UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C.  20549

                                    FORM 10-K
(Mark  one)
[X]  ANNUAL  REPORT  PURSUANT  TO  SECTION  13  OR  15(d)  OF  THE  SECURITIES
     EXCHANGE  ACT  OF  1934
                For the fiscal year ended      December 31, 2000
                                              ------------------
                                       OR
     TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR  15(D)  OF THE SECURITIES
[ ]  EXCHANGE  ACT  OF  1934
                   For the transition Period from             to
                                                  -----------    -------------

                     Commission file number:    000-26881
                                            -----------------

                            NETNATION COMMUNICATIONS INC.
                            -----------------------------
             (Exact name of registrant as specified in its charter)

                Delaware                                33-0803438
     ---------------------------------    ------------------------------------
       (State or other jurisdiction       (I.R.S. Employer Identification No.)
     of incorporation or organization)

   Suite 1410 - 555 West Hastings Street
    Vancouver, British Columbia, Canada                  V6B 4N6
 ----------------------------------------            ----------------
 (Address of principal executive offices)              (Zip Code)

  Registrant's telephone number, including area code  (604) 688-8946
                                                     ----------------
     Securities registered under
      Section 12(b) of the Act:
          Title  of  Class               Name  of  exchange  on which registered

              None                                      None
 ----------------------------------     ----------------------------------------

Securities  registered  under
  Section  12(g)  of  the  Act:        Common Stock, $0.0001 par value
                                ------------------------------------------------
                                        (Title  of  class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding  12  months  (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
                                              ----         ---

Indicate  by  check mark if disclosure of delinquent filers pursuant to Item 405
of  Regulation S-K (  229.405 of this chapter) is not contained herein, and will
not  be contained, to the best of registrant's knowledge, in definitive proxy or
information  statements  incorporated by reference in Part III of this Form 10-K
or  any  amendment  to  this  Form  10-K. [ ]

As  of  March  16,  2001, the aggregate market value of the voting common equity
held  by  non-affiliates of the registrant was $20,226,963, based on the closing
trade  reported  on  the  Nasdaq  Small  Capitalization Market quotation system.
Shares  of common stock held by each officer and director and by each person who
owns  five  percent  or  more of the outstanding common stock have been excluded
from  this  calculation  as such persons may be considered to be affiliated with
the  Company.

As  of  March  16,  2001, the registrant's outstanding common stock consisted of
15,232,321  shares,  $0.0001  par  value  per  share.


<PAGE>
<TABLE>
<CAPTION>
                                TABLE OF CONTENTS


Part  Item(s)                                                                               Page No.
----  -------                                                                               --------
<S>   <C>                                                                                   <C>
I     1      Business                                                                       1
      2      Properties                                                                     25
      3      Legal  Proceedings                                                             26
      4      Submission  of Matters to a Vote of Security Holders                           26

II    5      Market  for  Registrant's  Common  Equity  and  Related Stockholder Matters    27
      6      Selected  Financial  Data                                                      28
      7      Management's  Discussion  and  Analysis  of  Financial  Condition  and
                Results  of  Operations                                                     30
      7A     Quantitative  and  Qualitative  Disclosure  About  Market  Risk                33
      8      Financial  Statements  and  Supplementary  Data                                34
      9      Changes  in  and  Disagreements  with  Accountants  on  Accounting  and
                Financial  Disclosure                                                       34

III   10     Directors  and  Officers  of  the  Registrant                                  35
      11     Executive  Compensation                                                        37
      12     Security Ownership of Certain Beneficial Owners and Management                 40
      13     Certain Relationships and Related Transactions                                 40

IV    14     Exhibits,  Financial  Statement  Schedules and Reports on Form 8-K             41

             Signatures                                                                     42

             Index  to  Consolidated  Financial  Statements                                 43
</TABLE>


<PAGE>
                                     PART I

ITEM  1:  BUSINESS
------------------

                           FORWARD -LOOKING STATEMENTS

Except  for  the  historical information presented in this document, the matters
discussed  in  this  Form  10-K,  and  specifically  in  the  sections  entitled
"Business"  and "Management's Discussion and Analysis of Financial Condition and
Results  of  Operations,"  or  otherwise  incorporated  by  reference  into this
document  contain  "forward-looking  statements" (as such term is defined in the
Private  Securities  Litigation  Reform  Act  of  1995). These statements can be
identified  by  the  use  of  forward-looking  terminology  such  as "believes,"
"expects,"  "may," "will," "should," or "anticipates" or the negative thereof or
other  variations  thereon  or  comparable  terminology,  or  by  discussions of
strategy  that  involve  risks  and uncertainties. The safe harbor provisions of
Section  21E of the Securities Exchange Act of 1934, as amended, and Section 27A
of  the  Securities Act of 1933, as amended, apply to forward-looking statements
made  by  the  Registrant.  These  forward-looking  statements involve risks and
uncertainties,  including  those identified within the section entitled "Factors
Affecting  Future  Operating  Results"  and  elsewhere  in,  or  incorporated by
reference  into, this Form 10-K. The actual results that the Registrant achieves
may differ materially from any forward-looking projections due to such risks and
uncertainties.  These  forward-looking   statements   are   based   on   current
expectations,  and   the  Registrant   assumes  no  obligation  to  update  this
information.  Readers  are  urged  to  carefully review and consider the various
disclosures made by the Registrant in this Annual Report on Form 10-K and in the
Registrant's  other  reports  filed  with the Securities and Exchange Commission
that  attempt  to  advise  interested  parties of the risks and factors that may
affect  the  Registrant's  business.

                              OTHER MATTERS OF NOTE

Unless  otherwise  indicated  or  the context otherwise requires, all references
herein  to  "NetNation" or the "Company" are to NetNation Communications Inc., a
Delaware  corporation, and its consolidated wholly-owned subsidiaries: NetNation
Communications  Inc.  (the "Canadian Subsidiary"), NetNation Communications (UK)
Ltd.  (the  "U.K.  Subsidiary"),  NetNation Communications (USA) Inc. (the "U.S.
Subsidiary"),  and  DomainPeople  Inc.

NetNation   Communications  Inc.,  NetNation.com,   and   DomainPeople.com   are
trademarks  or service marks of NetNation Communications, Inc.  Other trademarks
and  tradenames  in  this Form 10-K are the property of their respective owners.

                             OVERVIEW OF THE COMPANY

NetNation  competes  in the shared and dedicated web hosting, server co-location
and  domain  name  registration  markets  and is focused on meeting the needs of
small  and  medium-sized  businesses  and  individuals  who  are  establishing a
commercial  or  informational  presence  on  the  Internet.  These  markets  are
currently  managed  as  a  single  operating  segment  by  the  Company.

Web  Hosting

NetNation  commenced  web  hosting  operations  in February of 1997. Web hosting
services  offered  by NetNation can be described to fit between the creation and
development  of web-sites and the direct provision of Internet connectivity such
as by an Internet Service Provider (ISP).  Web hosting encompasses a broad range
of  possible  services,  including  basic  services  such  as  simply  posting a
customer's  web-site  on  the  Internet  using  the  hosting  company's computer
hardware  and  software,  to  enhanced  services  such  as  enabling   financial
transactions  over   the  Internet   (E-commerce),   email,  audio   and   video
capabilities.  Enhanced  services may be developed internally by the web hosting
company  or  purchased  from  external  sources  and  resold  by the web hosting
company.  NetNation offers a range of basic and enhanced web hosting services to
businesses  wishing  to  place their web-site on the Internet.  These businesses
often  decide to use a web hosting company in order to avoid the financial cost,
time  and  expertise requirements of hosting the web-site and obtaining enhanced
services  themselves.


                                        3
<PAGE>
Web  hosting  can be differentiated into shared or dedicated hosting.  NetNation
offers both services.  Shared hosting involves multiple customers who have their
web-sites  hosted  on  a  shared  computer  server.  Dedicated server hosting is
available  to  customers  that  prefer  not  to host their web-sites on a shared
server.  Dedicated  servers  provide  significantly  more   server  and  network
resources  than  those  available  from  a  shared server and give customers the
ability  to  run  complex,   high   volume   or  high  bandwidth  web-sites  and
applications.  NetNation  has  partnered  with  Cobalt  Networks  Inc.  to offer
dedicated  server  solutions  which  are located at the Company's data center in
Vancouver.  NetNation  offers  a  number  of dedicated server options at various
prices  depending upon the specific hardware configuration, level of service and
data  transfer  rates  required  by  the  customer.

NetNation  hosts  customer  web-sites  and  indirectly  provides  access  to the
Internet through its ISP's.  However, NetNation has strategically determined not
to  offer   web-site  design  and  development  services.  Web-site  design  and
development may include such features as graphics, text, color, typestyle, audio
and  video.  The  person  or  company typically responsible for assisting in the
design  and  maintenance  of a web-site is called a webmaster.  This function is
labor  intensive  and  would  involve  significant  human  resources and time to
service  a broad customer base.  Consequently, webmaster functions are typically
performed  by  specialized  companies  servicing  a  number of customers.  These
customers may also rely upon their webmasters to direct them to suitable hosting
and/or  ISP  companies.  NetNation  has  decided  not to provide the services of
webmasters to its customers due to the intensive use of human resources required
and  the  corresponding  impact  on the ability of the Company to scale quickly.
Instead,  NetNation  has  developed a program for resellers which is designed to
provide  incentive for the webmasters to direct their customers to NetNation for
web  hosting.

Server  Co-Location

NetNation  also  provides   server  co-location  services.  Server   co-location
services  involves  a  customer  physically  placing  their   computer  hardware
(referred  to as a "server") on NetNation's premises.  The customer gains access
to  NetNation's  Internet  support and maintenance services, high-speed Internet
connections,  security  systems  and  appropriate  physical  environment for the
server  (e.g.  static  free,  air-conditioned).  NetNation's  data  center  also
provides  for  back-up  and secure continuous power supply and 24 hour-per-day 7
day-per-week  monitoring  by  NetNation  technical  staff.

Domain  Name  Registration

NetNation  is  accredited  and operational as a domain name registrar and offers
the  service  through  its  wholly-owned  subsidiary,  DomainPeople  Inc.   This
accreditation  allows NetNation to register domain names (e.g. Top-level domains
such  as  .com,  .net,  and  .org)  for  individuals  and  companies.

Every  person  or  business that would like to obtain a personalized web address
must  first  reserve  a  domain  name  (such as "mycompany.com").  Customers can
register  a  domain  name  initially for a minimum one year period.  The Company
believes that offering this service provides a marketing advantage as the domain
name  registration customer may return to NetNation when selecting a web hosting
provider.  NetNation  provides   a  number   of  incentives   for  domain   name
registration  customers  to  migrate  into  the  web  hosting  services that are
expected  to  generate  a  recurring  revenue  stream.

Prior  to  November 30, 1999, registration of these domain names was exclusively
provided  through Network Solutions Inc.  The registration fee, formerly payable
to  Network  Solutions  Inc.,  is now received directly by the registrars.  Each
registrar,  in  turn,  submits a fee of $6 per domain name, per year, to Network
Solutions  Inc.  as  its  contribution  towards the maintenance of a centralized
database  registry.  To  expand  its  domain  name  registration  market  share,
DomainPeople  is  forming  alliances and is private labeling with ISPs and other
Internet  companies  worldwide.


                                        4
<PAGE>
In  August 2000, the Company, through its wholly-owned subsidiary, DomainPeople,
Inc.,  made a 5% minority interest investment in Afilias, LLC (Afilias), through
the purchase of 100 Class A Units representing a 5% voting interest.  Afilias is
a  company  formed  for  the  purpose  of  bidding  for,  developing, financing,
marketing,  owning  and  operating  a registry to register and maintain Internet
top-level  domain  names  and  has obtained the exclusive rights to register and
maintain the new .info top-level domain names.  The registration of these domain
names  is  expected  to  commence  some  time in 2001.   NetNation does not have
significant  influence  over  Afilias  and  NetNation  uses  the  cost method of
accounting for the investment.  The carrying value of the investment at December
31,  2000  was  $100,000.

Marketing  and  Sales

NetNation's  marketing  is  comprised  of  print  and online advertising that is
designed  to  position the Company and increase brand awareness.  NetNation also
has  developed a number of initiatives designed to attract Value Added Resellers
("VARs"),  Original  Equipment  Manufacturers  ("OEMs"),   and   other   revenue
generating  arrangements.

Operations

NetNation  has  operations  in  Vancouver, Canada (it's head office) and London,
England.

                            BACKGROUND OF THE COMPANY

During 2000, NetNation derived 74% of its revenue from its web hosting services.
Web  hosting, which is sometimes referred to as "web-site outsourcing", involves
the  rental  of space on a computer infrastructure.  The infrastructure consists
of  computer  hardware,  referred  to as  "servers", and computer software.  The
hardware  and  software facilitate the connection of customers' web-sites to the
Internet.  In  addition  to  the basic infrastructure, web hosting companies may
also provide customer support services and access to additional services such as
enabling  commercial  transactions  on the Internet.  These additional services,
which  are  essentially  software packages, may be developed directly by the web
hosting  company  or  obtained  under  license  from  third  parties.

To  begin  using  a web hosting service, the typical customer would register and
pay  for a domain name and would set-up a billing account with NetNation for web
hosting  services.  The  customer  would  pay the initial set-up fee for the web
hosting  service  and  then  pay a recurring monthly fee.  A customer would then
provide  its  web-site to NetNation for placement on a computer server, which in
turn  is  connected  to  the  Internet  through  an  ISP.  If the customer has a
commercial  web-site,  NetNation  can  assist  the  customer  in  meeting  those
commercial  objectives  by  making  available  services  that  enable commercial
transactions  over  the  Internet.

Typical  customers  of  web hosting companies consist of small- and medium-sized
businesses  that  wish  to have a web-site on the Internet without incurring the
costs  and  time delays involved with developing, maintaining and updating a web
presence  on  their  own.  The web-site is an informational or an informational/
commercial  tool  for  these  customers.  In addition to small- and medium-sized
businesses,  web hosting services may be purchased by entities, such as VARs and
OEMs,  that  will  resell  the services in connection with their own web related
services.

NetNation will host a customer's web-site on NetNation's computer infrastructure
for  a  basic  monthly fee ranging from $10-$50.  The fee entitles a customer to
basic  services, including disk storage space on NetNation's server, the ability
to  receive and transmit data over the Internet, 24-hour customer support, email
access, and email forwarding capabilities.  Additional services available for an
extra  charge  include,  for  example,  the  ability  to  add  security  to data
transmissions,  to  carry out financial transactions over the Internet, to track
and  send  orders,  to  give  a  receipt  for  purchases made through customers'
web-site,  and  to  add audio/video capabilities.  Additional information on the
services  offered by NetNation is described under the section entitled "Services
and  Products  of  NetNation".


                                        5
<PAGE>
NetNation  believes  that  the  Internet  continues  to  represent a growing and
substantial opportunity for businesses or organizations that wish to interact in
innovative  ways  with  offices,  employees,  customers,  suppliers and partners
around  the  globe.  Both  small  and large business enterprises are recognizing
their  increasing  need  to  take  advantage  of  the  Internet  by establishing
web-sites.  As  a  result,  reliable  web-site  hosting  services  and  enhanced
services are becoming increasingly critical to most mainstream enterprises.  Due
to this ever-growing importance, many enterprises are seeking to outsource these
functions  in  order  to  ensure  reliability,  scalability  for  rapid  growth,
sophisticated  performance  monitoring  and  expert  management.

The  skill  and  technology  demands  of  the Internet can present a significant
barrier  to  in-house development for all but the largest Information Technology
("IT")  departments.  To  set-up an in-house solution, the company would have to
buy  the  computing  hardware  equipment,  firewall/switching  equipment,  power
back-up  system,  fire  control  system,  physical  security, fast network cable
connection, and pay the wages of a system administrator.  The cost for a typical
small business to obtain a T-1 (1.54 Megabit) or greater bandwidth connection to
the  Internet  by  telephone  line  is  upwards  of  $1,000 per month. NetNation
estimates  that a company will typically save at least two-thirds of the cost of
an  in-house  solution  due to lower communications, equipment, and labor costs.

NetNation  has  targeted the North American and European small- and medium-sized
business  markets for a number of reasons.  The percentage of these markets that
utilize  the  Internet  is expected to continue to be one of the fastest growing
segments  internationally.  In  addition,  as  globalization  of  business takes
place, these businesses are required to compete domestically and internationally
against  better  capitalized  and larger competitors.  They need to be efficient
and  make use of the latest technology in order to gain advantage or to survive.
These  businesses  may  look  to  outsource their Internet services because they
typically  lack  the technology expertise and resources, capital, personnel, and
time  required  to install, maintain and monitor their own web servers and added
services.

The  geographic  location  of  the market for web hosting services is worldwide,
although  NetNation's  marketing plan targets prospective customers in countries
with  high  Internet  use  backed  by  good  ISP and telecommunications support.
Marketing  in all geographic areas includes exposure to prospective customers of
NetNation's  services  through  VARs.  Up  to  December  31,  2000,  NetNation's
marketing  efforts  have  been directed primarily to North American and European
markets.  During  2001,  the  Company  is  significantly expanding its marketing
effort  with  strategic  partnerships  and extended international marketing.  To
date, NetNation has primarily utilized trade shows, television, print, marketing
agreements  with  other online service providers, online media, and co-marketing
with  creators  of  web-site  creation/authoring  tools, to effect its marketing
plan.

                                BUSINESS STRATEGY

NetNation  plans  to  significantly  increase   its  marketing  efforts  in  the
international  market  for web hosting and domain name registration services and
will  continue to emphasize the development of strategic- and revenue-generating
arrangements  with  VARs, OEMs and other strategic arrangements.  NetNation will
also  continue  to  expand  its  data  center  in  Vancouver,  Canada.

Due  to the constantly evolving nature of the Internet and related technologies,
existing  web  hosting  products and services, such as online commerce packages,
will be reviewed on an ongoing basis in order to keep pace with changes in third
party  technologies and generally in how business is transacted on the Internet.
Examples  of products and services NetNation expects will be demanded by current
and  potential  customers  in  2001  and  beyond  include:

     a) managed  services;
     b) enhanced  services;
     c) dedicated  hosting  services;
     d) new top-level domain name extensions (i.e. .info, .store, .web, .firm,
        etc);
     e) unified  messaging and intranets for "virtual" and distributed offices;
        and
     f) automated  marketing  tools.

Existing  products  and  services  will  require  integration  with  third-party
technology  and  products  in  order  to  upgrade NetNation's service solutions.


                                        6
<PAGE>
                                  ORGANIZATION

NetNation  was  incorporated  under  the laws of the State of Delaware on May 7,
1998,  under  the  name Collectibles Entertainment Inc. ("Collectibles") for the
purpose  of  operating  an  online  sports  card and other tradeable memorabilia
distribution   business.    Collectibles   changed   its   name   to   NetNation
Communications,  Inc. on April 14, 1999 in conjunction with the acquisition of a
web-site  hosting  business  based  in  Vancouver, Canada.  The common shares of
NetNation  currently  trade on the Nasdaq Small Capitalization  Market under the
ticker  symbol  "NNCI".

NetNation  has  four  wholly-owned  subsidiaries: NetNation Communications Inc.,
NetNation  Communications  UK  Ltd.,  NetNation  Communications  (USA) Inc., and
DomainPeople  Inc.

NetNation  entered  into the web hosting business through its acquisition of the
Canadian  Subsidiary.  The Canadian Subsidiary is a private company incorporated
under the laws of the Province of British Columbia, Canada on February 19, 1997.
The  Canadian  Subsidiary  became  a  wholly  owned  subsidiary on April 7, 1999
pursuant to an agreement between the shareholders of the Canadian Subsidiary and
Collectibles  (the  "Share Purchase Agreement").  Pursuant to the Share Purchase
Agreement,  Collectibles  acquired 9,000,000 Class A common shares and 1,000,000
Class B preferred shares of the Canadian Subsidiary, being all of the issued and
outstanding  shares  of  the  Canadian  Subsidiary.  The  purchase price for the
shares of the Canadian Subsidiary was $1,000,000 in Canadian currency, which was
paid  by  the  issuance  of  10,000,000  common  shares  of  Collectibles.  Upon
conclusion  of  the  acquisition,  Collectibles  changed  its name to NetNation.

NetNation  has  a  wholly-owned  subsidiary  in  the  United  Kingdom, NetNation
Communications  UK  Ltd.,  a  company  incorporated under the laws of the United
Kingdom  on  June  1,  1999.  The  UK  Subsidiary was incorporated to facilitate
NetNation's  UK  operations  and  facilitate  the  Company's European expansion.

NetNation  has  a  wholly-owned  subsidiary  in  the  United  States,  NetNation
Communications  (USA) Inc, a company incorporated under the laws of the State of
Delaware  on October 20, 1999.  The US Subsidiary was incorporated to facilitate
NetNation's  U.S.  operations.

NetNation has a wholly-owned subsidiary in the United States, DomainPeople Inc.,
a  company  incorporated under the laws of the State of Delaware on November 24,
1999.  DomainPeople  was  incorporated  to  encompass  the Company's Domain Name
Registration  business.

                       SERVICES AND PRODUCTS OF NETNATION

NetNation  offers  a  range  of  Internet  products and services targeted to the
small-  and  medium-sized  business  market.

All of NetNation's services have been designed to meet the specific and evolving
needs  of its target market.  Customers pay a one-time set-up fee and thereafter
pay  monthly  fees  for  the  services they utilize.  NetNation can then provide
enhanced  services  to  these  customers  as  their  needs  evolve.

The  concept behind NetNation's products and services is to enable its customers
to  create,  update,  upgrade  and  expand  their  web presence faster, and on a
substantially  more  cost-effective  basis,  than  the  customers  could develop
internally.  The  services  offered  by  NetNation can be summarized as follows:

1.   Shared  server  web-site  hosting:  This service permits a customer to post
     their  web-site  on  the  Internet using NetNation's hardware and software,
     Internet  access,  web-site  management  tools  and  support  services. The
     customer's  web-site  is hosted on a server that is shared with a number of
     other  NetNation  customers.


