|UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549


FORM 10-KSB
|-------------------------------------------------------------------------------------

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

For the fiscal year ended March 31,
2001

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

Commission File Number 000-27603

|I2CORP.COM(Name of
small business issuer in its charter)
|--------------------------------------------------------

|Nevada(State or other jurisdiction ofincorporation or organization) | 84-1423373(IRS EmployerIdentification No.)
|------------------------------------------------------------------- | ------------------------------------------

|5392 S. Eastern Avenue, Building A- NorthLas Vegas, Nevada(Address of principal executive offices) | 89119(Zip Code)
|-------------------------------------------------------------------------------------------------- | ---------------

|Issuers telephone
number: (702) 597-3331


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


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


Common Stock, par value
$.001 per share(Title of Class)


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


Check if there is no disclosure of
delinquent filers in response to Item 405 of Regulation S-B 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 were $6,942.


The aggregate market value of the
voting and non-voting common equity held by non-affiliates of the issuer was
approximately $5,665,000 based on the closing price of $.71 of the issuers Common Stock,
par value $.001 share, as reported by Nasdaq OTC Bulletin Board on June 14, 2001.


On June 14, 2001, there were
30,501,000 shares of the issuers Common Stock outstanding.


Documents Incorporated by reference


Companys report on Form S-8 dated March, 15, 2001: Part II


Transitional Small Business
Disclosure Format: Yes [_] No [X]



Part I


ITEM 1. Description of
Business


History of i2corp.com


We were originally incorporated in
the state of Utah on November 7, 1985, under the name of International Hi-Tech Research
Corporation (Hi-Tech). Hi-Tech was organized to manufacture and distribute small
airplane parts. In October 1991, Hi-Tech acquired Standard Aero Parts, Inc., a California
corporation. In December 1991, Hi-Tech merged into Standard Group International, Inc. a
California corporation (Standard California) with Standard California as the surviving
corporation. On June 30, 1996, Standard California rescinded the acquisition of Standard
Aero Parts, Inc.


On July 21, 1997, Standard
Californias wholly owned subsidiary, Standard Group International, Inc. was incorporated
in the state of Nevada (Standard Nevada). Standard California merged with Standard
Nevada on April 30, 1998, solely to change its domicile from California to Nevada.
Standard Nevada changed its name to Entertainment 21, Inc. (Entertainment) on May 20,
1998. On November 18, 1998, Entertainment merged with PCG Media, Inc. with Entertainment
being the surviving corporation. PCG Media, Inc. was an investment management company
established to acquire and manage independent media and entertainment properties.
Pursuant to the Articles of Merger, Entertainment changed its name to PCG Media, Inc. (PCG)
on November 18, 1998. Subsequent to the merger, certain contracts failed to commence, and
PCG ceased commercial operations shortly after the merger.


On February 10, 2000, Home Gambling
Network, Inc., a Nevada Corporation (HGN), merged with PCG Sub, Inc., a Nevada
corporation and a wholly owned subsidiary of PCG formed for the purpose of this merger,
with HGN as the surviving corporation (Reverse Acquisition). Concurrent with the
Reverse Acquisition, PCG changed its name to i2corp.com. In addition to HGN, we have two
other wholly owned subsidiaries. Our other wholly owned subsidiaries are: (i)
i2Consult.com, a Nevada corporation that will provide services to our licensees; and (ii)
i2Develop.com, a Nevada corporation that will develop and market future technologies to
licensees.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|History of Home Gambling
Network, Inc.


HGN was formed on August 2, 1995,
for the purpose of managing, marketing and licensing US Patent 5,800,268, which details
the method for wagering on live remote games and events utilizing electronic transactions
(the Patent). The Patent was issued to Melvin Molnick, current President of HGN, on
September 1, 1998. Mr. Molnick assigned his rights under the Patent to HGN on October 22,
1998.


Since formation, HGN has
concentrated its resources on educating and informing the gambling industry, regulatory
agencies and policy makers around the world about Remote Wagering and gambling. Such
information has been focused on any and all electronic means and technologies such as,
but not limited to TV, satellite and wireless gambling and our methods incorporating the
Patent.



Description of The Patent


The Patent was issued September 1,
1998. It has been reciprocated in and was published in Europe in November 1999, allowing
us full provisional patent protection until final approval and issuance, which is
expected in late 2001 (the European Patent). The scope of the European Patent will
include full protection in the United Kingdom, Austria, Germany, the Netherlands, as well
as all other European countries, their territories and possessions. We also have
corresponding patent applications pending in Australia and Canada.


Our Patent is comprised of three
primary actions:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | The gambling is live
| | - |  | --------------------

| |  |  | The player is remote and physically away from the actual game or event
| | - |  | ----------------------------------------------------------------------

| |  |  | The winnings and losses are transacted electronically
| | - |  | -----------------------------------------------------

|Today, consumers identify Internet
gambling as a manner in which to emulate casino-style games, otherwise known as virtual
gambling. Our method of Remote Wagering, on the other hand, requires the games and
events to be actually live and in real time. Under our Patent, gamblers may wager with
gaming and wagering entities worldwide that accept wagers on live games and events (to
include, but not limited to, horse racing, soccer, bingo, or blackjack) from playersremote
of the physical facility offering electronic transactions.


We will only license operators that
are licensed in jurisdictions that are properly regulated by their respective
governments. This criterion is in place in order to protect the credibility of our
licensees among consumers and respective regulatory bodies.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Using our method, name-brand casinos
will be able to recreate the gambling experience in their physical properties on-line.
Casinos can create a broadcast facility with real table games staffed by actual dealers
and croupiers. Sports betting facilities can accept remote wagers on live events from
players not physically located at the casino, sports book or off-track betting (OTB)
facility. The on-line player will participate remotely through the Internet (and/or any
communication medium available to especially include wireless technologies),
communicating with the dealer through a video camera using a keyboard or a through a
computer-integrated microphone.


Revenues generated from
Internet-based broadcast facilities could be substantial as this industry is in its
infancy. Also, the start-up costs for this type of gambling are a fraction of what it
would cost to develop a Las Vegas-style casino/hotel property. Furthermore, it is
expected that player fraud will be reduced because all live play will be recorded and
archived. Cash handling will be non-existent because all transactions will be electronic.
Casual gambling is expected to increase because of ease of use and player confidence in
name brand, land-based casinos and other recognized wagering entities. In addition, the
market size is expected to grow exponentially because operators can take wagers outside
their geographic location.


INDUSTRY ANALYSIS AND
MARKETING APPROACH


Size and Growth Trends


The online gambling market is
expanding at an unprecedented rate, with combined revenues from the US and Europe alone
estimated by Datamonitor at $6.7 billion in 2001 and growing to an excess of $20.8
billion dollars by 2005. The global online gambling market is much bigger than that of
the US and Europe alone. With markets like Australia, United Kingdom, the Caribbean
islands and South America, it is very difficult to fully estimate the total actual
dollars that are being wagered globally.


In the United States, some form of
legalized gambling exists in 47 states (Hawaii, Tennessee, and Utah are the exceptions
with Hawaii having discussed possible legalization in 2001). While Nevada was the first
state to pass a bill legalizing online gambling, Oregon has already legislated a form of
online sports wagering. The New Jersey Legislature is considering similar legislation
that would allow it to compete in the Internet gambling realm.



Geographic Market
Analysis


While North America accounts for 40%
of the total number of active Internet users in the world at present, eMarketer forecasts
that this share will fall to 25% by 2004. Internet users in both Europe and Asia Pacific
are growing rapidly and will account for 39% and 27%, respectively, of the worldwide user
total in 2004.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|Active Internet Users (14+), by Region, 2000-2004(as a % of global users)
|-------------------------------------------------------------------------
|                                                                         
|
|                                                                         
|North America                                                            
|                                                                         
|Europe                                                                   
|                                                                         
|Asia Pacific                                                             
|                                                                         
|Latin America                                                            
|                                                                         
|Africa/Middle East                                                       
|                                                                         
|Note: May not add up to 100% due to rounding. Source: eMarketer, 2001    

|SALES AND MARKETING


We use various methods to promote
our product including field visits to potential customers, speaking engagements at
industry functions, live product demonstrations, advertising in trade journals,
participation in trade shows and a worldwide Internet presence. We are currently in the
process of developing a Proof of Concept which will demonstrate a working implementation
of the Patent. This has been done at the request of a licensed, US land-based operator,
whom we are in discussion with, and will be utilized for negotiations, marketing, and
regulatory lobbying.



