U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                               AMENDMENT NO. 1
                                       TO
                                   FORM 10-KSB

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

                    For Fiscal Year Ended: December 31, 2000

                                       OR

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

          For the transition period from               to
                                        --------------    ---------------------

         Commission file number                  000-26751
                               ------------------------------------------------

                               CyPost Corporation
         ---------------------------------------------------------------
            (Exact name of small business issuer as specified in its
                                    charter)

            Delaware                                        98-0178674
------------------------------------               ----------------------------
  (State or other jurisdiction                            (IRS Employer
of incorporation or organization)                        Identification No.)

    900-1281 West Georgia St.
    Vancouver, British Columbia, Canada                        V6E 3J7
--------------------------------------------------------------------------
    (Address of principal executive offices)                (Zip Code)

Issuer's telephone number                   (604) 904-4422
                         ------------------------------------------------------

Securities registered under Section 12(b) of the Act:          NONE
                                                     --------------------------

Securities registered under Section 12(g) of the Act: Common Stock, par value
                                                         $.001 per share
                                                     ---------------------------

         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 SB is not contained in this form, and no disclosure will
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]


<PAGE>

         State issuer's revenues for its most recent fiscal year:  $4,595,823

         State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the
common equity was sold, or the average bid and asked prices of such common
equity, as of a specified date within the past 60 days. (See definition of
affiliate in Rule 12b-2 of the Exchange Act.) $7,046,037 as of April 2, 2001.

         Note: If determining whether a person is an affiliate will involve an
unreasonable effort and expense, the issuer may calculate the aggregate market
value of the common equity held by non-affiliates on the basis of reasonable
assumptions, if the assumptions are stated.

      ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS

         Indicate by check mark whether the issuer has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act
after the distribution of securities under a plan confirmed by a court. Yes [ ]
No [ ]

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

         State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 21,562,025 as of April 2,
2001.

                       DOCUMENTS INCORPORATED BY REFERENCE

         If the following documents are incorporated by reference, briefly
describe them and identify the part of the Form 10-KSB (e.g., Part I, Part II,
etc.) into which the document is incorporated: (1) any annual report to security
holders; (2) any proxy or information statement; and (3) any prospectus filed
pursuant to Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act").
The listed documents should be clearly described for identification purposes
(e.g., annual report to security holders for fiscal year ended December 24,
1990).

         No documents are incorporated by reference into this Annual Report on
Form 10-KSB.

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


                                       2
<PAGE>

                                   SIGNATURES

     In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this Amendment to Annual Report on Form
10-KSB to be signed on its behalf by the undersigned, thereunto duly authorized.



DATE:  April 23, 2001                 CYPOST CORPORATION




                                       By:/s/ Robert Adams
                                          -----------------------------------
                                          Robert Adams
                                          President, Chief Operating Officer,
                                          Secretary and Treasurer
                                          (Principal Financial Officer)

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

Name                          Title                                  Date
----                          -----                                  ----

/s/  Robert Sendoh            Chairman of the Board             April 23, 2001
------------------            and Director
Robert Sendoh

/s/  Robert Adams             President, Chief Operating        April 23, 2001
-----------------             Officer, Secretary, Treasurer
Robert Adams                  and Director

/s/  J. Thomas W. Johnston    Director                          April 23, 2001
--------------------------
J. Thomas W. Johnston


                                       3
<PAGE>

                       CYPOST CORPORATION AND SUBSIDIARIES
                          INDEX TO FINANCIAL STATEMENTS















   Independent Auditors' Report                                            F-1


   Consolidated Balance Sheets as of December 31, 2000 and 1999            F-2


   Consolidated Statements of Operations for the years ended
            December 31, 2000 and 1999                                     F-3


   Consolidated Statements of Stockholders' Equity for the years ended
            December 31, 2000 and 1999                                     F-4


   Consolidated Statements of Cash Flows for the years ended
            December 31, 2000 and 1999                                     F-5


   Notes to  Consolidated Financial Statements                             F-6








<PAGE>

                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders of
CyPost Corporation and Subsidiaries


We have audited the accompanying consolidated balance sheet of CyPost
Corporation and Subsidiaries as of December 31, 2000 and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the year then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit. The
consolidated financial statements of CyPost Corporation and Subsidiaries as of
December 31, 1999, were audited by other auditors whose report dated March 23,
2000, included an explanatory paragraph that raised substantial doubt about the
Company's ability to continue as a going concern.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of CyPost Corporation
and Subsidiaries as of December 31, 2000, and the results of its operations and
cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company has incurred operating losses
since its inception and requires additional financing to continue operations.
These conditions raise substantial doubt about the Company's ability to continue
as a going concern. Management's plans in regard to these matters are described
in Note 1. The consolidated financial statements do not include any adjustments
relating to the recoverability and classification of asset carrying amounts or
the amount and classification of liabilities that may result should the Company
be unable to continue as a going concern.


                                            GOOD SWARTZ BROWN & BERNS LLP.



Los Angeles, California
April 6, 2001


                                       F-1


<PAGE>
<TABLE>
                      CYPOST CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2000 AND 1999
                                 (U.S. Dollars)

<CAPTION>
                                                             2000            1999
                                                         ------------    ------------
ASSETS

CURRENT ASSETS
<S>                                                      <C>             <C>
        CASH                                             $    250,631    $    415,779
        ACCOUNTS RECEIVABLE, NET OF ALLOWANCE FOR
                DOUBTFUL ACCOUNTS                             173,207         233,188
        INSURANCE PROCEEDS RECEIVABLE                          58,488            --
        PREPAIDS AND DEPOSITS                                 250,534         173,319
                                                         ------------    ------------

        TOTAL CURRENT ASSETS                                  732,860         822,286

 PROPERTY AND EQUIPMENT, NET OF ACCUMULATED
        DEPRECIATION                                          751,020         599,582
 GOODWILL AND OTHER INTANGIBLES, NET OF
        ACCUMULATED AMORTIZATION                            3,193,015       5,036,785
 OTHER ASSETS                                                   5,371          69,389
 SOFTWARE DEVELOPMENT, NET OF ACCUMULATED AMORTIZATION           --           139,535
                                                         ------------    ------------

                                                         $  4,682,266    $  6,667,577
                                                         ============    ============

 LIABILITIES AND STOCKHOLDERS' EQUITY

 CURRENT LIABILITIES
        ACCOUNTS PAYABLE & ACCRUED LIABILITIES              1,026,666         983,237
        LOANS                                               2,110,000         875,000
        DEFERRED REVENUE                                      640,483         626,143
        PURCHASE OF INTERNET ARENA                               --           240,000
                                                         ------------    ------------

        TOTAL CURRENT LIABILITIES                           3,777,149       2,724,380
                                                         ------------    ------------

 COMMITMENTS AND CONTINGENCIES (NOTE 11)

 STOCKHOLDERS' EQUITY
        SHARE CAPITAL
             AUTHORIZED
                5,000,000 PREFERRED STOCK WITH A
                PAR VALUE OF $.001 30,000,000 COMMON
                STOCK WITH A PAR VAUE OF $.001

             ISSUED AND OUTSTANDING
                PREFERRED STOCK - NONE                           --              --
                COMMON STOCK 21,556,993 - 2000,
                20,246,480 - 1999                              21,557          20,246
        PAID-IN CAPITAL                                    14,047,544       8,814,002
        ACCUMULATED DEFICIT                               (13,197,006)     (4,908,127)
        CURRENCY TRANSLATION ADJUSTMENT                        33,022          17,076
                                                         ------------    ------------
        TOTAL STOCKHOLDERS' EQUITY                            905,117       3,943,197
                                                         ------------    ------------