                                        7
<PAGE>
2.   Dedicated  server web-site hosting: This service permits a customer to post
     their  web-site  on  the Internet and access NetNation's Internet services.
     The  customer's web-site is hosted on a dedicated server that is not shared
     with  any  other web-sites. This service is appropriate for those customers
     that run complex, high volume or high bandwidth web-sites and applications.
     NetNation  has  partnered with Cobalt Networks Inc. to offer an affordable,
     yet  robust,  dedicated  server  solution.

3.   Server  co-location:  This  service  permits  a customer to place their own
     server  hardware  in  NetNation's  premises and access NetNation's Internet
     services.

4.   Domain  name  registration: NetNation's ICANN accreditation and operational
     status  allows for the registration of domain names (e.g. top-level domains
     such  as  .com,  .net,  and  .org)  for  individuals  and  companies.

5.   Enhanced  Internet  services:  These  services  permit  a  customer  with a
     web-site  to  add  features  to  that  web-site such as audio/video, online
     commerce  capabilities,  email  and  various  other  features.

6.   OEM  Products  and  Services:  These  services  consist  of web hosting and
     enhanced  Internet  services  tailored  for  wholesale  to  OEMs.

A  description  of  each  of  the  above  services  is  set  out  below.

Shared  Server  Web-site  Hosting

A  core  component of NetNation's business is the provision of shared web server
hosting  services  for individuals and businesses that want an Internet presence
at a reasonable cost.  Shared server means that a number of customers will share
space  on  one  server.  NetNation  offers  a  number  of shared server web-site
hosting  plans  to  meet  the  needs  of  a  broad  range  of  customers.

NetNation's  entry-level   shared   server   web-site  hosting  plan  is  called
WebStarter(TM).  The  WebStarter (TM) package of services offers customers up to
500  megabytes  ("MB")  of  data transfer per month and 10 MB of disk storage on
NetNation's  web servers. Customers can store HyperText Markup Language ("HTML"-
a  programming  language)  coded  files,  graphics,  video  and  audio  on their
web-site. This basic service meets the requirements of most individuals and that
of  relatively  small  businesses.

To  allow  customers  to make effective use of their web presence, customers can
establish  emailboxes  on  their web-site, have their email forwarded to another
computer,  establish  online  chat rooms, and even have automated email messages
(autoresponders)  sent  to visitors of their web-site.  Support is also provided
for  popular web-authoring tools such as Microsoft FrontPage and its specialized
extensions.

The  more  advanced  and  costly  web-site  hosting   services  offer   enhanced
functionality  and  resources.  NetNation  has implemented a variety of tools to
allow  its  customers  to  use  their  sites  more   effectively.   All  of  the
standardized  web-site  hosting plans feature detailed web statistics and access
to  raw  log  files,  giving  customers the ability to track the performance and
evaluate  the  effectiveness  of  their web-sites.  Customers are able to update
web-sites  remotely by sending files through File Transfer Protocol ("FTP").  In
addition,  NetNation  provides  a  number  of  popular  Common Gateway Interface
("CGI",  a programming language) scripts that allow customers to deploy web-site
and web page hit counters, guest books, mail forms and discussion forums rapidly
and easily.  NetNation also supports custom CGI scripts that enable customers to
build  unique  functionality  into  their  web-sites.

NetNation  supports the following platforms, operating systems and applications:

     Intel  based  servers  (Pentium  Pro,  Pentium  II,  etc.)
     Red  Hat,  Slackware  and  Storm  Linux
     Windows  NT  4.0  and  Windows  2000
     Apache  web  server
     Microsoft  IIS


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<PAGE>
NetNation  has developed a set of utilities called the customer's Control Panel.
The  Control  Panel  is  a  proprietary  account  interface tool that enhances a
customer's web-site control and management capabilities.  For example, customers
can  use the Control Panel to change passwords, set email forwarding options and
view  web-site  statistics  without the need to converse directly with NetNation
staff.

Dedicated  Server  Web-site  Hosting

Dedicated  server  solutions are available for customers that prefer not to host
their  web-sites  on  a  shared server.  Dedicated servers provide significantly
more  server and network resources than those available from a shared server and
give  customers  the  ability  to  run  complex,  high  volume or high bandwidth
web-sites  and  applications.  NetNation has partnered with Cobalt Networks Inc.
to  offer  dedicated  server  solutions  which are located at the Company's data
center  in  Vancouver,  Canada.  NetNation  offers  a number of dedicated server
options  at  various  prices depending upon the specific hardware configuration,
level  of  service,  and  data  transfer  rates  required  by  the  customer.

Server  Co-location

Server  Co-location  is the service of providing a physical space on NetNation's
premises  where  customers  can place their own server while sharing NetNation's
Internet connectivity, network infrastructure, and physical security.  This type
of  service  is  useful  for  those  customers  that do not want to share server
resources with other customers in a hosted environment.  A typical candidate for
server  co-location  would  be someone that requires video/audio streaming for a
busy  site,  a specialized online commerce package or someone that requires full
control  of  the  server's  functionality.  Co-located servers can be managed by
NetNation  or  by  the  customer  using  remote  access  software.  Customers
outsourcing  these services are often able reduce expenses and eliminate many of
the  headaches  associated  with  running  web-sites,  particularly  large ones.

Domain  Name  Registration

Every  individual  or  business  entity  desiring  a web-site address must first
reserve  a  domain  name  that  will  serve  as  the basis of their personalized
web-site  address  through  which  users  of  the  Internet can connect to their
web-site.  In  May  1999,  NetNation  was  selected  as an official registrar of
domain  names  by  ICANN.  Prior  to  then,  Network  Solutions  Inc.  held sole
authority  to register top-level domain names ("TLD's") ending in .com, .net and
 .org,  which  account  for  between 50% - 75% of the world's Internet addresses.
NetNation became operational as a domain name registrar in December of 1999.  As
at  March  16,  2001,  the Company had registered approximately 170,000 Internet
domain  names.  The  domain  name  registration  service  also  is  a  source of
marketing  for  NetNation's  web  hosting  services.

Enhanced  Internet  Services

Due  to  the  rapid  evolution  of  web-based services, NetNation is continually
exploring  complementary  and  new services targeted at the needs of its current
and  prospective  customers.  Other  industry-specific  web  hosting  activities
include  audio and video streaming, and electronic commerce solutions, which are
currently  offered  by  NetNation.  Current  areas  of new product focus include
expanded  electronic  commerce  products, simplified web-site development tools,
and  automated  marketing  services.  Most of NetNation's service packages are a
combination of software licensed from third parties and an enabling/facilitating
software  that  is  developed  in-house  at  NetNation.

NetNation  provides  several  different  electronic  commerce solutions to allow
businesses  to  develop  and  maintain  successful  online storefronts which may
replicate  many  of  the features, products, services, payment methods, delivery
options  etc. which are offered by land-based businesses. Dependent on the level
of  complexity  and their specific needs, businesses can choose on-line commerce
solutions  ranging  from  simple  online  catalogues  to  complex  full-featured
interactive  online  stores.  These  commerce  solutions  are distinguished from
web-site development in that they are packaged solutions that are available from
a  web  host.  Some  modification  may  be  required  by  the user to ensure the
application  is  specific  to  the  business.   Web-site   development   instead
concentrates on the physical appearance of the entire web-site, graphics, color,
typestyles,  text,  layering  of  pages,  placement  of icons, and other similar
issues.


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<PAGE>
With  these products, NetNation's web hosting customers can construct customized
online  storefronts  with  integrated  end-to-end  sales  process   support  and
automated  payment  systems with connections to their legacy accounting systems.
Customers  can  select  one  of these credit card processing services or another
service of their own choosing. Any financial arrangements for these services are
between  the customer and the credit card processing company. NetNation does not
purchase  credit  card  processing  services  from  these  entities  for  resale
purposes.

For  an initial setup fee and a subsequent monthly fee, NetNation offers several
packages  that support online commerce.  The packages are available to both UNIX
and Windows NT users.  The Unix packages are based on a "shopping cart" licensed
from  Miva Corporation while the Windows NT packages are based on shopping carts
licensed  from  Inex  Inc.  A  "shopping cart" refers to a program that allows a
business  to  implement an online storefront by enabling tracking and sending of
orders  made  through the web-site and giving a customer a receipt for purchases
made  through  the  web-site.

OEM  Products  and  Services

NetNation  offers  its  proprietary technology and services to OEMs that want to
private  label  their  web-site hosting and domain name registration activities,
but  wish  to  outsource  the  actual  service.  OEMs make bulk purchases of web
hosting  services and resell them under their own name.  An example of an OEM is
a  traditional Internet service provider ("ISP") that does not offer focused web
hosting  services.  NetNation  sells  the  services in bulk to the ISP, which in
turn  resells the services to end users of the ISP under a different brand name.

As  another  example  of  these OEM relationships, NetNation, through its wholly
owned  subsidiary  DomainPeople,  is  currently  providing an OEM with a private
label  domain  search  and  registration  service, using NetNation's proprietary
"Smart  Whois"  service  (http://www.swhois.com).  The  OEM  prefers  to  obtain
certain  services  from  third  party  providers  rather   than  undertake   the
development  on  its  own to replicate a particular service.  In this particular
case,  NetNation is a third-party provider of the service (Smart Whois) that the
OEM  wishes  to obtain and utilize on a private label basis.  Customers visiting
the  OEM  web-site  would  not  know  that  the program is linked to NetNation's
servers in completing the service.  The revenue, generated from the registration
of  domain  names  using  the  Smart  Whois  service,  is  shared.

                         MARKETING AND PUBLIC RELATIONS

The marketing and public relations group of NetNation is responsible for product
and  service  planning,  advertising,  marketing   communications   and   public
relations.  NetNation  relies  primarily  on  a  combination of  print media and
online  advertising.  NetNation has placed aggressive print advertising in major
business  and  technical publications to accelerate NetNation's customer growth.
Some  of  the  publications used for advertising are Fortune, Entrepreneur, Home
Office  Computing,  Small  Business  Computing,  e  Biz,  PC  World,  Wired, Web
Techniques,  PC  Computing,  Wall  Street Journal, National Post and the Globe &
Mail.  NetNation  allocates  75%  of  its print advertising budget towards these
major  publications.  Each  one of these publications is considered by NetNation
to  be  a major publications for the market segment that NetNation is targeting.
For example, National Post and the Globe & Mail are the only mainstream national
newspapers  in  Canada.  Entrepreneur  and  Home  Office  Computing  are  widely
distributed magazines in the area of individuals starting their own business and
who may want an Internet presence.  Web Techniques is a specialized magazine for
businesses  and  individuals  wanting  to  develop  web-sites.  PC  World and PC
Computing  are  widely  distributed magazines targeting the consumer market that
may want a comparative analysis of computing products and services.  NetNation's
online  marketing program consists of a general rotation and of keyword specific
web  banner  advertisements.  Other marketing vehicles used by NetNation include
collateral  sales  materials  and NetNation's web-site.  The latter is the first
interface  point  for most prospective customers, particularly those reacting to
one  of  NetNation's  online  ads.  NetNation  is  continuously  analyzing  the
effectiveness  of  each  of  these  marketing  initiatives  for  the  purpose of
developing  future  marketing  strategies.  The Company is increasing its public
relations  program  and  cultivation  of  media  relationships, with the goal of
securing  broader  media  coverage  and  public  recognition  of  NetNation.


                                        10
<PAGE>
                             DISTRIBUTION AND SALES

NetNation  sells  its  products  and services worldwide directly to existing and
potential  customers  and  indirectly  through  VARs and OEMs.  Direct sales are
generated  through  the use of traditional media and online marketing campaigns.
Indirect  sales  are  generated  from  NetNation's  more  than 1,200 value-added
resellers  in  approximately  80  countries.   The  VARs  attract  customers  to
NetNation because the potential customer has already developed an Internet-based
business  relationship  with  the  VAR.  NetNation also generates indirect sales
through  the  relationships  that  have  been  established  with  OEM  partners.

NetNation has approximately 16,000 web hosting accounts in over 130 countries as
of  March  16,  2001.  For  the  year  ended  December  31,  2000, United States
customers  comprised  52%  of  the  total web hosting customer base, followed by
Canada  at  30%,  and  all  other  countries  combined  at  18%.

Direct  Sales

At present, NetNation generates most of its new web hosting accounts from online
registrations  on its web-site and calls  received  from its  traditional  media
and  online  advertising   campaigns.   NetNation's  web-site  enables  customer
registration  around  the clock and its automated voice mail system allows sales
calls  to be captured 24 hours a day.  NetNation has expanded its sales force to
include  outbound  sales,  and has specialized sales personnel for dedicated and
co-located  hosting  and  domain  name  registration  services.

VARs

As  at  March  16,  2001,  NetNation  has  a  network  of  over  1,200  VARs  in
approximately 80 countries that resell NetNation's services.  Most of these VARs
base  their  businesses  on  selling web page design, integration and consulting
services.  Approximately  70% of the VARs are in the business of web page design
and  30%  are  in  the  business  of  integration  and  consulting.  NetNation's
International  Reseller  Program  was designed for these webmasters, consultants
and  other  value  added  resellers that wish to offer web hosting services as a
value  added  service  in  their particular market. The VARs are responsible for
maintaining customer  relationships,  technical  support, customer  billing, and
the provision  of  alue-added  services  such as  web  page  design  and  system
integration.  When  a  customer of the VAR requests a particular set of services
configured  with a specific web-site package, the VAR arranges with NetNation to
provide  the bundled web hosting package to the customer.  The VAR then buys the
web  hosting  services  from NetNation at a discount from retail and resells the
services  to  their  customers  as  a  complete package. Resellers set their own
price,  marketing and technical support policy that is best suited to the market
that  they  are  serving.

In  order  to  facilitate  purchasing  from  NetNation, a VAR maintains a master
account  with  NetNation.  Each  VAR  typically  resells NetNation's web hosting
services  to  between  5  and  10  new  customers.  In  order to terminate a VAR
relationship,  the  VAR  must  typically  give  30  days  notice.

OEMs

OEM  stands for "original equipment manufacturer", which in this document refers
to  other service providers that may buy NetNation's services in bulk and resell
them  under  their own brand name.  To further expand its distribution channels,
NetNation  is  establishing  OEM  relationships  with  companies  that  have  an
attractive  target  customer  base for NetNation's services.  Candidates for OEM
partnering include telecommunication and cable companies, online communities and
Internet  portal  companies,  ISPs,  marketing  organizations,  and large system
integrators.  NetNation  believes  that OEMs will typically consist of potential
competitors  that for cost reasons have opted to outsource their web-hosting and
domain  name  registration  services and resell them under their own brand name.
NetNation  believes  that various OEMs already have access to NetNation's target
markets  but  that  not  all  of  the customer demands are being met.  NetNation
believes  that  by entering into OEM relationships with such entities there will


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<PAGE>
be  an  overlap  of  customer demands.  For example, an OEM relationship with an
online  search  company  will allow NetNation to offer web hosting solutions and
domain  name  registration  services to customers of the search company, whereas
the  online  search  company  could  provide  the  search   capabilities.   Such
relationships  create  situations  where customers can be referred among the OEM
parties.

NetNation  also  distributes  its  services  by bundling them with complementary
software  packages  such as HTML editors, online commerce packages and other web
development  tools.  The  relationships with these software companies call for a
variety  of  distribution  cooperation  ranging  from advertising each partner's
products  on  their  respective  web-sites,  to including NetNation's free trial
coupons  in  software packages directly targeted at web-site builders and users.

                                CUSTOMER SERVICE

NetNation  uses  online  and automated customer support through its web-site and
online  "frequently  asked questions" feature (FAQs).  These online services are
in  addition  to  NetNation's  multi-lingual  technical  support  staff  who are
accessible  via  telephone  or email 24 hours per day, 7 days a week.  Technical
support  staff are responsible for helping customers with their web-site hosting
accounts,  web  page  setup and transfer, and use of the various online web-site
management  tools  that  NetNation  provides.

NetNation's  Customer Service and Accounts Receivable/Accounting Solutions Group
handles accounting and billing information.  NetNation has implemented a feature
to  its  "Control  Panel"  to  allow customers to check their billing statements
online.  Additionally, customers can call NetNation during normal business hours
to  discuss  their  account.

                                   TECHNOLOGY

NetNation  has created a secure, scalable and reliable web-site hosting service.
NetNation  believes  that  this  technology  provides  a significant competitive
advantage  and  is focused on combining its internally developed technology with
third-party  software  and  hardware.

Web-site  Hosting  Platform

NetNation  attempts  to  balance  and limit the number of web-site customers per
server  machine  to ensure quality service levels. Even though industry-standard
web  servers  can support multiple web-sites on a single machine, the ability to
manage  large  numbers  of  sites  is   difficult   and   requires   significant
technological  innovation.   NetNation   has   expended   significant  resources
developing  technology and tools to efficiently manage a high ratio of customers
to servers and to simultaneously monitor service quality. Although NetNation has
developed  the technology to allow over 3,000 simultaneous web-sites on a single
server,  it  generally limits the number of web-sites to approximately 2,000 per
machine.

NetNation  believes that  it has the capability  to  accommodate  most hardware/
software  configurations  that  prospective  customers  may have. NetNation uses
standard  technologies  such  as  the  Linux  operating  system, Cobalt Networks
servers,  Apache  web  server  software, Sendmail mail server, and Bind for DNS.
Some  of  the  technological  barriers  that NetNation has been able to overcome
include  the ability to communicate with a Microsoft Windows NT based SQL server
from  a UNIX machine, the elimination of the "file handle" limits on the servers
and  the  ability  to  run  Microsoft  FrontPage  extensions  on Linux machines.

To  facilitate customer maintenance and support, NetNation has developed various
tools  that  enable  customers  to  change  their own passwords, setup POP3 mail
accounts,  modify email routing for automatic message forwarding, and to monitor
their  web-site  statistics.  Customers  access   these   services   through   a
proprietary  Control  Panel  front-end  interface.  The  Control Panel tools are
continually  being  upgraded to enhance customer service and ensure a high level
of  scalability  as  additional  servers  and  customers  come  online.


                                       12
<PAGE>
Network  Operations

The  provision  of qualified service is of the utmost importance to the business
of  NetNation.   Accordingly,  NetNation   invests  significant  resources  into
building  a scalable network infrastructure.  Wherever feasible, NetNation makes
its  network  fault  tolerant  with  redundant  equipment.  Such actions include
standby  equipment  to handle additional capacity if a server has to be replaced
for  such  reasons  as  malfunction of a hard drive or software.  The redundancy
allows  for operations to continue efficiently as possible although the point of
failure can be isolated to a particular piece of equipment.  Another instance of
failure  can  occur with the power backup supply to a server that may have to be
replaced.  The availability of redundancy of equipment or excess capacity allows
for the alternative processing of data until the defective equipment or software
can  be  replaced or repaired.  These measures, along with continual monitoring,
are  designed  to  help  minimize  down time and provide early identification of
potential  sources of failure.  At March 16, 2001, the Company had one operating
data  center,  located  in  Vancouver,  Canada.

                                   COMPETITION

The  markets  for  web  hosting  and  domain name registration services are very
competitive.  It  is  estimated  that  there  are over 5,000 web hosting service
providers  in  North  America alone.  Over 95% of them are very small and run by
programmers  or  other  "techies".  Others  are ISPs that offer limited web-site
hosting  as  an  add-on  service to their dial-up web access services. There are
also  almost  150  accredited  registrars  of  top-level domain names worldwide.

NetNation's  current  and  potential  competitors  include:

a)     other  web  hosting  and  Internet  services  companies;
b)     "pure"  domain  name  registrars  that  are  accredited  and operational;
c)     domain  name  registrars  that  are  accredited  but not yet operational;
d)     regional  and  national  ISPs;
e)     regional  and  national  telecommunications  companies;
f)     large  information  technology  outsourcing  firms;  and
g)     cable  and  satellite  service  providers.

The  principal  competitive  factors  in  this  market  include:

a)     efficient,  available  customer  service  and  technical  support;
b)     quality  and  reliability  of  service;
c)     network capability and  scalability (scalability refers to the ability of
       the  hardware and software to support increasingly larger or more complex
       web-site  requirements  of  customers);
d)     pricing  of  services;
e)     brand  name  recognition;
f)     breadth  of  products  and  services  offered and the timely introduction
       thereof;
g)     technical  and  engineering  expertise;
h)     network  security;
i)     maintenance  and  expansion  of  marketing  distribution  channels;
j)     financial  resources;
k)     attraction  and  retention  of  key  technical  and managerial personnel;
l)     development  of  a  broad  international  presence;  and
m)     compliance  with  and  the  leveraging  of  industry  standards.

NetNation  considers  that  most  web  hosting  competitors  fit  into two major
groupings, each having its own set of competitive strengths and weaknesses.  The
first  grouping, and most obvious of NetNation's direct competitors, are the big
telephone  and  cable companies.  NetNation believes that because of their large
corporate  size,  it  takes  these  competitors   much  longer  to  develop  and
incorporate new features into their hosting services and to offer those services
at  a competitive price without subsidizing the pricing.  As a result, NetNation
believes  that  by careful attention to its cost structure and rapid response to
market  demand  for new features it can effectively compete with larger and more
financially  secure  companies,  both  in  services  provided  and  on  price.


                                       13
<PAGE>
The  second  major  type  of  competitors  are  the  pure-play  web-site hosting
companies.  NetNation  believes  that  many of these companies have insufficient
resources, inadequate infrastructure, insufficient Internet connectivity, and/or
inadequate  technical  support.  These  companies  may  have  congested  network
servers  and  slow  Internet  connectivity causing delays in web-site access and
upload.  This  can  result  in  lost customers visiting and exploring a web-site
through  abandoned  connections.  The  smaller  of  these companies may not have
scalable  systems  that   can   respond  quickly  to   their  customers'  growth
requirements  and  may  not  be  capable  of  supporting  large  numbers  of new
customers.  NetNation is aware that some of its customers came to NetNation as a
result  of experiencing an inadequate level of service from a competitor.  While
some  of  these  pure-play web-site hosting companies may face these competitive
deficiencies,  there  are a number of web-site hosting companies that have shown
the  ability  to  compete effectively, including  Interland, Hostpro, Interliant
and  Webhosting.com.  The  ability of NetNation to compete with these  companies
over  time  is  unproven.

