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

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-KSB

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

        For the year ended June 30, 2000

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

        For the transition period from  ________________ to _________________

Commission file number 0-27587

                                CDKnet.com, Inc.
================================================================================
                 (Name of small business issuer in its charter)

         Delaware                                              22-3586087
---------------------------------                           -------------------
(State or other jurisdiction                                 (I.R.S. Employer
of incorporation or organization)                           Identification No.)

250 West 57th Street, Suite 1101
New York, New York                                                 10019
----------------------------------------                         ----------
(Address of principal executive offices)                         (Zip Code)

Issuer's telephone number:  (212) 547-6050

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

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

                         Common Stock, $.0001 par value
================================================================================
                                (Title of Class)

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

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

Issuer's revenues for its most recent fiscal year.  $345,000.
                                                     -------
The aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the average high and low price of such
common equity, as of September 27, 2000 is $15,612,000.
                                            ----------
<PAGE>



As of October 11, 2000, 21,348,178 shares of common stock, $.0001 par value,
were outstanding.

Portions of the Definitive Proxy Statement to be delivered to shareholders in
connection with the Annual Meeting of Shareholders to be held on December 20,
2000 are incorporated by reference into Part III.

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
















                                       -2-
<PAGE>
                                CDKNET.COM, INC.

                          ANNUAL REPORT ON FORM 10-KSB

                                TABLE OF CONTENTS


                                                                          Page
                                                                          ----
                                     Part I
                                     ------

Item 1      Description of Business.....................................    4

Item 2      Description of Property.....................................   23

Item 3      Legal Proceedings...........................................   24




                                     Part II
                                     -------

Item 5      Market for Common Equity and Related Stockholder Matters....   24

Item 6      Management's Discussion and Analysis of Financial Condition
            and Results of Operations ..................................   26

Item 7      Financial Statements........................................   30

Item 8      Changes in and Disagreements with Accountants on
            Accounting and Financial Disclosure.........................   31



                                    Part III
                                    --------

Item 9      Directors, Executive Officers, Promoters and Control
            Persons; Compliance with Section 16(a) of the Exchange Act..   31

Item 10     Executive Compensation......................................   31

Item 11     Security Ownership of Certain Beneficial Owners and
            Management..................................................   31

Item 12     Certain Relationships and Related Transactions..............   31

Item 13     Exhibits and Reports on Form 8-K............................   31








                                       -3-
<PAGE>
                                     PART I
                                     ------

                          FORWARD-LOOKING INFORMATION

All statements in this Form 10-KSB that are not historical are forward-looking
statements within the meaning of Section 21e of the Securities Exchange Act,
including statements regarding our "expectations," "beliefs," "hopes,"
"intentions," "strategies," or the like. Such statements are based on
management's current expectations and are subject to a number of factors and
uncertainties that could cause actual results to differ materially from those
described in the forward-looking statements. We caution investors that there can
be no assurance that actual results or business conditions will not differ
materially from those projected or suggested in such forward-looking statements
as a result of various factors, including, but not limited to, the risk factors
discussed in this Annual Report on Form 10-KSB. We expressly disclaim any
obligation or undertaking to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change in our
expectations with regard thereto or any change in events, conditions, or
circumstances on which any such statements are based.

ITEM 1.  DESCRIPTION OF BUSINESS.

OUR COMPANY

         CDKnet.com, Inc. is an Internet holding company incorporated in the
State of Delaware. Our business is conducted through two of our subsidiaries:
CDKnet, LLC and ValueFlash.com Incorporated. CDKnet, LLC provides proprietary
convergence technology that links audio, video and the worldwide web on standard
CDs. ValueFlash provides proprietary, non-intrusive, highly targeted e-messaging
(which we call "Vflash(TM)") that enables our clients to communicate directly
with their customers on a real-time basis.

         CDKNET, LLC
         -----------
         Our subsidiary CDKnet, LLC, a New York limited liability corporation,
formed in October 1997, has developed a unique multimedia technology, CDK(TM),
integrating audio, video and Internet connectivity on a standard compact disc.
Our MixFactory(TM) system, an extension of the core CDK(TM) technology, enables
users to create their own personalized multimedia compact discs from a web site.
These custom compact discs include full-screen, full-motion video, Red Book
(digital standard) audio and targeted web links. The media components are
presented through CDKnet, LLC's proprietary media players that have been
developed for ease of use and functionality.

         Our business model is based on three revenue streams. The first revenue
stream is from development and use fees for client-specific CDKs(TM). We intend
to leverage the marketing opportunity offered by the Vflash technology by
presenting CDK 2.0 client specific CDs (CDK's) as the logical distribution
method for the Vflash messenger in the form of commercially sold or
promotionally distributed CDs. This strategy has already begun to increase
business. Recent Vflash agreements have enabled us to produce 2,000,000 CDKs for
the House of Blues, 52,000 CDK's for the Ford Motor Company, up to 3,000,000 (of
a potential 50,000,000) CDK's for Blockbuster in addition to CDK's being
produced for NBC's The Today Show. Past clients for this product (CDK 1.0)
include Citibank, Pfizer, Montana Power Company, Sandals Resorts and the New
York Knicks.

         The second revenue stream is the sale of custom compact discs to
consumers through MixFactory.com(TM) and MixFactory(TM) partner sites. We will
continue to make MixFactory(TM) technology available to content providers
enabling them to promote or sell their wares on a customized basis. In exchange
for a per disc manufacturing fee, the content provider receives the right to
utilize the Mix Factory(TM) services on their website(s). This scenario also
includes content licensed by us that is then sold

                                       -4-
<PAGE>

through our Website. We expect to receive direct revenue from the sale of custom
compact discs. The MixFactory agreements we currently have in place include:

         o    Central Park Media (live site)
         o    Megaforce Records (live site)
         o    CollegeMusic.com (live site)
         o    Rolf Gibbs (live site)
         o    SugarBeats.com (live site)
         o    HappyPuppy.com (November 2000)

         Sales will be made via the web through client-specific MixFactory(TM)
sites that will be linked from MixFactory.com(TM).

         The third revenue stream is the sale of Web links and Web advertising
on MixFactory.com(TM) and MixFactory(TM) partner sites. Digitization fees
associated with preparation of partner content are expected to add to these
proceeds.

         Of the three revenue streams, two are currently generating revenue --
development and use fees for client-specific CDKs and the sale of custom compact
discs. We placed emphasis on research and development throughout fiscal 2000.
The new version of our product, CDK 2.0, has been available since August 1999.
Since that time, we have generated revenue through client-specific CDK 2.0 discs
for Maverick Records, WorldWest Communications, and Raval Media. There are a
number of CDK 2.0 projects that are pending, namely Ford, IBM, Blockbuster, EMI
and NBC. Custom compact disc sales, which were minimal in fiscal 2000, are
expected to increase as we sign up additional content providers. The third
revenue stream, sale of web links and web advertising, has not yet materialized.

         VALUEFLASH.COM INCORPORATED
         ---------------------------
         Our subsidiary ValueFlash, a Delaware corporation, was established in
January 2000 to take advantage of the dynamic, real-time characteristics of the
Internet and to address the need for a non-intrusive yet highly targeted
interactive direct marketing application. ValueFlash has developed, and is now
marketing, its proprietary Vflash(TM) messenger, a computer desktop application
which













                                       -5-
<PAGE>

provides a wide variety of organizations with a real-time method of directly
marketing to, and communicating with, their customer base.

         The Vflash(TM) concept was initially developed by CDKnet, LLC to take
advantage of the distribution opportunity presented by our main product,
web-connected multimedia compact discs. To fully capitalize on this market
opportunity, we formed ValueFlash.

         ValueFlash's objective is to provide marketers with an unrivaled
solution for identifying customers and creating a direct rapport with these
individuals, thereby facilitating targeted communications and relevant
e-commerce opportunities. Direct communication with consumers will be
facilitated by the Vflash(TM) messenger, which will serve as an engaging
Internet direct-marketing tool allowing service providers and retailers to
develop long-term customer relationships.

         In addition to driving e-commerce revenue for online retailers, the
Vflash(TM) application serves as a unique mechanism for promoting, and driving
traffic to, offline retailers. The ability to provide real-time targeted
messages and offers based on an interest profile as well as a demographic
profile creates a compelling offering for both "brick & mortar" and "brick &
click" retailers.

         The ValueFlash revenue model is based on four distinct revenue streams:
hosting fees, advertising sales, e-commerce sales and international licensing
and fees.

         The first revenue stream is Hosting Fees, which are based on the
aggregate number of subscribers that are receiving information through the
various Vflash messengers. We will charge our corporate customers a fee to
operate and maintain their individual Vflash modules on a per subscriber basis.

         The second revenue stream is Advertising Sales, which will consist of
fees received for banner advertising within the modules. The rate for banner
advertising through the Vflash module is based on a fixed cost per each thousand
active users.

         The third ValueFlash revenue stream is E-commerce sales, which
represent commissions received for products that are sold through the modules.

         The fourth revenue stream is International Technology Licensing and
Fees. Currently, we have signed agreements with representatives in both Japan
(20% ownership) and Hong Kong (30% ownership) to establish regional offices. We
will receive both an annual licensing fee as well as a share of the net revenue
generated. These agreements call for a combined, guaranteed minimum fee of over
$15.0 million between 2000-2004.

         Separately, we are in negotiations with Impiric offices in Latin
America that will serve as our regional hub. We will maintain substantial
ownership interests in any such operations. A variety of international clients
are currently considering utilizing Vflash technology.

         We anticipate that international licensing and fees will provide the
majority of our initial revenue and have begun to realize revenue from this
stream in 2000.

         Current Vflash(TM) clients include: IBM, NBC; Ford Motor Company;
Atlantic Records; Artemis Records (Kittie); Arista Records; Fan Club house; RCA
Records; PlanetGiving.com; EMI Christian Music Group; Medium4.com; the House of
Blues; Blockbuster and Giant Records (Warner Brothers) (Pat McGee Band).
Strategic partners include Impiric, a wholly owned subsidiary of Young &
Rubicam, J. Walter Thompson, a subsidiary of WPP Dotcom.

                                      -6-
<PAGE>

         Distribution of the Vflash(TM) module will be achieved through multiple
channels including music industry and promotional CDs (many of which will be
provided by CDKnet, LLC), direct download and email. ValueFlash's strategy is to
first utilize retail music compact disc sales as a distribution channel for
software that will serve as a key marketing tool. For example, music compact
discs featuring value added content such as videos will drive consumers to play
the compact discs on their computer, thereby simultaneously loading the
Vflash(TM) module and inviting them to register as a user. This base of users
will allow labels to target market an artist's back catalogue, upcoming
releases, concert tours, online events (e.g., streaming media) and affiliated
merchandise.

         ORGANIZATION WITHIN LAST FIVE YEARS
         -----------------------------------
         Our executive offices are located at 250 West 57th Street, Suite 1101,
New York, New York 10019. The following is a chronology of our corporate
history:

         On August 20, 1997, Creative Technology, LLC, a limited liability
company organized under the laws of the State of New York, was formed to operate
technology related enterprises for the development and sale of computer
technology and software. Creative Technology began operations on October 1,
1997.

         On or around October 1, 1997, Technology Applications, LLC, a limited
liability company organized under the laws of the State of New York, was formed
to operate technology related enterprises for the development and sale of
computer technology and software.

         In October 1997, Creative Technology contributed capital of
approximately $1,100,000 and subordinated loans of $400,000 in exchange for a
40% interest and voting control in Technology Applications. The operating
agreement for Technology Application provided that Creative Technology would
control the management committee.

         Kelly Music and Entertainment Corp., a Delaware corporation, was
founded in 1995 to operate technology related enterprises for the development
and sale of computer technology and software. In October 1997, Kelly Music
contributed all of its intellectual property (which forms the core of the
majority of our products and fixed assets) to Technology Applications in
exchange for a 40% ownership interest in Technology Applications valued at
$1,500,000. Kelly Music received its 40% ownership interest directly from
Technology Applications in consideration for Kelly Music's contribution of
intellectual property to Technology Applications.

         In October 1997, Alvin Pock and Robert Kelly, both principals of Kelly
Music, contributed to Technology Applications notes of Kelly Music (some of
which were collateralized). In exchange, Pock and Kelly received ownership
interests in Technology Applications of 12.5% and 7.5% respectively.

         On February 4, 1998, Technology Applications changed its name to
CDKnet, LLC. On May 7, 1998, Technology Horizons Corp. was formed as a Delaware
corporation to operate technology related enterprises for the development and
sale of computer technology and software. On that same day, Technology Horizons
purchased 100% of the ownership interests of Creative Technology in exchange for
6,000,000 shares of Technology Horizons common stock, acquiring Creative
Technology as a wholly owned subsidiary.

         On May 21, 1998, Technology Horizons merged with International Pizza
Group, Inc., a Florida corporation that was inactive but had its common stock
traded on the Over-the-Counter Bulletin Board under the symbol "IPZZ." As a
result of the merger, Technology Horizons acquired the net assets of
International Pizza and began trading on the Over-the-Counter Bulletin Board on
May 21, 1998, under the symbol "THCX."

                                      -7-
<PAGE>

         On June 2, 1998, Creative Technology, Kelly Music, Pock, Kelly and
CDKnet, LLC agreed to convert $280,766 and $93,750 of debt which CDKnet, LLC
owed to Creative Technology and Pock into additional ownership interests of 8%
and 2.5%, respectively. Accordingly, the ownership interests of Kelly Music and
Kelly were reduced to reflect the increased ownership of Creative Technology and
Pock.

         Following this debt conversion, the ownership of CDKnet, LLC was as
follows: Creative Technology 48%, Pock 15%, Kelly 5.85% and Kelly Music 31.15%.
By agreement dated June 3, 1998 Creative Technology, Kelly Music, Pock, Kelly
and CDKnet, LLC, CDKnet, LLC, agreed that $800,000 in advances from CDKnet, LLC
to Kelly Music were to be used to reduce Kelly Music's membership interest in
CDKnet, LLC by 5%, thereby increasing the combined ownership of Pock, Kelly and
Creative Technology by an aggregate of 5%. Following this transaction, the
ownership of CDKnet, LLC was as follows: Creative Technology 51.5%, Pock 16.1%,
Kelly 6.25% and Kelly Music 26.15%.

         Additionally, by agreements dated June 3, 1998, Technology Horizons
acquired Kelly and Pock's 6.25% and 16.1% interests in CDKnet, LLC issuing in
exchange 363,636 and 936,727 common shares of Technology Horizons, to Kelly and
Pock, respectively. Following these transactions, Technology Horizons held a
22.35% direct ownership interest in CDKnet, LLC bringing its total direct and
indirect ownership to 73.85%.

         On July 8, 1998, Technology Horizons entered into an agreement that was
subsequently amended to purchase Kelly Music's remaining 26.15% ownership
interest in CDKnet, LLC for $5,171,122, payable in a combination of 1,883,635
common shares of Technology Horizons and debt retirement of $600,000 in notes,
and a cash payment of $65,000 raising Technology Horizons' direct interest in
CDKnet, LLC to 48.5%. Creative Technology held the remaining 51.5%.

         On December 16, 1998, Technology Horizons changed its name to
CDKNET.COM, INC. and, on December 18, 1998, began trading on the
Over-the-Counter Bulletin Board under the symbol of "CDKX".

         On October 7, 1999, we were deleted from the Over-the-Counter Bulletin
Board until our Registration Statement on Form 10-SB, as amended, completed the
Commission's comment process. We were re-instated on the Bulletin Board in April
2000.

         On January 13, 2000, we created ValueFlash.com Incorporated, a Delaware
corporation. Currently, we own 5,000,000 shares, or 75.75% of the outstanding
common stock and 3,500,000 options. The remaining shareholders of ValueFlash
are: Alvin Pock, 75,000 shares; Michael Vasinkevich, 125,000 shares and
1,250,000 options; AMRO International, S.A., 300,000 shares and 150,000 options;
Austost Anstalt Schaan, 100,000 shares and 50,000 options; Balmore Funds, S.A.,
100,000 shares and 50,000 options; Mabcrown, Inc., 500,000 shares and 250,000
options; Aizik Wolf, 50,000 shares and 25,000 options; Incentive Management,
Inc., 250,000 shares and 500,000 options; David Wolf, 100,000 shares and 150,000
options.

         We currently have two other wholly-owned subsidiaries, Creative
Technology and CDKnet, LLC. We directly own 100% of Creative Technology and
48.5% of CDKnet, LLC. Creative Technology owns the remaining 51.5% ownership
interest of CDKnet, LLC, giving us an indirect 100% ownership interest of
CDKnet, LLC. We conduct our business through both CDKnet, LLC and ValueFlash.com
Incorporated. Our manufacturing, research and development is conducted out of
our office located at 250 West 57th Street, Suite 1101, New York, New York
10019. CDKnet, LLC and ValueFlash can be reached at our principal offices by
telephone at 212-547-6050 or on our websites at: WWW.CDKNET.COM. or
WWW.VFLASH.COM.

                                      -8-
<PAGE>

1.       GENERAL
         -------
         Our audited financial statements for the period July 1, 1999 to June
30, 2000, reflect a net loss of $7,118,000 to common stockholders on revenues of
$345,000 compared to a net loss of $6,195,000 on revenues of $474,000 in the
fiscal year ended June 30, 1999. Revenues declined $125,000 in the current
period due to the continued shift in focus to enhancing our core technologies
and product development. We anticipate that VFlash(TM) will be a major factor in
our future revenue and business growth. Significant expenditures have been
incurred and will continue to be required for marketing and advertising the
product and to build the infrastructure to support it.

