SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 AMENDMENT 2 TO FORM 10 GENERAL FORM FOR REGISTRATION OF SECURITIES Under Section 12(b) or 12(g) of The Securities Exchange Act of 1934 INTERNET SPORTS NETWORK, INC. ----------------------------------------------- (Name of Small Business Issuer in its charter) Florida 65-0704152 -------------------------------- --------------------------------- (State or Other Jurisdiction (IRS Employer Identification No.) of Incorporation or Organization) 225 Richmond Street West, Suite 403, Toronto, Ontario, Canada M5V 1W2 (Address of principal executive offices) (Zip Code) (416) 599-8800 (Issuer's Telephone Number, Including Area Code) Securities to be registered under Section 12(b) of the Act: Title of each class Name of each exchange on which to be so registered each class is to be registered ------------------- ------------------------------ None None ---- ---- Securities to be registered pursuant to section 12(g) of the Act: Common Stock, par value $.001 ----------------------------- (Title of Class)

PART I ITEM 1. DESCRIPTION OF BUSINESS A. BUSINESS DEVELOPMENT 1. FORM AND YEAR OF ORGANIZATION Internet Sports Network, Inc. was first incorporated in April, 1997 in the state of Nevada. BirchTree Capital Corporation, a Florida corporation was incorporated in the state of Florida on October 4, 1996. BirchTree Capital Corporation was a publicly traded corporation, trading under the symbol BITC on the Over the Counter/Bulletin Board. Effective January 19, 1999, the stockholders of Internet Sports Network, Inc. a Nevada corporation initiated the exchange of one hundred percent (100%) of their shares in that corporation for nine million eighty five thousand two hundred twenty nine (9,085,229) shares of BirchTree Capital Corporation. On February 1, 1999, BirchTree Capital Corporation changed its name to Internet Sports Network, Inc., a Florida corporation, and changed its OTC/BB symbol to ISNI. On February 22, 1999, Internet Sports Network, Inc., a Nevada corporation merged into Internet Sports Network, Inc. a Florida corporation with the Florida corporation being the surviving entity. The surviving entity, Internet Sports Network, Inc., a Florida corporation (the "Company" or "ISN") traded on the over the counter/bulletin board as ISNI. 2. ANY BANKRUPTCY, RECEIVERSHIP OR SIMILAR PROCEEDING. Not Applicable. 3. ANY MATERIAL RECLASSIFICATION, MERGER, CONSOLIDATION, OR PURCHASE OR SALE OF A SIGNIFICANT AMOUNT OF ASSETS NOT IN THE ORDINARY COURSE OF BUSINESS. In January 1999, Internet Sports Network, Inc., then a privately held Nevada corporation, entered into an agreement with Birchtree Capital Corporation, a Florida shell corporation with no operations which traded on the over the counter/bulletin board as "BITC" and its majority shareholder, Eric Littman. Pursuant to this agreement, Birchtree Capital Corporation issued in excess of 9,000,000 shares of stock to the shareholders of Internet Sports Network, Inc., the Nevada corporation. For the additional consideration of being permitted to retain 1,025,000 shares of common stock of Birchtree Capital Corporation and for the cash payment of $250,000, Mr. Littman agreed to cancel 3,975,000 shares of common stock held in his name. At the time of this transaction, the Company did not have sufficient cash resources to pay the consideration requested by Mr. Littman. Certain of our shareholders, Benitz & Partners and Mark Valentine, agreed to pay the cash consideration portion to Mr. Littman in exchange for receiving an option to purchase 500,000 shares each of common stock held by Mr. Littman. Benitz & Partners and Mark Valentine also agreed to the cancellation of 350,000 shares each of their Internet Sports Network, a Nevada corporation, common stock. Effective January 19, 1999, the stockholders of Internet Sports Network, Inc. a Nevada corporation initiated the exchange of one hundred percent (100%) of their shares for an equal number of shares of common stock of Birchtree Capital Corporation. On February 1, 1999, Birchtree Capital Corporation changed its name to Internet Sports Network, Inc., a Florida corporation, and changed its OTC/BB symbol to ISNI. On February 22, 1999, Internet Sports Network, Inc., a Nevada corporation merged into Internet Sports Network, Inc. a Florida corporation with the Florida corporation being the surviving entity. The capitalization of the resulting company, Internet Sports Network, Inc., a Florida corporation was less than 1% of the issued and outstanding shares of common stock held by former Birchtree Capital Corporation shareholders and greater than 99% of the issued and outstanding shares of common stock held by former Internet Sports Network, Inc. a Nevada corporation.