                                                         $  4,682,266    $  6,667,577
                                                         ============    ============

</TABLE>


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




                                       F-2

<PAGE>
                       CYPOST CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
                                 (U.S. Dollars)


                                                           2000            1999
                                                   ------------    ------------


REVENUE                                            $  4,595,823    $  1,020,541

DIRECT COSTS                                          2,138,456         563,118
                                                   ------------    ------------

                                                      2,457,367         457,423
                                                   ------------    ------------
EXPENSES
         SELLING, GENERAL AND ADMINISTRATIVE          3,546,654       1,999,151
         AMORTIZATION AND DEPRECIATION                2,912,555         588,538

                                                   ------------    ------------
                                                      6,459,209       2,587,689
                                                   ------------    ------------

LOSS BEFORE OTHER INCOME (EXPENSE)                   (4,001,842)     (2,130,266)
                                                   ------------    ------------

OTHER INCOME (EXPENSE)

         NET RECOVERY FROM FIRE INSURANCE               228,966            --

         GAIN ON SALE OF INVESTMENT IN CYPOST KK         36,202            --

         LOSS ON ABANDONMENT OF PLAYA OPERATIONS     (2,201,253)           --

         WRITE-OFF OF SOFTWARE DEVELOPMENT COSTS       (128,726)           --

         INTEREST EXPENSE                            (2,113,570)     (2,221,322)

                                                   ------------    ------------
         TOTAL OTHER INCOME (EXPENSE)                (4,178,381)     (2,221,322)
                                                   ------------    ------------

MINORITY INTEREST                                      (108,656)           --

                                                   ------------    ------------
NET LOSS                                           $ (8,288,879)   $ (4,351,588)
                                                   ============    ============

LOSS PER SHARE BASIC & DILUTED                     $      (0.39)   $      (0.28)
                                                   ============    ============

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING        21,182,796      15,816,232
                                                   ============    ============



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




                                       F-3

<PAGE>

<TABLE>
                                                 CYPOST CORPORATION AND SUBSIDIARIES
                                           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                           FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
                                                           (U.S. Dollars)
<CAPTION>
                                                                           Additional                   Cummulative
                                                      Common Stock          Paid-in                     Translation
                                                 Number         Amount      Capital        Deficit      Adjustment        Total
                                              -------------  -----------  ------------   ------------   -------------    ---------
<S>                                             <C>            <C>          <C>           <C>             <C>            <C>
BALANCE, DECEMBER 31, 1998                      13,264,500     $ 13,264     $ 624,416     $ (556,539)     $ 33,966       $ 115,107
 Issued for acquisition of
  Intouch.Internet, Inc.                             9,855           10        28,515                                       28,525
 Issued for acquisition of NetRover Inc.
  and NetRover Office Inc.                         219,000          219       679,324                                      679,543
 Issued for acquisition of Connect Northwest       147,985          148       659,852                                      660,000
 Issued for acquisition of Internet Arena           20,140           20        59,980                                       60,000
 Issued for loan conversion                      4,500,000        4,500     3,995,500                                    4,000,000
 Issued for exercise of warrants                 2,085,000        2,085       553,915                                      556,000
 Beneficial conversion feature on loans                                     2,212,500                                    2,212,500
 Cummulative translation adjustment                                                                        (16,890)        (16,890)
 Net loss                                                                                 (4,351,588)                   (4,351,588)
                                              ------------   ----------   -----------    -----------    ----------     -----------
BALANCE, DECEMBER 31, 1999                      20,246,480       20,246     8,814,002     (4,908,127)       17,076       3,943,197
 Issued for acquisition of Internet Arena           80,558           81       239,919                                      240,000
 Issued for acquisition of Playa Corporation       785,455          785     2,699,215                                    2,700,000
 Issued for services/debt                           26,500           27        92,723                                       92,750
 Issued for services                               369,500          370       212,196                                      212,566
 Issued for services                                48,500           48        26,989                                       27,037
 Beneficial conversion feature on loans                                     1,962,500                                    1,962,500
 Cummulative translation adjustment                                                                         15,946          15,946
 Net loss                                                                                 (8,288,879)                   (8,288,879)
                                              ------------   ----------   -----------    -----------    ----------     -----------
BALANCE, DECEMBER 30, 2000                      21,556,993     $ 21,557  $ 14,047,544   $(13,197,006)     $ 33,022       $ 905,117
                                              ============   ==========   ===========   =============  ===========      ==========

</TABLE>


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

                               F-4


<PAGE>
<TABLE>
                       CYPOST CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
                                 (U.S. Dollars)
<CAPTION>

                                                                           2000           1999
                                                                       -----------    -----------
<S>                                                                    <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
       NET LOSS                                                        $(8,288,879)   $(4,351,588)
       Adjustments to reconcile net loss to cash used by
           operating activities:
             Amortization and depreciation                               2,912,555        588,538
             Interest expense                                            1,962,500      2,212,500
             Gain on sale of investment in CyPost KK                       (36,202)          --
             Minority interest                                             108,656           --
             Loss on abandonment of Playa operations                     2,201,253           --
             Write-off of software development costs                       128,726           --
             Casualty loss on equipment                                      7,901           --
             Fair value of stock issued for services                       332,353           --
             Currency translation adjustments on loss on abandonment        60,501           --
             Translation adjustments                                        15,946           --
       Changes in assets and liabilities
             Accounts receivable                                            59,981        (90,017)
             Insurance receivable                                          (58,488)          --
             Prepaid and deposit                                           (77,215)      (109,550)
             Other assets                                                   64,018        (15,972)
             Accounts payable and accrued liabilities                      (35,160)       645,204
             Deferred revenue                                               14,340        149,921
                                                                       -----------    -----------
NET CASH USED BY OPERATING ACTIVITIES                                     (627,214)      (970,964)
                                                                       -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES
       Acquisition of business                                            (592,454)    (3,612,066)
       Purchase of property and equipment                                 (391,638)      (270,100)
       Investment in software development                                  (87,431)      (209,303)
       Proceeds from sale of investment in CyPost KK                       220,000           --
                                                                       -----------    -----------
NET CASH USED IN INVESTING ACTIVITIES                                     (851,523)    (4,091,469)
                                                                       -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES
       Loan proceeds                                                     1,413,589      4,875,000
       Loan repayment                                                     (100,000)          --
       Exercise of warrants                                                   --          556,000
                                                                       -----------    -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                1,313,589      5,431,000
                                                                       -----------    -----------
NET INCREASE (DECREASE) IN CASH                                           (165,148)       368,567
CASH, BEGINNING OF YEAR                                                    415,779         47,212
                                                                       -----------    -----------
CASH, END OF YEAR                                                      $   250,631    $   415,779
                                                                       ===========    ===========

NON-CASH INVESTING AND FINANCING ACTIVITIES
       Common Stock issued for services and acquisitions               $ 3,272,353    $ 1,428,068
       Common Stock issued for debt conversion                                --      $ 4,000,000

OTHER CASH INFORMATION
   Interest paid                                                       $    29,059    $      --

</TABLE>


 The accompanying notes are an integral part of these consolidated statements

                                       F-5


<PAGE>

                       CYPOST CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2000 AND 1999
                                 (U.S. Dollars)


1.   NATURE OF OPERATIONS AND GOING CONCERN

     CyPost Corporation ("CyPost") was incorporated on September 5, 1997 under
the laws of the State of Delaware and its principal executive offices are
located in Vancouver, Canada. CyPost is engaged in the business of providing
Internet connection services for business and personal use. Previously the
Company was also involved in developing certain software products using
encryption components to enhance user security and convenience for communication
across digital networks, and in securing local data storage equipment, which
activities the Company no longer currently pursues. The Company emerged from the
development stage in 1999 and commenced revenue generating activities. The term
"Company" refers to CyPost and its consolidated subsidiaries.

