SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                  ANNUAL REPORT


                                    Form 10-K

                                  ANNUAL REPORT
                     PURSUANT TO SECTION 13 or 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   For the Fiscal Year Ended December 31, 1999


                              FIRST ECOM.COM, INC.
               (Exact Name of Registrant as Specified in Charter)

           Nevada                     0-27753                    98-0206979
(State or Other Jurisdiction        (Commission                (IRS Employer
       of Incorporation)            File Number)             Identification No.)

902 Henley Building 5, Queen's Road Central, Hong Kong              SAR
(Address of Principal Executive Offices)                         (Zip Code)

Registrant's telephone number, including area code        (852) 2801-5181

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

     None

Securities registered pursuant to Section 12(g) of the Act:
     Common Stock, par value $0.001 per share

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not 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-K or any amendment to this
Form 10-K. [X]

Aggregate market value of the voting and non-voting common equity held by non-
affiliates of the registrant: $472,814,342

Number of shares of Common Stock outstanding: 18,185,167

Documents incorporated by reference: none


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ITEM 1. BUSINESS

     The Company was formed on September 16, 1998 to facilitate electronic
payment processing of e-commerce transactions for banks and their merchants
through the medium of the Internet. The Company has developed an electronic
gateway to convert consumers' credit card information collected by merchants on
the Internet into a format that can be processed by banks. The Company acts as a
payment system service provider between banks, on-line merchants and consumers.
The principal geographic area in which the Company provides its services is
throughout Asia. The Company charges merchants service fees for processing
transactions through this gateway on their behalf. The Company plans to charge
service fees to banks for providing them with the same service.

     The Company remains in development stage and, whilst it has begun to
generate revenues, it is still in the process of acquiring and developing its
software and hardware, training its personnel, performing research and
development activities, and developing its markets. The Company earned revenues
from operations in its first year through December 31, 1999 but they were
insignificant.

     The Company incurred operating losses of $6.79 million in the year ended
December 31, 1999 and on December 31, 1999 the Company's accumulated deficit was
$6.79 million. Whilst the Company expects its accumulated deficit to grow for
the foreseeable future, between November 15, 1999 and March 6, 2000 the Company
privately placed with non-U.S. persons further securities totaling 5,478,500 new
Units. 1,000,000 Units comprise one share and one warrant to purchase one share,
and 4,478,500 Units comprise one share and one warrant to purchase one-third of
a share. This private placing raised additional funds of $45,295,750, which the
Company regards as sufficient to support the Company's development requirements
through the year ended December 31, 2000. The Company's longer-term ability to
emerge from development stage is of course ultimately dependent upon the
successful start-up of operations, including implementing for customers the
Company's operating software and hardware as well as developing sufficient
markets.

Payment Processing Over The Internet

     The Internet consists of an inter-connected web of computers around the
world. It has grown from a web of 1.3 million computers at the end of 1992 to
over 70 million computers as of January, 2000. The Internet is now a key
economic resource, serving commerce worldwide. New commercial services and
products brought about as a result of this transformation will be more
attractive if payments can be processed in electronic form quickly, securely and
cheaply. The Internet has become a viable alternative to mail and telephone
order business. From a base of $2.7 billion in 1996, on-line purchases of goods
and services by consumers and businesses are expected to grow 150% through 1999
and 138% through 2000, and to reach $1.3 trillion by 2003.

     To purchase goods or services over the Internet, a customer generally
visits a merchant's website to view and select these goods or services.
Purchases are almost invariably paid for by credit card, and prior to furnishing
the goods or services a merchant would require the customer to

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submit his credit card detail and permit the merchant seek authorization to
charge the card for the purchase.

     To accept payment by credit card, a merchant establishes a bank account
with a financial institution and has his web site specifically configured to
accept payment by credit cards for goods or services ordered from him online.
Payment procedures then comprise three steps: authorization, settlement and
funds transfer:

     Authorization - when ordering goods or services, a customer is presented by
the merchant's website with a "pay" form containing, as a hidden field, a
digitally signed version of the purchase order. The consumer completes the form
by filling in his order and shipping details and also his credit card
information. When he confirms a purchase request, the customer's credit card
details are sent over the Internet to a payment gateway in the form of an
electronic mail message. The electronic mail message refers to the particular
transaction and is an authorization request for the customer's credit card to be
debited for the cost of the goods and services. Where a merchant's electronic
commerce offering relies on the Company's payment gateway, the electronic mail
message is encrypted and sent to that gateway. The Company's payment gateway
verifies that the electronic mail message concerns a transaction involving a
merchant whose website employs First Ecom payment processing. The payment
gateway then routes the authorization request over the Internet to a payment
switch. Payment switches are maintained by banks and other financial
institutions and their role is to identify the type of card used and then route
the information into the appropriate card network (e.g. VISA, MasterCard), where
it is forwarded to the bank which issued the consumer's credit card.

     The issuing bank either approves or declines the transaction. Where it
approves a transaction it blocks the relevant amount of funds in the consumer's
account. Its response is routed back through the appropriate card network to the
payment switch, over the Internet to the Company's payment gateway and finally
over the Internet to the merchant's website and the consumer simultaneously. The
entire process takes an average of 10 seconds, and so the consumer is advised
almost immediately whether or not his purchase is approved. The merchant will
from time to time review the status of transactions by using a Merchant
Accounting Reporting System (MARS), the Company's proprietary software. This
software runs on the Company's payment gateway and records the progress of
purchases made by consumers.

     Settlement - The merchant will from time to time review his MARS account
over the Internet to determine which purchases have been requested. In the case
of those which have been approved, the merchant must then ship the goods or
services. Once this has been done, the merchant is permitted to request
settlement of the transaction, and does so by reviewing his MARS account and
requesting settlement, usually on a batch by batch basis.

     Funds transfer - The settlement request from the merchant is routed over
the Internet to the payment switch, through the appropriate card network to the
bank which issued the consumer's credit card. The issuing bank then releases the
funds to the merchant's bank, completing the payment process.

The Company and the Bank of Bermuda

     The Company owns and operates its own payment gateway, which is located in
Bermuda. On May 6, 1999 the Company agreed with the Bank of Bermuda to


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connect this gateway to that bank's payment switch, which provides access to
VISA, MasterCard and American Express. The Bank engaged the Company as a "master
merchant" with authority to act on behalf of one or more individual merchants,
each of whom have separate agreements with the Company. This arrangement allows
the Company to connect individual merchants to the Bank of Bermuda without their
having to establish a presence in Bermuda as would otherwise be required. This
makes it easier for merchants to process their credit card transactions through
the Company's payment gateway and the Bank of Bermuda's payment switch, into the
credit card networks.

     The gateway began operation in late October 1999. As of March 1, 2000, 29
merchants had been authorized for connection to the Company's gateway and 7
merchants were transacting through that gateway. From September 1, 1999 to
December 31, 1999, 157 transactions representing an aggregate value of $5,251
were processed through the Company's gateway. From September 1, 1999 to March 1,
2000, 1,214 transactions representing an aggregate value of $45,509 were
processed. During the period September 1, 1999 to December 31, 1999, the average
transaction value was approximately $33. During the period September 1, 1999 to
March 1, 2000, the average transaction value was approximately $37. The Company
charges the merchants fees equal to a percentage of value of the transaction.
The percentage is greater for smaller transactions than for larger ones.

     In transactions undertaken by merchants through the Company's "master
merchant" arrangement with the Bank of Bermuda, the Company is a principal and
is therefore liable for any payment made by the bank to a merchant that uses the
Company's gateway in the event the bank is unable to collect the payment from a
cardholder because of a dispute. While the merchant would have a corresponding
liability to the Company, the Company may ultimately be unable to collect the
payment from the merchant. Whilst the Company has not yet formulated any
procedures designed to prevent liability for disputed transactions, the Company
has adopted procedures that are in its opinion adequate to mitigate liability
for disputed transactions. These procedures include evaluating the
creditworthiness of merchants initially and on an on-going basis and monitoring
the number of disputed transactions by any merchant. Furthermore, the Company is
now focusing its services on the needs of banks in Asia and during the second
quarter of 2000 it plans to refer to those banks all merchants currently
enjoying the "master merchant" relationship. This particular risk is therefore
considered by the Company to be of limited duration and materiality.

     On February 1, 2000 the Company and the Bank of Bermuda signed a binding
agreement to form First Ecommerce Data Services Limited, a joint-venture
operation to house the Company's payment gateway and that bank's credit card
switch business. The Bank of Bermuda agreed to provide card processing systems,
staff, data processing center and other supporting features, including formal
authorization and licenses with regard to the processing of credit card
transactions by holders of VISA and MasterCard credit cards. The Company agreed
to invest $3 million in cash for a 40% share of First Ecommerce Data Systems
Limited. This new company will provide to banks and their merchants a wide range
of credit card payment processing services, such as online and batch transaction
processing for Visa, MasterCard, credit and debit cards, comprising
authorization, electronic data transmission for settlement, and full transaction
reporting. Banks and merchants will be able to manage, retrieve and archive the
full range of data associated with the transactions processed on their behalf.
Subject to


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obtaining the relevant regulatory approvals, this transaction is expected to be
completed by March 31, 2000.

The Company's Technology

     The Company's payment gateway consists of two servers (each of which are
powerful personal computers) located on the premises of the Bank of Bermuda. If
one server fails, the other will process all the gateway's transactions until
the failed server has been restored to service. The Company maintains engineers
at all times to monitor the gateway and repair any server failure. The servers
are connected to the Internet through separate Internet service providers, one
in London and one in New York, to protect against Internet outages.

     Details of all transactions that are processed through the gateway are
collected and stored on the MARS database on the payment gateway. Merchants
access this information by web browser over the Internet using a personalized ID
and password to review the status of transactions, so as to determine which
require shipment of goods and which can be submitted for settlement.

     The Company's gateway, connected with the Bank of Bermuda's payment switch,
allows transactions to be processed in multiple currencies. Thus, for example, a
merchant whose web site is connected to the gateway can offer to sell its
products around the world over the Internet priced in Yen, Pounds Sterling and
U.S. Dollars.

     The Company provides software to the merchants that use its gateway to
assist them in connecting their web sites to it. This software encrypts the
transaction information sent over the Internet by the consumer to the gateway,
which in turn encrypts the information that it sends to the Bank of Bermuda's
switch. This encryption is 128-bit key length. The software can be provided to
the merchant direct or to the merchant's specialist web designer or web hoster.
A version of this software has been developed in conjunction with Microsoft
Corporation and is available to Microsoft customers by way of download over the
Internet as a "plug-in" to the Microsoft Site Server Commerce Edition suite of
programs.

     The Company is operating in an area of business where new concepts,
products and services are being featured on a regular basis. The Company
believes it is important to identify and secure registration of all available
intellectual property rights. The Company is in the course of registering
trademarks for the name "First Ecom" in those countries it believes will serve
as its principal markets or operational locations. The Company is also in
discussion with counsel as to the proprietary nature of the systems run on the
Company's payment gateway. No patent claims have been filed as of the date of
this annual report, however.

Asia Internet Limited

     The software used by the gateway was developed on behalf of the Company by
Asia Internet Limited, an independent contractor that is 30% owned by one of the
Company's directors (see "Item 13 - Certain Relationships and Related
Transactions") and which is in the course of being acquired by the Company.
Pursuant to the terms of a technology development agreement, the Company may
request from time to time that this contractor develop on behalf of the Company
additional software. Particulars of required functionality, stated
specifications and fees would be negotiated case by case. The development


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agreement is not exclusive and the Company may also elect to retain other
persons to develop software for it. The development agreement provides that all
intellectual property rights existing in any work performed for the Company
belong to the Company. On March 16, 2000 the Company signed an agreement with
the owners of Asia Internet to purchase the entire issued share capital of Asia
Internet for a consideration of $1.2 million in cash and 24,870 shares in the
Company. Subject to the completion of satisfactory due diligence procedures,
this transaction is expected to be completed by March 31, 2000.

Canadian Technical Support

     The Company plans to establish an office in Toronto, Ontario, in order to
build further technical expertise in North America and provide support to First
Ecommerce Data Services of Bermuda. This office will initially engage two staff
members and is expected to increase to over 20 during the course of the current
year.

The Company's Strategy for the Future

     The Company plans to increase utilization of its payment gateway services
through four strategic initiatives:

Turnkey solutions for merchants - the Company will increase the number of
alliances with businesses which specialize in Internet development and related
technologies, so as to enjoy greater referral of merchants requiring turnkey
solutions. The Company has already formed strategic alliances with Federal
Express, SUN Microsystems and Sybase, and has secured referral agreements with
over 40 web hosting businesses, storefront suppliers and systems integrators.
None of these agreements are exclusive and all may be terminated at short
notice.

Ease of connection for merchants - the Company aims to simplify the software
needed to connect a merchant with its gateway and make it easier to install and
use. Towards this end, the Company engaged Microsoft to develop software that
can be used in web sites to connect them to the Company's gateway. Microsoft
completed this project in November, 1999.

Innovative solutions for merchants - the processing of e-commerce transactions
can be tailored to specific industry-relevant solutions, e.g. Electronic Bill
Presentment & Payment (EBPP). On November 26,1999 the Company signed an
agreement with Peoples Telephone, a cellular telephone operator in Hong Kong, to
provide EBPP services. The Peoples Phone web site has been connected to the
Company's payment gateway so that customers can pay their phone bills by credit
card over the Internet. The Company is remunerated with a percentage of the
value of the credit card payments processed through the Company's gateway, plus
a fixed additional fee per transaction for credit cards other than VISA
International and MasterCard International.

Third Party Payment Processing for banks - the Company is seeking to provide its
gateway service to merchant banks besides the Bank of Bermuda. The Company has
recently signed memoranda of understanding with a number of banks in Hong Kong,
Taiwan and Korea. Whilst these memoranda of understanding are not binding
agreements, they provide a framework for the Company to work with the banks
concerned so that the Company and each bank may examine and assess the technical
and commercial demands and benefits of the banks outsourcing


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their Internet payment processing requirements to the Company. In the event that
binding agreements are reached with these banks, the Company will provide
e-commerce services to these banks' merchants.

