abravanel was
                  acquired effective April 25, 2000 (the "Effective Date").
                  Abravanel had no significant operations prior to the
                  acquisition. At the Effective Date, Abravanel had net assets
                  of approximately $26,000.

            iii)  The consolidated statements of operations and cash flows
                  include Infotopia's results of operations and cash flows from
                  July 1, 1998. Abravanel had no operations subsequent to the
                  Effective Date. Infotopia incorporated all of Abravanel's
                  assets into their continuing operations.

            Originally, Infotopia had a fiscal year ending June 30. It changed
            its year-end to February 28 to coincide with Abravanel's fiscal
            year. It then changed to a calendar year to be more comparative to
            its peers. As a result of those changes, the statements of
            operations and cash flows presented are for the year ended June 30,
            1999, the eight months ended February 29, 2000 and for the ten
            months ended December 31, 2000.

        b)  Nature of Operations

            The Company engages in the development, marketing, advertising and
            selling of new health, fitness and consumer products.


                                      - 9 -
<PAGE>   30
                         INFOTOPIA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000



NOTE 1 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

        d)  Use of Estimates

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

        e)  Revenue Recognition

            For the ten months ended December 31, 2000, eight months ended
            February 29, 2000, and the year ended June 30, 1999, respectively,
            the Company's revenues were derived solely from fitness products.
            Revenue is recognized upon shipment of products to the customer.

            Receipts for sales that have not been shipped at the end of the
            period presented are recorded as deferred revenue.

            The Company maintains a provision for estimated returns and
            allowances.

            Securities and Exchange Commission ("SEC") Staff Accounting Bulletin
            ("SAB") No. 101, as amended by SAB 101B, addresses revenue
            recognition policies and is effective for the quarter ending
            December 31, 2000. The Company is already substantially in
            compliance with SAB 101 and its adoption has no material effect on
            the financial statements.

        f)  Cash and Cash Equivalents

            The Company considers all highly liquid investments purchased with
            maturities of three months or less to be cash equivalents.

        g)  Concentration of Credit Risk

            The Company places its cash in what it believes to be credit-worthy
            financial institutions. However, cash balances exceeded FDIC insured
            levels at various times during the year.

        h)  Accounts Receivable

            For financial reporting purposes, the Company utilizes the allowance
            method of accounting for doubtful accounts. The Company performs
            ongoing credit evaluations of its customers and maintains an
            allowance for potential credit losses. The allowance is based on an
            experience factor and review of current accounts receivable.
            Uncollectible accounts are written off against the allowance
            accounts when deemed uncollectible. In addition, the Company
            maintains an allowance for customer returns, based on an experience
            factor. The Company considers these allowances adequate at December
            31, 2000.


                                     - 10 -
<PAGE>   31
                         INFOTOPIA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000



NOTE 1 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

        i)  Inventory

            Inventory consists of finished goods, which are valued at the lower
            of cost or market on a first-in, first-out basis.

        j)  Investments

            The Company classifies all of its investments as available-for-sale.
            Available-for-sale securities are carried at fair value, with the
            unrealized gains and losses reported as a component of stockholders'
            equity in comprehensive income (loss), net of income taxes.
            Investments available for current operations are classified in the
            consolidated balance sheet as current assets; investments held for
            long-term purposes, if any, are classified as non-current assets.
            Interest income and realized gains and losses on securities are
            included in "Other expense (income) -- net" in the consolidated
            statement of operations. The cost of securities sold is based on the
            specific identification method.

        k)  Property and Equipment

            Property and equipment are stated at cost. Repair and maintenance
            costs are charged against income as incurred, while renewals and
            betterments are capitalized as additions to the related assets.
            Depreciation is provided for in amounts sufficient to relate the
            cost of depreciable assets to operations over their estimated
            service lives, primarily on a straight-line basis. The estimated
            service lives used in determining depreciation are five to seven
            years for computers, software, furniture and equipment.

            Upon retirement or sale, the cost and related accumulated
            depreciation of the disposed assets are removed and any resulting
            gain or loss is credited or charged to operations.

        l)  Capitalized Production Costs

            Pursuant to Financial Accounting Standards Board ("FASB") Statement
            on Financial Accounting Standards ("SFAS") No. 53, "Financial
            Reporting by Producers and Distributors of Motion Picture Films"
            production costs are capitalized and amortized over the useful lives
            of the programs.

        m)  Intangibles

            Intangibles consist of goodwill and license costs. Goodwill
            represents costs in excess of net assets acquired in connection with
            businesses acquired. Goodwill is amortized over 5 years. License
            costs are amortized over the lives of the license agreements.