     The accompanying consolidated financial statements have been prepared on
the basis of accounting principles applicable to a "going concern", which assume
that the Company will continue in operation for at least one year and will be
able to realize its assets and discharge its liabilities in the normal course of
operations.

     Several conditions and events cast doubt about the Company's ability to
continue as a "going concern". The Company has incurred net losses of
approximately $13.2 million for the period from inception September 5, 1997 to
December 31, 2000, has a working capital deficiency at December 31, 2000 of
approximately $3 million, and requires additional financing for its business
operations.

     The Company's future capital requirements will depend on numerous factors
including, but not limited to, whether the Company wishes to recommence software
development activities, and market penetration of and profitable operations from
its Internet connection services. The Company does not believe that bank
borrowings are available under present circumstances, and there can be no
assurance that any financing could be obtained from other sources. Even if
funding were available, it might be available only on terms which would not be
favorable to the Company or which management would not find acceptable.
Meanwhile, the management is working on attaining cost and efficiency synergies
by consolidating the operations of the businesses acquired.

     These financial statements do not reflect adjustments that would be
necessary if the Company was unable to continue as a "going concern". While
management believes that the actions already taken or planned, as described
above, will mitigate the adverse conditions and events which raise doubt about
the validity of the "going concern" assumption used in preparing these financial
statements, there can be no assurance that these actions will be successful.

     If the Company were unable to continue as a "going concern", then
substantial adjustments would be necessary to the carrying values of assets, the
reported amounts of its liabilities, the reported revenues and expenses, and the
balance sheet classifications used.

                                       F-6


<PAGE>

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     CONSOLIDATION

     The consolidated financial statements include the accounts of CyPost
Corporation and its subsidiaries. The principal subsidiaries, all of which,
except CyPost KK for a certain period of time during 2000, are wholly owned,
include ePost Innovations Inc., NetRover Inc., NetRover Office Inc., Hermes Net
Solutions Inc., and Intouch.Internet Inc. All significant inter-company
transactions and balances have been eliminated in consolidation.


     FOREIGN CURRENCY TRANSLATION

     The functional currency of the Company is U.S. dollars. Balance sheet
accounts of international self-sustaining subsidiaries, principally Canadian,
are translated at the current exchange rate as of the balance sheet date. Income
statement items are translated at average exchange rates during the period. The
resulting translation adjustment is recorded as a separate component of
stockholders' equity. Dollar values in this consolidated financial statements
are expressed in U.S. Dollars, unless indicated otherwise. On December 31, 2000
one Canadian Dollar (Cdn) was exchangeable for .66720 U.S. Dollars.

     USE OF ESTIMATES

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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.

     FAIR VALUE OF FINANCIAL INSTRUMENTS

     The Company has, where practicable, estimated the fair value of financial
instruments based on quoted market prices or valuation techniques such as
present value of estimated future cash flows. These fair value amounts may be
significantly affected by the assumptions used, including the discount rate and
estimates of cash flow. Accordingly, the estimates are not necessarily
indicative of the amounts that could be realized in a current market exchange.
Where these estimates approximate carrying value, no separate disclosure of fair
value is shown.

     PROPERTY AND EQUIPMENT

     Property and equipment are stated at cost less accumulated depreciation.
Depreciation is computed over the estimated useful lives using the straight-line
method over a period of three to five years. Maintenance and repairs are charged
against operations and betterments are capitalized.



                                       F-7

<PAGE>

     EARNINGS (LOSS) PER SHARE

     Earnings (loss) per share have been computed in accordance with SFAS 128.
Basic earnings (loss) per share is computed by dividing net income (loss)
attributable to common shareholders by the weighted average number of common
shares outstanding during the respective periods. Diluted earnings (loss) per
share is computed similarly, but also gives effect to the impact that
convertible securities, such as warrants, if dilutive, would have on net
earnings (loss) and average common shares outstanding if converted at the
beginning of the year. The effect of potential common shares such as warrants
would be antidilutive in each of the periods presented in these financial
statements, and accordingly, are not presented.


     REVENUE RECOGNITION AND DEFERRED REVENUE

     In December 1999, the Securities and Exchange Commission released Staff
Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements", to provide guidance on the recognition, presentation and disclosure
of revenues in financial statements. The Company believes its revenue
recognition practices are in conformity with the guidelines prescribed in SAB
No. 101.

     The Company's primary source of revenue is earned from Internet connection
services. For contracts which exceed one month, revenue is recognized on a
straight-line basis over the term of the contract as services are provided.
Revenues applicable to future periods are classified as deferred revenue.

     DIRECT COSTS

     Direct costs consist of telecommunications charges in respect to providing
Internet connection services to customers. These costs are expensed as incurred.

     SOFTWARE DEVELOPMENT COSTS

     SFAS No.  86,  "Accounting for the Costs of Computer Software to Be
Sold, Leased, or Otherwise Marketed", and Statement of Position 98-1 (SOP 98-1),
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use", provide guidance over accounting for computer software developed
or obtained for internal use including the requirement to capitalize specified
costs and amortization of such costs. The capitalization of software development
costs begins upon the establishment of technological feasibility of the product,
which the Company has defined as the completion of beta testing of a working
product. The establishment of technological feasibility and the ongoing
assessment of the recoverability of these costs require considerable judgment by
management with respect to certain external factors, including, but not limited
to, anticipated future gross product revenue, estimated economic life and
changes in software and hardware technology. Software developments costs are
amortized on the straight-line method over the estimated economic life of the
product of three years.

     As at December 31, 1999, the Company capitalized $209,303 of software
development costs and amortized $69,768 of these costs. During 2000, the Company
capitalized $87,431 of software development costs and amortized $98,240 of these
costs. At the end of 2000, the management of the Company assessed the
recoverability of the Company's software products assets and determined that
this asset was impaired. Therefore, the Company has written off the net book
value of this asset in the amount of $128,726.


                                       F-8

<PAGE>

     GOODWILL AND OTHER INTANGIBLE ASSETS

     Intangible assets consist primarily of customer lists and goodwill related
to acquisitions accounted for under the purchase method of accounting.
Amortization of these purchased intangibles is provided on the straight-line
basis over the respective useful lives of the intangible assets which is
estimated to be three years.


     IMPAIRMENT OF LONG-LIVE ASSETS

     Long-live assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognized when the aggregate of estimated future cash
inflows less estimated future cash outflows, to be generated by an asset are
less than the asset's carrying value. Future cash inflows include an estimate of
the proceeds from eventual disposition. For purposes of this comparison,
estimated future cash flows are determined without reference to their discounted
present value. If the sum of undiscounted estimated future cash inflows is equal
to or greater than the asset's carrying value, impairment does not exist. If,
however, expected future cash inflows are less than carrying value, a loss on
impairment should be recorded. Such a loss is measured as the excess of the
asset's carrying value over its fair value. Fair value of an asset is the amount
at which an asset could be bought or sold in a current transaction between a
willing buyer and seller other than in a forced or liquidation sale. The Company
measures an impairment loss by comparing the fair value of the asset to its
carrying amount. Fair value of an asset is calculated as the present value of
expected future cash flows.

