SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

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

         For the fiscal year ended December 31, 1999

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

                        Commission file number 333-86347

                             NEWAGECITIES.COM, INC.
                 (Name of Small Business Issuer in Its Charter)

                  FLORIDA                                       91-0927532
         (State or Other Jurisdiction of                     (I.R.S. Employer
         Incorporation or Organization)                      Identification No.)

                     1401 Johnson Ferry Rd., SUITE 328, F-36
                             Marrieta, Georgia 30062
                            -------------------------
               (Address of Principal Executive Offices)(Zip Code)

                                 (561) 989-0808
                (Issuer's Telephone Number, Including Area Code)

Securities  registered  under  Section 12(b) of the  Securities  Exchange Act of
1934:

         Title of Each Class          Name of Each Exchange on Which Registered

                  None                                   None

Securities  registered  under  Section 12(g) of the  Securities  Exchange Act of
1934:

                     COMMON STOCK, PAR VALUE $.02 PER SHARE
                                (Title of Class)

Check  whether the  registrant:  (1) filed all  reports  required to be filed by
Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 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 disclosure  of delinquent  filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure  will be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [X]

State registrant's revenues for the year ended December  31, 2000:  $23,368.

State the aggregate market value of the voting stock held by  non-affiliates  of
the  registrant on March 31, 2001 computed by reference to the closing bid price
of its Common Stock as reported by the OTC Bulletin  Board on that date ($.00):
$

                      APPLICABLE ONLY TO CORPORATE ISSUERS

The number of shares  outstanding of the  registrant's  Common Stock,  par value
$.02 per share (the "Common Stock") as of March 31, 2001, was 8,034,658.

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


                       DOCUMENTS INCORPORATED BY REFERENCE

                                     None.


<PAGE>

         This Annual Report Form 10-KSB  contains  "forward-looking  statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.  All statements,
other than  statements  of  historical  facts,  included in or  incorporated  by
reference into this Form 10-KSB, are  forward-looking  statements.  In addition,
when  used in this  document  the  words  "anticipate,"  "estimate,"  "intends,"
"project"  and similar  expressions  are  intended  to identify  forward-looking
statements.  These  forward-looking  statements  are  subject to certain  risks,
uncertainties   and   assumptions.   Should  one  or  more  of  these  risks  or
uncertainties  materialize,  or should  underlying  assumptions prove incorrect,
actual  results  may  vary  materially  from  those  anticipated,  estimated  or
projected.  Although the Company  believes that the  expectations  we include in
such forward-looking  statements are reasonable, we cannot assure you that these
expectations will prove to be correct.

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PART 1

ITEM 1. DESCRIPTION OF BUSINESS

Newagecities.com, Inc.'s goal is to become a leading provider of Internet
Community-building and electronic commerce services for the New Age population
and to create a demographically targeted Web site on the Internet focused on the
New Age community. The New Age population consists of many millions of people
interested in a variety of different areas, including aromatherapy (mood
changing aromas), astrology, crystal energy, eastern philosophy, natural health,
psychics, and a host of other topics. Newagecities.com is creating a Web site
that serves as a doorway, or portal, to a range of information, products and
services specifically designed with the New Age community in mind.

Due to a lack of significant revenue growth in the first half of 2000, the
company decided to accelerate the implementation of the business-to-business
portions of its business plan. In keeping with this strategy, On April 6, 2001
Newagecities.com signed an agreement to merge with Al-Wali Corporation d/b/a
New Leaf Distributing Company, Inc. (New Leaf), a leading wholesale distributor
of New Age books, magazines, sidelines (gift items) and other literature
throughout the United States. New Leaf's sales have been as high as $30 million
annually. In 1999 profits were $328,000 on sales of $24 million. The merger of
these two companies is contingent upon several factors, including a successful
capital raise of at least $2 million. The plan is to combine these companies and
employ new technologies to create one entity with significantly higher revenues
and potential profits than the two generate separately.


Our background

Psychicnet.com,  Inc.  was  formed on  January  29,  1999 to  provide  "New Age"
services and products on the Internet. On April 6, 1999, Psychicnet was acquired
by Virginia City Gold Mines, Inc., an Idaho corporation, for 2,700,000 shares of
common  stock.  The exchange  was  completed  through an  Agreement  and Plan of
Reorganization  between  Psychicnet  and  Virginia  City.  Virginia  City had no
operations at the time of the  acquisition.  The exchange was accounted for as a
reverse  acquisition  under  the  purchase  method  for  business  combinations.
Subsequent to the exchange,  Virginia City changed its name to newagecities.com,
Inc., its present corporate name.

Industry background

The term "New Age" is typically used to refer to a set of beliefs and practices
that originated in centuries past. These include aromatherapy, astrology,
crystal energy, eastern philosophy, natural health, psychics, UFOs and a host of
other topics. Although each of these areas is distinct from the others, they are
all considered within the umbrella concept of "New Age."

Spirituality, wellness, alternative health and other New Age concepts have
recently garnered significant attention in the mainstream press with articles
and stories appearing in Barrons and Time, and on CNN. According to a recent CNN
report (March 2000), in the 1960's approximately 20 percent of Americans were
interested in spirituality. More recent polls now indicate that this number has
swelled to over 80%. A recent Business 2.0 (June 2000) article reported that in

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1984, 56% of Americans felt the need for spiritual growth and that this number
has grown to 82% in 2000. In addition, the sale of religious and spiritual books
shot up 59% between 1992 and 1994.

Along with the increase in public interest in New Age ideas has come an increase
in the sales of related products and services. While these products and services
may not be labeled as such, they clearly fall within this marketplace.
Oftentimes items that fall into the New Age genre are classified within a more
mainstream category. The book sensation, The Celestine Prophecy, by James
Redfield, is a prime example. The book has sold over 7 million copies to date
and is clearly a New Age title, although it is commonly classified as fiction.
Other best-selling book examples include Conversations with God, by Neale Donald
Walsch, as well as the myriad of best sellers by Deepak Chopra. These and other
New Age books are found on the shelves (and Web sites) of all major book
retailers in various sections of the store, including psychology, religion,
self-help, philosophy, UFOs, etc. Additional New Age concepts that have entered
into everyday life include candles and aromatherapy. These products can now be
found on supermarket shelves all over the world. Overall, it is clear that the
market for New Age products is quite substantial. In fact, preliminary results
of a forthcoming study (New Editions New Age Consumer Survey, Sophia Tarila,
Ph.D., New Editions International) reveal that the market is estimated at over
38 million people and over $40 billion annually, in the U.S. alone.

The growth in the demand for New Age and related products is evident in the
figures summarized below:

o        Book industry sales have grown by approximately 7% per year for the
         last three years, with religious books being one of its fastest growing
         segments.

o        Sales of aromatherapy products are approximately $575 million and
         growing in the U.S., Asia, and Europe.

o        The National Candle Association estimates that U.S. candle consumer
         retail sales are over $2.3 billion annually. Since the early 1990's,
         the industry has averaged a growth rate of 10-15% annually. In recent
         years, this growth has doubled.

As the New Age market grows, newagecities.com will grow with it, offering new
products and services designed to meet the expanding demand.

With such a large and fragmented market, it is not surprising that the New Age
Industry has been slow to move into the Internet. New Editions International
estimates that currently only 50% of wholesalers, publishers and manufacturers
in this market have any kind of online presence and that only 17% of retail
storeowners have one. Post-merger with New Leaf, the company will be in a unique
place in the industry, serving both suppliers and retailers with traditional
products and services as well as through some innovative technology. The company
is perfectly positioned and has the tools in place, to capitalize on this slow
movement.

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<PAGE>

The need for a New Age online destination

The New Age population is a large and under served market segment that desires
interaction, communication, a sense of community and an environment that caters
to their particular needs. New Age consumers build their own communities
off-line. We believe they are interested in extending these communities onto the
Internet because of the opportunity for interaction on a larger scale.

For many in the New Age community there is also a need for access to products
and services that are not commonly available. Most New Age products are
purchased at small retail stores that specialize in this industry. However, in
many areas where these stores are not present, New Age consumers are somewhat
limited to those products available in more mainstream outlets. Even those that
have New Age stores in their vicinity are often disappointed because these
stores can only stock a small amount of products.


The Newagecities.com solution

We believe our company can serve as the conduit between the New Age Community,
the Industry and the Internet. We have created a Web portal where members of
this community can interact, be entertained and shop in an environment that
caters specifically to their needs and desires. Newagecities.com integrates
community and commerce through a network of different Web sites and features
focused primarily on the New Age devotee and by offering updated content and a
forum for community interaction.

The company is developing a New Age affinity mall, to be located at
www.newagechoice.com, that will feature listing of online and offline New Age
stores. Visitors to the newagecities.com network of Web sites will be directed
to these stores for product and service purchases. Stores in the listing will
pay the company either a set monthly fee or a percentage of sales. The merger
with New Leaf opens up the possibility of marketing this service directly to
their existing customer base of over 5000 retailers, as well as manufacturers
that wish TO enter the online retail market. In addition, the company is
currently developing a system whereby retailers can use whatever portions of the
New Leaf inventory database they select as the product base for their store.

Retailers  wanting  to  become  affiliates  will  be  provided  with a  one-stop
wholesale  distribution source, their own e-commerce enabled storefronts,  and a
small  order  fulfillment  platform  to  better  service  their  clientele.   By
implementing  this  strategy,  the NACT will  provide a full cycle  system  that
integrates an advanced  e-commerce  front-end with a powerful order  fulfillment
back-end,  thereby  enabling the storeowners to attract and retain customers and
increase  product  offerings.  NACT will  alleviate  the  retailers'  need for a
distribution   infrastructure  or  other  third-party  outsource  providers.  In
addition to existing retail  storeowners,  this system offers the flexibility to
provide products and services for larger Internet-only operations.