Competitive  Advantages

The  following key advantages are provided to the customers of NetNation through
its  various  service  solutions:

     High-performance  with  quality   and  reliability.   NetNation's  web-site
hosting  solutions  are designed to deliver hardware and software performance to
ensure customers' web-sites load rapidly when visited.  This is a factor that is
consistently used by web hosting ratings services such as TopHost and HostIndex.
NetNation  believes that features such as redundant and fault tolerant equipment
housed  in  secure  and environmentally protected facilities permit NetNation to
offer  a  reliable  service  with  minimal  downtime  to  customer  web-sites.

     Large  number  of  service options.  NetNation's services range from domain
name registration to sophisticated web hosting commerce offerings.  In 2000, 74%
of  NetNation's  revenues  were generated by web-site hosting services.  This is
augmented by a number of fee based Internet enhancement services. These enhanced
services  include  electronic  commerce  solutions  for  the  web, expanded disk
storage  and  data  bandwidth  options,  web-site  to  database  interfaces, and
multimedia  support  tools  for  applications  such  as RealAudio and RealVideo.
NetNation  also  offers the ability for customers to co-locate their web servers
on  NetNation's  secure  premises and gain access to technical support services,
expertise,  and  bandwidth.

     Cost-effective  solutions.  There  are  potential  significant  cost saving
benefits  to NetNation's customers through the elimination of high capital costs
for web-site equipment, labor, and software. Customers can tap directly into the
knowledge  and  operating  experience  of  NetNation's staff.  Ongoing operating
costs  to  customers  are usually a small fraction of costs of staffing, support
and  bandwidth  of  an  internally  hosted web-site costs.  The shared nature of
NetNation's  services  provides  customers  with  access  to  the huge bandwidth
capabilities  at  a  cost  of  less than $100 versus over a $1,000 per month for
their  own  T-1  (1.54  megabits)  or  greater  bandwidth  telephone  line.

     Flexibility and Scalability.  NetNation's web-site hosting solutions offers
a  highly scalable structure designed to permit the support of tens of thousands
of  web-sites.  This  enables NetNation to provide a continual level of reliable
service  to  both  existing and new customers. NetNation's structure permits the
quick  expansion  of available disk storage space and network bandwidth required
to  accommodate  rapid  growth in the activity, size of or number of visitors to
customers'  web-sites.

     Customer  Support.  Through  its  standardized  systems,  NetNation has the
ability to rapidly deploy customer web-sites.  Most of this process is automated
and  does  not  require  the  extensive  involvement of any NetNation personnel.
NetNation  believes  it has developed an efficient system of support and related
customer  services  via email or telephone through NetNation's technical service
group.  Customer  support services are available 24 hours per day and 7 days per
week.


                                       14
<PAGE>
     Ease  of  Use.  Through  interactions  with  its  thousands  of  customers,
NetNation has developed and implemented proprietary software tools to assist its
customers.  These  tools  allow  customers  to  easily order, change, and manage
their  web-sites, remotely.  Detailed statistics and activity logs are available
for  customers  to  review  their  account  and  performance  information.   For
customers  that  are  buying the "DomainPlus" package, NetNation has developed a
tool that allows customers to create a one page web-site based on a selection of
Company  provided  templates.  By using this tool, customers can create a simple
web-site  within  minutes.

                                    EMPLOYEES

As  of  March  16,  2001,  NetNation  had 80 employees.  All employees, with the
exception  of  the  founders, are required to enter into an employment agreement
that  contains  industry  standard  terms  including  protection  of proprietary
interests,  confidentiality,  and  non-competition  terms.

NetNation  believes  that  its  ability  to  attract, hire, and retain qualified
personnel now and in the future is important to its success.  While sourcing and
recruiting  appropriate  technical personnel is often difficult and competitive,
NetNation  expects  that  its need to recruit additional personnel in the future
will  not  negatively  affect  its  operations.  Management  believes  that  its
employee relations are good.  None of NetNation's employees are represented by a
collective  bargaining  unit.

                          INTELLECTUAL PROPERTY RIGHTS

NetNation  relies  on copyrights, trademarks, trade secret laws, and contractual
restrictions to establish and protect its proprietary rights in its services and
products.  NetNation  does  not  have  any patented technology at this time that
would  limit  competitors  from  entering  NetNation's  market.   Management  of
NetNation believes that the steps taken by NetNation to protect its intellectual
property  are  consistent with industry standards for web-site hosting companies
today.

NetNation  also  relies  on  third  party  software licenses.  All employees and
contractors  are required to and have entered into confidentiality and invention
assignment  agreements.  Suppliers, distributors, and certain customers are also
required  to  enter  into  confidentiality  agreements.

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

                 RISK FACTORS AFFECTING FUTURE OPERATING RESULTS

Limited  Operating  History

NetNation  has  only  been  operating  since  February  1997.  As  a result, the
NetNation  business  model is still in an evolving stage.  The limited operating
history  means  NetNation  does  not  have  the  benefit  of  the  many years of
experience  that  some other companies have and can use to modify their business
plans  and  optimize  their  business  strategies.  The  ability of NetNation to
sustain  revenue  and income, in the future, is unproven.  Therefore NetNation's
limited  operating  history  makes  an evaluation of NetNation and its prospects
difficult.  See  "Management's  Discussion  and  Analysis"  in  this  Form 10-K.

Continuing  Losses  Expected

The  Company  expects  to  incur  additional  losses  and  to  generate negative
operating cash flow for part of 2001.  The Company's build up of its data center
and  expansion of its services will require significant amounts of cash in 2001.
The  extent  to  which  negative  cash  flow will occur depends upon a number of
factors,  including  the  following:


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  -  the  number,  size,  and  timing  of  any  investments  and  acquisitions;

  -  the  expense and time required to integrate any future acquired operations;

  -  the  time  and  effort  required  to  capture  operating  efficiencies;

  -  the  ability  to  generate  increased  revenues  and  cash  flow;  and

  -  potential regulatory developments that may apply to NetNation's operations.


Industry  Risks

NetNation  and  its prospects must be considered in light of the risks, expenses
and difficulties encountered by companies in the new and rapidly evolving market
for  web  hosting,  domain  name  registration,  and  related  enhanced Internet
services.  To  address these risks, NetNation must market its services and build
its  brand  names  effectively,  provide  scalable,  reliable and cost-effective
services,  continue  to  grow  its  infrastructure  to  accommodate   additional
customers  and  increased  use  of its network bandwidth, expand its channels of
distribution,  continue  to  respond  to competitive developments and retain and
motivate  qualified  personnel.  NetNation  may  not  sustain  revenue growth in
future  quarterly  or  annual  periods.

Fluctuations  in  Results  of  Operations

NetNation  has experienced significant fluctuations in its results of operations
on a quarterly and an annual basis.  NetNation expects to continue to experience
significant  fluctuations  in its quarterly and annual results of operations due
to a variety of factors, many of which are outside the Company's control.  These
controllable  and  non-controllable  factors  include:

Controllable  Factors

a)     introductions  of  products  or  services  by  NetNation;
b)     the  mix  of  services  sold  by  NetNation;
c)     the  timing and magnitude of capital expenditures, including construction
       costs  relating  to  the  expansion  of  operations;
d)     the  timing  and  magnitude of expenditures on advertising and promotion;
e)     changes  in  the  pricing  policies  of  NetNation;  and
f)     the  timing  and  magnitude of expenditures on advertising and promotion.

Non-controllable  Factors

a)     demand  for  and  market  acceptance  of  NetNation's  services;
b)     introductions  of  products  or  services  by  NetNation's  competitors;
c)     reliable  continuity  of  service  and  network  availability;
d)     the  ability  to  increase  bandwidth  as  necessary;
e)     provisions  for  customer  discounts  and  credits;
f)     customer  retention;
g)     timing  and success of marketing efforts and service introductions by the
       Company,  its  VARs  and  OEMs;
h)     the  introduction  by  third  parties  of  new  Internet  and  networking
       technologies;
i)     increased  competition  in  NetNation's  markets;
j)     changes  in  the  pricing  policies  of  NetNation's  competitors;  and
k)     fluctuations  in  bandwidth  used  by  customers.


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<PAGE>
After consideration for the increase in variable marketing expenses, NetNation's
committed  costs  pertaining  to  premises,  communication and wages account for
approximately  50%  of total expenses for the foreseeable short term.  Absorbing
these  costs  within  the  short term and maintaining efficient operations means
that  NetNation would be particularly sensitive to fluctuations in revenues.  If
NetNation  was  unable  to  continue  using  third-party products in NetNation's
services  offerings,  NetNation's  service  development  costs   could  increase
significantly.   For   these  and   other  reasons,  in  some  future  quarters,
NetNation's results of operations may not meet or exceed the expectations of the
investors, which could have a material adverse effect on NetNation's worth.  See
"Management's  Discussion  and  Analysis"  in  this  Form  10-K.

Dependence  Upon  New  Markets;  Uncertainty  of  Acceptance  of  Services

The markets for web-site hosting, domain name registration, and related enhanced
Internet  services  have  only  begun  to  develop in the past few years and are
evolving  rapidly.  There  is  significant  uncertainty  regarding whether these
markets  ultimately will prove to be viable over the long term or, if they prove
viable,  whether they will continue to grow.  NetNation's future growth, if any,
will  depend  upon  the  willingness of businesses to outsource web-site hosting
services  and  NetNation's  ability  to  market its services in a cost-effective
manner  to a sufficiently large number of customers.  The market for NetNation's
services  may  not  develop further, NetNation's services may not be more widely
adopted,  and significant numbers of businesses or organizations may not use the
Internet  for  commerce  and  communication.  If  these  markets fail to develop
further  or  develop  slower  than  expected,  or if NetNation's services do not
achieve  broader  market acceptance, NetNation's business, results of operations
and  financial  conditions  would  be  materially  and  adversely  affected.  In
addition,  to  be  successful in this emerging market, NetNation must be able to
differentiate  itself  from  its  competition  through its service offerings and
brand recognition.  NetNation may not be successful in differentiating itself or
achieving  market  acceptance  of  its services, and may experience difficulties
that  could  delay  or  prevent  the  successful  development,  introduction  or
marketing  of these services.  If NetNation incurs increased costs or is unable,
for  technical  or  other  reasons,  to  develop  and  introduce new services or
products  or  enhancements  to  existing  services in a timely manner, or if new
services  do  not  achieve  market  acceptance  in  a  timely  manner or at all,
NetNation's  business,  results  of  operations and financial condition could be
materially  adversely  affected.

Dependence  Upon  Expansion  of  Service  Offerings

NetNation's  success depends on the growth of its current web hosting and domain
name registration businesses.  The Company expects to drive this internal growth
by  expanding  and  enhancing  its  product  and  service  base  with additional
value-added  products  and  product  lines.  The  Company may be able to develop
these additional product capabilities internally, but expects that primarily the
development  of  strategic  relationships  with various vendors and distribution
partners  will  be critically important.  Accordingly, it will be important that
the Company either develops these capabilities internally or identifies suitable
potential product and service vendors and distributors with whom the Company can
complete  agreements on acceptable terms. NetNation expects that competition for
strategic  relationships  with  key  vendors and potential distributors could be
significant,  and that the Company may have to compete with other companies with
greater  financial  and other resources to obtain these important relationships.
There  can  be  no  assurance  that  NetNation will be able to identify suitable
partnering candidates or be able to complete agreements on acceptable terms with
these  parties.

Dependence  Upon  Channel  Partners

An  important  element  of  NetNation's  strategy  for  growth is to continue to
develop  its  reseller channel through the marketing of Reseller Packages, which
is  being  used  by  NetNation's network of domestic and international VARs, and
through  the  development  of  NetNation's  OEM relationships.  NetNation's VARs
typically  are  web  development  or  web  consulting  companies  that also sell
NetNation's web-site hosting services but that do not generally have established
customer  bases  to  which  they can market NetNation's services.  Therefore, in
those  markets,  primarily  international,  where  NetNation  does not focus its
direct  marketing  efforts, NetNation is dependent on third parties to stimulate
demand  for  NetNation's  services.  Currently,  NetNation  does not have direct
marketing  efforts  in  South  America,  Africa,  and Australia.  The failure of
NetNation's  services to be commercially accepted in certain markets, whether as
a  result  of  a  VARs performance or otherwise, could cause NetNation's current
channel  partners  to  discontinue  their  relationships  with  NetNation,   and
NetNation  may  not  be  successful  in  establishing additional channel partner


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<PAGE>
relationships as required.  OEMs and VARs have no obligation to market or resell
NetNation's web-site hosting and domain name registration services, and OEMs can
terminate  their relationships with NetNation with limited or no penalty with as
little  as  30  days'  notice.  The  loss  of  VARs or OEMs, the failure of such
parties  to  perform  under  agreements  with  or  the inability of NetNation to
attract  and  retain  new  VARs or OEMs with the industry experience required to
market  NetNation's  web-site  hosting  and  domain  name  registration services
successfully  in  the future could have a material adverse effect on NetNation's
business,  results  of  operations  and financial condition.  NetNation's direct
sales  efforts  may  conflict with the efforts of its indirect channel partners,
which  may  adversely  affect  NetNation's relationships with such partners.  In
addition,  to the extent that NetNation succeeds in increasing its sales through
indirect channels such as VARs or OEMs, those sales will be at discounted rates,
and  revenue  and gross margin to NetNation for each such sale will be less than
if  NetNation  had  sold  the  same services to the customer directly.  Refer to
"Distribution  and  Sales"  in  this  Form  10-K.

Highly  Competitive  Markets  With  Few  Barriers  to  Entry

The markets served by NetNation are highly competitive and are becoming more so.
There  are few substantial barriers to entry, and NetNation expects that it will
face additional competition from existing competitors and new market entrants in
the  future.

NetNation  may not have the resources, expertise or other competitive factors to
compete  successfully  in  the  future.  Many  of  NetNation's  competitors have
substantially  greater  financial,  technical  and  marketing  resources, larger
customer  bases,  longer  operating histories, greater name recognition and more
established  relationships in the industry than NetNation.  As a result, certain
of  these  competitors  may   be  able  to  develop  and  expand  their  network
infrastructures  and  service  offerings  more rapidly, adapt to new or emerging
technologies  and  changes in customer requirements more quickly, take advantage
of acquisition and other opportunities more readily, devote greater resources to
the  marketing  and  sale  of  their  services and adopt more aggressive pricing
policies  than  can  NetNation.  In addition, these competitors have entered and
will  likely  continue  to  enter  into joint ventures or consortiums to provide
additional  services  competitive  with  those  provided  by  NetNation.

Rapid  Growth  May  Strain  Resources

NetNation  has been growing, and expects to continue to experience rapid growth.
This  rapid growth has placed, and is likely to continue to place, a significant
strain  on  the  Company's managerial, operating, financial and other resources.
The  expansion  efforts  also  require  significant  time  commitments  from the
Company's  senior  management and places a strain on their ability to manage the
existing  business.  The  Company  also  may  be  required  to  manage  multiple
relationships with third parties as the Company's value-added service offerings,
including  web  hosting, are expanded.  Future performance will depend, in part,
upon  NetNation's  ability  to manage this growth effectively.  To that end, the
Company  will  have  to  undertake  the  following  improvements,  among others:

   -  implement  additional  management  information  systems  capabilities;

   -  further  develop  operating, administrative and financial and accounting
      systems  and  controls;

   -  improve  coordination between  engineering, accounting, finance, marketing
      and  operations;  and

   -  hire  and  train  additional  personnel.

Risks  Associated  with  International  Expansion  and  Operations

NetNation's  success  is  dependent  in  part  on  expanding  its  international
presence, primarily through NetNation's VARs. As a result, NetNation will depend
upon  its VAR network to market and sell its services and manage the accounts of
customers  internationally.  NetNation's  VARs  may  not  be able to continue to
market  and  sell  NetNation's web-site hosting services successfully. NetNation
denominates  its  sales to VARs in U.S. dollars. Thus, fluctuations in the value
of  the  U.S.  dollar  relative  to the Canadian dollar and to the currency of a
given  country  may  make  NetNation's  services  less   (or  more)  profitable
and therefore  less  (or  more)  attractive  to  VARs  selling  in that country.
In addition,  there  are  certain  risks   inherent   in   conducting   business
internationally,   such   as   changes  in   regulatory   requirements,   export
restrictions,  tariffs and other trade barriers, differing technology standards,


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<PAGE>
longer  payment  cycles,  political  and  economic  instability, fluctuations in
currency  exchange  rates,  imposition  of  currency exchange controls, seasonal
reductions in business activity, increased difficulty in enforcing contracts and
potentially  adverse  tax  consequences,  any  of  which  could adversely affect
NetNation's  international  operations.  Furthermore,  foreign governments where
NetNation  currently  operates  or  plans  to  operate,  have  enforced laws and
regulations  related  to  the  operations of Internet service providers, such as
Germany,  that  are  stricter than those currently in place in the United States
and  Canada.  In  Germany,  in  August  of  1997, the German legislation entered
into  force  a  federal  law  to  regulate  the  conditions  for information and
communications services (the "Multimedia Law"). Such provisions obligate service
providers to protect data collected from customers. Such duties include allowing
customers  in Germany to pay for Internet service on an anonymous basis. Service
providers  in  Germany  are also required to protect contractual data from being
used  in  advertising  and  market  research.  Service  providers in Germany are
prohibited  from transferring billing data on a customer, or former customer, to
third  parties.  Furthermore,  all personal data on a customer has to be deleted
after  termination  of  the  relationship.

One or more of these factors could have a material adverse effect on NetNation's
current  or  future  international  operations and, consequently, on NetNation's
business,  results  of  operations  and financial condition.  To the extent that
NetNation  does  business  in  foreign  markets directly, NetNation will also be
subject to risks such as challenges in staffing and managing foreign operations,
employment  laws,  and practices in foreign countries and problems in collecting
accounts  receivable.  In addition, NetNation or its channel partners may not be
able  to  compete  effectively  in  international  markets.

General  Acquisition  Risks

The Company may acquire strategically important companies and operations.  These
acquisitions  could  materially adversely affect the Company's operating results
as  a  result  of  dilutive  issuances of equity securities or the incurrence of
debt.  In  addition,  the  purchase  price for many of these acquired businesses
likely  will  significantly  exceed the current fair values of the net assets of
the  acquired  businesses.  As  a result, material goodwill and other intangible
assets  would  be  required  to  be  recorded  which would result in significant
amortization  charges  in  future  periods.  These  charges,  in addition to the
financial  impact  of such acquisitions, could have a material adverse effect on
NetNation's  business,  financial  condition  and  results  of  operations.

Increased  Bandwidth  Requirements

As  customers'  usage  of  bandwidth  increases,  NetNation  will  need  to make
additional  investments  in  its  infrastructure to maintain adequate downstream
data  transmission  speeds, the availability of which may be limited or the cost
of  which  may be significant.  Additional network capacity may not be available
from  third-party suppliers as NetNation needs it, and, as a result, NetNation's
network  may  not be able to achieve or maintain a sufficiently high capacity of
data  transmission,  especially if the usage of NetNation's customers increases.
NetNation's failure to achieve or maintain high-capacity data transmission could
significantly  reduce  consumer  demand  for  its  services  and have a material
adverse  effect  on its business, results of operations and financial condition.

To  accommodate  a  higher degree of scalability from the present structure will
require  further  additions  to  capital  assets,  possible  upgrade and partial
replacement  of  existing  capital  assets,  and additional costs to accommodate
increased  bandwidth  usage.  The  Company  has  implemented  an  infrastructure
maintenance program to ensure that these issues are proactively addressed.  This
program,  however,  may  result  in  increased  capital  expenditure  costs.

Network  Solutions'  Competitive  Advantage

The  Internet  domain  name  registration  system  is  composed of two principal
functions: registry and registrar. Registries maintain the database that contain
names  registered  within the top level domains and their corresponding Internet
protocol  addresses.  Registrars  act as intermediaries between the registry and
individuals  and  businesses,  referred  to  as registrants, seeking to register
domain  names.  The  agreements  among  Network  Solutions,  ICANN  and the U.S.


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<PAGE>
Department  of  Commerce  have  given  Network  Solutions the exclusive right to
operate  and  maintain the registry for the .com, .net and .org domains at least
until  November  30,  2003. Registrars other than Network Solutions are known in
the  industry  as "competitive registrars."  As the exclusive registry for these
domains,  Network Solutions receives from NetNation, and every other competitive
registrar,  $6  per domain name per year. Although registry fees may not be used
directly  to  fund  Network  Solutions'  registrar business, the substantial net
revenues  from  these fees, and the certainty of receiving them, provide Network
Solutions  significant  advantages  over  any  competitive  registrar.

Increased  Domain  Name  Registration  Competition

Competition  in the domain name registration services industry will intensify as
the  number  of entrants into the market increases.  As at March 16, 2001, ICANN
had  accredited  almost  150  competitive  registrars,  including  NetNation, to
register  domain  names  in  the  .com, .net, and .org domains.  NetNation faces
substantial  competition  from  competitive  registrars  and  others  in  that:

   -  many accredited registrars that are not currently registering domain names
      may  begin  to  do  so  in  the  near  future;
   -  companies  that  are  not  accredited  registrars  may  offer  domain name
      registrations  through  a  competing  accredited  registrar's  system; and
   -  ICANN  may  accredit  new registrars to register domain names in the .com,
      .net  and  .org  domains.