     INCOME TAXES

     The Company computes income taxes using the asset and liability method,
under which deferred income taxes are provided for the temporary differences
between the financial reporting basis and the tax basis of the Company's assets
and liabilities. Deferred tax assets and liabilities are measured using
currently enacted tax rates that are expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. A valuation allowance is established when necessary to reduce deferred
tax assets to the amounts expected to be realized.

     ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

     SFAS No.  133,  "Accounting for Derivative Instruments and Hedging
Activities", requires the recognition of all derivatives as either assets or
liabilities and the measurement of those instruments at fair value.  SFAS No.
137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of
the Effective Date of SFAS No.  133", issued in August 1999, postpones for one
year the mandatory effective date for adoption of SFAS No.  133 to January 1,
2001.

     The Company does not currently engage in derivative trading or hedging
activities; hence, SFAS No. 133 and SFAS No. 137 will not have a material impact
on its financial position or results of operations.


                                       F-9

<PAGE>

     PENSIONS AND OTHER POSTRETIREMENT BENEFITS

     SFAS No. 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits, an amendment of FASB Statements No. 87, 88 and 106",
revises employers' disclosures about pension and other postretirement benefit
plans. It does not change the measurement or recognition of those plans. It
standardizes the disclosure requirements for pension and other postretirement
benefits to the extent practicable, requires additional information on changes
in benefit obligations and fair values of plan assets that will facilitate
financial analysis, and eliminates certain disclosures that are no longer
considered useful.

     The Company does not offer any pension or other postretirement benefits.

3.  ACQUISITIONS

     During 2000 and 1999, the Company completed a number of business and asset
acquisitions. These acquisitions are accounted for using the purchase method,
and accordingly, these consolidated financial statements include the results of
operations from the date of acquisition of each respective business.

     HERMES NET SOLUTIONS, INC. AND INTOUCH.INTERNET, INC.

     On June 30, 1999, the Company acquired all of the shares of Hermes Net
Solutions, Inc. (Hermes) for approximately $528,000. Also on June 30, 1999, the
Company purchased all the issued and outstanding shares of Intouch.Internet,
Inc. (Intouch) for a purchase price of approximately $293,000. The consideration
for the purchase included cash of approximately $265,000 and the issuance of
9,855 shares of the Company's Common Stock valued at approximately $28,000. Both
Hermes and Intouch are based in Vancouver, British Columbia, Canada.

     In both acquisitions, the goodwill of approximately $759,000 will be
amortized on a straight-line basis over its estimated useful life of three
years.



                                      F-10

<PAGE>

     NETROVER INC. AND NETROVER OFFICE INC.

     On October 4, 1999, the Company acquired all of the shares of NetRover Inc.
and NetRover Office Inc. for approximately $2,000,000. The consideration for the
purchase included cash of approximately $1,335,000 and 219,000 shares of the
Company's Common Stock valued at approximately $665,000. NetRover Inc. and
NetRover Office Inc. are based in Toronto, Canada.

     The purchase included goodwill and other intangibles of approximately
$2,900,000 which will be amortized on a straight-line basis over its estimated
useful life of three years.

     CONNECT NORTHWEST

     On October 27, 1999, the Company purchased certain assets and assumed
certain liabilities of Connect Northwest for a purchase price of $1,400,000. The
purchase price consisted of a cash payment to the sellers of $670,000, the
issuance to the sellers of 147,985 shares of the Company's Common Stock valued
at $660,000, and the payment of Connect Northwest liabilities in the aggregate
amount of $70,000. Connect Northwest is based in Washington State, United States
and operates as a DBA of CyPost. The purchase included goodwill and other
intangibles of $1,300,000 which will be amortized on a straight-line basis over
its estimated useful life of three years.


     INTERNET ARENA

     On November 9, 1999, the Company purchased certain assets and liabilities
of the business of Internet Arena for $600,000. The consideration for the
purchase included cash of $300,000 and 100,698 shares of the Company's Common
Stock for a value of $300,000. As of December 31, 1999, 20,140 shares of common
stock were issued and the remaining 80,558 were issued subsequent to year-end.
Internet Arena is based in Oregon, United States and operates as a DBA of
CyPost.

     The purchase included goodwill and other intangibles of approximately
$536,000 which will be amortized on a straight-line basis over its estimated
useful life of three years.


     PLAYA CORPORATION

     On February 23, 2000, the Company purchased all the shares of Playa
Corporation (a Japan company) for $3,000,000. The consideration paid by the
Company consisted of cash in the amount of $300,000 and 785,455 shares of the
Company's common stock valued at $2,700,000. Due to a clerical error
subsequently discovered, the number of shares originally calculated to be
issued, and actually issued to the seller, was incorrectly determined to be
771,426. Therefore, in January 2001, the Company issued an additional 14,029
shares of its common stock to the seller to account for the difference. For
purposes of financial statement presentation, all 785,455 shares of the
Company's common stock were deemed issued as of February 23, 2000.


                                      F-11

<PAGE>

     The acquisition has been accounted for by the purchase method of
accounting. The purchase included goodwill and other intangibles of $3,665,778
which will be amortized on a straight-line basis over its estimated useful life
of three years. Due to a number of factors, including without limitation, weak
performance by Playa, the difficulties of operating one small Japanese company
following the sale by the Company of CyPost KK, a former subsidiary of the
Company, and the Company's own liquidity needs, in the fourth quarter 2000, the
Company's management decided to abandon the business of Playa. In connection
therewith, the Company has written off the assets of Playa in the net amount of
$2,201,253 which is reflected as "Loss on abandonment of Playa operations",
consisting of approximately $3,067,065 in actual assets, including the goodwill
and approximately $865,812 of liabilities owed by Playa to various parties for
which the Company does not believe it is liable. These consolidated financial
statements include the results of operations of Playa for the period from
February 24, 2000 to September 30, 2000.


     CYPOST KK

     On March 17, 2000, the Company purchased 400 shares of CyPost KK,
representing 100% of the then issued and outstanding shares, for $188,870
(20,000,000 Yen), and transferred 180 of such shares, or 45% of the then issued
and outstanding shares, to certain members of the management of CyPost KK in
consideration of their future effort to raise additional capital for CyPost KK.

     On May 5, 2000, the Company purchased an additional 400 shares of CyPost KK
from CyPost KK for $184,915 (20,000,000 Yen). The Company funded this purchase
$106,326 (11,500,000 Yen) from its own funds (with respect to 230 shares) and
$78,589 (8,500,000 Yen) in the form of a loan from these certain members of
CyPost KK management to the Company (with respect to the remaining 170 shares).
Of the 400 shares purchased by the Company on such date, the Company transferred
180 shares to these individuals in consideration of their future effort to raise
additional capital for CyPost KK. The transferred shares have been valued at the
Company's cost. As a result of acquiring a net additional 220 shares of CyPost
KK, the Company maintained its 55% ownership in CyPost KK.

     On May 22, 2000, Access Media International, a company which is not
affiliated with the Company, purchased 200 shares of CyPost KK from CyPost KK
for 10,000,000 Yen, resulting in a reduction of the Company's interest in Cypost
KK to 44%.

     All 360 shares of CyPost KK stock which were transferred by the Company to
these individuals were specifically intended to compensate them solely with
respect to equity financing activities and were contingent upon their ability to
raise additional equity financing in Japan for CyPost KK. Because these
individuals were not able to raise such additional financing, no portion of the
360 shares were earned.

     In part because these individuals were ultimately not able to arrange such
financing, the Company decided to sell its entire interest in CyPost KK. On July
12, 2000, the Company sold all 630 shares it then owned in CyPost KK to Access
Media International for $220,000, resulting in a gain of $36,202.