                                     - 11 -
<PAGE>   32
                         INFOTOPIA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000



NOTE 1 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

        m)  Intangibles

            Should events or circumstances occur subsequent to the acquisition
            of a business or purchase of a license which brings into question
            the realizable value or impairment of the related intangible asset,
            the Company will evaluate the remaining useful life and balance of
            the intangible asset and make adjustments, if required. The
            Company's principal consideration in determining an impairment
            includes the strategic benefit to the Company of the particular
            asset as measured by undiscounted current and expected future
            operating income of that specified group of assets and expected
            undiscounted future cash flows. Should an impairment be identified,
            a loss would be reported to the extent that the carrying value of
            the related intangible asset exceeds the fair value of that
            intangible asset as determined by discounted future cash flows.

        n)  Income Taxes

            Income taxes are provided for based on the liability method of
            accounting pursuant to SFAS No. 109, "Accounting for Income Taxes."
            The liability method requires the recognition of deferred tax assets
            and liabilities for the expected future tax consequences of
            temporary differences between the reported amount of assets and
            liabilities and their tax bases.

        o)  Offering Costs

            Offering costs consist primarily of professional fees. These costs
            are charged against the proceeds of the sale of common stock in the
            periods in which they occur.

        p)  Advertising Costs

            Advertising costs are expensed as incurred and are included in
            selling expenses. For the ten months ended December 31, 2000, the
            eight months ended February 29, 2000, and the year ended June 30,
            1999, advertising expense amounted to $3,743,282, $2,402,304 and
            $1,709,676, respectively.

        q)  Fair Value of Financial Instruments

            The carrying amounts of cash and cash equivalents, accounts
            receivable, accounts payable, accrued expenses and income taxes
            payable approximate fair value due to the relatively short maturity
            of these instruments. The face value of the note receivable at
            December 31, 2000, was determined to be its fair value. The fair
            value of long-term borrowings was determined based upon interest
            rates currently available to the Company for borrowings with similar
            terms. The fair value of long-term borrowings approximates the
            carrying amounts at December 31, 2000.


                                     - 12 -
<PAGE>   33
                         INFOTOPIA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000



NOTE 1 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

        r)  Long-lived Assets

            Long-lived assets are reviewed for impairment whenever events or
            changes in circumstances indicate that the related carrying amount
            may not be recoverable. Recovery of assets to be held and used is
            measured by a comparison of the carrying amount of the assets to the
            future net cash flows expected to be generated by the asset. If such
            assets are considered to be impaired, the impairment to be
            recognized is measured by the amount by which the carrying amount of
            the assets exceeds the fair value of the assets. Assets to be
            disposed of are reported at the lower of the carrying amount or fair
            value less the cost to sell.

        s)  Stock-Based Compensation

            The Company has adopted the intrinsic value method of accounting for
            stock-based compensation in accordance with Accounting Principles
            Board Opinion ("APB") No. 25, "Accounting for Stock Issued to
            Employees" and related interpretations.

        t)  Earnings Per Share

            SFAS No. 128, "Earnings Per Share" requires presentation of basic
            earnings per share ("Basic EPS") and diluted earnings per share
            ("Diluted EPS").

            The computation of basic earnings per share is computed by dividing
            earnings available to common stockholders by the weighted average
            number of outstanding common shares during the period. Diluted EPS
            gives effect to all dilutive potential common shares outstanding
            during the period. The computation of diluted EPS does not assume
            conversion, exercise or contingent exercise of securities that would
            have an anti-dilutive effect on losses.

            The shares used in the computation of earnings per share were as
            follows:


<TABLE>
<CAPTION>
                                                          Ten Months            Eight Months             Year
                                                              Ended               Ended                 Ended
                                                           December 31,         February 29,           June 30,
                                                              2000                 2000                  1999
                                                        ---------------        --------------         ----------
<S>                                                     <C>                    <C>                    <C>
            Basic                                           105,490,686             8,167,387          8,167,387
                                                        ===============        ==============         ==========
            Diluted                                         105,490,686             8,167,387          8,167,387
                                                        ===============        ==============         ==========

            Loss per share -  - Basic and Diluted       $          (.25)       $         (.76)        $     (.61)
                                                        ===============        ==============         ==========
</TABLE>


                                     - 13 -
<PAGE>   34
                         INFOTOPIA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000



NOTE 2 -    PREPAID EXPENSES

            Prepaid expenses and other current assets are summarized as follows:

<TABLE>
<S>                                                                      <C>
            Prepayment for inventory                                     $   163,208
            Legal and professional services                                   15,794
            Taxes                                                              5,000
            Royalties                                                         74,844
            Interest receivable                                                9,205
                                                                         -----------
                  Total prepaid expenses and other current assets        $   268,051
                                                                         ===========
</TABLE>

NOTE 3 -    INVESTMENTS IN MARKETABLE SECURITIES

            The investment securities available for sale at December 31, 2000
are as follows:


<TABLE>
<CAPTION>
                                                                          Market
                                                          Cost            Value
                                                       ---------       ---------
<S>                                                    <C>             <C>
            Millennium Direct, Inc. common stock       $ 150,000        $174,000
            National Boston Medical Common Stock         444,444              --
                                                       ---------       ---------
               Total                                   $ 594,444         174,000
                                                       =========       =========
               Net Unrealized Gain                                        24,000
                                                                       =========
               Impairment Loss                                         $(444,444)
                                                                       =========
</TABLE>

            The net unrealized gain of $24,000 has been reported in other
            comprehensive loss.