         We have received an infusion of $1,700,000 in capital since January 1,
2000. Additionally, we have raised $3,200,000 for ValueFlash through private
placements during the same period of which $150,000 has not yet been received.

         Our common stock, $.0001 par value, is quoted on the Over-the-Counter
Bulletin Board. As of October 11, 2000, we had 21,348,178 shares of common stock
issued and outstanding. Of these shares, 1,805,231 shares are restricted stock
owned by our directors and key employees. The remaining 19,542,947 shares are
owned by approximately 135 shareholders, 2 of whom we believe hold more than
five percent (5%) ownership of our common stock.




























                                       -9-
<PAGE>
2.       INDUSTRY
         --------
         A.    OVERVIEW
               --------
               (1) THE CUSTOM CD MARKET
                   --------------------
               Internet usage has increased dramatically in the last decade. As
a result, many new personal and commercial applications have been developed for
Internet users and, increasingly, consumers are conducting business through
Internet applications. We believe that web-connected multimedia compact discs
will be one of the next significant applications of the Internet. Web-connected,
multimedia compact discs contain audio, video and HTML (or, HyperText Markup
Language, the underlying "code" for web pages) all navigable by a standard web
browser. Our CDK(TM) technology forms the foundation multimedia for CD-ROM
authoring, production, and custom online compilations.  Further, our CDK(TM)
technology provides an outstanding platform for the dissemination of our Vflash
messenger.

               We believe there is strong market potential for CDK(TM)
technology across various industries. Target industries include:

         -- Entertainment (music, movies, TV)          -- Toys/Games
         -- Travel & Tourism                           -- Fashion
         -- Professional Sports                        -- Food/Cooking
         -- Financial Services                         -- Automotive
         -- Education                                  -- HealthCare

               The premiere companies in each of these industry categories have
fully developed Websites with significant user traffic, lending themselves as
prime candidates for the MixFactory(TM) operation. We believe that the industry
will become more competitive. Our inability to compete in the market could have
a material effect on our business operations.

               (2) THE DIRECT ONLINE MARKETING MARKET
                   ----------------------------------
               Online direct marketing campaigns represent the fastest growing
portion of total online advertising. We believe that the Internet holds the
potential to be the most powerful of all direct marketing channels within the
next several years and that online direct marketing will present a highly
attractive alternative to traditional direct marketing channels due to its
economy, speed and effectiveness. With the greater cost efficiency, more rapid
message delivery and significantly higher response rates, many companies and
marketing firms are developing online direct marketing strategies.

               We believe that our Vflash messenger is uniquely positioned to
fulfill the promise of online direct marketing. By residing on the user's
desktop and serving as a delivery portal, our clients can send direct marketing
messages to their customers and establish loyalty program accounts. Our client's
customers receive personalized news and information content through one compact
and highly powerful channel. Further, as Vflash product development continues,
we expect to add additional features including chat and other community-based
functions in order to leverage the installed base of like-minded individuals who
subscribe to particular Vflash messengers. Facilitating communications between
Vflash users will increase their dependence on the Vflash application as an
essential Internet utility.

               The ability to combine targeted news, information and e-commerce
offerings with the added feature of instant communication between friends,
family and business associates will be particularly important as we evaluate
opportunities for the Vflash messenger within the wireless services market
(e.g., cell phones, PDAs, etc.).

               However, the expected growth of this market has led to the
formation of several companies that cater specifically to organizations

                                      -10-
<PAGE>

developing and implementing online direct marketing campaigns. Several companies
already exist that specifically cater to this market and we believe that the
industry will become even more competitive. Our inability to compete in the
market will have a material effect on our business operations.

         B.    COMPETITION
               -----------
               (1) CUSTOM CD MARKET COMPETITION
                   ----------------------------
               While other companies have the potential to develop web-based,
audio and video, custom compact discs, we believe that none offer the economic,
development or quality advantages of our CDK(TM) and MixFactory(TM) technology.
We believe that there are four main companies currently offering custom audio
compact disc development. These companies are Customdisc.com, Amplified.com, and
K-Tel.com. However, we believe that none of these companies offer custom audio
and video compact disc development. In an effort to further secure a strong
position in the marketplace, CDKnet, LLC has submitted patent requests for
certain aspects of our technology. Finally, we believe that other companies,
including established Internet companies, software companies and companies in
the entertainment business could enter this business and become competitors.

               (2) DIRECT ONLINE MARKETING COMPETITION
                   -----------------------------------
               The direct online market is very competitive and will become more
competitive as more companies attempt to increase direct contact with consumers.
ValueFlash's main competitors include the following:

                   o email marketing companies (such as: Digital Impact and
                     YesMail);
                   o online loyalty programs (such as: MyPoints and
                     Netcentives); and
                   o online news and info delivery services (such as: EntryPoint
                     and Etour).

               The Vflash(TM) messenger is designed to utilize some of the best
attributes from all of the above mentioned services. By residing on the user's
desktop and serving as a delivery portal, users can:

                   o receive direct marketing messages,
                   o establish loyalty program accounts, and
                   o receive personalized news and information content through
                     one compact and highly powerful channel.

               ValueFlash is, therefore, well positioned within the marketplace
to establish a significant position within a very rapidly growing industry.

               As Vflash(TM) product development continues, ValueFlash expects
to add additional features including chat and other community-based functions in
order to leverage the installed base of like-minded individuals who subscribe to
any particular Vflash(TM) messenger. Facilitating communications between
Vflash(TM) users will increase their dependence on the Vflash(TM) application as
an essential Internet utility.

3.       PRODUCTS AND SERVICES
         ---------------------

         A.    PRODUCTS AND SERVICES
               ---------------------
         We have developed and are marketing the following products and
services:

                                      -11-
<PAGE>

         (1)   CDK(TM) TECHNOLOGY
               ------------------
         CDK(TM) technology combines the following through a browser interface:

         o compact disc digital audio (i.e., audio tracks that are playable on
           both home stereo systems and personal computers);
         o full-screen video; and
         o integrated web links.

         A browser interface is the main interface page that is presented when
the compact disc is placed in a personal computer. Our technology allows video
playback at the full-screen size of the video monitor and at full-motion which
is the industry standard of 30 frames per second. The browser interface also
allows easy linking to other web sites through the CDK(TM) interface page.

         The CDK(TM) HTML authoring system -- the process for creating web pages
-- is used by CDKnet, LLC to produce custom HTML interface pages for specific
clients in about a day. We have proprietary techniques for creating full-motion,
full-screen video playback from using a compact disc. Any user with a PC of at
least 166MHZ or Macintosh G3 should be able to play our custom audio and video
compact discs.

         CDK(TM) has been engineered to offer compatibility with the majority of
CD-ROM drives on the market. We believe that we have achieved a high level of
reliability, as evidenced by extensive testing and major CDK(TM) releases, and
we believe this reliability will provide a major competitive advantage over
other multisession (i.e., both audio and video) compact discs in the market.
Additionally, the CDK(TM) system is engineered for mass-production. The
integration of the complete file structure of the CDK(TM) is automated. Audio,
video and HTML assets can be placed in the production templates created by us
for a fast turn-around time for the creation of CDKs.

         (2)   MIXFACTORY(TM) CUSTOM MANUFACTURING
               -----------------------------------
         MixFactory(TM) is a custom, multi-session compact disc manufacturing
system built upon CDK(TM) technology. The entire system is automated so that
little human intervention is required for the custom manufacturing process.
Based on our review of current custom-compact disc operations in the
marketplace, we believe that MixFactory(TM) is a unique system.

         To create a custom compact disc, a user visits a website and selects a
compilation of audio, video, or other content titles. Titles are browsed and/or
searched and audio/video clips are previewed through an easy to use interface.
After selecting the compilation, the user personalizes the disc by selecting
artwork for the disc label, cover and HTML interface.

         The MixFactory(TM) system allows multimedia content providers such as:

         o music labels,
         o major sports leagues,
         o pharmaceutical companies,
         o travel-related organizations, and
         o companies within the fashion industry -- to offer their assets on a
           customized basis, either as promotional content or as full retail
           products.

         For example, a visitor to the CollegeMusic.com website will be
presented with a MixFactory(TM) link that will enable the user to develop a
custom compact disc consisting of available site content. This content will
include video and audio tracks of live music performances from major nightclubs
across the United States.

                                      -12-
<PAGE>

         We plan to form agreements with multiple content providers. We are not
looking to license content through such agreements. Rather, we are looking to
license MixFactory (TM) technology to the content providers (owners). Therefore,
we will not be in danger of violating any intellectual property rights. For
example, the CollegeMusic Mixfactory website enables fans to create custom
compact discs containing music videos as well as audio tracks. The compact disc
will also contain integrated web links to the CollegeMusic website driving
targeted traffic.

         We expect to leverage the planned MixFactory.com(TM) Website to serve
as a link (or portal) to other web sites that provide digital entertainment
content. Initially, MixFactory.com(TM) is expected to serve as a point of
content distribution for independent music artists and labels with links to
other MixFactory(TM) sites. Ultimately, we expect the site will have extensive
search and browse capability that will guide the user to a wide range of digital
entertainment websites and content. We also plan that the portal will provide a
custom-compact disc recording (also called, "burning") service for users who
want to download digital content but do not have the bandwidth and equipment to
download and burn their own compact disc at home.

         We believe some of the specific benefits of the MixFactory(TM) model to
the content provider include:

         o a new marketing platform for goods and services that drives web
           traffic and provides valuable customer information from both buyers
           and non-buyers;
         o the opportunity to leverage marketable inventory that was previously
           "dormant";
         o attractive operating efficiencies (such as no added inventory costs);
         o targeted mailing lists;
         o new advertising revenue opportunity on customized compact discs;
         o return hits to the content provider's website direct from the
           customized compact disc; and
         o cross-promotion from the MixFactory.com(TM) website.

         Additional possible sources of income for us from the MixFactory(TM)
operation include advertising revenues from the MixFactory.com(TM) website and
possible revenue sharing from advertising on our partners' MixFactory(TM) sites.
We also plan to charge content providers a nominal fee for digitizing audio and
video assets above a specified level.

         The MixFactory(TM) operation is designed to be a complete end-to-end
e-commerce solution, including production, payment processing and fulfillment.
Once the user confirms the content selections and completes a credit card
transaction, the selected titles are queued from storage to a Compact Disc
Recordable ("CD-R") burning workstation. The customer's tracks are




                                      -13-
<PAGE>

formatted into the industry standard Red Book audio session along with an
iso9660 (or data session on a CD-ROM) and transferred together to the CD-R
(disc). The automated workstation transfers the complete CD-R to the compact
disc printer where the user-selected label is printed onto the surface of the
CD-R.

         In parallel with the transfer of the tracks to the CD-R, the custom
packaging materials are printed. That is, as soon as the job is queued for
burning, the printed job is also queued to the printer. Packing and shipping of
the finished product is currently the only manually operated step in the
process. We are currently investigating equipment that will automate the packing
process.

         (3)   MIXFACTORY.COM(TM) PORTAL SITE
               ------------------------------
         MixFactory.com(TM) serves as a web portal for digital multimedia
content, including music, movies, and game demos. We design sites so that
consumers are able to search and browse for content, select items to include on
their custom compact disc and purchase the compact disc. Once the compact disc
is received, the consumer is able to view the information on the compact disc
via his or her personal computer and link back to related web pages through
targeted links included on the compact disc.

         We believe the main consumer advantage derived from the MixFactory(TM)
portal site is the ability to receive high-quality, high-bandwidth digital
assets without waiting hours for the files to download. The content provider may
also derive advantages from the MixFactory(TM) site including, possibly, a new
distribution channel, a reliable consumer database/mailing list, increased
return hits to the content provider's website as well as a potential
distribution method for a Vflash messenger.

         We believe that from a technical standpoint, the custom-burning service
that MixFactory.com(TM) provides is a unique application. The ability to select
files (from various websites) to include on a custom compact disc, send that
information to the MixFactory(TM) server and then have a custom compact disc
created and shipped is a service that, to our knowledge, does not currently
exist elsewhere on the Internet.

         (4)   VFLASH(TM)
               ----------
         The Vflash(TM) module is our computer desktop application which
provides a wide variety of organizations with a real-time method of directly
marketing to, and communicating with, their customer base. The Vflash(TM) module
remains active on the user's Windows taskbar at all times and can flash or make
noise to alert the user of breaking news, new product offerings and exclusive
promotions. Consumers have single-click access to exclusive "club" content, not
available to general visitors to the same web site, including discounts,
first-run announcements and special events.





                                      -14-
<PAGE>

         The Vflash messenger is designed to create a sophisticated content
management system, which delivers specific messages to specific targeted users,
based on their preferences.

         This system is comprised completely of existing technologies and
operating systems including Microsoft Windows, HTML, JavaScript, C++, COM, Java,
XML, Microsoft ASP, and MS SQL Server.

         The Vflash messenger is installed either as a result of download from
the Internet or via a CD-ROM install process. After installation, the module
program is executed. Upon execution, the module exists as an icon in the system
tray of a Microsoft Windows operating system desktop (on the Macintosh, it is
expected to exist in the menu bar). The icon changes state based on messages
from the server. The icon can display various logos and can flash, blink and
emit audible tones alerting the user about status of content availability.

         The basic arrangement of the client gateway is a window with three
specific areas. There is a navigation area to page through content, a message
area where the actual HTML/Javascript/Flash messages appear, and an advertising
area where a banner-type ad may appear which may be animated and may also
include audio.

         Upon establishment of network connectivity, the Vflash module sends a
message to a hardcoded URL containing status that it is alive and ready to
receive messages. This communication is referred to as a heartbeat. This
heartbeat occurs at regular intervals to let the server know that it is alive.

         The server delivers command, configuration, and control information to
the gateway page using XML documents. Application XML messages provide key
information that can be used to enhance or control the browsing experience from
the client application. Notification of new content is one example, while many
other possibilities exist. The client can be configured to allow user directed
browsing or could be completely controlled from the server with only specific
user interaction allowed.

         The server communicates with a content management system that allows
individual editors to prepare content for delivery at certain times to a
targeted demographic. The content management system is the point at which
graphical, textual, and audio content, ads, and configuration information are
integrated and scheduled for delivery to targeted Vflash messenger consumers. In
addition, the content management system automates the tasks of preparing
newsfeed-type information and other content that is available at regular
intervals.

         ValueFlash's database management system keeps track of all of the
individual users along with their preferences and configurations. It also stores
information about the various content providers and the relationships between
the content providers and the individual users.

         B.    RESEARCH & DEVELOPMENT
               ----------------------
         Through the fiscal year ending June 30, 2000, we expended $164,000 on
research and development of our products and services. During the fiscal year
ending June 30, 1999, we expended approximately $211,000 on research and

                                      -15-
<PAGE>

development. Among our various activities, we are developing products and
services which will deliver customized and client specific information to
customers. We are continuing development of both the newly released CDK(TM)
2.2.1 technology as well as MixFactory(TM), our customized multimedia compact
disc system.

         During the fiscal year ending June 30, 2000, we continued to enhance
the value of our product/service offerings through ongoing research and
development efforts. Specifically, we are engaged in the following internal
projects:

         o Development of enhanced technologies and features to improve our
           Vflash product offering including chat, instant messaging, community
           based functions and wireless applications.

         o Development of CDK(TM) 2.0 version featuring Macintosh compatibility,
           a reduced installation set as well as improved video performance.
           This version was released on August 9, 1999.

         o Development of CDK(TM) 3.0 version featuring video encryption,
           international language capabilities, and greater flexibility to alter
           the look, feel and function. We have also developed the "Game
           Installer" which allows browser-based installation of any software
           product from a CDK multimedia CD. This version is in its final
           testing stage.

         o Efforts are underway to integrate the new Digtial Versatile Disc
           (commonly referred to as "DVD") manufacturing capability into the
           MixFactory(TM) system. This effort includes DVD-R writer to the
           robotic manufacturing system and the integration of DVD authoring
           tools into the MixFactory(TM) system.


4.       SALES AND MARKETING
         -------------------

         A.    STRATEGY
               --------

         1.    CDKnet, LLC
               -----------

         The primary marketing objective for CDKnet, LLC is to establish CDK(TM)
technology as the standard for integrating digital audio,
full-screen/full-motion video and Web links on a standard compact disc. CDK(TM)
technology provides clients with the ability to distribute information and
multimedia content to their existing and potential customer base. Additionally,
our client-specific CDKs(TM) are ideally suited to distribute the client's
Vflash messenger.

         MARKETING:  CDKNET, LLC

         CDKnet, LLC will continue to capitalize on the market opportunity
presented by ValueFlash by providing ValueFlash's clients with Web-connected
multimedia CDs (CDKs) that serve as an efficient distribution mechanism for the
Vflash application. Additionally, CDKnet, LLC will continue to provide
multimedia CD production to clients who are interested in developing CD-based
marketing programs but who may not be candidates for a full-fledged Vflash
program.

         2.    ValueFlash
               ----------

         The core strategy of ValueFlash is to give content providers and
retailers a highly efficient computer-based direct marketing mechanism that will
allow them to provide their customer base with personalized real-time
information, products and service offerings. By using the Vflash technology,
companies marketing products and services will be able to provide their
clientele with the kind of customized services they demand. By providing this
customized product, the marketer thereby will establish a true one-to-one
relationship and create an environment that makes the end user more receptive to
marketing messages and more likely to feel comfortable with the purchase of
goods or services through the company's Website.