The company will also provide products and services for business owners in the
New Age Industry via www.newagebiz.com. This site offers business owners a rich
array of information and services designed to improve and expand their
businesses, as well as the opportunity to partner with/purchase services from
newagecities.com/New Leaf.

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<PAGE>

Newagecities.com has launched an Internet-only radio station at the Web site
address "newagesound.com." The station offers continuous (24 hours a day) New
Age music and programming. Newagesound.com is available to anyone with Internet
access. We are using advanced streaming technology to provide high quality and
accessibility for all users. We have available a full audio studio as well as
the ability to broadcast large amounts of data directly through one of our
direct high-speed connections to the Internet.

Newagesound.com  generates  revenues  through  product  and  advertising  sales.
Advertising will be sold for both "on-air"  commercials and on the Web site. Web
site advertising  takes the form of banners or other graphics with links back to
the  advertisers'  sites.  Product  sales  consist of New Age CDs.  Although the
company  will be  discontinuing  most of its direct  retail  sales,  in favor of
promoting other businesses on newagechoice.com, newagcities.com will continue to
sell retail  products on  newagesound.com  until a suitable sales and technology
partner is located.


Strategy

Newagecities.com already has in place a set of tools to increase product and
service offerings to businesses owners. These tools include:

o        AffiliateDirect - software that enables affiliate partners to offer
         commission based affiliate programs of their own.

o        Internet Store - an e-commerce software package that allows the company
         to offer other merchants the opportunity to open their own online
         stores with point-and-click ease.

Both of these software packages will be offered to business owners who will pay
a percentage of sales to newagecities.com. In addition the company is currently
developing new business-business products such as-


o        Advertising Sales- merchants and others can purchase advertising on any
         of newagecities.com network of Web sites.

o        Newagechoice.com - an online New Age affinity mall. Merchants in the
         mall will consist of newagecities.com commission based affiliate
         partners as well as others who will pay a monthly fee for mall
         placement.

In addition to online sales, the company's major focus will be on improving the
sales and earnings of New Leaf. Members of the newageciites.com and New Leaf
management teams, along with other industry experts, have developed a specific
set of short and long term goals for the upgrade/further development of product
and service offerings, as well as cost savings for New Leaf. A summary of these
changes is presented below.

o        Increase New Leaf's market share by adding all of their products to the
         Internet.

o        Make alliances with small publishers, to enable the company to sell to
         chain books stores with a larger array of exclusive products.

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<PAGE>

o        Increase New Leaf's sales by utilizing outbound telemarketing.

o        Deliver timely e-mail product updates, newsletters, industry news and
         trends, clearance specials, and one-of-a-kind closeouts.

o        Increase sales by implementing small order fulfillment for online
         stores.

o        Add a computer Kiosk to targeted retail stores to virtually expand
         their inventory (with next day delivery to either the customer or the
         store).

o        Expand the publishing division, search and find new authors and books.

o        Expand the Audio, Video and Sideline base of products.

o        Establish a market for returns/damaged/blems and seconds books on the
         Internet and to the New Leaf Distribution Chain, via e-mail, fax and
         web presence.



Strategic Alliances

Newagecities.com management understands the power of partnering with other
industry leaders, both on and offline, and has formed strategic alliances with
several.

The company's alliance with QSound Labs (Nasdaq:QSND) provides newagecities.com
with licenses for Internet Store and AffiliateDirect. Internet Store is the
e-commerce software that allows the company to offer other merchants the chance
to open their own online stores. AffiliateDirect is the software that enables
business owners to allow other Web page owners to sell their products and earn a
commission. Internet Store and AffiliateDirect are already two of the most
complete and easy-to-use packages of their kind available. In addition, QSound
has customized the software to newagecities.com's specifications.

The company has also formed a strategic partnership with Here's How Marketing, a
leading provider of marketing services for the New Age Industry. With the help
of Here's How personnel, newagecities.com's introduction to the New Age business
world at the 1999 & 2000 International New Age Trade Shows was a tremendous
success.

The company has also formed an alliance with New World Music, a leading record
label in the New Age market. Newagecities.com features and sells many of the New
World titles on its Internet-only radio station at www.newagesound.com. The
company is also already a distributor of New World products, and provides
product to other New Age businesses.

Marketing and promotions

The products and services offered by newagecities.com/New Leaf will be marketed
to New Age and other businesses via a mix of on and offline marketing
techniques.

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<PAGE>

Offline (traditional) Marketing efforts will Include:

Magazine Advertising:

At present there a number of industry specific business magazines, which tend to
set the trends in the industry. As such, the company will present a cohesive
marketing campaign via these magazines. These magazines include the New Age
Retailer, NAPRA Review and New Age Voice.

Trade Shows:

We will also maintain a significant presence at industry trade shows, such as
the International New Age Trade Show, the Tucson Gem & Mineral Show and the Book
Exhibitors of America show.

The company will also use these traditional sales and marketing methods to
attract new customers, such as mainstream gift shops, nature stores, chain
bookstores and health food stores.

Online Marketing efforts will include:

Web site promotion:

We will promote our services to New Age business owners through our
business-to-business Web site, www.newagebiz.com. The site offers business
owners a rich array of information and services designed to improve and expand
their businesses, as well as the opportunity to partner with/purchase services
from us.

One main thrust of the company's marketing will be the development of
newagechoice.com, the New Age Internet Mall .The company is designing a
comprehensive marketing plan designed to highlight the following benefits to
industry members:

For Retailers

Retail storeowners will be provided with their own e-commerce enabled
storefronts to better service their clientele including:

o        A fully integrated on-line presence to sell any goods or services.
o        The option of single item fulfillment services
o        Exposure to a much larger selection of goods through the our wholesale
         distribution base
o        The ability to sell inventory not physically in their stores
o        A global reach o Inclusion in the largest New Age shopping portal on
         the Internet
o        Lower shipping costs

Retailers will also benefit from the information, ideas and directory listings
available at the company's business-to-business Web portal, newagebiz.com,
including:

o        New product listings and reviews

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o        Industry news
o        Marketing tips and trends
o        Tax & other business tips
o        Access to new manufacturers and suppliers

For Wholesalers

Wholesalers, distributors and manufacturers will also gain substantial benefits
from inclusion in newagebiz.com's supplier directory, including:

o        Exposure via an electronic, never-closing, virtual tradeshow
o        Access to more potential customers globally
o        A forum to showcase new products or services
o        Access to new Internet-only stores and other distributors


Online marketing will be geared primarily towards driving consumer traffic to
newagechoice.com, and hence increasing the sales of retail storeowners, thereby
increasing the value (and price) of a placement in mall and increasing the
demand for New Age products being supplied by the company. Marketing will be
completed in the form of banner advertisements, sponsorships and special
advertising partnerships whereby the company will provide content to other large
Websites with links back to our network of sites.


International markets

We expect that some  portion of our traffic and revenue  generation  will result
from markets outside of the United States. Many New Age ideas originated outside
the U.S.,  and now the Internet makes it easier for cultures and ideas to spread
globally.  Additionally,  many markets outside of the U.S. have no access to the
range of products and services offered at newagecities.com.

Historically, New Leaf has derived approximately 7-10% of its revenues from
accounts outside of the U.S. International is one of the fastest growing
segments of New Leaf's business.

Technology

Our technology infrastructure contains a Windows NT network made up of computers
purchased  through Dell, or put together by our own technicians.  All of our Web
servers are housed in a secure  facility,  located in Miami,  FL. All of our Web
content  is being  housed on IBM  compatible  servers at the  facility.  Our Web
servers  are  connected  directly  to an  OC-12,  one  of the  fastest  possible
connections to the Internet.  All of our computers and our Internet  connections
have redundant systems in place to ensure reliability.

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Competition

Our competition comes from other New Age industry  businesses and from other Web
sites within the same genre. In terms of business-to-business offerings there is
no one  company  that will be able to offer  all of the  products  and  services
available via  newagecities.com/New  Leaf. The addition of e-commerce technology
to New Leaf should increase the revenues and market stronghold of this leader to
an even greater extent. The largest  competitors in this marketplace are not yet
online and cannot achieve that goal with the same speed and efficiency  that the
newagecities.com technology provides. Additionally, newagebiz.com, the company's
business-to-business  industry portal, has no direct competition and provides an
important vehicle for further growth.

Historically, a large portion of New Leaf's strength in the New Age market has
been a result of choosing prominence in a single marketplace over pursuing a
less focused role as a general wholesaler/distributor. This philosophy has lead
the company to offer a depth and breadth of products not seen in any of their
competitors. In terms of wholesale product sales, competitors include an array
of companies that each offers a subset of the products available from the
company. These competitors range from very large national traditional book
distributors such as Ingram and Baker & Taylor to regional and niche
booksellers, such as Book Source and Book People. The company also faces
competition in the sale of music and other non-book items from companies like
Narada, Music Design and Lotus Light. While the company will share a portion of
its business with each of these competitors, its collection of value-added
technology services and product depth give it an edge moving forward over the
next several years.

With regard to online competition, while there are other Web sites devoted to
the New Age community that contain similar information to that available on the
newagecities.com network of sites, the wealth of content and information
available on the network attracts an ever-growing population of users that can
be directed to the company's affiliate partners at newagechoice.com, deriving
revenues for the company.

The market for members, visitors, Internet advertising and New Age products is
rapidly evolving and competition is sure to increase. With the rapid expansion
of the New Age community and the limited number of barriers to entry, we expect
additional competition to arrive over time. Some of our potential competitors
may be larger, better funded and more technically capable than us. Increased
competition may lead to pricing pressures on our advertising and product rates,
which could have adverse material effects on us.

Employees

Newagecities.com currently has three full-time employees, each of which is
deferring pay until the company is better able to pay them. No employee of
newagecities.com is covered by a collective bargaining agreement nor is
represented by a labor union. Newagecities.com considers its employee relations
to be good.