                                      F-12

<PAGE>

In connection with the sale by the Company of its entire interest in CyPost KK
to Access Media International, on July 3, 2000 these certain members of CyPost
KK management (i) returned to the Company 190 shares of the CyPost KK stock that
the Company had previously transferred to them, consisting of the 180 shares
transferred to them by the Company in March 2000 and 10 shares transferred to
them by the Company in May 2000; (ii) canceled the $78,589 loans made by them to
the Company in May 2000 to purchase 170 of the shares; and (iii) retained those
170 shares purchased by the Company, for which the purchase price was $78,589.

     Despite the fact that there was a brief period of time during which the
Company owned less than a majority of the voting shares of CyPost KK (May 22,
2000 through July 3, 2000), the Company owned a majority interest for most of
the period from formation of CyPost KK through June 30, 2000 and therefore had
the ability to control its operations. The Company has reflected the amounts of
revenue, cost of revenue and expenses on a consolidated basis for the entire
period of ownership. Had the Company reflected the amounts of revenue, cost of
revenue and expenses on a consolidated basis for the period from March 17, 2000
through May 22, 2000 and an equity method for the period from May 22, 2000
through June 30, 2000, the impact on the consolidated financial statements would
not have been material.

     During its period of ownership of CyPost KK, the Company loaned CyPost KK
$64,764 and CyPost KK paid certain expenses on behalf of the Company in the
amount of $25,542, leaving a balance of $39,222 owed by CyPost KK to the Company
at the time of sale. In connection with the sale by the Company of all of its
interest in CyPost KK, the Company canceled the net outstanding balance of
$39,222 in loans made by the Company to CyPost KK and CyPost KK canceled $39,222
in loans made by CyPost KK to Playa Corporation ("Playa"). At September 30,
2000, the last date for which financial statements for Playa were available,
there was a balance of $168,062 owed by Playa to CyPost KK. This loan bears
interest at 5.5% per annum and is payable in 60 monthly installments beginning
January 15, 2001. This loan balance has been written off in connection with the
abandonment of Playa's business. See "Acquisition of Playa".

4.   PROPERTY AND EQUIPMENT

     Property and equipment consist of the following:

                                             2000               1999
                                         -----------        -----------

    Office furniture                     $   194,436        $   153,434

    Leasehold improvement                     14,360             15,704

    Computer hardware and software         1,144,234            839,267
                                         -----------        -----------
                                           1,353,030          1,008,405
    Less accumulated depreciation           (602,010)          (408,823)
                                         -----------        -----------
                                         $   751,020        $   599,582
                                         ===========        ===========

The depreciation expense charged to the operations for the years ended December
31, 2000 and 1999 were $232,299 and $60,012, respectively.





                                      F-13

<PAGE>

5.   GOODWILL AND OTHER INTANGIBLES

     Goodwill and other intangibles consist of the following:

                                          2000             1999
                                       -----------      -----------
    Customer lists                     $ 3,663,000      $ 3,663,000
    Goodwill                             1,832,543        1,832,543
                                       -----------      -----------
                                         5,495,543        5,495,543
    Less accumulated amortization       (2,302,528)        (458,758)
                                       -----------      -----------
                                       $ 3,193,015      $ 5,036,785
                                       ===========      ===========

The amortization expense charged to the operations for the years ended December
31, 2000 and 1999 were $2,582,016 and $458,758, respectively.


6.    LOANS

      Loans as of December 31, 2000 and 1999 consist of:

                                             2000            1999
                                          ----------      ----------
      Blue Heron Venture Fund, Ltd.       $2,085,000      $  875,000

      Pacific Gate Capital                    25,000            --
                                          ----------      ----------
                                          $2,110,000      $  875,000
                                          ==========      ==========


     Loans from Blue Heron Venture Fund, Ltd are pursuant to two promissory note
agreements ($2,000,000 and $10,000,000 loan facilities). The loans are
unsecured, bear interest at 8% per annum, and the principal and accrued interest
are due on demand. The lender has the option to withdraw its offer to lend at
any time and to convert the loans into shares of common stock of the Company. If
the lender elects to convert the outstanding principal amount of the loans of
$2,085,000 as of December 31, 2000 into shares of common stock of the Company,
the lender would be entitled to an aggregate of 2,780,000 shares of common
stock.

     At the commitment date of each of the promissory notes, the conversion
price was less than the fair value of the common stock, hence a beneficial
conversion feature is attributable to these convertible notes. The amount of
this beneficial conversion feature is $1,962,500 and has been recorded as
interest expense and additional paid-in-capital for the year ended December 31,
2000.

     Under the terms of the loan agreements, if the lender converts its debt to
equity, it will waive its right to be paid interest on the loans. As of December
31, 2000 and 1999, the Company has accrued interest of $158,583 and $36,572,
respectively.

     During 1999, $4,000,000 of loans were settled by the issuance of 4,500,000
shares of common stock valued at $4,000,000.


                                      F-14

<PAGE>

     The loan from Pacific Gate Capital is unsecured, bears interest at 8% per
annum, and the principal and accrued interest are due on demand.


7.   SHARE CAPITAL

     AUTHORIZED STOCK

     The Company is authorized to issue:

     (a)  30,000,000 shares of common stock at a par value of $0.001 per share.

     (b)  5,000,000 shares of preferred stock at a par value of $.001 per share.

     The Board of Directors of the Company has the authority, without further
action by the holders of the outstanding shares of common stock, to issue shares
of preferred stock from time to time in one or more classes or series, to fix
the number of shares constituting any class or series and the stated value, if
different from the par value, and to fix the terms of any such series or class,
including dividend rights, dividend rates, conversion or exchange rights, voting
rights, rights and terms of redemption (including sinking fund provisions), the
redemption price and the liquidation preference of such class or series. The
designations, rights and preferences of any shares of preferred stock would be
set forth in a Certificate of Designation which would be filed with the
Secretary of State of the State of Delaware.

     STOCK SPLIT

     On September 24, 1999, the Company effected a 3-for-2 stock split of its
shares of common stock. All share, per share, unit, and warrant amounts in the
accompanying consolidated financial statements have been adjusted retroactively
to give effect to this stock split.

     COMMON STOCK SUBSCRIBED

     As at December 31, 1999, the Company was obligated to issue 80,558 shares
of common stock valued at $2.98 per share as consideration for the purchase of
the assets of Internet Arena. These shares were issued in 2000.


     ISSUANCE OF SHARES

     On March 2, 2000, the Company issued 26,500 shares of its commons stock in
an aggregate amount of $92,750 at the closing price of $3.50 per share on
February 29, 2000, to Kaplan, Gottbetter and Levenson, as payment of services
accrued at December 31, 1999 and through February 29, 2000.

     On March 13, 2000, the Company issued 80,558 shares of its common stock at
the closing price of $2.98 on July 12, 1999 (as adjusted for a 3-for-2 stock
split), the date of signing the Letter of Intent, to the owners of Internet
Arena, Inc., as payment for the balance due in the amount of $240,000 in
connection with the Company's acquisition of that entity.

                                      F-15

<PAGE>

     On June 8, 2000, the Company issued 785,455 shares of its common stock to
the selling stockholders of Playa as partial payment of the purchase price
$3,000,000 in connection with the Company's acquisition of that company. See
Note 3.