     The Company has begun to develop its own payment switch product and plans
to have it certified by the appropriate credit card networks so it can be used
by many banks, enabling each to avoid having to maintain a switch of its own to
connect to credit card networks. This switch product would also be able to
process traditional (non-Internet) point-of-sale and ATM transactions. As with
gateways, switches will be installed in multiple locations if the demand
warrants. On March 16, 2000 the Company signed an agreement with Oasis
Technology of Toronto, Canada to purchase from Oasis licenses for its
Information Switching Technology (IST) and to have Oasis establish a dedicated
customization team in order to develop the switch product to suit the Company's
specific application requirements. The Oasis IST platform is a switching
technology that routes data between destinations and provides a single platform
for processing every type of e-payment transaction across private networks or
the Internet. IST operates across the widest range of open UNIX and Windows
NT-based systems and all payment processing systems can be integrated into the
platform, which then consolidates all payment processing systems on a single
infrastructure.

     The gateways and switches planned by the Company are expected to be
suitable for transactions in multiple currencies using credit cards, debit cards
and smart cards. Smart cards are cards that contain a microprocessor that can be
programmed for multiple functions.

     Finally, the Company has begun the development of software that a shipper
can use to record on his MARS account which goods have been shipped. By so
doing, the merchant will automatically be made aware of those accounts where
settlement may be requested. The Company and Federal Express have entered into a
memorandum, which is not a binding agreement, setting out possible objectives
that an agreement between them might have. This memorandum has been entered into
for the sole purpose of facilitating discussions between the parties, however,
and the parties may never actually reach an agreement.

     The Company believes that it has adequate funds to achieve these goals.

Sources of Revenue

     Through December 31, 1999 the Company received insignificant revenues from
the operation of its payment gateway. If the Company can realize its goals as
set forth above, revenue could potentially come from fees that banks and their
merchants would pay to connect to the Company's gateway. Fees would also
potentially be charged for each transaction processed through the gateway. These
fees could be fixed for each transaction or variable based upon the size of the
transactions. See Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.

Employees

     The Company has established its core base of developers and project
managers in Hong Kong and intends to hire additional project managers in-house.
The Company outsourced to Asia Internet the development of software to connect
its gateway to merchants' websites and the purchase of Asia Internet should
bring benefits and cost savings. The Company's network operations and


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e-commerce payment gateway and processing center located on the premises of Bank
of Bermuda is supported seven days a week, 24 hours a day by qualified network
and transaction processing personnel employed by Asia Internet Limited. The
establishment of the Company's Toronto office will enable that support role to
be undertaken from Toronto.

     The Company currently employs 43 full-time personnel and employee
relationships are good. None of the Company's employees is a member of a labor
union. During the second half of 1999 through early 2000 the Company has
steadily built up its management team by adding senior executives with a track
record in senior management, the information technology industry, e-commerce,
and transaction processing. Further recruitment is planned for 2000 and this
will include regional sales managers and sales executives, administrative
managers and support personnel. Each major new project will be headed by a
project manager, who will be supported by technical and administrative support
staff. The Company has signed an agreement to purchase its technology developer,
Asia Internet Limited and will absorb some 20 additional staff from that
business. Over the next twelve months the Company expects to hire 40 new
employees to help build the Company's technology and marketing efforts overseas.

Market

     The immediate market for the Company's services is facilitating electronic
payment processing of e-commerce transactions for banks and their merchants. To
date, two industry sectors have dominated e-commerce: computer hardware and
software sales, and supporting functions within the travel business. The
majority of remaining online commerce consists of the sale of miscellaneous
consumables, including books, music, videocassettes, apparel, gifts, flowers,
food and beverages. Several service sectors are now emerging to further fuel the
demand for e-commerce. These include on-line stockbroking, banking, insurance,
telecommunications, education, and technical and professional publications and
information.

     The number and nature of commercial websites changes daily, with portals
becoming increasingly sophisticated and easier to use. There were 414,000 such
sites at the beginning of 1998 and this figure has been projected to rise to 1.6
million by end 2002. These websites offer an increasing array of goods and
services, including computer hardware and software, travel arrangements,
entertainment, financial services, and education. In order to sell these goods
and services, banks and their e-merchant customers must be able to accept and
process transactions on widely-held credit cards such as MasterCard, Visa and
American Express, and in as many currencies as possible.

     Nearly 50% of households in the United States today have access to
e-commerce via the Internet. Although the penetration is lower in Asia, it is
growing rapidly. In Hong Kong, for example, only 20% of households have Internet
access, but this figure is increasing at an annual rate of 20%. Of total
e-commerce, however, 92% is currently generated through websites hosted in the
United States.

Sales and Marketing

     The Company plans to be the third party processor of electronic
transactions for many of the world's financial institutions and their merchants.


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     The Company is initially focusing its efforts in Hong Kong and other Asian
markets. The principal marketing office is located in Hong Kong. The Company is
in the course of establishing marketing offices in Taiwan and the Philippines
and a marketing and technical support office in Toronto, Canada. The Company
plans to establish marketing offices as follows: in Korea by the second quarter
of 2000; in Europe by the third quarter of 2000; and in Brazil, Japan and the
United States by 2001.

     The Company has already secured an agreement with Peoples Telephone of Hong
Kong whereby Peoples uses the Company's gateway together with the Bank of
Bermuda to offer its customers the option of paying their telephone bills
online. The Company will pursue similar relationships with airlines, telecom
service providers, utilities, established e-commerce retailers, and major
traditional retailers looking to build an e-commerce presence, particularly on a
global basis.

     The Company has begun the process of marketing to banks in Hong Kong,
Korea, Taiwan and the Philippines, many of whom are unable to process credit
card transactions and serve e-merchants. In this connection, the Company has
secured memoranda of understanding with banks in each of Hong Kong, Korea and
Taiwan and plans to extend this effort throughout the rest of Asia.

     Websites, portals and Internet service providers are also potentially
important sources of merchants. Internet Service Providers have begun offering
e-commerce services and hosting storefronts and e-malls. The Company has already
targeted a select number of websites, portals and Internet Service Providers
with particular regional or global profiles and has signed referral agreements
with over 40 parties. These agreements are non-exclusive and may be terminated
at short notice.

     E-commerce website designers are also in a key position to refer business
to the Company since they are responsible for designing and integrating payment
links. From March 3, 1999 until December 31, 1999, the Company retained US
Web/CKS Corporation, a large web-site design company to assist the Company in
marketing to merchants. Mr. Cody Cain, a director of the Company until February
24, 2000, was an employee of US Web/CKS Corporation until December 31, 1999 and
is now a full-time employee of the Company.

     Integral to all of these efforts is the hiring of experienced business
development and sales employees. The Company engaged sales consultants in Korea
and the Philippines in July 1999. In February 2000, the Company began to open
offices in the Philippines and Taiwan and is in the course of employing a small
marketing staff in each of these two locations.

Competition

     The most dominant participant in credit card processing is First Data
Corporation, which enjoys a near monopoly of the industry in North America.
Outside of North America, however, First Data is not dominant. In Asia, the
Company's principal market, competition will come from three sources:

     o    Large merchants having their own gateways;

     o    Merchant banks maintaining their own gateways;


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     o    Internet service providers and similar businesses that host merchant
          web sites maintaining their own gateways.

     Many of these competitors are substantially larger than the Company, have
longer operating histories and have much greater resources at their disposal.

     The Company believes that competition will be on the basis of price and
quality of service. Because the Company's gateway and planned switch are to be
shared by many merchants and banks, the Company believes that its prices will be
competitive on the grounds of economies of scale. It should be cheaper for each
bank and merchant to share the cost of the Company's gateway and (if developed)
switch rather than maintain its own. Since operating gateways and switches will
be the core business of the Company, it believes that it will have an advantage
over merchants and banks in maintaining the highest quality of service possible.
The Company's gateway already features the Merchant Accounting Reporting System
(MARS) program which collects and analyses information a merchant can use to
determine which transactions are ready for collection. The Company will endeavor
to develop services that enhance the value of its product, such as software that
connects a shipper to the Company's gateway in order to allow the shipper to
inform merchants when goods have been sent in response to a customer's order so
that the merchant can collect the amount owing. To the best of the Company's
knowledge, no other vendor presently offers access to a gateway combined with a
bank and switch as well as the software to assist a merchant in connecting to
it. Competitors of the Company, however, will have greater resources to allocate
to the development and maintenance of a gateway and switch should they choose to
do so.

     The Company's ability to offer, together with the Bank of Bermuda, the
processing of transactions in multiple currencies is regarded by the Company as
a competitive advantage. This feature should prove attractive to merchants
(including U.S. merchants) by allowing, for example, purchasers in Japan to
transact in Yen rather than United States dollars. At the moment, a US merchant
looking to offer e-commerce to foreign purchasers must establish a banking
relationship (and in many cases a local presence) in each foreign country, which
in turn forces the merchant to integrate its systems with many banks instead of
just one, and may in addition require payment of taxes in some jurisdictions
where it has established a presence. The Company's system, on the other hand,
will enable e-merchants to meet the requirement to transact in the currency of
the customer's choice. Further, as the processing of the transaction will take
place in Bermuda, this will not require the payment of taxes that would not
otherwise be payable.

The Company

     The Company was incorporated on February 12, 1999 in the state of Nevada in
the United States. On February 12, 1999, before issuing any shares of capital
stock, the Company consummated an agreement and plan of merger with JRL
Resources Corp., a Florida corporation, whereby JRL's 12,040,000 outstanding
shares of common stock were converted into 12,040,000 shares of the Company's
common stock on a one-for-one basis. JRL was incorporated in Florida on November
13, 1996 and was inactive from the time of its formation until its merger with
the Company. Before August 18, 1998, JRL was named Vantage Sales Corp. Shortly
before this merger, JRL had acquired all the outstanding capital stock of First
Ecommerce Asia Limited, now the Company's only direct subsidiary, which is
located in Hong Kong.



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First Ecommerce Asia Limited was incorporated in Hong Kong on September 16,
1998. Before December 10, 1998, it was named Gold Pacific Management Limited. On
January 28, 1999 all of First Ecommerce Asia Limited's outstanding shares of
common stock were exchanged for 985,000 of JRL's 1,025,000 then-outstanding
shares plus 3,015,000 newly issued shares, and it became a wholly owned
subsidiary of JRL. For accounting purposes, this transaction was treated as an
acquisition of JRL by First Ecommerce Asia Limited, and therefore the financial
information contained herein is only presented from September 16, 1998, the date
on which First Ecommerce Asia Limited was formed. JRL had no operations before
this date. When JRL was merged into the Company, First Ecommerce Asia Limited
became the subsidiary of the Company.

     The Company's headquarters are presently located at 8th Floor, Henley
Building, 5, Queen's Road Central, Hong Kong SAR.

Risk Factors

     The Company is in development stage and an investment in the Company's
common stock involves a high degree of risk. The Company's business and results
of operations could be seriously harmed and the trading price of the Company's
common stock could decline should any of these risks come to fruition.

     The Company's Limited Operating History May Prevent it From Achieving
Success

     The Company's date of inception was September 16, 1998. It has a limited
operating history, which may prevent it from achieving success. The Company's
revenue and income potential are unproven. It will encounter challenges and
difficulties frequently encountered by early-stage companies in new and rapidly
evolving markets.

Chief among these challenges and difficulties are:

     o    persuading banks to outsource their internet credit card processing;

     o    proving its payment processing technology

     o    finding and hiring personnel with an expertise in:

          -    computer software and hardware technology;

          -    banking;

          -    internet strategy for merchants; and

          -    credit card processing.

     It may fail to address any of these challenges and failure to do so would
seriously harm the Company's business and operating results. In addition,
because of the Company's limited operating history, it has limited insight into
trends that may emerge and affect the Company's business.



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     The Company has Incurred Losses and Expects Future Losses

     The Company has experienced operating losses in each period since inception
and expects these operating losses to continue in the foreseeable future. On
December 31, 1999, the Company had an accumulated deficit of $6.79 million. The
Company expects to increase its operating expenses significantly. As a result,
the Company will need to increase its revenues significantly to achieve
profitability. The Company's failure to increase its revenues significantly
would seriously harm the Company's business and operating results. In fact, the
Company may not have any revenue growth.

     Future Operating Results Will Likely Fluctuate

     The Company's quarterly operating results will likely vary significantly in
the future. As a result, period-to-period comparisons of the Company's operating
results will not be meaningful and should not be relied upon as indicators of
the Company's future performance. In the future, the Company's operating results
may be below the expectations of securities analysts and investors. The
Company's failure to meet these expectations would likely depress the market
price of the Company's common stock. To date, the Company has not had sufficient
operating results to gauge any period-to-period fluctuations. In the future, the
Company expects to receive revenues from one-time initiation fees when banks or
merchants connect to the Company's system and from ongoing fees that will be a
fixed amount per transaction and a variable amount based upon the size of the
transaction. The revenues received in any period will vary with the number and
size of transactions that are processed through the Company's system. The number
and size of transactions processed by each bank or merchant will be outside the
control of the Company. The Company may be able to add to its number of banks
and merchants by increasing its marketing efforts and thereby expand the overall
number of transactions and generate more transaction fees. However, its ability
to add banks and merchants will depend in part upon the speed with which they
wish to begin transacting business over the Internet, a factor over which the
Company has no control.

     The Company Expects Significant Increases in Operating Expenses

     The Company intends to increase operating expenses as it:

     o    Increases sales and marketing activities, including expanding the
          Company's sales force;

     o    Increases technical support and development; and

     o    Expands customer support.

     The amount of this increase will depend entirely upon the extent to which
the Company undertakes the above activities given its resources at the time.
With these additional expenses, the Company must significantly increase its
revenues in order to continue as a going concern and ultimately to become
profitable. These expenses will be incurred before the Company generates any
significant revenues by this increased spending. If the Company does not
significantly increase revenues from these efforts, the Company's business and
operating results would be seriously harmed.

     The Company Depends on the Growth of Its Customer Base

     The Company's success is substantially dependent on the growth of its
customer base of merchants and banks that use its gateway (and, if it



                                       11
<PAGE>


completes the development of one, its switch). If it fails to increase its
customer base, its business and operating prospects would be seriously harmed.
The Company's ability to attract customers will depend on a variety of factors,
including the price and quality of the Company's services as well as the
Company's ability to market its products and services effectively.

     The Company's Markets Are Highly Competitive

     The Company's markets are new, rapidly evolving and highly competitive, and
it expects this competition to persist and intensify in the future. The
Company's failure to maintain and enhance its competitive position could
seriously harm its business and operating prospects. It will encounter
competition from a number of sources.