         MARKETING:  VALUEFLASH

         Initially, ValueFlash will focus on marketing its services to companies
within industries where there is the ability to provide services to a very large
and growing worldwide customer base, where products and services are constantly
changing, and where Internet delivery has already become an important

                                      -16-
<PAGE>

distribution channel. Music, sports and news are three excellent examples of
industries that fit these criteria. Longer term, however, there are many
industries that will soon recognize the benefit of the technology. Apparel and
houseware retailers, convenience stores, and financial services firms are just a
few of the consumer oriented organizations that are expected to be candidates
for the technology.

         In order to penetrate these markets, we have developed a three pronged
marketing strategy that includes dedicating internal staff to certain markets as
well as establishing marketing relationships with national firms that can help
expedite the process. Internally, we already have several staff members
focussing solely on the entertainment area with an added concentration on the
music industry where consumers are already used to the delivery of products
through compact discs (CDs). These efforts have the potential to drive revenue
for both CDKnet, LLC and ValueFlash.

         B.    PLAN OF OPERATION
               -----------------
         Our operational plan for fiscal year 2000 included: (1) moving custom,
multimedia compact disc operations (i.e., MixFactory(TM)) to a higher volume,
lower rent production environment; (2) forming strategic alliances with a
digital video services company to meet increasing demand for these services;
(3) signing up MixFactory(TM) partner sites across various industries; and
(4) develop the Vflash technology and product and begin marketing. We achieved
all of the goals.

         Our operational plan for fiscal 2001 anticipates that Vflash will be a
major factor in our revenue and business growth. We expect revenue growth to be
generated from international licensing agreements and fees, hosting fees,
advertising commission and E-commerce revenue splits. Such growth will be driven
by expanding our international relationships and, increasing the active
subscriber and corporate client base.

         Also, we will continue to focus on generating revenue from the sale of
client specific CDs, and Mixfactory customer CDs services.

         Costs are projected to increase to support the growing operations,
clients, and subscribers and continuing development.

         For more information, see "Management's Discussion and Analysis or Plan
of Operation."

         We plan to raise additional financing to fund our operations through
sales of our products and services as well as through private placements and
debt financings. We need to raise such financing to continue our operations.

         C.    MATERIAL AGREEMENTS
               -------------------
         We consider the following agreements to be material to our ability to
provide our customers with our products and services:

         o     Agreement between CDKnet, LLC and Central Park Media Corporation
               dated March 29, 1999 under which the parties will via the
               Internet create, market and take orders for custom video-based





                                      -17-
<PAGE>

               compact discs produced with CDK(TM) technology. We will set up
               the web site at no charge. In return, Central Park Media will
               insert a MixFactory.com link on its web sites in order to
               promote, market, and advertise MixFactory.com's Japanese
               animation, Amine and/or other content. We will receive a per
               compact disc fee for all sales. Central Park Media shall obtain
               any and all rights, licenses, clearances, releases, or other
               permissions necessary for the parties to perform their respective
               duties under the agreement. The term of this agreement is three
               years.

         o     Agreement between CDKnet, LLC and CollegeMusic, Inc. entered into
               in August 1999 under which the parties will develop a
               CollegeMusic MixFactory web site. The new web site will enable
               CollegeMusic fans to create a custom compact disc containing
               music videos as well as audio tracks. The compact disc will also
               create integrated web links to the CollegeMusic web site driving
               targeted traffic. The cost of the web site is free to
               CollegeMusic; however, we will keep all proceeds from shipping
               and handling of the compact discs. The term of this agreement is
               indefinite.

         o     Agreement between CDKnet, LLC and Megaforce Records dated
               September 1, 1999 to create a Megaforce Records web site at no
               charge. The web site will use MixFactory technology to enable
               users of the site to create customized and personalized
               multimedia compact disc. Consumers will choose from Megaforce
               artist's video and audio content to create a customized compact
               disc. We will receive the proceeds from shipping and handling as
               well as a per compact disc fee. The term of this agreement is
               three years.

         o     Agreement between CDKnet, LLC and DreamWorks Records Corporation
               executed in October 1999 under which DreamWorks will license from
               CDKnet, LLC the CDK(TM) technology, in order to produce
               Web-connected compact discs with content supplied by DreamWorks.
               We will receive a fee per master compact disc. DreamWorks shall
               be responsible for obtaining any and all rights, licenses,
               clearances, releases, or other permissions necessary for the
               parties to perform their respective duties under the agreement.
               The term of this agreement is one year.

         o     Agreement dated November 16, 1999 with Asia Pioneer, Ltd., a Hong
               Kong-based Internet technology company serving the
               Chinese-speaking world population. The agreement grants Asia
               Pioneer the right to our web-connected multimedia compact disc
               technology as well as MixFactory(TM) technology to offer
               customized multimedia compact discs through Asia Pioneer's new
               web site beatasia.com. Beatasia.com is a comprehensive music
               entertainment web site and is known as "the heartbeat of Asia."
               Rights extended in the agreement cover the worldwide Chinese
               speaking community. In exchange for these rights, we received




                                      -18-
<PAGE>

               a 4.89% ownership interest in Asia Pioneer at the completion of
               the underlying services. The parties also entered into a
               Subscription Agreement under which Asia Pioneer purchased 500,000
               shares of our common stock at $.50 per share in two allotments.

         o     Agreement between ValueFlash and Richard A. Eisner & Company, an
               accounting and consulting firm, dated April 17, 2000, as amended
               under which Eisner will provide consulting services to ValueFlash
               in the following areas: (1) developing a business plan, (2)
               determining appropriateness of underlying presumptions in the
               financial statements, (3) raising capital, (4) assisting in
               developing a marketing plan and (5) helping create an
               organizational structure. In return ValueFlash must provide a
               retainer, pay monthly consulting expenses, and grant 240,000
               warrants of ValueFlash for the purchase of ValueFlash common
               stock. The warrants will vest quarterly from the signing of the
               agreement until April 15, 2002. The term of this agreement is one
               year.

         o     Agreement between ValueFlash, CDKnet, LLC, Track Marketing
               Partners, Inc., and Arcadia Marketing, Inc. dated May 4, 2000 for
               the marketing of ValueFlash and CDKnet technologies. Track will
               have exclusive rights to market and/or sell the products to an
               established client list. From ValueFlash, Track will receive (1)
               a percentage of ValueFlash gross revenues created by Track
               clients, (2) options from ValueFlash for every Track client that
               becomes a ValueFlash client, and options based on revenues
               generated by a Track Client, and (3) the right to a cash bonus if
               certain revenues from Track clients are met in the first two
               years of the agreement. From CDKnet, Track will receive (1) a
               percentage of the net revenues from the sale to a Track Client,
               (2) CDKnet.com options based on gross revenues generated by Track
               Clients, and (3) if Track identifies or introduces investors to
               CDKnet or ValueFlash, then Track will receive 2.5 percent of the
               investment made by that investor. This agreement is for 24 months
               except as to specific provisions identified as existing longer.

         o     Agreement between ValueFlash, CDKnet, LLC, and Arcadia Marketing,
               Inc.(AMI) dated May 4, 2000 for the marketing of ValueFlash and
               CDKnet technologies. AMI will receive compensation as follows:

               >>  From ValueFlash: (1) options, (2) cash bonuses from residuals
                   received from any AMI/ValueFlash clients, (3) a percentage of
                   ValueFlash residuals, (4) a cash bonus for revenues generated
                   by AMI/ValueFlash clients in excess of $5,000,000 in the
                   first two years of the agreement, (5) compensation for its
                   services, and (6) a percentage of the net revenues from AMI
                   client purchases.

               >>  From CDKnet.com: (1) options based on gross revenue created
                   by AMI efforts or clients, and (2) 5 percent of the
                   investment if AMI identifies or introduces investors to
                   CDKnet or ValueFlash.

               >>  AMI will also receive compensation in the form of: (1)
                   options to purchase ValueFlash common stock for each new
                   Track client, (2) ValueFlash residuals, (3) options to
                   purchase ValueFlash common stock based on revenues, (4) cash
                   bonus of 5 percent of ValueFlash revenues generated by AMI
                   clients which are in excess of $5,000,000 in the first two

                                      -19-
<PAGE>

                   years of use of ValueFlash, (5) 20 percent of CDKnet net
                   revenue when sales are related to a Track client and
                   one-third of net revenue when the client also uses
                   ValueFlash, (6) CDKnet.com options based on revenues
                   generated, (7) CDKnet.com options for every 1,000,000 compact
                   disc units produced and (8) 2.5 percent of any investment in
                   ValueFlash or CDKnet identified by Track for ValueFlash or
                   CDKnet.

               >>  When JMC clients are involved, AMI will also receive
                   compensation of (1) options to purchase ValueFlash common
                   stock per new client, (2) ValueFlash residuals, (3) options
                   to purchase ValueFlash common stock based on ValueFlash
                   revenues, (4) 5 percent of all ValueFlash revenues generated
                   by AMI clients which in the aggregate are in excess of
                   $5,000,000 in the first two years of ValueFlash use by the
                   client, (5) one third of ValueFlash net revenue from the JMC
                   clients, (6) options to purchase CDKnet.com common stock
                   based on gross revenue from AMI clients, (7) options to
                   purchase CDKnet.com common stock for every 1,000,000 compact
                   disc units produced with CDK(TM) technology if AMI clients
                   were cause of production, and (8) 2.5 percent of investments
                   made to CDKnet of ValueFlash by an investor identified by
                   JMC.

         o     Agreement between ValueFlash, CDKnet, LLC, JMC Investments, LLC,
               and Arcadia Marketing, Inc. dated May 4, 2000 for the marketing
               of ValueFlash and CDKnet technologies. JMC will have exclusive
               rights to market and/or sell the products to an established
               client list. JMC will receive:

               >>  From ValueFlash: (1) a percentage of ValueFlash gross
                   revenues created by JMC clients, (2) options to purchase
                   ValueFlash common stock for every JMC client that becomes a
                   ValueFlash client, (3) options to purchase ValueFlash common
                   stock for revenue generated by a JMC Client exercisable at
                   $2.00 per share, (4) the right to a 5 percent cash bonus if
                   the aggregate revenues from JMC clients are in the aggregate
                   more than $5,000,000 in the first two years of the agreement,
                   (5) if revenue is generated from the sale to a JMC client of
                   a CDK(TM)technology then the net revenues will be split among
                   JMC, AMI, and CDKnet.

               >>  From CDKnet.com: (1) options to purchase CDKnet.com common
                   stock based on gross revenues generated by JMC clients, (2)
                   options to purchase CDKnet.com common stock for the use of
                   the CDK(TM) technology, and (3) if JMC identifies or
                   introduces investors to CDKnet or ValueFlash then JMC will
                   receive 2.5 percent of the investment made by that investor.
                   This agreement is for 24 months except as to specific
                   provisions identified as existing longer.

         o     Agreement between CDKnet, ValueFlash and the House of Blues dated
               May 12, 2000 for use of CDKnet and ValueFlash technologies to
               develop House of Blues promotional activities. CDKnet will
               develop a promotional compact disc, links to ValueFlash "Music
               News," and manage the replication of 2,000,000 units of the
               compact discs. ValueFlash will develop a marketing messenger
               program called "Music News," assist in content update, and
               provide custom animation. The term of the agreement is one year
               with an option to renew.

                                      -20-
<PAGE>

         o     Agreement between CDKnet and Young and Rubicam, Inc. dated
               February 3, 2000 to enter into a joint venture whereby Young and
               Rubicam is allowed to invest in founder's common stock in
               ValueFlash.com and will present to ValueFlash $15 million in
               revenue opportunities. If the target revenue is met, Young and
               Rubicam will receive: (1) further equity in the form of warrants
               earned proportionately to the target revenue, (2) up to 5 percent
               of additional ownership, available at $2 per share and another 5
               percent at fair market value to be determined on April 1, 2001,
               (3) if an IPO occurs in the first 24 months, ValueFlash may vest
               unvested warrants (price to be determined in April 2001) at the
               IPO price, and (4) at least observer status on the board of
               directors.

         o     Agreement between ValueFlash and ValueFlash Japan, dated May 25,
               2000 for an exclusive distributorship of ValueFlash products in
               Japan by ValueFlash Japan. ValueFlash Japan will pay an annual
               fee of $1,000,000 the first year and increasing by $1,000,000
               every year until the fee caps at $5,000,000 for the fifth year
               and thereafter. The annual fee terminates if ValueFlash Japan is
               listed on a Japanese stock exchange. ValueFlash will own 20
               percent of the ValueFlash Japan shares. The term of this
               agreement is ten years.

         o     Agreement between ValueFlash and House of Blues dated June 1,
               2000 for the production of multimedia compact discs by CDKnet for
               the House of Blues summer promotion "Run of the House." The
               compact discs will also include a PlanetGiving.com public service
               announcement. PlanetGiving.com will fund the sponsorship at a
               total cost of $370,000.

         o     Non-binding agreement between ValueFlash and theglobe.com date
               June 26, 2000 to work together to distribute the HappyPuppy.com
               messengering service. ValueFlash agrees not to promote
               competitors of HappyPuppy.com. HappyPuppy.com and ValueFlash
               would equally share advertising revenue after 20 percent seller's
               commission. Sales commissions derived from sales of games by
               Chips & Bits attributed to the HappyPuppy.com ValueFlash
               Messenger would be split equally. The term of the agreement is
               one year.

         o     Non-binding agreement between CDKnet and theglobe.com dated June
               26, 2000 for the development of a web site with use of CDKnet
               technology. The web site will allow HappyPuppy.com users to
               create custom game demo compact discs. CDKnet agrees not to enter
               similar agreements with HappyPuppy.com competitors for the first
               three-months of this agreement. HappyPuppy.com would maintain a
               link on its web site for which CDKnet will pay $120,000 in 12
               monthly installments of $10,000. Advertising and promotional
               revenue would be equally shared after a 29 percent reduction for
               the seller's commission. All sales revenue from Chips and Bits
               attributable to the compact discs will be shared equally by
               CDKnet and HappyPuppy.com.

         o     Agreement between ValueFlash and Naviant Marketing Solutions,
               Inc. dated June 13, 2000 for a promotional compact discs and
               database licensing arrangement. Naviant




                                      -21-
<PAGE>
               will participate in the House of Blues Summer Promotional by
               offering a free Club Rewards membership for people who subscribe
               to Music ValueFlash service through the promotional sites. The
               membership form will require personal information that Naviant
               will compile and license portions of to ValueFlash. Naviant will
               pay a fee per compact disc distributed up to $460,000 and
               ValueFlash will receive 1,000,000 records from the compiled
               database for a fee. The term of the licensing agreement is 12
               months.

         o     Agreement between ValueFlash and J. Walter Thompson dated June
               29, 2000 forming a strategic alliance for bringing clients to
               ValueFlash. Each party will have a non-exclusive limited license
               to use the other's name to promote the alliance. ValueFlash will
               use the name of JWT to develop other clients. The contract shall
               remain in effect until either party terminates by giving 60 days
               notice to the other party. JWT will receive (1) a commission on
               revenues earned by ValueFlash during the first 60 months of a
               services agreement, (2) a warrant to purchase ValueFlash common
               stock as an additional incentive to enter the alliance WPP Dotcom
               Holdings, an affiliate of JWT, (3) the right to appoint two
               members to the ValueFlash Board so long as WPP has common stock
               or warrants in ValueFlash, (4) for WPP Dotcom Holdings, a
               60-month warrant for the purchase of 3 percent of the capital
               stock of ValueFlash, and, (5) performance based warrants to WPP
               Dotcom for every 30,000 users registered pursuant to the alliance
               WPP.

         o     ValueFlash/CDKnet has entered into an agreement with Blockbuster
               Inc. dated July 12, 2000 for the production and distribution of
               promotional Blockbuster CD's that include software for the use of
               the V-flash module. The term of the agreement is three years and
               shall be automatically renewed for one year periods; provided,
               however, that after the first year, Blockbuster will have the
               right to terminate the agreement for any reason with 60 days
               prior written notice and ValueFlash/CDKnet, LLC will have the
               right to terminate the agreement for any reason with six months
               prior notice.

         o     Letter Agreement between CDKnet, LLC and Energenic, LLC dated
               October 11, 1999, for the exclusive further development of the
               technology used by ValueFlash. Under the agreement, ValueFlash
               (1) granted Energenic options to purchase 150 shares of
               ValueFlash's common stock; (2) granted Bob Hopwood options to
               purchase 50,000 shares at the price of $2.00 per share; and (3)
               may grant Energenic additional incentive options to purchase
               50,000 shares for $2.00 per share. In addition, by January 1,
               2001, ValueFlash will grant Bob Hopwood options to purchase
               50,000 shares of its common stock for 25% of the market price of
               the stock; and will grant Energenic options to purchase 50,000
               shares of its common stock for 25% less than the market price.

         o     Joint Venture Agreement between Infocom Technology Ltd. and
               ValueFlash dated June 15, 2000, providing for the creation of a
               new joint venture called ValueFlash (Asia) Ltd. ValueFlash will
               have a thirty percent ownership interest and profit share in the
               joint venture. Infocom will pay an initial agency fee of
               $1,000,000. Thereafter, Infocom will pay an annual fee based on
               the gross revenue of Infocom. Infocom has the option to have a
               joint venture with ValueFlash in Hong Kong, Taiwan, and China to
               offer ValueFlash services that include hosting, graphic design,
               client database management and software maintenance in connection
               with the V-Flash technology. The term of this agreement is
               indefinite.

         o     Letter Agreement between BusinessDevelopment.com and ValueFlash
               dated July 21, 2000, to introduce ValueFlash to various
               businesses. In exchange, ValueFlash will issue to
               BusinessDevelopment.com a 5-year warrant for the purchase of 2.5
               million shares of ValueFlash's common stock at an exercise price
               of $1.50 per share. The warrants shall vest based on the number
               of clients to whom BusinessDevelopment.com introduces to
               ValueFlash. The term of this agreement is 2 years but is
               cancelable by either party at any time upon 30 days notice.

         o     Joint Venture Agreement between ValueFlash (Asia) Limited and
               Sprouts Online PTE, Ltd. dated September 15, 2000, providing for
               the creation of a joint venture company in China called
               VflashSingapore. The agreement gives VflashSingapore the right to
               become the regional partner for VflashAsia and its parent
               companies in Singapore, Malaysia and Indonesia. VflashSingapore
               will have the exclusive right to provide Vflash services in those
               territories, including hosting, graphic design, client data base
               management and software maintenance. VflashSingapore will pay an
               initial setup fee of $500,000 and an annual fee beginning in
               2001. VFlashAsia will own 30% of VFlashSingapore, and will
               receive 30% of the profits. The term of this agreement is
               indefinite.

         o     Joint Venture Agreement between ValueFlash and Infocom Technology
               Ltd. dated June 15, 2000, for the creation of a joint venture
               company in China that will be called ValueFlash (Asia) Ltd. The
               agreement gives VflashAsia the right to become the regional
               partner for Vflash in Hong Kong, Taiwan and China. VflashAsia
               will have the exclusive right to provide Vflash services in those
               territories, including hosting, graphic design, client data base
               management and software maintenance. VflashAsia is obligated to
               pay minimum fees totaling $6 million through 2005. VFlash will
               own 30% of VflashAsia. The term of this agreement is indefinite,
               subject to certain performance criteria.