            On August 21, 2000, National Boston Medical filed for protection
            under Title 11 of the United States Code. Since the realization of
            this investment is uncertain, the total cost has been written off to
            impairment expense.

NOTE 4 -    PROPERTY AND EQUIPMENT

            Property and equipment is summarized as follows:

<TABLE>
<S>                                                                <C>
            Warehouse equipment and molds                          $295,941
            Computer equipment and software                         163,696
            Furniture and office equipment                           35,519
                                                                   --------
                                                                    495,156
            Less:  Accumulated depreciation and amortization        255,383
                                                                   --------
            Property and equipment, net                            $239,773
                                                                   ========
</TABLE>

            Depreciation expense for the ten months ended December 31, 2000, the
            eight months ended February 29, 2000, and the year ended June 30,
            1999 was $93,075, $85,647 and $91,020, respectively.


                                     - 14 -
<PAGE>   35
                         INFOTOPIA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 5 -    CAPITALIZED PRODUCTION COSTS

            Capitalized production costs represent costs incurred in connection
            with the production of infomercials:

<TABLE>
<S>                                                                   <C>
            Total Tiger                                               $350,000
            Prostate                                                   250,000
            Medicus Dual 2000                                           10,000
            Cathi Graham                                                20,000
            Rejuvicare                                                  11,000
            Facial Spa                                                  29,475
            Robert Allen                                                20,000
                                                                      --------
            Capitalized Production Costs                              $690,475
                                                                      ========
</TABLE>

            The infomercial productions described above have not yet aired and,
            therefore, no amortization has been recorded. For the period ended
            December 31, 2000, the Company recorded an impairment of $993,618 of
            unamortized production costs.

NOTE 6 -    INTANGIBLE ASSETS

            Intangible assets are summarized as follows:

<TABLE>
<S>                                                                 <C>
            Goodwill                                                $  880,277
            Prosteo License                                             84,000
            Bun and Thigh products license                           1,770,000
                                                                    ----------
                                                                     2,734,277
            Less:  Accumulated Amortization                            318,970
                                                                    ----------
            Total intangibles -  - net                              $2,415,307
                                                                    ==========
</TABLE>


            The goodwill arises from the acquisition of Infotopia by National
            Boston Medical, Inc. ("NBM"), the former parent of Infotopia, Inc.

            On November 21, 1998, NBM entered into an agreement for the exchange
            of stock with Infotopia. In executing the agreement, NBM issued
            12,870,000 shares of common stock valued at $563,056 to the
            shareholders of Infotopia, and assumed certain liabilities with a
            fair market value of $850,729. In return, NBM received 100% of the
            issued and outstanding shares of Flex and certain assets that had a
            fair market value of $533,508. The excess of purchase price over net
            assets acquired of $880,277 was recorded as goodwill on Infotopia's
            books.

            Originally, management estimated the life of the goodwill to be 5
            years. As of February 28, 2000, the estimate was changed to 15
            years. As of December 31, 2000, the Company had accumulated
            amortization of $273,233 and had expensed $44,014, $165,513 and
            $144,708 of amortization expense for the ten months ended December
            31, 2000, the eight months ended February 29, 2000, and the year
            ended June 30,1999, respectively. For the period ended December 31,
            2000, the Company impaired $513,043 of unamortized licenses.


                                     - 15 -
<PAGE>   36
                         INFOTOPIA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000



NOTE 7 -    ACCOUNTS PAYABLE AND ACCRUED EXPENSES

            Accounts payable and accrued expenses consist of the following:

<TABLE>
<S>                                                                 <C>
            Accounts payable                                        $1,253,202
            Accrued expenses                                           545,418
                                                                    ----------
                                                                    $1,798,620
                                                                    ==========
</TABLE>

            Accounts payable includes liabilities assumed when the Company was
            spun off from its former parent company.

NOTE 8 -    CONVERTIBLE DEBENTURE, SHORT-TERM

            On August 25, 2000, the Company issued a 270-day promissory note
            with non-detachable warrants, granting the note holder the right to
            convert the note into common stock, 300,000 shares at $.08 per share
            and 52,500 shares at $.50 per share. The non-detachable warrants
            expire 5 years from the date of the note. The note bears interest at
            10% per annum, payable quarterly. Principal is due in two
            installments of 50% each, at 180 days and 270 days from date of
            issuance, respectively. As of December 31, 2000, the warrants had
            not been exercised. As of December 31, 2000, a beneficial conversion
            feature of $50,000 had been amortized to interest expense. In
            addition, $1,763 of interest expense had been accrued.