ITEM 2. DESCRIPTION OF PROPERTIES

Newagecities.com  currently leases facilities  consisting of approximately 5,145
square feet of office and warehouse space in Boca Raton,  Florida.  The lease is
for a  five-year  period.  The first  year's rent is  $43,732.50,  the second is
$45,919  and  third,  fourth  and  fifth  are  $48,215,  $50,626,  and  $53,157,
respectively,  plus newagecities'  proportionate  share of taxes,  insurance and
operating expenses on the building.  The facility is currently in the process of
being subleased, as the company has moved its headquarters to Georgia.

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ITEM 3. LEGAL PROCEEDINGS

     We are not a party to any material legal proceeding, nor are any of our
officers, directors or affiliates a party adverse to us in any legal proceeding.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS

         Not Applicable.


ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED  SHAREHOLDER MATTERS

     Our common stock is traded over-the-counter and quoted on the OTC
Electronic Bulletin Board under the symbol "NACT". The reported high and low bid
prices for the common stock are shown below for the period from April 14, 1998,
the date our common stock began trading on the OTC Electronic Bulletin Board,
through December 31, 2000. The prices do not always represent actual
transactions. The following information gives effect to a 1:80 reverse stock
split of our outstanding common stock completed on April 6, 1999. As of April
30, 2001, we had 1,029 stockholders of record.

Period                                          High            Low
Quarter ended June 30, 1998                    $3.20          $   .80
Quarter ended September 30, 1998               $2.48          $   .80
Quarter ended December 31, 1998                $4.80          $  1.60

Quarter ended March 31, 1999                   $5.60          $  1.60
Quarter ended June 30, 1999                    $8.00          $  2.50
Quarter ended September 30, 1999               $3.75          $  1.37
Quarter ended December 31, 1999                $2.88          $  1.50

Quarter ended March 31, 2000                   $3.50          $  1.75
Quarter ended June 30, 2000                    $2.19          $   .30
Quarter ended September 30, 2000               $ .44          $   .20
Quarter ended December 31, 2000                $ .19          $   .04

On March 31, 2001, the closing bid price of our common stock was $ .15

We have never paid cash dividends on our common stock. We intend to keep future
earnings, if any, to finance the expansion of our business. We do not anticipate
that any cash dividends will be paid in the foreseeable future.

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ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

              The following discussion and analysis should be read in
conjunction with the financial statements of the Company and the notes thereto
appearing elsewhere.

             Newagecities.com, Inc is a leading provider of Internet
Community-building and electronic commerce services for the worldwide New Age
Community. The company has developed a network of web sites that utilize
cutting-edge technology to provide a wide array of products, services and
information to the expanding audience of New Age enthusiasts.

              Our goal is to build newagecities.com into a leading online
destination for members of the New Age community and to serve as one of the
predominant product and service providers in the New Age Industry. We believe
the execution of this strategy will help newagecities.com to realize revenue
growth through expanded product and service offerings as well as advertising and
marketing opportunities. The key to implementing this strategy requires
increasing our customer base, both retail and wholesale, building brand
recognition, enhancing the online features of our Web portal, maintaining fresh
content and integrating new technology.

         During the 12-month period immediately following the date of this
filing, the company will complete the merger agreed upon with Al Wali, Inc.,
d/b/a New Leaf Distributing located in Lithia Springs, Georgia, to which it has
signed a Merger Agreement, then consolidate all operations and management of the
combined company from Georgia with the goal of creating a leader in
Business-to-Business-to-Consumer product and service offerings in the New Age
Industry. The plan is to combine these companies and employ new technologies to
create one entity with potentially significantly higher revenue and profits than
the two generate separately.

         The term "New Age" refers to a set of beliefs and practices that
originated in past time and includes aromatherapy, astrology, crystal energy,
eastern philosophy, natural health and healing, psychics, UFOs and a host of
other topics. The company will be focused on providing services and selling
goods related to the New Age concept. Newagecities.com, Inc. will not sell to
the consumer directly but through New Age retail store-owners and New Age
Manufacturers and Importers by enabling Industry wholesale vendors and retail
business owners to enter and effectively penetrate the growing Internet
marketplace and following-up with the sale and fulfillment of products to a
variety of end-users - Consumers, Other Retail Store Owners, and Distributors.

         The intent is to have New Leaf improve upon the operations, revenues
and profitability of it's traditional distributorship, while generating
additional revenues and profits by offering products and services to both retail
storeowners and wholesalers over the Internet. To date NACT has signed-on over
70 retail storeowner and 20 wholesaler e-commerce partners. The software is in
place to accomplish the company's objectives and to create a business-to
-business "Click and Mortar" portal, unique to the $40 billion New Age
marketplace. Retailers wanting to become affiliates will be provided with a
one-stop wholesale distribution source, their own e-commerce enabled
storefronts, and a small order fulfillment platform to better service their
clientele. By implementing this strategy, NACT will provide a full cycle system
that integrates an advanced e-commerce front-end with a powerful order
fulfillment back-end, thereby enabling the storeowners to attract, retain and
expand customer bases and increase product offerings. NACT will alleviate the
retailers' need for a distribution infrastructure or other third-party outsource
providers. In addition to existing retail storeowners, this system offers the
flexibility to provide products and services for larger Internet-only

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operations. Wholesalers, distributors and manufacturers will be given exposure
to retail storeowners via a virtual tradeshow, directory listings, and new
product postings on a business-to-business portal that NACT has already created
at www.newagebiz.com.

         To ensure the success of these online and off-line ventures, the
company will continue to expand its network of popular Web sites that draw large
numbers of highly targeted consumers. These consumers will be directed to the
products and service offerings of the New Age business owners that are
affiliated with the company (affiliate partners) both cyber-stores and
brick-and-mortar stores. The company (combined with New Leaf) will derive
revenues directly from wholesale accounts (off-line), and affiliate partners
(on-line), or both at the same time, including our normal distributor discount,
placement fees, sales commissions, and advertising and promotion fees.
Newagecites.com will continue to market its services, including its New Age
affinity mall, at newagechoice.com, to consumers via its growing network of Web
sites specifically designed with the New Age community in mind. In order to
accomplish our goal, we must create, with the assistance of various consultants,
a complex computer network and e-commerce based system that will allow our
clients to receive our services and purchase New Age related products from their
personal computers. We are developing our computer systems and network so that
they can evolve into a fully operating system which will allow newagecities.com
to provide services and market its products on a larger scale.

         Newagecities.com has in place a set of tools to increase product and
service offerings to both businesses and consumers. In addition, the company is
committed to continued development of leading edge tools that enable further
offerings. When possible, the company partners with other leading edge firms to
accomplish these goals. One important partnership with Qsound Labs, provides
Newagecities with software licenses for Internet Store and AffiliateDirect.
Internet Store is the e-commerce software that allows the company to offer other
merchants the opportunity to open their own online stores. AffiliateDirect is
the software that enables Web page owners to sell our products on their pages
and earn a commission. Internet Store and AffiliateDirect are already two of the
most complete and easy-to-use packages of their kind available. In addition,
QSound has customized the software to newagecities specifications. The two
companies will use these packages to create a virtual mall
(www.newagechoice.com), similar to that created by Qsound at www.choicemall.com.
Merchants will either pay a monthly fee or commissions on sales for mall
placement.

         Historically New Leaf has operated almost exclusively through wholesale
distribution of products. New Leaf's revenues are derived from the sales of
products to retail storeowners. Primarily, sales are accomplished via a set of
published catalogs that are updated on a quarterly basis. Retailers purchase
products at discounts of 20%-40% below retail price, depending on items and
volume of total purchases. Most of their existing accounts (approximately 6,000)
are independent book and New Age stores. The company offers a wide variety or
products including books, calendars, periodicals, videos, music, candles and
more. Sales of non-book items that support community bookstores are a major area
of growth for New Leaf. These items especially continue to expand in the
international market. The company has a small Internet presence that does not
contain any electronic commerce capabilities.

         From completion of the merger and in the years to come, New Leaf will
serve this market not only through wholesaling, but through an entire array of
services including publishing, distribution (exclusive contracts for all

                                       13

<PAGE>

wholesale sales), editorial and literary agent services for authors and
publishers, brokering of international rights on behalf of small presses,
consulting and training services to help both vendors and retailers succeed,
marketing efforts which include further development of an excellent customer
service culture, for the purpose of increasing our sales and supporting the
retailers' success. Purchases are accomplished over the phone and through an
electronic ordering system. NACT is perfectly positioned to expand upon the
leadership positions already earned by newagecities.com and New Leaf in the New
Age marketplace. By combining the strengths of these two companies, we should be
able to achieve more than either would have alone. New Leaf will improve upon
the operations, revenues and profitability of its traditional wholesale
business, while generating additional revenues and profits by offering products
and services to both retail storeowners and wholesalers over the Internet.
Retailers wanting to become affiliates will be provided with a one-stop
wholesale distribution source, their own e-commerce enabled storefronts, and a
small order fulfillment platform to better service their clientele.

         Spirituality, wellness, alternative health and other New Age concepts
have recently garnered significant attention in the mainstream press with
articles and stories appearing in Barrons and Time, and on CNN. According to a
CNN report (March 2000), in the 1960's approximately 20 percent of Americans
were interested in spirituality. More recent polls now indicate that this number
has swelled to over 80%. A recent Business 2.0 (June 2000) article reported that
in 1984, 56% of Americans felt the need for spiritual growth and that this
number has swelled to 82% in 2000, the sale of religious and spiritual books
shot up 59% between 1992 and 1994.

