SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-KSB

           [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                      For the year ended December 31,1999.


                        Commission File Number 000-27897


                                IP FACTORY, INC.
                             -----------------------
             (Exact name of registrant as specified in its charter)

        DELAWARE                                        95-4737507
    ----------------------                          -------------------
    (State of organization)                         (I.R.S. Employer
                                                    Identification No.)

            860 VIA DE LA PAZ, SUITE E-1, PACIFIC PALISADES, CA 90272
          -----------------------------------------------------------
                    (Address of principal executive offices)

       Registrant's telephone number, including area code (310-230-6100)


       Securities registered pursuant to Section 12(b) of the Act,
                                      None

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



<PAGE>

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

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

Issuer's revenues for its most recent fiscal year.               $0.00

The  aggregate  market value of the Common Stock held by  non-affiliates  of the
registrant,  based on the average of the high and low prices of the Common Stock
on the OTC  Bulletin  Board on March 1,  2000,  was  $0.00  (no  trading  market
exists).  For purposes of this  computation,  all  officers,  directors,  and 5%
beneficial  owners of the  registrant (as indicated in Item 12) are deemed to be
affiliates.  Such  determination  should  not be deemed an  admission  that such
directors,  officers,  or 5% beneficial  owners are, in fact,  affiliates of the
registrant.

Number of shares of Common  Stock,  $0.001  Par Value,  outstanding  at April 1,
2000, was 1,019,000.

                     Documents incorporated by reference:     None



                                       2
<PAGE>


                   TABLE OF CONTENTS - 1999 FORM 10-KSB REPORT

                                                                       Page
                                                                     Numbers
                                                                     -------
                                     PART I

Item   1.      Business                                                    4

Item   2.      Properties                                                  6

Item   3.      Legal Proceedings                                           6

Item   4.      Submission of Matters to a Vote of Security Holders         6

                                     PART II

Item   5.      Market for Registrant's Common Equity and Related
               Stockholder Matters                                         6

Item   6       Management's Discussion and Analysis of Financial
               Condition and Results of Operations                         7

Item   7.      Financial Statements                                        9

Item   8.      Changes in and Disagreements with Accountants on
               Accounting and Financial Disclosure                         9

                                    PART III

Item  9.       Directors, Executive Officers, Promoters and
               Control Persons; Compliance with Section 16(a)
               of the Exchange Act                                        10

Item  10.      Executive Compensation                                     11

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

Item  12.      Certain Relationships and Related Transactions             12

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

Signatures                                                                14


                                       3


<PAGE>
                                     PART I


Item   1.      Business


IP   FACTORY,   Inc.   will   provide   leading   worldwide   enterprises   with
optimizedsolutions for integrating network and Internet design,  implementation,
security,  maintenance  and  management.  IP FACTORY  has  assembled  a group of
experts and professionals in areas such as Internet Protocol uniformity, Network
Design, Security, Software Applications,  and System Integration,  each of which
has a strong customer base. The IP FACTORY group will work in synergy to provide
complete enterprise  solutions to Global 2000 firms and government  institutions
worldwide while enhancing growth of its potential subsidiaries.

Rapidly Expanding Trillion Dollar Corporate Network Market

The  dominating  trend in today's  global  economy is the ability to communicate
efficiently,  as  industry  leaders  continue  the quest to find  better ways to
deliver  information  in a timely  manner.  A  Business  Research  Group  report
entitled: "Web Server and the Rise of the Corporate Internet" [1997] showed that
an  increasing  number  of  companies  are  now  turning  to the Web as a way to
organize their internal  communications.  The report surveys 170 decision makers
at large  and  medium-size  companies,  and  shows  that 23% of the  sites  have
implemented  or plan to implement the Web  internally,  with an  additional  20%
studying the option.  A study by IDC examining  Intranet  technology  concludes,
"Typical   implementations   (of  Intranets)  are  achieving  ROI's  (Return  on
Investment) well over 1,000 percent."