NOTE 9 -    DEFERRED REVENUE


            Deferred revenue represents unfulfilled sales orders at December 31,
            2000 in the amount of $38,162.

NOTE 10 -   CONVERTIBLE DEBENTURES

            On December 28, 2000, the Company completed the sale of a $600,000
            secured convertible debenture. The debenture matures December 28,
            2003 and bears interest at 12% per annum. The agreement contains
            various restrictions and events of default.

            On January 19, 2001, the debenture holder sold the debenture to a
            third party who converted it to 12,000,000 shares of common stock of
            the Company, subject to "Rule 144". In exchange for early conversion
            rights, the Company agreed to accept $.145415 per share that
            provided additional funds of $1,144,980, in addition to the $600,000
            previously advanced under the terms of the debenture, bringing the
            total conversion price to $1,744,980.

            Amortization of a $600,000 beneficial conversion feature will be
            expensed January 1 through January 19, 2001, the date convertible.


                                     - 16 -
<PAGE>   37
                         INFOTOPIA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000



NOTE 10 -   CONVERTIBLE DEBENTURES (Continued)

            During the months of July, August and September, 2000, the Company
            issued various 270-day notes, totaling $1,825,500, with
            non-detachable warrants, granting the note holders of $1,767,500 the
            right to convert their notes into common stock, 10,605,000 shares at
            $.08 and 1,855,875 at $.50, and note holders of $58,000 notes the
            right to convert their notes into 145,000 shares of common stock at
            $.40 per share, resulting in a beneficial conversion feature
            (discount) of $1,728,689 which was amortized to interest expense
            from the issuance date to the earliest conversion date. As of
            December 31, 2000, these notes were converted to common stock.

NOTE 11 -   COMMITMENTS AND CONTINGENCIES

            Employment Agreements

            The Company has entered into employment agreements as follows:

            The Company has a three-year employment agreement with Daniel Hoyng,
            its Chief Executive Officer. The term runs through April 26, 2003
            and, unless notified by the Board of Directors or the Executive
            Committee of the Company, the agreement will automatically be
            renewed for one year, each year thereafter. In addition to a base
            salary, bonuses and other incentives, Mr. Hoyng will be granted
            1,000,000 shares of common stock annually on the anniversary date of
            the agreement. These shares carry an anti-dilution provision and are
            not subject to any reverse split. To give the executive the
            opportunity to attain an ownership position of not less than 5% of
            the outstanding stock of the Company, the executive will be granted
            no less than 3,000,000 options to purchase the Company's stock over
            3 years. The first such award will be no less than 1,000,000 shares
            with an award date of June 1, 2000. Additionally, once a year the
            executive may choose to convert one-third of his annual salary to
            stock, the purchase price being the lowest closing price of the
            Company's stock during the last twelve months (see Note 14).
            In addition, in accordance with the agreement, the executive
            received on September 13, 2000 a signing bonus of 1,500,000 shares
            of the Company's common stock.

            The Company has a three-year employment agreement with Ernest
            Zavoral, its President. The term runs through April 26, 2003 and,
            unless notified by the Board of Directors or the Executive Committee
            of the Company, the Agreement will automatically be renewed for one
            year, each year thereafter. The provisions of Mr. Zavarol's
            agreement, relating to stock and options, are substantially the same
            as those of Mr. Hoyng's agreement.


                                     - 17 -
<PAGE>   38
                         INFOTOPIA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

NOTE 11 -   COMMITMENTS AND CONTINGENCIES (Continued)

            The Company has a three-year employment agreement with Marek
            Lozowicki, its Executive Vice President. The term runs through April
            26, 2003 and, unless notified by the Board of Directors or the
            Executive Committee of the Company, the Agreement will automatically
            be renewed for one year, each year thereafter. The provisions of Mr.
            Lozowicki's agreement, relating to stock and options, are
            substantially the same as those of Mr. Hoyng's agreement.

            Compensation to the Board of Directors and Corporate Secretary

            According to board resolutions adopted on December 13, 2000, three
            current directors and the corporate secretary are entitled to
            receive options to purchase 500,000 shares of the Company's common
            stock each, per quarter, at the lowest trading price of the
            Company's common stock during the past twelve months. If the Company
            achieves $30,000,000 in total revenues during the twelve month
            period March 1, 2000 through February 28, 2001, the three board
            members and the secretary will be eligible for an additional stock
            option bonus of 500,000 shares each.

            The options are retroactive and prorated on a one-third basis each
            (167,000 shares) for the first quarter of the 2001 fiscal year
            (March, April, May) and in full amounts for the calendar quarters
            thereafter.