Target Customers and
Proposed Geographic Areas


We intend to market our Patent to
name brand, land-based wagering entities, offshore Internet wagering entities, Native
American Indian tribes and foreign governments. Our initial marketing areas will be in
the following geographic target markets: United States, Canada, Europe, Australia, and
then to the emerging geographic markets of Africa, South America, Central America and
Russia.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Gambling Market Segments


Our major market segments are as
follows:
|--------------------------------------------------------------------

| |  |  | Casino-style games
| | - |  | ------------------

| |  |  | Horse and dog racing (pari-mutuel wagering)
| | - |  | -------------------------------------------

| |  |  | Sports wagering
| | - |  | ---------------

| |  |  | Lottery
| | - |  | -------

|Legal and Regulatory
Environments


Internet gambling is capturing the
attention of regulators, policy makers and consumers worldwide. Due to an exponential
increase in customer demand, the main issues facing Internet gambling operators are
regulation, taxation, consumer protection and fraud detection. No single country is able
to monitor and control the growth of Internet gambling. The United States, for example,
attempted to make it illegal for non-US sanctioned operators to accept wagers from US
citizens, but this effort did not result in any laws or regulations. Despite the efforts
of the Federal government, states such as Nevada and Oregon have legalized the
implementation of Internet gambling regulations for US operators in their respective
jurisdictions. Other countries, such as Australia, Norfolk Islands, UK, Holland,
Gibraltar, Malta, Belize, Antigua, Curacao and Dominica have passed legislation that
permits Internet gambling. These countries view Internet gambling as inevitable and
therefore believe that they can best protect consumers through regulation. Other
countries embrace Internet gambling as a form of tax revenues for their respective
governments, the study notes.


According to Websense, there are
over 31,000 Internet gambling sites, most operating out of the Caribbean and Central and
South America. This represents an 80% annual increase. In the United States, nationally
recognized, land-based casino operators (e.g. Harrahs, MGM Mirage, Mandalay Resort
Group) have directly entered the Internet gambling play for fun market. Name-brand
casino operator Park Place Entertainment, Inc., owns interests in foreign-based casinos
that in turn own and operate Internet gambling operations outside the US.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|United States


The United States presents a unique
set of issues that define the complexity associated with the next generation of Remote
Wagering. For example, segments of the Federal government have taken the position that
Internet gambling violates the Wire Act and thus, Internet gambling is illegal. To date,
the United States has focused enforcement efforts on US citizens who operate offshore
wagering websites rather than on individuals that place bets on such websites.


A significant piece of federal
legislation pending in the United States is the Goodlatte Bill (HR 3125), introduced in
both 1999 and 2000 by Representative Bob Goodlatte (R-VA). The Goodlatte Bill attempts to
stop unauthorized (non-US licensed) offshore Internet gambling operators by blocking
various payment methods used for Internet gambling activities. However to date the bill
has not been formally reintroduced for consideration in 2001. A number of US states have
moved to prohibit Internet gambling, but several are permitting closed-loop Intranet
gambling and carving out exemptions for state lotteries, horse and dog racing and other
gambling activities currently legal in the respective state.


On June 14, 2001, Nevada became the
first US state to authorize Interactive Casino Gambling (AB 466). The law is enabling
legislation that defines criteria that needs to be met by the Nevada Gaming Control
Commission prior to the adoption of regulation and the issuance of licenses. The law is
also subject to clarification from the Federal Government regarding its applicability or
lack of applicability under the Federal Wire Act. Previously the Untied States has
interpreted the Federal Wire Act of 1961, as amended (the Wire Act) to prohibit
Internet gaming. The Wire Act was originally created to assess penalties for the illegal
transmission of wagers or wagering information using telephone lines between two parties
(i.e., bookie and bookmaker). Recently, a federal court in Louisiana ruled that the
Federal Wire Act does not apply to casino games, but only sports betting. This ruling is
subject to appeal and may be the deciding factor as to the scope of the Federal Wire Act.


Indian tribes currently operate
casinos and are now considering operating Internet gambling websites. Several Indian
casinos offer casino-style games and lotteries on closed-loop Intranets. It is
anticipated that Indian tribes in California will offer Internet gambling to Californias
34 million residents, as well as to the worldwide Internet audience. However, the State
of California is currently considering legislation that will prohibit Internet gambling
with exclusions for Indian tribes, the state lottery and any other currently legal
gambling activity.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Canada


Canada has been trying to legalize
Internet gambling, but to date has failed to enact legislation. Vancouver, for example,
has become populated with US/Canadian operators that act as a server farm (facilities
that are dedicated solely to housing web servers to conduct virtual casino games) for
gambling sites. It is widely believed that Vancouver is quickly becoming the Internet
gaming capital of the world. On another front, the Kahnawake Mohawk Nation has created
Mohawk Internet Technologies, which is an Internet service provider (ISP) offering
sovereign legal protection for Internet gambling companies. The tribe also operates an
Internet gambling site. The outcome of this venture is unclear, especially due to the
fact that the tribe offers its services to residents of the United States.



Europe


European sports book operators such
as Ladbrokes, William Hill and Victor Chandler are leading the next wave of Remote
Wagering. To some degree, these companies are utilizing the Internet and wireless
devices to facilitate wagering. Recently the Government of the UK changed its betting tax
structure to lure the UK operators back from their offshore operations. This move has
created a positive, regulated Internet gambling atmosphere in the UK and to date, most
major operators have relocated to mainland England.


European casinos are evaluating
broadcasting live, casino-style games on the Internet. European-based lottery operators,
too, are moving their games to the Internet. Denmark, for example, operates a national
lottery on the Internet that is only available in that country. Liechtenstein, however,
operates an international lottery and sells tickets worldwide through its website.



Australia


Australia has legalized Internet
gambling in a number of its states, including the Northern Territory, Australian Capital
Territory, Tasmania and Queensland. The Australian government has overseen and
participated in the development of the jurisdiction regulations and licensing process.
Name-brand land-based Australian wagering entities such as Tattersalls, Crown and
Lasseters have obtained licenses that are specifically related to the ability to conduct
Internet gaming. Australia is a US$1.2 billion gaming market with more than 90 percent of
Australians over the age of 18 having participated in some form of legalized wagering.
However, in early 2000 the Australian Federal Government instituted a 12-month moratorium
on Internet gambling in Australia. This moratorium halted operations for many licensees
and forced prospective licensees to begin to look elsewhere for a favorable operating
environment. Recently, the Federal Government has introduced legislation entitled
Interactive Gambling Act 2001 that will ban Internet gambling in Australia except for
sports wagering and state lotteries.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Emerging Markets


South Africa has legalized
land-based and Internet gambling in some jurisdictions, a move designed to generate
export revenues from state-run wagering entities as well as to collect tax revenues. In
Central America, such countries as Belize, Guatemala and Costa Rica are welcoming both
conventional and Internet gambling operators. South America, too, is opening its borders
to gaming operators, especially in Argentina and Brazil.



TECHNOLOGY


The technology required to benefit
from our method of wagering is virtually accessible to any person or marketplace.
Millions of consumers use or have access to high-speed data and voice communications,
satellite and cable television, or wireless devices. These types of communication tools
are needed for broadcasting live games and events. According to eMarketers April 2001
Broadband Report there are over 22.8 million households worldwide with broadband access
in 2001. It is estimated that that number will increase to 93.6 million households
worldwide by 2004.