     The Company's competitors have longer operating histories and significantly
greater financial, technical, marketing and other resources than the Company.
Many of these competitors have extensive customer bases and strong customer
relationships that they could leverage, including relationships with the
Company's current and potential customers. These competitors also have
significantly more established customer service organizations than the Company
does. In addition, these competitors may adopt aggressive pricing policies. Now
processing at the rate of 5 billion credit card transactions annually, First
Data Corporation of Atlanta, Georgia is regarded by the Company as dominating
credit card processing in North America.

     The Company Needs to Develop and Expand Its Sales and Marketing
Capabilities

     The Company needs to expand its marketing and sales operations in order to
increase market awareness of the Company's services and generate increased
revenues. Competition for qualified sales personnel is intense, however, and the
Company may not be able to hire enough qualified individuals in the future. The
Company plans to establish marketing offices in other Asian locations during
2000, and thereafter in Europe and North and South America by 2001. One office
will be opened in each region initially, and additional offices will be opened
if demand requires. The Company's services require sophisticated sales effort
targeted at senior management of the Company's prospective customers, which are
principally banks and large international conglomerates. The Company has only
been marketing its services since early 1999.

     The Company Must Manage Its Growth and Expansion

     The Company's historical growth has placed, and any future growth is likely
to continue to place, a significant strain on the Company's resources. Any
failure to manage growth effectively could seriously harm the Company's business
and operating results. To be successful, the Company will need to implement
management information systems, improve operating, administrative, financial and
accounting systems and controls, train new employees and maintain close
coordination among executive, technical, accounting, finance, marketing, sales
and operations organizations. In addition, the Company's growth has resulted,
and any future growth will result, in increased responsibilities for management
personnel.



                                       12
<PAGE>


     The Company Must Retain and Attract Key Personnel

     The Company's success depends largely on the skills, experiences and
performance of the members of its senior management and other key personnel. The
Company needs employees with knowledge of Internet and computer technology,
banking, Internet marketing strategy and credit card processing. The Company may
not be successful in attracting, assimilating or retaining qualified personnel.
In addition, the Company's future success will depend on the Company's ability
to continue attracting and retaining highly skilled personnel. Like other
companies in Hong Kong the Company faces intense competition for qualified
personnel.

     Reliance On Key Personnel

     The Company considers Gregory M. Pek and Ravi K. Daswani to be key
employees. The loss of either of them could seriously harm the Company's
business. The Company does not maintain key man life insurance for either of
these employees.

     The Company Will Be Liable For Certain Accounts Receivable That Banks Are
Unable to Collect From Credit Cardholders

     If a merchant that uses the Company's gateway in the Company's "Master
Merchant" arrangement and receives payment from a bank for a transaction that a
purchaser is not obligated to pay because of fraud, failure on the part of the
merchant to ship the purchased goods, sales return or other dispute, the Company
will be obligated to reimburse the bank for the amount of the payment and the
Company may be unable to collect the amount of the reimbursement from the
merchant.

     The Company Depends on Continued Use of the Internet and Growth of
E-commerce

     Rapid growth in the use of the Internet has occurred only recently. As a
result, its acceptance and use may not continue to develop at historical rates,
and a sufficiently broad base of consumers may not adopt, and continue to use,
the Internet and other online services as a medium of commerce. Demand and
market acceptance for recently introduced services and products over the
Internet are subject to a high level of uncertainty, and there exist few proven
services and products.

     The Internet may not be accepted as a long-term commercial marketplace for
a number of reasons, including potentially inadequate development of the
necessary network infrastructure or delayed development of enabling technologies
and performance improvements. The Company's success will depend, in large part,
upon third parties maintaining the Internet infrastructure to provide a reliable
network backbone with the necessary speed, data capacity, security and hardware
for reliable Internet access and services.

     Thin Public Market for The Company's Common Stock; Stock Price May
Fluctuate

     The Company's common stock is sometimes very thinly traded. Its trading
price may not be an accurate reflection of the Company's value. The market price
of the Company's common stock may fluctuate significantly in response to a
number of factors, some of which (such as interest rates, general economic
conditions and trading multiples of comparable companies) are beyond



                                       13
<PAGE>


the Company's control, and some of which (such as operating results and
announcements of new products) are within the Company's control.

     Future Sales of Shares Could Affect The Company's Stock Price

     If the Company's stockholders sell substantial amounts of the Company's
common stock in the public market, the market price of the Company's common
stock could fall. Of the Company's outstanding common stock, 53.4% is eligible
for sale in the public market immediately.

     Shareholders Will Receive No Dividends

     The Company has never paid dividends and has no current plans to do so.
Given the Company's financial position, it is unlikely that it will pay any
dividends in the foreseeable future. The Company plans instead to retain
earnings, if any, to fund internal growth.

     Special Note Regarding Forward-Looking Statements

     This document contains forward-looking statements. These statements relate
to future events or the Company's future financial performance. In some cases,
one can identify forward-looking statements by terminology. For example, "may",
"will", "should", "expect.., "plan", "anticipate", "believe", "estimate",
"predict", "potential" or "continue", or the negative of these terms or other
comparable terminology, indicate forward-looking statements. These statements
are only predictions. Actual events or results may differ materially. In
evaluating these statements, one should specifically consider various factors,
including the risks outlined in the Risk Factors section. These factors may
cause the Company's actual results to differ materially from any forward-looking
statement.

     Although it believes that the expectations reflected in the forward-looking
statements are reasonable, the Company cannot guarantee future results, levels
of activity, performance or achievements. Accordingly, neither the Company nor
any other person assumes responsibility for whether the forward-looking
statements ultimately prove accurate. The Company will not update any of the
forward-looking statements after the date of this annual report to conform them
to actual results or to changes in the Company's expectations that occur after
the date of this annual report.


ITEM 2. PROPERTIES.

     The Company does not own any real property. It leases 8,740 square feet of
office space at the address of its headquarters in Hong Kong for $41,890 per
month. This lease expires on March 21, 2001. Asia Internet leases 2,100 square
feet of office space in Kowloon, Hong Kong for $4,470 per month. The Company
also occupies office space for network operations and processing center
rent-free on the premises of the Bank of Bermuda in Bermuda. The Company has not
yet entered into agreements to lease property in respect of its new offices in
Canada, the Philippines and Taiwan but expect to do so in the near future. The
Company otherwise believes that its present facilities are adequate to meet its
current business requirements and that suitable facilities for expansion will be
available when necessary.




                                       14
<PAGE>


ITEM 3. LEGAL PROCEEDINGS.

     The Company is not a party to any legal proceedings which, in its opinion,
after consultation with legal counsel, could have a material adverse effect on
the Company. However, the Company is involved in ordinary routine litigation
incidental to its business.


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

     No matters were submitted to a vote of security holders during the fourth
quarter of fiscal year 1999.


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

     The Company's common stock has traded on the OTC Bulletin Board under the
symbol "FECC" since March 8, 1999, has traded on the Berlin over-the-counter
stock exchange since January 27, 2000 and has been listed on the Bermuda Stock
Exchange since December 23, 1999. In addition, the Company's Units (each of
which consists of one share of common stock and a warrant to purchase one third
of a share of common stock) have been listed on the Bermuda Stock Exchange since
December 23, 1999. The following table sets forth the high and low closing
prices for the common stock for the periods indicated.


1999                                        High                 Low
-----------------------------------   ----------------   -------------------

Fourth Quarter                             $10.31               $6.69
Third Quarter                               11.38                6.69
Second Quarter                              12.13                5.88
First Quarter                                7.25                2.25

     As of March 1, 2000 there were approximately 43 holders of record of the
common stock and 2 holders of the Units. On March 1, 2000, the closing sales
price of the Company's common stock was $30.44 per share.

     The Company has not paid any cash dividends on its Common Stock and does
not presently intend to do so. Future dividend policy will be determined by its
Board of Directors on the basis of its earnings, capital requirements, financial
condition and other factors deemed relevant.

     The transfer agent and registrar of the Company's Common stock is Nevada
Agency and Trust Company, 50 West Liberty, Suite 880, Reno, Nevada 895O1. The
transfer agent and registrar of the Company's Units is The Bank of Bermuda
Limited, 6 Front Street, Hamilton, Bermuda.

Recent Sales of Unregistered Securities

     JRL Resources Corp. issued 3,015,000 shares of its common stock to the
shareholders of First Ecommerce Asia Limited (Messrs. Pek and Daswani) on
January 28, 1999 in return for all the outstanding equity of that company. This
issuance was exempt from registration pursuant to Regulation S. On the same
date, JRL Resources Corp. issued 8,000,000 shares of its common stock in a
transaction exempt from registration under Regulation S to financial advisors
for services rendered in connection with organizational activities



                                       15
<PAGE>


at a deemed value of $308,000, which includes $8,000 of cash received. These
advisors, and the number of shares issued to each, were:

                                                            Shares
                                                            ------

              Beaconsfield Corporation
              Nassau, Bahamas                              450,000

              Claritas Trading Ltd.
              Turks & Caicos Islands, BWI                  480,000

              Crescent Group SA
              Nassau, Bahamas                              480,000

              Ermine Overseas Ltd.
              British Virgin Islands                       500,000

              Gastinough Incorporated
              Nassau, Bahamas                              500,000

              Georgina Industries limited
              British Virgin Islands                       450,000

              Hawk Management Ltd
              Turks & Caicos Islands                       450,000

              Hildesheim Kapital GmbH
              Alofi, Niue                                  450,000

              Inversiones Arturo S. A
              Republic of Panama                           450,000

              Richard N. Jeffs
              Vancouver, British Columbia                  300,000

              Kaleyard Corp.
              Nassau, Bahamas                              480,000

              James R. King, Jr
              Vancouver, British Columbia                  300,000

              Marble Hall Investments Ltd
              Douglas, Isle of Man                         480,000

              Minglow Management S.A
              Republic of Panama                           500,000

              Octavia Kapital GmbH
              Alofi, Niue                                  500,000

              Rockridge Estates Ltd.
              Nassau, Bahamas                              450,000

              Robert Smith
              North Vancouver, British Columbia            300,000

              Wherry Trading S. A
              Republic of Panama                           480,000


                                       16
<PAGE>


     The services they rendered were in the nature of financial and business
advice related to finding, evaluating, financing and negotiating the acquisition
of First Ecommerce Asia Limited. In connection with rendering these services,
they paid for their own out-of-pocket expenses, including attorneys' fees.

     On February 12, 1999 the Company (which had not previously issued any
capital stock) issued 12,040,000 shares of its common stock to the shareholders
of JRL Resources Corp. in connection with merging JRL into the Company. These
issuances were exempt from registration under Regulation S and Rule 504.

     The Company issued 500,000 shares of its common stock to Gera Unternehmen
GmbH, of Alofi, Niue outside the United States on March 3, 1999 at a price of
$4.00 per share. This issuance was exempt from registration pursuant to
Regulation S.

     The Company issued a 12% promissory note due November 10, 1999
(subsequently extended to January 12, 2000) in the principal amount of
$1,000,000 at par to Private Investment Company Ltd., Nassau, Bahamas on August
10, 1999. This note was convertible into shares of the Company's common stock at
the rate of $8 per share. The note was accompanied by five-year warrants to
purchase 100,000 shares of the Company's common stock for $8.50 per share. These
issuances were exempt from registration pursuant to Regulation S. Principal and
interest on that note were repaid in full on December 29, 1999. The five-year
warrants remain outstanding.

     On September 8, 1999, the Company issued 166,667 shares of its Common Stock
to Tradewinds Investments Ltd., Nassau, Bahamas outside the United States at a
price of $9 per share. The issuance was exempt from registration pursuant to
Regulation S.

     On November 26, 1999 the Company issued 1,000,000 units, each of which
consists of one share of common stock and a five-year warrant to purchase one
share of common stock for $7.80, to The Bank of Bermuda Limited, Hamilton,
Bermuda outside the United States for $6.50 per unit. This issuance was exempt
from registration pursuant to Regulation S.

     On December 21, 1999 the Company issued 1,250,000 units, each of which
consists of one share of common stock and a five-year warrant to purchase
one-third of a share of common stock for $7.80 per whole share, to clients of
Lines Overseas Management (Cayman) Limited, Hamilton, Bermuda outside the United
States for $6.50 per unit. This issuance was exempt from registration pursuant
to Regulation S.

     On March 6, 2000 the Company issued 3,228,500 units, each of which consists
of one share of common stock and a five-year warrant to purchase one third of a
share of common stock for $11.40 per whole share, to the investors named below
outside the United States for $9.50 per unit. This issuance was exempt from
registration pursuant to Regulation S:



                                       17
<PAGE>


                                                                Units
                                                                -----
Power Broadcasting Inc,                                       1,000,000
Canada
Lines Overseas Management,                                      616,500
Bermuda
Tung Tai Securities,                                            550,000
Hong Kong
Asia Icon Sdn Bhd,                                              210,000
Malaysia
Douglas Moore,                                                  200,000
Hong Kong
Vic Enterprises,                                                168,000
Singapore
Ultra Asia Phoenix Fund,                                        100,000
Isle of Man
Classic Fund                                                    100,000
Hong Kong
Sunder Khemlani,                                                 67,000
Hong Kong
Macondray & Co, Inc,                                             50,000
Singapore
Kelton International                                             50,000
England
Ashok Kirpalani,                                                 33,000
Hong Kong
Olivia Lee,                                                      30,000
Hong Kong
Desiderata Holdings,                                             27,000
Singapore
Bunga Raya Investments,                                          27,000
Singapore


ITEM 6. SELECTED FINANCIAL DATA

     The following selected financial data should be read in conjunction with
the Company's audited consolidated financial statements appearing elsewhere
herein.


