<PAGE>

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

                                  FORM 10-QSB/A
                                 AMENDMENT NO. 1

(Mark One)

/X/      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED FEBRUARY 29, 2000

/ /      TRANSITION  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______ TO ________

Commission file number  000-26331
                       --------------------------------------------------------

                               PALWEB CORPORATION
-------------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

             DELAWARE                                    75-1984048
----------------------------------           ----------------------------------
 (State or other jurisdiction of                      (I.R.S. Employer
  incorporation or organization)                      Identification No.

     1607 WEST COMMERCE STREET                    DALLAS, TEXAS 75208
----------------------------------           ----------------------------------
(Address of principal executive offices)         (City, State and Zip Code)

                                 (214) 698-8330
-------------------------------------------------------------------------------
                           (Issuer's telephone number)

-------------------------------------------------------------------------------
            (Former name, former address and former fiscal year,
                         if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.

Yes   X    No
    -----     -----

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: February 29, 2000 -
205,456,628 common shares, $0.10 par value.

TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT
(CHECK ONE):
Yes       No   X
    -----    -----

<PAGE>

THIS AMENDMENT NO. 1 IS FILED TO AMEND PART I, ITEMS 1 AND 2 AND PART II,
ITEMS 5 AND 6.

                               PALWEB CORPORATION

                                  FORM 10-QSB/A
                     FOR THE PERIOD ENDED FEBRUARY 29, 2000
                                 AMENDMENT NO. 1

PART I.  FINANCIAL INFORMATION

<TABLE>
<CAPTION>

ITEM 1.  FINANCIAL STATEMENTS                                                                    PAGE
<S>                                                                                              <C>
                  Statements of Operations
                  For the Nine Month Periods Ended
                  February 29/28, 2000 and 1999                                                    1

                  Statements of Operations
                  For the Three Month Periods Ended
                  February 29/28, 2000 and 1999                                                    2

                  Balance Sheets as of February 29,
                  2000 and May 31, 1999                                                            3

                  Statements of Cash Flows for the
                  Nine Month Periods Ended February
                  29/28, 2000 and 1999                                                             4

                  Notes to Financial Statements                                                    5


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION                                 6


PART II.  OTHER INFORMATION

ITEM 5.  OTHER INFORMATION                                                                         8

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                                                          9

</TABLE>

<PAGE>

PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS
                               PalWeb Corporation
                          (a development stage company)
                      Consolidated Statements of Operations
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                      From Inception
                                         Nine Month Period          (November 20, 1995)
                                       Ended February 29/28,         To February 29,
                                 ------------------------------      ---------------
                                     2000              1999                2000
                                 ------------      ------------      ---------------
<S>                              <C>               <C>               <C>

Sales                            $      6,091      $     41,510      $        98,785

Expenses:
 Research and development                  --                --              406,943
 General and administrative
  expenses                          2,050,117         4,957,639            9,851,944
 Depreciation expense                 131,943           115,555              541,057
 Impairment                                --                --            3,456,231
 Interest expense                     137,949           199,287              601,140
                                 ------------      ------------      ---------------
     Total expenses                 2,320,009         5,272,481           14,857,315
                                 ------------      ------------      ---------------

Other income (expense):
 Gain on settlement of
  liabilities                          75,027                --               75,027
 Other                                 (6,337)           51,573              270,848
                                 ------------      ------------      ---------------
         Total other                   68,690            51,573              345,875
                                 ------------      ------------      ---------------

Loss before discontinued
 operations and
 extraordinary items               (2,245,228)       (5,179,398)         (14,412,655)

Loss from discontinued
 operation                                               (7,300)            (857,061)

Extraordinary gain                         --            46,266               68,616
                                 ------------      ------------      ---------------

Net Loss                         $ (2,245,228)     $ (5,140,432)     $   (15,201,100)
                                 ============      ============      ===============

Loss Per Common Share:
 Loss before discontinued
  operations & extraordinary
  loss                           $      (0.01)     $      (0.03)
 Loss from discontinued
  operation                                --                --
 Extraordinary loss                        --                --
                                 ------------      ------------

 Loss per common share           $      (0.01)     $      (0.03)
                                 ============      ============

</TABLE>

See notes to consolidated financial statements.