According to 1999 IBM company reports, The Information Technology industry is on
target to  generate  $1.2  trillion  in  worldwide  revenues  by the year  2001.
Networking  will  contribute 50%, or $600 billion by the year 2001 worldwide and
will  claim a 75% share of the IT market by 2003.  This  market is  expected  to
continue growing at a 25% compounded rate.

The  average  business  maintains  at least  7-10  different  vendors  for their
network/Internet  needs, with each supplying only a piece of the total solution.
The end result has consistently been a technology bottleneck that can often lead
to massive losses in productivity,  customer service deficiencies, and financial
losses in the tens of millions of dollars.



                                       4
<PAGE>

A Robust Business Model

Effective communication  management may be the single most important element for
success in business today.  Advances in technology have increased  productivity,
improved performance and enhanced  communications by enabling people to send and
receive messages  quickly and effectively,  when and how they want. As a result,
we are also faced with the daily  challenge  of utilizing  voice mail,  personal
computer, e-mail, cellular phone, PDA, fax and pager messages as tools to assist
in the  efficient  performance  of  business  responsibilities,  as  opposed  to
interruptions that effectively extend the time required to get work done. In our
personal  lives as well,  the efficiency of our  communication  capabilities  is
vital to  fulfilling  our  routine  obligations  in order to allow  the time and
ability to enjoy elective  activities.  IP Factory,  recognizing  the increasing
demand and largely untapped market for integrating  solutions,  will address the
complete  range of customer  needs,  all under a single source of  comprehensive
customer support.
These include:

     _    A  well-orchestrated  e-business  solution  approach of network design
          combined  with  integration  of an  optimum  combination  of  software
          applications, hardware components and systems support, tailored to fit
          the business needs of the enterprise.

     _    Integration  of  data,   voice,  fax,   graphical,   image  and  video
          communications within the organization's network.

     _    Unified  messaging  utilizing  effective and  efficient  communication
          among e-mail, fax, pager and voice mediums, via the Internet.

     _    Highly flexible  accounting system designed around the Oracle database
          and which is capable of handling  pre-paid monthly  billing,  pre-paid
          transaction-based  billing,  and  the  traditional  post-paid  monthly
          billing systems.

     _    Solutions  for the  myriad of  security  concerns  which  arise in all
          aspects of data transmission, storage, access and management.

     _    Solutions  for the full  range of  electronic  business  and  commerce
          needs,   including  sales   transactions,   billing  and  collections,
          marketing, shipping and inventory control.


                                       5
<PAGE>


Item   2.      Properties

The Company's executive and administrative  offices are located at 860 Via De La
Paz, Suite E-1, Pacific Palisades, California 90272.
In 1999, the Company neither owned nor leased any real or personal  property.  A
shareholder provided office space and services at no charge.



Item   3.      Legal Proceedings

IP Factory is not currently a party to any pending legal proceedings.



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

No items were submitted to a vote of the security  holders by the Company during
the year ended December 31, 1999.



                                     PART II

Item   5.      Market for Registrant's Common Equity and Related
               Stockholder Matters

The Company registered its common stock on a Form 10-SB  Registration  Statement
on a  voluntary  basis,  which  became  effective  on January 1, 2000.  There is
currently no market for IP Factory's securities.

IP Factory
has never paid cash dividends on its common stock.  Payment of future  dividends
will be within the discretion of IP Factory's Board of Directors and will depend
on,  among  other  factors,  retained  earnings,  capital  requirements  and the
operating and financial condition of IP Factory.