The  Company  faces  competition from other competitive registrars and others in
the  domain  name registration industry who may have longer operating histories,
greater  name  recognition or greater resources.  Competitors in the domain name
registration  industry  include  companies  with  strong  brand  recognition and
Internet  industry  experience,  such  as  major telecommunications firms, cable
companies,  ISPs,  web-hosting providers, Internet portals, systems integrators,
consulting  firms  and  other  registrars.  Many of these companies also possess
core  capabilities  to  deliver  ancillary  services,  such as customer service,
billing  services  and network management.  NetNation's market position could be
harmed  by  any  of these existing or future competitors, some of which may have
longer  operating  histories,  greater  name  recognition and greater financial,
technical,  marketing,  distribution  and  other  resources than NetNation does.

Since  competition  in  the  domain  name  registration industry is in its early
stages,  NetNation  cannot  provide  assurance  that  the  Company  will  not be
required,  by market factors or otherwise, to reduce, perhaps significantly, the
prices  charged  for domain name registration and related products and services.
Further,  some of NetNation's competitors are offering domain name registrations
for  free  and  derive  their  revenues from other sources.  Reducing the prices
NetNation  charges  for  domain  name  registration  services in order to remain
competitive  could   materially   adversely  affect  the  Company's  results  of
operations.

Accreditation  to  New  Top-Level  Domains

ICANN  or  another approving entity may introduce new generic top-level domains.
The  Company  cannot  provide  assurance  that, if introduced, NetNation will be
accredited  to  offer registrations in these domains or that customers will rely
on  NetNation  to provide registration services within any new generic top level
domains.  The Company's business, financial condition, and results of operations
would  be materially adversely affected if substantial numbers of customers turn
to  other  registrars  for  these  registration  needs.

Maintenance  of  ICANN  Accreditation

NetNation  needs to be an ICANN-accredited registrar in order to register domain
names  in  the  .com,  .net,  and  .org  domains.  The  Company's  current ICANN
accreditation  agreement  expires  on  May  23,  2001  and the Company is in the
process of obtaining a five year renewal of its original agreement to August 16,
2005.  While  NetNation  anticipates that ICANN will renew this agreement, there
is  no  assurance  that  it  will  do so.  If ICANN does not renew the Company's
accreditation,  NetNation's  business,  financial   condition   and  results  of
operations  would  be  materially  adversely  affected.


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<PAGE>
Risk  of  System  Failure

NetNation's  operations  depend   upon  its   ability  to  protect  its  network
infrastructure,  equipment  and  customer files against damage from human error,
fire,  earthquakes, hurricanes, floods, power loss, telecommunications failures,
sabotage, intentional acts of vandalism and similar events.  The occurrence of a
natural  disaster  or  other   unanticipated  problems  at  NetNation's  Network
Operations  Centers  could  result  in interruptions in the services provided by
NetNation.   The  Company  has  no  formal  disaster  recovery  plan.   Although
NetNation is currently building redundancy into its network, NetNation's network
is currently subject to various single points of failure, and a problem with one
of  NetNation's  routers or switches could cause an interruption in the services
provided  by  NetNation  to  a  portion of its customers.  NetNation has, in the
past,  experienced periodic interruptions in service ranging from 2 minutes to 3
hours,  totaling  between  20 and 24 hours a year.  Although these interruptions
were of short duration, they did occur and the extent of future interruptions is
indeterminable.  The  interruptions had no significant impact on the business of
NetNation.

In  addition,  failure  of  any  of  NetNation's telecommunications providers to
provide  the  data communications capacity required by NetNation, as a result of
human  error,  a natural disaster, or other operational disruption, could result
in  interruptions  in  NetNation's  services.  Any damage to, or failure of, the
systems  of NetNation or its service providers could result in reductions in, or
terminations  of, services supplied to NetNation's customers, which could have a
material  adverse  effect  on  NetNation's  business, results of operations, and
financial  condition.  In  addition,  NetNation's reputation could be materially
adversely  affected.

Dependence  Upon  Network  Infrastructure

NetNation's  success will depend upon the capacity, scalability, reliability and
security  of its network infrastructure, including the capacity leased from AT&T
Canada  Inc.,  Group  Telecom, and Bell Intrigna, its telecommunications network
suppliers.  NetNation is dependent on such companies to maintain the operational
integrity  of   their   telecommunications   networks.   Therefore,  NetNation's
operating  results  depend,  in  part,  upon  the  pricing  and  availability of
telecommunications  network  capacity  from  a  limited number of providers in a
consolidated market.  In the event of a material increase in pricing or decrease
in  telecommunications capacity available to NetNation, if NetNation were unable
either  to  access  alternative networks on a cost-effective basis to distribute
its  customers'  content  or  to  pass through any additional costs of utilizing
existing or alternative networks to its customers, NetNation's business, results
of  operations  and  financial condition could be materially adversely affected.

Dependence  Upon  the  Internet  and  Internet  Infrastructure  Development

NetNation's  success will depend largely upon continued growth in the use of the
Internet.  Critical  issues  concerning  the  commercial  use  of  the Internet,
including  security,  reliability,  cost, ease of access, quality of service and
necessary  increases in bandwidth availability, remain unresolved and are likely
to  affect  the development of the market for NetNation's services. The adoption
of  the   Internet   for  information   retrieval  and  exchange,  commerce  and
communications,  particularly by those enterprises that have historically relied
upon  alternative  means  of information gathering, commerce and communications,
generally will require the acceptance of a new medium of conducting business and
exchanging  information.  Demand  and  market  acceptance  of  the  Internet are
subject  to  a  high  level  of uncertainty and depend upon a number of factors,
including  the  growth  in  consumer access to and acceptance of new interactive
technologies,  the  development  of  technologies  that  facilitate  interactive
communication  between organizations and targeted audiences and increases in the
speed  of user access.  If the Internet as a commercial or business medium fails
to  develop further or develops more slowly than expected, NetNation's business,
results  of  operations  and  financial  condition could be materially adversely
affected.

Rapid  Technological  Change;  Evolving  Industry  Standards

NetNation's  future  success  will  depend,  in  part, upon its ability to offer
services  that  incorporate  leading   technologies,  address  the  increasingly
sophisticated  and  varied  needs  of  its current and prospective customers and
respond  to technological advances and emerging industry standards and practices
on  a  timely  and  cost-effective basis. The market for NetNation's services is
characterized  by  rapidly changing and unproven technologies, evolving industry


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<PAGE>
standards,  changes  in  customer  needs,  emerging competition and frequent new
service introductions. Technological advances may have the effect of encouraging
certain of NetNation's current or future customers to rely on in-house personnel
and  equipment  to  furnish  the  services  currently  provided by NetNation. In
addition,  keeping  pace with technological advances in NetNation's industry may
require  substantial  expenditures  and  lead  time,  which  may have a material
adverse  effect  on  NetNation's  business,  results of operations and financial
condition.

NetNation  believes  that  its ability to compete successfully also depends upon
the  continued  compatibility and interoperability of its services with products
offered by various vendors. Enhanced or newly developed third-party products may
not  be  compatible  with  NetNation's infrastructure, and such products may not
adequately  address  the  needs  of  NetNation's  customers.  Although NetNation
currently  intends  to support emerging standards, industry standards may not be
established,  and  even  if  they  are established, NetNation may not be able to
conform  to  these  new standards in a timely fashion and maintain a competitive
position  in  the  market. The failure of NetNation to conform to the prevailing
standard,  or  the failure of a common standard to emerge, could have a material
adverse  effect  on  NetNation's  business,  results of operations and financial
condition.  In  addition, products, services or technologies developed by others
could  render  NetNation's  services  noncompetitive  or  obsolete.

System  Security  Risks

A  significant barrier to electronic commerce and communications is the need for
secure transmission of confidential information over public networks. Certain of
NetNation's  services  rely  on  security technology licensed from third parties
to  provide  the  encryption  and  authentication  necessary  to  effect  secure
transmission of confidential information. Unauthorized access, computer viruses,
accidental  or  intentional actions and other disruptions could occur. NetNation
has in the past experienced minor delays or interruptions in service as a result
of  the  accidental  and intentional actions of Internet users or "hackers", and
may  in  the  future  experience such interruptions because of the same actions.
Furthermore,  such  inappropriate use of the network by third parties could also
potentially  jeopardize the security of confidential information, such as credit
card  and  bank  account  numbers,  stored in the computer systems of NetNation,
which  could result in liability to NetNation and the loss of existing customers
or  the  deterrence  of  potential customers. NetNation's security measures have
been  circumvented  in  the  past, and any new measures implemented by NetNation
could  be  circumvented  in the future. The costs required to eliminate computer
viruses  and  alleviate other security problems could be prohibitively expensive
and  the  efforts to address such problems could result in interruptions, delays
or  cessation  of  service to NetNation's customers, which could have a material
adverse  effect  on  NetNation's  business,  results of operations and financial
condition.  Concerns  over the security of Internet transactions and the privacy
of  users  may also inhibit the growth of the Internet, especially as a means of
conducting  commercial  transactions.

Government  Regulation  and  Legal  Uncertainties

Only  a  small  body  of  laws  and  regulations currently apply specifically to
content  of,  access  to, or commerce on, the Internet. It is possible that laws
and  regulations  with  respect to the Internet may be adopted by governments in
any  of  the  jurisdictions  in  which NetNation can sell its products, covering
issues such as user privacy, freedom of expression, pricing, characteristics and
quality  of  products  and   services,   taxation,   advertising,   intellectual
property  rights,  information  security  and  the  convergence  of  traditional
telecommunications  services with Internet communications.  Although sections of
the  U.S.  Communications  Decency  Act  of  1996  (the "CDA") that, among other
things,  proposed to impose criminal penalties on anyone distributing "indecent"
material  to  minors  over  the Internet were held to be unconstitutional by the
U.S. Supreme Court, similar laws may be proposed, adopted and upheld in the U.S.
or  other jurisdiction. The nature of future legislation and the manner in which
it  may  be  interpreted and enforced cannot be fully determined and, therefore,
legislation  similar  to the CDA could subject NetNation and/or its customers to
potential  liability,  which  in  turn  could  have a material adverse effect on


                                       22
<PAGE>
NetNation's  business,  results  of  operations  and  financial  condition.  The
adoption  of  any  such  laws  or  regulations  might decrease the growth of the
Internet,  which in turn could decrease the demand for the services of NetNation
or  increase  the cost of doing business or in some other manner have a material
adverse  effect  on  NetNation's  business,  results of operations and financial
condition. In addition, applicability to the Internet of existing laws governing
issues  such  as  property  ownership, copyright and other intellectual property
issues,  taxation,  libel, obscenity and personal privacy is uncertain. The vast
majority  of  such  laws  were  adopted  prior to the advent of the Internet and
related  technologies and, as a result, do not contemplate or address the unique
issues  of  the Internet and related technologies. Changes to such laws intended
to  address  these issues could create uncertainty in the marketplace that could
reduce  demand  for  the  services  of  NetNation  or increase the cost of doing
business as a result of costs of litigation or increased service delivery costs,
or  could  in  some  other  manner have a material adverse effect on NetNation's
business,  results  of  operations and financial condition. In addition, because
NetNation's  services  are  available over the Internet virtually worldwide, and
because  NetNation  facilitates  sales  by its customers to end users located in
multiple  provinces,  states and foreign countries, such jurisdictions may claim
that NetNation is required to qualify to do business as a foreign corporation in
each such state/province or that NetNation has a permanent establishment in each
such  foreign  country. Failure by NetNation to qualify as a foreign corporation
in a jurisdiction where it is required to do so could subject NetNation to taxes
and  penalties  for  failure  to  qualify  and  could result in the inability of
NetNation  to  enforce  contracts  in such jurisdictions. Any new legislation or
regulation,  or  the application of laws or regulations from jurisdictions whose
laws  do  not  currently  apply  to  NetNation's business, could have a material
adverse  effect  on  NetNation's  business,  results of operations and financial
condition.

NetNation  is  not  currently  subject  to  direct  regulation  by  the  Federal
Communications   Commission  or  any  other   governmental  agency,  other  than
regulations  applicable  to  businesses in general.  However, in the future, it
may become subject  to  regulation  by the  FCC or  another  regulatory  agency.
NetNation's  business  could  suffer  depending  on  the  extent  to  which  its
activities  are  regulated  or proposed to be regulated. In respect to the FCC's
recent  decision  that  could  result in an increase in the cost of transmitting
data  over the Internet, since the data transmission costs are not a significant
component, it is anticipated that this issue will have a minor adverse effect on
the  Company's  business.

NetNation  does  not  currently collect sales or other taxes with respect to the
sale of services or products in states and countries where NetNation believes it
is  not  required to do so.  NetNation does collect sales and other taxes in the
states and countries in which NetNation has offices and is required by law to do
so.  Currently,  NetNation  collects  federal  taxes  in  Canada  from  Canadian
residents.  One  or  more jurisdictions  have sought to  impose  sales  or other
tax obligations  on  companies  that  engage  in  online  commerce  within their
jurisdictions.  A  successful  assertion  by  one  or  more  jurisdictions  that
NetNation  should  collect sales or other taxes on its products and services, or
remit  payment  of  sales  or  other taxes for prior periods, could have a minor
adverse  effect  on  the  Company's  business.

In respect to the Internet Freedom Act (in which the tax free moratorium ends on
October  21, 2001), it is possible that U.S. states may impose taxes on Internet
based  commerce  after  October  21, 2001.  The materiality of such taxes on the
results  of  operations  cannot  be determined by the Company at this time.  The
growth  of  the  Internet,  coupled with publicity regarding Internet fraud, may
lead  to  the enactment of more stringent consumer protection laws. If NetNation
becomes  subject  to  claims  that  NetNation  has  violated  any  laws, even if
NetNation  successfully defends against these claims, the business could suffer.
Moreover,  new  laws  that  impose restrictions on NetNation's ability to follow
current  business  practices  or increase its costs of doing business could hurt
the  business.

Risks  Associated  With  Information  Disseminated  Through  NetNation's Network

The  law  relating  to  the  liability of online services companies and Internet
access  providers  for  information  carried  on  or  disseminated through their
networks  is  currently  unsettled.  Despite  the  passage of the Communications
Decency  Act  which  provided some relief to online service providers from civil
liability  for  content they did not create, it is possible that claims could be
made  against  online  services  companies  and  Internet access providers under
United States, Canadian and foreign laws for defamation, negligence or copyright
or  trademark infringement, or other theories based on the nature and content of
the  materials  disseminated  through  their  networks. Several private lawsuits
seeking  to  impose  such  liability upon online services companies and Internet
access  providers  are  currently  pending.  In  addition,  legislation has been
proposed  that  imposes  liability  for  or  prohibits the transmission over the


                                       23
<PAGE>
Internet  of  certain  types  of  information. The imposition upon NetNation and
other  web-site hosting providers of potential liability for information carried
on  or  disseminated  through their systems could require NetNation to implement
measures  to  reduce  its  exposure  to  such  liability,  which may require the
expenditure  of   substantial  resources,  or  to  discontinue  certain  service
offerings.  The increased attention focused upon liability issues as a result of
these  lawsuits  and  legislative  proposals  also  could  affect  the growth of
Internet  use. In addition, NetNation is subject to a number of risks associated
with  the  potential  actions  of  customers  utilizing NetNation's network. For
example, if a customer were to engage in "spamming" (a practice of sending large
quantities  of  unsolicited  email), NetNation would have an obligation to block
that customer's access to the Internet through NetNation's network. A failure by
NetNation  to  satisfy  this  obligation  could result in NetNation being denied
access  to  the  telecommunications  networks  through which NetNation's network
links  to  the  Internet.  Spamming could also cause a significant disruption in
NetNation's  ability  to  route  email  to  and  from  its  customers.

Dependence  on  Key  Personnel

NetNation's  success  depends in significant part upon the continued services of
its  key  personnel.  The  Company's technical, sales and administrative matters
come  under  the  direct  responsibility of, or are shared by, the following key
personnel:  David  Talmor,  Chairman  and  President;  and  Joseph  Kibur, Chief
Executive Officer.  The loss of the services of one or both of these key persons
could  have  a  material  adverse  effect  on  NetNation's  business, results of
operations  and  financial  condition.

Ability  to  Attract,  Train  and  Retain  Personnel

NetNation's  failure  to  attract  additional  qualified  personnel could have a
material  adverse  effect  on  NetNation's  business,  results of operations and
financial  condition.  Any officer or employee of NetNation can terminate his or
her  relationship  with  NetNation at any time.  NetNation's future success will
also  depend  on  its  ability  to  attract,  train,  retain and motivate highly
qualified  technical, marketing, sales and management personnel. Competition for
such  personnel  is intense, and NetNation may not be able to attract and retain
key  personnel.

Protection  and  Enforcement  of  Intellectual  Property  Rights

NetNation  relies  on  a  combination  of copyright, trademark, service mark and
trade  secret laws and contractual restrictions to establish and protect certain
proprietary  rights  in  its  services.  NetNation  has  no patented  technology
that would preclude or inhibit competitors  from  entering  NetNation's  market.
NetNation  has  entered into confidentiality and invention assignment agreements
with  its  employees  and  contractors,  and  nondisclosure  agreements with its
suppliers,  distributors  and  certain customers in order to limit access to and
disclosure of its proprietary information. These contractual arrangements or the
other  steps  taken  by  NetNation  to protect its intellectual property may not
prove  sufficient  to  prevent  misappropriation of NetNation's technology or to
deter  independent  third-party development of similar technologies. The laws of
certain  foreign  countries may not protect NetNation's services or intellectual
property  rights  to  the  same  extent  as do the laws of the United States and
Canada.  NetNation  also  relies  on  certain technologies that it licenses from
third  parties.  These  third-party  technology  licenses may not continue to be
available to NetNation on commercially reasonable terms. The loss of the ability
to  use  such  technology  could  require  NetNation to obtain the rights to use
substitute  technology,  which could be more expensive or offer lower quality or
performance,  and  therefore  have  a  material  adverse  effect  on NetNation's
business,  results of operations and financial condition.  To date, NetNation is
not  a  subject  of  a lawsuit in respect to NetNation's services infringing the
proprietary  rights of third parties, but third parties could claim infringement
by NetNation with respect to current or future services.  NetNation expects that
participants  in its markets will be increasingly subject to infringement claims
as the number of services and competitors in NetNation's industry segment grows.
Any  such  claim, whether meritorious or not, could be time-consuming, result in
costly  litigation,  cause  service  installation delays or require NetNation to
enter into royalty or licensing agreements. Such royalty or licensing agreements
might not be available on terms acceptable to NetNation, or at all. As a result,
any  such  claim could have a material adverse effect upon NetNation's business,
results  of  operations  and  financial  condition.

Future  Capital  Needs

NetNation  has  capital  requirements  for  such  applications  as marketing and
advertising, the development of new services, the expansion and upgrading of its
technical infrastructure and data center, and geographical expansion.  NetNation
may  not  be  successful in generating sufficient cash from operations for those
purposes  and  will  need  to  raise  additional  capital.  Failure  to generate


                                       24
<PAGE>
sufficient  cash  flows  or  to  raise sufficient funds may require NetNation to
revise,  delay  or abandon some or all of its development and expansion plans or
otherwise forego market opportunities and may make it difficult for NetNation to
respond  to  competitive  pressures,  any of which could have a material adverse
effect  on  NetNation's business, results of operations and financial condition.

Control  by  Principal  Stockholders,  Executive  Officers  and  Directors

NetNation's  Chairman  and President, David Talmor, and Chief Executive Officer,
Joseph  Kibur,  in  the  aggregate,  beneficially  own  approximately  55.2%  of
NetNation's  outstanding  common  stock as at March 16, 2001.  As a result, such
persons,  acting  together,  will  have  the  ability  to  control  most matters
submitted  to stockholders of NetNation for approval (including the election and
removal  of  directors)  and to control the management and affairs of NetNation.
Accordingly,  such  concentration  of ownership may have the effect of delaying,
deferring  or  preventing  a  change in control of NetNation, impeding a merger,
consolidation,  takeover  or  other  business combination involving NetNation or
discouraging  a  potential  acquirer  from  making  a  tender offer or otherwise
attempting  to  obtain control of NetNation, which in turn could have a material
adverse  effect  on  NetNation's  worth.

Dilutive  Effect  of  Future  Sales  of  Securities

Future  sales  of substantial amounts of NetNation's Common in the public market
could  adversely  affect  the  market price of the common stock and shareholders
could  experience  dilution  in  their stock ownership of the Company and in the
value  of  their  shares.  Dilution  is a reduction in the value of the holder's
investment  measured  by the difference between the purchase price of the shares
of  the  common  stock  and  the net tangible book value of the shares after the
purchase  takes place.  As at December 31, 2000, there were 10,415,821 shares of
common  stock  which  are  restricted or affiliate shares ("Restricted Shares").
Those  Restricted Shares will gradually be converted to free-trading shares, the
sale of which could have a material adverse effect on the future market price of
NetNation's  common  stock.

Stock  Price  Volatility

The market price of NetNation's common stock has fluctuated significantly in the
past,  and  is  likely  to continue to be highly volatile.  To date, the trading
volume  in  the  Company's  stock  has been relatively low and significant price
fluctuations  can  occur  as a result. If the low trading volumes experienced to
date  continue, such fluctuations could occur in the future.  The Company cannot
provide assurance that the sales price of its common stock will not fluctuate or
decline  significantly  in the future. In addition, the U.S. equity markets have
from  time  to  time  experienced significant price and volume fluctuations that
have  particularly  affected  the  market  prices  for  the stocks of technology
companies.  These  broad market fluctuations may materially adversely affect the
market  price  of  NetNation's  common  stock  in  future. Such fluctuations and
variations  may  be the result of changes in NetNation's business, operations or
prospects,  announcements  of  technological  innovations  and  new  products by
competitors,   NetNation  or  its  competitors  entering  into  new  contractual
relationships with strategic partners, proposed acquisitions by NetNation or its
competitors,  financial  results  that  fail  to  meet   public  market  analyst
expectations  of  performance,  regulatory considerations and general market and
economic  conditions  in  the  U.S.  and  throughout  the  world.