                                       18
<PAGE>


<TABLE>
<CAPTION>
                                                                                   For the year ended      From September 16,
                                                                                   December 31, 1999       1998 (date of
                                                                                   and cumulative since    inception) to
                                                                                   inception               December 31, 1998
                                                                                   US$                     US$
<S>                                                                                 <C>                             <C>
Revenue
Set up fee and processing income                                                         2,634                      --

Operating expenses
General and administration expenses
Staff costs                                                                         (1,725,191)                     --
Stock compensation costs                                                              (646,532)                     --
Organizational costs                                                                  (300,000)                     --
Advertising and promotion                                                             (252,179)                     --
Legal,  professional and technology development fees                                (1,858,745)                     --
Traveling and entertainment                                                           (408,780)                     --
Depreciation                                                                          (250,382)                     --
Operating lease charges in respect of properties                                      (276,431)                     --
Other operating expenses                                                              (638,616)                     --
                                                                                   -----------             -----------
                                                                                    (6,354,222)                     --
Other income/(expenses)
Interest income                                                                         36,761                      --
Interest expense                                                                      (471,424)                     --
                                                                                   -----------             -----------
                                                                                      (434,663)                     --
                                                                                   -----------             -----------
Net loss for the year/period                                                        (6,788,885)                     --
                                                                                   ===========             ===========
Basic and diluted loss per share applicable to common stockholders                       (0.56)                     --
                                                                                   ===========             ===========
Weighted average shares used in computing per share amounts                         12,043,662                      --
                                                                                   ===========             ===========

<CAPTION>
                                                                                                           As at December 31
Balance Sheet Data:                                                                1999                    1998
                                                                                   US$                     US$
<S>                                                                                 <C>                             <C>
Current Assets                                                                      12,159,946                      --
Property and Equipment                                                               1,046,237                      --
Total Assets                                                                        13,206,183                      --
Deferred Rent                                                                           62,017                      --
Obligations under capital lease                                                          3,788                      --
(including current installments)
</TABLE>



                                       19
<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

General.

     The only material financial transactions have been capital raising, paying
the costs of forming the Company, funding the development of the Company's
payment gateway and associated reporting features, and commencing limited
marketing initiatives and operations. The Company is a corporation with a
limited operating history. Its date of inception was September 16, 1998. It is a
development stage company with minimal operating revenues to date. The Company
has begun to derive revenues from one-time initiation fees when merchants
connect to the Company's payment gateway and from ongoing transaction fees that
are variable with the size of the transaction being processed. These are as yet
insignificant but the Company expects transaction fee revenues to grow. The
Company also expects to derive revenues from one-time initiation fees when banks
connect to the Company's payment gateway and from ongoing transaction fees which
will be charged at a flat rate. However, the Company has insufficient operating
history on which to base an evaluation of its business and prospects. Any such
evaluation must be made in light of the risks frequently encountered by
companies in their early states of development, particularly for companies in
the rapidly evolving sector related to the Internet. See "Item 1. Business -
Risk Factors". There is no assurance that the Company will be successful in
addressing these risks and if it fails to do so its financial condition and
results of operations would be materially adversely affected.

     In instances where a bank is unable to collect from a cardholder because of
fraud, failure of the merchant to ship goods, sales returns or other disputes,
the merchant is liable for the uncollected amount. If the amount cannot be
collected from the merchant, however, then the Company, where that merchant is
engaged under the Company's "Master Merchant" arrangements with the Bank of
Bermuda, will have to reimburse the bank for the uncollected amount. The Company
has adopted procedures aimed at evaluating the credit of merchants initially and
on an ongoing basis and at monitoring each merchant's transactions for excessive
disputes.

     The Company's agreement with the Bank of Bermuda gives the bank the right
to retain a percentage (determined solely by the bank) of any day's remittances
as security for disputed items. It can hold this amount for up to 180 days, at
which time it must release it to the Company unless a dispute over it has
developed. Amounts so retained by the bank will not have to be paid to the
merchant until they are first received by the Company. Alternatively, the bank
at its sole option may require the Company to deposit with it an amount,
determined solely by the bank, that the bank will hold as security for disputed
items. The amount of the deposit must be evaluated by the bank at least every
180 days and, if necessary, increased or reduced to reflect more or less risk
from disputed items as a result of greater or lesser volume of transactions or
otherwise. Although its present arrangements with merchants do not presently so
provide, the Company plans to require that the merchant whose disputed
transactions cause the Bank of Bermuda to require the Company to put up a
security deposit reimburse the Company and agree to be repaid only when the bank
refunds the security deposit. The Company believes that this measure will
prevent the requirement that it post a security deposit from having any material
impact on its financial position or its liquidity. Moreover, as is explained in
"Item 1 -



                                       20
<PAGE>


Business", the Company plans to refer those merchants enjoying the "master
merchant" relationship to other banks once the Company has commenced providing
its services to them, and as a consequence expects this particular risk
eventually to be eliminated.

Results of Operations.

     Because the Company's date of inception was September 16, 1998, no period
to period comparison of operations is possible. Operating expenses incurred for
the ended December 31, 1999 were $6,354,222, and represent the cost of forming
the Company, building its infrastructure, hiring and paying employees, and
advertising and marketing. As of December 31, 1999, the Company had an
accumulated deficit of $6,788,885.

     The expenses (and two offsetting revenue sources) that make up the
accumulated deficit are:

Expense (Revenue)                                                       Amount
-----------------                                                       ------
                                                                           $
Set up fee & processing income                                           (2,634)
Interest Income                                                         (36,761)
Staff costs                                                           1,725,191
Stock compensation                                                      646,532
Organizational costs                                                    300,000
Advertising and promotion                                               252,179
Legal, professional and
  technology development fees                                         1,858,745
Traveling costs                                                         408,780
Interest                                                                471,424
Depreciation                                                            250,382
Recruitment costs                                                       151,131
System development costs                                                156,536
Operating lease charges
  in respect of properties                                              276,431
Others                                                                  330,949
                                                                     ----------
                                                                      6,788,885
                                                                     ==========

Liquidity and Capital Resources.

     On March 3, 1999, the Company issued 500,000 shares of Common Stock at
$4.00 per share to raise $2,000,000 in working capital.

     On August 10, 1999, the Company issued a promissory note in principal
amount of $1,000,000 at par to Private Investment Company Ltd. to raise working
capital. This note bore interest at the rate of 12% per annum, had an original
maturity date of November 10, 1999 (subsequently extended to January 12, 2000)
and was fully repaid on December 29, 1999. This Note was accompanied by
separable five-year warrants to purchase 100,000 shares of Common Stock at $8.50
per share, the last trade price on August 6, 1999.

     On September 8, 1999, the Company issued 166,667 shares of Common Stock at
$9 per share to raise $1,500,000 of working capital.



                                       21
<PAGE>


     On October 27, 1999 the Company borrowed $250,000 and on November 12, 1999
it borrowed $500,000 from Pacific Capital Markets, which is owned by Richard N.
Jeffs, James R. King, Jr. and Robert Smith, all shareholders of the Company.
These loans were evidenced by demand promissory notes and were due for repayment
on January 12, 2000. These loans were fully repaid as to principal and all but
$27,007 of interest on December 29, 1999. The balance of $27,007 of outstanding
interest was paid on January 10, 2000.

     In November, 1999 the Company retained Prudential Securities Inc. to
complete a private offering before March 31, 2000. The offering was to comprise
common stock and warrants to purchase common stock, all in the form of
restricted securities. An aggregate of $45,295,750 was raised during the period
of this engagement, which was completed on March 6, 2000.

     On November 26, 1999, the Company issued 1,000,000 units, each of which
consisted of one share of common stock and a warrant to purchase one share of
common stock for $7.80 at any time for five years, to the Bank of Bermuda
Limited to raise $6,500,000 of working capital. On December 23, 1999 the Company
issued 1,250,000 units, each of which consisted of one share of common stock and
a warrant to purchase one third of one share of common stock for $7.80 per whole
share at any time for five years, to Lines Overseas Management of Bermuda to
raise $8,125,000 of working capital. On March 6, 2000 the Company issued
3,228,500 units, each of which consisted of one share of common stock and a
warrant to purchase one third of one share of common stock for $11.40 per whole
share at any time for five years, to a number of non-U.S. persons to raise
$30,670,750 of working capital. These financings represent the sole sources of
the Company's working capital to date.

     In September 1999, the Company paid $1,500,000 to a consultant in full
satisfaction of an obligation under a Consulting Agreement dated for reference
March 5, 1999 pursuant to which the consultant will render services to the
Company through August 31, 2000.

     These services are:

     o introducing the Company to investment banks, institutional investors, and
high net worth individual investors and assisting in negotiating the terms of
debt, equity or convertible debt financing as required by the Company;

     o designing and implementing a public relations program for the Company to
broaden exposure to the Company's services, and introducing the Company to
potential customers and partners and helping to negotiate the terms of any
arrangement with them;

     o designing and implementing a program to broaden the Company's exposure to
financial industry analysts, financial institutions, brokerage firms, individual
brokers and the investing public;

     o developing an advertising strategy for the Company that may involve
electronic, print or broadcast advertising to promote the development and
marketing of the Company's products and services.

     The consultant is required to bear all costs (including out-of-pocket
expenses) incurred in connection with providing the above-described services.



                                       22
<PAGE>


     On March 15, 2000, the Company had $39,815,425 of cash, cash equivalents
and marketable securities available to fund operations. At the rate the Company
is currently using cash (approximately $550,000 per month), this amount would be
sufficient to enable the Company to maintain its current operations for
approximately 36 months and fund the development of those systems it plans to
introduce within the current year.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Exchange Risk

     The Company initially intends to market its services throughout the
Asia-Pacific region and ultimately into North America and Europe. As a result,
its financial results could be affected by factors such as changes in foreign
currency exchange rates or weak economic conditions in its existing and
potential markets. To-date, a substantial majority of the Company's revenue has
been made in Hong Kong dollars, its functional currency. The Company's interest
income is sensitive to changes in the general level of Hong Kong and U.S.
interest rates. However, due to the short-term nature of its investments, the
Company believes that there is no material risk exposure.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The consolidated financial statements and reports of the Company's
independent public accountants are filed as part of this report on pages F-1
through F-26.


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

     None


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The names, ages, and terms of office of directors and executive officers of
the Company who held office during the year ended December 31, 2000 and who have
been appointed subsequent to the year end are set forth below:

Name                            Position With Company

Gregory M. Pek(1)               Director, President, and Chief Executive Officer
Ravi K. Daswani(1)              Director & Chief Operating Officer
Ermanno Pascutto(1)             Director
Cody Cain(2)                    Director
Douglas Moore(1)                Director
Ian G. Robinson (1),(3)         Director
Raymond Chan                    Executive Vice President, Marketing
Anders Green                    Country Manager - Philippines
Chris Yau                       Country Manager - Taiwan
Mike Mahboobani                 Executive Vice President, Systems & Technology
John R. Brewer                  Secretary & Chief Financial Officer

(1)  Member of the Company's Board of Directors



                                       23
<PAGE>


(2)  Mr. Cain resigned as a Member of the Company's Board of Directors on
     February 24, 2000

(3)  Mr. Robinson was appointed as a Member of the Company's Board of Directors
     on February 24, 2000

     Gregory M. Pek, 44, has been a Director of the Company and the President
and Chief Executive Officer of the Company since March 3, 1999 and has been a
Director of First Ecommerce Asia Limited since its inception. He was from March
1994 to February 1999 an executive officer of David Resources Company Limited,
Kong Tai International Holdings Company Limited and from 1998 to February 1999 a
director of Singapore Hong Kong Properties Investment Limited. Before 1994, Mr.
Pek was a director and officer of a number of public companies in Canada.

     Ravi K. Daswani, 33, has been a Director of the Company and Chief Operating
Officer of the Company since March 3, 1999 and has been a Director of First
Ecommerce Asia Limited since its inception. He was from December 1997 to
February 1999 the managing director and co-owner of Asia Internet Limited, a
Hong Kong Internet service provider. For more than three years before December
1997, he resided in Panama where he was managing director of a wholesale and
retail apparel business.

     Ermanno Pascutto, 46, has been a Director of the Company since March 3,
1999. He is a Canadian and Hong Kong lawyer with extensive experience in
securities regulation and corporate governance. Mr. Pascutto has been for more
than five years a partner with Goodman Phillips & Vineberg working in the in
Toronto and Hong Kong offices of the firm. Before that Mr. Pascutto was deputy
chairman and executive director of the Hong Kong Securities and Futures
Commission where, among other things, he was involved in the regulation of
listed companies. Prior to his joining the Hong Kong SFC, he was executive
director and chief operating officer of the Ontario Securities Commission.

     Ian Robinson, 61, has been a Director of the Company since February 24,
2000. Mr. Robinson is a Chartered Accountant and a former senior partner of the
Hong Kong office of the international accountancy firm Ernst & Young. He is a
Member of the Hong Kong Housing Society and a member of its Audit Committee. He
also serves on the boards of several of Kerry Packer's Consolidated Press Group
companies.

     Douglas Moore, 42, has been a Director of the Company since October 27,
1999. Since 1994, Mr. Moore has worked for Credit Suisse in Hong Kong and is
currently the director of Credit Suisse Investment Advisory (Hong Kong) Limited,
a wholly owned subsidiary of Credit Suisse. Before joining Credit Suisse, Mr.
Moore practiced international tax law with the Hong Kong office of McMillan
Binch, a Canadian law firm. He is a Canadian and a Hong Kong lawyer.

     Cody Cain, 31, served as a Director of the Company from May 31, 1999 until
February 24, 2000. He was the Partner for the Asia Pacific Region of USWeb/CKS
Corporation, an Internet consulting company. Mr. Cain joined Gray Peak
Technologies, a computer network infrastructure consulting company where



                                       24
<PAGE>


he was the managing Director and founder of the Hong Kong office in January
1998. Gray Peak was acquired by USWeb/CKS in July 1998.

     Raymond Chan, 60, joined the Company on June 1, 1999. Before joining the
Company on that date, he spent 17 years at Visa International where he was
ultimately promoted to Executive Vice President and General Manager of Greater
China Region.

     Anders Green, 43, joined the Company in August 1999. Before that for more
than ten years he was the proprietor and chief executive officer of Sky
International Consultancy, a Hong Kong company that represented European
businesses seeking to do business in Asia.

     Chris Yau, 47, joined the Company on March 1, 2000. Mr. Yau has 15 years of
experience in network systems with companies such as NEC, MITAC and MasterCard,
where he worked for 7 years.

     Mike Mahboobani, 41, joined the Company on February 1, 2000. From March
1997 until January 2000, he was President and co-owner of Asia Internet Limited,
a Hong Kong Internet service provider. Before that, he spent over 10 years
managing manufacturing enterprises in Africa and Hong Kong.

     John R. Brewer, 43, joined the company in September 1999. Before that, he
was the corporate secretary of Astec (BSR) PLC in Hong Kong from June 1996 to
August 1999. He was the proprietor of East Asia Trust, a registered investment
advisor in Hong Kong, from May 1993 until May 1996.


ITEM 11. EXECUTIVE COMPENSATION.