     On August 1, 2000, the Company issued an aggregate 129,500 shares of its
common stock in an aggregate amount of $76,897 to seven employees at the closing
price of $0.5938 per share on July 17, 2000 in consideration for their providing
certain services to the Company from June 16, 2000 through July 15, 2000.
Subsequently 10,000 of these shares will be canceled. For purposes of financial
statement presentation, those shares were deemed canceled as of October 1, 2000.

     On August 1, 2000, the Company issued 75,000 shares of its common stock in
an aggregate amount of $133,605 to each of the Company's three directors at the
closing price of $0.5938 on July 17, 2000 in consideration for their providing
certain services to the Company from June 16 through July 15, 2000.

     On August 17, 2000, the Company issued an aggregate 43,500 shares of its
common stock in an aggregate amount of $25,787 to six people at the closing
price of $0.5938 per share on July 25, 2000 in consideration for their providing
consulting work to the Company from April 1, 2000 through June 30, 2000.

     On October 1, 2000, the Company accrued the issuance of an aggregate 27,500
shares of its common stock in an aggregate amount of $8,800 to three employees
and one consultant at the closing price of $0.32 per share in consideration for
their providing certain services to the Company. Subsequently in the first
quarter 2001, 25,000 of these shares were issued and 2,500 share will be issued
in the second quarter 2001. For purposes of financial statement presentation,
all shares were deemed issued as of October 1, 2000.

     On December 29, 2000, the Company accrued the issuance of 2,500 shares of
its common stock in an aggregate amount of $450 to a consultant at the closing
price of $0.18 per share in consideration for his providing certain services to
the Company. As of December 31, 2000, these shares have not been issued, however
for purposes of financial statement presentation, all shares were deemed issued
as of December 29, 2000.


8.   INCOME TAXES

     At December 31, 2000 and 1999, the Company has net operating loss carry
forwards for income tax purposes of approximately $9,000,000 and $2,800,000,
respectively which are available to offset future taxable income. The Company's
utilization of these carryforwards may be restricted due to changes in ownership
of subsidiaries during the year. The components of the deferred tax asset as of
December 31, 2000 and 1999 are as follows:

                                                2000              1999
                                         -----------       -----------
    Net operating loss carryforwards     $ 4,050,000       $ 1,260,000

    Less: valuation allowance             (4,050,000)       (1,260,000)
                                         -----------       -----------
                                         $        -        $       -
                                         ===========       ===========


                                      F-16
<PAGE>

9.   NET RECOVERY FROM FIRE LOSS

     On January 31, 2000, the Company suffered a fire loss at its Etobicoke
(suburban Toronto), Ontario facility. The loss was completely covered by
insurance. During the fiscal year ended December 31, 2000, the Company received
net recovery from fire insurance in the amount of $228,966.


10.  RELATED PARTY TRANSACTIONS

     The Company has obtained most of its financing through Blue Heron Venture
Fund Ltd. ("Blue Heron"), a corporation in which Kelly Shane Montalban may be
deemed to have an "indirect pecuniary" interest as a result of his status as
fund manager for Blue Heron. Blue Heron and Mr. Montalban are principal
stockholders of the Company. Blue Heron may be deemed to be an affiliate of
Pacific Gate, another of the Company's lenders, in which Mr. Montalban is the
sole stockholder, sole director and sole officer. Blue Heron loans are unsecured
and are convertible into Common Stock at the lender's option, in which case Blue
Heron would waive its right to be paid interest. The balance of these loans as
of December 31, 2000 and 1999 are $2,085,000 and $875,000, respectively. See
Note 6.

     During the fiscal year ended December 31, 2000, the Company borrowed an
aggregate $125,000 from Pacific Gate Capital Ltd. ("Pacific Gate"), of which
amount $25,000 was outstanding on December 31, 2000. These loans bear interest
at 8% per annum and are payable on demand.

     As of December 31, 2000, the Company advanced $30,615 to one of the
executive officer. This advance bears no interest and no term.


11.  COMMITMENTS AND CONTIGENCIES

     LEGAL PROCEEDINGS

     Canada Post Litigation

     On June 11, 1999, Canada Post Corporation filed a Statement of Claim in the
Federal Court of Canada (Court File No. T-1022-99) in which it sought injunctive
and unspecified monetary relief for the allegedly "improper" use by the
Company's subsidiary, ePost Innovations, of certain marks and names which
contain the component "post". On October 18, 1999, ePost Innovations filed its
Defense and Counterclaim. In a motion heard November 24, 1999, Canada Post
Corporation challenged certain parts of the Counterclaim and the Federal Court
reserved judgment. There has been no pre-trial discovery and no trial date has
been set.

     On May 25, 1999, ePost Innovations filed a statement of Claim in the
British Columbia Court (Court File No. C992649) seeking a declaration that the
public notice of Canada Post Corporation's adoption and use of CYBERPOSTE and
CYBERPOST on November 18, 1998 and December 9, 1998 respectively, did not affect
the Company's use of CYPOST and ePost Innovations as trademarks and trade-names
prior to said dates. ePost Innovations sought summary judgment for such a
declaration and on September 14, 1999, the BC Court rejected summary judgment on
the basis that no


                                      F-17

<PAGE>

right of the Company was being infringed and that a trial of the issues was more
appropriate. The rejection is pending appeal. There has been no pre-trial
discovery (except to the extent that some was done as part of the summary
judgment application) and no trial date has been set.

     Canada Post seeks relief in the form of preventing ePost Innovations from
using trademarks, trade names or brand names and does not seek monetary damages.
Accordingly, the Company does not believe that this litigation will have a
material impact on its future results of operations, financial condition and
liquidity.

     ePost Innovations and Canada Post have commenced settlement discussions to
resolve the litigation. However, due to the inherent uncertainties of
litigation, the Company cannot predict whether the parties will reach a
definitive settlement and, if they do, whether the terms of any settlement will
be favorable to the Company.


     Berry Litigation

     On March 31, 2000, the Company commenced suit in the Supreme Court of
British Columbia, Action #S001822, Vancouver Registry against Tia Berry (the
"Tia Action"), the wife of Steven Berry ("Berry"), the former President and
Chief Executive Officer of the Company. In the Tia Action, the Company claims
$42,516 (CDN) from Tia Berry on account of monies paid to her by the Company
which she was not entitled to receive. Tia Berry has filed a Statement of
Defense in the Tia Action in which she alleges that the payments which she
received from the Company were to reimburse her for business expenses which she
had charged to her credit cards on behalf of Berry. The Tia Action has not yet
been set for trial.

     On April 4, 2000, Berry commenced an action in the Supreme Court of the
State of New York, County of New York (Index No. 601448/2000), against the
Company and Continental Stock Transfer Company ("Continental"), (the "New York
Action"). In the New York Action, Berry claimed damages for alleged conversion,
fraud, breach of contract and breach of fiduciary duty all arising from the
alleged wrongful Stop Transfer Order which the Company placed relating to 75,000
shares of the Company's Common Stock registered in Berry's name and the
Company's cancellation of a further 600,000 shares (the "Contingent Shares").
The complaint in the New York Action claims damages in excess of $3,000,000 with
the precise amount to be determined at trial.

     Berry received the 600,000 Contingent Shares upon condition that he would
remain in the Company's employ as Chief Executive Officer for at least two
years. Berry commenced his employment with the Company on January 4, 1999, and
resigned his employment with the Company on January 17, 2000. Following Berry's
resignation, the Company attempted to have a Stop Transfer Order issued with
respect to the 75,000 shares registered in Berry's name and cancel the 600,000
Contingent Shares. The Stop Transfer Order was not effective and Berry
subsequently sold the 75,000 shares.