5.       INTELLECTUAL PROPERTY RIGHTS

         We rely on copyrights, trademarks, patents, trade secret laws and
contractual restrictions to establish and protect our proprietary rights in our
services and products. We were issued U.S. Patent No. 6,047,292 on April 4,
2000, relating to the basic CDK(TM) technology. The patent is directed to a
multi-session, digitally encoded recording medium navigable by an Internet web
browser. Our intellectual property counsel has filed a continuation application
to separate the previously rejected claims from the issued patent into a new
application, which intellectual property counsel will continue to prosecute in
the U.S. Patent and Trademark Office.

         No assurance can be given that a second patent will issue or that if a
second patent does issue that it will be broad enough to provide significant
protection to us. No assurance can be given that the issued patent is valid and
enforceable or that it provides sufficient coverage to prevent a competitor from
entering our market or adopting a version of our patented technology. Moreover,
one of our competitors may be able to design a system which operates similarly
to ours, but does not infringe the patent. Our management believes that the
steps taken by us to protect its intellectual property are consistent with
industry standards for online, custom compact disc companies today.

         Additionally, on June 6, 2000, we filed a patent application (No.
09/588,768) for a system and method for disseminating information over a
communication network according to predefined consumer profiles, for our Vflash
product.


                                      -22-
<PAGE>

         We also rely on third-party software licenses, such as Microsoft
Development Network (MSDN), which provides software development tools. All
employees and contractors are required to and have entered into confidentiality
and invention assignment agreements. Suppliers, distributors and customers are
also required to enter into confidentiality agreements.

         To date, we have received no notification that our services or products
infringe the proprietary rights of third parties. Third parties could however
make claims of infringement in the future. Any future claims that do occur may
have a material adverse effect on our business.


         We have the following issued and pending trademarks:

               o   Issued Trademark Registrations
                   ------------------------------
                   TM: CDK
                   Serial No. 75/426,937 - Filed February 2, 1998
                   Issued: 06-27-00
                   Reg. No. 2,361,144

               o   Pending
                   -------
                   TM: MIX FACTORY
                   Serial No. 75/757,751
                   Filed: 7/22/99

                   TM: VFLASH
                   Serial No. 75/950,782
                   Filed: 3/2/00


6.       EMPLOYEES

         As of October 12, 2000, we had the following number of employees: 36
full-time employees of ValueFlash; and 6 full-time employees of CDKnet,LLC.
While sourcing and recruiting appropriate technical personnel is often difficult
and competitive, we expect that our need to recruit additional personnel in the
future will not negatively affect our operations. Management believes that our
employee relations are good, and none of our employees are represented by a
collective bargaining unit.

ITEM 2.  DESCRIPTION OF PROPERTY.

         Our executive office is located at 250 57th Street, Suite 1101, New
York, New York 10019.  Our executive office may be reached at (212) 547-6050.






                                      -23-
<PAGE>

         Our manufacturing, research and development is conducted out of our
offices located at 250 West 57th Street, New York, New York 10019. The office
consists of approximately 6,690 square feet, leased under the terms of two
leases. We have 10-year leases for this office space through 2010. The lease
calls for annual rent payments at: $207,000 from 2000 to 2002; $221,000 from
2002 to 2004; $227,000 from 2004 to 2006; and $234,000 from 2006 through 2010.
This office may be contacted by telephone at 212-547-6050. All property is
insured to industry standards.

         We have a sales office in Los Angeles, California. The office consists
of approximately 2,180 square feet and is being leased for three years. The
annual lease rate ranges from $85,000 to $90,000.


ITEM 3.  LEGAL PROCEEDINGS.

         On March 30, 2000, our subsidiary, CDKnet, LLC, along with Shai
Bar-Lavi (Chief Executive Officer of CDKnet, LLC and Chief Executive Officer and
Chairman of ValueFlash), and John Nussbaum, were sued in Superior Court in
California, County of Los Angeles, by Wordsite, Inc., the landlord of our
California office. The lawsuit alleged conversion, fraud and breach of oral
contract. The lawsuit was settled out of court by the parties on May, 31, 2000.



                                     PART II
                                     -------


ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

1.       MARKET INFORMATION

         Our stock is quoted on the Over-the-Counter Bulletin Board. As of
October 11, 2000, we had 21,348,177 shares of common stock outstanding. Of this
amount, 6,244,839 of those shares are nonrestricted and 15,076,992 of those
shares are restricted. As of October 11, 2000, the number of holders of record
of our common stock, $0.0001 par value, was 137. The following table sets forth
the range of high and low sales prices for the stock for each full quarterly
period within the two most recent fiscal years and any subsequent interim period
covered by the financials. The sales represent prices between dealers, do not
include retail markup, mark down or other fees or commissions, and do not
necessarily represent actual transactions.









                                      -24-
<PAGE>

Calendar Quarter                             Bid Prices
     Ended                     Low                                 High
----------------              ------------------------------------------

FISCAL YEAR 1999

September 30, 1998            $.500                               $3.625
December 31, 1998             $.500                               $1.843
March 31, 1999                $.906                               $2.625
June 30, 1999                 $.937                               $3.125


FISCAL YEAR 2000

September 30, 1999            $.968                               $1.843
December 31, 1999             $.350                               $1.000
March 31, 2000                $.375                               $8.200
June 30, 2000                 $1.312                              $5.950


FISCAL YEAR 2001

July 1, 2000 to
September 30, 2000            $.687                               $3.937


2.       DIVIDEND POLICY

         To date, we have not paid a cash dividend to our shareholders. We are
also limited in our ability to do so under the terms of our 6% convertible
subordinated debenture due September 1, 2003. On April 12, 2000, we announced
our intent to explore the issuance of a dividend of ValueFlash common stock to
our shareholders.  The board is committed to issuing the dividend, pending
underwriter approval.

3.       RECENT SALES OF UNREGISTERED SECURITIES; USE OF PROCEEDS FROM
         REGISTERED SECURITIES

         We have filed two registration statements, as amended, with the
         Commission registering certain shares of our common stock as follows:

         o     On December 22, 1999, we filed a Registration Statement on Form
               SB-2 (File No. 333-93277), as amended, which became effective on
               March 27, 2000. This registration statement was amended by our
               August 1, 2000 registration statement which is not yet effective.

         o     On August 1, 2000, we filed a Registration Statement on Form SB-2
               (File No. 333-42696), which also amended our prior SB-2 (File No.
               333-93277). This registration statement is not yet effective.

         We incorporate by reference from our registration statement on Form
         SB-2, dated August 1, 2000 (File No. 333-93277), the list of securities
         that we have issued or sold during the last three years. The following
         additional securities were issued or sold without registering them
         under the Securities Act of 1933 in reliance upon the exemptions from
         registration provided by the Securities Act as follows:

         o     26,347 shares of our common stock representing conversion of
               $15,000 of 6% debentures. We issued stock to the purchaser in
               reliance upon the exemption provided by Regulation D and/or
               Section 4(2) because the purchaser is an accredited investor who
               purchased the options for investment purposes.

         o     250,000 five-year options to purchase our stock to Steven
               Wildstein exercisable at $0.69 per share expiring on September
               21, 2005 issued in connection with a Consulting Agreement between
               the parties dated September 22, 2000. We issued options to the
               purchaser in reliance upon the exemption provided by Regulation D
               and/or Section 4(2) because the purchaser is an accredited
               investor who purchased the options for investment purposes.

         o     500,000 five-year options to purchase our stock to Cutler, Ltd.,
               exercisable at $0.69 per share expiring on September 21, 2005
               issued in connection with a Consulting Agreement between the
               parties dated September 22, 2000. We issued options to the
               purchaser in reliance upon the exemption provided by Regulation D
               and/or Section 4(2) because the purchaser is an accredited
               investor who purchased the options for investment purposes.

         o     100,000 shares of ValueFlash common stock for $2.00 per share on
               August 8, 2000 and 150,000 warrants to purchase ValueFlash common
               stock at an exercise price of $2.00 per share expiring on August
               7, 2001 to David Wolf. We issued the stock and warrants to the
               purchasers in reliance upon the exemption provided by Regulation
               D and/or Section 4(2) because the purchaser is an accredited
               investor who purchased the stock and warrants for investment
               purposes.

         o     100,000 options to purchase common stock of ValueFlash.com, Inc.
               at an exercise price of $1.50 per share to Mary Benjamin
               effective June 26, 2000, in accordance with ValueFlash.com's
               Stock Option Plan. We issued options to the purchaser in reliance
               upon the exemption provided by Regulation D and/or Section 4(2).

         o     3,250,000 options to purchase common stock of ValueFlash.com,
               Inc. to J. Walter Thompson, at the exercise price of at $1.50 per
               share expiring on June 18, 2005 issued in connection with a
               Strategic Partnership between the parties dated June 29, 2000.
               750,000 options were issued at signing with the remaining
               2,500,000 options representing performance based options. We also
               issued 1,250,000 options to purchase the common stock of
               ValueFlash.com, Inc at the exercise price of $4.00 per share
               expiring on June 28, 2002. We issued options to the purchaser in
               reliance upon the exemption provided by Regulation D and/or
               Section 4(2) because the purchaser is an accredited investor who
               purchased the options for investment purposes.

         o     We have agreed to issue 2,500,000 performance based options to
               purchase common stock of ValueFlash.com, Inc. to
               BusinessDevelopment.com, at the exercise price of at $1.50 per
               share expiring on July 17, 2005, which options are to be issued
               in connection with a Letter Agreement between the parties dated
               July 18, 2000. We agreed to issue the options to the purchaser in
               reliance upon the exemption provided by Regulation D and/or
               Section 4(2) because the purchaser is an accredited investor who
               purchased the options for investment purposes.

         o     10,000 options to purchase common stock of ValueFlash.com, Inc.
               at an exercise price of $1.50 per share to Charles Hale effective
               March 31, 2000, in consideration of agreeing to work exclusively
               on ValueFlash.com, Inc. projects until at least September 30,
               2000 at reduced billing rates and working overtime when required.
               We issued options to the purchaser in reliance upon the exemption
               provided by Regulation D and/or Section 4(2).

         o     We have agreed to issue 1,250,000 performance based options to
               purchase common stock of ValueFlash.com, Inc. at the exercise
               price of at $1.50 per share and 1,250,000 performance based
               options at an exercise price to be determined by April 1, 2001,
               to Young & Rubicam Inc, all expiring on February 2, 2005, in
               connection with a Letter Agreement between the parties dated
               February 3, 2005. We agreed to issue the options to the purchaser
               in reliance upon the exemption provided by Regulation D and/or
               Section 4(2) because the purchaser is an accredited investor who
               purchased the options for investment purposes.

         o     150,000 options to purchase common stock of ValueFlash.com, Inc.
               at an exercise price of $2.00 per share to Marcia Irwin effective
               February 14, 2000, in accordance with ValueFlash.com's Stock
               Option Plan. We issued options to the purchaser in reliance upon
               the exemption provided by Regulation D and/or Section 4(2).

         o     100,000 options to purchase common stock of ValueFlash.com, Inc.
               at an exercise price of $2.00 per share to Yaron Ben-Horin
               effective February 14, 2000, in accordance with ValueFlash.com's
               Stock Option Plan. We issued options to the purchaser in reliance
               upon the exemption provided by Regulation D and/or Section 4(2).

                                      -25-
<PAGE>

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

The following contains forward-looking statements based on current expectations,
estimates and projections about our industry, management's beliefs, and
assumptions made by management. All statements, trends, analyses and other
information contained in this report relative to trends in our financial
condition and liquidity, as well as other statements, including, but not limited
to, words such as "anticipate," "believe," "plan," "intend," "expect,"
"predict," and other similar expressions constitute those statements. These
statements are not guarantees of future performance and are subject to risks and
uncertainties that are difficult to predict. Accordingly, actual results may
differ materially from those anticipated or expressed in the statements.
Potential risks and uncertainties include, among others, those set forth below.
Particular attention should be paid to the cautionary statements involving our
limited operating history, the unpredictability of our future revenues, the
unpredictable and evolving nature of our business model, the competitive online,
multimedia CD industry and the risks associated with capacity constraints,
systems development, management of growth and business expansion, as well as
other risk factors.

Overview
--------

We have developed a multimedia technology, called CDK(TM), which integrates
audio, video and Internet connectivity on a standard compact disc. Our
technology enables users to create their own personalized compact discs simply
by visiting a Website. These custom compact discs play audio and display videos
on a full-screen, using high-quality videos and digital technology. The custom
compact discs also include software applications and targeted Web links.

We have also developed "VFlash(TM)," a software based communication module which
we are distributing through our subsidiary, ValueFlash. VFlash provides a real
time, direct communication vehicle for marketers to reach their customers using
a personal computer desktop application. Our subsidiary, CDKnet, LLC, initially
developed the VFlash product. It was transferred to ValueFlash in January 2000
for further development, production, marketing and distribution. VFlash will be
distributed by multimedia CDs that will be produced by CDKnet, LLC and by
downloads from the Internet.

The CDK(TM) product is targeted at the following industries: (1) entertainment
(music, movies, and TV); (2) travel and tourism; (3) professional sports; (4)
financial services; (5) education; (6) toys/games; (7) fashion; (8)
food/cooking; (9) automotive; and (10) healthcare. Its primary customers and/or
strategic partners include Central Park Media, CollegeMusic.com, Megaforce
Records, HappyPuppy.com, theglobe.com and SugarBeats.com.




                                      -26-
<PAGE>

In March 2000, the first VFlash(TM) messenger application was launched. In the
subsequent months, marketing alliances with Atlantic Records, Impiric (formerly
Wunderman Cato Johnson), J. Walter Thompson, RCA Records, Blockbuster, NBC, EMI
Christian Music Group and Artemis Records have been announced.

We have a limited operating history. While historically we have generated
revenues primarily from development and use fees for client specific CD's and
the sale of custom CD's, most resources have been directed to developing and
marketing the VFlash product in accordance with our fiscal 2000 operating plan.
We anticipate that VFlash will be a major factor in our future revenue and
business growth. We expect our revenue growth to be generated from international
licensing agreements, hosting fees, advertising commissions and e-commerce
revenue splits related to the VFlash product.

Significant expenditures have been incurred and will continue to be required for
marketing and advertising the product and to build the infrastructure to support
it.

From a marketing standpoint, we continue to: (1) maintain corporate and
ValueFlash Web sites which solicit feedback from potential clients; (2) appear
at relevant trade shows and seminars; and (3) retain a public relations firm to
service corporate announcements to the press. In the near term, we will continue
to focus on generating revenue from the sale of client-specific CDKs, MixFactory
custom CD services, and the VFlash desktop, direct marketing application and
communications module.

Our current business development efforts include both full-time employees as
well as outside consultants. Consultants are compensated on a performance basis.

We receive funds from product sales and services. We also continue to rely on
our ability to raise money through equity financing to fund our business
endeavors. To date, we have focused our funds on the development of CDK(TM)
products (including CDK(TM)) 1.0, CDK(TM) 2.0, and Gameplayer 2.0 and our new
E-commerce facility MixFactory.com(TM), and VFlash.

We have had success at recent financing efforts although we have had a history
of operating losses that raised doubts about our ability to continue operations.
The Company has raised $3 million from the sale of our common stock in the year
ended June 30, 2000. We have also successfully raised $2.5 million in private
financings through our subsidiary, ValueFlash.com, Inc. through June 30, 2000
and an additional $700,000 subsequent to then.

We will continue to explore various financings including private placements and
debt financings.

If we are unable to obtain significant additional financing or otherwise obtain
working capital to fund our operations, we may be obliged to seek protection of
the bankruptcy courts. Our current and former independent certified public
accountants added an emphasis paragraph to their report on our consolidated
financial statements as of June 30, 2000 and 1999 and for each of the years then
ended,
                                      -27-
<PAGE>

relating to factors that cast substantial doubt about our ability to continue as
a going concern. The factors cited by them include the following: (1) continued
losses; (2) use of significant cash in operations, and (3) lack of sufficient
funds to execute our business plan.

As of October 11, 2000, we had 21,321,831 shares of common stock issued and
outstanding. In April, 2000, we were reinstated on the Over-the-Counter Bulletin
Board where our stock is traded under the symbol "CDKX."