Effective February 5, 1999, the Company acquired all of the shares of SportsMark, Inc. an Alberta, Calgary, Canada corporation, SportsMark Promotions, Inc., a Delaware corporation and Classroom 2000, Inc., an Alberta, Calgary, Canada corporation, and assets of SMP SportsMark Promotions, International, Inc., a Barbados Company (collectively the "SportsMark Companies" or "SportsMark"). This agreement resulted in the Company acquiring SportsMark's subscriber base and the assets of SMP SportsMark Promotions International, Inc. which consisted of the trademarks "Weekend Winners" and "Ultimate Draft" and all of its rights to use U.S. Sports Contest Software. The shareholders of SportsMark received 1,500,000 shares of common stock of ISN and $1,254,000 cash as the consideration granted in this agreement. On March 5, 1999, ISN California, Inc. a California corporation was incorporated as a wholly owned subsidiary of ISN. Effective March 5, 1999, the Company entered into a Merger Agreement with Pickem Sports, Inc. a Maine corporation doing business in California ("Pickem") and the individual stockholders of Pickem Sports Inc., wherein ISN would purchase all of the stock of Pickem Sports, Inc. in exchange for one million eight hundred seventy-seven thousand nine hundred ninety five (1,867,995) shares of common stock of ISN and $3,000,000 in cash. Also, pursuant to this Agreement, Pickem Sports, Inc. merged with ISN California, Inc. with ISN California, Inc. being the surviving entity. This merger resulted in the Company acquiring Pickem's web-based contest software. This software creates specific contests for customers and strategic joint venture partners from the Company's proprietary generic programs. Effective June 22, 1999, the Company acquired certain assets of National Publisher Services, Inc., an Iowa corporation. These assets consisted of the Ultimate Sports Publishing division, which is made up of the publications: Ultimate Sports Baseball; Ultimate Sports Football; Hawes Fantasy Baseball; Hawes Fantasy Football; Ultimate Sports Basketball, Hawes Fantasy Basketball; and Ultimate Sports Hockey. Pursuant to this agreement, the Company also acquired the trademarks "FTA" and "Ultimate Sports". Ultimate Sports publishes fantasy sports contest publications and provides the Company with a cross-marketing tool between traditional media and web-based media. These assets were acquired for 125,000 shares of common stock of ISN and $860,000 cash. ISN Wisconsin, a Wisconsin corporation was incorporated as a wholly owned subsidiary of ISN. Effective June 30, 1999, the Company, ISN Wisconsin, Inc., Innovation Partners Inc., d.b.a. SportsBuff, a Wisconsin corporation ("SportsBuff"), and the individual shareholders of SportsBuff entered into a Merger Agreement, wherein ISN would purchase the stock of SportsBuff in exchange for six hundred sixteen thousand sixty (616,060) shares of common stock of ISN and $1,000,000 cash. Also, pursuant to this Agreement, Innovation Partners, Inc. merged with ISN Wisconsin, Inc. with ISN Wisconsin, Inc. being the surviving entity. B. FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS. The Company has sustained losses since its inception. For the period from April 28, 1997 (inception) to April 30, 1998, the Company sustained losses of $643,000. For the period from May 1, 1998 to March 31, 1999, the Company sustained losses of $3,514,000. Management expects substantial losses for the foreseeable future. All of ISN's revenue derives from one source, the provision of sports related games, contests and content. These contest revenues are earned primarily from fees from consumers who pay to enter sports contests, fees from companies that license the contest applications, and fees from third parties advertising their products and services where these contests take place. The Company has also recently entered the publishing sector whereby it produces and distributes annual pre-season sports magazines which provide content about sports teams and players prior to the start of the given sports season. This sector is expected to make up less than 20% of the Company's total forecasted revenues, assets and net income (loss) for the next year.

C. NARRATIVE DESCRIPTION OF BUSINESS. ISN is an Internet based sports media and entertainment company specializing in interactive sports contests, as well as offering some non-sports games and contests. The Company offers consumers the opportunity to get involved in their favorite sports by playing skill-testing contests based upon the outcomes of real-life sporting events, such contests being generally known as "fantasy sports". As well as fantasy sports, the Company offers non-fantasy-style contests such as Internet animation games that emulate the action of a real game, and trivia-question applications. The Company's sources of revenue are fees from consumers who pay to enter "pay to play" contests, revenues from media companies that license ISN's applications, and fees from third parties advertising their products and services on web sites and offline media where these contests take place. The Company also offers sports contests in offline media such as newspapers in order to augment its Internet distribution channel and to establish its brand in offline channels as a migration path for the rapidly growing number of consumers moving from offline to online media usage. 1. PRINCIPAL PRODUCTS AND THEIR MARKETS THE MARKET The Company markets contests in online as well as off-line media. There has been no formal study of the fantasy sports market size, but various industry publications such as Business 2.0 and Silicon Alley Reporter, estimate there is somewhere between 11 to 15 million fantasy sports players online. These players participate in a variety of pay-to-play contests as well as advertising-supported no-fee contests. According to Media Matrix, an Internet and Digital Media measurement firm, as of August, 1999, there has been a continuing growth trend in the number of visitors, in the amount of content viewed and the number of hours users spent online over the past twelve months. Media Matrix indicated that: - The number of monthly visitors (at home and work combined) to the Internet grew more than 11 percent since July 1998 from 56.6 million to 62.9 million in July 1999. - The average number of unique web pages viewed per visitor per day increased by 25 percent to 40.1 pages in July 1999 from 32.2 pages in July 1998. - The average number of unique pages viewed per month increased nearly 50 percent over the past twelve months, from 330 unique pages per visitor in July 1998 to 487 per visitor in July 1999. - the number of days users accessed the Internet increased nearly 20 percent from 10.3 days in July 1998 to 12.1 days in July 1999. Internet users spent over 36 percent more time on the Internet in July 1999 than a year ago-an increase from 5.8 average hours per person in July 1998 to 7.9 hours in June 1999. In August 1999, Jupiter Communications, a provider of research on Internet consumer behavior and Internet commerce, published a survey of attitudes, behaviors and demographics of the online user. This survey estimate the potential online market for sports and non-sports contests.