     On May 19, 2000 CyPost and ePost Innovations commenced suit in the Supreme
Court of British Columbia, Action #S002798, Vancouver Registry, against Berry
and his wife, Tia Berry (the "BC Action"). In the BC Action, the Company seeks
an


                                      F-18
<PAGE>

order directing Berry to return the 600,000 Contingent Shares to the Company for
cancellation or an order entitling the Company to cancel the same on the basis
that Berry did not fulfill the employment conditions which were the condition
precedent to his becoming the beneficial owner of the Contingent Shares.

     In the BC Action, the Company also claims at least Cdn$800,000 from Berry
on account of breach of fiduciary duty, negligence, breach of statutory duties
and breach of contract arising from Berry's failure to properly carry out his
employment responsibilities. In the BC Action, the Company also claims
Cdn$34,013 from Berry and Tia Berry on account of conspiracy to defraud and
injure the Company and ePost Innovations by causing certain personal expenses to
be paid by the Company rather than by Berry and Tia Berry personally. The
Company also claims punitive and exemplary damages from Berry and Tia Berry in
the BC Action.

     On May 25, 2000, the Company moved in the New York Action for an order
dismissing the action against the Company for lack of jurisdiction or, in the
alternative, on the basis of forum non conveniens. On September 5, 2000, the
court dismissed the New York Action on forum non conveniens grounds, subject to
the Company making certain stipulations in the New York Action. Those
stipulations have been made and the appeal period in the New York Action has
expired without Berry or any other party appealing the September 5, 2000 order.

     The issues raised by Berry and the Company in the New York Action will be
litigated in the BC Action together with the further issues raised by the
Company in the BC Action. The Company feels that Berry's claims in the New York
Action were without merit and that the Company will be successful in obtaining
an order declaring that Berry's 600,000 Contingent Shares be cancelled and
further entitling the Company to substantial damages. The Company will
vigorously pursue its position in all respects.

     On December 21, 2000, Berry and Tia Berry commenced suit in the Supreme
Court of British Columbia, Action #S006790, Vancouver Registry, against CyPost,
ePost Innovations, Kelly Shane Montalban, J. Thomas W. Johnston, Carl Whitehead
and Robert Sendoh (the "Berry Action"). Statements of Defense have been filed on
behalf of the Company and the other defendants.

     The Plaintiffs in the Berry Action allege that the Tia Action, the BC
Action, and the action by Kelly Shane Montalban (Supreme Court of British
Columbia, Action #S002147, Vancouver Registry), against Berry for specific
performance of an option agreement (the "Montalban Action"), collectively,
amount to an abuse of process, malicious prosecution, unlawful interference with
the Plaintiffs' economic rights, or were commenced pursuant to a civil
conspiracy to injure the Plaintiffs.

     In the Berry Action, the Plaintiffs seek a declaration that Berry is
entitled to the 600,000 Contingent Shares and claim unspecified damages which
are estimated at Cdn$2,000,000 based on the Statement of Claim. They also claim
punitive or aggravated damages and costs. The Company believes that the
allegations in the Berry Action are without merit and they will be vigorously
defended.

     It is expected that the Tia Action, the BC Action and the Berry Action will
be consolidated for the purposes of trial due to the fact that there are
numerous issues of fact and law which are common to all of these actions. The
Company believes that trial will likely take place in the fall of 2002.

                                      F-19

<PAGE>

     A loss by the Company of the claim for monetary damages would have a
material adverse effect on the Company's future results of operations, financial
condition and liquidity; however, the Company does not expect to lose this
action and believes additionally that it would be able to negotiate reasonable
payment terms should it lose this suit.

     The Company is also subject to routine litigation from time to time in the
operations of its business. None of such routine litigation is material to the
Company, its assets or results of operations.

     Due to the inherent uncertainties of litigation, the Company cannot predict
the outcome of any litigation to which it is a party.


     LEASE COMMITMENTS

     The Company leases office space and equipment, and its lease payments in
the next five years are as follows:

                   2001                    $285,000
                   2002                     202,000
                   2003                     151,000
                   2004                      92,000
                   2005                      40,000
                                           --------
                                           $770,000
                                           ========

     The Company entered into agreements with several companies that provides
network infrastructure for some of the Company's Internet Services Provider
services. The minimum payments in the next three years are as follows:

                   2001                   $  929,000
                   2002                      109,000
                   2003                       23,000
                                          ----------
                                          $1,061,000
                                          ==========

     EMPLOYMENT AGREEMENT

     The Company has an employment agreement with Robert Adams. The employment
agreement provides for Mr. Adams' employment by the Company as its "Operations
Manager of Canadian ISP Division", at an annual salary of Cdn $70,000. The
employment agreement has an initial term of three years commencing on October 5,
1999 and ending on October 4, 2002. The employment agreement will automatically
renew for successive terms, on a year to year basis, unless notice of
non-renewal is given by either the Company or Mr. Adams at least 90 days prior
to the expiration of the then applicable term of the contact. Bonuses may be
awarded to Mr. Adams based on his annual review, which takes place each January.
In addition, Mr. Adams is eligible for increases in his base salary, in the
discretion of the Company, on the anniversary date of each year of the
employment agreement.



                                      F-20

<PAGE>

                                  EXHIBIT INDEX

      Exhibit
        No.          Description

       2.1    Acquisition Agreement dated as of September 17, 1997 between
              CyPost Corporation and ePost Innovations, Inc. regarding the
              acquisition of ePost Innovations, Inc. (1)

       2.2    Share Purchase Agreement dated as of October 29,1998 between
              CyPost Corporation and Mushroom Innovations, Inc., regarding the
              acquisition of Communication Exchange Management Inc. (1)

       2.3    Share Purchase Agreement dated as of June 30, 1999 by and between
              CyPost Corporation and Stephen S.W. Choi, Eve Long and Jason Xu,
              regarding the acquisition of Hermes Net Solutions Inc. (6)

       2.4    Share Purchase Agreement dated as of June 30, 1999 between CyPost
              Corporation and Coyotenet Inc. regarding the acquisition of
              InTouch Internet Inc. (6)

       2.5    Share Purchase Agreement dated as of July 23, 1999 by and between
              CyPost Corporation, Robert Adams, Beata Adams and Tami Allan,
              regarding the acquisition of NetRover Inc. and NetRover Office
              Inc. (2)

       2.6    Acquisition Agreement dated October 26, 1999, by and between
              CyPost Corporation, Connect Northwest Internet Services, L.L.C.,
              Alexander G. Free, James P. Fick, Madeline C. O'Donnell, Ira Jay
              Graham, Robert M. Free, Paul M. Maughan, James P. Eberhardt,
              Judith L. Fick, Charles A. Fick, Jr., Susan Free and Karen
              Maughan, regarding the acquisition of Connect Northwest Internet
              Services, L.L.C. (7)

       2.7    Asset Purchase Agreement dated November 9, 1999 by and between
              CyPost Corporation, Internet Arena, Inc., David Neff, Jerrold
              Lively, John B. Anderson, Clarence and Neva Neff Living Trust,
              Stephen Dentel, Mike Stupak, Heidi Stupak and Matt Campbell,
              regarding the acquisition of Internet Arena, Inc. (7)

       2.8    Purchase Agreement dated as of January 26, 2000, between CyPost
              Corporation, Playa Corporation and Hirofumi Watanabe regarding the
              acquisition of Playa Corporation (7)

       2.9    Share Purchase Agreement dated July 10, 2000 by and between CyPost
              Corporation and Access Media International, Inc. regarding the
              purchase of shares in CyPost KK (10)