            Royalty and Management Agreements

            In July 2000, the Company entered into a license agreement with
            Torso Tiger for the exclusive worldwide rights to advertise,
            promote, market, sell, distribute and exploit Torso Tiger, an
            abdominal fitness product. Pursuant to the agreement, the Company
            engaged Torso Tiger Inc. as its exclusive management company to
            oversee all operations relating to the advertising, promotion,
            manufacturing, sale, marketing, distribution and exploitation of the
            product.

            In consideration of the license granted, the Company issued
            4,000,000 shares of its restricted common stock, equal to $600,000
            at the price of $.15 per share. In the event such shares are not
            valued at $600,000 at the time they become freely trading, the
            Company shall pay Torso Tiger or its designee the difference in cash
            or issue additional shares, warrants, or stock options to purchase
            Infotopia common stock to achieve an aggregate value of $600,000.

            In consideration of the services rendered by Torso Tiger, the
            Company (i) issued unrestricted free trading common stock with a
            value equal to $1,000,000, (ii) grants weekly royalties of 5% of
            "Gross Sales Revenues" of Torso Tiger (worldwide sales by any means
            other than retail), (iii) grants weekly royalties of 17% of the
            "Wholesale Selling Price" (from worldwide retail sales) of the
            product, (iv) shall pay additional contingent cash bonuses if
            certain levels of Gross Sales Revenues, Wholesale Selling Price are
            achieved and (v) shall pay additional contingent cash bonuses if
            certain Gross Television Sales Revenues are achieved. The agreement
            terminates on June 10, 2002 and can be extended for one or more
            periods.


                                     - 18 -
<PAGE>   39
                         INFOTOPIA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 11 -      COMMITMENTS AND CONTINGENCIES (Continued)

            Royalty and Management Agreements (continued)

            As of December 31, 2000, the Company discontinued the sale of the
            Torso Tiger and, therefore, established an impairment loss for the
            Torso Tiger license.

            In November 2000, the Company entered into a license agreement with
            Lohan Media, LLC ("LM") for the exclusive rights, until January 31,
            2004, unless terminated earlier, to jointly, with LM, advertise,
            promote, market, sell, distribute and exploit the product currently
            known as "Body by Jake, Bun & Thigh Rocker" and a related product
            known as "Body by Jake Body Shape Up System" in North America,
            excluding Canada and in any and all media. The rights to distribute
            the product in any other international markets are specifically
            excluded; however, the Company will receive a reverse royalty on
            products sold by LM internationally after February 20, 2001.

            In consideration for the license, the Company shall pay LM a weekly
            royalty of five percent of "Gross Sales Revenues" from sales and
            exploitation of the product other than retail sales. In addition,
            the Company shall pay LM additional weekly royalties for payment by
            LM to Body By Jake Enterprises, LLC and the producers of the
            Infomercial.

            In consideration of the services to be rendered by LM, the Company
            (i) issued unrestricted free trading common stock with a value
            equal to $1,000,000, (ii) shall make an additional cash payment of
            $1,000,000 on February 20, 2001, and (iii) shall issue 7,000,000
            shares of the Company's unrestricted free trading stock in February
            2001. After February 20, 2001, the company will pay additional cash
            bonuses equal to $250,000 for every $5,000,000 of gross sales
            revenue. In addition, Infotopia shall pay royalties of 2% of "Gross
            Sales Revenue", 10% of the "Adjusted Gross Retail Revenue" and 3% of
            the "Adjusted Gross Revenues to a management company.

            On November 16, 2000, the Company entered into an agreement with a
            management company for the joint development of certain infomercial
            projects, which are currently managed by the management company. The
            Company issued 800,000 restricted shares of its common stock as
            payment for management consulting fees relating to the production of
            the infomercial. Upon "roll-out" of any of the selected projects,
            Infotopia will pay $12,500 to the management company, cash payments
            equal to 10% of the gross revenue from continuing product sales and
            participation, as agreed, in other sources of revenue and/or
            economic advantage. The agreement shall terminate, unless extended
            in writing in the form of a marketing and distribution agreement for
            each of the selected projects. As of the date of this report, the
            Company has agreed to sign marketing and distribution agreements for
            all five products covered by this agreement.


                                     - 19 -
<PAGE>   40
                         INFOTOPIA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000



NOTE 12 -   RELATED PARTY TRANSACTIONS

            On October 8, 2000, the Company advanced funds to its former parent
            and received a two-year, $500,000 note bearing interest at 8%. The
            first interest payment is due on April 1, 2001; thereafter, interest
            is due quarterly. At the election of the Company, the note is due in
            cash or Parent stock. On August 21, 2000, the former parent company
            filed for protection under Title 11 of the United States Code. The
            funding of the principle of this note is subject to bankruptcy court
            approval. Because of the uncertainty of the collection on this note,
            the full amount of $500,000 has been written off to impairment
            expense.