Continued consumer acceptance of
e-commerce is another technological trend that will support our method of wagering
utilizing electronic transactions. ActivMedia Research predicts that electronic
transactions will increase to $5.7 billion in 2001, up from $500 million in 2000, with 90
percent of these online transactions completed by using credit cards. Bear Stearns
recently reported, in their March 2001 E-Gaming Revisited report, that consumers are
becoming more confident about making electronic (Web) transactions as they become more
familiar with using the Internet. The report also confirmed that the pari-mutuel industry
is becoming increasingly dependent upon electronic transactions, as 80 percent of their
business is derived remote of the track (offsite). Due to the remote nature of this
industry, i2corp.coms management believes that this will be a key growth sector under
the HGN method Patent.


BARRIERS TO ENTRY


The barrier to entry to operate an
on-line wagering entity is low. The cost of establishing an Internet casino is a fraction
of the cost to develop a traditional brick and mortar casino. Presently, the market is in
a state of flux with small-cap, first-to-market companies facing increased competition
from traditional name-brand operators. Through our Patent, we maintain a legal barrier to
entry in this industry, because we are the only entity that can issue a license for our
method of wagering. In addition, we require that a potential customer be licensed in a
regulated jurisdiction before that entity can utilize our method of gambling. This
strategy has insured us the opportunity to license our product in highly regulated
jurisdictions such as Nevada. Licensees must also pay an up-front licensing fee and an
ongoing royalty during the term of the license. We expect to continue incurring legal
fees to assert our rights under the Patent worldwide.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|LICENSE AGREEMENTS


On May 23, 2000, we entered into a
one-year license agreement with CompuRace Inc. (CompuRace). In May, 2001, the license
agreement expired and the option to renew was not granted.


On January 9, 2001, a master license
agreement for the territory covered by the pending European Patent was issued to
Live2You, Ltd. of Gibraltar. The license is an exclusive, five-year agreement covering
all forms of gambling, except for bingo. If all the criteria set forth in this agreement
are met, we could receive $120 million or more in royalties over the term of the
agreement.



EMPLOYEES


As of June 14, 2001, we had 6
full-time employees engaged in management and administration. We also periodically engage
consultants to assist it in various activities. We believe that our employee relations
are good.



ITEM 2. Description of
Property.


On March 15, 2000, we entered into a
two (2) year lease for approximately 3,200 square feet of office space in Las Vegas,
Nevada. The current monthly lease payment for this facility is $4,000 and the lease
provides for certain annual rent adjustments. For the fiscal year ending March 31, 2002,
lease payments for this facility are expected to be $44,000. We also lease, on a
month-to-month basis, off-site facilities in Henderson, Nevada for storage. We do not own
any real estate.


ITEM 3. Legal
Proceedings.


We are not currently involved in any
legal proceedings, the outcome of which, in the view of management, would materially
affect our operations.


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


There have been no matters submitted
to a vote of security holders during the fiscal year ended March 31, 2001.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|PART II


ITEM 5. Market for
Common Equity and Related Stockholder Matters.


On February 18, 2000, i2corp.coms
common stock began trading on the NASDAQ OTC Bulletin Board under the symbol ITOO. From
November 19, 1998 to February 17, 2000 the common stock traded on the NASDAQ OTC Bulletin
Board under the symbol PCGM. From June 8, 1998 to November 18, 1998 the common stock
traded on the NASDAQ OTC Bulletin Board under the symbol ENTM.


The following table sets forth the
high and low bid prices per share of our Common Stock for the quarters indicated. These
prices represent inter-dealer prices, without adjustment for retail markup, markdown or
commissions, and may not necessarily represent actual transactions.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                          | HIGH | LOW    
|------------------------- | ---- | -------
|YEAR ENDED MARCH 31, 2001 |      |        
|Three months ended-      |     
|June 30, 2000             |      | $4.3750
|September 30, 2000        |      | 2.5000 
|December 31, 2000         |      | 1.3438 
|March 31, 2001            |      | 0.4062 
|YEAR ENDED MARCH 31, 2000 |     
|Three months ended       |     
|September 30, 1999        |      | $2.7500
|December 31, 1999         |      | 5.0000 
|March 31, 2000            |      | 5.8750 

|As of June 14, 2001, we had
approximately 1,100 stockholders of record, excluding objecting beneficial owners whose
shares are held in street name by brokerage firms and other nominees who hold shares for
multiple investors.


Holders of common stock are entitled
to receive dividends if, and when declared by our Board of Directors out of funds legally
available therefore, subject to the dividend and liquidation rights of any preferred
stock that may be issued and outstanding. We have never declared or paid any dividends on
our common stock. We intend to retain any future earnings for use in the operation and
expansion of its business. Consequently, we do not anticipate paying any cash dividends
on our common stock to our stockholders for the foreseeable future.


The Company has been presented with
claims asserting that certain individuals and/or entities are entitled to an aggregate of
approximately 750,000 shares of the Companys common stock. Based on the available
evidence, management believes these claims are inconsistent with the Companys records
and invalid. There may be other similar claims asserted in the future. However, based, in
part, upon the advice of counsel, management believes that such matters will not have a
significant effect on the Company. In the unlikely event the Company would be required to
issue some or all of the shares that are claimed by these individuals or entities, there
would be up to 2.5% dilution of interests of its stockholders, based on claims presently
known.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|ITEM 6. Managements
Discussion and Analysis or Plan of Operation.


Forward Looking
Statements


Statements which are not historical
facts, including statements about our confidence and strategies and our expectations
about our product, technologies and opportunities, market and industry segment growth,
demand and acceptance of our products are forward looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995 that involve risks and
uncertainties. These risks include, but are not limited to, product demand and market
acceptance risks; the impact of competitive products; the results of financing raising
activities; the effects of economic conditions and trade, legal, social and economic
risks, such as regulations, governmental licensing issues, foreign qualifications and
ability to conduct our method of business and the results our business plan.


Development Stage Entity


Revenues


We are in the development stage,
with limited incidental revenues. We currently do not have any active revenue-generating
licensing agreements executed. For the years ended March 31, 2001 and 2000, our revenues
consisted of non-refundable payments received in connection with cancelled or expired
licensing agreements and miscellaneous income.



Expenses


We expect that we will continue to
incur substantial marketing expenses for further product position that will cause us to
incur additional losses in the near future. Salaries, professional fees and occupancy
costs will continue to contribute to our substantial losses.



Loss


As of March 31, 2001, we had
cumulative net losses since inception of $1,663,912, and we expect to continue to incur
substantial losses and negative cash flow at least through fiscal year ending March 31,
2002.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Cash Flow


In connection with, and as an
incentive for HGN to enter into, the Reverse Acquisition with PCG, a minority stockholder
(then of PCG) agreed informally to make a capital contribution to the Company originally
in the amount of $3.1 million. As of March 31, 2001, approximately $1.4 million has been
received, leaving a receivable balance of approximately $1.7 million (Capital
Contribution Receivable). Subsequent to March 31, 2001, $103,250 was received in cash
and, therefore, has been classified in the accompanying balance sheet as a current asset
as of that date. The remaining receivable may be paid off in whole or in part at any time
without premium or discount. However, there is no due date.


We expect cash flows from operating
activities to begin during the fiscal year ending March 31, 2002. Factors that may
contribute to this include the changing legislative climate and legal entrance into the
Internet gambling market of gaming and wagering operators. Our current cash on hand is
not sufficient to meet ongoing operating expenses and we are currently dependent on
collections on the Capital Contribution Receivable. Depending on the success of our
efforts to execute revenue-generating licensing agreements, our management believes that
present working capital will need to be supplemented to support our operations over the
next 12 months. Additional working capital may be sought through additional debt or
equity private placements, additional financing from banks or officers, directors or
shareholders, or from industry-available funding sources at market rates of interest, or
a combination of these. The ability to raise necessary financing will depend on many
factors, including the nature and prospects of any business to be acquired and the
economic and market conditions prevailing at the time financing is sought. Though we are
optimistic that we will obtain the necessary financing, there can be no assurances that
financing in the amount and on terms acceptable to us will be available within the time
frame required.