According to this survey, participation in contests and sweepstakes is one of the top 10 online activities. Amongst these "top 10 online activities" contest participation showed the single greatest percentage growth annually, from 27% of the online users in 1998 to 49% in 1999. According to this survey, sports is one of the top categories of content accessed online. Silicon Alley Reporter, a digital media industry trade publication, stated that sports is the leading content application, and interactive sports contests are the "killer application" that no sports web site can do without. THE PRODUCTS ISN has a range of contest products operating in online and offline media, in sports and non-sports categories. The Company's products permit the customer to subscribe to the level of competition, sophistication, and cost with which they are most comfortable. The Company's primary revenue is currently derived from subscription packages. These products include contests co-branded with media distribution partners, such as major web portals, television stations and newspapers, as well as the Company's own "Sportsrocket" branded contests. The media partner contests provide media partners and their advertisers/sponsors with a promotional vehicle to help generate usage of their media products. The contest products aim to provide a target marketing opportunity to the sponsors/advertisers and merchandisers that work with the media companies, as such contest products are believed, according to an articles from Business 2.0, to be attractive to a targeted demographic that is mostly male and between the ages of 18 and 45 years. The contests generate customer loyalty for the co-sponsor and provides a source of revenue through sales of service subscription packages and sponsorships. With promotion and advertising from the co-sponsor in their media properties, the Company designs and manages contests such as football, baseball, basketball, golf, NASCAR, hockey or investment challenge contests. The net revenues from the subscriptions for the contests are then divided between the co-sponsor and the Company. The division of revenues from subscriptions varies per the agreement. Under existing agreements, the division of revenues range from as little as 80% to the Company to as much as 96% to the Company. The Company also designs and manages contests on a fee-for-service basis for major Internet portals and for other media companies. These contests are client-customized, sports and non-sports games, contests and promotions. The goal of these products and services is to: drive and sustain traffic to its web sites; attract sponsors and general advertising revenues; promote the sponsor's products and services; convert casual visitors to long-lasting members; build brand awareness; assist in gathering important user information through registrations and surveys; and, create cross-promotional opportunities between off-line and online media. The Company's current marketing plan focuses on: 1. INCREASING PRIVATE LABEL PARTNERSHIPS WITH LEADING MEDIA COMPANIES AND CONSUMER-PRODUCTS COMPANIES. The Company believes there is an increasing demand for contest products, especially in online media. The Company has recently entered into agreements with Labatt Brewing Company, Ltd. and Playboy Enterprises. These agreements are to develop and maintain contest sites for the joint venture partners' website. In the case of Labatt's, the website is Beer.com, and in the case of Playboy, the website is Playboy Online. Although hosted on the Company's server, the Company's technology allows the contest site to appear to be on the joint venture partner's web site. The Company intends to aggressively pursue additional joint venture relationships with large companies who traditionally have an offline market but are seeking to increase their online traffic through providing content on their web site. While varying in the percentage split, these agreements require the Company and the joint venture partner to share contest site generated contest revenue, advertising and merchandising.

2. INCREASING CROSS-PROMOTIONS FROM OFF-LINE MEDIA TO ONLINE MEDIA. The Company believes that, through it experience in running contests with media companies that have off-line (newspaper and television) and online media products, there exists significant opportunity to capture consumer attention through off-line media and to cross-promote these consumers to online media. 3. ADDING MAGAZINE PARTNERS. The Company believes that certain magazines can be effective distribution vehicles for increased sales of the premium series of contests. 4. INTERNATIONAL GROWTH. The Company operates contests in South America and Europe and hopes to significantly increase its operations in these markets as well as in Asia. 2. STATUS OF ANY PUBLICLY ANNOUNCED NEW PRODUCT OR SERVICE. Not applicable. 3. THE SOURCES AND AVAILABILITY OF RAW MATERIALS. Not applicable. 4. THE IMPORTANCE OF PATENTS, TRADEMARKS, LICENSES, FRANCHISES AND CONCESSIONS HELD. The Company currently has an application pending with the United States Patent and Trademark Office ("PTO") and the Canadian Patent and Trademark Office for registration of the name "Internet Sports Network" as a servicemark. The Company has registered the websites www.sportspool.com, www.internetsportsnet.com, www.ultsports.com, www.internetsportsnetwork.com, www.sportsbuff.com, www.sportsrocket.com and www.pickem.com. The Company currently operates most of its contests on the www.sportsrocket.com website. As part of the Sportsmark transaction, ISN acquired Sportsmark's trademarks and tradenames filed in the Canadian trademark office including: Sportsmark, All Star Challenge, Great Canadian Hockey draft, Fantasy Hockey Dream Team, Fantasy Basketball Dream Team, Fairway Fantasy, Playoff Payoff, Weekend Winners, Fantasy Baseball Dream Team, Fantasy Football Dream Team, Hockey Draft Sweepstakes. The Sportmark trademark expires fifteen years from January 18, 1999. All Star Challenge has recently acquired approval from the Canadian trademark office. It's filing date will commence upon the filing of a statement of use by the Company. Great Canadian Hockey draft will expire 15 years from April 30, 1997. Fantasy Hockey Dream Team will expire 15 years from February 5, 1997. Fantasy Basketball Dream Team will expire 15 years from January 14, 1997. Fantasy Football Dream Team will expire 15 years from February 24, 1989. Fairway Fantasy will expire 15 years from March 22, 1996. Playoff Payoff will expire 15 years from August 28, 1994. Weekend Winners will expire 15 years from August 5, 1994, and Hockey Draft Sweepstakes will expire 15 years from November 23, 1988. As part of the transaction with National Publisher's Services, Inc., d.b.a. Ultimate Sports, the Company was assigned the trademarks "Ultimate Sports" and "FTA". FTA was registered with the PTO on May 4, 1998 and thus would expire by May 3, 2008. The "FTA" trademark consisting of stylized letters was registered with the PTO on November 14, 1997 and would expire by November 13, 2007. The "Ultimate Sports" trademark was registered with the PTO on July 22, 1993 and would expire July 21, 2003. The Company has filed the assignment forms with the United States Patent and Trademark office. As part of the merger by and between Innovation Partners, Inc. d.b.a. SportsBuff and ISN, Wisconsin, ISN Wisconsin is the surviving entity and has all right and title to the trademarks, trade names and proprietary information owned by SportsBuff. Such trademarks include "Buffball" and "SportsBuff". "SportsBuff" was registered with the PTO on July 22,1997 and thus would expire by July 21, 2007. The mark "Buff Ball" was registered with the state of Wisconsin on November 24, 1993 and is valid for a period of ten years. The Company does not rely on proprietary technology in providing its sports entertainment services. While the Company uses technology which has been customized for its own purposes, the Company has deliberately avoided becoming overly dependent on any one technology. By avoiding reliance on any one technology, the