Recent Developments
-------------------

Stock Dividend

On April 12, 2000, we announced our intention to issue a stock dividend based
upon 10% of our holdings in our subsidiary, ValueFlash, subject to registration
and underwriter approval prior to distribution. Our board of directors is
committed to issuing such a dividend, pending underwriter approval.

Stock Issuance

In July and August 2000 ValueFlash sold 350,000 shares of common stock for
$700,000 through private equity sales, of which $550,000 was received by
October 5, 2000.

Agreements

In July 2000, ValueFlash acquired a 20% interest in ValueFlash Japan Ltd. for
$470,000.

Results of Operations - Years ended June 30, 2000 and June 30, 1999
-------------------------------------------------------------------

During the year ended June 30, 2000, we incurred a net loss of $7.1 million on
revenues of $345,000 compared to a net loss of $6.2 million on revenues of
$474,000 in the year ended June 30, 1999. Revenues declined $129,000 in the
current year due to the continued shift in focus to enhancing our core
technologies and product development. While such shift contributed to declining
revenues through the first nine months of fiscal 2000, fiscal fourth quarter
2000 revenues increased significantly compared to the prior year period due to
international licensing fees for the Vflash product in Japan.

The cost of revenues for the year ended June 30, 2000 was $80,000 compared to
$289,000 for the year ended June 30, 1999. The decreasing costs are directly
related to the decrease in revenues noted above.




                                      -28-
<PAGE>

For the year ended fiscal 2000, we expensed approximately $164,000 on research
and development compared to $211,000 during fiscal year end 1999. Our research
and development costs were higher during the fiscal 2000 due to expenditures for
the development of V-Flash, enhancements to our core technology and product
development.

For the year ended June 30, 2000, other operating expenses were $6.0 million
compared to $3.3 million during the year ended June 30,1999 as expenditures
related to the marketing, advertising and infrastructure buildup to support
ValueFlash were incurred.

Interest expense was $84,000 for the fiscal 2000, compared to $1,105,000 in
fiscal 1999. Fiscal year ended 1999 included approximately $1.0 million in
interest related to beneficial conversions and debt discount amortization.


Liquidity and Capital Resources
-------------------------------

As of June 30, 2000, we had $1.0 million in cash and cash equivalents. Our
principal commitments are $255,000 in Subordinated Convertible Debentures and
$151,000 in long-term debt and operating and capital lease obligations. We have
no material commitments for capital expenditures, nor do we anticipate any. We
anticipate that we will experience growth in operating, marketing and
advertising expenses for the foreseeable future and that such expenses will be a
material use of our cash resources.

Our cash requirements have historically been financed primarily through the sale
of debentures and common stock. In the year ended June 2000, $3 million has been
raised from the sale of our common stock and $2,500,000 from the sale of
ValueFlash.com, Inc. common stock through private equity sales to outside
investors. We do not maintain credit facilities with any financial institutions.
Future financings will be necessary to fund our operations in the form of
additional debt and equity transactions. There can be no assurances that we will
be able to secure sufficient funding to continue executing our operating plan,
but management believes that we will be able to secure sufficient financing for
operations for the next twelve months.

Net cash used by operating activities equaled $4.2 million for the year ended
June 30, 2000, compared to net cash used in operating activities of $2.2 million
for the year ended June 30, 1999. Cash used by operations resulted from net
losses partly offset by non-cash depreciation and amortization charges,
compensation charges related to stock options and services paid in common stock
and warrants.

Net cash used in investing activities was $627,000 for the year ended June 30,
2000, compared to $241,000 in the prior year period. Net cash used in investing
activities in each of these periods was primarily due to the purchases of
furniture and equipment. Additionally, in fiscal year ended June 30, 2000, the
Company spent $323,000 on software development, mostly on the VFlash product.

Net cash from financing activities was $5.6 million for the year ended June 30,
2000, compared to $2.2 million for the year ended June 30, 1999. Cash provided
by financing activities resulted from $3 million in proceeds from the sale of
our common stock, $2.5 million in proceeds from the sale of ValueFlash common
stock and minority interest sale.

                                      -29-
<PAGE>

The proceeds from these financing activities have been and will be used to (i)
continue our ongoing operations, (ii) to further develop our CDK(TM), VFlash,
Gameplayer, and MixFactory.com(TM) product lines, and (iii) repay our debt.

Factors Affecting Future Results
--------------------------------

We do not provide forward looking financial information. However, from time to
time statements are made by employees that may contain forward looking
information that involve risks and uncertainties. In particular, statements
contained in this annual report that do not historically contain predictions
are made under the Safe Harbor Corporate Private Sector Litigation Reform Act of
1995. Our actual result of operations and financial condition have varied and
may in the future vary significantly from those stated in any predictions.
Factors that may cause these differences include without limitation the risk,
uncertainties and other information discussed within this registration
statement, as well as the accuracy of our internal estimate of revenue and
operating expense levels. We face a number of risk factors which may create
circumstances beyond the control of management and adversely impact the ability
to achieve our business plan.





ITEM 7.  FINANCIAL STATEMENTS.

         Our financial statements are filed under this Item 7, beginning on page
         F-1 of this report.
















                                      -30-
<PAGE>

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

         The information called for by this Item 8 is incorporated by reference
from our: (1) Registration Statement on Form 10-SB, as amended (File No.
0-27587) filed with the Commission on October 7, 1999, and (2) quarterly report
on Form 10-QSB filed with the Commission on February 14, 2000 and amended on
February 25, 2000 (File No. 0-27587).


                                    PART III
                                    --------

         The information called for by Part III of Form 10-KSB (consisting of
Item 9 - Directors and Executive Officers of the Registrant, Item 10 - Executive
Compensation, Item 11 - Security Ownership of Certain Beneficial Owners and
Management and Item 12 - Certain Relationships and Related Transactions) is
incorporated by reference from our definitive proxy statement, which will be
filed with the Securities and Exchange Commission within 120 days after the end
of the fiscal year to which this Annual Report on Form 10-KSB relates.


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

         (a)   The exhibits to this Form 10-KSB are listed in subsection (d) of
               this Item 13.

         (b)   No reports on Form 8-K were filed during the last quarter of the
               period covered by this report.

         (c)   Our financial statements are set forth beginning on page F-1 of
               this report.





















                                      -31-
<PAGE>


         (d)      Exhibits.

                                  EXHIBIT INDEX
                                  -------------

   3.1     Articles of Incorporation of the Registrant. (Incorporated by
           reference from our Registration Statement filed on Form 10-SB on
           October 7, 1999 (File No. 0-27587).)
   3.2     Amendment to the Articles of Incorporation. (Incorporated by
           reference from our Registration Statement filed on Form 10-SB on
           October 7, 1999 (File No. 0-27587).)
   3.3     By-Laws of the Registrant. (Incorporated by reference from our
           Registration Statement filed on Form 10-SB on October 7, 1999 (File
           No. 0-27587).)
   3.4     Certificate of Merger of the Registrant. (Incorporated by reference
           from our Registration Statement filed on Form 10-SB on October 7,
           1999 (File No. 0-27587).)
   3.5     Amendment to the Articles of Incorporation. (Incorporated by
           reference from our Registration Statement filed on Form 10-SB on
           October 7, 1999 (File No. 0-27587).)
   3.6     Designation of Series A Preferred Stock. (Incorporated by reference
           from our Registration Statement filed on Form 10-SB on October 7,
           1999 (File No. 0-27587).)
   4.1     Specimen of Common Stock Certificate. (Incorporated by reference from
           our Registration Statement filed on Form 10-SB on October 7, 1999
           (File No. 0-27587).)
   4.2     Technology Horizons Corp. Stockholders Agreement dated May 7, 1998.
           (Incorporated by reference from our Registration Statement filed on
           Form 10-SB on October 7, 1999 (File No. 0-27587).)
   10.1    Technology Horizons Corp. 1998 Equity Incentive Plan. (Incorporated
           by reference from our Registration Statement filed on Form 10-SB on
           October 7, 1999 (File No. 0-27587).)
   10.2    Convertible Subordinated Debenture Due February 1, 2009.
           (Incorporated by reference from our Registration Statement filed on
           Form 10-SB Amendment No. 2 on November 26, 1999 (File No. 0-27587).)
   10.2.1  Amendment No. 1 to Convertible Subordinated Debenture due February 1,
           2009. (Incorporated by reference from our Registration Statement
           filed on Form 10-SB Amendment No. 2 on November 26, 1999 (File No.
           0-27587).)
   10.3    Registration Rights Agreement between Technology Horizons Corp. and
           Kelly Music & Entertainment Corp. dated September 4, 1998.
           (Incorporated by reference from our Registration Statement filed on
           Form 10-SB on October 7, 1999 (File No. 0-27587).)
   10.4    Assignment Agreement between Kelly Music & Entertainment Corp. and
           Technology Horizons Corp. dated September 4, 1998. (Incorporated by
           reference from our Registration Statement filed on Form 10-SB on
           October 7, 1999 (File No. 0-27587).)
   10.5    Amendment to Registration Rights Agreement between Technology
           Horizons Corp. and Alvin Pock dated October 15, 1998. (Incorporated
           by reference from our Registration Statement filed on Form 10-SB on
           October 7, 1999 (File No. 0-27587).)


                                      -32-
<PAGE>

   10.6    Amendment to Registration Rights Agreement between Technology
           Horizons Corp. and Robert L. Kelly dated October 15, 1998.
           (Incorporated by reference from our Registration Statement filed on
           Form 10-SB on October 7, 1999 (File No. 0-27587).)
   10.7    Registration Rights Agreement between Technology Horizons Corp. and
           Robert L. Kelly dated June 3, 1998. (Incorporated by reference from
           our Registration Statement filed on Form 10-SB on October 7, 1999
           (File No. 0-27587).)
   10.8    Registration Rights Agreement between Technology Horizons Corp. and
           Alvin Pock dated June 3, 1998. (Incorporated by reference from our
           Registration Statement filed on Form 10-SB on October 7, 1999 (File
           No. 0-27587).)
   10.9    Assignment Agreement between Robert L. Kelly and Technology Horizons
           Corp. dated June 3, 1998. (Incorporated by reference from our
           Registration Statement filed on Form 10-SB on October 7, 1999 (File
           No. 0-27587).)
   10.10   Assignment Agreement between Alvin Pock and Technology Horizons Corp.
           dated June 3, 1998. (Incorporated by reference from our Registration
           Statement filed on Form 10-SB on October 7, 1999 (File No. 0-27587).)
   10.11   Assignment Agreement between Kelly Music & Entertainment Corp. and
           CDKnet, LLC, dated June 3, 1998. (Incorporated by reference from our
           Registration Statement filed on Form 10-SB on October 7, 1999 (File
           No. 0-27587).)
   10.12   Employment Agreement, dated August 1, 1999, by and between
           CDKNET.COM, INC. and Shai Bar-Lavi. (Incorporated by reference from
           our Registration Statement filed on Form 10-SB on October 7, 1999
           (File No. 0-27587).)
   10.13   Finder's Agreement between the Registrant and Shai Bar-Lavi and
           Frederick Smithline dated June 1, 1999. (Incorporated by reference
           from our Registration Statement filed on Form 10-SB Amendment No. 2
           on November 26, 1999 (File No. 0-27587).)
   10.14   Employment Agreement dated August 1, 1999, by and between CDK, LLC
           and Tom Ross. (Incorporated by reference from our Registration
           Statement filed on Form 10-SB Amendment No. 2 on November 26, 1999
           (File No. 0-27587).)
   10.15   Stock Purchase Agreement between CDKnet.com, Inc. and the Gross
           Foundation, Inc., Steven A. Horowitz, Shai Bar-Lavi, and Michael
           Sonnenberg dated November 2, 1999. (Incorporated by reference from
           our Registration Statement filed on Form 10-SB Amendment No. 2 on
           November 26, 1999 (File No. 0-27587).)
   10.16   Subscription Agreement between CDK and Asia Pioneer Limited dated
           November 16, 1999. (Incorporated by reference from our Registration
           Statement filed on Form 10-SB Amendment No. 4 on March 6, 2000 (File
           No. 0-27587).)
   10.17   Technology and License Agreement CDK and Asia Pioneer Limited dated
           November 16, 1999. (Incorporated by reference from our Registration
           Statement filed on Form 10-SB Amendment No. 4 on March 6, 2000 (File
           No. 0-27587).)
   10.18   Agreement dated March 19, 1999 between Peterson's and CDKnet, LLC.
           (Incorporated by reference from our Registration Statement filed on
           Form 10-SB Amendment No. 2 on November 26, 1999 (File No. 0-27587).)




                                      -33-
<PAGE>

   10.19   Undated Registration Rights Agreement between Spiga Limited and CDK
           INC. (Incorporated by reference from our Registration Statement filed
           on Form 10-SB Amendment No. 2 on November 26, 1999 (File No.
           0-27587).)
   10.20   Agreement dated October 25, 1999, between CDKnet, LLC and Atomic Pop,
           LLC. (Incorporated by reference from our Registration Statement filed
           on Form 10-SB Amendment No. 4 on March 6, 2000 (File No. 0-27587).)
   10.21   Agreement dated March 29, 1999, between Central Park Media Corp. and
           CDKnet, LLC. (Incorporated by reference from our Registration
           Statement filed on Form 10-SB Amendment No. 2 on November 26, 1999
           (File No. 0-27587).)
   10.22   Purchase Agreement dated August 9, 1999 between CDK and Y2G.
           (Incorporated by reference from our Registration Statement filed on
           Form 10-SB Amendment No. 2 on November 26, 1999 (File No. 0-27587).)
   10.23   Convertible Subordinated Debenture Due September 1, 2003.
           (Incorporated by reference from our Registration Statement filed on
           Form 10-SB Amendment No. 2 on November 26, 1999 (File No. 0-27587).)
   10.24   Letter Agreement dated May 4, 1998, between Megaforce Entertainment
           and CDKnet, LLC regarding the use of CDK technology. (Incorporated by
           reference from our Registration Statement filed on Form 10-SB
           Amendment No. 2 on November 26, 1999 (File No. 0-27587).)
   10.25   Agreement dated August 5, 1999 between the Company and DreamWorks
           Records. (Incorporated by reference from our Registration Statement
           filed on Form 10-SB Amendment No. 4 on March 6, 2000 (File No.
           0-27587).)
   10.26   Agreement dated September 16, 1999 between the Company and
           CollegeMusic, Inc. (Incorporated by reference from our Registration
           Statement filed on Form 10-SB Amendment No. 4 on March 6, 2000 (File
           No. 0-27587).)
   10.27   Agreement between CDKnet, Inc. and Young & Rubicam dated February 3,
           2000. (Incorporated by reference from our Registration Statement on
           Form SB-2 dated August 1, 2000 (File No. 333-42696).)
   10.28   Agreement between ValueFlash.com Incorporated and Richard A. Eisner
           and Company dated April 15, 2000. (Incorporated by reference from our
           Registration Statement on Form SB-2 dated August 1, 2000 (File No.
           333-42696).)
   10.29   Agreement between ValueFlash.com Incorporated, CDKnet, LLC, Track
           Marketing and Arcadia Marketing, Inc. dated May 4, 2000.
           (Incorporated by reference from our Registration Statement on Form
           SB-2 dated August 1, 2000 (File No. 333-42696).)
   10.30   Agreement between ValueFlash.com Incorporated, CDKnet, LLC, and
           Arcadia Marketing, Inc. dated May 4, 2000. (Incorporated by reference
           from our Registration Statement on Form SB-2 dated August 1, 2000
           (File No. 333-42696).)
   10.31   Agreement between ValueFlash.com Incorporated, CDKnet, LLC, JMC
           Investments, LLC and Arcadia Marketing, Inc. dated May 4, 2000.
           (Incorporated by reference from our Registration Statement on Form
           SB-2 dated August 1, 2000 (File No. 333-42696).)
   10.32   Development Proposal between ValueFlash.com Incorporated, CDKnet, LLC
           and House of Blues dated May 12, 2000. (The Registrant has requested
           confidential treatment of certain portions of this exhibit and has
           omitted such portions. A complete copy has been filed separately with
           the Commission.)