                                       6
<PAGE>


RECENT SALES OF UNREGISTERED SECURITIES

In November 1998, IP Factory issued to each of PageOne Business Productions, LLC
("PageOne") and Appletree Investment Company, Ltd.  ("Appletree"),  9,500 shares
of common stock in  consideration  of services  rendered to IP Factory valued at
$19.00 in the aggregate. There was no underwriter or placement agent involved in
the offer or sale of these  securities and there was no public  solicitation  or
advertisement  by IP  Factory  in  connection  with  the  offer or sale of these
securities.   The   foregoing   issuances  of  common  stock  were  exempt  from
registration  under the Securities Act of 1933, as amended,  pursuant to Section
4(2) thereof.

In March 1999, IP Factory issued 900,000 shares of common stock to Appletree and
100,000  shares of common stock to Page One. The purchase price for these shares
was $0.001 per share.  There was no underwriter  or placement  agent involved in
the offer or sale of these  securities and there was no public  solicitation  or
advertisement  by IP  Factory  in  connection  with  the  offer or sale of these
securities.   The   foregoing   issuances  of  common  stock  were  exempt  from
registration  under of the  Securities  Act of 1933,  as  amended,  pursuant  to
Section 4(2) thereof.



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

PLAN OF OPERATIONS

     IP Factory will function like the "old days" movie studios. There will be a
team of creatives and a team of business management. The entirety of these teams
will work on each and every project together.  Together,  they will all be known
collectively  as the  Talent.  As was the case with the old film  studios,  each
project  will  assemble  a team from  within  the  group,  having a team  leader
(director or producer)  and the creative and business  backup.  This will be the
case whether it is a client side project or an internal  one. If you think of it
like day jobs and jobs of  passion,  this will be good.  The day job will be the
client projects.

EXAMPLE:  Cisco  Systems  hires IP Factory (IPF) to produce a show for Broadband
distribution,  they  will  pay  IPF a fee.  After  salaries  and  other  company
expenses,  the net will be put back into the  company and be applied to internal
projects.  The  internal  talent  will pitch show  concepts to  management  on a
frequent  basis.  Though we will  definitely  start with a "slate"  of  internal
shows,  we plan to enlarge that slate form year to year.  We may even adjust the
initial slate depending on what our talent initially pitches.


                                       7
<PAGE>

     By following  this model,  we will secure equity in all projects we produce
whether they are client side  applications  or  self-produced  projects (this is
because we will  provide  the means of  distribution  similar to the way the old
studios did it). In the above  example,  we will  retain a small  percentage  of
equity in the client product and, ideally through our relationship  with Fusebox
and  Webcasts.com,  we will also  provide the hosting  facility and the means of
distribution,  respectively. Additionally, our investors will be appeased by the
client side as that will be the thing, at first,  that keeps the cash flowing in
and gives us the  ability to commit to a  reasonable  ROI.  It follows  that the
talent we bring in will all be  established  professionals  in their  respective
fields and have their own  contacts  that can be made to be clients or strategic
relationships or both.

     Another  important factor of the company is the uniqueness from which it is
being sprung.  Contrary to traditional start-ups that create a business plan and
see it through,  we will be creating a show and forming the  business  plan from
the actual  success of the  proprietary  side  products.  Of course,  we will be
earning money  through the client side,  but our real agenda will be to form the
internal  production side of the company through proven successes on that front.
Once we are seeing a high and steady stream of revenue from our own projects, we
may spin off the  client  side  into  another  company  or drop it all  together
depending on the resources  available at that time. If we do spin it off, we may
be able to acquire investment at that time for the spin off company and see that
one through to IPO.  The value will then be the clients and the equity we retain
in the shows we produce for them.  The internal  side would  remain  private and
continue  to reap  extensive  profits  and  build  equity  through  intellectual
property.  In the long term,  the company  will  continue to collect  additional
revenue  streams  through  continued  residual  distribution  paid by performing
rights societies, guilds, etc.

     Lastly  and a  potentially  very  lucrative  prong  to the  revenue  model,
additional revenue streams include  merchandising,  both traditional and online,
e-commerce,  advertising,  singular  show  sponsorships,  licensing,  publishing
residuals,  cross media platform  applications,  proprietary  software,  product
placement, etc.