Liquidity


Net cash used in operating
activities in the year ended March 31, 2001 amounted to $989,319 compared to $179,519 in
the nine months ended March 31, 2000. The increased use of cash is mainly attributable to
a full year of increased levels of marketing, general and administrative expenses. Net
cash used in investing activities amounted to $50,091 in the year ended March 31, 2001
compared to $104,845 in the ninen months ended March 31, 2000. This decrease in use of
cash is primarily due to a decrease in furniture and equipment purchases. Financing
activities generated net cash of $927,124 in the year ended March 31, 2001 compared with
$389,592 in the nine months ended March 31, 2000, with the increase attributable to the
increased collections on the Capital Contribution Receivable. At March 31, 2001 the
Company had cash of $1,418 and current Capital Contribution Receivable of $103,250 for
total liquid assets of $104,668. Accounts payable and accrued liabilities at March 31,
2001 amounted to $392,426.



Subsequent Events


In February 2001, the Company
entered into a short term management consulting agreement. In exchange for the contracted
services, the Company issued options to purchase 2,500,000 shares of newly issued common
stock, exercisable at $.12 per share. These options expire in February 2004. The shares
underlying these options were registered on Form S-8 filed with the Securities and
Exchange Commission on March 25, 2001. As of June 14, 2001, 501,000 options had been
exercised, generating approximately $60,000 of cash flow.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|ITEM 7. Financial
Statements.


This information is contained on
pages F-1 through F-9 hereof.
|----------------------------------------------------------------------------------------------

|Financial Statements                                                                                                                                                                                  | Page
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----
|Report of Independent Auditors                                                                                                                                                                        |     
|Consolidated Balance Sheets - March 31, 2001 and 2000                                                                                                                                                 |     
|Consolidated Statements of Development Stage Operations                                                                                                                                               |     
|for the year ended March 31, 2001, the nine months ended                                                                                                                                              |     
|March 31, 2000, and the cumulative period from August 2, 1995, through                                                                                                                                |     
|March 31, 2001                                                                                                                                                                                        |     
|Consolidated Statement of Stockholders' Equity Deficiency for the year ended March 31, 2001 the nine months ended
March 31, 2000, and the cumulative period from August 2, 1995 through June 30, 1999 |     
|Consolidated Statements of Cash Flows for the year ended March                                                                                                                                        |     
|31, 2001, the nine months ended March 31, 2000, and the cumulative period                                                                                                                             |     
|from August 2, 1995, through March 31, 2001                                                                                                                                                           |     
|Notes to Consolidated Financial Statements, for the year                                                                                                                                              |     
|ended March 31, 2001, the nine months ended March 31, 2000 and the                                                                                                                                    |     
|cumulative period from August 2, 1995, through March 31, 2001                                                                                                                                         |     

|ITEM 8. Changes In and
Disagreements With Accountants on Accounting and Financial Disclosure.


The Company has not changed
accountants, and no disagreements on accounting or financial disclosure practices
occurred during the fiscal year ended March 31, 2001.


PART III


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


The following table sets forth the
names of our current directors and executive officers and certain information with regard
to each such person.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Name               | Age | Position
|------------------ | --- | --------
|dee dee Molnick    |     | 29      
|Chris P. Almida    |     | 30      
|Jesse D. Molnick   |     | 26      
|Melvin Molnick     |     | 58      
|H. Yale Gutnick    |     | 59      
|Philip J. Anderson |     | 49      
|Suzanne Molnick    |     | 45      

|dee dee Molnick became our Chief
Executive Officer and Chairwoman on February 10, 2000. From its inception in August 1995
until February 2000, she was President and Director of HGN. Ms. Molnick, an
internationally recognized expert on Internet gambling, has provided information to
various governmental authorities around the world regarding Internet gaming. In addition,
Ms. Molnick is a regular columnist in various gaming publications, including Indian
Gaming and Casino International. Molnick studied civil engineering at the Howard Hughes
College of Engineering, at University of Nevada Las Vegas. Ms. Molnick is the daughter of
Melvin Molnick and Suzanne Molnick, brother of Jesse Molnick, and the wife of Chris Almida.



Chris Almida became our
Vice President and Director on February 10, 2000. On November 8, 2000, he became our
President. From 1995 until Feburary 10, 2000, he was Vice President and Director of HGN.
Mr. Almida served in the United States Army from 1989 to 1993. Mr. Almida entered the
world of information technology while enlisted in the US Army, where he assisted in the
implementation of the Unit Level Logistic System. Mr. Almida specializes in new and
emerging Internet and wireless technologies to ensure intellectual property is utilized
in the accordance with the latest state of technology. Mr. Almida is the husband of dee
dee Molnick.


Jesse D. Molnick joined our Board of
Directors on September 1, 2000, and became our Vice President on November 8, 2000. From
August 1995, to June 2000, Mr. Molnick served as a director of HGN. Mr. Molnick studied
computer science at Bellevue Community College. Mr. Molnick is the son of Melvin Molnick
and the brother of dee dee Molnick.


Melvin Molnick became our Secretary
and Treasurer on February 10, 2000. From August 1995 until August 1998, Mr. Molnick
served as a Director of HGN and from August 1998 until February 2000 was HGNs Secretary.
Mr. Molnick is the inventor of method covered by our Patent and has served as President
of HGN since April 25, 2000. From 1994 to 1997, he served as Vice President of Rocky
Mountain Erectors located in Henderson, Nevada. In 1984, Mr. Molnick received his first
patent (US 4,442,581) for a button puncher capable of significantly improving the ease
with which steel sheets are punched together. This technology is now used throughout the
world in the construction trade industry. Mr. Molnick is father of dee dee Molnick and
Jesse Molnick, and the husband of Suzanne Molnick.


H. Yale Gutnick became a member of
our Board of Directors on February 10, 2000. Since 1978, he has been a partner
Strassburger McKenna Gutnick & Potter of Pittsburgh, PA, where he now serves as Senior
Partner. Mr. Gutnick is also Vice President and Secretary of Tribune Review Publishing
Co. located in Pittsburgh, Pennsylvania since 1988. From 1967 to 1970, he served as a
trial attorney for the United States Justice Department in Washington, D.C. From 1970 to
1978, he was a partner at the Pittsburgh law firm of Rose, Schmidt & Dixon. He served as a
member of the Board of Directors of Magicworks Entertainment, Inc. from its inception
until it was acquired by SFX Entertainment, Inc. in 1998. Mr. Gutnick is also a member of
the Board of Directors of various privately held companies, including Richard M. Scaife
Publisher, Inc., Calvary, Inc., Mercer Lime and Stone Company. Mr. Gutnick attended Ohio
Wesleyan University and graduated in 1964, with academic honors with a BA degree in
Liberal Arts. Mr. Gutnick obtained his law degree, with honors, from the University of
Pittsburgh Law School in 1967, Mr. Gutnick is admitted to practice law in the
Commonwealth of Pennsylvania.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Philip J. Anderson became a member
of our Board of Directors on February 10, 2000. He currently is a partner in the firm of
Anderson & Morishita in Las Vegas, Nevada where he specializes in intellectual property.
From November 1995 to April 2000 he was a partner at Quirk & Tratos located in Las Vegas,
Nevada. Mr. Anderson attended the University of Illinois at Champaign-Urbana, Illinois,
and received a degree in Mechanical Engineering. Mr. Anderson received his law degree
from Whittier College School of Law in Southern California in 1979. He is admitted to
practice law in the states of California, Illinois, and Nevada, and is admitted to
practice in front of the United States Patent Office


Suzanne Molnick became a member of
our Board of Directors on February 10, 2000. Since 1995, Mrs. Molnick has worked in a
variety of positions with HGN. Mrs. Molnick is the wife of Melvin Molnick and the mother
of dee dee Molnick and Jesse Molnick.


All of our Directors were elected
for a term of one year or until their successors are duly elected and qualified. There
are no arrangements or understandings between any Director and any other person(s)
pursuant to which a Director was selected as a Director.