                                      -34-
<PAGE>

   10.33   Agreement between ValueFlash.com Incorporated and ValueFlash Japan
           Inc. dated May 25, 2000. (Incorporated by reference from our
           Registration Statement on Form SB-2 dated August 1, 2000 (File No.
           333-42696).)
   10.34   Agreement between ValueFlash.com Incorporated and Naviant Marketing
           Solutions, Inc. dated June 12, 2000. (Incorporated by reference from
           our Registration Statement on Form SB-2 dated August 1, 2000 (File
           No. 333-42696).)
   10.35   Agreement between ValueFlash.com Incorporated and theglobe.com, Inc.
           dated June 26, 2000. (Incorporated by reference from our Registration
           Statement on Form SB-2 dated August 1, 2000 (File No. 333-42696).)
   10.36   Agreement between CDKnet, LLC and theglobe.com, Inc. dated June 26,
           2000. (Incorporated by reference from our Registration Statement on
           Form SB-2 dated August 1, 2000 (File No. 333-42696).)
   10.37   Agreement between ValueFlash.com Incorporated and J. Walter Thompson
           U.S.A., Inc. dated June 29, 2000. (Incorporated by reference from our
           Registration Statement on Form SB-2 dated August 1, 2000 (File No.
           333-42696).)
   10.38   Warrant to Purchase Stock between ValueFlash.com Incorporated and WPP
           Dotcom Holdings (Twelve) LLC dated June 29, 2000, for 5% interest in
           ValueFlash.com. (Incorporated by reference from our Registration
           Statement on Form SB-2 dated August 1, 2000 (File No. 333-42696).)
   10.39   Warrant to Purchase Stock between ValueFlash.com Incorporated and WPP
           Dotcom Holdings (Twelve) LLC dated June 29, 2000, for 5% interest in
           ValueFlash.com. (Incorporated by reference from our Registration
           Statement on Form SB-2 dated August 1, 2000 (File No. 333-42696).)
   10.40   Agreement between ValueFlash.com Incorporated and WPP Dotcom Holdings
           (Twelve) LLC dated June 29, 2000. (Incorporated by reference from our
           Registration Statement on Form SB-2 dated August 1, 2000 (File No.
           333-42696).)
   10.41   Agreement between ValueFlash.com Incorporated and ACUSA.com dated
           June 1, 2000 for services to the House of Blues. (Incorporated by
           reference from our Registration Statement on Form SB-2 dated August
           1, 2000 (File No. 333-42696).)
   10.42   Agreement between ValueFlash (Asia) Limited, Sprouts Online Pte Ltd.
           and Prodigy Alliances Pte Ltd. dated September 15, 2000.
   16      Letter from former accountant Grant Thornton LLP. (Incorporated by
           reference from our report on Form 10-QSB Amendment No. 1, filed on
           February 25, 2000.)
   16.1    Letter from former Accountant, Wagner, Zwerman & Steinberg LLP.
           (Incorporated by reference from our Registration Statement on Form
           10-SB Amendment No. 3 filed on December 28, 1999 (File No.
           000-27587).)




                                      -35-
<PAGE>

   21      Subsidiaries of the Registrant. (Incorporated by reference from our
           Registration Statement filed on Form 10-SB, as amended, on October 7,
           1999 (File No. 0-27587).)
   27      Financial Data Schedule.
   99.1    Chart of the signatories to the Company's Stockholder's Agreement
           (and their interest in the Company). (Incorporated by reference from
           our Registration Statement filed on Form SB-2 on December 22, 1999,
           as amended (File No. 333-93277).)




























                                      -36-
<PAGE>

                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report on form 10-KSB to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                           CDKnet.com, Inc.
                                           ----------------
                                           (Registrant)


                                           By: /s/ Steven A. Horowitz
                                               ----------------------------
                                               Chairman, Chief Executive
                                               Officer, Chief Financial
                                               Officer and Secretary

                                           Date:  October 13, 2000


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

<TABLE><CAPTION>
<S>                              <C>                              <C>
                                 Chairman, Chief Executive
                                 Officer, Chief Financial
/s/ Steven A. Horowitz            Officer and Secretary            October 13, 2000
---------------------------      -------------------------        ------------------
    Steven A. Horowitz                    (Title)                       (Date)



/s/ Andrew J. Schenker                   Director                  October 13, 2000
---------------------------      -------------------------        ------------------
    Andrew J. Schenker                    (Title)                       (Date)



/s/ Anthony J. Bonomo                    Director                  October 13, 2000
---------------------------      -------------------------        ------------------
    Anthony J. Bonomo                     (Title)                       (Date)


</TABLE>








                                      -37-
<PAGE>

                              FINANCIAL STATEMENTS

                                TABLE OF CONTENTS






                                                                         PAGE
                                                                         ----

Reports of Independent Certified Public Accountants                    F-1 - F-2



Financial Statements

    Consolidated Balance Sheet at June 30, 2000                           F-3

    Consolidated Statements of Operations for the years ended
      June 30, 2000 and June 30, 1999                                     F-4

    Consolidated Statement of Stockholders' Equity for the years
      ended June 30, 2000 and June 30, 1999                            F-5 - F-6

    Consolidated Statements of Cash Flows for the years ended
      June 30, 2000 and June 30, 1999                                  F-7 - F-8



    Notes to Consolidated Financial Statements                        F-9 - F-26



<PAGE>

                          INDEPENDENT AUDITOR'S REPORT


Board of Directors and Stockholders
CDKNET.COM, Inc. and Subsidiaries

         We have audited the accompanying consolidated balance sheet of
CDKNET.COM, Inc. as of June 30, 2000, and the related consolidated statements of
operations, stockholders' equity, and cash flows for the year ended June 30,
2000. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

         We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the 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 principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of the
Company as of June 30, 2000, and the results of its operations and cash flows
for the year ended June 30, 2000 in conformity with generally accepted
accounting principles.

         The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. The Company has suffered from
recurring losses from operations, including a net loss of $7,055,000 for the
year ended June 30, 2000, and has a working capital deficit as of June 30, 2000.
These factors raise substantial doubt about the Company's ability to continue as
a going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.



                                                  /s/ RADIN, GLASS & CO, LLP

                                                  Certified Public Accountants

New York, New York
September 8, 2000 and
October 5, 2000 as to Note 13




                                       F-1
<PAGE>



               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS





Board of Directors and Stockholders
CDKNET.COM, INC.

         We have audited the accompanying consolidated statements of operations,
stockholders' equity and cash flows for the year ended June 30, 1999 of
CDKNET.COM, INC. and Subsidiaries (the "Company"). These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

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

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated results of operations and
cash flows for the year ended June 30, 1999 of CDKNET.COM, INC. and Subsidiaries
in conformity with accounting principles generally accepted in the United States
of America.

         As shown in the consolidated financial statements, since inception the
Company has sustained significant losses and used substantial amounts of cash in
operations. The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going concern. The
uncertainty as to the Company's ability to raise additional financing and
sustain profitable operations, as discussed in Note 1 to the consolidated
financial statements, raises substantial doubt about the Company's ability to
continue as a going concern. The consolidated financial statements do not
include any adjustments that might result from this uncertainty.







/s/  GRANT THORNTON LLP

Melville, New York
September 21, 1999





                                       F-2
<PAGE>
                        CDKNET.COM, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET
                                                                     June 30,
                                                                       2000
                                     ASSETS                        ------------
CURRENT ASSETS
  Cash & cash equivalents                                          $  1,035,000
  Accounts receivable                                                   406,000
  Prepaid expenses and other current assets                              71,000
                                                                   ------------
          Total current assets                                        1,512,000

NOTES RECEIVABLE                                                        255,000
INVENTORY                                                               330,000
FURNITURE AND EQUIPMENT - at cost, less accumulated
  depreciation and amortization of $286,000                             676,000
COST IN EXCESS OF FAIR VALUE OF NET ASSETS ACQUIRED,
  less accumulated amortization of $2,901,000                         4,240,000
INTANGIBLE ASSETS, less accumulated amortization of $727,000            645,000
SOFTWARE DEVELOPMENT                                                    323,000
SECURITY DEPOSITS                                                        72,000
OTHER ASSETS
  Deferred financing costs, less accumulated
  amortization of $80,000                                                17,000
                                                                   ------------
                                                                   $  8,070,000
                                                                   ============
                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable and accrued expense                             $  1,161,000
  Deferred Revenue                                                      887,000
  Due to related party                                                  106,000
  Current portion of long-term debt and capitalized
    lease obligations                                                    58,000
                                                                   ------------
          Total current liabilities                                   2,212,000

LONG-TERM DEBT AND CAPITALIZED LEASE OBLIGATIONS,
  net of current portion                                                151,000
SUBORDINATED CONVERTIBLE DEBENTURES                                     255,000
MINORITY INTEREST                                                        71,000
OTHER LIABILITIES                                                        40,000

COMMITMENTS and CONTINGENCIES

STOCKHOLDERS' EQUITY
  Convertible Preferred stock - par value $.0001 per
    share; authorized 5,000,000 shares; 1,500,000
    shares outstanding (stated value $1,500,000)                      1,265,000
  Common stock - par value $.0001, per share;
    authorized, 40,000,000 shares; 21,236,986 shares
    issued and outstanding                                                2,000
  Additional paid in capital                                         19,258,000
  Accumulated deficit                                               (14,434,000)
  Unearned compensation expense                                        (750,000)
                                                                   ------------
                                                                      5,341,000
                                                                   ------------
                                                                   $  8,070,000
                                                                   ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT.

                                       F-3
<PAGE>
                        CDKNET.COM, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS



                                                    Year ended      Year ended
                                                     June 30,        June 30,
                                                       2000            1999
                                                   ------------    ------------
Net revenues                                       $    345,000    $    474,000
Cost of revenues                                         80,000         289,000
                                                   ------------    ------------
          Gross profit                                  265,000         185,000

Selling, general and administrative expenses          5,958,000       3,305,000
Depreciation and amortization                         1,868,000       1,981,000
                                                   ------------    ------------
          Loss from operations                       (7,561,000)     (5,101,000)

Other income (expense)
    Interest income                                      31,000          11,000
    Interest expense, including interest
      related to beneficial conversion and
      debt discount of $1,038,000 in 1999               (84,000)     (1,105,000)
    Gain on equipment sale                               80,000
    Minority interest in loss of subsidiary             479,000
                                                   ------------    ------------
          NET LOSS                                  ($7,055,000)    ($6,195,000)
                                                   ============    ============
Preferred dividend                                       63,000
                                                   ------------
Net Loss to Common Stockholders' Equity             ($7,118,000)    ($6,195,000)
                                                   ============    ============
Basic and diluted (loss) per share                       ($0.40)         ($0.47)
                                                   ============    ============
Weighted-average shares outstanding-
    basic and diluted                                17,704,924      13,282,176
                                                   ============    ============



THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT.


                                       F-4
<PAGE>
                        CDKNET.COM INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                   For the years ended June 30, 2000 and 1999

<TABLE><CAPTION>


                                     Preferred                         Common
                                       Shares          Amount          Shares          Amount
                                    ------------    ------------    ------------    ------------
<S>                                 <C>             <C>             <C>             <C>
Balance, June 30, 1998                                                11,300,348           1,000

Common stock and common stock
     warrants issued for purchase
     of fixed assets                                                      75,000
Common stock issued for purchase
     of minority interests                                             1,883,635
Debt discount
Conversion of subordinated
     debentures                                                          476,358
Common stock and common stock
     warrants issued for
     financing costs                                                      16,667
Exercise of stock options                                                116,084
Compensation related to stock
     option plan
Common stock and common stock
     warrants issued for services                                        175,000
Common stock issued in lieu of
     cash interest                                                         3,814
Stock warrants issued for
     termination agreement
Net loss
                                    ------------    ------------    ------------    ------------
Balance, June 30, 1999                         0               0      14,046,906           1,000

Common stock and common stock
     warrants sold for cash,
     net of expenses                                                   5,585,333           1,000
Conversion of 5.75% subordinated
     debentures to preferred
     shares, net                       1,500,000       1,265,000
Conversion of 6% subordinated
     debentures to common
     shares, net                                                          29,459
Exercise of stock options                                              1,254,623
Common shares issued for late
     registration penalty                                                  5,665
Common stock and common stock
     warrants issued for services                                        315,000
Equity in issuance of subsidiary
     stock - Valueflash
Preferred stock dividends paid
Net loss
                                    ------------    ------------    ------------    ------------
Balance, June 30, 2000                 1,500,000    $  1,265,000      21,236,986    $      2,000
                                    ============    ============    ============    ============
</TABLE>


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT.

                                       F-5
<PAGE>
                        CDKNET.COM INC. AND SUBSIDIARIES

           CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (CONTINUED)

                   For the years ended June 30, 2000 and 1999

<TABLE><CAPTION>

                                     Additional                       Unearned         Total
                                      paid-in        Accumulated    Compensation    Stockholders'
                                      capital          Deficit         Expense         Equity
                                    ------------    ------------    ------------    ------------
<S>                                 <C>             <C>             <C>             <C>
Balance, June 30, 1998                 5,250,000      (1,184,000)                      4,067,000

Common stock and common stock
     warrants issued for purchase
     of fixed assets                     144,000                                         144,000
Common stock issued for purchase
     of minority interests             4,506,000                                       4,506,000
Debt discount                          1,142,000                                       1,142,000
Conversion of subordinated
     debentures                          325,000                                         325,000
Common stock and common stock
     warrants issued for
     financing costs                      51,000                                          51,000
Exercise of stock options                 70,000                                          70,000
Compensation related to stock
     option plan                         248,000                                         248,000
Common stock and common stock
     warrants issued for services        396,000                                         396,000
Common stock issued in lieu of
     cash interest                         9,000                                           9,000
Stock warrants issued for
     termination agreement                91,000                                          91,000
Net loss                                              (6,195,000)                     (6,195,000)
                                    ------------    ------------    ------------    ------------
Balance, June 30, 1999                12,232,000      (7,379,000)              0       4,854,000

Common stock and common stock
     warrants sold for cash,
     net of expenses                   2,448,000                                       2,449,000
Conversion of 5.75% subordinated
     debentures to preferred
     shares, net                                                                       1,265,000
Conversion of 6% subordinated
     debentures to common
     shares, net                          20,000                                          20,000
Exercise of stock options                575,000                                         575,000
Common shares issued for late
     registration penalty
Common stock and common stock
     warrants issued for services      1,014,000                         (35,000)        979,000
Equity in issuance of subsidiary
     stock - Valueflash                2,977,000                        (715,000)      2,262,000
Preferred stock dividends paid            (8,000)                                         (8,000)
Net loss                                              (7,055,000)                     (7,055,000)
                                    ------------    ------------    ------------    ------------
Balance, June 30, 2000              $ 19,258,000    ($14,434,000)   ($   750,000)   $  5,341,000
                                    ============    ============    ============    ============
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT.

                                       F-6
<PAGE>
                        CDKNET.COM, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE><CAPTION>
                                                              Year ended     Year ended
                                                               June 30,       June 30,
                                                                 2000           1999
                                                              ----------     ----------
<S>                                                           <C>            <C>
Cash flows from operating activities
  Net loss                                                   ($7,118,000)   ($6,195,000)
  Adjustments to reconcile net loss to net
  cash used in operating activities
    Depreciation and amortization                              1,868,000      1,981,000
    Amortization of debt discount                                 49,000      1,038,000
    Uncollectible advances                                                       29,000
    Compensation related to stock option plan                    145,000        248,000
    Common stock and stock warrants issued for services          870,000        396,000
    Common stock issued in lieu of cash interest                                  9,000
    Stock warrants issued for termination agreement                              91,000
    Minority interest in loss of consolidated subsidiary        (479,000)
    Changes in assets and liabilities
        Accounts receivable                                     (387,000)        87,000
        Inventory                                               (330,000)         4,000
        Due from officer                                          12,000        (12,000)
        Prepaid expenses and other current assets                (61,000)        16,000
        Notes Receivable                                        (255,000)
        Accounts payable and accrued expense                     632,000        118,000
        Deferred Revenue                                         887,000
                                                              ----------     ----------
          Net cash used in operating activities               (4,167,000)    (2,190,000)

Cash flows from investing activities
    Purchase of furniture and equipment                         (426,000)      (212,000)
    Proceeds from sale of equipment                              154,000
    Advances to related party                                                   (29,000)
    Software development                                        (323,000)
    Security Deposits                                            (72,000)
    Other Liabilities                                             40,000
                                                              ----------     ----------
          Net cash used in investing activities                 (627,000)      (241,000)

Cash flows from financing activities
    Proceeds from notes payable                                                 792,000
    Repayment of notes payable                                                 (491,000)
    Proceeds from subordinated convertible debentures                         2,100,000
    Deferred financing costs                                                   (197,000)
    Principal payments on capitalized lease obligations         (169,000)       (11,000)
    Proceeds from issuance of common stock                     3,024,000
    Minority interest                                            550,000
    Equity in ValueFlash                                       2,201,000
    Preferred Dividends Paid                                      (8,000)
                                                              ----------     ----------
          Net cash provided by financing activities            5,598,000      2,193,000
                                                              ----------     ----------
          NET INCREASE (DECREASE) IN CASH                        804,000       (238,000)

Cash at beginning of period                                      231,000        469,000
                                                              ----------     ----------
Cash at end of period                                         $1,035,000     $  231,000
                                                              ==========     ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT.

                                       F-7
<PAGE>

                        CDKNET.COM, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)


<TABLE><CAPTION>
                                                                  Year ended     Year ended
                                                                   June 30,       June 30,
                                                                     2000           1999
                                                                  ----------     ----------
<S>                                                               <C>            <C>

Supplemental disclosures of cash flow information:
    Cash paid during the period for
        Interest                                                  $   78,000     $   36,000
        Income taxes
Noncash investing and financing transactions:
    Fixed asset acquisitions financed through
        capitalized lease obligations                                               114,000
    Common stock and stock warrants issued for purchase
        of fixed assets                                              110,000        144,000
    Common stock issued for purchase of minority interest                         4,506,000
    Debt discount                                                                 1,142,000
    Stock issued upon conversion of subordinated debentures        1,285,000        325,000
    Stock and stock warrants issued for financing costs              250,000         51,000
    Exercise of stock options for debt extinguishment                                70,000


</TABLE>





THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT.

                                       F-8
<PAGE>

                        CDKNET.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2000


NOTE 1 - NATURE OF OPERATIONS

CDKNET.COM, INC. and Subsidiaries, formerly Technology Horizons, Inc.
(collectively the "Company"), is a New York-based company that provides products
worldwide to customers utilizing internally developed technology. The Company
has developed a multimedia technology, CDK(TM), and a software based
communication module, VFlash(TM). The CDK(TM) technology integrates audio, video
and Internet connectivity on a standard compact disc ("CDs"), enabling users to
create personalized CDs simply by visiting a Website. The VFlash(TM) technology
provides a real-time, direct communication vehicle for marketers to reach their
customers using a personal computer desktop application.