            As of December 31, 2000, the Company had non-interest bearing
            receivables from and payables to officers and employees that
            amounted to $65,485 and $108,723, respectively.

            During the ten months ended December 31, 2000, the Company acquired
            certain assets from its former parent in exchange for assumption of
            an obligation. The Company paid $100,000 in settlement of this
            obligation.

            In April 2000, Abravanel purchased the stock of Flex Marketing, Inc.
            (Infotopia, Inc., Ohio) from its former Parent, in exchange for the
            rights to a patent for a back massage device. After the acquisition
            by Abravanel, which became Infotopia, Inc., the Company paid the
            patent owner $368,434 as settlement of a lawsuit the patent holder
            had against the former parent for commissions due from Flex
            Marketing, Inc.

NOTE 13  -  COMMON STOCK

            On April 25, 2000, Abravanel issued 8,167,387 shares of stock for
            all the stock - - 100 shares - - of Infotopia. Before the
            transaction, there were 3,203,130 shares of Abravanel outstanding.
            After the transaction the ownership of Abravanel was as follows:

<TABLE>
<CAPTION>
                                                 Shares       Percent
                                                 ------       -------
<S>                                             <C>           <C>
            Original shareholders
              (including public owners)          3,203,130        28
            Former owners of Infotopia           8,197,387        72
                                                ----------       ---
               Total                            11,400,517       100
                                                ==========       ===
</TABLE>


                                     - 20 -
<PAGE>   41
                         INFOTOPIA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 13  -  COMMON STOCK (Continued)

            Because the former owners of Infotopia obtained control of
            Abravanel, the transaction would normally be considered a purchase
            by Infotopia. However, since Abravanel is not a business, the
            transaction is accounted for as a recapitalization of Infotopia and
            the issuance of stock by Infotopia (represented by the outstanding
            shares of Abravanel) for the assets and liabilities of Abravanel.
            The value of the net assets of Abravanel is the same as their
            historical book value.

            Of the 172,236,005 shares of common stock issued as of December 31,
            2000, 17,271,878 shares are restricted pursuant to the Securities
            Act of 1933.

NOTE 14  -  EQUITY COMPENSATION AND STOCK OPTIONS

            On April 26, 2000, the Company issued 367,988 shares and on
            September 13 and 14, 2000, 3,950,000 shares of common stock as
            compensation to employees of Infotopia, Inc. for their involvement
            in the Company's activities. These shares have a vesting date of
            April 26, 2000 and are valued at $.001 per share (market at date of
            grant). As of December 31, 2000, employees holding 4,242,988 of such
            stock certificates remain employed by the Company and the total
            expense associated with these shares is included in the financial
            statements.

            Pursuant to his employment contract, on June 1, 2000, the Chief
            Executive Officer was granted options to purchase 1,000,000 shares
            of common stock with an exercise price of $.125 (the lowest market
            price of the prior twelve months); fair market value at date of
            grant was $.1566; therefore, a compensation cost aggregating $.0316
            per share has been recognized in the financial statements. On
            December 13, 2000, the CEO was granted options to convert one-third
            of his salary into 928,000 shares of common stock with an exercise
            price of $.0625 (the lowest market price of the prior twelve
            months); fair market value at date of grant was $.0781; therefore, a
            compensation cost aggregating $.0156 per share has been recognized
            in the financial statements. On December 15, 2000, the CEO was
            granted options to purchase 2,167,000 shares of common stock with an
            exercise price of $.0625 (the lowest market price of the prior
            twelve months) for services on the board of directors; fair market
            value at date of grant was $.0938; therefore, a compensation cost
            aggregating $.0313 per share has been recognized in the financial
            statements.

            Pursuant to his employment contract, on June 1, 2000, the President
            was granted options to purchase 800,000 shares of common stock with
            an exercise price of $.125 (the lowest market price of the prior
            twelve months); fair market value at date of grant was $.1566;
            therefore, a compensation cost aggregating $.0316 per share has been
            recognized in the financial statements. On December 13, 2000, the
            President was granted options to convert one-third of his salary
            into 880,000 shares of common stock


                                     - 21 -
<PAGE>   42
                         INFOTOPIA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 14  -  EQUITY COMPENSATION AND STOCK OPTIONS (Continued)

            with an exercise price of $.0625 (the lowest market price of the
            prior twelve months); fair market value at date of grant was $.0781;
            therefore, a compensation cost aggregating $.0156 per share has been
            recognized in the financial statements. On December 15, 2000, the
            CEO was granted options to purchase 2,167,000 shares of common stock
            with an exercise price of $.0625 (the lowest market price of the
            prior twelve months) for services on the board of directors; fair
            market value at date of grant was $.0938; therefore, a compensation
            cost aggregating $.0313 per share has been recognized in the
            financial statements.