ITEM  2:  PROPERTIES
--------------------

NetNation's  executive  offices  and  Network  Operation  Center, are located in
Vancouver  B.C., Canada. They consist of approximately 14,000 square feet, which
is  leased  at a rate of $21,000 per month pursuant to  agreements  that expire
on April  30,  2002.   Beginning  on  July  1,  1999,  NetNation  established  a
representative  sales  office  in London, England, which is leased on a month to
month basis at a rate of $3,900.  All property is insured to industry standards.
The Company believes that these facilities will be suitable for the operation of
its  business  for  the  foreseeable  future.


                                       25
<PAGE>
ITEM  3:  LEGAL  PROCEEDINGS
----------------------------
As  at  December 1, 2000, the Company has discontinued lease payments on the San
Diego  premises due to a number of circumstances.  To date, the landlord has not
commenced  legal action against the Company.  Should the landlord commence legal
action  against  the  Company,  the  outcome of the proceedings is unknown.  The
remaining  lease  payments  of  $381,254  have  been accrued in the consolidated
financial  statements, and a gain will be recognized in the event of a favorable
outcome.

The  Company contracted with Inovaware Corporation (formerly known as ISP Power)
on January 17, 2000 to develop customized billing software.  The contract called
for  three payments of $80,000 totalling $240,000 and the Company made the first
payment  in  2000.  The  Company claims that Inovaware Corporation was unable to
complete  development  of  the  software  in  accordance  with  the terms of the
contract,  and  has  terminated  the  contract  with Inovaware on the basis that
Inovaware  Corporation  did  not fulfill its contractual obligations.  Inovaware
Corporation is claiming the Company owes it the remaining $160,000, plus $40,000
for  additional  work  under  the  terms  of  the  contract.  To date, Inovaware
Corporation  has  not  commenced  legal  action  against  the  Company.   Should
Inovaware  commence  legal  action  against  the  Company,  the  outcome  of the
proceedings  and  the  amount  of potential damages is unknown.  However, should
Inovaware  prevail  in  its  claim, the Company could be required to pay damages
which  could  have  a  material  effect  on  the  Company's  operating  results.

To  the knowledge of the officers and directors of NetNation, there are no other
pending  legal proceedings or litigation and none of its property is the subject
of a pending legal proceeding.  Further, NetNation's officers and directors know
of  no  legal  proceedings against NetNation or its property contemplated by any
governmental  authority.

ITEM  4:  SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS
---------------------------------------------------------------------

No  items were submitted to a vote of security holders during the fourth quarter
of  2000.


                                       26
<PAGE>
                                     PART II

ITEM  5:  MARKET  FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
--------------------------------------------------------------------------------

                MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
                  COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market  Information

NetNation's   common  shares   are  principally   traded  on  the  Nasdaq  Small
Capitalization  Market  under  the ticker symbol NNCI.  From February 3, 1999 to
April  27,  1999,  the common shares of NetNation traded under the ticker symbol
CBET,  reflecting  the  previous name of NetNation as Collectibles Entertainment
Inc.  On  April  27, 1999, NetNation began trading under the ticker symbol NNCI.


<TABLE>
<CAPTION>
                                         Price Range of Common Stock
                                         ---------------------------
                                           High/Ask       Low/Bid
                                         -------------  ------------
<S>                                      <C>            <C>
Fiscal Year Ended December 31, 2000
  First Quarter . . . . . . . . . . . .  $      17.875  $      4.563
  Second Quarter. . . . . . . . . . . .  $      15.500  $      3.500
  Third Quarter.. . . . . . . . . . . .  $       6.375  $      3.375
  Fourth Quarter. . . . . . . . . . . .  $       4.000  $      1.313

Fiscal Year Ended December 31, 1999
  First Quarter (from February 3, 1999)  $       4.500  $      2.000
  Second Quarter. . . . . . . . . . . .  $       6.125  $      3.250
  Third Quarter . . . . . . . . . . . .  $       5.750  $      3.500
  Fourth Quarter. . . . . . . . . . . .  $       4.875  $      3.750
</TABLE>

Holders

As  at  March 16, 2001 there were approximately 1,800 registered shareholders of
record  of  NetNation's  common  stock.

Dividends

NetNation  has  not declared any cash dividends on its common stock and does not
intend  to pay cash dividends in the foreseeable future.  NetNation's  policy is
to  reinvest  all  earnings  into  the  business.

                     RECENT SALES OF UNREGISTERED SECURITIES

All  amounts  shown  under  this  item  are  in  U.S.  dollars.

On  March  3, 2000, NetNation completed a private placement of 250,000 shares of
its  common  stock  at  a  price  of  $10.00  per  share  for  gross proceeds of
$2,500,000.  As  part  of  the  private  placement,  the  investor also received
warrants which entitled it to purchase one additional common share for every two
shares  it originally purchased.  The warrants are exercisable during a two-year
period  at  $12  per  common share.  The Company may require the exercise of the
warrants  during  this  time  period if certain financial conditions are met, in
which  case  the Company will receive an additional $1,500,000 and will issue an
additional  125,000 common shares.  The offering was made to Pictet Ltd. without
registration  under  the  Act,  in reliance upon the exemption from registration
afforded  by  506  of Regulation D under the Act.  If the exemption under 506 of
Regulation D is not available, NetNation believes that this sale was also exempt
under  Regulation  S and 4(2) under the Act, due to the foreign residency of the


                                       27
<PAGE>
purchaser,  their  level  of sophistication and the limited number of investors.
The  price per share in the offering was determined by the board of directors of
NetNation  based  on  the then current market price for the shares.  At the time
the transaction was under negotiation, the share price was trading in the $4.563
to  $17.875 range and the offering price reflected the size, volatility and risk
commensurate  with  the  nature  of  the  transaction.

NetNation  has not sold any securities in reliance upon a registration statement
filed  under  the  Securities  Act.


ITEM  6:  SELECTED  FINANCIAL  DATA
-----------------------------------

                                    OVERVIEW

On  April 7, 1999, NetNation acquired 100% of the Canadian Subsidiary.  Prior to
the  acquisition,  there were no significant business operations.  In accordance
with generally accepted accounting principles this transaction was accounted for
as  a  recapitalization  of  the  Canadian Subsidiary, as if it issued stock for
consideration  equal  to the net monetary assets of NetNation.  Accordingly, the
results  from  the  Canadian  Subsidiary  are  presented  as  the  prior  period
comparative  information  of  the  consolidated  companies.

For  the  year  ended  December  31,  2000, NetNation had revenue of $5,011,859,
representing  an  increase  of  100%  over  the previous year.  Since inception,
NetNation  has  focused  on  maximizing  the  growth  of  its  customer base and
expanding  the  range  of  services  and  products  offered.

Prior to April 1999, NetNation did not raise significant external equity or debt
to  assist  in  growth.  Historically,  NetNation has reinvested all excess cash
flow  in  order  to  maximize  growth.  The  majority  of any surplus funds were
invested  in  expanded  marketing  activities,  particularly  advertising  since
advertising  has  been  NetNation's  prime  driver  of  new   business  and  has
consistently  proven  its  ability to generate revenue growth and new customers.

On  April  7, 1999, NetNation raised $0.9 million through the issuance of common
shares.  On  April  12,  1999,  NetNation  raised  a  further  $1.1  million  of
convertible  debt financing which was subsequently converted to common shares on
February  18, 2000.  On March 3, 2000, NetNation raised $2.5 million through the
issuance  of  common  shares.


                                       28
<PAGE>
                             SELECTED FINANCIAL DATA
===========================================================================
                                        Years ended December 31,
                                           2000          1999          1998
---------------------------------------------------------------------------

Sales                               $ 5,011,859   $ 2,511,021   $1,108,430

Gross profit                          3,199,603     1,799,065      687,191

Expenses
    Sales & marketing                 2,977,927     1,575,699      461,913
    General & admin.                  3,352,296     1,472,687      303,400
    Depreciation                        340,977        95,445       31,428
    Write-off of intellectual
      property                          500,000            --           --

Net loss                              3,971,597     1,344,766      124,677

Loss per share                      $      0.26   $      0.10   $     0.01

Weighted average number              15,316,804    13,164,836    9,692,030
of common shares

Total assets                        $ 3,130,828   $ 1,518,165   $  177,359

Debentures payable                  $        --     1,100,000   $       --

Cash generated by (used for)
    Operating activities            $(1,123,555)  $  (604,773)  $   94,177
    Investing activities             (1,514,787)     (435,922)     (86,590)
    Financing activities              2,399,010     1,982,909       (4,734)
===========================================================================


                                       29
<PAGE>
ITEM 7:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
--------------------------------------------------------------------------------
OF  OPERATION
-------------

                                OPERATING RESULTS

YEAR  ENDED  DECEMBER  31,  2000  COMPARED  WITH  YEAR  ENDED  DECEMBER 31, 1999

Revenue

NetNation's  2000  revenue  was generated from providing web hosting services to
SMEs  and  domain  name  registration.  Also included in revenue were co-located
server  services;  during  the  year  2000, however, these were relatively minor
contributors.  NetNation's  web  hosting customers normally pay a set-up fee and
regular charges, either monthly, quarterly or annually, thereafter.  There are a
variety  of  hosting  packages  offered  by NetNation in addition to a number of
value-added  services  and  products,  to  enable customers to easily select and
modify  a  solution  that  precisely  meets  their  individual  requirements.

NetNation's  2000  revenues  were  derived  from  Web Hosting (72%), Domain Name
Registration  services  (26%),  and Server Co-Location (2%).  As at December 31,
2000,  NetNation  had registered approximately 150,000 Internet domain names and
was  hosting  more than 16,000 web-sites.  NetNation's products and services are
sold  worldwide, directly to customers and through VARs (Value Added Resellers).

In  December  1999,  the  SEC issued Staff Accounting Bulletin No. 101, "Revenue
Recognition  in Financial Statements" ("SAB 101").  SAB 101 and related material
indicates  that  the fair value of initial set-up fees should be recognized over
the estimated period of service.  The Company's contracts generally include such
fees.  The  Company  has  determined  the  impact  of  SAB 101 and the resulting
cumulative  adjustment  of $597,950 has been recorded in the Company's financial
statements  in  the  fourth  quarter  of 2000.  The effect on first quarter 2000
results  if the Company were to restate the previously reported results would be
that  revenue and gross profit would decrease by $423,217 and the net loss would
increase by the same amount.  The effect on second quarter 2000 results would be
that  revenue and gross profit would decrease by $173,677 and the net loss would
increase  by  the same amount.  The effect on the third quarter results would be
that  revenue  and gross profit would decrease by $21,764 and the net loss would
increase  by  the  same  amount.

NetNation's  2000  revenue of  $5,011,859  was an  increase  of  $2,500,838, or
100%, over  1999  revenue.  During  2000,  the  number of sites hosted increased
approximately  60%,  from  10,000  to 16,000, and the number of resellers in the
network  grew  approximately  60%.  The  growth  in  hosted  sites  and revenue
was entirely  "organic"  and  resulted  from  a  significant  numbe  of valuable
partnerships  and  reselling  relationships  established  during  the  year.

Cost  of  Sales

Cost  of  sales  increased  $1,100,300  or 155% from 1999 and as a percentage of
revenues,  increased  from  28%  to  36%.  Part of the change as a percentage of
revenue was due to the effect of the SAB 101 adjustment in 2000 mentioned above.
The  majority  of  cost  of  sales  consists  of personnel costs for the network
operations  center  and technical support and the costs to register domain names
for  the  Company's  customers.

Sales  and  Marketing  Expenses

Sales  and  marketing  expenses  rose  $1,402,228,  or  89%, from 1999, and as a
percentage  of  revenue,  decreased  from  63%  to 59%.  The increase was due to
higher  expenditures on advertising and the increase in the number of personnel.
The  largest  single  expenditure  category  in  sales  and  marketing  expenses
continues to be the advertising expenditures.  Advertising, online and print, is
considered  to  be  a  significant  driver  of NetNation's web hosting business.


                                       30
<PAGE>
In March 2000, an equity financing was secured that allowed NetNation to further
increase  advertising  activities  in  support  of  its  internal  growth  plan.
NetNation's  advertising  is  focused  in media where NetNation's advertising is
believed  to  best engage the attention of the target hosting market, small- and
medium-sized  businesses.

General  and  Administrative  Expenses

General  and  administrative  expenses  include  expenditures  on administrative
personnel,  rent,  general  office  costs,  professional  advisors   and  public
relations.  In  2000,  general and administrative expenses increased $1,879,609,
or  128%,  over 1999, and as a percentage of revenue, increased from 59% to 67%.
The overall increase was due mainly to additional personnel, the amortization of
the  deferred  compensation  expense,  additional rent on the Company's expanded
office  space,  and  increased  legal  costs.

The  Company has set up a provision of $381,254 for the remaining lease payments
on the lease on the San Diego premises.  As at December 1, 2000, the Company has
discontinued  lease  payments  due  to  a number of circumstances.  To date, the
landlord  has  not  commenced  legal  action  against  the  Company.  Should the
landlord  commence  legal  action  against  the  Company,  the  outcome  of  the
proceedings  is  unknown.  In  the event of a favourable outcome, a gain will be
recognized.

Write-Off  of  Intellectual  Property

In  2000,  the  Company made an unsuccessful attempt to acquire American Digital
Network  ("ADN"),  a  company  involved  in  the  web-hosting, ISP, and Internet
services  industry.  As  part of the planned acquisition, NetNation advanced ADN
$500,000  and  received  as  security  the  intellectual  property rights to the
eStoreManager  software.  The  acquisition  was terminated and NetNation has not
been  able  to  recover  its  advanced  funds  and  has  taken possession of the
eStoreManager  software.  If ADN is unable to repay the advances, NetNation will
retain  the  full  rights  to the eStoreManager software.  ADN has the option to
repurchase  the  software from NetNation at $500,000 plus 10% annual interest if
repurchased  by  February  10, 2001, $750,000 with no interest if repurchased by
May 10, 2001, and $1,500,000 with no interest if repurchased by August 10, 2001.
If  the  vendor  decides  to repurchase after February 10, 2001 and on or before
August  10, 2001, NetNation retains a non-exclusive rights to have a world-wide,
royalty-free,  perpetual license to use, distribute, and reproduce the software.
As  at  March  16,  2001,  ADN  has  not  exercised its option to repurchase the
software.   As  the  Company  does not expect to recover the amounts advanced to
ADN,  nor  does  it  expect  to make commercial use of the intellectual property
rights  acquired,  the  Company  has decided to write-off the amount advanced to
ADN.


YEAR  ENDED  DECEMBER  31,  1999  COMPARED  WITH  YEAR  ENDED  DECEMBER 31, 1998

Revenue

NetNation's  1999  revenue  was generated from providing web hosting services to
SMEs  and  domain  name  registration.  Also  included in revenue was co-located
server  services  but  for  1999  this  was  a   relatively  minor  contributor.
NetNation's web hosting customers normally pay a set-up fee and regular charges,
either  monthly,  quarterly  or  annually,  thereafter.  There  are a variety of
hosting  packages  offered  by  NetNation in addition to a number of value-added
services  and  products,  to  enable  customers  to  easily  select and modify a
solution  that  precisely  meets  their  individual  requirements.

NetNation's  1999  revenues  were  derived  from  Web Hosting (88%), Domain Name
Registration  services  (12%),  and Server Co-Location (1%).  As at December 31,
1999, NetNation had registered over 55,000 Internet domain names and was hosting
more  than  10,000  web-sites.   NetNation's  products  and  services  are  sold
worldwide,  directly  to  customers  and  through  VARs (Value Added Resellers).


                                       31
<PAGE>
NetNation's  1999  revenue of $2,511,021 was an increase of $1,402,591, or 128%,
over 1998 revenue.  During 1999, the number of sites hosted increased 117%, from
4,600 to over 10,000, and the number of resellers in the network grew 150%.  The
growth  in  hosted  sites and revenue was entirely "organic"  and resulted from
a significant  number  of  valuable  partnerships  and  reselling  relationships
established  during  the  year.

Cost  of  Sales

Cost  of  sales  increased  $290,717  or  69%  from  1998 and as a percentage of
revenues,  decreased from 38% to 28%.  The majority of cost of sales consists of
personnel  costs  for  the  network  operations  center  and  technical support.

Sales  and  Marketing  Expenses

Sales  and  marketing  expenses  rose  $1,113,786,  or 241%, from 1998, and as a
percentage  of  revenue, increased from 42% to 63%.  The significant majority of
sales  and  marketing  expenses  are  comprised of advertising expenditures.  In
fact,  during  1999,  82% of non-personnel sales and marketing expenses were for
online and print advertising. Advertising, online and print, is considered to be
a  significant  driver  of  NetNation's  web  hosting  business.

During  1998 expenditures were restricted on advertising to a level supported by
internal  cash generation.  In April 1999, an equity financing was secured which
allowed  NetNation to increase advertising activities in support of its internal
growth  plan.  NetNation's  advertising  is  focused  in media where NetNation's
advertising  is  believed  to  best  engage  the attention of the target hosting
market,  small-  and  medium-sized  businesses.

General  and  Administrative  Expenses

General  and  administrative  expenses  include  expenditures  on administrative
personnel,  rent,  general  office  costs,   professional  advisors  and  public
relations.  In  1999,  general and administrative expenses increased $1,169,287,
or  385%,  over 1998, and as a percentage of revenue, increased from 27% to 59%.
The  increase was due mainly to additional personnel and the additional costs of
professional  advisors  and  public  relations that are normally associated with
public  companies.

                         LIQUIDITY AND CAPITAL RESOURCES

Prior  to  1999,  NetNation's   strategy   required   funding   growth   through
internally-generated  cash  flows.  During  1999,  NetNation moved into the next
phase  of  its  growth  strategy  by entering the public markets as an operating
company.  NetNation  was  able  to  raise the capital required for the growth in
revenues during 1999 through private investment.  NetNation's financing strategy
calls for a minimization of debt financing in favor of equity financing whenever
feasible.

On April 7, 1999, NetNation acquired all of the outstanding common and preferred
shares  of  the  Canadian  Subsidiary  in  exchange  for  10,000,000  shares  of
NetNation's common stock issued from treasury.  These shares are subject to a 12
month  hold  period  from  April  7, 1999, in addition to volume restrictions on
resale  that  apply  thereafter  until  April  7,  2001,  and  affiliate  resale
restrictions  that may apply.  As part of the acquisition transaction, 1,000,000
shares  of  common  stock  were  cancelled  which  had  been held by an original
shareholder  who  was  no  longer  involved  in  the  operations of the company.

On  April  12, 1999, after the acquisition of the Canadian Subsidiary, NetNation
raised  $1,100,000  through the  sale of  two Series  A Convertible  Debentures,
both of which  originally matured  on  September 30,  2000.  Each  debenture  is
non-interest bearing and is convertible into 275,000 shares of common stock at a
rate  of  $2.00 per share.  On February 18, 2000, the holders of the convertible
debentures  exercised their option to convert the debentures to shares of common
stock.  NetNation  also  raised  $900,000 through a private placement of 450,000
shares  of  common  stock  at  $2.00  per  share.


                                       32
<PAGE>
During  the  summer  of  1999,  NetNation  issued  60,000 shares to an unrelated
company  in  return  for  investor  and  public  relations  services.

On  March  3,  2000, NetNation issued 250,000 common shares at $10 per share for
gross  proceeds of $2,500,000.  In addition, NetNation issued warrants entitling
the investors to purchase one additional share for every two shares they already
own.  The  warrants  are  exercisable  during  a  two-year  period  at  $12  per
additional  share purchased.  NetNation may require the exercise of the warrants
during  this  time period if certain financial conditions are met, in which case
NetNation will receive an additional $1,500,000 and will issue a further 125,000
shares  of  common  stock.

In  2000,  NetNation  utilized  net cash of  $1,123,555 for operating activities
which includes a positive contribution of $1,895,503 from working capital items.
NetNation  continued  to  build  its  brand  in  web  hosting  through increased
marketing  expenditures  included   in   the  operating  loss.   NetNation  also
established  itself  in  the  domain  name  registration  business  through  the
incorporation  of  its  wholly-owned  subsidiary   DomainPeople  Inc.  and   the
associated  marketing  expenditures.  NetNation  continued  to  expand  its data
center  through  investment  in  infrastructure.   To  fund  these  initiatives,
$2,348,942  was  raised  through  the  issuance  of common stock and the Company
entered  into   leasing  transactions   of  $51,565  for  part  of  its  capital
expenditures.  At  the  end  of  2000,  the  Company  had  $748,745  in cash and
equivalents.

In  1999, NetNation utilized net cash of $604,773 for operating activities which
includes  a  positive  contribution  of $252,490 from working capital items.  In
addition  to  increased  marketing  expenditures included in the operating loss,
NetNation  also set the stage for future growth by increasing investment in data
center  and  other equipment.  To fund these expenditures, $1,100,000 was raised
through  the issue of debentures and $932,211 through the issue of common stock.
At  the  end  of  1999,  the  Company  had  $988,077  in  cash  and equivalents.

In  1998,  NetNation  generated  sufficient cash from operations to fund capital
expenditures.  NetNation  did not raise significant equity or debt funding.  Net
cash  generated  from  operating  activities  was  $94,177  in  1998.

                        OUTLOOK: ISSUES AND UNCERTAINTIES

Refer  to  "Risk  Factors Affecting Future Operating Results" in this Form 10-K.


ITEM  7A:  QUANTITATIVE  AND  QUALITATIVE  DISCLOSURE  ABOUT  MARKET  RISK
--------------------------------------------------------------------------

NetNation  believes its exposure to overall foreign currency risk is immaterial.
NetNation  does  not  manage  or  maintain market risk sensitive instruments for
trading  or  other  purposes  and is, therefore, not subject to multiple foreign
exchange  rate  exposures.  As  disclosed  in  Item 7, on February 24, 2000, the
holders  of  the convertible debentures exercised their option and converted all
of  the  debentures into common shares.  After giving effect to this conversion,
the  Company  has no outstanding long-term indebtedness for which the Company is
subject  to  the  risk  of  interest  rate  fluctuations.