<PAGE>
      Exhibit
        No.          Description


       3.1    Certificate of Incorporation of CyPost Corporation (1)

       3.2    Certificate of Amendment to Certificate of Incorporation of CyPost
              Corporation (1)

       3.3    Amended and Restated Certificate of Incorporation of CyPost
              Corporation (6)

       3.4    Bylaws of CyPost Corporation (1)

       4.1    Modified Retainer Agreement dated March 2, 2000, between CyPost
              Corporation and Kaplan Gottbetter & Levenson (5)

       4.2    Cancellation of Loan Letter Agreement regarding CyPost KK executed
              by Robert Sendoh dated June 30, 2000, together with related
              Transfer of Shares Letter Agreement dated June 30, 2000 (10)

       4.3    Cancellation of Loan Letter Agreement regarding CyPost KK executed
              by Yoshisuke Ishiuchi dated June 30, 2000, together with related
              Transfer of Shares Letter Agreement dated June 30, 2000 (10)

       4.4    Cancellation of Loan Letter Agreement regarding CyPost KK executed
              by Hirofumi Watanabe dated June 30, 2000, together with related
              Transfer of Shares Letter Agreement dated June 30, 2000 (10)

       4.5    Cancellation of Loan Letter Agreement regarding CyPost KK executed
              by Ibuki Tsuchiya dated June 30, 2000, together with related
              Transfer of Shares Letter Agreement dated June 30, 2000 (10)

       4.6    Transfer of Shares Letter Agreement regarding CyPost KK executed
              by Jiro Miyamoto dated June 30, 2000 related to cancellation of
              indebtedness between CyPost KK and CyPost Corporation (10)

       4.7    Promissory Notes executed by CyPost Corporation dated January 19,
              2000; January 26, 2000; January 27, 2000; February 11, 2000;
              February 25, 2000; February 28, 2000; March 7, 2000; March 20,
              2000; April 13, 2000; May 1, 2000; and November 3, 2000, in favor
              of Blue Heron Venture Fund, Ltd. (10)

       4.8    Promissory Notes executed by CyPost Corporation dated May 12,
              2000; June 23, 2000; July 10, 2000; August 25, 2000; and September
              11, 2000, in favor of Pacific Gate Capital Corporation (10)
<PAGE>
      Exhibit
        No.          Description

       10.1   Lease Renewal and Modification Agreement dated September 4, 1998
              by and between Sze &Yee Investments Ltd. and Overdale Investments
              Ltd., and 469506 B.C. Ltd., DBA Intouch Cordless Communications,
              and Glenn Duncan Ninow and Susan Siu Jing Ninow regarding 3448
              Cambie Street, Vancouver, British Columbia, Canada (10)

       10.2   Lease Amendment and Novation Agreement dated October 27, 1998 by
              and among Timothy B. White Properties, Connect Northwest, LLC and
              CyPost Corporation, and related Assignment of Lease and Acceptance
              (10)

       10.3   Lease (Indenture) Agreement dated March 14, 2000 by and between
              Mansa Holdings Ltd. and CyPost Corporation regarding space at 1281
              West Georgia Street, Vancouver, British Columbia, Canada (6)

       10.4   Lease Amendment and Renewal Agreement dated June 13, 2000 by and
              between The Imperial Life Assurance Company of Canada and
              NetRover, Inc. regarding 93 Skyway Avenue, Etobicoke, Ontario,
              Canada (10)

      *10.5   Lease Assignment Agreement dated November 2, 2000 by and among
              H.V.M. Holdings Inc., Garden Green Realty Inc. and NetRover Inc.
              regarding 405 Review Drive, Chatham, Ontario, Canada

      *10.6   Lease Amendment Agreement dated January 4, 2001 by and between 890
              West Pender Ltd. and CyPost Corporation regarding space at 890
              West Pender Street, Vancouver, British Columbia, Canada

       10.7   Assignment of Building Internet Access Agreement dated November 9,
              1999 by and between American Property Management Corporation, as
              agent for and on behalf of Weston Holding Company, L.L.C.,
              Internet Arena, Inc. and CyPost Corporation regarding providing
              Internet access at 1020 S.W. Taylor Street, Portland, Oregon (10)

       10.8   Lease for Internet Equipment dated April 19, 2000 by and between
              Internet Finance+Equipment, a division of LINC Capital Inc., and
              CyPost Corporation DBA Connect Northwest and Internet Arena (10)

       10.9   Lease Agreement dated May 1, 2000 by and between Telcom Leasing
              Canada and ePost Innovations Inc. regarding installation of
              Norstar voicemail system, Northern Applications Module 4 Port and
              Training (10)
<PAGE>
      Exhibit
        No.          Description

       10.10  Master Lease Agreement dated May 3, 2000 by and between Heller
              Financial Canada, Ltd., and NetRover, Inc., regarding Internet
              network equipment, together with related Subordination Agreement
              and related equipment schedules (10)

       10.11  UUNet Agreement (Provider Quotation) dated June 30, 1999 between
              NetRover Inc. and UUNet Canada Inc., and related addendum (10)

       10.12  Letter agreement from Blue Heron Venture Fund, Ltd. to CyPost
              Corporation dated February 9, 1999, regarding debt financing for
              CyPost Corporation (4)

       10.13  Letter agreement from Blue Heron Venture Fund, Ltd. to CyPost
              Corporation dated March 17, 2000, regarding debt financing for
              CyPost Corporation (4)

       10.14  Letter agreement from Blue Heron Venture Fund, Ltd. to CyPost
              Corporation dated July 12, 2000, regarding debt financing for
              CyPost Corporation (4)

       10.15  Preferred Supplier Agreement dated March 15, 1999 by and between
              CyPost Corporation and the Canadian Bar Association, British
              Columbia Branch (6)

       10.16  Employment Agreement dated October 5, 1999 between Robert Adams
              and CyPost Corporation (10)

      *10.17  Assignment of Lease dated November 9, 1999 between American
              Property Management Corporation, as agent for Weston Holdings
              Company, L.L.C., David J. Neff, individually, and CyPost
              Corporation

       21     List of Subsidiaries (10)

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

*      Filed herewith

(1)    Filed as an exhibit to the Company's General Form for Registration of
       Securities of Small Business Issuers on Form 10-SB, filed with the SEC on
       July 19, 1999.

(2)    Filed as an exhibit to the Company's Current Report on Form 8-K, filed
       with the SEC on October 12, 1999.


<PAGE>

(3)    Filed as an exhibit to the Company's Current Report on Form 8-K, filed
       with the SEC on October 19, 1999.

(4)    Filed as an exhibit to the Company's Quarterly Report on Form 10-QSB,
       filed with the SEC on December 9, 1999.

(5)    Filed as an exhibit to the Company's Registration Statement on Form S-8,
       filed with the SEC on March 8, 2000.

(6)    Filed as an exhibit to the Company's General Form for Registration of
       Securities of Small Business Issuers on Form 10-SB, Amendment 1, filed
       with the SEC on March 9, 2000.

(7)    Filed as an exhibit to the Company's General Form for Registration of
       Securities of Small Business Issuers on Form 10-SB, Amendment 3, filed
       with the SEC on April 17, 2000.

(8)    Filed as an exhibit to the Company's Current Report on Form 8-K,
       Amendment 2, filed with the SEC on July 24, 2000.

(9)    Filed as an exhibit to the Company's Current Report on Form 8-K,
       Amendment 3, filed with the SEC on August 28, 2000.

(10)   Filed as an exhibit to the Company's Annual Report on Form 10-KSB, filed
       with the SEC on April 16, 2001.