Company will be able to take advantage of technological advances to provide new and improved services and superior sports contests to its subscribers. ISN has no collective labor agreements. 5. THE EXTENT TO WHICH THE BUSINESS OF THE SEGMENT IS OR MAY BE SEASONAL. Sports contests are geared towards the sports season for a particular sport. As an example, the football season runs from September to the Super Bowl in January; the hockey season runs from September through to the playoffs in June; and the baseball season runs from April through to the World Series in October. The Company offers contests surrounding most major sporting seasons, however the majority of cash is received in the months prior to the start of a given sports' season. As a result, the Company's cash flows tend to be focused in the late summer, early fall prior to the Football (NFL), Basketball (NBA) and Hockey (NHL) seasons. Cash flow representing approximately 40% of the Company's annual revenues are received in September to November. Additional revenues are received each sport season through weekly contests and transaction revenues, however the bulk of cash receipts occur at the start of each season. Revenue is recognized for accounting purposes evenly over the course of the associated sporting event or season, therefore revenues are higher from September to March, during the 3 main sport seasons discussed above. 6. THE PRACTICE OF THE REGISTRANT AND THE INDUSTRY RELATING TO WORKING CAPITAL ITEMS. This item is not applicable to this industry or segment. 7. DEPENDENCE ON A SINGLE OR FEW CUSTOMERS. Not applicable. 8. BACKLOG ORDERS. Not applicable 9. GOVERNMENT APPROVAL. No government approval is required for any of the Company's current products or services. 10. COMPETITION The interactive sports contests industry is rapidly evolving and very competitive, which the Company expects will intensify in the future. Barriers to entry are minimal, allowing current and new competitors to launch new products at a relatively low cost. The Company currently or potentially competes with other companies which have sports related websites. These competitors include ESPN.com, CDM, Inc., CBS Sportsline.com, SmallWorld Sports, Sandbox, Commissioner.com, Prime Sports Interactive as well as many other smaller competitors. Many of the Company's current and potential competitors have longer operating histories, larger customer bases, greater brand name recognition and significantly greater financial, marketing and other resources than the Company. In addition, other competitors may be acquired by, receive investments from, or enter into other commercial relationships with larger, well-established and well-financed companies as use of the Internet and other online services increases. Certain of the Company's competitors may be able to devote greater resources to marketing and promotional campaigns, and devote substantially more resources to Web site and systems development then the Company. Increased competition may result in reduced operating margins, loss of market share and a diminished franchise value. There can be no assurance that the Company will be able to compete successfully against current and future competitors, and competitive pressures faced by the Company may have a material adverse effect on the Company's business, prospects, financial condition and results of operations. Further as a strategic response to changes in the competitive environment, the Company may, from time to time, make certain service or marketing decisions or acquisitions that could have a material adverse effect on its business, prospects, financial condition and results of operations. New technologies and the expansion of existing