Our directors currently receive $500
for attending Board of Directors meetings in person, and $250 for participating by
telephone, in addition to reimbursement of reasonable expenses incurred in attending
meetings. On October 24, 2000, Philip J. Anderson and H. Yale Gutnick were each awarded
options to purchase 1,000 shares of our common stock at a strike price of $.85 per share.
The options are fully vested and expire on October 24, 2010.


Our Officers are elected for terms
of one year, or until their successors are duly elected and qualified or until terminated
by action of the Board of Directors. Currently, our officers have not entered into any
type of employment agreement and we are in the process of identifying which employees we
need to enter into employment agreements and the terms for such agreements. We expect to
enter into some employment agreements with certain of our officers during the next fiscal
year.


Section 16(a) Beneficial
Ownership Reporting Compliance


Section 16(a) of the Securities
Exchange Act of 1934 requires our Officers, Directors and persons who own more than ten
percent of a registered class of our equity securities to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. These reporting persons
are required by regulation to furnish to us with copies of all Section 16(a) forms they
file. Based solely on our copies of such forms received or written representations from
certain reporting persons that no Form 5s were required for those persons, we believe
that, for the fiscal year ended March 31, 2001, all filing requirements applicable to its
officers, directors and greater-than-ten-percent beneficial owners were complied with.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|ITEM 10. Executive
Compensation:


The following table sets forth the
aggregate compensation paid or accrued by us for the fiscal year ended March 31, 2001 to
the executive officers and key personnel.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        |  | Annual Compensation | Long Term Compensation Awards | Payouts
|----------------------- |  | ------------------- | ----------------------------- | -------
|
|
|dee dee Molnick         |  | 2001                |                               | 75,400 
|Chairwoman and CEO      |  | 2000                |                               | 14,571 
|                        | 
|Chris Almida            |  | 2001                |                               | 108,666
|President               |  | 2000                |                               | 14,571 
|                        | 
|Jesse D. Molnick        |  | 2001                |                               | 61,862 
|Vice President          | 
|                        | 
|Melvin Molnick          |  | 2001                |                               | 106,800
|Secretary and Treasurer |  | 2000                |                               | 14,571 

| |  | (1) |  | Includes
accrued wages of $13,075.
| |  | --- |  | ----------------------------------

| |  | (2) |  | Includes
accrued wages of $27,533.
| |  | --- |  | ----------------------------------

| |  | (3) |  | Includes
accrued wages of $27,609.
| |  | --- |  | ----------------------------------

| |  | (4) |  | Includes
accrued wages of $27,717.
| |  | --- |  | ----------------------------------

| |  | (5) |  | Other
Annual Compensation in the above tables represents benefits attributable to our payments
for lease automobiles.
| |  | --- |  | ---------------------------------------------------------------------------------------------------------------------

|There are no employment contracts
with any of the Companys employees.


ITEM 11. Security
Ownership of Certain Beneficial Owners and Management


The following table sets forth, as
of June 14, 2001, certain information concerning those persons known to us to be the
beneficial owners of more than five percent of our Common Stock, the number of shares of
our Common Stock owned by our Directors individually, and by all of our Directors and
executive officers as a group:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|Name and AddressBeneficial Owners(1) | Amount and Nature ofBeneficial Ownership | Percent ofClass(2)
|------------------------------------ | ---------------------------------------- | ------------------
|Melvin Molnick(3,4,7)                |                                          | 17,336,140        
|                                    
|Suzanne Molnick(3,4,7)               |                                          | 17,336,140        
|                                    
|dee dee Molnick(5,6)                 |                                          | 3,840,000         
|                                    
|Chris Almida(5,6)                    |                                          | 3,840,000         
|                                    
|Jesse Molnick                        |                                          | 1,952,599         
|                                    
|Trust for Michael Molnick(3,4,7)     |                                          | 1,920,000         
|                                    
|H. Yale Gutnick(8)                   |                                          | 16,000            
|                                    
|Philip J. Anderson(9)                |                                          | 1,000             
|                                    
|Shares of all directors, executive   |                                         
|Officers, and key employees          |                                         
|as a group (8 persons)               |                                          | 23,145,739        

| |  | (1) |  | The
mailing address for each of the above Beneficial Owners is 5392 S. Eastern Avenue,
Building A-North, Las Vegas, Nevada 89119
| |  | --- |  | --------------------------------------------------------------------------------------------------------------------------------

| |  | (2) |  | Based
on 30,501,000 shares outstanding as of June 14, 2001
| |  | --- |  | ----------------------------------------------------------

| |  | (3) |  | Of
these 17,336,140 shares, Mr. Molnicks wife Suzanne owns 2,160,000 shares, and 1,920,000
shares are held in a trust for the benefit of Mr. Molnicks minor child, Michael Molnick.
Mr. Molnick is a co-trustee of the trust for Michael Molnick.
| |  | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (4) |  | Of
these 17,336,140 shares, Mrs. Molnicks husband Melvin owns 13,256,140 shares, and
1,920,000 shares are held in a trust for the benefit of Mrs. Molnicks minor child,
Michael Molnick. Mrs. Molnick is a co-trustee of the trust for Michael Molnick.
| |  | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (5) |  | Of
these 3,840,000 shares, 1,920,000 shares are owned by Ms. Molnicks husband, Mr. Almida.
| |  | --- |  | -------------------------------------------------------------------------------------------

| |  | (6) |  | Of
these 3,840,000 shares, 1,920,000 shares are owned by Mr. Almidas wife, Ms. Molnick.
| |  | --- |  | ----------------------------------------------------------------------------------------

| |  | (7) |  | These
shares are held in trust for the benefit of Michael Molnick, a minor. The parents of
Michael Molnick, Melvin and Suzanne Molnick are co-trustees.
| |  | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (8) |  | Of
these 16,000 shares, Mr. Gutnick has the right to acquire 1,000 shares from options.
| |  | --- |  | ---------------------------------------------------------------------------------------

| |  | (9) |  | Mr.
Anderson has the right to acquire these 1,000 shares from options.
| |  | --- |  | ----------------------------------------------------------------------

|ITEM 12. Certain
Relationships and Related Transactions:


From the inception of HGN in August,
1995 until February, 2000, our main source of funding had been advances, in the form of
promissory notes, from certain of our shareholders, including members of the Molnick
family. Generally, the notes earn interest ranging from six to eight percent (6-8%). The
notes from the Molnick family aggregated approximately $111,500 including interest, and
we repaid these notes by March 31, 2000. We believe that these loans were on marketable
terms.


As of March 31, 2001, approximately
$100,000 of unpaid wages was accrued to the benefit of officers and employees. Interest
on unpaid amounts was also accrued at a rate of 8%.


As part of the HGN merger, a
minority shareholder of PCG agreed informally to make a capital contribution to our
company of $3.1 million. However, because of substantial uncertainty as to this
arrangement, no accounting recognition was given to this transaction until an
understanding was reached in August 2000 between this shareholder and us. As of June 14,
2001, the balance of this Capital Contribution Receivable was approximately $1.5 million.


From time to time, we have retained
Strassburger McKenna Gutnick & Potter, located in Pittsburgh, Pennsylvania and Anderson & Morishita
located in Las Vegas, Nevada, for certain legal matters. Mr. Gutnick, a member of our
Board of Directors is a senior partner with Strassburger McKenna Gutnick & Potter and Mr.
Anderson, also a member of our Board of Directors, is a partner with Anderson and
Morishita. The fees incurred by us through March 31, 2001, these law firms, aggregating $135,000 for the year then ended, did not
exceed five percent of that particular law firms gross revenues for that firms last
full fiscal year.