            Pursuant to his employment contract, on June 1, 2000, the Secretary
            was granted options to purchase 600,000 shares of common stock with
            an exercise price of $.125 (the lowest market price of the prior
            twelve months); fair market value at date of grant was $.1566;
            therefore, a compensation cost aggregating $.0316 per share has been
            recognized in the financial statements. On December 13, 2000, the
            Secretary was granted options to convert one-third of his salary
            into 533,320 shares of common stock with an exercise price of $.0625
            (the lowest market price of the prior twelve months); fair market
            value at date of grant was $.0781; therefore, a compensation cost
            aggregating $.0156 per share has been recognized in the financial
            statements. On December 15, 2000, the Secretary was granted options
            to purchase 2,167,000 shares of common stock with an exercise price
            of $.0625 (the lowest market price of the prior twelve months) for
            his services as Company Secretary; fair market value at date of
            grant was $.0938; therefore, a compensation cost aggregating $.0313
            per share has been recognized in the financial statements.

            Pursuant to a board of Directors resolution, dated December 13,
            2000, a board member was granted options to purchase 2,500,000
            shares of the Company's common stock at $.0625 per share, the lowest
            closing price of the Company's common stock during the past twelve
            months. All options issued are exercisable within one year from date
            of issuance. As of December 31, 2000, none of the options had been
            exercised.

            Pursuant to an interim agreement between Infotopia and Modern Health
            Sciences, Inc. ("Modern Health"), dated October 30, 2000, Modern
            Health was granted options for management services to be rendered on
            December 15, 2000 to purchase 4,666,667 shares of the Company's
            Common Stock at an exercise price of $.06 per share. All options
            issued are exercisable within one year from date of issuance. As of
            December 31, 2000, none of the options had been exercised.


                                     - 22 -
<PAGE>   43
                         INFOTOPIA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 14  -  EQUITY COMPENSATION AND STOCK OPTIONS (Continued)

            In addition to the stock options granted to employees, the Company
            has granted 4,666,667 options with an exercise price of $.0625 to an
            outside consultant for the services performed related to management
            services for a new product line. These options were valued at
            $200,278, using the Black-Scholes option pricing model and have been
            included in consulting services.

            The following table summarizes the option activity during the ten
            months ended December 31, 2000:

<TABLE>
<CAPTION>
                                                                                 Weighted
                                                                                  Average
                                                                                  Exercise
                                                               Shares              Price
                                                              ----------          --------
<S>                                                           <C>            <C>
            Options outstanding at beginning of year                  --               --
            Options exercised                                         --               --
            Options granted                                   18,075,987          $0.0533
            Options forfeited/expired                                 --               --
                                                              ----------
            Options outstanding at end of year                18,075,987          $0.0533
                                                              ==========          =======

            Option price ranges at end of year                               $0.0625 to $0.125
            Weighted-average fair value of options
              Granted during the year                                             $0.0533
            Options exercisable at end of year                18,075,987
                                                              ==========
</TABLE>

            The following table summarizes options outstanding at December 31,
2000:

<TABLE>
<CAPTION>
                                                                                  Weighted
                                                          Weighted                 Average
                   Number                                  Average                Remaining
                 Outstanding      Exercise prices       Exercise prices        Contractual life
                 -----------      ---------------       ---------------        ----------------
<S>                               <C>                   <C>                     <C>
                  2,400,000          $0.1250               $0.1250                 5 months
                 15,675,987          $0.0625               $0.0625                31 months
</TABLE>

            The fair value of each option grant is estimated on the date of
            grant, using the Black-Scholes options-pricing model, with the
            following weighted-average assumptions used for grants during the
            ten months ended December 31, 2000:

<TABLE>
<S>                                                      <C>
            Risk-free interest rate                        4.88% to 5.96%
            Volatility rate                              128.57%
            Expected lives                                 5 to 31 months
</TABLE>


                                      - 23-
<PAGE>   44
                         INFOTOPIA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000



NOTE 14  -  EQUITY COMPENSATION AND STOCK OPTIONS (Continued)

            The Company uses the intrinsic value method (APB Opinion 25) to
            account for its stock options granted to officers, directors, and
            employees. Under this method, compensation expense is recorded over
            the vesting period based on the difference between the exercise
            price and quoted market price on the date the options are granted.