technologies may increase the competitive pressures on the Company. In addition, companies that control access to transactions through network access or Web browsers could promote the Company's competitors or charge the Company a substantial fee for inclusion. 11. RESEARCH AND DEVELOPMENT COSTS Not Applicable. 12. COST AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS AND REGULATIONS The Company is not involved in a business which involves the use of materials in a manufacturing stage where such materials are likely to result in the violation of any existing environmental rules and/or regulations. Further, the Company does not own any real property which would lead to liability as a land owner. Therefore, the Company does not anticipate that there will be any costs associated with the compliance of environmental laws and regulations. 13. EMPLOYEES As of the date hereof, the Company employed 34 full-time employees and 5 part-time employees. The Company hires independent contractors on an "as needed" basis only. The Company has no collective bargaining agreements with its employees. The Company believes that its employee relationships are satisfactory. In the long term, the Company will attempt to hire additional employees as needed based on its growth rate. D. FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREAS. 1. ISN currently derives net sales primarily from the United States of America and Canada. No other foreign country or geographic areas accounted for more than 10% of net sales. A detailed discussion of the information on the basis of geographic areas is set forth below and in the Financial exhibits provided in item 15 below. There were no transfers between geographic areas during the periods ending March 31, 1999 and April 30, 1998. Identifiable assets in the United States equal approximately $12,457,000 and $0 in fiscal 1999 and 1998, respectively. The remaining identifiable assets are in Canada. The $12,457,000 of identifiable assets in the United States consist of the following: <TABLE> <S> <C> - Purchased intangibles (net) $8,891,000 - Goodwill(net) 3,556,000 - Capital assets 10,000 </TABLE> I. REVENUE ATTRIBUTION. For the 11 month period ending March 31, 1999, reflecting the results of acquired companies outlined on page 1 from the dates of acquisition, with comparative figures for the period from April 28, 1997 (inception) through April 30, 1998: A. United States: Of the Company's net revenues $28,000 is attributable to U.S. customers, consisting of 18% of the Company's total revenues. In 1998, there were no net revenues attributable to U.S. customers. B. All foreign countries: Of the Company's revenues $124,000 is attributable to all foreign countries, consisting of 82% of the Company's total revenues. In 1998, $77,000 or 100% of the Company's net revenues were attributable to Canadian customers. All foreign countries, for purposes of this calculation is limited to Canada. II. LONG-LIVED ASSETS. Not Applicable. 2. CROSS REFERENCE TO FINANCIAL STATEMENTS.

The information requested by this section is contained in the Financial Exhibits and provided in Item 2.

3. RISKS ATTENDANT TO FOREIGN OPERATIONS. The primary risk attendant to foreign operations of ISN is the effect of currency exchange rates. The unit of measurement of the Company is the Canadian dollar while the reporting currency is the United States dollar. The assets and liabilities of the Canadian subsidiaries are translated using the exchange rate in effect at the year end, and revenue and expenses are translated at the average rate during the period. Exchange gains or losses on translation of the Company's net equity investments in these subsidiaries are deferred as a component of other comprehensive income. The translation adjustments as of March 31, 1999 and April 30, 1998 were insignificant. Management does not believe this risk is material due to natural currency hedges in the organization through Canadian currency revenues offsetting Canadian currency expenses, thus the net Canadian dollar exposures are minimized, however, this is re-evaluated periodically. 4. INTERIM FINANCIAL INFORMATION. The financial data for geographic areas is not indicative of future operations of the Company. The Company has made several acquisitions based in the United States during 1999, and as such related revenues and expenses from the United States will increase significantly as a percentage of total revenue and in gross amounts. E. AVAILABLE INFORMATION. Not Applicable. F. REPORTS TO SECURITY HOLDERS. Not Applicable. G. ENFORCEABILITY OF CIVIL LIABILITIES AGAINST FOREIGN PERSONS. Not Applicable. ITEM 2 FINANCIAL INFORMATION SELECTED HISTORICAL FINANCIAL DATA The following is management's discussion and analysis of ISN's financial condition and results of operations. Detailed information is contained in the financials included in this document. This section contains forward-looking statements that involve risks and uncertainties, such as statements of ISN's plans, objectives, expectations and intentions. The cautionary statements made in this document should be read as being applicable to all related forward-looking statements wherever they appear in this document.

The following table sets forth, for the periods indicated, selected financial information for the Company: INTERNET SPORTS NETWORK, INC. SELECTED HISTORICAL FINANCIAL DATA SCHEDULE FROM INCEPTION TO MARCH 31, 1999 <TABLE> <CAPTION> Period from April 28 11 months ended 1997 (inception) to March 31, 1999 April 30, 1998 -------------- -------------- <S> <C> <C> Net sales or operating revenues 152,000 77,000 Prize commitments and other direct costs 250,000 41,000 Other costs and expenses 1,466,000 670,000 Interest and bank charges 17,000 9,000 Stock compensation, stock options and debenture related costs 796,000 -0- BTC acquisition and other due diligence costs 546,000 -0- Amortization of purchased intangibles and goodwill 827,000 -0- ---------------------------------------------------- Net loss before tax (3,750,000) (643,000) -0- Deferred tax recovery 236,000 ---------------------------------------------------- Loss from operations (3,514,000) (643,000) ==================================================== Loss from operations per common share (0.45) (0.17) ==================================================== <CAPTION> As at As at March 31, 1999 April 30, 1998 -------------- -------------- <S> <C> <C> Cash and cash equivalents 2,928,000 9,000 Other current assets 211,000 76,000 ---------------------------------------------------- Total current assets 3,139,000 85,000 Purchased intangibles and goodwill, net 13,492,000 -0- Equipment, net 84,000 46,000 ---------------------------------------------------- Total Assets 16,715,000 131,000 ==================================================== Total current liabilities 339,000 167,000 Deferred income taxes 3,855,000 -0- Long-Term obligations -0- 196,000 ---------------------------------------------------- ---------------------------------------------------- Total liabilities 4,194,000 363,000 ---------------------------------------------------- Common stock 17,127,000 425,000 Share subscriptions receivable -0- (14,000) Deferred compensation (449,000) -0- Accumulated deficit (4,157,000) (643,000) ---------------------------------------------------- Total shareholders' equity 12,521,000 (232,000) ---------------------------------------------------- Total liabilities and shareholders' equity 16,715,000 131,000 ==================================================== Cash dividends per common share -0- -0- Cash dividends declared per common share -0- -0- </TABLE>