                                       1
<PAGE>

                               PalWeb Corporation
                          (a development stage company)
                      Consolidated Statements of Operations
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                  Three Month Period
                                                Ended February 29/28,
                                           ----------------------------
                                               2000            1999
                                           -----------      -----------
<S>                                        <C>              <C>

Sales                                      $     6,091      $        --

Expenses:
 Research and development                           --               --
 General and administrative
  expenses                                   1,661,598        4,456,038
 Depreciation expense                           56,243           44,601
 Impairment                                         --               --
 Interest expense                               38,809           90,701
                                           -----------      -----------
Total expenses                               1,756,650        4,591,340
                                           -----------      -----------

Other income (expense):
 Gain on settlement of liabilities              75,027               --
 Other                                              --            4,294
                                           -----------      -----------
         Total other                            75,027            4,294
                                           -----------      -----------

Loss before discontinued operations
 and extraordinary items                    (1,675,532)      (4,587,046)

Income from discontinued operation                  --               --

Extraordinary gain                                  --          122,421
                                           -----------      -----------


Net Loss                                   $(1,675,532)     $(4,464,625)
                                           ===========      ===========

Loss Per Common Share:
 Loss before discontinued
  operations and extraordinary
  loss                                     $     (0.01)     $     (0.02)

 Loss from discontinued operation                   --               --

 Extraordinary loss                                 --               --
                                           -----------      -----------

 Loss per common share                     $     (0.01)     $     (0.02)
                                           ===========      ===========

</TABLE>

See notes to consolidated financial statements.


                                       2
<PAGE>

                               PalWeb Corporation
                          (a development stage company)
                           Consolidated Balance Sheets
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                    February 29,                  May 31,
           ASSETS                                      2000                        1999
                                                   ------------                ------------
<S>                                                <C>                         <C>
Current Assets:
 Cash                                              $        322                $        710
 Accounts receivable                                      3,852                          --
 Inventory                                                9,778                       9,938
                                                   ------------                ------------
  Total current assets                                   13,952                      10,648

Property, Plant and Equipment, at cost                2,301,677                   2,192,982
Accumulated depreciation                               (466,205)                   (373,766)
                                                   ------------                ------------
  Total Property, Plant and Equipment                 1,835,472                   1,819,216

Other Assets:
  Intangible assets                                      67,964                      67,964
  Accumulated Amortization                              (10,215)                     (7,215)
  Other                                                  30,173                      30,173
                                                   ------------                ------------
    Total other assets                                   87,922                      90,922
                                                   ------------                ------------

Total Assets                                       $  1,937,346                $  1,920,786
                                                   ============                ============

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current Liabilities:
 Notes and mortgages payable                       $     50,000                $     50,000
 Accounts payable and accrued expenses                  461,779                   1,146,605
 Payable to related parties                           1,619,422                   2,222,992
 Customer deposits                                           --                     300,000
                                                   ------------                ------------
         Total current liabilities                    2,131,201                   3,719,597

Long-term Debt                                          340,000                          --
Lease Finance Obligation                              1,757,958                   1,766,958

Stockholders' Deficiency:
 Preferred stock, $.0001 par, 20,000,000
  shares authorized - outstanding 2,885,000
  and 880,000, respectively                                 289                          88
 Common stock, $.10 par value,
  250,000,000 authorized, outstanding -
  205,456,628, and 217,981,046, respectively         20,545,663                  21,798,105
 Additional paid-in capital                           6,798,890                   2,027,465
 Deficit accumulated during
  development stage                                 (29,636,655)                (27,391,427)
                                                   ------------                ------------
         Total stockholders' deficiency              (2,291,813)                 (3,565,769)
                                                   ------------                ------------
Total Liabilities and
 Stockholders Deficiency                           $  1,937,346                $  1,920,786
                                                   ============                ============

</TABLE>

See notes to consolidated financial statement.


                                       3
<PAGE>

                               PalWeb Corporation
                          (a development stage company)
                      Consolidated Statements of Cash Flows
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                    From Inception
                                                         Nine Month Period       (November 20, 1995)
                                                       Ended February 29/28,       To February 29,
                                                   ----------------------------      -----------
                                                       2000             1999             2000
                                                   -----------      -----------      -----------
<S>                                                <C>              <C>              <C>

Net cash provided from
      Operating activities                         $  (179,852)     $   184,408      $   195,886

Cash Flows from Investing Activities:
 Purchase of property and equipment                   (169,536)        (115,653)      (3,385,109)
 Proceeds from sale of equipment                        18,000           74,995           92,995
 Proceeds from lease finance
  obligation                                                --               --          149,517
                                                   -----------      -----------      -----------
Net cash used by investing activities                 (151,536)         (40,658)      (3,142,597)