The Company has a limited operating history. These financial statements are
prepared on a going-concern basis which assumes that the Company will realize
its assets and discharge its liabilities in the normal course of business. The
Company has incurred net losses of $14,387,000 since inception and has
experienced significant negative cash flows from operations. The Company's cash
requirements have been financed primarily through the sale of subordinated
convertible debentures and common stock of $2,100,000 and $1,960,000,
respectively, and through $2,500,000 in proceeds from the sale of a subsidiary's
(ValueFlash.com, Inc.) common stock and minority interest sale. The Company does
not maintain a credit facility with any financial institution.

The Company currently generates limited revenues from development and use fees
for client specific CDs, the sale of custom CDs and Vflash(TM) international
licensing fees. Most resources have been directed to developing and marketing
the Vflash(TM) product. It is expected that Vflash(TM) will be a major factor in
revenue and business growth beginning in fiscal year ended June 30, 2001.
Significant expenditures will also be incurred for marketing and advertising the
product and building the infrastructure to support it.

Remaining a going concern requires additional financing until such time as
sufficient cash flows are generated from operations. Additional debt and equity
financings are anticipated. There can be no assurances that the Company will be
able to obtain such financing to execute its business model, which is still
evolving. However, management believes that it will be able to secure sufficient
funding for operations at least for the next twelve months.

As a result of the continued losses, the use of significant cash in operations
and the lack of sufficient funds to execute its business plan, there is
substantial doubt about the Company's ability to continue as a going concern. No
adjustments have been made with respect to the consolidated financial statements
to record the results of the ultimate outcome of this uncertainty.



                                       F-9
<PAGE>
                        CDKNET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  June 30, 2000


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of
CDKNET.COM, INC. (the "Parent"), its wholly owned subsidiaries, Creative
Technology, LLC ("Creative") and CDKnet,LLC ("CDK LLC"), both limited liability
companies, and its majority owned subsidiary ValueFlash.com,Inc. ("ValueFlash")
after elimination of intercompany accounts and transactions. Certain amounts for
prior years have been reclassified to conform to the current presentation.

USE OF ESTIMATES

The Company uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. These estimates and
assumptions affect the reported amounts of assets and liabilities, the
disclosures of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that the Company uses.

REVENUE RECOGNITION AND DEFERRED REVENUE

The Company recognizes revenue for development and use fees for client-specific
CD's and custom CD's on the date the product is shipped to the customer.
Revenues from licensing and agency fees are recognized ratably over the term of
such agreements. Revenues from web links will be recognized in the month earned.
Revenues from web advertising will be recognized ratably over the period in
which the advertising is displayed. Revenues from barter advertising
transactions will be recognized during the period the advertising is displayed.
Barter transactions will be recorded at the fair market value of the goods or
services provided or received, whichever is more readily determinable. To date,
no revenues have occurred from the following revenue streams: web links, web
advertising and barter transactions.

ACCOUNTING FOR LONG-LIVED ASSETS

The Company reviews long-lived assets, certain identifiable assets and any
goodwill related to those assets for impairment whenever circumstances and
situations change such that there is an indication that the carrying amounts may
not be recoverable. At June 30, 2000, the Company believes that there has been
no impairment of long-lived assets.





                                      F-10
<PAGE>
                        CDKNET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  June 30, 2000


CASH AND CASH EQUIVALENTS

All liquid investments having an original maturity not exceeding three months
are treated as cash equivalents. Included in cash and cash equivalents is
$80,000 of restricted cash as collateral for a term loan. See Note 6.

INVENTORY

Inventory is valued at the lower of cost or market determined by the first-in,
first-out method of accounting.

FURNITURE AND EQUIPMENT

Furniture and equipment are recorded at cost. Maintenance and repairs are
charged to expenses as incurred; major renewals and betterments are capitalized.
When items of furniture or equipment are sold or retired, the related cost and
accumulated depreciation are removed from the accounts and any gain or loss is
included in the results of operations. Furniture and equipment are depreciated
using the straight-line method over their estimated useful lives, which range
from three to seven years. Leasehold improvements are amortized over the term of
the related lease or the useful life of the improvements, whichever is shorter.

COST IN EXCESS OF FAIR VALUE OF NET ASSETS ACQUIRED

Cost in excess of fair value of net assets acquired ("goodwill") is being
amortized on a straight-line basis over five years.

WEB-SITE DEVELOPMENT COSTS

The Company adopted EITF 00-2 "Accounting for Web-Site Development Costs." EITF
00-2 requires certain web-site development costs to be expensed and others to be
capitalized. No web-site development costs have been capitalized under EITF
00-2.

INTANGIBLE ASSETS

Intangible assets, principally acquired intellectual property related to the
acquisition, are being amortized over the estimated useful life of five years.
On an ongoing basis, management reviews the valuation and amortization of
goodwill and intangible assets to determine the possible impairment by
considering current operating results and comparing the carrying value to the
anticipated undiscounted cash flows of the related assets.

DEFERRED FINANCING COSTS

The costs associated with completed financings are being amortized ratably over
the term of the financing.




                                       F-11
<PAGE>
                        CDKNET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  June 30, 2000


RESEARCH AND DEVELOPMENT COSTS

Research and development costs include expenses incurred by the Company to
develop new products and enhance the Company's existing products. Research and
development costs are expensed as incurred. During the years ended June 30,2000,
and 1999 such costs aggregated $164,000 and $211,000, respectively.

SOFTWARE DEVELOPMENT COST

The Company capitalized software development costs in accordance with SFAS No.
86 and SOP 98-1. The Company has capitalized $343,000 of such software
development costs during the year ended June 30, 2000 and will amortize such
costs over 30 months on a straight-line basis.

STOCK BASED COMPENSATION

The Company accounts for employee stock options in accordance with APB Opinion
No. 25, "Accounting For Stock Issued to Employees" and has adopted the
disclosure-only option under SFAS No. 123 for compensation to employees and
directors. The Company accounts for non-employee stock transactions in
accordance with SFAS NO. 123 and ETIF 96-18.

INCOME TAXES

The Parent files separate Federal, state and city corporate income tax returns.
Creative and CDK LLC file separate Federal, state and city (where applicable)
partnership income tax returns. Earnings or losses from these limited liability
companies pass through directly to the Parent. ValueFlash will file separate tax
returns.

The Company follows the asset and liability method of accounting for income
taxes by applying statutory tax rates in effect at the balance sheet date to
differences among the book and tax bases of assets and liabilities. The
resulting deferred tax liabilities or assets are adjusted to reflect changes in
tax laws or rates by means of charges or credits to income tax expense. A
valuation allowance is recognized to the extent a portion or all of a deferred
tax asset may not be realizable.

LOSS PER COMMON SHARE

Basic loss per share is computed using the weighted average number of shares of
common stock outstanding during the period.

All potential common shares have been excluded from the computation of diluted
loss per share as their effect would be antidilutive and, accordingly, there is
no reconciliation of basic and diluted loss per share for each of the periods
presented.





                                       F-12
<PAGE>
                        CDKNET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  June 30, 2000


FAIR VALUE OF FINANCIAL INSTRUMENTS

Due to the substantial uncertainties about the Company's ability to continue as
a going concern, it is not practicable to estimate the fair value of the
Company's financial liabilities. Information concerning their terms is contained
in Notes 6 and 7.

CONCENTRATION OF CREDIT RISK

Included in accounts receivable is a $300,000 installment due on an agency
agreement, which was collected by August 31, 2000.

Occasionally, the Company has cash held in excess of $100,000, which exceeds the
FDIC insurance limits and is therefore uninsured.


NOTE 3 - NOTE RECEIVABLE

The Company has provided for a consultant to the Company to exercise his right
to purchase 350,000 shares of common stock in the Company at $.75 per share or
$262,500. The Company has recorded two notes receivable for total monies due on
December 31, 2000 which bear interest at 6% per annum. A $7,500 payment has
been received on account of the two notes due.


NOTE 4 -  ACQUISITION AND PURCHASE OF ASSETS

On July 8, 1998, the Company entered into an agreement, subsequently amended
(the "Agreement"), based on terms previously agreed upon with Kelly Music &
Entertainment, Inc. ("KME"), to acquire the minority interest of CDK LLC for
$5,171,000. The consideration was (1) the retirement of $600,000 of notes
accounted for as a stock subscription (2) issuance of 1,883,635 shares of the
Company's common stock and (3) a cash payment of $65,000. The amendment provided
for the waiver of previously agreed upon registration rights on common stock in
excess of 250,000 shares, terminated any and all demand registration rights with
certain stockholders of KME and released the Company from any and all claims,
liabilities, demands and causes of action known or unknown that KME could assert
in the future, as defined.

The Company accounted for the acquisition as a purchase. The Company valued the
minority interest based on the shares issued at the market price of the stock
after considering a 15% market discount for the shares that had no stated
registration rights requirement. The estimated fair value of the tangible assets
acquired of $700,000 approximated the book value of such assets. The excess
consideration over the estimated fair value of the net assets acquired of
$4,471,000 has been recorded as cost in excess of fair value of net assets
acquired and is being amortized on a straight-line basis over five years.





                                      F-13
<PAGE>
                        CDKNET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  June 30, 2000



NOTE 5 - FURNITURE AND EQUIPMENT

Furniture and equipment consist of the following at June 30, 2000:

     Furniture                                       $ 122,000
     Equipment                                         726,000
     Leasehold improvements                            114,000
                                                     ---------
                                                       962,000

Less accumulated depreciation and amortization         286,000
                                                     ---------
                                                     $ 676,000
                                                     =========

Depreciation expense for the years ended June 30, 2000 and 1999 was $165,000 and
$124,000, respectively.


NOTE 6 - LONG-TERM DEBT AND CAPITALIZED LEASE OBLIGATIONS

TERM LOAN

In June 1999, the Company entered into a term loan with a lender. Borrowings
aggregating $175,000 under the agreement, which are collateralized by the
equipment and cash collateral provided by the Company's CEO, are repayable in
monthly installments of approximately $3,500, including interest at 7.86%
through March 2004. As of June 30, 2000 the loan balance and cash collateral are
approximately $141,000 and $80,000, respectively.

CAPITALIZED LEASE OBLIGATIONS

The Company leases certain equipment under leases accounted for as capital
leases. The obligations require the Company to make monthly payments of
approximately $3,000 through May 2002.

The following is a summary of aggregate annual maturities of long-term debt and
capitalized lease obligations as of June 30, 2000.

Year ending June 30,
2001                                         $ 79,000
2002                                         $ 76,000
2003                                         $ 42,000
2004                                         $ 35,000
                                             --------

Less amounts representing interest             23,000
                                             --------
                                              209,000
Less current portion                          (58,000)
                                             --------
                                             $151,000
                                             ========





                                      F-14
<PAGE>
                        CDKNET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  June 30, 2000


Interest paid for the year ended June 30, 2000 was approximately $14,000.


NOTE 7 - SUBORDINATED CONVERTIBLE DEBENTURES

6.00% SUBORDINATED CONVERTIBLE DEBENTURES

During the period September 4, 1998 through January 21, 1999, the Company issued
$600,000 in 6% Subordinated Convertible Debentures due September 1, 2003 with
detachable five-year warrants (the "Notes") to purchase 60,000 shares of common
stock of the Company at an exercise price of $3.00 per share. The Notes are
immediately convertible into common stock of the Company at an effective
conversion price of the lower of (i) 70% of the average current market price of
the Company's common stock during the five days preceding the date of the
original issuance, or (ii) 75% of the average current market price during the
five-day trading period ending one trading day preceding the date the Notes are
converted. The agreement contains antidilution provisions whereby the conversion
price is subject to (downward) adjustment in certain circumstances. The Company
may redeem the Notes at any time for 120% of the principal amount of the Notes
plus accrued interest. The Notes are subordinated to the claims and rights of
all Senior Debt, as defined by the underlying agreement. In addition, the
agreement contains covenants limiting the Company's ability to pay dividends,
incur new debt, enter into certain transactions and reacquire common or
preferred stock of the Company. If an event of default occurs beyond a stated
cure period the notes shall become payable at the option of the holder.

In connection with the agreement, the Company recorded a discount on the Notes
in the aggregate amount of $238,000 resulting from the allocation of proceeds of
$203,000 to a beneficial conversion feature and the fair value of the underlying
warrants of $35,000. Due to the immediate conversion rights under the agreement,
the discount attributed to the beneficial conversion feature was expensed on the
date of issuance. The carrying value of the Notes is being accreted to the face
value of $600,000 using the interest method over the life of the Notes. The
accretion in fiscal 2000 and 1999 was $3,000 and $20,000, respectively.

During the period from issuance to June 30, 2000, $345,000 in debentures plus
accrued interest of $3,000 was converted into 480,172 shares of the Company's
common stock.

In connection with the sale of the Notes, the Company incurred fees of $60,000
and issued five-year warrants to purchase 30,000 shares of the Company's common
stock at $3.00 per share. The Company computed the approximate fair value of the
warrants issued to be $19,650 using the Black-Scholes method.







                                      F-15
<PAGE>
                        CDKNET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  June 30, 2000



5.75% SUBORDINATED CONVERTIBLE DEBENTURE CONVERTED TO PREFERRED STOCK

On February 2, 1999, the Company issued a $1,500,000, 5.75% Subordinated
Convertible Debenture due February 1, 2009 with detachable four-year warrants
(the "Debenture") to purchase 100,000 shares of common stock of the Company at
an exercise price of $1.75 per share. The Debenture is immediately convertible
into common stock of the Company at an effective conversion price of the lower
of (i) $1.30, or, (ii) subsequent to November 1, 1999, 75% of the average
current market price during the five-day trading period ending one trading day
preceding the date the Debenture is converted (limited to a minimum conversion
price of $.60 through July 1, 2000). The agreement contains antidilution
provisions whereby the conversion price is subject to (downward) adjustment in
certain circumstances. The Company, at its option, may convert the Debenture
into shares of 5.75% Convertible Preferred Stock having the same rights as the
Debenture. In October 1999, the Company exercised their right to call the
outstanding debentures in exchange for Preferred Stock. In addition, the
agreement contains covenants limiting the Company's ability to pay dividends,
incur new debt, enter into certain transactions and reacquire common or
preferred stock of the Company.

In connection with the agreement, the Company recorded a discount on the
Debenture in the aggregate amount of $756,000, resulting from the allocation of
proceeds of $663,000 to a beneficial conversion feature and the fair value of
the underlying warrants of $93,000. The fair value allocated to the warrants was
determined based on the estimated fair value of the debt using an effective
interest rate of 14% and the fair value of the warrants using the Black-Scholes
option-pricing model. Due to the immediate conversion rights under the
agreement, the discount attributed to the beneficial conversion feature was
expensed on the date of issuance.

In connection with the sale of the Debenture, the Company incurred fees of
$135,000 and issued 16,667 shares of the Company's common stock having a market
value of $31,250.


NOTE 8 - INCOME TAXES

Temporary differences which give rise to deferred taxes are summarized as
follows:

                                            2000               1999
                                         ----------         ----------
   Deferred tax assets:
     Net operating loss and other
     carryforwards                       $4,062,000         $1,510,000

   Less valuation allowance              (4,062,000)        (1,510,000)
                                         ----------         ----------
   Net deferred tax asset                $       --         $       --
                                         ==========         ==========


The Company has recorded a full valuation allowance to reflect the estimated
amount of deferred tax assets that may not be realized.

                                      F-16
<PAGE>
                        CDKNET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  June 30, 2000



The Company's effective income tax rate differs from the statutory Federal
income tax rate as a result of the following:

                                                   2000               1999
                                                -----------       -----------
Tax benefit at statutory rate                   $(2,399,000)      $(2,106,000)
Nondeductible expense/nontaxable (income)- net      340,000         1,219,000
State benefit, net of federal tax effect           (282,000)         (246,000)
Valuation allowance on net operating loss         2,341,000         1,133,000
                                                -----------       -----------
                                                $        --       $        --
                                                ===========       ===========


The provision for Federal income taxes has been determined on the basis of a
consolidated tax return. At June 30, 2000, the Company had a net operating loss
carry forward for Federal income tax reporting purposes amounting to
approximately $10,690,000, expiring from 2018 through 2020. The Internal Revenue
Code of 1986, as amended, limits the amount of taxable income the Company may
offset with net operating loss carry forwards in any single year. No Federal
taxes were paid in the years ended June 30, 2000 and 1999.


NOTE 9 -  STOCKHOLDERS' EQUITY

a.   On February 2, 1999, the Company's Board of Directors amended the
     certificate of incorporation, increasing the number of authorized shares
     from 20 million to 45 million, of which 5 million are preferred shares.

b.   During the year ended June 30, 1999 the Company executed the following
     summarized equity transactions;

o    1,883,635 shares of common stock was issued to purchase certain minority
     interests which resulted in a net $4,506,000 value attributed to the shares
     issued. See Note 4 for further discussions.

o    75,000 shares of common stock was issued for the purchase of certain fixed
     assets, which was valued at $144,000. The purchase of such fixed assets
     also included a cash component.

o    The Company recorded $1,142,000 of value attributed to the detachable
     equity rights related to the 6% and 5.75% convertible debentures issued as
     a debt discount. See Note 7 for further discussions.

o    The Company recorded $60,000 attributed to the issuance of 20,000 shares of
     common stock and warrants for certain financing costs.

o    During the year, $325,000 of 6% convertible debentures were converted into
     476,000 shares of common stock.