         Results of Operations - January 1, 2000 - December 31, 2000 - For the
twelve-months ended December 31, 2000, we generated revenues of $23,368 as
compared to $2,672 during the period ended December 31, 1999. The cost of goods
sold was $7,945 resulting in a gross profit of $15,423 for the twelve-months
ended compared to $909 during the same period ended in 1999. Operating expenses
were $8,076,733 for the twelve-months ended, as compared to $1,293,859 for the
comparable prior period. These expenses consisted mainly of losses on the
impairment of the Company's assets of $3,993,435, general and administrative
expense of $1,253,933 which was primarily attributable to salaries of
approximately $581,000, marketing and advertising of $93,000, consulting and
professional fees of approximately $163,000, rent and office expenses of
$155,000, depreciation of $25,000, communications costs of $36,000, travel
expenditures of $24,000 and various administrative cost of $177,000.
Additionally, operating expenses consisted of the amortization of goodwill of
$2,088,815, which relates to the acquisition of MemberNet, Inc. and the Q-Sound
license, and noncash compensation for common stock issued for consulting
services of $740,550. Additionally, we recorded net interest expense of
$482,169, which is attributable to the convertible notes payable, which were
satisfied on March 9, 2000. The increase in operating expenses for the year
ended December 31, 2000 as compared to the year ended December 31, 1999 was due
to the full implementation of our business plan.

         Liquidity, Capital Resources and Plan of Operations

         We have financed our growth and cash requirements through the
borrowings from existing shareholders of approximately $208,000, along with the
repayment to these shareholders in shares of the Company's common stock. We do
not have any credit facilities from financial institutions or private lenders.
We do not currently have any material commitments for capital expenditures.

                                       14
<PAGE>

         Cash used in operations for the twelve-months ended December 31, 2000
was approximately $680,000 attributable primarily to the net loss of
approximately $8,543,000, offset by a decrease in inventories, prepaid and other
current assets, and other assets of $146,000 and a decrease in accrued expenses
of $381,000 and the following non-cash expenses: depreciation and amortization
of $2,229,000, stock issued for services of $741,000, interest of $374,000 and a
loss on the impairment of assets of $3,993,000. Cash used in investing
activities during the period was approximately $354,000 that was for leasehold
improvements to new office space, the purchase of computer equipment and
software and acquisition expense of $149,000. Cash provided by financing
activities was $221,000, which consisted of a bank overdraft of $600, loans from
shareholders of $208,000, proceeds from the exercise of warrants of $12,500.
Total cash decreased by approximately $813,000 during the twelve-months ended
December 31, 2000.

ITEM 7.  FINANCIAL STATEMENTS

         See  "Index  to  Financial  Statements"  for the  financial  statements
included in this Form 10-KSB.

                                       15

<PAGE>


                     NEWAGECITIES.COM, INC. AND SUBSIDIARIES
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS





newagecities.com, Inc.:

  Independent Auditors' Report                                               F-2

  Consolidated Balance Sheet                                                 F-3

  Consolidated Statements of Operations                                      F-4

  Consolidated Statement of Stockholders' Deficit                            F-5

  Consolidated Statements of Cash Flows                                      F-6

  Notes to Consolidated Financial Statements                         F-7 - F- 15











                                      F-1

<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors
newagecities.com, Inc.
Boca Raton, Florida

         We  have  audited  the  accompanying   consolidated  balance  sheet  of
newagecities.com, Inc. and Subsidiaries as of December 31, 2000, and the related
consolidated statements of operations,  stockholders' deficit and cash flows for
the year ended  December  31, 2000 and the period  January 29, 1999  (Inception)
through 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 amount 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
newagecities.com, Inc. and Subsidiaries as of December 31, 2000, and the results
of its  operations  and its cash flows for the year ended  December 31, 2000 and
the period January 29, 1999 (Inception) through December 31, 1999, in conformity
with generally accepted accounting principles.

         The accompanying  consolidated  financial statements have been prepared
assuming the Company will continue as a going concern. As discussed in Note 3 to
the consolidated  financial statements the Company has an accumulated deficit of
approximately  $10,483,000  at December 31, 2000,  and has incurred  significant
operating losses which raise  substantial doubt about its ability to continue as
a going concern without the raising of additional  debt and/or equity  financing
to fund operations.  Management's plans in regard to these matters are described
in Note 3. The consolidated  financial statements do not include any adjustments
that might result from the outcome of this uncertainty.



                                           /s/Feldman Sherb & Co., P.C.
                                              Certified Public Accountants

New York, New York
April 6, 2001

                                       F-2


<PAGE>



                     NEWAGECITIES.COM, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

                                DECEMBER 31, 2000


                                     ASSETS

FURNITURE AND EQUIPMENT, net                                  $       52,210

LICENSING AGREEMENT, net                                             316,980
                                                                -------------
                                                              $      369,190
                                                                =============


                      LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
     Bank overdraft                                           $          526
     Accounts payable and accrued expenses                           463,029
     Loans payable - shareholders                                    208,472
                                                                -------------
TOTAL CURRENT LIABILITIES                                            672,027
                                                                -------------


STOCKHOLDERS' DEFICIT:
     Common stock, $.02 par value, 45,000,000 shares
         authorized; 8,034,658 issued and outstanding                160,693
     Additional paid-in capital                                   10,019,083
     Accumulated deficit                                         (10,482,613)
                                                                -------------
TOTAL STOCKHOLDERS' DEFICIT                                         (302,837)
                                                                -------------
                                                              $      369,190
                                                                =============







                 See notes to consolidated financial statements
                                      F-3

<PAGE>

                     NEWAGECITIES.COM, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS



                                                          For the Period
                                       Year Ended        January 29, 1999
                                      December 31,       (Inception) to
                                         2000           December 31, 1999
                                     --------------     ------------------


SALES                                $     23,368       $         2,672

COST OF SALES                               7,945                 1,763
                                     --------------     ------------------
                                           15,423                   909
                                     --------------     ------------------

OPERATING EXPENSES:
     Research and development                -                  258,750
     General and administrative         1,253,933               675,859
     Impairment of assets               3,993,435                  -
     Amortization                       2,088,815                  -
     Noncash compensation expense         740,550               359,250
                                     --------------     ------------------
                                        8,076,733             1,293,859
                                     --------------     ------------------
OPERATING LOSS                         (8,061,310)           (1,292,950)

INTEREST EXPENSE                         (482,169)             (646,184)
                                     --------------     ------------------
NET LOSS                             $ (8,543,479)      $    (1,939,134)
                                     ==============     ==================


LOSS PER COMMON SHARE
 - basic and diluted                 $      (1.25)      $         (0.54)
                                     ==============     ==================


WEIGHTED AVERAGE COMMON SHARES
  OUTSTANDING - basic and diluted       6,819,620             3,599,757
                                     ==============     ===================




                 See notes to consolidated financial statements.
                                      F-4

<PAGE>

                     NEWAGECITIES.COM, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT

<TABLE>
<CAPTION>

                                         Common Stock
                                       -----------------    Additional                    Total
                                      Number of              Paid-in     Accumulated   Stockholders'
                                       Shares      Amount    Capital       Deficit       Deficit
                                     ----------   --------  -----------  -----------  --------------


<S>              <C> <C>               <C>       <C>      <C>            <C>           <C>
Balance, January 29, 1999 (Inception)  400,158   $  8,003 $    (8,003)   $       -     $      -

Issuance of common stock pursuant
     to share exchange agreement     2,200,000     44,000     (44,000)           -            -

Issuance of shares and warrants for
     licensing agreement               400,000      8,000     663,250            -         671,250

Sale of common stock                   300,000      6,000     530,841            -         536,841

Common stock and warrants issued
     for services and financings       300,000      6,000     640,000            -         646,000

Beneficial conversion feature of
     convertible notes payable            -          -        605,000            -         605,000

Issuance of common stock and warrants
     for acquisition                 2,500,000     50,000   5,440,000            -       5,490,000

Warrants issued for debt                  -          -         49,620            -          49,620

Net loss                                  -          -           -         (1,939,134)  (1,939,134)
                                     ----------   --------  -----------   -----------  --------------
Balance, December 31, 1999           6,100,158    122,003   7,876,708      (1,939,134)   6,059,577

Common stock issued for services       895,000     17,900     722,650            -         740,550

Exercise of warrants                   105,000      2,100      10,400            -          12,500

Issuance of common stock
 for equipment                          75,000      1,500      11,325            -          12,825

Issuance of shares for related
 party loans                           658,812     13,176   1,028,124            -       1,041,300

Issuance of shares for interest        200,688      4,014     369,876            -         373,890

Net loss                                  -          -           -         (8,543,479)   (8,543,479)
                                     ----------   -------- -----------    -----------    -----------
Balance, December 31, 2000           8,034,658   $160,693 $10,019,083    $(10,482,613) $   (302,837)
                                     ==========   ======== ===========    ============    ===============

</TABLE>















                See notes to consolidated financial statements.
                                      F-5

<PAGE>

                     NEWAGECITIES.COM, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                               For the Period
                                           Year Ended         January 29, 1999
                                           December 31,        (Inception) to
                                              2000           December 31, 1999
                                          --------------    --------------------

CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss                                 $(8,543,479)       $    (1,939,134)
  Adjustments to reconcile net loss to
  net cash used in operations:
  Depreciation and amortization             2,228,509                139,928
  Common stock issued for services            740,550                618,000
  Common stock issued for interest            373,890                605,000
  Loss on impairment of assets              3,993,435                   -
  Warrants issued for debt                       -                    49,620
  Changes in assets and liabilities:
   Inventories                                 97,073                (97,073)
   Prepaid and other current assets            12,475                (12,475)
   Deferred financing costs                      -                   (88,802)
   Other assets                                36,222                (36,222)
   Accrued expenses                           380,919                 82,110
                                          --------------    --------------------
    Total adjustments                       7,863,073              1,260,086
                                          --------------    --------------------
NET CASH USED IN OPERATING ACTIVITIES        (680,406)              (679,048)
                                          --------------    --------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Acquisition expenses                        (148,723)                  -
 Capital expenditures                        (204,938)               (86,524)
                                          --------------    --------------------
NET CASH FLOWS USED IN INVESTING
  ACTIVITIES                                 (353,661)               (86,524)
                                          --------------    --------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Bank overdraft                                   526                   -
 Loans from shareholders                      208,472                   -
 Proceeds from exercise of warrants            12,500                   -
 Proceeds for the issuance of convertible
  notes payable                                  -                 1,041,300
 Proceeds from issuance of common stock          -                   536,841
                                          --------------    --------------------
NET CASH FLOWS PROVIDED BY FINANCING
  ACTIVITIES                                  221,498              1,578,141
                                          --------------    --------------------
NET DECREASE IN CASH                         (812,569)               812,569
CASH - beginning of period                    812,569                   -
                                          --------------    --------------------
CASH - end of period                      $   116,802        $       812,569
                                          ===============   ====================


SUPPLEMENTAL DISCLOSURE OF CASH FLOW
 INFORMATION:
  Noncash investing and financing activities:
   Common stock issued for acquisition    $      -           $     5,490,000
                                          ===============   ====================
   Common stock issued for license        $      -           $       671,250
                                          ===============   ====================

   Common stock and warrants issued for
    services and financing                $      -           $       646,000
                                          ===============   ====================

   Beneficial conversion feature recorded
    as additional paid-in capital         $      -           $       605,000
                                          ===============   ====================

   Warrants issued for debt               $      -           $        49,620
                                          ===============   ====================
   Common stock issued for equipment      $    12,825        $          -
                                          ===============   ====================
   Common stock issued for related
    party loans                           $ 1,041,300        $          -
                                          ===============   ====================


                 See notes to consolidated financial statements.
                                       F-6

<PAGE>
                     NEWAGECITIES.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 YEAR ENDED DECEMBER 31, 2000 AND FOR THE PERIOD

                JANUARY 29, 1999 (INCEPTION) TO DECEMBER 31, 1999


Psychicnet.Com, Inc. ("Psychic") was formed on January 29, 1999 to provide "New
Age" services and products on the internet.

On April 6, 1999, Psychic was acquired by Virginia City Gold Mines, Inc.
("VCGM"), an Idaho corporation, for 2,200,000 shares of VCGM stock (the
"Exchange"). The Exchange was completed pursuant to the Agreement and Plan of
Reorganization between Psychic and VCGM. The Exchange has been accounted for as
a reverse acquisition under the purchase method for business combinations.
Accordingly, the combination of the two companies is recorded as a
recapitalization of Psychic, pursuant to which Psychic is treated as the
continuing entity. Subsequent to the Exchange, with the approval of the Board of
Directors, VCGM changed its name to newagecities.com, Inc. (the "Company").

The Company has adopted a December 31 year end.

On December 15, 1999 the Company completed the acquisition of MemberNet, Inc.
("MemberNet"), a California company formed in 1999.

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a.       Principles  of  consolidation  -  The  financial  statements  include
         the  accounts  of  the  Company  and  its  wholly-owned subsidiaries.
         All material intercompany transactions have been eliminated.

b.       Income taxes - Income taxes are accounted for under Statement of
         Financial Accounting Standards No. 109, "Accounting for Income Taxes,"
         which is an asset and liability approach that requires the recognition
         of deferred tax assets and liabilities for the expected future tax
         consequences of events that have been recognized in the Company's
         financial statements or tax returns.

c.       Fair value of financial instruments - The carrying amounts reported in
         the balance sheet for accounts payable and accrued expenses approximate
         their fair market value based on the short-term maturity of these
         instruments.

d.       Estimates - The preparation of 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
         revenue and expenses during the reporting period. Actual results could
         differ from those estimates.

                                      F-7
<PAGE>


e.       Impairment of long-lived assets - The Company evaluates the
         recoverability and carrying value of its long-lived assets at each
         balance sheet date, based on guidance issued in SFAS No. 121,
         "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
         Assets to be Disposed of." Among other factors considered in such
         evaluation is the historical and projected operating performance of
         business operations, the operating environment and business strategy,
         competitive information and market trends. Accordingly, the Company has
         recorded an asset impairment of $3,993,435 at December 31, 2000 in
         connection with the following items:

         MemberNet Goodwill - During the fourth quarter of year 2000, the
         Company recognized a goodwill impairment charge of $3,775,672 with no
         associated tax benefit, related to the 1999 acquisition of
         MemberNet.Com, Inc. ("MemberNet") (See Note 10). The review for
         impairment at these operations was triggered by recent cash flow losses
         and forecasted operating cash flows below those expected at the time
         MemberNet was acquired. Accordingly, the Company concluded that
         tangible assets were no longer recoverable through future operations
         and therefore recognized an impairment charge related to this asset.

         Fixed Assets - During the fourth quarter of year 2000, the Company
         recognized an impairment of certain fixed of $217,763. The Company
         concluded that tangible assets were no longer recoverable through
         future operations and therefore recognized an impairment charge related
         to these assets.

f.       Comprehensive Income (loss) - The Company has adopted Statement of
         Financial Accounting Standards No. 130 (SFAS 130) "Reporting
         Comprehensive Income". Comprehensive income is comprised of net loss
         and all changes to the statements of stockholders' equity, except those
         due to investments by stockholders', changes in paid-in capital and
         distributions to stockholders. Comprehensive income (loss) and net loss
         for the periods ended December 31, 2000 and 1999 were the same.

g.       Research and development - Research and development costs are expensed
         as incurred. Theses costs primarily consist of fees paid for the
         development of the Company's software. Research and development costs
         for the period ended December 31, 2000 and 1999 were $0 and $258,750,
         respectively.

h.       Stock based  compensation - The Company accounts for stock transactions
         in accordance with APB No. 25,  "Accounting for Stock Issued to
         Employees."  In  accordance  with  Statement  of  Accounting  Standards
         No. 123 ("SFAS  123"),  "  Accounting  for Stock-Based Compensation,"
         the Company adopted the pro forma disclosure requirements of SFAS 123.

                                      F-8
<PAGE>

i.       Licensing agreements - Licensing agreements are stated at cost, less
         accumulated amortization. Amortization is computed using the
         straight-line method over an estimated life of three years based upon
         management's expectations relating to the life of the technology and
         current competitive market conditions. The estimated life is
         reevaluated each year based upon changes in these factors. Amortization
         for the periods ending December 31, 2000 and 1999 were $223,748 and
         $130,522, respectively.

j.       Revenue recognition - The Company's revenues from advertisements placed
         on the website are recognized at the time the advertisements are
         displayed on the website. Revenues from the sale of products are
         recorded when the goods are shipped or transmitted via E-mail.

         Recent accounting pronouncements:

         In June 1998 and June 2000, the FASB issued SFAS No133, "Accounting for
         Derivative Instruments and Hedging Activities" and SFAS No. 138,
         "Accounting for Certain Derivative Instruments and Certain Hedging
         Activities." These statements establish accounting and reporting
         standards requiring that every derivative instrument be recorded on the
         balance sheet as either an asset or liability measured at its fair
         value. SFAS Nos. 133 and 138 also require that changes in the
         derivative's fair value be recognized currently in earnings unless
         specific hedge accounting criteria are met. SFAS Nos. 133 and 138 are
         effective for fiscal years beginning after June 15, 2000. The Company
         does not expect that the adoption of these new standards will have a
         material impact on the Company's earnings or financial position.

         In December 1999, the Securities and Exchange Commission ("SEC") issued
         Staff accounting Bulletin No. 101, "Revenue Recognition in Financial
         Statements" ("SAB 101"), which clarifies certain existing accounting
         principles for the timing of revenue recognition and its classification
         in the financial statements. In June 2000, the SEC delayed the required
         implementation date of SAB 101. As a result, SAB 101 will not be
         effective for the Company until the quarter ended September 30, 2001.
         In October 2000, the SEC issued further guidance on the interpretations
         included in SAB 101. The Company is currently analyzing the impact of
         this Staff Accounting Bulletin.

         In September 2000, the FASB issued SFAS No. 140 "Accounting for
         Transfers and Servicing of Financial Assets and Extinguishments of
         Liabilities--a replacement of FASB Statement No. 125" ("SFAS 140").
         SFAS 140 revises the standards for accounting for securitizations and
         other transfers of financial assets and collateral and requires certain
         disclosures, but it carries over most of SFAS 125's provisions without
         reconsideration. This Statement is effective for transfers and
         servicing of financial assets and extinguishments of liabilities
         occurring after March 31, 2001. This Statement is effective for
         recognition and reclassification of collateral and for disclosures

                                      F-9

<PAGE>

         relating to securitization transactions and collateral for fiscal years
         ending after December 15, 2000. The Company is currently analyzing this
         new standard.


2.       FURNITURE AND EQUIPMENT

         Furniture and equipment are as follows:

                                  Estimated Life
         Office Furniture            7 Years          $  64,904
         Computer Equipment          5 Years             12,110
         Retail Equipment            5 Years              9,510
                                                        --------
                                                         86,524
         Less: Accumulated Depreciation                 (34,314)
                                                        --------
                                                      $  52,210
                                                        ========

3.       BASIS OF PRESENTATION

The Company has an accumulated deficit of approximately $10,483,000 at December
31, 2000, and has incurred significant operating losses which raise substantial
doubt about its ability to continue as a going concern without the raising of
additional debt and/or equity financing to fund operations. Management is
actively pursuing new debt and /or equity financing and continually evaluating
the Company's profitability, however any results of their plans and actions
cannot be assured. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

4.       LICENSING AGREEMENT

The Company acquired a licensing agreement from a software development company
for the use of its e-commerce software. The license was acquired for 400,000
shares of the Company's common stock. Such shares of common stock were valued at
fair market value of $1.60 per share (based on discount for restrictions on the
resale of such shares). The Company also issued warrants to purchase 125,000
shares of the Company's common stock exercisable at $2.25 per share over a five
year period. The warrants have been valued at $31,250 and have been included in
the value of the license. In addition the software development company will
receive 3% of website revenues generated from product sales using their
software.