     Directors are not paid any fees in connection with their so acting. They
are reimbursed for out-of-pocket expenses incurred in connection with attending
board meetings. Compensation was paid to Directors and Senior Management during
the year as follows:



                                       25
<PAGE>


<TABLE>
<CAPTION>
                                                                                       Long term compensation
                                                                                ---------------------------------------
                                                                   Other        Awards
                                        Annual compensation        annual       Restricted    Securities                  All Other
Name and                              ------------------------     compen-      stock         Underlying   Payouts        Compen-
Principal                             Salary             Bonus     sation       award(s)      options      LTIP Payouts   sation
Position          Year                ($)                ($)       ($)          ($)           (#)          ($)            ($)
-----------------------------------------------------------------------------------------------------------------------------------
<S>                <C>                <C>                <C>       <C>          <C>            <C>          <C>           <C>
Gregory Pek        Y/E Dec. 31, 99    167,742            --        --           --             --           --            --
CEO
Ravi Daswani       Y/E Dec. 31, 99    167,742            --        --           --             --           --            --
Chief Operating
Officer
Ermanno Pascutto   Y/E Dec. 31, 99     -                 --        --           --             --           --            --
Director
Douglas Moore      Y/E Dec. 31, 99     -                 --        --           --             --           --            --
Director
Cody Cain(1)       Y/E Dec. 31, 99     -                 --        --           --             --           --            --
Director
John Brewer        Y/E Dec. 31, 99    did not exceed     --        --           --             --           --            --
Secretary & CFO                       100,000
Raymond Chan       Y/E Dec. 31, 99    did not exceed     --        --           --             --           --            --
EVP, Marketing                        100,000
Anders Green       Y/E Dec. 31, 99    did not exceed     --        --           --             --           --            --
Country Manager                       100,000
Cheong Wan Lee(2)  Y/E Dec. 31, 99    did not exceed     --        --           --             --           --            --
Country Manager                       100,000
Christopher Fox(3) Y/E Dec. 31, 99    did not exceed     --        --           --             --           --            --
Chief Technology                      100,000
Officer
Paul Fok(4)        Y/E Dec. 31, 99    did not exceed     --        --           --             --           --            --
Projects Director                     100,000
</TABLE>

(1)  resigned as director on February 24, 2000

(2)  employment ceased on Jan. 31, 00

(3)  employment ceased on Jan. 12, 00

(4)  employment ceased on Feb. 3, 00


                                       26
<PAGE>



     Directors and executive officers were granted options to purchase the
Company's common stock during the year as follows:

Option grants in Fiscal year ended Dec. 31, 99

Individual grants

<TABLE>
<CAPTION>
                                   Percent of
                                   Total
                     Number of     options                                             Potential realizable value at assumed annual
                     securities    granted to   Exercise                               rates of Stock price appreciation for option
                     underlying    employees    of base                                term
                     options       in fiscal    price      Market     Expiration       Value at grant date
Name                 granted       year         ($/Sh)     price      Date             0%                 5%              10%
------------------------------------------------------------------------------------------------------------------------------------
<S>                  <C>           <C>          <C>        <C>        <C>              <C>                <C>             <C>
Gregory Pek, CEO     100,000       6.6%         7.65       9.06       22-Jun-04        141,000            391,311         694,122
Ravi Daswani         100,000       6.6%         7.65       9.06       22-Jun-04        141,000            391,311         694,122

Ermanno Pascutto     100,000       6.6%         7.65       9.06       22-Jun-04        141,000            391,311         694,122
Douglas Moore        100,000       6.6%         7.65       8.06        4-Nov-04         41,000            263,683         533,071
Cody Cain(1)         100,000       6.6%         7.65       9.06       22-Jun-04        141,000            391,311         694,122
John Brewer           30,000       2.0%         7.65       8.06        4-Nov-04         12,300             79,105         159,921
Raymond Chan         100,000       6.6%         7.65       9.06       22-Jun-04        141,000            391,311         694,122
                     100,000       6.6%         7.65       6.88       15-Sep-04             --            113,082         343,031
Cheong Wan Lee(2)    100,000       6.6%         7.65       8.06        4-Nov-04         41,000            263,683         533,071
Christopher Fox(3)   250,000      16.5%         7.65       9.06       22-Jun-04        352,500            978,278       1,735,305
Paul Fok(4)           20,000       1.3%         7.65       9.06       22-Jun-04         28,200             78,262         138,824
</TABLE>

Total effective options as at Dec. 31, 99   1,512,500

(1)  resigned as a director on February 24, 2000

(2)  employment ceased on Jan. 31, 00

(3)  employment ceased on Jan. 12, 00

(4)  employment ceased on Feb. 3, 00



                                       27
<PAGE>


     Mr. Pek, Mr. Daswani, Mr. Cain and Mr. Pascutto were granted options to
purchase the Company's common stock for $7.65 per share (85% of the fair market
value on June 22, 1999, the date of grant). On February 1, 2000, Mr. Pek and Mr.
Daswani were granted options to purchase the Company's common stock for $9.90
per share (100% of the fair market value on January 31, 2000). Mr. Moore was
granted options to purchase the Company's common stock for $7.65 per share (95%
of fair market value on November 4, 1999, the date of grant). Mr. Robinson was
granted options to purchase the Company's common stock for $9.90 per share (100%
of the fair market value on January 31, 2000, the date preceding the date of the
Board's decision but 32.8% of the fair market value on February 24, 2000, his
date of appointment, being the date the grant became effective) all as set forth
below:

                Name                 Number of Options
                -----------------    -----------------
                Gregory M. Pek            200,000
                Ravi K. Daswani           200,000
                Ermanno Pascutto          100,000
                Cody Cain*                100,000
                Douglas Moore             100,000
                Ian G. Robinson*           15,000

     *Mr. Cain resigned as director on February 24, 2000; Mr. Robinson was
appointed a director on February 24, 2000.

     No share options were exercised during the year; share options outstanding
in the hands of directors and senior management as at December 31, 1999 were as
follows:


                                       28
<PAGE>


<TABLE>
<CAPTION>
                                                          Number of securities underlying
                        Shares                            unexercised options at fiscal    Value of Unexercised In-The-Money options
                        acquired on                       year end                         at fiscal year end
                        exercise        Value realized    (#)                              ($)
Name                    (#)             ($)               Unexercisable                    Unexercisable
------------------------------------------------------------------------------------------------------------------------------------
<S>                     <C>             <C>               <C>                              <C>
Gregory Pek, CEO        --              --                100,000                          35,000
Ravi Daswani            --              --                100,000                          35,000
Ermanno Pascutto        --              --                100,000                          35,000
Douglas Moore           --              --                100,000                          35,000
Cody Cain(1)            --              --                100,000                          35,000
John Brewer             --              --                 30,000                          10,500
Raymond Chan            --              --                200,000                          70,000
Anders Green            --              --                     --                              --
Cheong Wan Lee(2)       --              --                100,000                          35,000
Christopher Fox(3)      --              --                250,000                          87,500
Paul Fok(4)             --              --                 20,000                           7,000
</TABLE>

Notes:

No options had been exercised as at fiscal year end

(1)  Mr. Cain resigned as a director on February 24, 2000

(2)  Mr. Lee's employment ceased on Jan. 31, 2000

(3)  Mr. Fox's employment ceased on Jan. 12, 2000

(4)  Mr. Fok's employment ceased on Feb. 3, 1999


                                       29
<PAGE>


     In addition to the options set forth above, as of February 1, 2000 senior
management as a group has been granted options to purchase the following shares:


     Number of Options        Exercise Price         Exercise Period
     725,000                  $9.90                  Feb 2, 2001 - Feb 1, 2010

     Other than Mr. Pek and Mr. Daswani, whose compensation is set out above,
the Company paid no Executive officer more than $100,000 in 1999. The law firm
of which Mr. Pascutto is a partner renders legal services to the Company from
time to time and charges the Company its usual rates plus out of pocket
disbursements for doing so. During the year ended December 31, 1999, the Company
paid that firm $315,056.

     Mr. Pek is the Chief Executive Officer of the Company. His employment
agreement, which became effective January 1, 1999, provided for a monthly salary
of 100,000 Hong Kong dollars, revised to 150,000 Hong Kong dollars on February
1, 2000, (one Hong Kong dollar equalled approximately 12.9 U.S. cents on
December 2, 1999) and a year-end bonus equal to one month's salary. The
agreement is for an indefinite term. Mr. Pek is required to devote his full time
efforts to being the Company's President and Chief Executive Officer. The
Company may terminate Mr. Pek without any payment for cause or disability or for
having reached mandatory retirement age or, by paying him one month's salary, at
its complete discretion. Mr. Pek may resign at any time upon one month's notice.
Following his employment, Mr. Pek has agreed not to compete with the Company for
periods ranging from six to 12 months depending upon the geographic region at
issue.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The following table sets forth the current beneficial ownership of the
Company's common stock by (i) each person known by the Company to beneficially
own five percent or more of the Company's outstanding common stock, (ii) the
Company's Chief Executive Officer and Directors and (iii) all of the Company's
Executive officers and Directors as a group. Except as otherwise indicated, all
shares of Common Stock are beneficially owned, and investment and voting power
is held, by the person named as owner.

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

Lines Overseas Management              2,488,667(1)               13.23%
Bank of Bermuda Limited                2,000,000(2)               10.42%
Gregory M. Pek                         1,850,000(3)               10.06%
Ravi K. Daswani                        1,850,000(3)               10.06%
Power Broadcasting Inc.                1,333,333(4)                7.20%
Ermanno Pascutto                         450,000(5)                2.40%
Cody Cain                                100,000(5)                0.55%
Douglas Moore                            366,667(6)                2.00%
Ian Robinson                              15,000(7)                0.08%
Executive Officers and
  Directors as a group                 5,271,667(8)               26.48%


                                       30
<PAGE>


(1)  Includes warrants to purchase 622,167 shares of common stock.

(2)  Includes warrants to purchase 1,000,000 shares of common stock.

(3)  Includes options to purchase 200,000 shares of common stock.

(4)  Includes warrants to purchase 333,333 shares of common stock.

(5)  Includes options to purchase 100,000 shares of common stock.

(6)  Includes options to purchase 100,000 shares and warrants to purchase 66,667
     shares of common stock.

(7)  Includes options to purchase 15,000 shares of common stock.

(8)  Includes options to purchase 1,725,000 shares of common stock.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     Messrs. Pek and Daswani formed First Ecommerce Asia Limited in 1998. Mr.
Pek contributed $1,507 to that company and Mr. Daswani contributed $1,507. In
return, each received one-half of the outstanding common stock of that company
(one share each). On January 28, 1999, JRL Resources Corp. acquired that company
for 3,015,000 newly-issued shares of the common stock of JRL and 985,000
already-outstanding shares of common stock of JRL (from JRL shareholders), of
which Messrs. Pek and Daswani each received half. These 4,000,000 shares
represent all but 40,000 of JRL's issued and outstanding shares after this
issuance. On February 12, 1999, JRL merged with and into the Company and in
connection with the merger the JRL common stock of each of Messrs. Pek and
Daswani was converted into 2,000,000 shares of the Company's common stock.

     Asia Internet Limited, of which Mr. Daswani is a director and shareholder,
received $465,442 from the Company for providing technical support, system
maintenance and other professional services for the Company during the year
ended December 31, 1999. On March 16, 2000 the Company signed an agreement with
the owners of Asia Internet to purchase the entire issued share capital of Asia
Internet for a consideration of $1.2 million in cash and 24,870 shares in the
Company. Subject to the completion of satisfactory due diligence procedures,
this purchase will become effective as of March 31, 2000.

     The Directors and management of the Company have been granted options to
purchase the Company's common stock. A law firm of which a director is a partner
has received legal fees. See Item 11 Executive Compensation.

     On July 21, 1999, the Company entered into an agreement with US Web/CKS
Corporation pursuant to which the Company was to pay $231,000 for technology
development services for one year. At the time of entering into that agreement
Mr. Cain was an employee of US Web/CKS Corporation. The agreement with US
Web/CKS terminated as of December 31, 1999, at which time Mr. Cain ceased to be
an employee of US Web/CKS. Mr. Cain became an employee of the Company on January
1, 2000 and resigned as a Director of the Company on February 24, 2000.



                                       31
<PAGE>


     The Company believes that the above transactions are on terms at least as
favorable to it as could have been obtained in an arm's length transaction.


ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, AND REPORTS ON FORM 8-K


INDEX TO FINANCIAL STATEMENTS

Title of Documents                                                    Page No.
==================                                                    ========

Independent Auditors' Report                                             F-1

Consolidated Balance Sheets
as of December 31, 1999 and 1998                                         F-2

Consolidated Statements of Operations for the Year Ended
December 31, 1999 and the Period Ended December 31, 1998                 F-4

Consolidated Statements of Stockholders' Equity
for the Year Ended December 31, 1999 and
the Period Ended December 31, 1998                                       F-5

Consolidated Statements of Cash Flows for the Year Ended
December 31, 1999 and the Period Ended December 31, 1998                 F-6

Notes to Consolidated Financial Statements                               F-8

(b)  EXHIBITS

3.1  Articles of Incorporation*

3.2  By-laws*

4.1  Specimen Stock Certificate*

10.1 Shareholder & Share Purchase Agreement with Bank of Bermuda

10.2 Stock Purchase Agreement with Asia Internet

11.1 Computation of Earnings (Loss) Per Share

21.1 List of Subsidiaries

27.1 Financial Data Schedule


*    Incorporated by reference to the Company's Registration Statement on Form
     10 filed October 21, 1999

Reports on Form 8-K

Form 8-K Filed on January 10, 2000 in Regard to Private Placement Made in
December, 1999

Form 8-K Filed on March 17, 2000 in Regard to Private Placement Completed on
March 6, 2000


                                       32
<PAGE>


FIRST ECOM.COM, INC. AND SUBSIDIARIES
(A GROUP OF COMPANIES IN
DEVELOPMENT STAGE)

CONSOLIDATED FINANCIAL STATEMENTS FOR THE
YEAR ENDED DECEMBER 31, 1999

CONSOLIDATED FINANCIAL STATEMENTS FOR THE
PERIOD FROM SEPTEMBER 16, 1998 (DATE OF INCEPTION) TO DECEMBER 31, 1998

TOGETHER WITH
INDEPENDENT AUDITORS' REPORT



                                       33
<PAGE>


                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.