Shows within the Shows - Advertising Model

     Client. We proposed approaching the investor relations  departments at some
of the fortune 500  companies  and building ad  campaigns  for them for the next
century type thing. For example, we could build a high-speed show (really an ad)
for Coke  that  would be the  first  of its kind for  Broadband.  If we have the
shows,  we have to have the ads.  However,  the ads don't  have to be 30, 60 and
1:30 spots like traditional TV. They could and should be shows within the shows.


                                       8
<PAGE>


     Most of the upper management team cannot be formally named at this time due
to their current positions. They are involved in employment contracts and cannot
afford to jeopardize their positions,  stock,  etc. with their current companies
until we are funded and ready to roll out.  This is why we cannot  utilize bios,
info  on  them.  What  Internet  producers  call  rich  media  (the  best in web
broadcast),  television  execs  simply call TV. The market is wide open for high
speed "rich media" and IP FACTORY intends to be the providers.

     The Company has  registered a dot.com name and has  determined it can begin
conducting its business with limited financing that it has arranged.


LIQUIDITY AND CAPITAL RESOURCES

     For the period since  inception  (November 20, 1998)  through  December 31,
1999,  during the Company's  development  stage, the Company has a positive cash
balance of  $200.00,  and has  generated  a net loss of  ($6,389.00).  Since its
organization,  IP Factory has satisfied its cash  requirements  through sales of
Common Stock and cash advances from its current  stockholders.  Our uses of cash
have been  professional  fees,  printing  costs,  postage  expenses  and similar
disbursements  relating  to  the  organization  of IP  Factory,  filing  of  its
registration  statement on Form 10-SB and the costs of filing  periodic  reports
with the Securities and Exchange  Commission.  Certain current stockholders have
agreed, in their discretion,  to make advances, if need be, to fund IP Factory's
immediate  cash  needs.  The  Company  will also seek  funding  through  private
placements of its securities and may seek a suitable business combination.



Item   7.      Financial Statements

     The  financial  statements  and  supplemental  data required by this Item 7
follow  the  index of  financial  statements  appearing  at Item 13 of this Form
10-KSB.



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

     Not applicable.




                                       9
<PAGE>


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

The following table sets forth certain information with respect to the directors
and executive officers of IP Factory.

Name                                Age(1)             Position
----                                ------             --------

George Todt                          46            President and Director

James Walters                        45            Vice President and Treasurer

Betsy Rowbottom                      28            Secretary


(1)     The ages of Messrs. Todt and Walters and Ms. Rowbottom are listed as of
December 31, 1999.

     Our director and executive  officers  devote such time and attention  tothe
affairs of IP Factory as they believe reasonable and necessary.  Set forth below
is a description of the background of our director and executive officers.

     George  A.  Todt  has  been  the  sole  director  and our  President  since
theinception  of IP  Factory.  Since 1996,  Mr. Todt has been a managing  member
ofPageOne Business Productions,  LLC, a Delaware limited liability company. From
1990 to 1995,  Mr.  Todt was the  chief  executive  officer  of REPCO,  Inc.,  a
worldwide designer and builder of environmental facilities.

     James  Walters has been the Vice  President and the Treasurer of IP Factory
since its inception.  For more than 20 years,  Mr. Walters has been engaged as a
certified  public  accountant  with the Los  Angeles,  California-based  firm of
Kellogg & Andelson.

     Besty  Rowbottom  became  Secretary of IP Factory in June 1999. She hasbeen
employed by PageOne since 1997 and has served as its Vice President  since March
1999.  From  1994 to  1997,  Ms.  Rowbottom  served  as a  talent  agent  at HSI
Productions, a Chicago, Illinois-based video production company.