NetNation  reports  its  operations  in  US  dollars  and its currency exposure,
although  considered by NetNation as immaterial, is primarily between the US and
Canadian  dollars.  Exposure  to  the  currencies  of  other  countries  is also
immaterial  as international transactions are settled in US dollars.  Any future
financing  undertaken  by  NetNation  will  be  denominated  in  US dollars.  As
NetNation increases its marketing efforts, the related expenses are basically in
US  dollars  except  for  the  marketing efforts in the UK and Canada.  If these
advertisements  are coordinated through a US agency, then the expenses are in US
dollars.


                                       33
<PAGE>
ITEM  8:  FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA
---------------------------------------------------------

The  Consolidated   Financial  Statements   of  NetNation  Communications  Inc.,
including  the  Report  of Independent Auditors, are set forth beginning on page
F-1.

UNAUDITED  QUARTERLY  FINANCIAL  INFORMATION

  The following table sets forth selected unaudited quarterly information for
  the  Company's  last  eight  fiscal  quarters:

<TABLE>
<CAPTION>
==========================================================================================
                                                      Fiscal  2000  Quarter  End
                                           -----------------------------------------------
                                           March 31    June 30   September 30  December 31
------------------------------------------------------------------------------------------
<S>                                        <C>        <C>        <C>           <C>
Sales before cumulative adjustment (note)  1,414,732  1,423,387     1,390,814    1,380,876
Cumulative adjustment (note)                (423,217)  (173,677)      (21,764)      20,708
Sales after cumulative adjustment (note)     991,515  1,249,710     1,369,050    1,401,584
Gross profit.                                590,823    750,596       880,241      977,943
Net loss for the period                      582,302    635,191     1,067,571    1,686,533
Net loss per share                              0.04       0.04          0.07         0.11
==========================================================================================
</TABLE>

<TABLE>
<CAPTION>
==========================================================================================
                                                     Fiscal  1999  Quarter  End
                                           -----------------------------------------------
                                           March 31     June 30  September 30  December 31
------------------------------------------------------------------------------------------
<S>                                        <C>        <C>        <C>           <C>
Sales                                       425,891     484,308       606,601      994,221
Gross profit                                306,435     336,888       432,000      723,742
Net loss                                        909     273,900       495,382      574,575
Net loss per share                             0.00        0.03          0.05         0.02
</TABLE>

Footnote:  The  fourth  quarter  of  2000  includes a cumulative adjustment of a
reduction  in  revenue and income of $597,950 for a change in accounting policy.


ITEM  9:  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING AND
--------------------------------------------------------------------------------
FINANCIAL  DISCLOSURE
---------------------

No changes in and disagreements with accountants are reportable pursuant to this
item.


                                       34
<PAGE>
                                    PART III

ITEM 10:  DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  REGISTRANT
------------------------------------------------------------------

IDENTIFICATION  OF  DIRECTORS  AND  EXECUTIVE  OFFICERS

The  following  table contains information regarding the members of the Board of
Directors  and  the  Executive  Officers  of  the Company as of the Record Date:

Name             Age                Position(s)
---------------  ---  ----------------------------------------

David Talmor      43  Chairman, President and Director
---------------  ---  ----------------------------------------
Joseph Kibur      28  CEO and Director
---------------  ---  ----------------------------------------
Ernest Cheung     50  Director
---------------  ---  ----------------------------------------
Anil Wirasekara   44  Director
---------------  ---  ----------------------------------------
Calvin Mah        38  CFO
---------------  ---  ----------------------------------------
Jag Gill          31  General Counsel, Secretary and Director
---------------  ---  ----------------------------------------

All  of  the  officers identified above serve at the discretion of the Board and
have consented to act as officers of the Company.  The biographies for the above
individuals  are  presented  below:

DAVID TALMOR is Chairman of the Board and President of NetNation Communications,
Inc.,  Delaware,  U.S.A.  Mr.  Talmor was Chief Executive Officer of the Company
until  January  2000.  Previously,  he  was  appointed  Chairman  of  the Board,
President,  Chief  Executive  Officer and Secretary of NetNation Communications,
Inc.,  Delaware,  U.S.A.,  in  April  1999.  From  March 1997 to April 1999, Mr.
Talmor served as Director, Chief Executive Officer and President of the Canadian
subsidiary  of  NetNation  Communications, Inc.  Mr. Talmor has over 15 years of
business  experience,  both  in Financial/Business roles (more recently), and in
Electronics  Engineering roles (Israeli Air Force, Eldat and Moldat).  From 1996
to  1997,  he  was  President  of Minerva Ventures Management, Richmond, British
Columbia,  Canada,  investigating suitable technological companies as investment
and  acquisition  candidates.  From  1994  to  1995, he was Business Development
Manager  of  MacDonald  Dettwiler & Associates Ltd., Richmond, British Columbia,
Canada,  (www.mda.ca),  a  Canadian  company  in the field of satellites' ground
stations.  Mr. Talmor qualified as a Certified Public Accountant (CPA) in Israel
with  Kesselman  &  Kesselman,  Chartered  Accountants,  the  country's  largest
accounting  firm and associated with Coopers & Lybrand. Mr. Talmor received a BA
in Economics and Accounting, a B.Sc. in Statistics and an MBA, all from Tel-Aviv
University  in  1985,  1985  and  1988  respectively.  In  addition,  Mr. Talmor
received  an  Electronics  Diploma  from  both  "The  Technological Institute of
Tel-Aviv"  in  1976  and  from  "The  Israeli  Air-Force",  IDF  in  1978.

JOSEPH  KIBUR was appointed Chief Executive Officer of NetNation Communications,
Inc., Delaware, U.S.A. in September 2000.  He was appointed a Director and Chief
Operating  Officer of NetNation Communications, Inc., Delaware, U.S.A., in April
1999.  From  March  1997  to  April 1999, he served as Director, Chief Operating
Officer  and  Secretary  of the Canadian Subsidiary of NetNation Communications,
Inc.  From  1995 to 1997 Mr. Kibur operated his own Internet consulting business
(Superhighway  Consulting,   Vancouver,  British  Columbia,   Canada)  until  he
co-founded  the  Canadian  Subsidiary of NetNation Communications, Inc. with Mr.
David  Talmor.  Prior,  Mr.  Kibur  attended  Simon  Fraser University, Burnaby,
British  Columbia,  Canada, and in 1996 obtained his Bachelor of Science (B.Sc.)
degree  in  Management  and  Systems  Science  (Computer  Science,  Business and
Mathematics).

ERNEST  CHEUNG  has  served  as  Director  of  NetNation  Communications,  Inc.,
Delaware,  since  February  1999.  Mr.  Cheung  received  an  MBA in Finance and
Marketing  from Queen's University, in Kingston,  Ontario in 1975,  and obtained
a  Bachelors  Degree  in  Math in 1973  from  University  of  Waterloo, Ontario.
From  1984 to 1991 he was Vice President and Director, Capital Group Securities,
Ltd.  in  Toronto,  Canada.  From  1991 to 1993 he was Vice President of Midland
Walwyn Capital, Inc. of Toronto, Canada. From 1993 to 1994 he was Vice Chairman,
Tele  Pacific  International  Communications  Corp.  of Vancouver,  B.C.  He has
served  or  served  as  a  director  of  the  following  companies:


                                       35
<PAGE>
<TABLE>
<CAPTION>
Name of Issuer                    Symbol       Market         Position    From      To
--------------------------------  ------  -----------------  ----------  -------  -------
<S>                               <C>     <C>                <C>         <C>      <C>
Agro International Holdings Inc.  AOH     CDNX               President   Jan-97   Current
BIT Integration Technology Inc.   BGT     CDNX               VP Finance  Feb-96   Jun-97
China NetTV Holdings Inc.*        CNHD    OTCBB              President   May-00   Current
Drucker, Inc.*.                   DKIN    OTCBB              Secretary   Apr-97   Current
Global-Pacific Minerals Inc.      GPJ     TSE, CDNX                      Mar-97   Current
ITI World Investment Group Inc.   IWI.A   CDNX                           Jun-98   Current
NetNation Communications Inc.     NNCI    Nasdaq Small Cap.              Apr-99   Current
Pacific E-Link Corp.              PLC     CDNX                           Sep-92   Jun-95
Richco Investors Inc.             YRU.A   CDNX               President   May-95   Current
SpeechLink Communications Corp    SLCC    NASD Pink Sheet                May-98   Current
Spur Ventures Inc.                SVU     CDNX                           Mar-97   Current
Xin Net Corp.*                    XNET    OTCBB              Secretary   Mar-97   Current
<FN>

*  Reporting  Companies  in  US
</TABLE>

ANIL  WIRASEKARA  has  served  as  Director  of  NetNation Communications, Inc.,
Delaware,  since   October  1999.  In  1992,  Mr.  Wirasekara  joined  MacDonald
Dettwiler  and  Associates  Ltd.,  one  of Canada's largest space technology and
information  systems  companies  and  a  world  leader  in satellite mapping and
spatial  information  services,  as  the  Manager  of  Operations Accounting and
Information,  and  in  1995 was appointed Chief Financial Officer.  From 1988 to
1991,  he  was  Controller  and Secretary of Rainex Limited, a Vancouver company
involved  in project developments, technology transfers and international trade.
Mr.  Wirasekara  holds  the designations of a Chartered Accountant and Certified
Management  Accountant.  Mr.  Wirasekara  is  also  a  member  of  the Chartered
Institute  of  Management  Accountants  of  the U.K., the Chartered Institute of
Marketing  and Management of the U.K. and the Institute of Chartered Accountants
of  Sri  Lanka.

CALVIN  MAH  was  appointed Chief Financial Officer of NetNation Communications,
Inc.  in  February  2001. Prior to joining NetNation, from 1996 to 2000, Mr. Mah
was  CFO  of  Simba Technologies Inc., a privately-held, venture-backed software
development  company.  In  1995-96,  Mr.  Mah  was  Senior Financial Analyst for
Pacific  Forest  Products  Ltd.,  a  $400  million  publicly-traded  logging and
sawmilling  company  with  1,100 employees.  In 1993-95, Mr. Mah was Controller
of  Brookdale  International  Systems  Inc.,  a  privately  held  developer  and
manufacturer  of  emergency respiratory devices for industrial and consumer use.
From  1989 to 1993, Mr. Mah was Manager of Corporate Finance for Granges Inc., a
$60  million  publicly-traded  gold, silver, copper and zinc mining company with
operations  in  the U.S. and Canada.  Mr. Mah is  professionally  qualified as a
Chartered  Accountant.  He  graduated  with a Bachelor of Commerce in Accounting
and  Management  Information  Systems  (Honours)  from the University of British
Columbia  in  1985.

JAG GILL was appointed General Counsel of NetNation Communications, Inc. in July
1999.  During  May  1997  to  July  1999,  Mr.  Gill  articled with Baker Newby,
Abbotsford  and  became Associate Solicitor prior to joining NetNation. Mr. Gill
attended Osgoode Hall Law School, York University, Toronto Ontario and graduated
with  a  Bachelor of Laws in 1997. He received his Bachelor of Arts in Economics
in  1993  from  the  University  of  Victoria  in  Canada.

Relationships  Among  Directors  or  Executive  Officers

There  are  no  family  relationships  among  any  of the directors or executive
officers  of  the  Company.

             SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section  16(a)  of the Securities Exchange Act of 1934, as amended, requires the
Company's  Directors,  executive officers and persons who own more than 10% of a
registered  class  of  the  Company's  securities  to  file with the SEC initial
reports  of  ownership  and  reports of changes in ownership of common stock and
other  equity  securities  of  the  Company.  Directors,  executive officers and
greater-than-10%  stockholders  are  required  by  SEC regulation to furnish the
Company  with  copies  of  all  Section  16(a)  reports  they  file.


                                       36
<PAGE>
To  the  Company's  knowledge,  based  solely  on a review of the copies of such
reports  furnished  to  the  Company  and  written representations that no other
reports  were required, the Company believes that during the year ended December
31,  2000,  its  Directors, Executive Officers and greater-than-10% stockholders
complied  with  all  Section  16(a)  filing  requirements.

ITEM 11:  EXECUTIVE  COMPENSATION
---------------------------------

                           SUMMARY COMPENSATION TABLE

The  following  table  discloses  all plan and non-plan compensation awarded to,
earned  by,  or paid to the Chief Executive Officer ("CEO") or individual acting
in  a  similar capacity, and the four most highly compensated executive officers
for the year ended December 31, 2000.  The table includes executive compensation
paid  to the principals of the Canadian Subsidiary prior to it being acquired by
the  Company.

<TABLE>
<CAPTION>
                               Annual Compensation                      Long Term Compensation
                     ------------------------------------------  ----------------------------------
                                                                           Awards          Payouts
                                                                 ------------------------  --------
                                                                  Restricted
                                                                    Shares     Securities
                                                                      Or          Under
                                                                  Restricted    Options/
Name and                                             Other           Share        SARs        LTIP
Principal             Year     Salary   Bonus        Annual          Units       Granted    Payouts
Position               ***     (USD$)    ($)    Compensation ($)      ($)          (#)        ($)
(a)                    (b)      (c)      (d)          (e)             (f)          (g)        (h)
----------------------------------------------------------------------------------------------------
<S>                  <C>      <C>       <C>     <C>               <C>          <C>          <C>
David Talmor,        2000     105,348
Chairman, President, 1999**   109,029       -                 -            -            -         -
and Director   ****  1998*     56,395       -                 -            -            -         -
<FN>

*    Compensation in 1998 precedes the acquisition of the Canadian Subsidiary by
     the  Company,  and  accordingly  the  Principal  Position  and compensation
     columns  relate  to  payments  made  by the Canadian Subsidiary and not the
     Company.

**   As  the  acquisition  of the Canadian Subsidiary by the Company occurred on
     April 7, 1999, the Principal Position and compensation prior to this relate
     to  payments  made by the Canadian Subsidiary and not the Company. Payments
     of  $36,000  were  made by the Canadian Subsidiary to David Talmor with the
     remainder  of  the  compensation  for  1999  being  paid  by  the  Company.

***  The Company's fiscal year end was changed to December 31, in order to match
     the  fiscal  year  end  of  the Canadian Subsidiary. The information in the
     above  table is presented as at December 31 for each of the relevant years.
</TABLE>

           OPTION/SAR GRANTS OR EXERCISES AND LONG TERM INCENTIVE PLAN

There  were  no  stock  option grants, stock appreciation rights (SAR's) grants,
option/SAR  exercises or long term incentive plans (LTIP's) awarded to the named
executive  officers  in  the  last  three  financial  years.


                                       37
<PAGE>
                        DEFINED BENEFIT OF ACTUARIAL PLAN

The  Company  does  not  have  a  defined  benefit  or  actuarial plan in place.

                            COMPENSATION OF DIRECTORS

Directors  are  not  compensated  for their service as directors other than with
stock  options.  All  directors  are  reimbursed  for  any  reasonable  expenses
incurred  in the course of fulfilling their duties as a director of the Company.

             EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT  AND
                         CHANGE-IN-CONTROL ARRANGEMENTS

There are currently no employment contracts in place with the executive officers
of  the  Company  other  than  the  standard  employment agreements used for all
employees.  The  Company  intends  to  review  its  contracts  with  certain key
individuals,  including  the  rights  and  obligations  of  the Company upon the
resignation  of  an  officer,  or  upon  a  change  in  control  of the Company.

Compensation  Committee  Interlocks  and  Insider  Participation

The members of the Compensation Committee are Mr. Cheung Mr. Wirasekara.  All of
the  members  of  the  committees  are  directors  of  the  Company.

Board  Compensation  Committee  Report  on  Executive  Compensation

The  Board  Compensation  Committee  was  formed  March 2000.  The board has not
prepared  a report on executive compensation at this time. As at March 16, 2001,
no  policies  have  been  defined  with  respect  to  compensation for executive
officers  by  the  committee.


                                       38
<PAGE>
                                PERFORMANCE GRAPH

The  following  graph  compares  the  cumulative total stockholder return on the
Company's  common stock with the cumulative total return on The Nasdaq Composite
Index  and  The  Nasdaq  Telecommunications  Index.  These two indices have been
chosen  for  their relevance in assessing the performance of the Company against
that  of  companies  in  the  same  or  similar  lines  of business.  The period
displayed  commences on September 30, 1999, being the end of the month date that
the  Company's common stock became registered under Section 12 of the Securities
Exchange  Act  of  1934, as amended.  The graph assumes an investment of $100 on
September  30,  1999,  and  the  reinvestment  of  any  dividends.

             [                  PERFORMANCE GRAPH
              Comparison of Cumulative Total Return to Stockholders
                    September 30, 1999 to December 31, 2000        ]

<TABLE>
<CAPTION>
----------------------------------------------------------
                    NetNation        Nasdaq       Nasdaq
                    Communications   Composite    Telecom
                    Inc.             Index        Index
----------------------------------------------------------
<S>                 <C>              <C>          <C>
September 30, 1999  $100.00          $100.00      $ 100.00
October 31, 1999    $103.13          $108.02      $ 118.69
November 30, 1999   $109.38          $121.48      $ 131.39
December 31, 1999   $115.63          $148.18      $ 162.52
January 31, 2000    $231.25          $143.49      $ 158.04
February 28, 2000   $294.53          $171.03      $ 182.64
March 31, 2000      $299.61          $166.52      $ 176.38
April 30, 2000      $181.25          $140.58      $ 142.53
May 31, 2000        $121.88          $123.84      $ 120.81
June 30, 2000       $110.94          $144.42      $ 139.36
July 31, 2000       $128.13          $137.17      $ 128.26
August 31, 2000     $100.00          $153.17      $ 133.09
September 30, 2000  $ 96.88          $133.74      $ 116.83
October 31, 2000    $ 75.78          $122.70      $  99.89
November 30, 2000   $ 71.88          $ 94.60      $  74.16
December 31, 2000   $ 75.00          $ 89.96      $  74.18
</TABLE>


                                       39
<PAGE>
ITEM 12:  SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS  AND  MANAGEMENT
-------------------------------------------------------------------------------

The  following  table  sets  forth  certain information regarding the beneficial
ownership  of  the  common  stock  as  of  March  16,  2001  by

    (i)   each  person  or  entity known by the Company to beneficially own more
          than  5%  of  the  common  stock;
    (ii)  each  Director  of  the  Company;
    (iii) each  of  the  named  Executive  Officers  of  the  Company;  and
    (iv)  all  Directors  and  executive  officers  as  a  group.

Except  as  noted  below, the Company believes that the beneficial owners of the
common  stock  listed below, based on information furnished by such owners, have
sole  voting  and  investment  power  with  respect  to  such  shares.

<TABLE>
<CAPTION>
--------------  ----------------------------------------  --------------------  -------------------
                            Name and Address              Amount of Beneficial
Title of Class            Of Beneficial Owner                  Ownership        Percent of Class(2)
--------------  ----------------------------------------  --------------------  -------------------
<S>             <C>                                       <C>                   <C>
                David Talmor(3)
Common          Chairman, President,  and Director                4,187,000(1)               27.49%
--------------  ----------------------------------------  --------------------  -------------------
                Joseph Kibur(3)
Common          CEO and Director                                     4,267,000               28.01%
--------------  ----------------------------------------  --------------------  -------------------
                Ernest Cheung
                Director
                830-789 West Pender Street,
Common          Vancouver, British Columbia, V6C 1H2                         0                   0%
--------------  ----------------------------------------  --------------------  -------------------
                Jag Gill(3)
                General Counsel and Secretary and
Common          Director                                                36,000                0.24%
--------------  ----------------------------------------  --------------------  -------------------
                Calvin Mah(3)
Common          CFO                                                          0                   0%
--------------  ----------------------------------------  --------------------  -------------------
                Anil Wirasekara
                Director
                13800 Commerce Parkway, Richmond,
Common          British Columbia, V6V 2J3                                    0                   0%
--------------  ----------------------------------------  --------------------  -------------------
                All Executive Officers and Directors as
Common          a Group (6 persons)                                  8,490,000               55.74%
--------------  ----------------------------------------  --------------------  -------------------
<FN>
1  2,093,500  common shares beneficially held by David Talmor are registered in the name of Shelley
   Talmor,  wife.

2  Based  on a total issued and outstanding share capital as at March 16, 2001 of 15,232,321 common
   shares.

3  The  business  address for the individuals indicated above is : 1410 - 555 West Hastings Street,
   Vancouver,  British  Columbia,  Canada,  V6B  4N6.
</TABLE>

ITEM 13:  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS
------------------------------------------------------------

No  transactions  with management or other parties occurred during the year that
would  otherwise  be  reported  under  this  section.

                                       40
<PAGE>
                                     PART IV

ITEM 14:  EXHIBITS,  FINANCIAL  STATEMENT  SCHEDULES  AND  REPORTS  ON FORM 8-K
-------------------------------------------------------------------------------

1)  FINANCIAL  STATEMENTS

The  following  consolidated  financial  statements of the Company and the notes
thereto,  the  related  reports  thereon  of  the  independent  certified public
accountants,  and financial statement schedules, are filed pursuant to Item 8 of
this  Report:

<TABLE>
<CAPTION>
Description                                                                                 Page
-----------                                                                                 ----
<S>                                                                                         <C>
Independent Auditors' Report dated March 7, 2001                                            F-1

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

Consolidated Statements of Operations for the years ended December 31, 2000, 1999 and 1998  F-3

Consolidated Statement of Stockholders' Equity (Deficiency) for the years ended
  December 31, 2000, 1999 and 1998                                                          F-4

Consolidated Statements of Cash Flows for the years ended December 31, 2000, 1999 and 1998  F-5

Notes to Consolidated Financial Statements                                                  F-6
</TABLE>

2)  REPORTS  ON  FORM  8-K

No  reports  on  Form 8-K were filed by the Company during the fourth quarter of
2000.