                                                         FIRST ECOM.COM, INC.
                                                      -------------------------
                                                           (Registrant)


       Signature                         Title                         Date
       ---------                         -----                         ----

/S/  Gregory M. Pek         Director, President, and Chief        March 24, 2000
-----------------------     Executive Officer
Gregory M. Pek

/S/  Ravi K. Daswani        Director & Chief Operating Officer    March 24, 2000
-----------------------
Ravi K. Daswani

/S/  Ermanno Pascutto       Director                              March 24, 2000
-----------------------
Ermanno Pascutto

/S/  Douglas Moore          Director                              March 24, 2000
-----------------------
Douglas Moore

/S/  Ian G. Robinson        Director                              March 24, 2000
-----------------------
Ian G. Robinson



                                       34
<PAGE>


kpmg

Independent Auditors' Report to
The Board of Directors and Stockholders
First Ecom.com, Inc.


We have audited the accompanying consolidated balance sheets of First Ecom.com,
Inc. and subsidiaries (a group of companies in development stage) (together "the
Group") as of December 31, 1999 and 1998, and the related consolidated
statements of operations, stockholders' equity, and cash flows for the year
ended December 31, 1999, the period from September 16, 1998 (date of inception)
to December 31, 1998 and the period from September 16, 1998 (date of inception)
to December 31, 1999. These financial statements are the responsibility of the
Group's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards
in Hong Kong and the United States. 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 audit provides a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of First Ecom.com, Inc.
and subsidiaries (a group of companies in development stage) as of December 31,
1999 and 1998, and the results of their operations and their cash flows for the
year ended December 31, 1999, the period from September 16, 1998 (date of
inception) to December 31, 1998 and the period from September 16, 1998 (date of
inception) to December 31, 1999 in conformity with generally accepted accounting
principles in the United States of America.



KPMG (sgd.)
Hong Kong
February 28, 2000, except for note 10 which is as of March 20, 2000.



                                      F- 1
<PAGE>



First Ecom.com, Inc. and subsidiaries (a group of companies in development
stage) Consolidated balance sheets at December 31, 1999 and 1998 (Expressed in
United States Dollars)




                                        Note           1999             1998
                                                        US$              US$
Assets

Current assets

Cash and cash equivalents                            11,099,606          --
Amounts due from stockholders                            12,540          --
Prepaid financial advisory fees           4             672,022
Other receivables and prepaid expenses                  375,778          --
                                                   ------------     ------------
Total current assets                                 12,159,946          --

Property and equipment                    5           1,046,237          --
                                                   ------------     ------------
Total assets                                         13,206,183          --
                                                   ============     ============


See accompanying notes to consolidated financial statements.



                                      F- 2
<PAGE>


First Ecom.com, Inc. and subsidiaries (a group of companies in development
stage) Consolidated balance sheets at December 31, 1999 and 1998 (continued)
(Expressed in United States Dollars)

<TABLE>
<CAPTION>
                                                                Note                1999             1998
                                                                                     US$              US$
<S>                                                             <C>                  <C>                  <C>
Liabilities and stockholders' equity

Current liabilities

Short term loan                                                 8                    27,007               --
Current instalments of obligations
under capital lease                                             6                     1,624               --
Accounts payable                                                                    304,480               --
Accrued expenses                                                                    574,896               --
Amounts due to related companies                                                    273,673               --
Deferred income                                                                      18,075               --
                                                                                -----------      -----------
Total current liabilities                                                         1,199,755               --

Deferred rent                                                                        62,017               --
Obligations under capital lease,
excluding current instalments                                   6                     2,164               --
                                                                                -----------      -----------
Total liabilities                                                                 1,263,936               --

Stockholders' equity

Common stock, $0.001 par value
Authorised
200,000,000 and 2 shares at December
31, 1999 and 1998 respectively;
Issued and outstanding shares
As of December 31, 1999 - 14,956,667
shares; As of December 31, 1998 - 2
shares                                                                               14,957               --
Additional paid-in capital                                                       18,716,175               --
Deficit accumulated during the
development stage                                                                (6,788,885)              --
                                                                                -----------               --
Total stockholders' equity                                                       11,942,247               --
                                                                                -----------      -----------
Total liabilities and stockholders'
equity                                                                           13,206,183               --
                                                                                ===========      ===========
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F- 3
<PAGE>


First Ecom.com, Inc. and subsidiaries (a group of companies in development
stage) Consolidated statements of operations for the year ended December 31,
1999 and for the period from September 16, 1998 (date of inception) to December
31, 1998

(Expressed in United States Dollars)
<TABLE>
<CAPTION>
                                                        For the year ended      From September 16, 1998
                                                        December 31, 1999       (date of inception) to
                                                        and cumulative since    December 31, 1998
                                                  Note  inception               US$
                                                        US$
<S>                                                      <C>                             <C>
Revenue
Set up fee and processing income                              2,634                      --

Operating expenses
General and administration
expenses
Staff costs                                              (1,725,191)                     --
Stock compensation costs                                   (646,532)                     --
Organisational costs                                       (300,000)                     --
Advertising and promotion                                  (252,179)                     --
Legal and professional fees                              (1,858,745)                     --
Travelling and entertainment                               (408,780)                     --
Depreciation                                               (250,382)                     --
Operating lease charges in
respect of properties                                      (276,431)                     --
Others                                                     (638,616)                     --
                                                        -----------             -----------

                                                         (6,354,222)                     --
Other income/(expenses)
Interest income                                              36,761                      --
Interest expense                                           (471,424)                     --
                                                        -----------             -----------
                                                           (434,663)                     --
                                                        -----------             -----------

Net loss for the year/period                             (6,788,885)                     --
                                                        ===========             ===========
Basic and diluted loss per
share applicable to common
stockholders                                                  (0.56)                     --
                                                        ===========             ===========
Weighted average shares used in
computing per share amounts                              12,043,662                      --
                                                        ===========             ===========
</TABLE>


See accompanying notes to consolidated financial statements.


                                      F- 4
<PAGE>


First Ecom.com, Inc. and subsidiaries (a group of companies in development
stage) Consolidated statements of stockholders' equity for the year ended
December 31, 1999 and for the period from September 16, 1998 (date of inception)
to December 31, 1998 (Expressed in United States Dollars)

<TABLE>
<CAPTION>
                                                                                    Deficit
                                                                                    accumulated       Total
                                                                   Additional       during the        stock-
                                                  Common           paid-in          development       holders'
                                           Note   stock            capital          stage             equity
                                                  US$              US$              US$               US$
-----------------------------------------------------------------------------------------------------------------
<S>                                        <C>         <C>          <C>              <C>               <C>
Consolidated statement
of stockholders' equity
for the period from
September 16, 1998
(date of inception) to
December 31, 1998

Balance at September 16, 1998              1               --               --               --                --
                                                  -----------      -----------      -----------       -----------

Balance at December 31, 1998                               --               --               --                --
                                                  ===========      ===========      ===========       ===========
Consolidated statement
of stockholders' equity
for the year ended
December 31, 1999

Balance at December 31, 1998                               --               --               --                --

Impact of merger with
JRL Resources Corp.                        1            4,040           (4,940)              --              (900)

Issuance of 8,000,000 shares of
common stock for organisational            1            8,000          300,000               --           308,000
costs

Secondary common stock offering of
500,000 shares                             1              500        1,999,500               --         2,000,000

Third common stock offering of
166,667 shares                             1              167        1,499,833               --         1,500,000

Fourth common stock offering of
1,000,000 shares                           1            1,000        6,229,000               --         6,230,000

Fifth common stock offering of
1,250,000 shares                           1            1,250        7,636,250               --         7,637,500

Stock-based compensation                                   --          646,532               --           646,532

Issuance of debt securities with
detachable warrants                        8               --          410,000               --           410,000

Net loss for the year                                      --               --       (6,788,885)       (6,788,885)
                                                  -----------      -----------      -----------       -----------
Balance at December 31, 1999                           14,957       18,716,175       (6,788,885)       11,942,247
                                                  ===========      ===========      ===========       ===========
</TABLE>



See accompanying notes to consolidated financial statements.


                                      F- 5
<PAGE>


First Ecom.com, Inc. and subsidiaries (a group of companies in development
stage) Consolidated statements of cash flows for the year ended December 31,
1999 and for the period from September 16, 1998 (date of inception) to December
31, 1998 (Expressed in United States Dollars)

<TABLE>
<CAPTION>
                                                                                            From September 16, 1998
                                                                    For the year ended      (date of inception)
                                                                    December 31, 1999       to December 31, 1998
                                                                    US$                     US$
-------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>                             <C>
Net loss for the period                                              (6,788,885)                     --
Organisational costs in excess of cash paid                             300,000                      --
Stock compensation costs                                                646,532                      --
Depreciation of property and equipment                                  250,382                      --
Loss on disposal of equipment                                             3,804                      --
Payment of financial advisory fee                                    (1,500,000)                     --
Amortisation of financial advisory fee                                  827,978                      --
Increase in other receivables and prepaid expenses                     (375,778)                     --
Increase in amounts due from stockholders                               (12,540)                     --
Accretion of discount on loan                                           410,000                      --
Increase in accounts payable                                            235,340                      --
Increase in accrued expenses                                            136,146                      --
Increase in amounts due to related companies                            239,727                      --
Increase in deferred rent                                                62,017                      --
Increase in deferred income                                              18,075                      --
                                                                    -----------             -----------
Net cash used in operating activities                                (5,547,202)                     --
                                                                    -----------             -----------
Cash flows from investing activities

Payments for property and equipment                                  (1,199,172)                     --
Proceeds from disposal of equipment                                       5,806                      --
                                                                    -----------             -----------
Net cash used in investing activities                                (1,193,366)                     --
                                                                    -----------             -----------
Cash flows from financing activities

Proceeds from issuance of common stock                               17,814,250                      --
Proceeds from short term loan with detachable warrants                1,000,000                      --
Proceeds from short term loans                                          750,000                      --
Repayment of short term loans                                        (1,722,993)                     --
Principal payments under capital lease obligations                       (1,083)                     --
                                                                    -----------             -----------
Net cash provided by financing activities                            17,840,174                      --
                                                                    -----------             -----------
Net increase in cash and cash equivalents                            11,099,606                      --

Cash and cash equivalents at beginning of year/period                        --                      --
                                                                    -----------             -----------
Cash and cash equivalents at end of year/period                      11,099,606                      --
                                                                    ===========             ===========
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F- 6
<PAGE>


First Ecom.com, Inc. and subsidiaries (a group of companies in development
stage)Consolidated statements of cash flows for the year ended December 31, 1999
and for the period from September 16, 1998 (date of inception) to December 31,
1998 (continued) (Expressed in United States Dollars)

The Group paid $61,424 and $Nil for interest for the year ended December 31,
1999 and for the period from September 16, 1998 (date of inception) to December
31, 1998 respectively.

Major non-cash transactions

Year ended December 31, 1999:

Property and equipment amounting to $4,871 were acquired under a capital lease
during the year ended December 31, 1999.

Issuance of 8,000,000 shares to financial advisors for services rendered in
connection with organisational activities of the Group at a deemed value of
$300,000, in excess of $8,000 cash received.

During the year ended December 31, 1999, $646,532 in compensation expense was
recorded for options granted.





See accompanying notes to consolidated financial statements.


                                      F- 7
<PAGE>


First Ecom.com, Inc. and subsidiaries (a group of companies in development
stage) Notes to consolidated financial statements for the year ended December
31, 1999 and for the period from September 16, 1998 (date of inception) to
December 31, 1998 (Expressed in United States Dollars)

1    Background and principal activities

Formation

First Ecommerce Asia Limited ("FEAL") (prior to December 10, 1998 named Gold
Pacific Management Limited ) was incorporated in Hong Kong on September 16, 1998
with two shares of HK$1 per share issued and outstanding. On January 28, 1999
FEAL entered into an agreement and plan of merger with JRL Resources Corp.
(prior to August 18, 1998 named Vantage Sales Corp.), a company incorporated in
the State of Florida on November 13, 1996 with 1,025,000 common shares issued
and outstanding ("JRL Resources"), which had been inactive since its formation.
Pursuant to the terms of the agreement and plan of merger and related
agreements, 3,015,000 newly issued shares of JRL Resources and 985,000 shares
held by existing shareholders of JRL Resources were exchanged for the two shares
of FEAL, and FEAL became a wholly-owned subsidiary of JRL Resources.

Issuance of common shares for organisational costs

Also on January 28, 1999, JRL Resources issued 8,000,000 shares to financial
advisors for services rendered in connection with organisational activities at a
deemed value of $308,000, including $8,000 cash received.

Accounting for the formation and organisational costs

The merger between JRL Resources and FEAL was a merger of a private operating
company into a non-operating public shell corporation with nominal net assets
that resulted in the owners and management of the private company having
operating control of the combined company after the transaction. For accounting
purposes, the transaction has been treated as a reverse acquisition of JRL
Resources by FEAL with FEAL deemed to be the accounting acquirer. The
consolidated financial statements for periods prior to the merger reflect the
financial position and results of operations of FEAL since its formation. Since
JRL Resources had no significant operations prior to the reverse acquisition,
pro forma information giving effect to the acquisition is not presented.

The issuance of common shares to financial advisors for organisational costs
were recorded at the deemed fair value of the services provided of $300,000,
plus the nominal amount of cash received of $8,000, or $0.0385 per share.


                                      F- 8
<PAGE>


First com.com, Inc. and subsidiaries (a group of companies in development stage)
Notes to consolidated financial statements for the year ended December 31, 1999
and for the period from September 16, 1998 (date of inception) to December 31,
1998

(Expressed in United States Dollars)

1    Background and principal activities (continued)

JRL Resources merger with First Ecom.com, Inc.

Pursuant to an agreement and plan of merger dated February 12, 1999, JRL
Resources was merged with and into First Ecom.com, Inc. ("FECI"), a company
incorporated in the State of Nevada on February 12, 1999, with no shares issued
and outstanding. Pursuant to the agreement and plan of merger, all of the
12,040,000 outstanding common shares of JRL Resources were exchanged on a
one-for-one basis for newly issued shares of FECI, with FECI being the surviving
corporation.

For accounting purposes, this merger is treated as a re-incorporation of JRL
Resources as FECI.

Secondary common share offering

On March 3, 1999, FECI completed a secondary stock offering of 500,000 new
common shares at $4 per share pursuant to a Subscription Agreement dated March
3, 1999, and raised net proceeds totalling $2,000,000.