5.       COMMITMENTS

The Company leases certain office and warehouse space under operating leases
commencing January 2000. The lease expires in January 2005.

In December 2000, with the agreement of the leasor, the Company terminated the
lease agreement for its office space.

                                      F-10
<PAGE>

The Company entered into three employment agreements with its officers in April
1999. All three of the agreements are for two years and expire in March 2001.
The agreement with its Chief Executive Officer, provides for an annual salary of
$85,000 and $106,000 in years ended 2000 and 2001. The agreement with the
President of the Company, provides for an annual salary of $60,000 and $75,000,
respectively. The agreement with the Company's Chief Financial Officer, calls
for an annual salary of $50,000 and $62,500, respectively. Each of these
contracts provide for a bonus of up to 25% of the prior years annual salary.
These bonuses are at the discretion of the Company's compensation committee.
Additionally, these officers will receive 20,000 options to purchase shares of
the Company's common stock at $2.00 per share at the end of each contract year.
The Company has accrued all unpaid salaries due to the above officers as of
December 31, 2000.

6.       LOANS PAYABLE - SHAREHOLDERS

Loans payable of $208,472 from shareholders are due on demand and are
non-interest bearing.

7.       INCOME TAXES

The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" "SFAS 100". SFAS 109 requires
the recognition of deferred tax assets and liabilities for both the expected
impact of differences between the financial statements and the tax basis of
assets and liabilities, and for the expected future tax benefit to be derived
from tax losses and tax credit carryforwards. SFAS 109 additionally requires the
establishment of a valuation allowance to reflect the likelihood of realization
of deferred tax assets.

The provision (benefit) for income taxes differs from the amounts computed by
applying the statutory federal income tax rate to income (loss) before provision
for income taxes, the reconciliation is as follows:

Taxes (benefit) computed at statutory rate               $       2,903,000
Income tax benefit not utilized                                 (2,903,000)
                                                              -------------
Net income tax benefit                                   $            -
                                                              =============

The Company has a net operating loss carryforward for tax purposes totaling
approximately $9,204,000 at December 31, 2000 expiring through the year 2020.

Listed below are the tax effects of the items related to the Company's net tax
asset:

Tax benefit of net operating loss carryforward           $       3,129,000
Valuation allowance                                             (3,129,000)
                                                              -------------
Net deferred tax asset recorded                          $            -
                                                              =============

                                      F-11
<PAGE>

8.       STOCKHOLDERS' DEFICIT

On April 6, 1999 the Company declared a 1 for 80 reverse stock split. The
financial statements for all periods presented have been retroactively adjusted
for the stock split.

The Company completed a private placement of 500,000 shares of its common stock
at $2.00 per share. The Company issued 300,000 of these shares for gross
proceeds of $600,000 (net proceeds of $536,841) and issued 200,000 shares (see
below) for services rendered to the Company.

In April 1999, the Company issued 150,000 shares of common stock to a consultant
who provides both website development and public relations services. These
shares were valued at the fair market value of $1.60 per share (based on Reg D
504 offering during April 1999 of $2.00 per share less a 20% discount for
restriction on the resale of such shares). The Company also issued to the
consultant warrants to purchase 75,000 shares of common stock exercisable at
$2.25 per share. Such warrants have been valued at $18,750. The Company has
expensed the total amount of $258,750 as research and development.

In April 1999, the Company issued 50,000 shares of common stock to a broker
dealer for consulting services rendered on behalf of the Company. These shares
were also valued at the fair market value of $1.60 per share (based on Reg D 504
offering during April 1999 of $2.00 per share less a 20% discount for
restriction on the resale of such shares). The Company has charged the total
amount of $80,000 to Additional Paid-in Capital.

Additionally, in April 1999, the Company issued 100,000 shares to a consultant
for services rendered. These shares were valued at the fair market value of
$1.60 per share (based on Reg D 504 offering during April 1999 of $2.00 per
share less a 20% discount for restriction on the resale of such shares). Such
issuance was recorded as compensation.

In March through May of 1999, the Company granted warrants to various
consultants and employees to purchase an aggregate of 563,000 shares of common
stock at a price of $2.25 per share. Such warrants were valued at $140,000 and
recorded as compensation.

In June 1999, the Company granted warrants to various consultants to purchase an
aggregate of 237,000 shares of common stock at a price of $2.25 per share. Such
warrants were valued at $59,250 and recorded as compensation.

In November 1999 the Company granted 50,000 warrants exercisable at $1.50 per
share on or prior to June 30, 2005 to a stockholder in connection with a loan of
$50,000 which was repaid prior to December 31, 1999.

In December 1999, the Company issued $1,041,300 of convertible notes payable
(See Note No. 10). On March 9, 2000, certain shareholders of the Company
exchanged 658,812 personally held shares of the Company in satisfaction of the
convertible notes. The Company recorded interest expense of $373,890 in this

                                      F-12

<PAGE>

transaction. Additionally, the shareholders exchanged 165,000 personally held
shares, to two consultants for services rendered. Such shares were valued at
$3.00 per share and the Company recorded compensation expense of $493,500 for
the year ended December 31, 2000.

The value of the shares exchanged by the shareholders was recorded by the
Company as an amount due to shareholders. On September 8, 2000, 658,812 shares
were issued to such shareholders to satisfy this short-term advance.

During May 2000, warrants to purchase 5,000 shares of the Company's common stock
were exercised at $1.50 per share aggregating proceeds of $7,500.

During October 2000, warrants to purchase 100,000 shares of the Company's common
stock were exercised at $0.05 per share aggregating proceeds of $5,000.

During the year ended December 31, 2000, the Company issued 730,000 shares of
its common to stock for services rendered by consultants and 75,000 shares of
its common stock for computer equipment. Such shares were valued at their market
value on the date of issuance, ranging between $0.19 and $0.78. The Company
recorded compensation expense of $247,050 in relation to the consulting
services.

9.       STOCK WARRANTS AND OPTIONS

A summary of outstanding warrants at December 31, 2000 are as follows:
<TABLE>
<CAPTION>

                                 Shares             Range of           Remaining           Average
                               Underlying           Exercise          Contractual          Exercise
                                Warrants              Price              Life               Price
                            -----------------     --------------    ----------------     -------------
<S>                                            <C>                                    <C>
Outstanding at beginning                   -   $              -                   -   $             -
of period
Granted                            2,250,000                  -        1 - 3.5 yrs.              2.00
Exercised                                  -                  -                   -                 -
                            -----------------     --------------    ----------------     -------------
Outstanding at December            2,250,000          1.50-2.50                                  2.00
31, 1999
Granted                                    -                  -                                     -
Exercised                           (105,000)         0.05-1.50                                     -
                            -----------------     --------------                         -------------
Outstanding at December            2,145,000   $      0.05-2.50                                  2.00
31, 2000
                            =================     ==============                         =============
</TABLE>

In November 1999, 120,000 options were granted. In 2000, no options were granted
or exercised. In 1999, had compensation cost for the plan been determined on the
fair value at the grant dates for the awards under the Plan, the Company's net
loss and net loss per share would have increased to the pro forma amounts
indicated below:

                                      F-13
<PAGE>


                                   As Reported        Pro Forma
                                 ----------------- -----------------
                                       1999              1999
                                 ----------------- -----------------
Net loss                             ($1,939,134)      ($1,992,642)
Basic and diluted net loss per
share                                     ($0.54)           ($0.55)

The fair value of each option grant is estimated on the date of grant using the
Black Scholes option-pricing model with the following weighted average
assumptions used for grants ; dividend yield 0%, expected volatility 20%,
risk-free interest rate 6.00%, expected lives in years 3.

The weighted average fair value of stock options granted during the year ended
December 31, 1999 was $2.00.


10.      CONVERTIBLE NOTES PAYABLE

On December 21, 1999, newagecities.com, Inc. and subsidiaries received net
proceeds of $952,498 and issued promissory notes in the aggregate principal
amount of $1,041,300 to certain non - U.S. investors under Regulation S of the
Securities Act of 1933. The notes are due on April 30, 2000 and bear interest at
the rate of 8% per year payable at the time principal is paid. The notes are
convertible into a total of 822,700 shares of common stock of newagecities.com.
Additionally, the Company issued 200,000 warrants to purchase the Company's
common stock to the holders' of the notes exercisable at $2.50 per share on or
before June 30, 2005. Such warrants were valued at $28,000. Units of the notes
representing a principal amount of $801,000 are secured by a pledge of 650,000
shares by two of the principal officers of the Company.

                                      F-14
<PAGE>

In connection with the financing the Company has recorded a beneficial
conversion feature of $605,000, which is included in interest expense in the
statement of operations.

11.      ACQUISITION

In December 1999, the Company acquired all of the outstanding shares of common
stock of MemberNet for 2,500,000 shares of the Company's common stock and
1,000,000 warrants to purchase shares of the Company's common stock exercisable
at $1.75 per share, with the acquisition being accounted for as a purchase
business combination. These shares were valued at the fair market value of $2.00
(based on the Reg D 504 offering during April 1999 of $2.00). A final allocation
of the purchase price is dependent upon valuations and other studies that are
not yet complete. Accordingly the purchase price allocation has been recorded as
goodwill. The computation is as follows:

Net book value of assets acquired        $       -
Purchase price:
Common stock                                5,000,000
Warrants                                      490,000
                                          ------------
Total purchase price                        5,490,000
                                          ------------
Goodwill                                 $  5,490,000
                                          ============

No pro forma results of the operations of the Company and MemberNet , as if the
acquisition had occurred on January 29, 1999, has been presented since the
activity of MemberNet was immaterial.