                                       10
<PAGE>


     Our board of directors currently consists of one member, who serves in such
capacity  for a  one-year  term or until  his  successor  has been  elected  and
qualified,  subject to  earlier  resignation,  removal  or death.  The number of
directors constituting the board of directors may be increased or decreased (but
not below the minimum  number  required by applicable  law) from time to time by
resolution of the board of directors.  Our officers  serve at the  discretion of
the board of directors, subject to any effective contractual arrangements.


               COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Section 16(a) of the Securities Exchange Act of 1934 requires that the Company's
officers  and  directors,  and  persons  who own  more  than  ten  percent  of a
registered class of the Company's equity securities, file reports of ownership
and changes in  ownership  with the  Securities  and  Exchange  Commission.  The
Company was not subject to the  reporting  requirements  of Section 16(a) during
fiscal 1999.



Item  10.      Executive Compensation

Consistent  with our present  policy,  no director  or  executive  officer of IP
Factory  receives  compensation for services  rendered to the company.  However,
these  persons are entitled to be  reimbursed  for expenses  incurred by them in
pursuit of our business objectives.



Item  11.      Security Ownership of Certain Beneficial Owners
               and Management

The  following  table sets forth as of  December  31, 1999  certain  information
relating to the ownership of the common stock.

Name and Address of                    Amount and Nature of         Percent of
Beneficial Owner (1)                 Beneficial Ownership (2)        Class (2)
--------------------                 ------------------------       ----------

Appletree Investment Company, Ltd          1,019,000(3)               100.0%

PageOne Business Productions, LLC            109,500                   10.7%

George Todt                                  109,500(4)                10.7%

James Walters                                109,500(4)                10.7%

Besty Rowbottom                              109,500(4)                10.7%

All officers and directors as a group        109,500(4)                10.7%
(3 persons)



                                       11
<PAGE>

------------------------

(1)  Unless otherwise indicated,  the address of each beneficial owner is in the
     care of IP Factory,  Inc., 860 Via de la Paz, Suite E-1, Pacific Palisades,
     California 90272.

(2)  Unless otherwise  indicated,  IP Factory believes that all persons named in
     the table have sole voting and investment  power with respect to all shares
     of common  stock  beneficially  owned by them. A person is deemed to be the
     beneficial  owner of securities which may be acquired by such person within
     60 days from the date of this  registration  statement upon the exercise of
     options,  warrants  or  convertible  securities.  Each  beneficial  owner's
     percentage of ownership is determined by assuming all options,  warrants or
     convertible  securities  that are held by such  person (but not held by any
     other person) and which are  exercisable or  convertible  within 60 days of
     this registration statement have been exercised or converted.

(2)  Percent  of Class  assumes  a base of  1,019,000  shares  of  common  stock
     outstanding as of December 31, 1999. (3) Consists of 909,500 shares held of
     record by Appletree  Investment Company,  Ltd., an Isle of Man corporation,
     and 109,500 shares held of record by PageOne Business  Productions,  LLC, a
     Delaware  limited  liability  company,  of which  Appletree  is a  managing
     member.  (4)  Consists  solely of  109,500  shares of common  stock held by
     PageOne Business Productions, LLC, a Delaware limited liability company, of
     which Mr. Todt and Mr.  Walters are managing  members and Ms.  Rowbottom is
     Vice President.



Item  12.      Certain Relationships and Related Transactions

     In March 1999,  IP Factory  issued  100,000  shares of common stock to Page
One,  of which  George  Todt and  James  Walters  are  managing  member  and Ms.
Rowbottom is Vice President.  The purchase price for these shares was $0.001 per
share.


                                       12

<PAGE>


Item  13.      Exhibits and Reports on Form 8-K

(a)(1)    The  following  financial  statements  are contained on Pages F-1
          through F-7:

          REPORT OF INDEPENDENT  AUDITORS  WEINBERG & COMPANY,  P.A.,  CERTIFIED
          PUBLIC ACCOUNTANTS, DATED APRIL 6, 2000.