Third common share offering

On September 8, 1999, FECI completed a stock offering of 166,667 new common
shares at $9 per share pursuant to a Subscription Agreement dated September 8,
1999, and raised net proceeds totalling $1,500,000.

Fourth common share offering

On November 26, 1999, FECI completed a stock offering of 1,000,000 new common
shares at $6.5 per share pursuant to a Subscription Agreement dated November 15,
1999, and raised net proceeds totalling $6,230,000, net of share issue cost of
$270,000. Each of these shares is attached with a five-year warrant to purchase
one FECI new common share at $7.8 per share. The warrants are exercisable at any
time up to November 25, 2004.


                                      F- 9
<PAGE>


First Ecom.com, Inc. and subsidiaries (a group of companies in development
stage) Notes to consolidated financial statements for the year ended December
31, 1999 and for the period from September 16, 1998 (date of inception) to
December 31, 1998 (Expressed in United States Dollars)

1    Background and principal activities (continued)

Fifth common share offering

On December 23, 1999, FECI completed a stock offering of 1,250,000 new common
shares at $6.5 per share pursuant to a Subscription Agreement dated December 23,
1999, and raised proceeds totalling $7,637,500, net of share issue cost of
$487,500. Each of these shares is attached with a five-year warrant to purchase
one-third of a FECI new common share at $7.8 per whole share. The warrants are
exercisable at any time up to December 22, 2004.

Formation of FEC Ltd.

On March 31, 1999, FEC Ltd. ("FECL") was incorporated in Bermuda as a
wholly-owned subsidiary of FEAL (together with FECI and FEAL "the Group").

Nature of Business

The Group was established to facilitate electronic payment processing of
e-commerce transactions for merchants and banks across the Internet. The Group
has developed an electronic gateway to convert consumers' credit card
information collected by merchants on the Internet into a format that can be
processed by banks. The Group will act as an intermediary payment system service
provider between on-line merchants, consumers and banks. The principal
geographic area in which the Group initially intends to provide its services is
throughout Asia. The Group initially intends to charge its merchants and banks
service fees to process transactions through this gateway.

Where reimbursement for any transaction cannot be obtained in connection with
merchant transactions processed through the Group's gateway with The Bank of
Bermuda Limited, the Group expects to retain the risk of loss related to sales
returns, fraud losses, and chargebacks. The Group expects to perform evaluations
of its merchants and monitor the level and nature of transactions of the
merchants.

Since its inception the Group has been in the development stage. The Group is in
the process of acquiring and developing its software and hardware, training its
personnel, performing research and development activities, and developing its
markets. Through December 31, 1999, the Group had insignificant revenues from
operations. The Group's ability to emerge from development stage is ultimately
dependent upon the successful start-up of operations, including placing in
service the Group's operating software and hardware as well as developing
sufficient markets.


                                      F- 10
<PAGE>


First Ecom.com, Inc. and subsidiaries (a group of companies in development
stage) Notes to consolidated financial statements for the year ended December
31, 1999 and for the period from September 16, 1998 (date of inception) to
December 31, 1998 (Expressed in United States Dollars)

2    Summary of significant accounting policies

(a)  Principles of consolidation

The consolidated financial statements include the financial statements of FECI
and its subsidiaries. All companies in which the parent has a controlling
financial interest through direct or indirect ownership of a majority voting
interest are consolidated. All significant intercompany balances and
transactions have been eliminated on consolidation.

The financial statements prepared as of and for the period ended December 31,
1998 reflect the financial position and results of operations of FEAL since its
formation. The financial statements as of and for the year ended December 31,
1999 and for the period prior to the merger with JRL Resources reflect the
consolidated financial position and results of operations of FEAL. Subsequent to
the merger, the financial statements reflect the consolidated financial position
and results of operations of FECI (as successor to JRL Resources subsequent to
FECI's formation and JRL Resources prior to FECI's formation) and its subsidiary
FEAL.

(b)  Business combinations

Business combinations have been accounted for under the purchase method of
accounting. The results of operations of the acquired business from the date of
acquisition are included in the results of the Group. Net assets or liabilities
of the companies acquired are recorded at their fair value to the Group at the
date of acquisition.

(c)  Revenue and cost recognition

With respect to fees generated by transactions processed on behalf of merchants,
revenues are recognized when the transaction is processed. Other payments
received for service revenues are recognized on a straight-line basis, unless
evidence suggests that the revenue is earned or obligation is fulfilled in a
different pattern, over the contractual term of the arrangement, or the expected
period during which those specified services are performed, whichever is longer.

Costs directly related to a contract that would not have been incurred but for
that contract (incremental direct acquisition costs) are deferred and charged to
expense in proportion to the revenue recognised. All other costs, such as costs
of services performed under the contract, general and administrative expenses,
advertising expenses and costs associated with the negotiation of a contract
prior to it being consummated, are charged to expense as incurred. The Group
expects to accrue for expected uncollectible sales returns, fraud losses, credit
card chargebacks and classify the resulting expense as an addition to the
allowance for doubtful debts.



                                     F- 11
<PAGE>


First Ecom.com, Inc. and subsidiaries (a group of companies in development
stage) Notes to consolidated financial statements for the year ended December
31, 1999 and for the period from September 16, 1998 (date of inception) to
December 31, 1998 (Expressed in United States Dollars)

2    Summary of significant accounting policies (continued)

(d)  Cash and cash equivalents

Cash and cash equivalents consist of money market instruments with original
maturities of three months or less.

(e)  Property and equipment

Property and equipment are stated at cost, net of accumulated depreciation.

Depreciation is calculated using the straight line basis over the anticipated
useful lives of the assets as follows:

Leasehold improvements                               Over the term of the leases
Computer equipment and processing system             3 years
Furniture, fixtures and office equipment             5 years

(f)  Software development costs

In accordance with Statement of Position 98-1, internal and external costs
incurred to develop internal-use computer software are expensed during the
preliminary project stage and capitalised during the application development
stage and amortised over three years. During the year ended December 31, 1999
and the period from September 16, 1998 (date of inception) to December 31, 1998,
$94,590 and $Nil of internal-use computer software development costs were
expensed, respectively. As of December 31, 1999 and 1998, capitalised software
net of accumulated amortisation was $454,950 and $ Nil respectively.

(g)  Income taxes

Income taxes are accounted for under the asset and liability method. Deferred
tax assets and liabilities are recognised for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss and tax credit carry forwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognised in income in the period that includes the enactment date. A
valuation allowance is recognised to reduce the deferred tax assets if it is
more likely than not that all or some portion of the deferred tax assets will
not be realised.


                                      F- 12
<PAGE>


First Ecom.com, Inc. and subsidiaries (a group of companies in development
stage) Notes to consolidated financial statements for the year ended December
31, 1999 and for the period from September 16, 1998 (date of inception) to
December 31, 1998 (Expressed in United States Dollars)

2    Summary of significant accounting policies (continued)

(h)  Commitments and contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation,
fines and penalties, and other sources are recorded when it is probable that a
liability has been incurred and the amount of the assessment and/or remediation
can be reasonably estimated.

(i)  Use of estimates

Management of the Group has made a number of estimates and assumptions relating
to the reporting of assets and liabilities and the disclosure of contingent
assets and liabilities to prepare these financial statements in conformity with
generally accepted accounting principles. Actual results could differ from those
estimates.

(j)  Translation of foreign currencies

The functional currency of the Group is Hong Kong dollars. The reporting
currency of the Group is United States dollars. Balance sheet accounts of the
Group are translated into United States dollars at current exchange rates.
Income statement items are translated at the average rates during the year. Net
translation gains and losses are recorded directly to a separate component of
stockholders' equity. Foreign currency transaction gains and losses are included
in the determination of net loss.

(k)  Research and development and advertising

Research and development, and advertising costs are expensed as incurred.
Research and development costs amounted to $Nil in the year ended December 31,
1999 and the period from September 16, 1998 (date of inception) to December 31,
1998. Advertising costs amounted to $252,179 and $Nil respectively in the year
ended December 31, 1999 and the period from September 16, 1998 (date of
inception) to December 31, 1998.

(l)  Start-up and pre-operating costs

Start-up and pre-operating costs are expensed as incurred.


                                      F- 13
<PAGE>


First Ecom.com, Inc. and subsidiaries (a group of companies in development
stage) Notes to consolidated financial statements for the year ended December
31, 1999 and for the period from September 16, 1998 (date of inception) to
December 31, 1998 (Expressed in United States Dollars)

2    Summary of significant accounting policies (continued)

(m)  Long-lived assets

The Group accounts for long-lived assets in accordance with the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 121, Accounting for the
Impairment of Long-lived Assets and for Long-lived Assets to Be Disposed Of.
This statement requires that long-lived assets and certain identifiable
intangibles be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to 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 carrying amount or fair value less costs to
sell.

(n)  Stock-based compensation

The Group accounts for stock-based compensation arrangements in accordance with
the provisions of Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" ("APB No. 25") and complies with the disclosure
provisions of SFAS No. 123 "Accounting for Stock-Based Compensation". Under APB
No. 25 compensation expense is based on the difference, if any, between the fair
value of the Group's stock and the exercise price of the option. The unearned
compensation is being amortized in accordance with Financial Accounting
Standards Board Interpretation No. 28 on a straight-line basis over the vesting
period of the individual options.

The Group accounts for equity instruments issued to non-employees in accordance
with the provisions of SFAS No. 123 and Emerging Issues Task Force 96-18. All
transactions in which goods or services are the consideration received for the
issuance of equity instruments are accounted for based on the fair value of the
consideration received or the fair value of the equity instrument, whichever is
more reliably measurable.

(o)  Basic and diluted loss per share

SFAS No. 128, "Earnings Per Share" requires the presentation of basic net income
per share, and for companies with complex capital structures, diluted net income
per share.

As of December 31, 1999 and 1998, 1,512,500 and Nil, respectively, for employee
share options and 1,516,667 and Nil, respectively, for warrants were
outstanding. Since their exercise prices are greater than the average market
price during the year ended December 31, 1999, there were no potentially
diluting securities for those periods.


                                     F- 14
<PAGE>


First Ecom.com, Inc. and subsidiaries (a group of companies in development
stage) Notes to consolidated financial statements for the year ended December
31, 1999 and for the period from September 16, 1998 (date of inception) to
December 31, 1998 (Expressed in United States Dollars)

2    Summary of significant accounting policies (continued)

(p)  Debt issued with stock purchase warrants

Debt issued with detachable stock purchase warrants is accounted for in
accordance with the provisions of Accounting Principles Board Opinion No. 14,
"Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants"
("APB No. 14"). Under APB No. 14 the portion of the proceeds of debt securities
issued with detachable stock purchase warrants which is allocable to the
warrants is accounted for as additional paid-in capital. The allocation is based
on the relative fair values of the two securities at the time of issue. Any
resulting discount or premium on the debt securities is accounted for as such
and amortised over the term of the debt securities.

(q)  Recent accounting pronouncements

In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No.
133 "Accounting for Derivative Financial Instruments and Hedging Activities"
which requires companies to record derivative financial instruments on their
balance sheets as assets or liabilities, measured at fair value. Gains and
losses resulting from changes in the values of those derivatives would be
accounted for depending on the use of the derivative and whether it qualifies
for hedge accounting. The key criterion for hedge accounting is that the hedging
relationship must be highly effective in achieving offsetting changes in fair
value or cash flows. In June 1999 the FASB issued SFAS No. 137 "Accounting for
Derivative Instruments and Hedging Activities - Deferral of Effective Date of
FASB Statement No. 133" which amends SFAS 133 to be effective for all fiscal
years beginning after June 15, 2000. The Group has not determined the potential
impact of this statement on its financial condition or results of its
operations.


                                      F- 15
<PAGE>


First Ecom.com, Inc. and subsidiaries (a group of companies in development
stage)Notes to consolidated financial statements for the year ended December 31,
1999 and for the period from September 16, 1998 (date of inception) to December
31, 1998 (Expressed in United States Dollars)

3    Income taxes

As the Group is in its development stage and incurred losses since its
inception, no income tax expenses were recognised for the year ended December
31, 1999 and for the period from September 16, 1998 (date of inception) to
December 31, 1998. There were no taxes payable at December 31, 1999 and 1998.

During the year ended December 31, 1999, the Group operated predominantly in
Hong Kong and is therefore subject to Hong Kong Profits Tax. A reconciliation of
income taxes computed at the Hong Kong statutory tax rate of 16% to the income
tax expense is as follows:

<TABLE>
<CAPTION>
                                                                                     From September
                                                                                     16, 1998 (date of
                                                               For the year ended    inception) to
                                                               December 31, 1999     December 31, 1998
                                                               US$                   US$
------------------------------------------------------------------------------------------------------
<S>                                                            <C>                           <C>
Income tax benefits at statutory tax rate                       1,086,222                    --

Effect of rate differential on transactions
subject to rates of other tax jurisdictions                       291,300                    --

Non-deductible items primarily
stock-based compensation                                         (103,445)                   --

Non-taxable items primarily interest income                         1,942                    --

Non-recognition of deferred tax assets                         (1,276,019)                   --

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


                                      F- 16
<PAGE>


First Ecom.com, Inc. and subsidiaries (a group of companies in development
stage) Notes to consolidated financial statements for the year ended December
31, 1999 and for the period from September 16, 1998 (date of inception) to
December 31, 1998 (Expressed in United States Dollars)

3    Income taxes (continued)

The components of deferred taxes are as follows:

                                                     1999                1998
                                                     US$                 US$

Deferred tax assets:

Net operating loss carry forwards                 1,387,723                   --

Less valuation allowance                         (1,276,019)                  --
                                                 ----------           ----------

Net deferred tax assets                             111,704                   --
                                                 ----------           ----------
Deferred tax liabilities:

Property and equipment, principally due
to differences in depreciation                      111,704                   --
                                                 ----------           ----------

Net deferred tax assets/liabilities                      --                   --

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

Currently, net operating loss carryforwards at December 31, 1999 of $5,241,936
that relates to the Group's operations in Hong Kong can be carried forward
indefinitely.