ITEM 13. Exhibits and
Reports on Form 8-K:


(a)   Exhibits.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|EXHIBIT   NO. |  | DESCRIPTION
|------------- |  | -----------

|2.1 |  | Agreement
and Plan of Merger dated as of January 18, 2000 between PCG Media, Inc. and Home Gambling
Network, Inc. (filed as Exhibit 1.1 to the original Report on Form 8-K dated February 8,
2000 and filed with the Commission on February 14, 2000 and hereby incorporated by
reference).
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2.2 |  | Certificate
of Merger between PCG Media, Inc. and Home Gambling Network, Inc. (filed as Exhibit 1.2
to the original Report on Form 8-K dated February 8, 2000 and filed with the Commission
on February 14, 2000 and hereby incorporated by reference).
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|

|3.1 |  | Amended
and Restated Articles of Incorporation (filed as Exhibit 1.3 to the original Report on
Form 8-K dated February 8, 2000 and filed with the Commission on February 14, 2000 and
hereby incorporated by reference).
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.2 |  | Revised
Bylaws of i2corp.com (filed as Exhibit 3.2 to the amended Report on Form 8-K dated June
6, 2000 and filed with the Commission on June 6, 2000 and hereby incorporated by
reference).
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.1 |  | Form
of Licensing Agreement (filed as Exhibit 10.1 to the Form 10-K filed with the Commission
on July 14, 2000 and hereby incorporated by reference).
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------

|10.2 |  | Assignment
of Patent, Trademarks and Intellectual Property between Home Gambling Network, Inc. and
Melvin Molnick dated October 22, 1998 (filed as Exhibit 10.1 to the Form 10-K filed with
the Commission on July 14, 2000 and hereby incorporated by reference).
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|99.1 |  | Press
release dated January 9, 2001 (filed as Exhibit 99.1 to the Form 10-QSB filed with the
Commission on February 14, 2001 and hereby incorporated by reference).
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b)     Reports on Form 8-K.


On
February 14, 2000, we filed a Current Report on Form 8-K to report the merger between PCG
Media, Inc. and Home Gambling Network, Inc.


On
April 14, 2000, we filed a Current Report on Form 8-K to report a delay in filing
financial statements relating to the merger of PCG Media, Inc. and Home Gambling Network,
Inc.


On May
15, 2000, we filed a Current Report on Form 8-K regarding the change in our fiscal year
from June 30 to March 31.


On
June 6, 2000, we filed a Current Report on Form 8-K containing the required financial
statements from the merger of PCG Media, Inc. and Home Gambling Network, Inc.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|SIGNATURES



Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Dated:  June 29, 2001 |  | I2CORP.COMBy: /s/   dee   dee   Molnick
dee   dee   MolnickChairwoman and President
|--------------------- |  | -------------------------------------------------------------------------------------------------

|Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the Company and in the capacities and on the
dates indicated.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

|/s/ | Chris P. Almida
 | Chris P. AlmidaPresident and Director | June 29, 2001
|--- | -------------------------- | ------------------------------------- | -------------

|/s/ | Jesse D. Molnick
 | Jesse D. MolnickVice President and Director | June 29, 2001
|--- | --------------------------- | ------------------------------------------- | -------------

|/s/ | Melvin Molnick
 | Melvin MolnickSecretary & Treasurer
                                            (Principal Accounting Officer) | June 29, 2001
|--- | ------------------------- | -------------------------------------------------------------------------------------------------------------- | -------------

|/s/ | H. Yale Gutnick
 | H. Yale GutnickDirector | June 29, 2001
|--- | -------------------------- | ----------------------- | -------------

|/s/ | Philip J. Anderson
 | Philip J. AndersonDirector | June 29, 2001
|--- | ----------------------------- | -------------------------- | -------------

|/s/ | Suzanne Molnick
 | Suzanne MolnickDirector | June 29, 2001
|--- | -------------------------- | ----------------------- | -------------

|INDEPENDENT AUDITORS
REPORT




To the Board of Directorsi2corp.com
and SubsidiaryLas Vegas, Nevada


We have audited the accompanying
consolidated balance sheet of i2corp.com and its subsidiaries, (collectively the
Company), a development stage enterprise, as of March 31, 2001 and 2000, and the related
consolidated statements of development stage operations, stockholders' equity deficiency, and cash flows for
the year ended March 31, 2001, the nine months ended March 31, 2000, and the cumulative
period from August 2, 1995, through March 31, 2001. These financial statements are the
responsibility of the Companys management. Our responsibility is to express an opinion
on these financial statements based on our audits.


We conducted our audits in
accordance with 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 the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.




In our opinion, the accompanying
consolidated financial statements of the Company present fairly, in all material
respects, its financial position as of March 31, 2001 and 2000, and the results of its
development stage operations and cash flows for the periods presented, in conformity with
generally accepted accounting principles.


The accompanying consolidated
financial statements have been prepared assuming that the Company will continue as a
going concern. As discussed in Note 2, the Company has incurred development stage losses
resulting in a substantial working capital deficiency and an operating deficit, and its
ability to pay its obligations when due and to commence operations is dependent upon its
obtaining license agreements for its product with satisfactory terms and raising
additional capital. These conditions raise substantial doubt as to the Companys ability
to continue as a going concern. Managements plans in regard to those matters are also
described in Note 2. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.






/s/ Piercy, Bowler, Taylor & Kern



Las Vegas, Nevada


June 19, 2001



F-1
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|i2corp.com and
Subsidiaries(A Development Stage Enterprise)CONSOLIDATED BALANCE SHEET


MARCH 31, 2001 AND 2000
|---------------------------------------------------------------------------------------------------------------

|                                                             | 2001    | 2000          
|------------------------------------------------------------ | ------- | --------------
|                                                             |         |               
|ASSETS                                                       |         |               
|Current assets:                                              |        
|Cash                                                         |         | $        1,418
|Current portion of capital contribution receivable           |         | 103,250       
|Due from shareholders                                        |         | 62,189        
|Other assets                                                 |         | 18,546        
|                                                             |         |               
|                                                             |         | 185,403       
|Furniture, fixtures, and equipment, net                      |         | 77,368        
|Patent                                                       |         | 107,087       
|                                                             |         |               
|                                                             |         | $    369,858  
|                                                             |         |               
|LIABILITIES AND STOCKHOLDERS EQUITY DEFICIENCY              |        
|Current liabilities:                                         |        
|Accounts payable                                             |         | $    277,175  
|Accrued expenses and other                                   |         | 115,251       
|Note payable                                                 |         |               
|                                                             |         |               
|                                                             |         | 392,426       
|                                                             |         |               
|Stockholders equity deficiency:                             |        
|Common stock, 50,000,000 shares authorized, 30,000,000       |        
|issued and outstanding, $.001 par value                      |         | 30,000        
|Additional paid-in-capital                                   |         | 3,180,900     
|Less capital contribution receivable, net of current portion |  
; | (1,569,556    
|Deficit accumulated in the development stage                 |         | (1,663,912    
|                                                             |         |               
|                                                             |         | (22,568       
|                                                             |         |               
|                                                             |         | $    369,858  
|                                                             |         |               

|See notes to consolidated financial
statements.




F-2
|-------------------------------------------------------

|i2corp.com and
Subsidiaries(A Development Stage Enterprise)CONSOLIDATED STATEMENTS OF DEVELOPMENT
STAGE OPERATIONS


FOR THE YEAR ENDED MARCH
31, 2001, THE NINE MONTHS ENDED   MARCH 31, 2000, AND THE CUMULATIVE PERIOD FROM AUGUST 2,
1995,   THROUGH MARCH 31, 2001
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                              | YearendedMarch 31, 2001 | Nine monthsendedMarch 31, 2000 | August 2, 1995,throughMarch 31, 2001
|--------------------------------------------- | ----------------------- | ------------------------------ | ------------------------------------
|Selling, general, and administrative expenses |                         | $(1,351,902                    | )                                   
|Interest expense                              |                         | (9,879                         | )                                   
|Less miscellaneous revenues                   |                         | 6,941                          |                                     
|                                              |                         |                                |                                     
|Net loss                                      |                         | $(1,354,840                    | )                                   
|                                              |                         |                                |                                     
|Net loss per common share                     |                         | $       (0.045                 | )                                   
|                                              |                         |                                |                                     
|Weighted average number of common             |                        
|shares outstanding                            |                         | 30,000,000                     |                                     
|                                              |                         |                                |                                     

|See notes to consolidated financial
statements.