                                      F-17
<PAGE>
                        CDKNET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  June 30, 2000


o    Cashless stock options were converted into 116,000 shares of common stock.

o    The Company recorded $644,000 of compensation for services for 175,000
     shares of common stock and certain warrants to purchase common stock and
     stock options issued during the year. The common stock issued was valued at
     the fair value of the common stock when the Company was obligated to issue
     the common stock. The common stock options and warrants were valued
     utilizing the Black-Scholes option-pricing model.


c.   On October 1, 1999, the Company gave notice to the holders of the
     $1,500,000 5.75% Subordinated Convertible Debentures and exercised its
     right to call the outstanding Debentures in exchange for $1,500,000 of
     5.75% Convertible Preferred Stock. Under the terms of the Debentures, the
     Convertible Preferred Stock shall have: (1) liquidation preferences equal
     to the principal amount of the Debenture, (2) a 5.75% cumulative annual
     dividend payable quarterly, (3) rights to convert into shares of Common
     Stock at the same conversion rate as the Debentures and (4) the same
     redemption rights at the option of the Company. The Company has paid
     dividends for these debenture holders in the amount of $8,000, during the
     year ended June 30, 2000. An amount of $55,000 of preferred dividends not
     declared has accumulated and is unpaid as of June 30, 2000.


d.   During the year ended June 30, 2000, the Company executed the following
     summarized equity transactions:

o    The Company sold 5,585,000 shares of common stock and common stock warrants
     or options for $2,448,000, net of the costs to raise such equity.

o    In October 1999, the Company exercised their right to call the 5.75%
     convertible debentures and converted such debentures to Convertible
     Cumulative 5.75% Preferred Stock. See 9(c) above for further discussions.

o    During the year, $20,000 of 6% convertible debentures were converted into
     29,000 shares of common stock.

o    The Company issued 1,254,000 shares of common stock for the exercise of
     stock options and common stock warrants, which resulted in $575,000 of net
     proceeds to the Company.

o    During the year, the Company issued 315,000 shares of common stock and
     certain stock options and warrants valued at $1,013,000, of which $35,000
     remains unearned as of June 30, 2000. The common stock issued was valued at
     the fair value of the common stock when the Company was obligated to issue
     the common stock. The common stock, options and warrants were valued
     utilizing the Black-Scholes option-pricing model.






                                      F-18
<PAGE>
                        CDKNET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  June 30, 2000



o    There were 6,000 shares of common stock issued to certain shareholders for
     a late registration penalty. There is no effect on equity for such common
     shares issued, since a value attributed to the common stock would be a
     reduction to equity for the costs to register such common shares resulting
     in the penalty.

o    A newly formed majority-owned subsidiary (ValueFlash) sold 20% of its
     shares to unrelated individuals for $2,500,000 and issued stock options and
     warrants for services. The result was an equity gain on the sale of the
     subsidiary stock in the amount of $2,012,000. A value for the stock options
     and stock warrants issued was recorded at $965,000, of which $715,000
     remains unearned as of June 30, 2000. The common stock options and warrants
     were valued utilizing the minimum-value method, since such equity rights
     have no market. See Note 9(g) below for further discussions.


e.   WARRANTS

Warrant activity for each of the two years ended June 30, 1999 and 2000 is
summarized as follows:
                                                             Weighted
                                                             Average
                                                             Exercise
                                             Shares           Price
                                            ---------        --------
     Outstanding at June 30, 1998                  --              --
          Granted                           1,328,498        $    .96
          Exercised                          (116,084)            .66
          Expired or cancelled                     --              --
                                            ---------
     Outstanding at June 30, 1999           1,212,414             .99
          Granted                           1,195,056            1.04
          Exercised                           (58,916)            .66
          Expired or cancelled                     --
                                            ---------
     Outstanding at June 30, 2000           2,353,554        $   1.04
                                            =========


Information, at date of issuance, regarding stock warrant grants during the two
years ended June 30, 1999 and 2000.
                                                          Weighted-    Weighted-
                                                           Average      Average
                                                           Exercise       Fair
                                               Shares       Price        Value
                                              -------      -------      -------
Year ended June 30, 1999:
Exercise price exceeds market price            90,000      $  3.00      $   .66
Exercise price equals market price            418,498          .61          .35
Exercise price is less than market price      820,000          .91          .70

Year ended June 30, 2000
Exercise price exceeds market price           200,000         1.50         1.00
Exercise price equals market price            975,056          .97          .80
Exercise price is less than market price       20,000      $   .66      $   .56


                                      F-19
<PAGE>
                        CDKNET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  June 30, 2000



The following table summarizes information about warrants outstanding and
exercisable at June 30, 2000:

                                                 Outstanding
                                   ====================================
                                                   Weighted-
                                                    Average    Weighted-
                                                   Remaining    Average
                                                    Life in     Exercise
                                    Shares           Years       Price
                                   ---------        -------     -------
     Range of exercise prices
     $.60 to $.85                    968,554         3.03        $ .70
     $1.00 to $1.25                  995,000         2.95         1.01
     $1.50 to $1.75                  300,000         3.42         1.58
     $2.00 to $3.00                   90,000         3.17         3.00
                                   ---------
                                   2,353,554
                                   =========

All of the above warrants are exercisable, with the exception of 562,500
warrants, at a $1.00 per share which vest ratably through July 2002.

Certain warrant agreements contain a cashless exercise provision whereby the
warrants may be exercised solely by the surrender of the warrants, and without
the payment of the exercise price in cash, for that number of warrant shares
determined by dividing the difference of the market price of the shares of
common stock issuable upon exercise of the warrants and the warrant exercise
price, by the market price of the common stock on the date of exercise. At June
30, 2000, 677,500 warrants were outstanding with cashless provisions.


f.   STOCK OPTION PLANS

In 1998, the Company adopted the 1998 Equity Incentive Plan (the "Plan") for
employees, officers, consultants and directors of the Company, pursuant to which
the Company may grant incentive stock options, nonqualified stock options, stock
appreciation rights, restricted stock or deferred stock. The total number of
shares of the Company's common stock available for distribution under the Plan
is 3,000,000. The option period during which an option may be exercised shall
not exceed ten years from the date of the grant and will be subject to other
terms and conditions of the Plan. The Plan will terminate automatically on June
30, 2008.

The Company accounts for its stock option plan under APB Opinion No. 25,
"Accounting for Stock Issued to Employees," under which no compensation expense
is recognized. The Company adopted SFAS No. 123, "Accounting for Stock-Based
Compensation," for disclosure purposes; accordingly, no compensation expense is
recognized in the results of operations for options granted at fair market value
as required by APB Opinion No. 25.






                                      F-20
<PAGE>
                        CDKNET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  June 30, 2000




Stock option activity for each of the two years ended June 30, 1999 and 2000 is
summarized as follows:
                                                             Weighted
                                                             Average
                                                             Exercise
                                             Shares           Price
                                            ---------        --------
     Outstanding at June 30, 1998           1,200,000        $    .60
          Granted                             412,500             .85
          Exercised                                --              --
          Expired or cancelled                     --              --
                                            ---------
     Outstanding at June 30, 1999           1,612,500             .67
          Granted                           7,708,000             .94
          Exercised                        (3,650,000)            .59
          Expired or cancelled                (32,500)           1.00
                                            ---------
     Outstanding at June 30, 2000           5,638,000        $   1.14
                                            =========


Information, at date of issuance, regarding stock option grants during the two
years ended June 30, 1999 and 2000.


                                                          Weighted-    Weighted-
                                                           Average      Average
                                                           Exercise       Fair
                                               Shares       Price        Value
                                              -------      -------      -------
Year ended June 30, 1999:
Exercise price exceeds market price                --      $    --      $    --
Exercise price equals market price            412,500          .85          .57
Exercise price is less than market price           --           --           --

Year ended June 30, 2000
Exercise price exceeds market price         3,398,000         1.15          .95
Exercise price equals market price          1,710,000          .81          .80
Exercise price is less than market price    2,600,000      $   .84      $   .62









                                      F-21
<PAGE>
                        CDKNET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  June 30, 2000



The following table summarizes information about warrants outstanding and
exercisable at June 30, 2000:

                                      Outstanding and Exercisable
                            -----------------------------------------------
                                        Weighted-
                                         Average   Weighted-
                                        Remaining   Average
                             Number      Life in    Exercise       Number
                           Outstanding    Years      Price       Exercisable
                            ---------     -----      -----        ---------
Range of exercise prices:
$.60 to $.75                  300,000      7.08      $ .63          300,000
$1.00                       4,558,000      3.95       1.00        3,409,167
$1.69                         515,000      3.83       1.69          105,000
$2.25 to $3.00                265,000      4.83      $2.96               --
                            ---------                             ---------
                            5,638,000                             3,814,167
                            =========                             =========


For disclosure purposes in accordance with SFAS No. 123, the fair value of each
stock option grant is estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted-average assumptions used for
stock options granted during the years ended June 30, 2000 and 1999: annual
dividends of $0.00, expected volatility of 97% for the Company's options and .1%
volatility for the ValueFlash options for 2000 and 85% for the Company for 1999,
risk-free interest rate of 5.7% in 2000 and rates ranging from 4.3% to 5.4% in
1999 and expected life of five years for all grants. If the Company recognized
compensation cost for the vested portion of the employee stock option plan in
accordance with SFAS No. 123, the Company's pro-forma net loss and loss per
share would have been as follows for the years ended June 30, 2000 and 1999:


                                       2000               1999
                                   ------------       ------------
Net loss
   As reported                     $ (7,118,000)      $ (6,194,600)
   Pro-forma                        (11,356,000)        (6,230,225)
Net loss per common share
   As reported                     $       (.40)      $       (.47)
   Pro-forma                               (.66)              (.47)


As of June 30, 2000, 1,905,000 of the non-employee stock options outstanding
vested. The compensation expense attributed to the issuance of these stock
options will be recognized as they are earned. These stock options are
exercisable for five years from the grant date.







                                      F-22
<PAGE>
                        CDKNET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  June 30, 2000


The employee stock option plan stock options are exercisable for five years from
the grant date and vest over various terms from the grant date to five years. As
of June 30, 2000, 1,859,167 of these stock options were vested.


g.    STOCK OPTIONS - VALUEFLASH

The Company has also issued stock options in its majority owned subsidiary
ValueFlash. The SFAS No. 123 disclosure for the pro-forma loss has been included
in Note (f) above with the pro-forma loss for options issued by the Company.

The following tables summarize the changes in options outstanding and the
related price ranges for shares in the subsidiary ValueFlash common stock:


         Employee Stock Option Plan:
                                                              Weighted
                                                               Average
                                                              Exercise
                                                 Shares         Price
                                               ---------        -----
         Outstanding at January 13, 2000              --           --
              Granted                          6,848,000        $1.46
              Exercised                               --           --
              Expired or cancelled                    --           --
         Outstanding at June 30, 2000          6,848,000        $1.46
                                               =========


         Non-Employee Stock Option:
                                                              Weighted
                                                               Average
                                                              Exercise
                                                Shares          Price
                                              ----------        -----
         Outstanding at January 13, 2000              --           --
              Granted                         12,320,834        $1.91
              Exercised                               --           --
              Expired or cancelled                    --           --
         Outstanding at June 30, 2000         12,320,834        $1.91
                                              ==========


Information, at date of issuance, regarding stock option grants during the two
years ended June 30, 2000.
                                                            Weighted-  Weighted-
                                                             Average    Average
                                                            Exercise     Fair
                                                 Shares       Price      Value
                                               ---------     ------     -------
Year ended June 30, 2000
  Exercise price exceeds market price          1,250,000     $ 4.00     $    --
  Exercise price equals market price          10,300,834     $ 1.68     $   .40
  Exercise price is less than market price     7,618,000     $ 1.48     $   .88



                                      F-23
<PAGE>
                        CDKNET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  June 30, 2000



The following table summarizes information about warrants outstanding and
exercisable at June 30, 2000:

                                      Outstanding and Exercisable
                            -----------------------------------------------
                                        Weighted-
                                         Average   Weighted-
                                        Remaining   Average
                             Number      Life in    Exercise       Number
                           Outstanding    Years      Price       Exercisable
                            ---------     -----      -----        ---------
Range of exercise prices:
$.50                          120,000      4.75      $ .50           60,000
$1.00 to $1.50             13,598,000      4.72       1.48        8,315,000
$2.00                       4,200,834      3.02       2.00          950,834
$4.00                       1,250,000      2.00      $4.00        1,250,000



The non-employee stock options outstanding of 6,570,834 are fully vested. The
remaining 5,750,000 of stock options are performance based and are unearned as
of June 30, 2000. The compensation expense attributed to the issuance of these
stock options will be recognized as they are earned. These stock options are
exercisable for five years from the grant date.

The employee stock option plan stock options are exercisable for five years from
the grant date and vest over various terms from the grant date to five years. As
of June 30, 2000, 4,005,000 of these stock options were vested.


NOTE 10 - AGENCY AND MARKETING AGREEMENTS

The Company has entered into two agency agreements. The Company has received all
monies due under these agreements to date. These agency fees will be recognized
as revenues on a ratable basis over the term of each annual installment.

The Company has recorded deferred revenues of $887,000 related to agency and
marketing agreements. The terms of such agreements are detailed below:

a.       The Company signed two agency agreements with foreign entities, which
         require each to pay a $1,000,000 initial agency fee, payable in
         installments through January 24, 2001. In July 2000 one of the
         agreements was amended to reflect the increase of the initial agency
         fee to $1,500,000 from $1,000,000. The combined future minimum payments
         to the Company are as follows:

                           $1,500,000 for 2001
                            2,750,000 for 2002
                            4,000,000 for 2003
                            5,250,000 for 2004
                            6,500,000 for 2005
                            6,500,000 for each year thereafter.





                                      F-24
<PAGE>
                        CDKNET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  June 30, 2000



         The Company may also receive certain other equity entitlements from
         these foreign entities, based on the terms of the agency agreements.
         These agency agreements cover Hong Kong, Taiwan, China and Japan. The
         agreements give these entities exclusive rights to provide V-Flash
         services to all clients located in the respective areas.


     b.  The Company has entered into various agreements to perform certain
         direct marketing via internet applications and multimedia CD's. The
         Company has recorded $230,000 in deferred revenues at June 30, 2000,
         attributed to such marketing efforts. Such amounts will be recognized
         as revenue as the marketing/promotional materials are distributed.


NOTE 11 - RELATED PARTY TRANSACTIONS

a.  During the years ended June 30, 2000 and 1999 legal services of $300,000 and
$168,000, respectively, were provided by firms (the "Firms") in which the
Company's CEO and principal stockholder is the managing partner. Further, the
Firm provided office space and accounting services for which no fees were paid.
During the year ended June 30, 2000 and 1999 the Company recorded an expense of
$47,000 for such services. In fiscal 1999, the Company entered into a $150,000
demand loan with the Firm at an interest rate of 11% and issued 150,000 stock
warrants at $.66 exercisable through October 1, 2003. The detachable warrants
with a fair value of $42,000 were accounted for as additional interest cost with
a credit to paid-in capital. In fiscal 2000, the firm received $77,000 as
finder's fees for equity raised during fiscal 2000.

b.  During fiscal 1999, certain stockholders of the Company provided loans to
the Company aggregating $150,000. In connection with the loans, the Company
granted 150,000 stock warrants with an exercise price of $.66, exercisable
through October 1, 2003. The detachable warrants with fair value of $42,000 was
accounted for as additional interest cost with a corresponding credit to paid-in
capital. The fair value of stock warrants was computed using the Black-Scholes
option-pricing model. After the partial repayment of these loans, the
stockholders used the remaining loan balances to effectuate the exercise of
certain of the aforementioned stock warrants.

c.  During fiscal 1999 CDK LLC provided noninterest bearing advances to KME of
$29,000. Such advances plus the notes from KME of $712,000 which was accounted
for as a subscription receivable (see Note 4) were extinguished as follows: 1)
$600,000 was deemed consideration in the purchase of KME's interest in CDK LLC,
2) $800,000 was accounted for as settlement by CDK LLC of a portion of KME's
ownership interest in CDK LLC and 3) the remaining amounts of $29,000 in 1999
and $160,000 in 1998 were deemed uncollectible and recorded as uncollectible
advances since KME no longer held a membership interest in CDK LLC.






                                      F-25
<PAGE>
                        CDKNET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  June 30, 2000



d.  In June 1999, the Company entered into a finder's agreement with a
consultant, who became CDK LLC's president effective as of August 1, 1999, and a
third party whereby the Company issued 100,000 stock warrants at an exercise
price of $1.00 to the third party upon execution of the agreement and agreed to
pay both parties future fees upon consummation of financing, purchase or venture
transactions with entities introduced by them, as defined. During the year ended
June 30, 1999, the Company recorded an expense of $100,000 representing the fair
value of the stock warrants, which was computed using the Black-Scholes
option-pricing model.

e.  The Company's CEO exercised 750,000 stock options for $450,000 during
fiscal 2000.


NOTE 12 - COMMITMENTS AND CONTINGENCIES

a.  FACILITIES

The Company leases office space pursuant to lease agreements, which expire on
April 1, 2003 and April 30, 2010.

The future minimum lease commitments are as follows:

                           June 30, 2001      293,000
                                    2002      299,000
                                    2003      288,000
                                    2004      222,000
                                    2005      227,000

Rent expense for the years ended June 30, 2000 and June 30, 1999 were $237,000
and $145,000, respectively.


b.  LITIGATION MATTERS

The Company is involved in claims and disputes which arise in the normal course
of business. Management believes that the resolution of these matters will not
have a material adverse effect on the Company's financial position or results of
operations.


NOTE 13 - SUBSEQUENT EVENTS

a.   In July 2000 ValueFlash acquired approximately 20% of ValueFlash Japan for
     $470,000.

b.   During July and August 2000, ValueFlash sold 350,000 shares of common stock
     for $700,000 of which $550,000 was received by October 5, 2000.








                                      F-26