          BALANCE SHEET AS OF DECEMBER 31, 1999

          STATEMENTS OF OPERATIONS  FOR THE YEAR ENDED DECEMBER 31, 1999 AND FOR
          THE PERIOD FROM NOVEMBER 20, 1998 (INCEPTION) TO DECEMBER 31, 1999

          STATEMENTS OF CHANGES IN STOCKHOLDERS'  DEFICIENCY FOR THE PERIOD FROM
          NOVEMBER 20, 1998 (INCEPTION) TO DECEMBER 31, 1999

          STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED  DECEMBER 31, 1999 AND FOR
          THE PERIOD FROM NOVEMBER 20, 1998 (INCEPTION) TO DECEMBER 31, 1999

          NOTES TO FINANCIAL STATEMENTS AS OF DECEMBER 31, 1999 .

(a)(3)   Exhibits

          The following exhibits are filed with this report.

3.1.1     Amended  and  Restated   Articles  of   Incorporation   of  Registrant
          (incorporated  herein  by  reference  to  the  Company's  Registration
          Statement on Form 10-SB 12(g), File No. 000-27897)

3.2.1     ByLaws  of  Registrant   (incorporated  herein  by  reference  to  the
          Company's  Registration  Statement  on  Form  10-SB  12(g),  File  No.
          000-27897)

27.1     Financial Data Schedule

(b)      Reports on Form 8-K

         None



                                       13
<PAGE>



                          INDEPENDENT AUDITORS' REPORT



To the Board of Directors of:
 IP Factory, Inc.
 (A Development Stage Company)

We  have  audited  the  accompanying  balance  sheet  of  IP  Factory,  Inc.  (a
development stage company) as of December 31, 1999 and the related statements of
operations, changes in stockholders' deficiency and cash flows for the year then
ended and for the period from  November  20, 1998  (inception)  to December  31,
1999.  These  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly in all
material  respects,  the financial  position of IP Factory,  Inc. (a development
stage  company) as of December 31, 1999,  and the results of its  operations and
its cash flows for the year then ended and for the period from November 20, 1998
(inception)  to  December  31,  1999,  in  conformity  with  generally  accepted
accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a growing  concern.  As  discussed  in Note 4 to the
financial  statements,  the  Company  is a  development  stage  company  without
operations  and has had  accumulated  losses of  $6,389  since  inception  and a
working  capital  deficiency of $5,370.  These factors raise  substantial  doubt
about its ability to continue as a going  concern.  The financial  statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.


                                        WEINBERG & COMPANY, P.A.

Boca Raton, Florida
April 6, 2000

                                      F-1

<PAGE>


                                IP FACTORY, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                                  BALANCE SHEET
                             AS OF DECEMBER 31, 1999

                                     ASSETS
Cash                                                                    $   200
                                                                        -------

TOTAL ASSETS                                                            $   200
                                                                        =======

                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY

LIABILITIES
  Loan payable - related party                                          $ 5,570
                                                                        -------

     TOTAL LIABILITIES                                                    5,570
                                                                        -------

STOCKHOLDERS' DEFICIENCY

  Preferred stock, $.001 par value, 8,000,000 shares
  authorized, none issued and outstanding                                   -
  Common stock, $.001 par value, 100,000,000 shares
   authorized, 1,019,000 issued and outstanding                           1,019
  Accumulated deficit during development stage                           (6,389)
                                                                        -------

     TOTAL STOCKHOLDERS' DEFICIENCY                                      (5,370)
                                                                        -------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                          $   200
                                                                        =======








                 See accompanying notes to financial statements.