INTERNET SPORTS NETWORK, INC. SELECTED HISTORICAL FINANCIAL DATA SCHEDULE FOR THE 3 MONTHS ENDING JUNE 30 (UNAUDITED) <TABLE> <CAPTION> June 30, 1999 June 30, 1998 ------------- ------------- <S> <C> <C> Net sales or operating revenues 672,000 8,000 Prize commitments and other direct costs 242,000 2,000 Other costs and expenses 1,093,000 146,000 Interest and bank charges 4,000 -0- Stock compensation, stock options and debenture related costs 213,000 -0- Due diligence costs 51,000 -0- Amortization of purchased intangibles and Goodwill 1,805,000 -0- ----------------------------------------------- Net loss before tax (2,736,000) (140,000) Deferred tax recovery 509,000 -0- ----------------------------------------------- Loss from operations (2,227,000) (140,000) =============================================== Loss from operations per common share (0.12) (0.03) =============================================== <CAPTION> As at As at June 30, 1999 June 30, 1998 ------------- ------------- <S> <C> <C> Cash 2,601,000 202,000 Accounts Receivable 240,000 3,000 Prepaid Expenses and other Deferred Charges 38,000 106,000 ----------------------------------------------- Total current assets 2,879,000 311,000 Capital assets, net 290,000 44,000 Other assets 18,000 -0- Purchased intangibles, net 15,272,000 -0- Goodwill, net 5,473,000 -0- ----------------------------------------------- Total Assets 23,932,000 355,000 =============================================== Total current liabilities 1,711,000 158,000 Deferred income taxes 5,473,000 -0- Long-Term obligations -0- 196,000 ----------------------------------------------- Total liabilities 7,184,000 354,000 ----------------------------------------------- Common stock 24,646,000 786,000 Deferred compensation (1,513,000) -0- Accumulated deficit (6,385,000) (785,000) ----------------------------------------------- Total shareholders' equity 16,747,740 1,000 ----------------------------------------------- Total liabilities and shareholders' equity 23,931,914 355,000 =============================================== </TABLE>

SUMMARY UNAUDITED PRO-FORMA FINANCIAL DATA The following presents summary unaudited pro-forma consolidated financial information, which gives effect to the various acquisitions of the Company occurring in the relevant periods. This summary pro-forma financial information should be read in conjunction with such Historical and Pro-forma Financial Data, the financial statements and Management's Discussion and Analysis of Operations and Financial Condition of ISN. Pro-forma information is presented based upon historical information and, accordingly, is not necessarily indicative of future financial positions or results of operations. The accompanying unaudited consolidated statements of operations are presented for the 11 months ended March 31, 1999, and gives effect to the acquisitions of Sportsmark, Pickem and Sportsbuff as if they had occurred at the beginning of the period.