Cash Flows from Financing Activities:
 Proceeds from notes and mortgage
  payable                                              340,000               --        2,703,807
 Payments on notes payable                                  --         (143,750)        (239,750)
 Proceeds from issuance of
  common stock                                              --               --          491,976
 Other                                                  (9,000)              --           (9,000)
                                                   -----------      -----------      -----------
Net cash provided by
 financing activities                                  331,000         (143,750)       2,947,033
                                                   -----------      -----------      -----------

Net Increase (Decrease) in Cash                           (388)              --              322
Cash, beginning of period                                  710               --               --
                                                   -----------      -----------      -----------

Cash, end of period                                $       322      $        --      $       322
                                                   ===========      ===========      ===========

Supplemental information:
 Non-cash investing activities -
  Property released in foreclosure                 $        --      $   415,232
  Net discontinued assets distri-
   buted to certain stockholders                            --          238,395
 Non-cash financing activities -
  Common and preferred stock
   issued for services & equipment                   1,468,771        4,363,000
  Common and preferred stock
   issued for debt                                     673,934          100,000
  Common stock issued for debt
   of related party                                  1,187,479               --
  Common stock issued on con-
   version of preferred stock                          208,389               --
 Debt contributed to additional
  paid in capital by related party                     189,000               --
 Common stock held by related party
  cancelled by default judgement                     4,144,331               --

</TABLE>

See notes to consolidated financial statements


                                       4
<PAGE>

                       PALWEB CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.    In the opinion of the PalWeb Corporation (the "Company" or "PalWeb"),
      the accompanying unaudited consolidated financial statements contain
      all adjustments and reclassifications, which are of a normal recurring
      nature, necessary to present fairly its financial position as of
      February 29, 2000, and the results of its operations and its cash flows
      for the three month and nine month periods ended February 29/28, 2000
      and 1999. These consolidated financial statements should be read in
      conjunction with the consolidated financial statements as of and for
      the year ended May 31, 1999 and the notes thereto included in the
      Company's Form 10-SB.

2.    The results of operations for the three month and nine month periods
      ended February 29, 2000 are not necessarily indicative of the results
      to be expected for the full year.

3.    The balance sheet as of May 31, 1999 has been restated to reflect a
      prior period adjustment. During the three month period ended May 31,
      1999, the Company issued 3,963,890 shares of preferred stock and
      460,000 shares of common stock and recorded a charge for consulting
      services in the amount of $673,934. Further analysis has determined the
      shares were issued to satisfy services and liabilities in connection
      with discontinued operations recorded during the year ended May 31,
      1998. The prior period adjustment results in an additional accrual of
      loss from discontinued operations in the amount of $481,956 for the
      year ended May 31, 1998 and an increase of $191,978 in the charge to
      deficits for the spin off of the discontinued operations during the
      year ended May 31, 1999. The restated deficit account as of May 31,
      1999 is as follows:

             Deficit, as previously reported             $(26,717,493)
             Adjustment for effect of accounting
               error                                         (673,934)
                                                         -------------

             Deficit, as adjusted                        $(27,391,427)
                                                         =============

4.    During the nine month period ended February 29, 2000, the Company
      issued common and preferred stock as follows:

<TABLE>
<CAPTION>

                                                     Number
                                                    of Shares           Value
                                                    ----------       -----------
          <S>                                       <C>              <C>
          Common stock issued for:
            Consulting services                     11,000,000       $1,100,000
            Equipment                                3,500,210          350,021
            Exchange of advances due to
             related party                          11,874,790        1,187,479
            Satisfaction of liabilities                460,000           79,350
            Conversion of 2,083,890 shares of
             preferred stock                         2,083,890              N/A

          Preferred stock issued for:
            Satisfaction of liabilities              3,963,890          594,584
            Legal services                             125,000           18,750

</TABLE>


                                       5
<PAGE>

5.    Effective April 3, 2000, PalWeb acquired Pace Holding, Inc. and its
      wholly-owned subsidiary Paceco Financial Services, Inc., from Mr. Paul
      Kruger, the Chairman and Chief Executive Officer of PalWeb, in exchange
      for 50,000,000 shares of PalWeb common stock.

6.    The computation of earnings per share is based on the weighted average
      shares outstanding. For the nine month periods ended February 29/28,
      2000 and 1999, the average shares outstanding are 184,316,000 and
      174,998,000, respectively. For the three month periods ended February
      29/28, 2000 and 1999, the average shares outstanding are 198,640,000
      and 188,448,000, respectively. Convertible preferred stock is not
      considered as their effect is antidilutive.


ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

RESULTS OF OPERATIONS

GENERAL TO ALL PERIODS

         Sales for the periods ended February 28, 1999 are occasional sales of
prototype plastic pallets of a design which did not meet development
standards. Sales for the periods ended February 29, 2000 represent initial
sales of the Company's tested product. However, PalWeb has not commenced
commercial production of plastic pallets. As of February 29, 2000, PalWeb has
for the most part completed development of its plastic pallet to compete with
wood pallets and is in the final stages of completion of the prototype
injection molding systems to produce plastic pallets for commercial sales.
PalWeb has obtained short-term financing to meet its short term working
capital needs.

         PalWeb's new pallet design has been subjected to standard industry
tests known as ASTM (American Society for Testing and Materials) Standard
D1185-98a, a strength test, and D 4728-91, a vibration test, conducted by
Container Technologies Laboratory, Inc., Lenexa, Kansas, an independent
testing facility. Container Technologies Laboratory certified PalWeb's plastic
pallet as having passed the above referenced tests. The testing procedures
found the pallet to be stronger and more versatile than the typical hardwood
pallet.

         Production utilizing prototype production equipment is scheduled to
begin about April, 2000, starting at 1,000 pallets per month and increasing to
4,000 per month by about July, 2000 upon completion of a redesign of the
heating system which controls the temperature of the raw material. The Company
hopes to increase commercial production capacity as soon as practical and is
currently seeking funding needed to acquire the necessary production equipment.

         For all periods presented, PalWeb's effective tax rate is 0%. PalWeb
has generated net operating losses since inception which would normally
reflect a tax benefit in the statement of operations and a deferred asset on
the balance sheet. However, because of the current uncertainty as to PalWeb's
ability to achieve profitability, a valuation reserve has been established
which offsets the amount of any tax benefit available for each period
presented in the consolidated statement of operations.

NINE MONTH PERIOD ENDED FEBRUARY 29, 2000 COMPARED TO THE NINE MONTH PERIOD
ENDED FEBRUARY 28, 1999

         General and administrative expenses for the nine months ended
February 29, 2000 decreased $2,907,522 over February 28, 1999 primarily due to
a lower cost of consulting services. Consulting costs were $4,366,500 for the
nine months ended February 29, 1999 which is $2,898,028 greater than the nine
months ended February 28, 2000.


                                       6
<PAGE>

         Interest expense declined $61,338 from $199,287 for the nine months
ended February 28, 1999 to $137,949 for the nine months ended February 29,
2000. The decrease is attributable to the reduction in notes payable.
Management negotiated a settlement of certain delinquent notes payable in the
prior period through foreclosure proceedings, cash payments or part cash, part
common stock.

         Other income in the nine months ended February 28, 1999 was primarily
rental income from leasing a portion of its plant facilities. The plant was
sold to a related party in April 1999 and PalWeb leases back only that portion
of the facility it utilizes. Because PalWeb holds an option expiring April
2002 to repurchase the property, the transaction was recorded as a financing
arrangement wherein the plant remains an asset on the balance sheet until such
time as the option expires without being exercised. The significant item in
other income in the nine months ended February 29, 2000, is a gain on
settlement of outstanding liabilities.

         Principally as a result of the above, PalWeb had a net loss of
$2,245,228 for the nine months ended February 29, 2000 compared to $5,140,432
for the nine months ended February 28, 1999, a decrease of $2,895,204.

THREE MONTH PERIOD ENDED FEBRUARY 29, 2000 TO THREE MONTH PERIOD ENDED
FEBRUARY 28, 1999

         General and administrative expenses decreased $2,794,440 from
$4,456,038 for the period ended February 28, 1999 to $1,661,598 for the period
ended February 29, 2000. This decrease is primarily due to reduced cost of
consulting services, which were $4,160,500 for the three months ended February
28, 1999 compared to $1,441,723 for the three months ended February 29, 2000.

         As discussed in the section above comparing the nine months ended
February 29, 2000 to the nine months ended February 28, 1999, certain
delinquent loans were resolved resulting in an extraordinary gain of $122,421
during three months ended February 28, 1999.

         As a result of the above, the net loss $1,675,532 for the three
months ended February 29, 2000 decreased $2,789,093 from the net loss of
$4,464,625 for the three months ended February 28, 1999.