                                      F-2

<PAGE>


                                IP FACTORY, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                            STATEMENTS OF OPERATIONS





                                                             November 20, 1998
                                             For the Year     (Inception) to
                                             Ended December      December
                                                31, 1999         31, 1999
                                             -------------    ---------------

INCOME                                       $       -        $       -
                                             -------------    -------------

EXPENSES

   Accounting fees                                   500              500
   Bank service charge                               120              120
   Consulting fees                                   750              769
   Legal fees                                      5,000            5,000
                                             -------------    -------------

NET LOSS                                     $    (6,370)     $    (6,389)
--------                                     =============    =============


NET LOSS PER SHARE
 BASIC AND DILUTED                           $   (0.0085)     $   (0.0094)
                                             =============    =============

WEIGHTED AVERAGE NUMBER OF  SHARES
OUTSTANDING DURING THE  PERIOD
BASIC AND DILUTED                                 753,247          677,477
                                             =============    =============







                 See accompanying notes to financial statements.

                                      F-3

<PAGE>


                                IP FACTORY, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
                      FOR THE PERIOD FROM NOVEMBER 20, 1998
                        (INCEPTION) TO DECEMBER 31, 1999



<TABLE>
<CAPTION>
                                                                           Deficit
                                                                         Accumulated
                                                    Common Stock           During
                                                ---------------------    Development
                                                 Shares      Amount         Stage        Total
                                                ---------   ---------     ---------    ---------

<S>                                             <C>         <C>          <C>           <C>
Common stock issued for services                   19,000   $     19      $      -     $      19

Net loss for the year ended December 31, 1998         -           -             (19)         (19)
                                                ---------   ---------     ---------    ---------

Balance at December 31, 1998                       19,000          19           (19)         -

Common stock issued for cash                    1,000,000       1,000           -          1,000

Net loss for the year ended December 31, 1999         -           -          (6,370)      (6,370)
                                                ---------   ---------     ---------    ---------

BALANCE AT DECEMBER 31, 1999                    1,019,000   $   1,019     $  (6,389)   $  (5,370)
---------------------------                     =========   =========     =========    =========
</TABLE>





                 See accompanying notes to financial statements.


                                      F-4

<PAGE>


                                IP FACTORY, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                            STATEMENTS OF CASH FLOWS


                                                                      November
                                                    For the Year      20, 1998
                                                        Ended       (Inception)
                                                      December      To December
                                                      31, 1999        31, 1999
                                                     ----------     -----------

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                            $(6,370)         $(6,389)
   Adjustments to reconcile net loss to net
    cash used in operating activities:
   Stock issued for consulting services                    -                 19
                                                       -------          -------

     Net cash used in operating activities              (6,370)          (6,370)
                                                       -------          -------

CASH FLOWS FROM INVESTING ACTIVITIES:                      -                -
                                                       -------          -------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Loan payable - related party                          5,570            5,570
   Proceeds from issuance of common stock                1,000            1,000
                                                       -------          -------

     Net cash provided by financing activities           6,570            6,570
                                                       -------          -------

INCREASE IN CASH AND CASH EQUIVALENTS
                                                           200              200

CASH AND CASH EQUIVALENTS -
 BEGINNING OF PERIOD                                       -                -
                                                       -------          -------

CASH AND CASH EQUIVALENTS - END OF PERIOD
                                                       $   200          $   200
                                                       =======          =======





                 See accompanying notes to financial statements.

                                      F-5

<PAGE>

                                IP FACTORY, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 1999

NOTE  1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         (A)  Organization and Business Operations

          IP Factory,  Inc. (a development  stage  company) ("the  Company") was
          incorporated  in  Delaware  on  November  20,  1998  to  engage  in an
          internet-based business. At December 31, 1999, the Company had not yet
          commenced  any  revenue-generating  operations,  and  activity to date
          relates to the Company's formation, proposed fund raising and business
          plan development.

          The  Company's  ability to commence  revenue-generating  operations is
          contingent  upon its ability to implement  its business plan and raise
          the capital it will require through the issuance of equity securities,
          debt securities, bank borrowings or a combination thereof.

         (B)  Use of Estimates

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

         (C)  Cash and Cash Equivalents

         For purposes of the statement of cash flows, the Company  considers all
         highly liquid investments  purchased with an original maturity of three
         months or less to be cash equivalents.