12.      SUBSEQUENT EVENT

On April 6, 2001 Newagecities, com signed an agreement to merge with Al-Wali
Corporation d/b/a New Leaf Distributing Company, Inc. (New Leaf), a leading
wholesale distributor of New Age books, magazines, sidelines (gift items) and
other literature throughout the United States. The merger of these two companies
is contingent upon several factors, including a successful capital raise of at
least $2 million.


                                      F-15
<PAGE>

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

         None.


                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Directors and Executive Officers

         The following table includes the names, positions held and ages of our
executive officers and directors.

NAME                     AGE                           POSITION
----                     ---                           --------

Joseph Ardito, Jr.        43                Chairman and Chief Executive Officer
Dr. Kenneth Shenkman      36                President and Director
Stanley Siegel            68                Director


  Mr. Ardito has served as a director, Chairman of the Board of Directors and
Chief  Executive  Officer of  newagecities.com  since March 1999. Mr. Ardito
previously worked in the following positions:

<TABLE>
<CAPTION>


DATES AND POSITION                                          BUSINESS OR ACTIVITY

<S>                                                         <C>
Between 1990 and 1998-Owner                                 Present Alternative, Boca Raton, Florida.
                                                            This retail store sold New Age products and
                                                            psychic readings
         .
1986 to 1991 - Vice President and Partner                   Professional Accounting Services Corp. New York,
                                                            New York.  This is an accounting firm where Mr.
                                                            Ardito headed  the marketing and client relations
                                                            departments, oversaw bookkeeping and  income tax
                                                            departments and led the computer integration
                                                            division

Dr. Shenkman  has  served  as a director and President of newagecities.com since
March 1999. Dr. Shenkman previously worked in the following positions:

                                       16

<PAGE>

September 1997 - April 1999-Consultant                      As independent consultant, Dr. Shenkman
                                                            has been an independent computer and
                                                            Internet consultant and trainer.

January 1999 - March 1999-Director of                       Arc Communications, Inc., Tinton Falls,
Internet Marketing                                          New Jersey.  This company is engaged in
                                                            designing Web sites.

July 1995 - September 1998-Vice President Operations        Computer Coach, Inc., Boca Raton, Florida.
                                                            This company engages in computer training
                                                            and Internet web design

Stanley  Siegel is the father-in law of Mr.  Ardito.  Mr. Siegel has served as a
director,  Chief Financial Officer,  Secretary and Treasurer of newagecities.com
since March 1999. Mr. Siegel previously worked in the following positions:

1955 - 1996                                                 Director of Human Resources, Head of
                                                            Special Accountings Department and
                                                            Accountant. United Merchants and
                                                            Manufacturers, Inc.

Mr. Smith was appointed  Chief  Technology  Officer in October,  1999. Mr. Smith
previously worked in the following positions:

Between May 1999 to September, 1999 -                       Bidnow.com, inc., Boca Raton, Florida
Interim Director of Technology                              This is a start-up Internet auction company

August 19, 1998 to May 1999 - Web Enabled Technologies      Equifax Corporation, St. Petersburg, Florida
Manager

January 1996 to August 1998 - Senior Online Designed and    Miami Herald Online, Miami, Florida
Project Manager

May 1996 to January 1999 - Director of Technology           Alton Entertainment Corp. (Internet Division Miami
                                                            Beach, Florida

September 1995 to May 1996 - Creative Director              Internet Communication of America, Inc. Miami, Florida
</TABLE>

                                       17

<PAGE>

         Our  directors  are elected at each annual meeting of stockholders. Our
directors hold office until the next annual meeting of  stockholders.  Executive
officers are elected by and serve at the  discretion  of the Board of Directors.
Member  Net has the  right  to  designate  for  nomination  the  names  of three
prospective directors. We have not received the name of designees at this time.

Board Committees

         We plan to establish an audit committee,  which will be responsible for
making   recommendations   concerning  the  engagement  of  independent   public
accountants,  reviewing the plans and results of the audit  engagement  with the
independent public accountants,  approving professional services provided by the
independent  public  accountants  and  reviewing  the  adequacy of our  internal
accounting  controls.  The Audit  Committee  will be  comprised  of designees of
Member  Net,  who will not be  management  employees,  and Mr.  Siegel.  We will
organize an independent  compensation committee which will evaluate compensation
programs  for  management  and  other  employees  as well as  individual  salary
arrangement with our executive officers. This committee will also be composed of
designees  of Member Net or other  independent  directors  added to our Board of
Directors.

Employment Agreements

         We entered into two-year employment agreements with Messrs. Ardito,
Shenkman and Siegel in 1999. The terms of the agreements were as follows:

         JOSEPH ARDITO: Mr. Ardito was to receive an annual salary of $85,000
beginning April 1, 1999 and ending March 31, 2000 and $106,000 annual salary for
the period April 1, 2000 and ending March 31, 2001. Mr. Ardito is entitled to a
bonus of up to 25% of his annual salary each year. On April 1, 1999, Mr. Ardito
was granted options to purchase a total of 40,000 shares of common stock at an
exercise price of $2.00 per share. These options expire on March 31, 2003, and
may be exercised for up to 20,000 shares beginning March 31, 2000 and as to the
remaining 20,000 shares beginning March 31, 2001.

                                       18

<PAGE>

In April 2001, the company signed a renewal agreement with Mr. Ardito for an
additional two years. Mr.Ardito will receive an annual salary of $106,000 for
the period April 1, 2001 and ending March 31, 2003, Mr. Ardito is entitled to a
bonus of up to 25% of his annual salary each year. In addition, at the
completion of each contract year, Mr. Ardito will be granted options to purchase
250,000 shares of common stock at an exercise price of $ .05 per share.

         KENNETH SHENKMAN: Dr. Shenkman was to receive an annual salary of
$60,000 beginning April 1, 1999 and ending March 31, 2000 and $75,000 annual
salary for the period April 1, 2000 and ending March 31, 2001. On April 1, 1999,
Dr. Shenkman was granted options to purchase a total of 40,000 shares of common
stock at an exercise price of $2.00 per share. These options expire on March
31,2003, and may be exercised for up to 20,000 shares beginning March 31, 2000
and as to the remaining 20,000 shares beginning March 31, 2001.

In April 2001, the company signed a renewal agreement with Mr. Shenkmman for an
additional two years. Mr. Shenkmman will receive an annual salary of $85,000 for
the period April 1, 2001 and ending March 31, 2003, Mr. Shenkmman is entitled to
a bonus of up to 25% of his annual salary each year. In addition, at the
completion of each contract year, Mr. Shenkmman will be granted options to
purchase 250,000 shares of common stock at an exercise price of $ .05 per share.

Due to a significant lack of funding, Messrs. Ardito and Shenkman elected to
defer a portion of their 2000/2001 payrolls until such time as the company is
fiscally able to meet these obligations. In total the company pay approximately
$35,000 to Dr. Shenkman and $45,000 to Mr. Ardito.


Each of the employment agreements terminates in April 2003. The officers are to
devote full time and efforts to our business. Their agreements contain
non-disclosure covenants during the term of employment and covering a period of
two years after the term of their employment. We may terminate each employment
agreement for cause.


                                       19
<PAGE>

Key-man life insurance

         We do not have key-man life insurance on our officers or directors.

Limitation on liability and indemnification matters

         The Idaho Business Corporation Act allows us to indemnify our officers
and directors from liability incurred in furtherance of their duties under
certain circumstances. In criminal proceedings, Idaho law states that we may
indemnify an officer or director if he or she acted in good faith and reasonably
believed that his or her conduct was in the best interests of the corporation if
he or she had no reasonable cause to believe his or her conduct was unlawful. In
addition, Idaho law requires us to indemnify directors, who succeed on the
merits of any defense proceeding or in any defense proceeding to which he or she
was party because he or she was a director of the corporation for reasonable
expenses incurred in connection with the proceeding. If we chose to indemnify
our officers and directors in accordance with the provisions of the Idaho
Business Corporation Act, our financial resources may be significantly affected.

         Insofar as indemnification for liabilities arising under the Securities
Act of 1933, may be permitted to our directors, officers and controlling persons
pursuant to the above, we are aware that in the opinion of the Securities and
Exchange Commission, this indemnification is against public policy as expressed
in the securities laws, and is, therefore unenforceable.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

         The Company is not subject to Section 16(a) of the Securities Exchange
Act of 1934, which requires the Company's directors and executive officers, and
persons who own more than ten percent of the Company's outstanding Common Stock
to file with the Securities and Exchange Commission initial reports of ownership
and reports of changes in ownership of Common Stock.

                                       20
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

Summary Compensation Table

         The following table sets forth information relating to all compensation
awarded to,  earned by or paid by us during the past three  fiscal years to: (a)
our Chief Executive  Officer;  and (b) each of our executive officers who earned
more than $100,000 during the fiscal year ended December 31, 2000:

<TABLE>
<CAPTION>

                               Fiscal                                Other Annual                LTIP          All Other
Name and Principal Position    Year         Salary        Bonus      Compensation   Options/ (#) Payouts    Compensation
---------------------------    -----------------------------------------------------------------------------------------

<S>                             <C>         <C>                                       <C>
Joseph Ardito, CEO              2000        $45,640         -             -           -             -            -
                                1999        $78,465         -             -           40,000        -            -

</TABLE>

Option Grants in Last Fiscal Year

         With respect to the Named Executive  Officers there were no granting of
stock options under the Company's Stock Option Plan during the fiscal year ended
December 31, 2000.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth, as of March 31, 2001, information known
to us relating to the beneficial ownership of shares of common stock by: each
person who is the beneficial owner of more than five percent of the outstanding
shares of common stock; each director; each executive officer; and all executive
officers and directors as a group.