                                      F- 17
<PAGE>


First Ecom.com, Inc. and subsidiaries (a group of companies in development
stage) Notes to consolidated financial statements for the year ended December
31, 1999 and for the period from September 16, 1998 (date of inception) to
December 31, 1998 (Expressed in United States Dollars)

4    Prepaid financial advisory fees

Pursuant to an agreement dated March 5, 1999, the Group paid a fee of $1,500,000
to a consultant for the following services:

introducing the Group to investment banks, institutional investors, finding
institutions and high net worth individual investors and assisting in
negotiation of the terms of debt, equity or convertible debt financing as
required by the Group;

designing and implementing a public relations program for the Group to broaden
exposure to the Group's services and introducing the Group to potential
customers and partners;

designing and implementing an investor relations program to broaden the Group's
exposure to the financial industry analysts, financial institutions, brokerage
firms, individual brokers and the investing public;

developing an advertising strategy for the Group that may involve electronic,
print or broadcast advertising to promote the development and marketing of the
Group's products and services.

These services are to be rendered to the Group over the period from March 5,
1999 to August 31, 2000 and the amount paid was deferred and is being amortised
over the life of the service agreement on a straight-line basis. For the year
ended December 31, 1999 the Group recognised approximately $828,000 in operating
expenses in respect of the consultant's fee and has approximately $672,000 in
prepaid expenses as of December 31, 1999 in respect of the consultant's fee.



                                      F- 18
<PAGE>


First Ecom.com, Inc. and subsidiaries (a group of companies in development
stage) Notes to consolidated financial statements for the year ended December
31, 1999 and for the period from September 16, 1998 (date of inception) to
December 31, 1998 (Expressed in United States Dollars)

5    Property and equipment

Details of the Group's property and equipment are as follows:

                                                          1999           1998
                                                          US$            US$

Leasehold improvements                                   318,227              --
Computer equipment and processing system                 835,752              --
Furniture, fixtures and office equipment                 141,819              --
                                                      ----------      ----------
                                                       1,295,798              --

Less accumulated depreciation                           (249,561)             --
                                                      ----------      ----------
                                                       1,046,237              --
                                                      ==========      ==========

Depreciation expense charged to results of operations was $250,382 for the year
ended December 31, 1999.

6    Leases

The Group leases office equipment under a capital lease. The lease includes a
bargain purchase option at the end of the lease term. At December 31, 1999 and
1998, the gross amount of property and equipment and related accumulated
depreciation held under the capital lease were as follows:

                                                         1999              1998
                                                         US$               US$
Office equipment                                        4,871                 --
Less accumulated depreciation                            (649)                --
                                                       ------             ------

                                                        4,222                 --
                                                       ======             ======

Depreciation of office equipment held under capital lease is included in
depreciation expense for the year ended December 31, 1999.


                                      F- 19
<PAGE>


First Ecom.com, Inc. and subsidiaries (a group of companies in development
stage) Notes to consolidated financial statements for the year ended December
31, 1999 and for the period from September 16, 1998 (date of inception) to
December 31, 1998 (Expressed in United States Dollars)

6    Leases (continued)

The Group also leases office premises under non-cancellable operating leases
that expiry over the next 15-month period. These leases do not contain renewal
options. Rental payments do not include any contingent rentals.

Rental expense for operating leases for the year ended December 31, 1999 and for
the period from September 16, 1998 (date of inception) to December 31, 1998 were
$276,431 and $Nil respectively.

Future minimum lease payments under non cancellable operating leases and future
minimum capital lease payments as of December 31, 1999 are:

<TABLE>
<CAPTION>
                                                         Capital lease      Operating lease
                                                         US$                US$
-------------------------------------------------------------------------------------------
<S>                                                        <C>               <C>
Years ending December 31,
2000                                                        1,965            502,690
2001                                                        1,965            101,262
2002                                                          655                 --
                                                         --------           --------

                                                            4,585            603,952
                                                                            ========
Less amount representing interest                            (797)
                                                         --------
Present value of net minimum lease payments
                                                            3,788
Less current instalments of obligations under capital
lease                                                      (1,624)
                                                         --------
Obligations under capital lease, excluding current
instalments                                                 2,164
                                                         ========
</TABLE>

There were no capital or operating leases as at December 31, 1998.



                                      F- 20
<PAGE>


First Ecom.com, Inc. and subsidiaries (a group of companies in development
stage) Notes to consolidated financial statements for the year ended December
31, 1999 and for the period from September 16, 1998 (date of inception) to
December 31, 1998 (Expressed in United States Dollars)

7    Stock options

Pursuant to a written consent of the directors on March 30, 1999, 3,000,000
shares of FECI's common stock have been reserved for issuance to employees of
the Group under an employee stock option plan.

On June 22, 1999, the board of directors approved the granting of share options
to certain employees of the Group. Under this stock option plan, the grantees
are allowed to purchase up to 1,137,500 shares of FECI's common stock at a price
of $7.65 per share. The fair value of the shares at the date of grant was $9.06
and related compensation expense will be recorded over the two-year vesting
period. 50% of these options are exercisable on and after June 22, 2000 and the
remaining 50% are exercisable on and after June 22, 2001. All of these options,
if remaining unexercised, will expire on June 22, 2004.

On September 15, 1999 the board of directors approved the granting of share
options to a further employee of the Group. Under this stock option plan, the
grantee is allowed to purchase up to 100,000 shares of FECI's common stock at a
price of $7.65 per share. The fair value of the shares at the date of grant was
$6.88. 50% of these options are exercisable on and after September 15, 2000 and
the remaining 50% are exercisable on and after September 15, 2001. All of these
options, if remaining unexercised, will expire on September 15, 2004.

On November 4, 1999 the board of directors approved the granting of share
options to a further group of employees of the Group. Under this stock option
plan, the grantees are allowed to purchase up to 335,000 shares of FECI's common
stock at a price of $7.65 per share. The fair value of the shares at the date of
grant was $8.06. 50% of these options are exercisable on and after November 4,
2000 and the remaining 50% are exercisable on and after November 4, 2001. All of
these options, if remaining unexercised, will expire on November 4, 2004.



                                     F- 21
<PAGE>


First Ecom.com, Inc. and subsidiaries (a group of companies in development
stage) Notes to consolidated financial statements for the year ended December
31, 1999 and for the period from September 16, 1998 (date of inception) to
December 31, 1998 (Expressed in United States Dollars)

7    Stock options (continued)

Had compensation costs been determined consistent with the fair value approach
enumerated in SFAS No. 123, the Group's net loss for the year ended December 31,
1999 and the period from September 16, 1998 (date of inception) to December 31,
1998 would have been increased as indicated below:

                                                               From September
                                                               16, 1999 (date of
                                       For the year ended      inception) to
                                       December 31, 1999       December 31, 1998
                                       US$                     US$
--------------------------------------------------------------------------------
Net loss             As reported       6,788,885               --
                     Proforma          8,113,944               --

Net loss per share   As reported       0.56                    --
                     Proforma          0.67                    --

The fair value of options granted on June 22, 1999 was estimated on the date of
grant using the Black-Scholes option-pricing model with the following
assumptions used: risk-free interest rate of 5.5%; expected life of 3 years;
51.45% expected volatility; and no dividends.

The fair value of options granted on September 15, 1999 was estimated on the
date of grant using the Black-Scholes option-pricing model with the following
assumptions used: risk-free interest rate of 5.5%; expected life of 3 years;
87.9% expected volatility; and no dividends.

The fair value of options granted on November 4, 1999 was estimated on the date
of grant using the Black-Scholes option-pricing model with the following
assumptions used: risk-free interest rate of 5.5%; expected life of 3 years;
91.2% expected volatility; and no dividends.


                                      F- 22
<PAGE>


First Ecom.com, Inc. and subsidiaries (a group of companies in development
stage) Notes to consolidated financial statements for the year ended December
31, 1999 and for the period from September 16, 1998 (date of inception) to
December 31, 1998 (Expressed in United States Dollars)

7    Stock options (continued)

A summary of the Group's stock option plan is presented below:

<TABLE>
<CAPTION>

                                                        For the year ended                      From September 16, 1999 (date
                                                        December 31, 1999                       of inception) to December 31, 1998
                                                        US$                    Weighted         US$
                                                        Number                 average          Number           Weighted
                                                        of                     exercise         of               average
                                                        options                price            options          exercise price
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>                   <C>                 <C>              <C>
Outstanding at beginning
of year/period                                                  --                --               --               --
Granted                                                  1,572,500             $7.65               --               --
Exercised                                                       --                --               --               --
Forfeited                                                  (60,000)            $7.65               --               --
                                                        ----------             -----            -----            -----
Outstanding at end of year/period                        1,512,500             $7.65               --               --
                                                        ==========             =====            =====            =====

Options exercisable at year/period end                          --                --               --               --
                                                        ==========             =====            =====            =====

Weighted-average fair value of options
granted during the year/period                                                 $3.97                                --
                                                                               =====                             =====
</TABLE>

At December 31, 1999 the weighted-average remaining contractual life of
outstanding options was 4.59 years.



                                      F- 23
<PAGE>


First Ecom.com, Inc. and subsidiaries (a group of companies in development
stage) Notes to consolidated financial statements for the year ended December
31, 1999 and for the period from September 16, 1998 (date of inception) to
December 31, 1998 (Expressed in United States Dollars)

8    Short term loans and warrants

On August 10, 1999 the Group entered into a loan agreement with a company (the
"Lender") for the advance of a $1,000,000 three month term loan to the Group.
Pursuant to the terms of the loan agreement the loan bears interest at 12% per
annum and is convertible into the common shares of the Group at $8 per share at
the Lender's option. The repayment date of the loan was subsequently extended to
January 10, 2000. On December 30, 1999, the loan was fully repaid.

The Lender was also granted at origination warrants to subscribe to 100,000
common shares of the Group at $8.50 per share, exercisable for 5 years
commencing on August 10, 1999. The intrinsic value of the conversion feature at
the date of issuance of the loan of $50,000 has been accounted for as additional
paid-in capital.

The portion of the loan proceeds issued with detachable warrants which is
allocable to the warrants of $360,000 has been accounted for as additional
paid-in capital. The allocation is based on the fair value of the loan of
$1,000,000 and the fair value of the warrants at the date of issue of $566,000.

The effective interest rate of the loan was calculated to be 280% per annum as a
result of the allocation of a portion of the proceeds to the separable warrants
and the conversion feature, the resultant discount of $410,000 created
therefrom, and the amortisation of the discount to the initial maturity date.

The fair value of warrants issued was estimated on the date of issue using the
Black-Scholes option-pricing model with the following assumptions used:
risk-free interest rate of 5.5%; expected life of 5 years; 76.7% expected
volatility; and no dividends.

On October 27, 1999 the Group entered into a loan agreement with a company
wholly owned by three shareholders of the Group for the advance of a $250,000
short term loan repayable by January 21, 2000. Pursuant to the terms of the loan
agreement the loan bears interest at 12% per annum. On December 30, 1999,
$222,993 was repaid and $27,007 remained outstanding.

On November 12, 1999 the Group entered into a loan agreement with the same
company wholly owned by three shareholders of the Group for the advance of a
$500,000 short term loan repayable on or before January 10, 2000. Pursuant to
the terms of the loan agreement the loan bears interest at 12% per annum. On
December 30, 1999, this loan was fully repaid.


                                      F- 24
<PAGE>


First Ecom.com, Inc. and subsidiaries (a group of companies in development
stage) Notes to consolidated financial statements for the year ended December
31, 1999 and for the period from September 16, 1998 (date of inception) to
December 31, 1998 (Expressed in United States Dollars)

9    Related party transactions for the year ended December 31, 1999

Asia Internet Limited ("AIL") is considered a related party to the Group by
virtue of a 30% shareholder of AIL being a director and stockholder of the
Group. AIL provided technical support, system maintenance and other professional
services to the Group and purchased computer and office equipment on behalf of
the Group. During the year ended December 31, 1999, the Group paid $465,442 to
AIL for the above services. The amounts charged by AIL to the Group for
technical support, system maintenance and other professional services and
purchase of computer and office equipment on the Group's behalf were $401,054
and $148,526 respectively. As at December 31, 1999, the Group owed AIL $84,138
(as at December 31, 1998: $Nil).

(b) Issuance of 8,000,000 shares to financial advisors for services rendered in
connection with organisational activities of the Group at a deemed value of
$300,000, in excess of $8,000 cash received.

(c) A director and shareholder of the Group is a partner in a firm of solicitors
to which the Group has paid legal fees in the ordinary course of its business.
The amount advanced by the Group to the firm during the year ended December 31,
1999 was $315,056 and the amount charged by the firm was $395,364. As at
December 31, 1999, the Group owed the firm $80,308 (as at December 31, 1998:
$Nil).

(d) During the year, a director of the Group was a partner in a professional
firm to which the Group has paid consultancy fees in the ordinary course of its
business. The amount charged by the firm to the Group during the year ended
December 31, 1999 was $234,319. As at December 31, 1999, the Group owed the firm
$109,227 (as at December 31, 1998: $Nil).


                                      F- 25
<PAGE>


First Ecom.com, Inc. and subsidiaries (a group of companies in development
stage) Notes to consolidated financial statements for the year ended December
31, 1999 and for the period from September 16, 1998 (date of inception) to
December 31, 1998 (Expressed in United States Dollars)

10   Subsequent events

On February 1, 2000 the Company and the Bank of Bermuda ("BOB") signed a
shareholder and share purchase agreement concerning the formation of First
Ecommerce Data Services Limited ("FEDS"), a joint venture operation to house the
Company's payment gateway and BOB's credit card switch business. The Company
agreed to purchase a 40% interest in FEDS for a cash consideration of $3,000,000
and the grant to BOB for FEDS employees of options to purchase 500,000 FECI
shares for $11.01 per share. This transaction is expected to be completed by the
end of March 2000 and will be accounted for under purchase accounting.

On February 1, 2000 the Company granted to certain employees a total of
1,177,000 share options over the Company's common stock, each at an exercise
price of $9.90, being the closing market price on January 31, 2000. Half of
these options may be exercised from February 1, 2001 and the balance from
February 1, 2002.

On March 6, 2000 the Company issued a total of 3,228,500 units, each comprising
one share of common stock and one five-year warrant to purchase one third of one
share of common stock for $11.40 per whole share. These units were issued at a
price of $9.50 each.

On March 16, 2000 the Company and the owners of Asia Internet Limited ("AIL")
signed an agreement whereby the Company agreed to purchase the entire issued
share capital of AIL for a consideration of $1,200,000 in cash and 24,870 shares
of the Company's common stock. This transaction is expected to be completed by
the end of March 2000 and will be accounted for under purchase accounting.


                                     F- 26