PRO-FORMA FINANCIAL STATEMENTS (UNAUDITED) 11 MONTHS ENDED MARCH 31, 1999 <TABLE> <CAPTION> ISN SportsMark California As Reported Group (Pickem) Sportsbuff Pro-forma Adj Note Pro-forma ------------ ---------- -------- ---------- ------------- ---- --------- <S> <C> <C> <C> <C> <C> <C> <C> REVENUE 152,000 1,558,000 179,000 1,212,000 - 3,101,000 EXPENSES Prize Commitments and other direct Costs 250,000 628,000 35,000 606,000 - 1,519,000 Other Costs and Expenses 1,622,000 504,000 120,000 537,000 187,000 E,F 2,970,000 Interest and Bank charges 17,000 4,000 - 5,000 - 26,000 Promotion and Advertising 367,000 55,000 (1,000) 1,000 - 422,000 Amortization of Capital Assets 23,000 8,000 15,000 28,000 - 74,000 Stock compensation, stock option and Debenture related costs 796,000 - - - - 796,000 Amortization of purchased Intangibles and goodwill 827,000 - - - 9,165,000 A,B,D,G 9,992,000 -------------------------------------------------------------------- --------------- NET LOSS BEFORE TAXES (3,750,000) 359,000 10,000 35,000 (9,352,000) (12,698,000) Deferred income Tax Expense (recovery) (236,000) 8,000 (1,000) - (2,571,000) H (2,800,000) -------------------------------------------------------------------- --------------- NET INCOME (LOSS) (3,514,000) 351,000 11,000 35,000 (6,781,000) (9,898,000) ==================================================================== =============== <CAPTION> As at March 31, 1999 ISN SportsMark California As Reported Group (Pickem) SportsBuff Pro-forma Adj Note Pro-forma ------------ ---------- --------- ------------ --------------- - ----- ---------- ASSETS Current Assets Cash and cash equivalents 2,928,000 - - 114,000 (1,000,000) C 2,042,000 Other Current Assets 211,000 - - 103,000 - 314,000 -------------------------------------------------------------------- --------------- Total Current Assets: 3,139,000 - - 217,000 (1,000,000) 2,356,000 Purchased intangibles and goodwill, net 13,492,000 351,000 11,000 - (2,043,000) A,B,C,D,G 11,811,000 Equipment, net 84,000 - - 31,000 - 115,000 -------------------------------------------------------------------- --------------- TOTAL ASSETS 16,715,000 351,000 11,000 248,000 (3,043,000) 14,282,000 ==================================================================== =============== Total current Liabilities 339,000 - - 234,000 50,000 F 623,000 Deferred Income Taxes 3,855,000 - - - (536,000) H 3,319,000 -------------------------------------------------------------------- --------------- TOTAL LIABILITIES 4,194,000 - 234,000 (486,000) 3,942,000 -------------------------------------------------------------------- --------------- Shareholder's Equity Share Capital 17,127,000 - - 8,000 4,058,000 C 21,193,000 Deferred Compensation (449,000) - - - - (449,000) Accumulated Deficit (4,157,000) 351,000 11,000 6,000 (6,615,000) E,C (10,404,000) -------------------------------------------------------------------- --------------- Total Shareholder's Equity 12,521,000 351,000 11,000 14,000 (2,557,000) 10,340,000 -------------------------------------------------------------------- --------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 16,715,000 351,000 11,000 248,000 (3,043,000) 14,282,000 ==================================================================== =============== </TABLE>

NOTES TO THE CONSOLIDATED PRO-FORMA FINANCIAL STATEMENTS FOR THE ELEVEN MONTHS ENDED MARCH 31, 1999: The consolidated pro-forma statement of operations includes the operating results of the Sportsmark Group of Companies for the first 9 months of the period and Pickem for the first 10 months of the period. It also includes the operating results of Sportsbuff for the full 11 months of the period. The balance sheet information also includes the purchase equation for Sportsbuff, as it had been acquired after March 31, 1999. The following is a description of the pro-forma adjustments referenced in the consolidated pro-forma financial statements: A. Recording 9 months of additional amortization of purchased intangibles and goodwill arising from the Sportsmark Group acquisition totaling $1,493,000 and $597,000 respectively. Also recording the additional amortization of the deferred income tax liability of $597,000. B. Recording 10 months of additional amortization of purchased intangibles and goodwill arising from the Pickem Sports acquisition totaling $2,604,000 and $1,041,000 respectively. Also recording the additional amortization of the deferred income tax liability of $1,041,000. C. Recording the acquisition of Sportsbuff, including purchased intangibles and goodwill of $5,087,000 and $2,035,000 respectively, the related deferred income tax liability of $2,035,000, paid for with $1,000,000 cash and $4,066,000 in common stock. Also eliminating the capital stock of $8,000 and accumulated deficit of $29,000 of Sportsbuff at the start of the period. D. Recording 11 months of amortization of the Sportsbuff purchased intangibles and goodwill totaling $2,331,000 and $933,000 respectively. Also recording the additional amortization of the deferred income tax liability of $933,000. E. Recording $137,000 of additional wages and benefits expense to reflect amounts taken as dividends by Sportsmark during the period before the acquisition. F. Accrual of $50,000 of acquisition costs associated with the purchase of Sportsbuff. G. Recording and amortization of purchased intangible variance of $362,000 (shown in the Sportsmark Group and ISN California (Pickem) columns) and $166,000 respectively had the acquisitions occurred at the beginning of the year. H. The deferred income tax liability and the goodwill arose as a result of the differences between the financial reporting and tax values of the purchased intangibles acquired through the Sportsmark Group, Sportbuff and Pickem acquisitions. The deferred income tax liability is amortized into income over the same period as the goodwill.