LIQUIDITY AND CAPITAL RESOURCES

         In December 1999, PalWeb secured a line of credit of $500,000 to
provide short term working capital. The credit line is being funded at the
rate of $100,000 per month beginning December 1, 1999 and reflects an
outstanding balance of $340,000 at February 29, 2000.

         Reference is made to the section above titled "General to All
Periods" regarding the need for long term financing to acquire production
equipment to attain commercial production levels. As discussed therein, PalWeb
has incurred delays in completing its prototype injection molding system which
has limited its ability to achieve its anticipated production level of 4,000
pallets per month. PalWeb management projects that a production level of 4,000
pallets per month will provide sufficient cash flow to maintain operations.
While this delay has an adverse effect on the cash flows, management feels
that a production level of 1,000 per month will provide sales revenue which
will cover current expenses.

         During the three months ended February 29, 2000, Mr. Paul Kruger, the
Chairman and Chief Executive Officer of PalWeb, and his affiliated companies
received 11,874,790 shares of common stock in exchange for advances and
customer deposits as of January 9, 2000, made to PalWeb in the amount of
$1,187,479.


                                       7
<PAGE>

         As discussed in Note 5 to the financial statements, PalWeb acquired
all of the outstanding stock of Pace Holding, Inc. and its wholly-owned
subsidiary Paceco Financial Services, Inc. on April 3, 2000. Paceco Financial
Services, Inc. is engaged in the business of making consumer and small
business loans primarily in Oklahoma. PalWeb intends to use Paceco Financial
Services, Inc. as a vehicle to offer financing to buyers of its plastic
pallets and injection molding equipment.

MATERIAL RISKS

          PalWeb is in the development stage, it has incurred significant
losses from operations and there is no assurance that it will achieve
profitability or obtain funds to finance continued operations.

         For other material risks, see Part I, Item 1 of the company's Form
10-SB/A.

PART II.  OTHER INFORMATION

ITEM 5.  OTHER INFORMATION

         ACQUISITION OF PACECO FINANCIAL

         On January 21, 2000, PalWeb entered into an agreement to acquire
Paceco Financial Services, Inc. ("PFS") by means of a merger of PFS's parent
company, Pace Holding, Inc., into a wholly owned subsidiary of PalWeb, PP
Financial, Inc. This acquisition was consummated on April 3, 2000. In the
acquisition, PalWeb issued 50 million shares of its common stock in exchange
for all the outstanding stock of Pace Holding and PFS became an indirect
wholly owned subsidiary of PalWeb. All of the outstanding stock of Pace
Holding was owned by Paul Kruger, the Chairman and Chief Executive Officer of
PalWeb. PFS, in addition to its other assets, owned 43.5 million shares of
PalWeb common stock, which by virtue of the acquisition, are treated as
treasury stock on PalWeb's records and, accordingly, the acquisition resulted
in the issuance of an additional 6.5 million shares of PalWeb common stock.

         PFS has been in business since 1952 and is engaged in the business of
making consumer and small business loans primarily in Oklahoma and is
regulated as an "investment certificate issuer" by the Oklahoma Securities
Department. For its last fiscal year ended September 30, 1999, PFS had
revenues of $790,000, net loss of $2,300,000 and total assets and
stockholder's deficiency of $7,000,000 and $1,700,000, respectively. For the
six months ended March 31, 2000, PFS had revenues of $370,000, net loss of
$800,000 and at such date had total assets of $5,500,000 and stockholder's
deficiency of $2,400,000.

         PFS expects to enter into an agreement with the Oklahoma Securities
Department pursuant to which the status of PFS as an "investment certificate
issuer" will be terminated within two years. This agreement will require that
during such period PFS find additional sources of funding for its activities
other than the sale of investment certificates. At March 31, 2000, PFS had
$6,700,000 in investment certificates outstanding.

         PalWeb intends to use PFS as a vehicle to offer financing to buyers
of its plastic pallets and injection molding equipment.

         The historical financial statements of Pace Holding, Inc. and the pro
forma financial information required by Section 310 of Regulation SB were
filed on June 2, 2000 as a part of PalWeb's Amendment No. 4 to Form 10-SB and
are incorporated herein by reference.


                                       8
<PAGE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         A.    See original filing.

         B.    No reports on Form 8-K were filed by PalWeb Corporation during
               the quarter ended February 29, 2000

         In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.


                                                 PALWEB  CORPORATION
                                       ----------------------------------------
                                                   (Registrant)


Date   6/02/00                                  /s/ PAUL KRUGER
       ------------------              ----------------------------------------
                                       Chairman of the Board and President



















                                       9