3)  LIST  OF  EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER   DESCRIPTION
-------  -----------
<C>      <S>
   2 **  Agreement dated March 31, 1999 between the shareholders of NetNation (The
         Canadian Subsidiary), NetNation (The  Canadian Subsidiary), and NetNation
         (formerly Collectibles Entertainment Inc.)

 3.1 **  Articles  of  Incorporation

 3.2 **  By-laws

 4.1 **  Convertible Debenture for $550,000 Maturing on September 30, 2000  issued
         to Polaris Investitionen Ltd.

 4.2 **  Convertible Debenture for $550,000  Maturing on September 30, 2000 issued
         to Beste Investitionen Ltd.

     21  List of Subsidiaries

     **  Incorporated by reference from the  Registration Statement  on Form 10 of
         the Registrant filed with the Securities and Exchange Commission on July
         29, 1999, as amended.
</TABLE>


                                       41
<PAGE>
                                   SIGNATURES

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

NETNATION  COMMUNICATIONS  INC.

By:/s/  Joseph  Kibur
   ------------------
Name:  Joseph  Kibur
Title:  Chief  Executive  Officer

Dated:  March  29,  2001.


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

<TABLE>
<CAPTION>
      SIGNATURE                            TITLE                          DATE
<S>                     <C>                                          <C>

By:/s/ David Talmor     President and Chairman of the Board and      March 29, 2001
----------------------
Name:  David Talmor     Director


By:/s/ Joseph Kibur     Chief Executive Officer and Director         March 29, 2001
----------------------
Name:  Joseph Kibur     (Principal Executive Officer)


By:/s/ Jag Gill         General Counsel and Secretary and Director   March 29, 2001
----------------------
Name:  Jag Gill


By:/s/ Anil Wirasekara  Director                                     March 29, 2001
----------------------
Name:  Anil Wirasekara


By:/s/ Ernest Cheung    Director                                     March 29, 2001
----------------------
Name:  Ernest Cheung


By:/s/ Calvin Mah       Chief Financial Officer                      March 29, 2001
----------------------
Name:  Calvin Mah       (Principal Accounting Officer)

</TABLE>


                                       42
<PAGE>
INDEX  TO  CONSOLIDATED  FINANCIAL  STATEMENTS

<TABLE>
<CAPTION>
Description                                                                                 Page
-----------                                                                                 ----
<S>                                                                                         <C>
Independent Auditors' Report dated March 7, 2001                                            F-1

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

Consolidated Statements of Operations and Comprehensive Loss for the years ended
December 31, 2000, 1999 and 1998                                                            F-3

Consolidated Statement of Stockholders' Equity (Deficiency) for the years ended
December 31, 2000, 1999 and 1998                                                            F-4

Consolidated Statements of Cash Flows for the years ended December 31, 2000, 1999 and 1998  F-5

Notes to Consolidated Financial Statements                                                  F-6
</TABLE>


                                       43
<PAGE>




AUDITORS'  REPORT  TO  THE  STOCKHOLDERS

We have audited the consolidated balance sheets of NetNation Communications Inc.
as  at December 31, 2000 and 1999, and the consolidated statements of operations
and comprehensive loss, stockholders' equity (deficiency) and cash flows for the
years  ended  December  31,  2000,  1999 and 1998.  These consolidated financial
statements  are  the  responsibility  of  the  Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements  based  on  our  audits.

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

In  our  opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at December 31, 2000
and  1999,  and  the  results of its operations and its cash flows for the years
ended  December  31,  2000,  1999 and 1998 in accordance with generally accepted
accounting  principles  in  the  United  States  of  America.




/s/ Chartered  Accountants

Vancouver,  Canada
March  7,  2001


                                      F-1
<PAGE>
<TABLE>
<CAPTION>
NETNATION  COMMUNICATIONS  INC.
Consolidated  Balance  Sheets
(Expressed  in  United  States  dollars)


December 31, 2000 and 1999
=================================================================================================
                                                                           2000          1999
-------------------------------------------------------------------------------------------------
<S>                                                                    <C>           <C>
Assets

Current assets:
  Cash and cash equivalents                                            $   748,745   $   988,077
  Accounts receivable                                                       33,208        10,961
  Prepaid expenses and deposits                                            131,879        63,208
  Deferred expenses                                                        541,000             -
-------------------------------------------------------------------------------------------------
                                                                         1,454,832     1,062,246

Deferred expenses, non current portion                                     125,044             -
Fixed assets, net of accumulated depreciation of $471,391
    (1999 - $134,885) (note 4)                                           1,450,952       455,919
Investments (note 5)                                                       100,000             -
-------------------------------------------------------------------------------------------------

                                                                       $ 3,130,828   $ 1,518,165
=================================================================================================

Liabilities and Stockholders' Equity (Deficiency)

Current liabilities:
  Accounts payable and accrued liabilities                             $   593,518   $   189,146
  Contingent lease payments (note 11(a))                                   381,254             -
  Customer deposits                                                         64,517             -
  Deferred revenue                                                       1,901,042       400,007
  Capital lease liability (note 8)                                          13,867             -
  Debentures payable (note 6)                                                    -     1,100,000
-------------------------------------------------------------------------------------------------
                                                                         2,954,198     1,689,153

Deferred revenue, non current portion                                      301,287             -
Capital lease liability, non current portion (note 8)                       37,698             -

Stockholders' equity (deficiency):
  Share capital (note 7):
    Authorized:  50,000,000 common shares with a par value of
      $0.0001 each
    Issued:  15,310,321 common shares, and 5,000 to be issued shares         1,532         1,461
  Additional paid-in capital (notes 7(b) and 7(c))                       5,970,896     2,339,471
  Deferred stock-based compensation                                       (666,732)   (1,015,466)
  Accumulated other comprehensive income                                    14,601        14,601
  Deficit                                                               (5,482,652)   (1,511,055)
-------------------------------------------------------------------------------------------------
                                                                          (162,355)     (170,988)
-------------------------------------------------------------------------------------------------

                                                                       $ 3,130,828   $ 1,518,165
=================================================================================================
</TABLE>

Commitment  (note  8)
Contingencies  (note  11)
Subsequent  events  (note  12)

See  accompanying  notes  to  consolidated  financial  statements.

Approved  on  behalf  of  the  Board:

 /s/ Joseph Kibur              Director /s/ David Talmor              Director
------------------------------          ------------------------------

                                      F-2
<PAGE>
<TABLE>
<CAPTION>
NETNATION  COMMUNICATIONS  INC.
Consolidated Statements of Operations and Comprehensive Loss
(Expressed  in  United  States  dollars)
==================================================================================
                                                 Years  ended  December  31,
                                                 ---------------------------
                                                2000         1999         1998
----------------------------------------------------------------------------------
<S>                                          <C>          <C>          <C>
Sales                                        $ 5,011,859  $ 2,511,021  $1,108,430

Cost of sales                                  1,812,256      711,956     421,239
----------------------------------------------------------------------------------

Gross profit                                   3,199,603    1,799,065     687,191

Expenses:
  Sales and marketing                          2,977,927    1,575,699     461,913
  General and administration                   3,352,296    1,472,687     303,400
  Write-off of intellectual property (note 3)    500,000            -           -
  Depreciation and amortization                  340,977       95,445      31,428
----------------------------------------------------------------------------------
                                               7,171,200    3,143,831     796,741
----------------------------------------------------------------------------------

Loss for the year                              3,971,597    1,344,766     109,550

Other comprehensive income (loss):
  Foreign currency translation adjustments             -            -     (15,127)
----------------------------------------------------------------------------------

Comprehensive loss                           $ 3,971,597  $ 1,344,766  $  124,677
==================================================================================

Loss per share, basic and diluted            $      0.26  $      0.10  $     0.01
==================================================================================

Weighted average shares used in comparing
  loss per share, basic and diluted           15,316,804   13,164,836   9,692,030
==================================================================================
</TABLE>

See  accompanying  notes  to  consolidated  financial  statements.


                                      F-3
<PAGE>
<TABLE>
<CAPTION>
NETNATION  COMMUNICATIONS  INC.
Consolidated  Statement  of  Stockholders'  Equity  (Deficiency)
(Expressed  in  United  States  dollars)
==================================================================================================================================
                                                                                 Deferred    Accumulated
                                                                  Additional       stock-       other
                                                                    paid-in        based    comprehensive
                                            Shares      Amount      capital     compensation    income     Deficit        Total
----------------------------------------------------------------------------------------------------------------------------------
                                                           $           $             $            $           $             $
<S>                                      <C>           <C>        <C>          <C>             <C>       <C>           <C>
Balance at December 31, 1997                       -          -            -               -      (526)      (19,423)     (19,949)

Issuance of common stock for cash          1,097,000        110       29,590               -         -             -       29,700

Foreign exchange gain                              -          -            -               -    15,127             -       15,127

Excess of cost over carrying value of
  common stock redeemed and cancelled              -          -            -               -         -       (37,316)     (37,316)

Loss for the year                                  -          -            -               -         -      (109,550)    (109,550)
----------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1998                 1,097,000        110       29,590               -    14,601      (166,289)    (121,988)

Issuance of common stock for cash          4,000,000        400       39,600               -         -             -       40,000

Common stock cancelled in conjunction
  with the recapitalization               (1,000,000)         -            -               -         -             -            -

Adjustment in accordance with
  recapitalization accounting
  principles                                       -       (100)     (62,864)              -         -             -      (62,964)

Common stock issued to effect the
  recapitalization                        10,000,000      1,000       25,672               -         -             -       26,672

Issuance of common stock for cash            450,000         45      899,955               -         -             -      900,000

Issuance of common stock for services
  provided to the Company                     60,000          6      266,394               -         -             -      266,400

Deferred stock-based compensation                  -          -    1,141,124      (1,141,124)        -             -            -

Amortization of deferred stock-based
  compensation                                     -          -            -         125,658         -             -      125,658

Loss for the year                                  -          -            -               -         -    (1,344,766)  (1,344,766)
----------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1999                14,607,000      1,461    2,339,471      (1,015,466)   14,601    (1,511,055)    (170,988)

Conversion of debentures to common
  stock                                      550,000         55    1,099,945               -         -             -    1,100,000

Cash proceeds from private placement of
  common stock, net of offering costs        250,000         25    2,348,437               -         -             -    2,348,462

Deferred stock-based compensation                  -          -      (12,829)         12,829         -             -            -

Amortization of deferred stock-based
  compensation                                     -          -            -         432,785         -             -      432,785

Issuance of common stock to settle
share issue costs                              5,000          1       49,999               -         -             -       50,000

Issuance of common stock for cash             48,000          4       97,356         (96,880)        -             -          480

Common shares to be issued                     5,000          1       49,999               -         -             -       50,000

Cancellation of common stock                (149,679)       (15)      (1,482)              -         -             -       (1,497)

Loss for the year                                  -          -            -               -         -    (3,971,597)  (3,971,597)
----------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2000                15,315,321      1,532    5,970,896        (666,732)   14,601    (5,482,652)    (162,355)
==================================================================================================================================
</TABLE>

See  accompanying  notes  to  consolidated  financial  statements.


                                      F-4
<PAGE>
<TABLE>
<CAPTION>
NETNATION  COMMUNICATIONS  INC.
Consolidated  Statements  of  Cash  Flows
(Expressed  in  United  States  dollars)
=============================================================================================
                                                             Years  ended  December  31,
                                                             ---------------------------
                                                           2000          1999         1998
---------------------------------------------------------------------------------------------
<S>                                                    <C>           <C>           <C>
Cash flows from operating activities:
  Loss for the year                                    $(3,971,597)  $(1,344,766)  $(109,550)
  Items not involving cash:
    Depreciation and amortization                          340,977        95,445      31,428
    Value assigned to shares issued for services                 -       266,400           -
    Value assigned to shares issued in settlement
      of share issue costs                                  50,000             -           -
    Value assigned to shares to be issued for
      settlement of share issue costs                       50,000             -           -
    Employee stock-based compensation                      432,785       125,658           -
    Loss on disposal of fixed asset                         78,777             -           -
  Changes in non-cash operating working capital:
    Accounts receivable                                    (22,247)        1,674      (7,324)
    Prepaid expenses and deposits                          (68,671)      (59,789)        437
    Deferred expenses                                     (666,044)            -           -
    Accounts payable and accrued liabilities               404,372        91,346      53,514
    Contingent lease payments                              381,254             -           -
    Customer deposits                                       64,517             -           -
    Deferred revenue                                     1,802,322       219,259     125,672
---------------------------------------------------------------------------------------------
  Net cash provided by (used in) operating activities   (1,123,555)     (604,773)     94,177
Cash flows from investing activities:
  Purchase of fixed assets                              (1,414,787)     (435,922)    (91,327)
  Purchase of investments                                 (100,000)            -           -
  Proceeds on disposal of fixed assets                           -             -       4,737
---------------------------------------------------------------------------------------------
  Net cash used for investing activities                (1,514,787)     (435,922)    (86,590)
Cash flows from financing activities:
  Redemption of capital                                          -       (49,302)     (5,860)
  Issue of debentures                                            -     1,100,000           -
  Lease financing                                           51,565             -           -
  Issue of share capital, net of share issue costs       2,348,942       932,211       1,126
  Cancellation of shares                                    (1,497)            -           -
---------------------------------------------------------------------------------------------
  Net cash provided by financing activities              2,399,010     1,982,909      (4,734)
Effect of exchange rates on cash and cash equivalents            -             -      15,127
---------------------------------------------------------------------------------------------

Increase (decrease) in cash and cash equivalents          (239,332)      942,214      17,980

Cash and cash equivalents, beginning of period             988,077        45,863      27,883
---------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period               $   748,745   $   988,077   $  45,863
=============================================================================================

Supplementary information:
  Cash paid for:
    Interest                                           $     2,350   $         -   $   6,934
    Income taxes                                                 -           959           -
  Non-cash transactions:
    Shares issued to third parties for services            100,000       266,400           -
    Conversion of debentures to common stock             1,100,000             -           -
    Shares issued to employees for services                      -     1,141,124           -
=============================================================================================
</TABLE>

See  accompanying  notes  to  consolidated  financial  statements.


                                      F-5
<PAGE>
NETNATION  COMMUNICATIONS  INC.
Notes  to  Consolidated  Financial  Statements
(Expressed  in  United  States  dollars)

Years  ended  December  31,  2000,  1999  and  1998
================================================================================

1.   DESCRIPTION  OF  BUSINESS:

     NetNation  Communications  Inc.  (the "Company") was incorporated on May 7,
     1998  under the laws of the State of Delaware as Collectibles Entertainment
     Inc.  ("Collectibles").

     On  April  7,  1999,  Collectibles  acquired  all of the outstanding common
     shares  of   NetNation   Communications  Inc.   ("NetNation  Canada").   As
     Collectibles was inactive at the time of the transaction, this issuance was
     accounted  for as a capital transaction of NetNation Canada, effectively as
     if NetNation Canada issued common shares to acquire the net monetary assets
     of  Collectibles  followed  by  a recapitalization. From April 7, 1999, the
     results of NetNation Canada are included on a consolidated basis with those
     of  Collectibles.  Subsequent  to the transaction, Collectibles changed its
     name  to  NetNation  Communications Inc.

     On  November  24,  1999, DomainPeople Inc. ("DomainPeople"), a wholly-owned
     subsidiary  of  NetNation,  was incorporated under the laws of the State of
     Delaware  and  was  formed  to  offer  domain name registration and related
     services.  DomainPeople  is  accredited  by  the  Internet  Corporation for
     Assigned  Names and Numbers, the regulatory body charged with administering
     accreditation,  as  a  registrar  for  top-level  domain  names.

     The  Company's  principal business activities are the provision of web-site
     hosting, domain name registration, and related services to small and medium
     sized  businesses.

2.   SIGNIFICANT  ACCOUNTING  POLICIES:

     (a)  Basis  of  presentation:

          These  consolidated  financial  statements include the accounts of the
          Company's  wholly  owned  subsidiaries, NetNation Communications Inc.,
          NetNation  Communications  (UK)  Inc.,  NetNation Communications (USA)
          Inc.,  and  DomainPeople  Inc.  All material intercompany balances and
          transactions  have  been  eliminated.

          These  consolidated   financial  statements  have  been   prepared  in
          accordance with generally accepted accounting principles in the United
          States  of  America.   Through   December  31,  1998,   the  Company's
          consolidated  financial  statements  were presented in accordance with
          generally accepted accounting principles in Canada. The application of
          United  States  accounting  principles to these consolidated financial
          statements  has  been  made on a retroactive basis. For the year ended
          December  31,  1998  there  were  no  material  differences previously
          reported  to  the  Company's consolidated financial statements arising
          from  differences  between generally accepted accounting principles in
          Canada  and  the  United  States.


                                      F-6
<PAGE>
NETNATION  COMMUNICATIONS  INC.
Notes  to  Consolidated  Financial  Statements
(Expressed  in  United  States  dollars)

Years  ended  December  31,  2000,  1999  and  1998
================================================================================

2.   SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED):

     (b)  Cash  and  cash  equivalents:

          Cash  and  cash equivalents include highly liquid investments, such as
          term  deposits,  having terms to maturity of three months or less when
          acquired  that  are readily convertible to contracted amounts of cash.

     (c)  Fixed  assets:

          Fixed  assets  are  stated  at  cost  less  accumulated  depreciation.
          Depreciation  is  computed  annually  as  follows:

<TABLE>
<CAPTION>
======================================================
Assets                        Basis           Rate
------------------------------------------------------
<S>                     <C>                <C>
Computer hardware       declining-balance          30%
Computer software       declining-balance          30%
Furniture               declining-balance          20%
Office equipment        declining-balance          30%
Leasehold improvements  straight-line      lease term
======================================================
</TABLE>

          The  Company  performs reviews for the impairment of long-lived assets
          whenever events or changes in circumstances indicate that the carrying
          amount  of  an  asset  may  not  be recoverable. An impairment loss is
          recognized  when  estimates of undiscounted future cash flows expected
          to  result  from  the use of an asset and its eventual disposition are
          less  than  its  carrying  amount.  When such a difference arises, the
          impairment loss is calculated as the excess of the carrying value over
          the asset's fair value. No such impairment losses have been identified
          by  the  Company for the years ended December 31, 2000, 1999 and 1998.

     (d)  Investments:

          The  Company  has  an  investment  in a non-publicly traded company in
          which  it  has less than 20% of the voting rights and in which it does
          not  exercise  significant  influence.  This  investment is carried at
          cost.  The  Company monitors this investment for impairment, and makes
          appropriate  reductions  in  carrying  value  when  necessary.

     (e)  Advertising  costs:

          Advertising  costs  are  expensed  as incurred and totaled $1,750,415,
          $1,271,350 and $348,069 during the years ended December 31, 2000, 1999
          and  1998,  respectively.


                                      F-7
<PAGE>
NETNATION  COMMUNICATIONS  INC.
Notes  to  Consolidated  Financial  Statements
(Expressed  in  United  States  dollars)

Years  ended  December  31,  2000,  1999  and  1998
================================================================================

2.   SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED):

     (f)  Revenue  recognition:

          Revenue  is  recognized  as  web-site hosting, domain name and related
          services  are  provided.  Revenue from web-site hosting set-up fees is
          recognized over the estimated period the hosting services are provided
          to  customers,  which is typically 12 months. Domain name registration
          and  maintenance  revenue is recognized ratably over the contract term
          which  is  between  one  and  ten  years.

          In  December  1999,  the SEC issued Staff Accounting Bulletin No. 101,
          "Revenue Recognition in Financial Statements" ("SAB 101"). SAB 101 and
          related  material indicates that the fair value of initial set-up fees
          should  be  recognized  over  the  estimated  period  of  service. The
          Company's  contracts  generally  include  such  fees.  The Company has
          determined  the  impact  of  SAB  101  and  the  resulting  cumulative
          adjustment  of  $597,950  has been recorded in the Company's financial
          statements  in  the  fourth  quarter  of  2000.

     (g)  Deferred  expense:

          The  cost  of  acquiring  domain  names  is  deferred and amortized in
          conjunction  with  the  recognition  of  domain  name registration and
          maintenance  revenue.

     (h)  Stock-based  compensation:

          The  Company  applies  the  intrinsic value-based method of accounting
          prescribed   by  Accounting  Principles   Board  ("APB")  Opinion  No.
          25,  "Accounting   for  Stock   Issued  to   Employees,"  and  related
          interpretations,  in  accounting for awards of common stock granted to
          employees.  Deferred  stock-based  compensation  is  recorded  at  the
          measurement  date,  which  is  generally  the  date of grant, when the
          market value of the underlying common stock exceeds the exercise price
          for  stock  options  or  the  purchase  price for the shares of common
          stock.  SFAS  No.  123,  "Accounting  for  Stock-Based  Compensation,"
          established  accounting  and  disclosure  requirements  using  a  fair
          value-based method of accounting for stock-based employee compensation
          plans. As allowed by SFAS No. 123, the Company has elected to continue
          to  apply  the  intrinsic  value-based  method of accounting described
          above, and has adopted the disclosure requirements of SFAS No. 123.

          Non-employee  options  are accounted for under SFAS 123 and recognized
          at  the  fair  value of the options as determined by an option pricing
          model  as  the  related  services  are  provided.


                                      F-8
<PAGE>
NETNATION  COMMUNICATIONS  INC.
Notes  to  Consolidated  Financial  Statements
(Expressed  in  United  States  dollars)

Years  ended  December  31,  2000,  1999  and  1998
================================================================================

2.   SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED):

     (i)  Use  of  estimates  and  assumptions:

          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 period then ended. Actual results may
          differ  from  these  estimates.

     (j)  Fair  value  of  financial  instruments:

          Carrying values of the Company's financial instruments, including cash
          and  cash  equivalents, accounts receivable, accounts payable, capital
          lease  liability and accrued liabilities approximate fair value due to
          their  short  terms  to  maturity.