         (D)  Income Taxes

         The Company  accounts for income taxes under the  Financial  Accounting
         Standards  Board Statement of Financial  Accounting  Standards No. 109,
         "Accounting for Income Taxes"  ("Statement  109"). Under Statement 109,
         deferred tax assets and  liabilities  are recognized for the future tax
         consequences   attributable   to  differences   between  the  financial
         statement carrying amounts of existing assets and liabilities and their
         respective tax basis.  Deferred tax assets and liabilities are measured
         using  enacted  tax rates  expected  to apply to taxable  income in the
         years in which those temporary differences are expected to be recovered
         or settled.  Under Statement 109, the effect on deferred tax assets and
         liabilities  of a change  in tax rates is  recognized  in income in the
         period  that  includes  the  enactment  date.  There were no current or
         deferred  income tax expense or benefits  due to the Company not having
         any material operations for the year ended December 31, 1999.

                                      F-6
<PAGE>

                                IP FACTORY, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 1999

NOTE  1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         (E)  Loss Per Share

         Net loss per common share for the year ended  December 31, 1999 and for
         the period from November 20, 1998  (inception)  to December 31, 1999 is
         computed based upon the weighted  average common shares  outstanding as
         defined by Financial Accounting Standards No. 128 "Earnings Per Share".
         There were no common  stock  equivalents  outstanding  at December  31,
         1999.

NOTE 2 - LOAN PAYABLE - RELATED PARTY

         The loan payable - related party is a non-interest-bearing loan payable
         to PageOne Business Productions, LLC arising from funds advanced to the
         Company. The amount is due and payable upon demand.

NOTE  3 - STOCKHOLDERS' DEFICIENCY

         The  Company  was  originally  authorized  to issue  100,000  shares of
         preferred stock at $.01 par value, with such designations, preferences,
         limitations  and relative rights as may be determined from time to time
         by the Board of  Directors.  In  addition,  the Company was  originally
         authorized  to issue  10,000,000  shares of  common  stock at $.001 par
         value.  The Company  issued  909,500 and  109,500  shares to  Appletree
         Investments  Company,  Ltd.  and  PageOne  Business  Productions,   LC,
         respectively.

         Management filed a restated certificate of incorporation with the State
         of Delaware which  increased the number of authorized  common shares to
         100,000,000,  increased  the number of authorized  preferred  shares to
         8,000,000 and decreased the par value of the preferred  shares to $.001
         per share. The financial statements at December 31, 1999 give effect to
         common and  preferred  stock  amounts and par values  enumerated in the
         restated certificate of incorporation.

NOTE 4 - GOING CONCERN

          As reflected in the accompanying financial statements, the Company has
          had accumulated  losses of $6,389 since  inception,  a working capital
          deficiency of $5,370 and has not generated any revenues  since it does
          not yet  implemented  its business plan. The ability of the Company to
          continue as a going concern is dependent on the  Company's  ability to
          raise  additional   capital  and  implement  its  business  plan.  The
          financial  statements  do not  include any  adjustments  that might be
          necessary if the Company is unable to continue as a growing concern.

          The Company  intends to  implement  its  business  plan and is seeking
          funding through the private placement of its equity or debt securities
          or may seek a combination  with another company already engaged in its
          proposed  business.  Management  believes that actions presently being
          taken provide the  opportunity  for the Company to continue as a going
          concern.



                                   F-7


[Financials]

<PAGE>




                                   SIGNATURES

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

                                   IP FACTORY, INC.


                                   /s/ George A. Todt
                               By: -----------------------
                                   George A. Todt
                                   President and Director

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

     Signature                          Title               Date

/s/ George A. Todt            Director, Chief Executive     April 13, 2000
                              Officer


/s/ James Walters             Chief Financial Officer,     April 13, 2000
                              Treasurer, Vice President


                                       14