            Had the Company chosen the fair value method of accounting for
            transactions involving stock option issuance (SFAS No. 123), the
            Company would have recorded an additional $650,165 as presented by
            the pro forma statement below:

<TABLE>
<S>                                              <C>
              Net loss as reported               $  (26,735,233)
                                                 ==============
            Proforma
              Net loss                           $  (27,385,393)
                                                 ==============
              Loss per share
                Basic                            $        (0.25)
                                                 ==============
                Diluted                          $        (0.26)
                                                 ==============
</TABLE>

NOTE 15 -   INCOME TAXES

            The components of the provision for income taxes are as follows:


<TABLE>
<CAPTION>
                                              Ten Months               Eight Months                  Year
                                                Ended                     Ended                      Ended
                                             December 31,               February 29,                June 30,
                                                2000                        2000                      1999
                                          -----------------          -----------------         -----------------
<S>                                       <C>                        <C>                       <C>
            Current Tax Expense
                U.S. Federal              $              --          $              --         $              --
                State and Local                          --                         --                        --
                                          -----------------          -----------------         -----------------
            Total Current                                --                         --                        --
                                          -----------------          -----------------         -----------------

            Deferred Tax Expense
                U.S. Federal                             --                         --                        --
                State and Local                          --                         --                        --
                                          -----------------          -----------------         -----------------
            Total Deferred                $              --          $              --         $              --
                                          -----------------          -----------------         -----------------
</TABLE>

            The reconciliation of the effective income tax rate to the Federal
            statutory rate is as follows for the ten months ended December 31,
            2000:


                                     - 24 -
<PAGE>   45
                         INFOTOPIA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000



NOTE 15 -   INCOME TAXES (Continued)

<TABLE>
<CAPTION>
                                                 Ten Months      Eight Months      Year
                                                   Ended           Ended           Ended
                                                 December 31,    February 29,     June 30,
                                                    2000            2000            1999
                                                   ------          ------          ------
<S>                                              <C>             <C>             <C>
            Federal Income Tax Rate                 34.0%          34.0%            34.0%
            Effect of Valuation Allowance          (34.0)%        (34.0)%          (34.0)%
                                                   ------          ------          ------
            Effective Income Tax Rate                0.0 %          0.0 %            0.0 %
                                                   ======          ======          ======
</TABLE>

            At December 31, 2000, the Company had net carry-forward losses of
            approximately $37,000,000. Because of the current uncertainty of
            realizing the benefit of the tax carry-forwards, a valuation
            allowance equal to the tax benefit for deferred taxes has been
            established. The full realization of the tax benefit associated with
            the carry-forwards depends predominantly upon the Company's ability
            to generate taxable income during the carry-forward period.

            Deferred tax assets and liabilities reflect the net tax effect of
            temporary differences between the carrying amount of assets and
            liabilities for financial reporting purposes and amounts used for
            income tax purposes. Significant components of the Company's
            deferred tax assets and liabilities are as follows:

<TABLE>
<S>                                                              <C>
            Deferred Tax Assets
               Loss Carry-forwards                               $ 12,580,000
               Less:  Valuation Allowance                         (12,580,000)
                                                                 ------------
            Net Deferred Tax Assets                              $         --
                                                                 ============
</TABLE>

            Net operating loss carry-forwards expire starting in 2007 through
            2019. Per year availability is subject to change of ownership
            limitations under Internal Revenue Code Section 382.

NOTE 16 -   GOING CONCERN

            The accompanying financial statements have been prepared assuming
            the Company will continue as a going concern. As of December 31,
            2000, the Company has an accumulated deficit of $38,026,530 and a
            current loss of $26,735,233. Based upon the Company's plan of
            operation, the Company anticipates that existing resources, together
            with funds generated from operations, will generate sufficient funds
            to fund the Company's working capital.


                                     - 25 -
<PAGE>   46
                         INFOTOPIA, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000



NOTE 17 -   SUBSEQUENT EVENTS

            In January 2001, the Company entered into one-year employment
            contracts with five new employees with terms expiring between
            January 1 and January 10, 2002. In connection with these employment
            agreements, the employees have the option to convert one third on
            their salaries each year into the Company's common stock. The
            exercise price is the lowest closing price of the preceding twelve
            months.

            On February 1, 2001, the Company entered into a retainer agreement
            for financial public relations counsel and for a program of
            financial communication and investor relations. The twelve month
            agreement calls for a monthly retainer of $5,000, plus direct and
            indirect expenses and the issuance of immediately vesting options to
            purchase 3,000,000 shares of the Company's common stock, exercisable
            at the closing bid price on February 1, 2001. The options expire
            January 31, 2006, and will be adjusted for any future stock splits
            and stock dividends.

            Subsequent to December 31, 2000, amendments were made to the royalty
            and management agreements regarding Total Tiger ("Total Tiger") and
            Body by Jake Bun and Thigh Rocker ("Bun & Thigh") products. The
            amendments call for the reduction of royalty payments and
            non-contingent payments in exchange for certain fixed payments for
            the licenses and finder's fees, totaling $9,050,000 and $4,000,000,
            for the Total Tiger and Bun & Thigh licenses, respectively.


                                     - 26 -