F-3
|-------------------------------------------------------

|i2corp.com and
Subsidiaries(A Development Stage Enterprise)CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY  DEFICIENCY


FOR THE YEAR ENDED MARCH
31, 2001, THE NINE MONTHS ENDED   MARCH 31, 2000, AND THE CUMULATIVE PERIOD FROM AUGUST 2,
1995,   THROUGH JUNE 30, 1999
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                                                         | Common stock | Additionalpaid-in | Capital contribution | Accumulated  | Total stockholders'equity
|---------------------------------------------------------------------------------------------------------------------------------------- | ------------ | ----------------- | -------------------- | ------------ | -------------------------
|
|From inception, August 2, 1995, to June 30, 1999:                                                                                        |              |                   |                      |              |                          
|Initial capitalization of HGN                                                                                                            |              | 1,000,000         |                      | $      1,000 |                          
|Retroactive effect of reverse         acquisition and recapitalization                                                                 |              | 24,179,700        |                      | 24,180       |                          
|Shares issued by predecessor        management for services    
    and other noncash transactions                                       |              | 4,770,300         |                      | 4,770        |                          
|Net loss                                                                                                                                 |              |                   |                      |              |                          
|                                                                                                                                         |              |                   |                      |              |                          
|Balances, June 30, 1999, after         retroactive recapitalization                                                                      |              | 29,950,000        |                      | 29,950       |                          
|Nine months ended March 31, 2000:                                                                                                        |             
|Shares issued for services,        August 1999, prior to "reverse    
     acquisition," valued by         predecessor management at par |              | 50,000            |                      | 50           |                          
|Capital contribution pledged                                                                                                             |              |                   |                      |              |                          
|Net loss                                                                                                                                 |              |                   |                      |              |                          
|                                                                                                                                         |              |                   |                      |              |                          
|Balances, March 31, 2000                                                                                                                 |              | 30,000,000        |                      | 30,000       |                          
|Year ended March 31, 2001:                                                                                                               |             
|Payments received on capital         contribution                                                                                        |              |                   |                      |              |                          
|Portion of capital contribution         receivable transferred to current    
     assets                                                |              |                   |                      |              |                          
|Options granted for services                                                                                                             |              |                   |                      |              |                          
|Net loss                                                                                                                                 |              |                   |                      |              |                          
|                                                                                                                                         |              |                   |                      |              |                          
|Balances, March 31, 2001                                                                                                                 |              | 30,000,000        |                      | $    30,000  |                          
|                                                                                                                                         |              |                   |                      |              |                          

See notes to consolidated financial
statements.

|F-4
|---

|i2corp.com and
Subsidiaries(A Development Stage Enterprise)CONSOLIDATED STATEMENTS OF CASH FLOWS


FOR THE YEAR ENDED MARCH
31, 2001, THE NINE MONTHS ENDED   MARCH 31, 2000, AND THE CUMULATIVE PERIOD FROM AUGUST 2,
1995,   THROUGH MARCH 31, 2001
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                               | YearendedMarch 31, 2001 | Nine monthsendedMarch 31, 2000 | August 2, 1995,throughMarch 31, 2001
|---------------------------------------------- | ----------------------- | ------------------------------ | ------------------------------------
|Operating activities:                          |                         |                                |                                     
|Net cash used in operating activities          |                         | $(989,319                      | )                                   
|                                               |                         |                                |                                     
|Investing activities:                          |                        
|Purchases of furniture, fixtures and equipment |                         | (26,036                        | )                                   
|Patent costs                                   |                         | (24,055                        | )                                   
|                                               |                         |                                |                                     
|Cash used in investing activities              |                         | (50,091                        | )                                   
|                                               |                         |                                |                                     
|Financing activities:                          |                        
|Payment of capital contribution receivable     |                         | 927,194                        |                                     
|Proceeds of shareholder advances               |                         |                                |                                     
|Repayments of shareholder advances             |                         |                                |                                     
|Proceeds of note payable                       |                         |                                |                                     
|                                               |                         |                                |                                     
|Net cash provided by financing activities      |                         | 927,194                        |                                     
|                                               |                         |                                |                                     
|Net increase (decrease) in cash                |                         | (112,216                       | )                                   
|Cash, beginning                                |                         | 113,634                        |                                     
|                                               |                         |                                |                                     
|Cash, ending                                   |                         | $     1,418                    |                                     
|                                               |                         |                                |                                     

|See notes to consolidated financial
statements.




F-5
|-------------------------------------------------------

|i2corp.com and
Subsidiaries(A Development Stage Enterprise)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


FOR THE YEAR ENDED MARCH
31, 2001, THE NINE MONTHS ENDED   MARCH 31, 2000, AND THE CUMULATIVE PERIOD FROM AUGUST 2,
1995,   THROUGH MARCH 31, 2001
1.   Background
information:


Business activities and history.
i2corp.com and its subsidiaries, Home Gambling Network, Inc. (HGN), i2consult.com and
i2develop.com (collectively, the Company), hold a patent for a method that allows
licensees to bring live gaming to players in remote locations via the internet and other
electronic media, and that enables making and receiving virtually instant electronic
payments to and from such players.


In February 2000, in what is
commonly referred to as a reverse acquisition,100% of HGNs stock was
effectively exchanged for a controlling interest in a publicly held shellcompany,
PCG Media, Inc. (referred to herein as PCG), which concurrently changed its name to
i2corp.com. PCG engaged in no business activity for a number of years prior to the
transaction described in the preceding paragraph. For financial accounting purposes, the
transaction was treated as an acquisition of PCG by, and a recapitalization of, HGN.
Accordingly, the historical statements of development stage operations and cash flows
presented are those of HGN, which has, in substance, been in the development stage since
the inception of HGN, August 2, 1995. Net loss per share is calculated after giving
retroactive effect to the recapitalization (Note 4).


PCG engaged in no business activity
for a number of years prior to the transaction described in the preceding paragraph.
Therefore, the Company has, in substance, been in the development stage since the
inception of HGN, August 2, 1995.


Prior to the reverse acquisition,
PCG had recently registered its outstanding common stock with the United States
Securities and Exchange Commission (SEC) under the Securities Exchange Act of 1934. PCG
previously reported on the basis of a fiscal year ending June 30. Effective with the
prior period, the Company changed its fiscal year end to March 31.


Equipment, furniture and fixtures.
Equipment, furniture and fixtures are stated at cost. Depreciation is provided using the
declining balance method over the estimated useful lives of the assets.


Patent costs. Patent costs will be
amortized over the life of the patents beginning when licensing revenues are earned.


Advertising costs. Costs for
advertising are expensed as incurred. Advertising costs expensed totaled $77,311 for the
year ended March 31, 2001, and $29,842 for the nine months ended March 31, 2000.


Use of estimates. Timely preparation
of financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts
and disclosures, some of which may require revision in future periods.


2.   Commitments and
contingencies:


Operating leases. The Company is
lessee under noncancelable operating lease agreements for automobiles and office space.
The Companys minimum future obligations under noncancelable operating leases is $56,963
for the year ending March 31, 2002, and none thereafter. The Company incurred rent
expense under these leases of $63,523 during the year ended March 31, 2001, $8,161 during
the nine months ended March 31, 2000, and none in prior periods.


Going concern. The accompanying
financial statements have been prepared assuming that the Company will continue as a
going concern. As of March 31, 2001, the Company has accumulated an operating deficit of
$1,663,912 and a working capital deficiency of $215,773. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.