         Unless otherwise indicated, the address of each beneficial owner in the
table set forth  below is care of  Newagecities.com,  Inc.,  1401 Johnson Ferry
Rd. Suite 328, F-36 Marrieta, GA 30062 The  address for Messrs. Quan, Gallagher,
Muhlfeld  and Gould is c/o Member Net,  Inc.,  9610  DeSoto  Avenue, Chatsworth,
CA 91311.

         We believe  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.

         Under the securities laws, a person is considered to be the beneficial
owner of securities that can be acquired by him within 60 days from the date of
this prospectus upon the exercise of options, warrants or convertible
securities. We determine beneficial owner's percentage ownership by assuming
that options, warrants or convertible securities that are held by him, but not
those held by any other person and which are exercisable within 60 days of the
date of this prospectus, have been exercise or converted. As of March 31, 2001,
there were 8,034,658 shares of our common stock issued and outstanding. The
issued and outstanding shares do not include 625,000 shares of our common stock
issuable upon the exercise of warrants issued in connection with our private
placement, or warrants to purchase 1,000,000 shares issued to the stockholders
of Member Net in connection with that acquisition.





                                       21

<PAGE>


Names and Address of       Number of shares               Percentage of shares
Beneficial Owner          Beneficially Owned                Beneficially Owned


Joseph Ardito                1,240,000(1)                         15.4%
Kenneth Shenkman               389,500(2)                          4.8%
Stanley Siegel                 110,000(3)                          1.3%
Q-Sound Labs                   525,000(4)                          6.5%
Nolan Quan                   1,006,250(5)                         12.5%
John Gallagher                 853,125(6)                         10.6%
Robert Gould                   743,750(7)                          9.25%
Bruce Muhlfeld                 437,500(8)                          5.4%

All executive officers and
directors as a group
(3 persons)                  1,739,500                            21.5%
-----------------



(1)      The number of shares owned by Joseph Ardito also includes 20,000 shares
         held by his wife directly and 22,000 shares held by his wife as
         custodian for two minor children. Mr. Ardito disclaims beneficial
         ownership of the shares held by his wife. The table includes 40,000
         under options that are currently exercisable.

(2)      The table includes 40,000 under options that are currently exercisable
         The table does not include (a) 26,000 shares of our common stock
         beneficially owned by Mr. Shenkman's parents or (b) 6,750 shares of our
         common stock issuable upon the exercise of warrants owned by Mr.
         Shenkman's parents.

(3)      The number of shares beneficially owned by Stanley Siegel includes (a)
         20,000 shares owned by his wife and (b) 40,000 shares under options
         that are currently exercisable

(4)      Does not include warrants to purchase 15,000 shares of our common stock
         issued to David Gallagher, President of Q-Sound Labs.

(5)      Includes 287,500 shares issuable upon exercise of warrants issued in
         connection with our acquisition of Member Net, Inc.

(6)      Includes 243,750 shares issuable upon exercise of warrants issued in
         connection with our acquisition of Member Net, Inc.

(7)      Includes 212,500 shares issuable upon exercise of warrants issued in
         connection with our acquisition of Member Net, Inc.

(8)      Includes 125,000 shares issuable upon exercise of warrants issued in
         connection with our acquisition of Member Net, Inc.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         In connection with the organization of Psychicnet.com, Inc., Messrs.
Ardito, Shenkman and Siegel received shares of common stock in connection with
the formation of Psychicnet.com. On March 8, 1999, we acquired Psychicnet.com,
Inc., and as result of this transaction, 1,900,000 shares, 400,000 shares and
100,000 shares of our common stock were exchanged with Joseph Ardito, Kenneth
Shenkman and Stanley Siegel, respectively. Thereafter, Messrs. Ardito, Shenkman
and Siegel transferred an aggregate of 180,000, 35,000 and 30,000 shares of
common stock respectively to various family members and friends without
consideration and solely in appreciation of their relationships. Since at
organization, Psychicnet had no value and newagecities.com had highly limited
value at the time newagecities.com acquired the stock of Psychicnet from our
current management, we believe that the share issuance was fair and reasonable
to us.

                                       22
<PAGE>

         Mr. Ardito also transferred 400,000 shares of common stock to Q-Sound
Labs valued at $1.60 per share in exchange for Q-Sound software licenses. In
addition to the 400,000 shares of our common stock Q-Sound received from Mr.
Ardito, Q-Sound also received warrants to purchase 125,000 shares of our common
stock at $2.25 per share. Mr. David Gallagher, president of Q-Sound, separately
received warrants to purchase 15,000 shares of our common stock at $2.25 per
shares for agreeing to serve on our Board of Advisors if it is constituted.
Since this transaction was the result of arms-length bargaining and the price
per share of $1.60 for restricted stock corresponded to our stock offering under
Rule 504 of $2.00, we believe this transaction was fair and reasonable.

         In February 1999, the individuals serving as officers and directors of
newagecities.com at that time purchased an aggregate of 700,000 shares of common
stock from newagecities.com at $.01 per share. The proceeds were used to pay
expenses associated with the acquisition of Psychicnet.com. Since our current
management was not involved with the original company (which changed its name to
newagecities.com, Inc. following the acquisition), it is difficult to evaluate
whether this transaction was fair to shareholders. However, since newagecities
had only nominal value at this time, we believe that the transaction was fair
and reasonable.

         During March and June 1999, we issued 6,000 shares of our common stock
to the parents of Dr. Shenkman for $12,000 or $2.00 per share as part of our
Rule 504 offering.

         In April 1999, we made a $40,000 interest free loan to Mr. Joseph
Ardito, an officer and director. The loan was repaid by Mr. Ardito in June 1999.

         Inasmuch as the transactions involving officers and directors of
newagecities.com and its predecessor, Psychicnet.com, occurred during a start-up
phase or prior to active operations, it is difficult to evaluate whether these
transactions represented arm's length transactions. We are unable to judge
whether these transactions were as favorable to newagecities.com as those that
could have been secured in arm's length transactions, but no operations would
have begun if these transactions had not occurred. However, given the above
circumstances, and the difficulties in developing a start-up operation facing
large hurdles, we believe these transactions were fair and reasonable to
newagecities.com.

         On July 30, 1999, the Company entered into a Merger Agreement and Plan
of Reorganization dated as of June 21, 1999 with Member Net, Inc. which provides
for the merger of Member Net into a wholly-owned subsidiary of newagecities.com.
The merger was consummated in December 1999. The five stockholders of Member Net
received from newagecities, a total of 2,500,000 shares of common stock and
warrants to purchase 1,000,000 shares of common stock exercisable at an exercise
price of $1.75 per share on or prior to June 30, 2001.As of the date of this
filing, the merger with Member Net is being reevaluated due to the fact that
full consideration, as outlined in the merger agreement,has not been received
by newagecitis.com.

                                       23
<PAGE>

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

A.       EXHIBITS:




Exhibit
Number                     Description


2        Agreement and Plan of Reorganization between Virginia City Gold Mines,
         Inc. and Psychicnet.com, Inc. dated March 8, 1999(1)
3.1      Articles of Incorporation(1)
3.2      Articles of Amendment to the Articles of Incorporation(1)
3.3      Articles of Amendment to the Articles of Incorporation(1)
3.4      Bylaws(1)
10.1     Employment Agreement between newagecities.com, Inc. and Joseph Ardito
         (1)
10.2     Employment Agreement between newagecities.com, Inc. and Kenneth
         Shenkman(1)
10.3     Employment Agreement between newagecities.com, Inc. and Stanley Siegel
         (1)
10.4     Lease Agreement between newagecities.com, Inc. and R. A. La Pointe(1)
10.5     Internet Consulting/Marketing Agreement between Psychicnet.com, Inc.
         and Virtual Financial Corp.(1)
10.6     License Agreement between newagecities, Inc. and Q Sound Labs, Inc.(1)
10.7     Merger Agreement and Plan of Reorganization(1)
10.8     Lease Agreement between newagecities.com, Inc. and R.A. La Pointe(1)
10.9     Note, Security Agreement and Warrant between newagecities.com, Inc. and
         Marc Siegel.(1)
10.10    Agreement and Plan of Merger with Al Wali (2)
10.11
-------------------------



(1)      Incorporated by reference to exhibits with the corresponding number
         filed with our registration statement on form SB-2 (File No. 333-86347)
(2)      Incorporated  by  reference  to  the company's current report form 8-K
         filed on 4/6/01

                                       24



B.       REPORTS ON FORM 8-K:

The company filed an 8-K on April 6, 2001 with regard to Agreement and Plan of
Merger with Al Wali Corporation.



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<PAGE>



                                   SIGNATURES


         In accordance  with Section 13 or 15(d) of the Securities  Exchange Act
of 1934, the registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, in Marrieta, Georgia on May 16, 2001.

                                            NEWAGECITIES.COM, INC.


                                    By: /s/ Joseph Ardito, Jr.
                                            Joseph Ardito, Jr.
                                            Chairman and Chief Executive Officer


         In accordance with the Securities Exchange Act of 1934, this report has
been  signed  by the  following  persons  on  behalf  of the  registrant  in the
capacities and on the dates indicated.


  SIGNATURE                         TITLE                              DATE
  ---------                         -----                              ----




/s/ Joseph Ardito, Jr.       Chairman of the Board, Chief           May 16, 2001
-----------------------      Executive Officer and Director
    Joseph Ardito, Jr.       (Principal Executive Officer)


/s/ Kenneth Shenkman         President and Director                 May 16, 2001
-----------------------
Kenneth Shenkman


/s/ Stanley Siegel           Director                               May 16, 2001
-----------------------
Stanley Siegel




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