     (k)  Translation  of  foreign  currencies:

          The  Company's  functional and reporting currency is the United States
          dollar.  Transactions  undertaken  in a currency other than the United
          States dollar are remeasured into United States dollars using exchange
          rates  at the date of the transaction. Monetary assets and liabilities
          denominated in foreign currencies are remeasured at each balance sheet
          date  at the exchange rate prevailing at the balance sheet date. Gains
          and  losses arising on remeasurement or settlement of foreign currency
          denominated transactions or balances are included in the determination
          of  income.

          The  foreign  currency financial statements of integrated subsidiaries
          are  translated  into United States dollars using the temporal method.
          Under  this  method, monetary assets and  liabilities are  translated
          At the  exchange  rates  in  effect  at  the  balance  sheet  date and
          non-monetary  items  are translated at the exchange rates in effect on
          transaction dates. Revenue and expense items, except amortization, are
          translated  at average exchange rates for the period, and amortization
          is  translated  at  the  same  exchange  rate as the asset to which it
          relates.  Exchange  gains and losses resulting from the translation of
          foreign  currency  financial statements of integrated subsidiaries are
          recognized  in  income.

     (l)  Income  taxes:

          The  Company  provides  for income taxes under the asset and liability
          method.  Deferred  tax  liabilities  and assets are recognized for the
          estimated future tax consequences of differences between the financial
          statement  carrying  amounts  of  existing  assets and liabilities and
          their  respective  tax  bases. Deferred tax assets and liabilities are
          measured  using  enacted  tax  rates  in  effect for the year in which
          temporary  differences  are  expected  to be recovered or settled. The
          effect on deferred tax assets and liabilities of a change in tax rates
          is  recognized  in  income  in  the period that includes the enactment
          date.  To the extent that realization of deferred tax assets cannot be
          considered  to  be  more  likely  than  not,  a valuation allowance is
          recognized  for  the  excess.


                                      F-9
<PAGE>
NETNATION  COMMUNICATIONS  INC.
Notes  to  Consolidated  Financial  Statements
(Expressed  in  United  States  dollars)

Years  ended  December  31,  2000,  1999  and  1998
================================================================================

2.   SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED):

     (m)  Comprehensive  income  (loss):

          The  Company  reports  comprehensive income (loss), which includes net
          earnings  as  well  as changes in equity from other non-owner sources,
          specifically  the  foreign  currency  translation  adjustment.

     (n)  Loss  per  share:

          Loss  per  share  is  calculated  in  accordance  with  SFAS  No. 128,
          "Earnings  per Share". Under SFAS No. 128, basic net loss per share is
          computed  using  the  weighted-average number of outstanding shares of
          common  stock,  excluding  common stock subject to repurchase. Diluted
          net  loss  per  share is computed using the weighted-average number of
          outstanding  shares  of  common  stock  and,  when dilutive, potential
          common  shares  from options and warrants to purchase common stock and
          common  stock  subject  to repurchase using the treasury stock method,
          and  from  convertible securities using the as-if converted basis. All
          potential  common  shares  have  been excluded from the computation of
          diluted  net  loss  per  share  for  all periods presented because the
          effect  would  have  been  anti-dilutive.

     (o)  Recent  accounting  pronouncements:

          The  FASB  issued SFAS No. 133, "Accounting for Derivative Instruments
          and  Hedging  Activities"  which established standards relating to the
          recognition  and  disclosure  of all aspects of derivative instruments
          and  hedging  activities.  To  date,  the  Company  has not engaged in
          hedging  activities. Accordingly, the Company has evaluated the impact
          of  adopting  SFAS 133 and determined that it will not have a material
          effect on its financial position, results of operations or cash flows.
          The  Company  will  implement  SFAS  No. 133 in its fiscal year ending
          December  31,  2001.

     (p)  Comparative  figures:

          Certain comparative figures have been reclassified to conform with the
          presentation  adopted  in  the  current  year.


                                      F-10
<PAGE>
NETNATION  COMMUNICATIONS  INC.
Notes  to  Consolidated  Financial  Statements
(Expressed  in  United  States  dollars)

Years  ended  December  31,  2000,  1999  and  1998
================================================================================

3.   WRITE-OFF  OF  INTELLECTUAL  PROPERTY:

     In  2000,  the  Company  made  an  unsuccessful attempt to acquire American
     Digital  Network  ("ADN"),  a company involved in the web-hosting, ISP, and
     internet  services  industry. As part of the planned acquisition, NetNation
     advanced  to  ADN  a  total  of  $500,000,  and  received  as  security the
     intellectual property rights to the eStoreManager software. The acquisition
     was  terminated  and  NetNation  has  not been able to recover its advanced
     funds,  and  has  taken possession of the eStoreManager software. If ADN is
     unable  to repay the advances, NetNation will retain the full rights to the
     eStoreManager  software. ADN has the option to repurchase the software from
     NetNation  at  $500,000 plus 10% annual interest if repurchased by February
     10,  2001,  $750,000  with  no interest if repurchased by May 10, 2001, and
     $1,500,000  with  no  interest  if  repurchased  by August 10, 2001. If the
     vendor  decides  to  repurchase  after  February  10, 2001 and on or before
     August  10,  2001,  NetNation  retains  a  non-exclusive  rights  to   have
     a worldwide,  royalty-free,  perpetual  license  to  use,  distribute,  and
     reproduce  the  software.  To  date,  ADN  has  not exercised its option to
     repurchase  the  software.

     As  the  Company does not expect to recover the amount advanced to ADN, nor
     does  it  expect to make commercial use of the intellectual property rights
     acquired,  the Company has decided to write-off the amount advanced to ADN.

4.   FIXED  ASSETS:

<TABLE>
<CAPTION>
=============================================================
                                     Accumulated    Net book
2000                       Cost     depreciation     value
-------------------------------------------------------------
<S>                     <C>         <C>            <C>
Computer hardware       $1,579,217  $     397,240  $1,181,977
Computer software           93,694         12,903      80,791
Furniture                   70,439         26,096      44,343
Office equipment           168,257         34,152     134,105
Leasehold improvements      10,736          1,000       9,736
-------------------------------------------------------------
                        $1,922,343  $     471,391  $1,450,952
=============================================================
</TABLE>

<TABLE>
<CAPTION>
==================================================================
                                           Accumulated   Net book
1999                              Cost    depreciation     value
------------------------------------------------------------------
<S>                             <C>       <C>            <C>
Computer hardware and software  $488,075  $     114,725  $ 373,350
Furniture                         42,544          6,170     36,374
Office equipment                  60,185         13,990     46,195
------------------------------------------------------------------
                                $590,804  $     134,885  $ 455,919
==================================================================
</TABLE>


                                      F-11
<PAGE>
NETNATION  COMMUNICATIONS  INC.
Notes  to  Consolidated  Financial  Statements
(Expressed  in  United  States  dollars)

Years  ended  December  31,  2000,  1999  and  1998
================================================================================

5.   INVESTMENTS:

     In  2000,  the  Company, through its wholly-owned subsidiary, DomainPeople,
     Inc.,  made  a 5% minority interest investment in Afilias, LLC ("Afilias"),
     through  the  purchase  of  100  Class  A  Units  representing  a 5% voting
     interest.  Afilias  is  a  company  formed  for the purpose of bidding for,
     developing,  financing,  marketing,  owning  and  operating  a  registry to
     register  and maintain Internet top-level domain names and has obtained the
     exclusive rights to register and maintain the new dot-info top-level domain
     names.  NetNation  does  not  have  significant influence over Afilias, and
     therefore  has  accounted  for  the  investment  using the cost method. The
     carrying  value  of  the  investment  at  December  31,  2000  is $100,000.

6.   DEBENTURES  PAYABLE:

     As  a  condition  of  a  capital transaction, the Company raised $1,100,000
     through  the  sale of two $550,000 Series A Convertible Debentures, both of
     which  mature  on  September  30, 2000. Each debenture was convertible into
     275,000 shares of common stock of the Company at a rate of $2.00 per share.
     The  debentures  were  non-interest  bearing.

     On  February  18, 2000, the holders of the convertible debentures exercised
     their  option  to convert the debentures into common shares of the Company.

7.   SHARE  CAPITAL:

     (a)  Private  placement:

          On  February  24,  2000,  the  Company finalized an agreement to issue
          250,000  common  shares  at  $10  per share for gross cash proceeds of
          $2,500,000.  The  Company also issued warrants entitling the investors
          to  purchase  one  additional  share  for  every two shares owned. The
          warrants  are  exercisable  during  a  two-year   period  at  $12  per
          additional share purchased and may be called by the Company if certain
          financial  conditions  are  met.

     (b)  Stock  to  be  issued:

          On  February  24,  2000,  the  Company agreed to issue 5,000 shares in
          settlement  of share issue costs of $50,000 in relation to the private
          placement described above. At year-end, the shares had not been issued
          however  the  Company  expects  to  issue  these  shares  in  2001.


                                      F-12
<PAGE>
NETNATION  COMMUNICATIONS  INC.
Notes  to  Consolidated  Financial  Statements
(Expressed  in  United  States  dollars)

Years  ended  December  31,  2000,  1999  and  1998
================================================================================

7.   SHARE  CAPITAL  (CONTINUED):

     (c)  Stock  option  compensation  plan:

          On  January  3,  2000,  the  Company's Board of Directors approved the
          adoption  of  a  stock option compensation plan. The plan provides for
          the issuance of both incentive and non-qualified stock options, at the
          Board  of  Directors'  discretion,  to  key  employees,  directors and
          consultants.  The Company's policy is to grant options with a purchase
          price  equivalent  to market value at the time of the grant. 2,000,000
          shares  have  been  reserved  for issuance under the plan. The options
          vest  over  a three year period and expire 30 days after each vesting,
          subject  to  change  under  management's  discretion.

          Effective  January  3,  2000,  the  Company granted 564,000 options at
          $4.63  per  share  under the stock option compensation plan. Effective
          January  20,  2000,  the  Company  granted 24,000 options at $7.69 per
          share  under  the  stock  option  compensation plan. Effective May 24,
          2000, the Company granted 144,000 options at $4.13 per share under the
          stock  option  compensation plan. Effective June 26, 2000, the Company
          granted  24,000  options  at  $3.63  per  share under the stock option
          compensation  plan.  Effective  November 16, 2000, the Company granted
          270,000 options at $2.31 per share under the stock option compensation
          plan.  As  at  December  31,  2000, no options granted under the stock
          option  compensation  plan  were  exercisable.

          (i)  A  summary  of the Company's stock option activity is as follows:

<TABLE>
<CAPTION>
=======================================================================
                                        Number of     Weighted average
                                      common shares    exercise price
-----------------------------------------------------------------------
<S>                                   <C>             <C>
Outstanding, December 31, 1999, 1998
  and 1997                                        -   $               -
Granted                                   1,026,000                4.00
Cancelled                                  (306,000)               4.55
-----------------------------------------------------------------------

Outstanding, December 31, 2000              720,000   $            3.76
=======================================================================
</TABLE>

               The  options  outstanding  at  December  31,  2000 expire between
               February  2,  2001  and  December  16,  2003.


                                      F-13
<PAGE>
NETNATION  COMMUNICATIONS  INC.
Notes  to  Consolidated  Financial  Statements
(Expressed  in  United  States  dollars)

Years  ended  December  31,  2000,  1999  and  1998
================================================================================

7.   SHARE  CAPITAL  (CONTINUED):

     (c)  Stock  option  compensation  plan  (continued):

          (ii) Additional  information  regarding  options  outstanding  as  at
               December  31,  2000  is  as  follows:

<TABLE>
<CAPTION>
==================================================================
                  Options outstanding          Options exercisable
           ----------------------------------  -------------------
                        Weighted
                        average     Weighted              Weighted
                       remaining     average               average
Exercise    Number    contractual   exercise    Number    exercise
prices     of shares  life (years)    price    of shares    price
------------------------------------------------------------------
<S>        <C>        <C>           <C>        <C>        <C>
2.31        270,000          1.96  $    2.31          -  $       -
4.13         72,000          1.48       4.13          -          -
4.63        366,000          1.09       4.63          -          -
7.69         12,000          1.13       7.69          -          -
------------------------------------------------------------------

            720,000          1.45  $    3.76          -  $       -
==================================================================
</TABLE>

          (iii)Stock-based  compensation:

               With  respect  to the stock options granted and stock issued, the
               Company  recorded  total  stock-based   compensation  expense  of
               $558,443.

               Pursuant to SFAS No. 123, the Company is required to disclose the
               proforma  effects  the net loss and net loss per share data as if
               the Company had elected to use the fair value approach to account
               for its employee stock-based compensation plans. If this approach
               had  been  applied,  the  Company's net loss per share would have
               been  as  indicated  below:

<TABLE>
<CAPTION>
===================================================================
                                      2000        1999       1998
-------------------------------------------------------------------
<S>                                <C>         <C>         <C>
Loss for the year:
  As reported                      $3,971,597  $1,344,766  $109,550
  Proforma                          5,272,830   1,344,766   109,550

Basic and diluted loss per share:
  As reported                      $     0.26  $     0.10  $   0.01
  Proforma                               0.34        0.10      0.01
===================================================================
</TABLE>


                                      F-14
<PAGE>
NETNATION  COMMUNICATIONS  INC.
Notes  to  Consolidated  Financial  Statements
(Expressed  in  United  States  dollars)

Years  ended  December  31,  2000,  1999  and  1998
================================================================================

7.   SHARE  CAPITAL  (CONTINUED):

     (c)  Stock  option  compensation  plan  (continued):

          (iii)Stock-based  compensation  (continued):

               The  fair  value  for  the  options  was  estimated  using  the
               Black-Scholes option pricing model assuming no expected dividends
               and  the  following  weighted  average  assumptions:

<TABLE>
<CAPTION>
============================================================
                                         Options
                              ------------------------------
                              Interest
                                Rate      Term    Volatility
------------------------------------------------------------
<S>                           <C>        <C>      <C>
Year ended December 31, 2000      5.66%    3 yrs        137%
============================================================
</TABLE>

8.   COMMITMENTS  AND  CAPITAL  LEASE  LIABILITY:

     The  Company leases its Vancouver, Canada premises under an operating lease
     agreement  which  expires  April  30,  2002  and  may  be  renewed  for one
     additional  year at the Company's option. The rent expense under this lease
     for  the  years  ended December 31, 1998, 1999, and 2000 , totaled $62,380,
     $108,242,  and $297,148, respectively. In 2000, $73,797 was incurred on the
     San  Diego  lease,  which  was held for six months of the year. The Company
     also  leases  certain  fixed  assets  under capital leases, which expire at
     various  dates  through  2004.

     The  Company  is committed to operating lease payments for rent in 2001 and
     2002  of  approximately  $279,000  and  $93,000,  respectively.

     Future  minimum commitments under non-cancelable capital leases at December
     31,  2000  are  as  follows:

<TABLE>
<CAPTION>
===================================================
<S>                                         <C>

2001                                        $20,439
2002                                         20,439
2003                                         21,637
2004                                          1,893
---------------------------------------------------

Total lease payments                         64,408
Amount representing interest                 12,843
---------------------------------------------------

Present value of capital lease obligations   51,565
Current portion                              13,867
---------------------------------------------------

                                            $37,698
===================================================
</TABLE>


                                      F-15
<PAGE>
NETNATION  COMMUNICATIONS  INC.
Notes  to  Consolidated  Financial  Statements
(Expressed  in  United  States  dollars)

Years  ended  December  31,  2000,  1999  and  1998
================================================================================

9.   INCOME  TAXES:

     Significant components of the Company's deferred tax assets at December 31,
     2000  and  1999  are  as  follows:

<TABLE>
<CAPTION>
============================================================
                                        2000         1999
------------------------------------------------------------
<S>                                 <C>           <C>
Deferred tax assets:
  Net operating loss carryforwards  $ 1,160,000   $ 559,000
  Fixed assets                          470,000      55,000
  Deferred revenue                      332,000           -
  Contingent lease payments             174,000           -
  Share issuance costs                   55,000           -
------------------------------------------------------------

Gross deferred tax assets             2,191,000     614,000
Valuation allowance                  (2,148,000)   (614,000)
------------------------------------------------------------

Total deferred tax assets                43,000           -

Deferred tax liability:
  Deferred expenses                     (43,000)          -
------------------------------------------------------------

Net deferred tax asset              $         -   $       -
============================================================
</TABLE>

     In assessing the realizability of deferred tax assets, management considers
     whether it is more likely than not that some portion or all of the deferred
     tax  assets  will not be realized. The ultimate realization of deferred tax
     assets is dependent upon the generation of future taxable income during the
     periods  in which those temporary differences become deductible. Management
     considers  the  scheduled  reversal  of deferred tax liabilities, projected
     future  taxable  income,  and  tax  planning   strategies  in  making  this
     assessment.  The  amount  of  the  deferred tax asset considered realizable
     could  change  materially  in  the near term based on future taxable income
     during  the  carry forward period.

     The  valuation  allowance for deferred tax assets as of January 1, 2000 was
     $614,000.  The  net  change  in  the total valuation allowance for the year
     ended  December  31,  2000  was  an  increase  of  $1,534,000.

     As of December 31, 2000, the Company has Canadian tax loss carryforwards of
     approximately  $1,857,000  available to reduce the future years' income for
     tax  purposes.  These  carryforward  losses  expire  in  2004  to  2007.

     As  of  December  31,  2000, the Company has U.S. tax loss carryforwards of
     approximately $605,000 available to reduce the future years' income for tax
     purposes.  These carryforward losses expire in 2019 to 2020. As of December
     31,  2000,  the  Company  has  U.K. tax loss carryforwards of approximately
     $347,000 available to reduce the future years' income for tax purposes. The
     losses  carry  forward  indefinitely.


                                      F-16
<PAGE>
NETNATION  COMMUNICATIONS  INC.
Notes  to  Consolidated  Financial  Statements
(Expressed  in  United  States  dollars)

Years  ended  December  31,  2000,  1999  and  1998
================================================================================

10.  SEGMENTED  INFORMATION:

     For the period from incorporation to December 31, 2000 the Company operated
     as  primarily  two  business segments from web-site hosting and domain name
     registration.

     The  Company's revenues are generated from the following business segments:

<TABLE>
<CAPTION>
============================================================
                             2000        1999        1998
------------------------------------------------------------
<S>                       <C>         <C>         <C>
Web hosting               $3,721,519  $2,210,478  $1,046,710
Domain name registration   1,290,340     300,543      61,720
------------------------------------------------------------

                          $5,011,859  $2,511,021  $1,108,430
============================================================
</TABLE>

     The  Company's  revenues  are  generated  from  the  following  geographic
     segments:

<TABLE>
<CAPTION>
=================================================
                  2000        1999        1998
-------------------------------------------------
<S>            <C>         <C>         <C>
United States  $2,538,673  $1,406,172  $  631,805
Canada          1,427,849     602,645     277,108
Other           1,045,337     502,204     199,517
-------------------------------------------------

               $5,011,859  $2,511,021  $1,108,430
=================================================
</TABLE>

     During  the  year ended December 31, 2000, 1999 and 1998, approximately 95%
     of  the  Company's  assets  and  employees  were  located  in  Canada.

11.  CONTINGENCIES:

     (a)  As at December 1, 2000, the Company has discontinued lease payments on
          the  San Diego premises due to a number of circumstances. To date, the
          landlord  has  not  commenced legal action against the Company. Should
          the landlord commence legal action against the Company, the outcome of
          the  proceedings  is unknown. The remaining lease payments of $381,254
          have been accrued in the consolidated financial statements, and a gain
          will  be  recognized  in  the  event  of  a  favorable  outcome.


                                      F-17
<PAGE>
NETNATION  COMMUNICATIONS  INC.
Notes  to  Consolidated  Financial  Statements
(Expressed  in  United  States  dollars)

Years  ended  December  31,  2000,  1999  and  1998
================================================================================

11.  CONTINGENCIES  (CONTINUED):

     (b)  The  Company  contracted with Inovaware Corporation (formerly known as
          ISP Power) on January 17, 2000 to develop customized billing software.
          The  contract  called for three payments of $80,000 totalling $240,000
          and  the  Company  made  the first payment in 2000. The Company claims
          that  Inovaware  Corporation was unable to complete development of the
          software  in  accordance  with  the  terms  of  the  contract, and has
          terminated  the  contract  with  Inovaware on the basis that Inovaware
          Corporation  did  not  fulfill  its contractual obligations. Inovaware
          Corporation  is  claiming  the Company owes it the remaining $160,000,
          plus  $40,000  for additional work under the terms of the contract. To
          date, Inovaware Corporation has not commenced legal action against the
          Company.  Should  Inovaware commence legal action against the Company,
          the  outcome of the proceedings and the amount of potential damages is
          unknown.  However,  should Inovaware prevail in its claim, the Company
          could be required to pay damages which could have a material effect on
          the  Company's  operating  results.

12.  SUBSEQUENT  EVENTS:

     Effective January 8, 2001, the Company granted 234,000 options at $2.25 per
     share  under  the  stock  option  compensation plan. Effective February 13,
     2001, the Company granted 36,000 options at $2.13 per share under the stock
     option  plan.  These options granted subsequent to year-end vest over three
     years,  and  expire  18  months  after  each  vesting.


                                      F-18
<PAGE>
<TABLE>
<CAPTION>
                                          EXHIBIT INDEX


EXHIBIT
NUMBER   DESCRIPTION
-------  ---------------------------------------------------------------------------------------
<C>      <S>
   2 **  Agreement dated March 31, 1999 between the shareholders of NetNation (The Canadian
         Subsidiary), NetNation (The Canadian Subsidiary), and NetNation (formerly Collectibles
         Entertainment Inc.)

 3.1 **  Articles  of  Incorporation

 3.2 **  By-laws

 4.1 **  Convertible Debenture for $550,000 Maturing on September 30, 2000 issued to Polaris
         Investitionen Ltd.

 4.2 **  Convertible Debenture for $550,000 Maturing on September 30, 2000 issued to Beste
         Investitionen Ltd.

  21     List of Subsidiaries

  **     Incorporated by reference from the Registration Statement on Form 10 of the Registrant
         filed with the Securities and Exchange Commission on July 29, 1999, as amended.
</TABLE>


<PAGE>