It is managements plan to finance
its operations for the foreseeable future primarily with proceeds from the capital
contribution receivable from a minority shareholder (Note 4) and to explore other
financing options in the investment community. Management is also in the process of
negotiating licensing agreements that, if consummated, would generate operating revenues.
However, there can be no assurance that these sources will provide sufficient cash
inflows to enable the Company to achieve its operational objectives in the short term.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|F-6
|---

|i2corp.com and
Subsidiaries(A Development Stage Enterprise)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)


FOR THE YEAR ENDED MARCH
31, 2001, THE NINE MONTHS ENDED   MARCH 31, 2000, AND THE CUMULATIVE PERIOD FROM AUGUST 2,
1995,   THROUGH MARCH 31, 2001
2.   Commitments and
contingencies (continued):


Other. The Company has been
presented with claims asserting that certain individuals and/or entities are entitled to
an aggregate of approximately 750,000 shares of the Companys common stock. Based on the
available evidence, management believes these claims are inconsistent with the Companys
records and invalid. There may be other similar claims asserted in the future. However,
based, in part, upon the advice of counsel, management believes that such matters will
not have a significant effect on the Company. In the unlikely event the Company would be
required to issue some or all of the shares that are claimed by these individuals or
entities, there would be up to 2.5% dilution of interests of its stockholders, based on
claims presently known.



3.   Income taxes:



Because, as of March 31, 2001, the
Company has engaged in extensive development stage activities and generated limited
revenues over a period of almost six years, it has incurred substantial losses. The
potential income tax benefits of such losses have been effectively offset by a 100%
valuation allowance and, therefore, are not reflected in the accompanying financial
statements. Moreover, for income tax reporting purposes, the Companys operating losses
have been deferred and will be amortized over five years commencing when significant
revenues are earned.



4.   Capitalization and
related party transactions:



The initial capitalization of HGN
was $1,000 and was made in the form of stockholder advances in payment of HGNs expenses
(Note 6). In giving retroactive effect to the reverse acquisition, the Company was
recapitalized in 2000 with 30,000,000 shares of $.001 common stock, requiring the $1,000
to be eliminated in consolidation and $30,000 to be assigned to common stock.


Except as discussed in the following
paragraph, the Companys only significant sources of financing has been a 6% loan in the
amount of $500,000 made by a minority stockholder (whose son was a director of the
Company at the time the loan was made), due July 2000, and advances made on its behalf by
its principal stockholders, which have earned interest at 8% and were due on demand until
repaid in the period ended March 31, 2000. Interest charged to operations on these
obligations totaled $7,783 for the year ended March 31, 2001, $8,390 for the nine months
ended March 31, 2000, and $23,753 for the cumulative period.


In connection with, and as an
incentive for HGN to enter into, the reverse acquisition, the minority stockholder (then
of PCG) agreed informally to make a capital contribution to the Company originally in the
amount of $3.1 million. In conjunction with the formalization of this receivable, the
$500,000 note payable to the minority stockholder was applied against this obligation.
Subsequent to March 31, 2001, $103,250 was received in cash and, therefore, has been
classified in the accompanying balance sheet as a current asset as of that date. The
remaining receivable may be paid off in whole or in part at any time without premium or
discount. However, there is no due date.


The Companys officer/stockholders
have provided their services to the Company, during substantially all of the development
stage periods presented, without compensation, until February 2000.


Subsequent to March 31, 2001, the majority
shareholder transferred $162,000 of his stock to vendors to pay for liabilities of the
same amount, owed by the Company.


The Company incurred legal fees of
approximately $135,000, $15,000, and $150,000 for fiscal 2001, 2000 and the cumulative period,
respectively, to the firms of members of the board of directors.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|F-7
|---

|i2corp.com and
Subsidiaries(A Development Stage Enterprise)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)


FOR THE YEAR ENDED MARCH
31, 2001, THE NINE MONTHS ENDED   MARCH 31, 2000, AND THE CUMULATIVE PERIOD FROM AUGUST 2,
1995,   THROUGH MARCH 31, 2001
5.   Financial instruments:


The carrying amounts of financial
instruments approximates their fair value because of their short maturities or because
the debt bears fixed rates that approximate current rates available on similar borrowings.



6.   Supplemental cash
flow information:


Reconciliation of net loss to net
cash used in operating activities:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                          | YearendedMarch 31, 2001 | Nine monthsendedMarch 31, 2000 | August 2, 1995,throughMarch 31, 2001
|------------------------- | ----------------------- | ------------------------------ | ------------------------------------
|Net loss                  |                         | $(1,354,840                    | )                                   
|Increase in due from      |                        
|shareholders              |                         | (92,955                        | )                                   
|Increase in other assets  |                         | (3,523                         | )                                   
|Depreciation              |                         | 24,524                         |                                     
|Stock-based compensation  |                        
|for services              |                         | 109,900                        |                                     
|Expenses paid by officer/ |                        
|shareholders              |                         |                                |                                     
|Increases (Decreases) in: |                        
|Accounts payable          |                         | 234,778                        |                                     
|Accrued expenses          |                         | 92,797                         |                                     
|                          |                         |                                |                                     
|                          |                         | $  (989,319                    | )                                   
|                          |                         |                                |                                     

|Cash paid for interest: Cash paid
for interest totaled $1,249, $1,653 and $2,902 in Fiscal 2001, 2000 and the cumulative
period, respectively.


Non-cash investing and financing
activities: Advances made as direct payments by the stockholders on behalf of the Company
for patent costs, other assets purchases, and selling, general and administrative
expenses totaled $6,761, $18,981 and $106,808 in fiscal 2001, 2000 and the cumulative period, respectively.


7.   Stock options:


In February 2000, the Company
adopted a stock option plan providing for qualified and non-qualified options for up to
3,000,000 shares to be awarded to employees, officers, directors, consultants and
independent contractors. In October 2000, the Company granted options under the plan for
102,000 shares, including 2,000 to non-employees exercisable immediately at $.85 per
share and the balance to an employee becoming exercisable at the same price as they vest
periodically beginning April 2001 through April 2005. The options expire in October 2010.
As a result of options granted to the employee, compensation expense has been reflected
in the year ended March 31, 2001, of $9,000, based on an estimated fair value per option
at the date of grant of $.50, using the Black-Scholes option valuation model, discounted
by 10% for restrictions that would be applicable to shares that are obtainable through
their exercise. The risk-free interest rate used in the calculation was 5.50%, expected
volatility was 275%, and expected dividends were zero. Options issued to non-employees
(directors) were similarly valued and are not material.


In February 2001, the Company
entered into a short term management consulting agreement. In exchange for contracted
services, the Company issued options to purchase 2,500,000 shares of newly issued common
stock, exercisable at $.12 per share. These options expire in February 2004. As a result
of this option grant, consulting expense has been reflected in the year ended March 31,
2001, of $100,000, based on an estimated fair value per option at the date of grant of
$.16, using Black-Scholes option valuation model. The risk-free interest rate used in the
calculation was 5.00%, expected volatility was 368%, and expected dividends were zero.


Outstanding options were not
included in weighted average number of shares outstanding used for per share
calculations, since the effect would be anti-dilutive.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|F-8
|---

|i2corp.com and
Subsidiaries(A Development Stage Enterprise)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)


FOR THE YEAR ENDED MARCH
31, 2001, THE NINE MONTHS ENDED   MARCH 31, 2000, AND THE CUMULATIVE PERIOD FROM AUGUST 2,
1995,   THROUGH MARCH 31, 2001
A summary of option activity for the
year ended March 31, 2001, follows:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                             | Shares reserve for options | Options outstanding
|-------------------------------------------- | -------------------------- | -------------------
|Adoption of option plan                      |                            | 3,000,000          
|$.85 options granted to employees and others |                            | (102,000           
|Approval of consulting agreement             |                            | 2,500,000          
|$.12 options granted  under consultit        |                            | (2,500,000         
|                                             |                            |                    
|Balances, March 31, 2001                     |                            | 2,898,000          
|                                             |                            |                    
|Weighted average exercise price              |                            |                    
|                                             |                            |                    

|Subsequent to March 31, 2001,
options for 501,000 shares were exercised under the consulting agreement at $.12 per
share.





F-9
|----------------------------------------------------------------------------------------------------------------------------------