Pro-forma results include the results of operations for SportsBuff for the 3 month period ending June 30, 1999, as if the acquisition had occurred at the beginning of the period. The accompanying unaudited pro-forma consolidated statement of operations is presented for the quarter ended June 30, 1999 and gives effect to the acquisition as if it had occurred at April 1, 1999: PRO-FORMA STATEMENTS 3 MONTHS ENDED JUNE 30, 1999 <TABLE> <CAPTION> ISN Pro-Forma As Reported Wisconsin Total Adjustments Note Pro-forma ----------- --------- ----- ----------- ---- --------- <S> <C> <C> <C> <C> <C> <C> REVENUE $ 672,231 $ 237,938 $ 910,169 - $ 910,169 ------------------------------------------------------------- --------------- EXPENSES Prize Commitments and other direct costs 241,473 276,178 517,650 - 517,650 Salaries and benefits 386,356 62,676 449,032 - 449,032 Consulting fees 220,031 5,370 225,401 - 225,401 Advertising 87,570 942 88,512 - 88,512 General and Administrative 138,026 62,380 200,407 - 200,407 Rent and Occupancy 23,108 6,900 30,008 - 30,008 Telephone 26,255 2,884 29,139 - 29,139 Legal and Accounting 21,633 4,549 26,182 - 26,182 Travel and Entertainment 186,244 10,242 196,487 - 196,487 Interest and Bank charges 4,053 1,520 5,573 - 5,573 ------------------------------------------------------------- --------------- TOTAL EXPENSES 1,334,750 433,641 1,768,391 - 1,768,391 ------------------------------------------------------------- --------------- Net Operating Income (Loss) (662,518) (195,703) (858,222) - (858,222) Depreciation 4,327 2,439 6,766 - 6,766 Amortization of Purchased Intangibles/Goodwill 1,805,379 - 1,805,379 931,040 A 2,736,419 Amortization of Stock Compensation 212,833 - 212,833 - 212,833 Acquisition Costs 51,404 - 51,404 - 51,404 ------------------------------------------------------------- --------------- Net Income (Loss) before taxes (2,736,462) (198,142) (2,934,604) (931,040) (3,865,644) Deferred Income Tax Expense (Recovery) (509,046) - (509,046) (266,000) A (775,046) ------------------------------------------------------------- --------------- NET INCOME (LOSS) (2,227,416) (198,142) (2,425,558) (665,040) (3,090,598) ============================================================= =============== Net Loss per Share (0.16) =============== Weighted Average Shares Outstanding 18,620,791 616,060 19,236,851 19,236,851 ============================================================= =============== </TABLE> A. Pro-forma adjustments consist of the effects of amortizing the purchased intangibles and related goodwill on the acquisition of Sportsbuff from the start of the period. Amortization is being calculated on a straight line basis over two years.

OVERVIEW ISN was originally incorporated on April 28, 1997 in Nevada for the purpose of providing interactive, computer sports entertainment through the Internet. The Company has a limited operating history on which to evaluate its prospects. The risks, expense, and difficulties encountered by start up companies must be considered when evaluating ISN's prospects. The operating expenses of ISN cannot be predicted with certainty. They will depend on several factors, including the amount of marketing expenses, the acceptance of the Company's services in the market, and competition for such services, and the acquisition activities of the Company. Management may be able to control the timing of such expenses in part by speeding up or slowing down marketing development and distribution activities and acquisition strategies. From its inception in April 1997 to date, ISN has incurred costs associated with the development of its internet sports entertainment products, probable markets and business. ISN incurred costs for conducting test marketing for its products and received revenues as a result. The test marketing consisted of advertising, processing membership applications and analysis of responses. During the period, ISN purchased computer and telecommunication equipment as necessary to conduct its operations. ISN financed its expenditures primarily through the sale of its common stock. Since inception through March 31, 1999, the company issued approximately 10,256,000 million common shares for net cash consideration of approximately $9,178,000. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES Cash used by operating activities is $1,606,000, which is less than the net loss due to amortization and other share based expenses. Since inception, the Company has funded its capital requirements by financing activities, substantially through the sale of its equity securities. Capital expenditures from inception to March 31, 1999 were $115,000. ISN has current commitments to upgrade its management information system, telecommunications system and office equipment to accommodate anticipated growth at an estimated cost of $250,000 over the next six months. Overall, capital expenditures, including those anticipated as a result of acquisition activity, during the year ending March 31, 2000 is anticipated to approximate $1,000,000. The Company's management believes that an additional $3,000,000 in funds combined with the funds already raised in private offerings and the revenues generated by its operations will be sufficient to fund its operations for the next twelve months under the current plan of operations. Additional funding may be required for further acquisition activity, depending on the cash component of the purchase price of any contemplated acquisitions. It is expected that such funds will be obtained by the sale of additional capital stock of the Company, although there can be no assurance that ISN will be able to obtain such funds. Beyond the next twelve month period, the Company will require working capital to fund operations during the off peak months (June to August). Excluding acquisition activity, the funds required would be approximately $2 million, however after this period, the Company expects to be able to operate with its cash from operations from that point forward. Any additional capital requirements would be due to acquisition activities, or modifications to the current growth plans. The Company maintains its interest in acquiring companies and assets which can benefit the Company's business and subscriber base. Currently, the Company is reviewing potential acquisition targets which could provide complimentary assets and market access to the Company's existing portfolio. These acquisitions are not assured at this time, and there is a risk that these acquisitions will not be completed.

RESULTS OF OPERATIONS AMORTIZATION The purchased intangibles and goodwill related to the acquisitions of Sportsmark and Pickem totaled $14,319,000. Amortization for the eleven months ending March 31, 1999, was $827,000. The purchased intangibles and goodwill related to the acquisition of Ultimate Sports Publishing and SportsBuff totaled $9,058,000. Amortization for the three months ended June 30, 1999 was $1,805,000. The Company is amortizing purchased intangibles and goodwill over 24 months. These intangibles include trademarks, software licenses and intellectual properties. The Company expects to continue to acquire companies and assets that can benefit its business and subscriber base. Currently, ISN is reviewing potential acquisition targets that could provide complementary games and contests and as well as new partners for the Company's existing games. THREE MONTHS ENDED JUNE 30, 1999 (UNAUDITED) AS COMPARED TO THE THREE MONTHS ENDED JUNE 30, 1998 (UNAUDITED). REVENUE. The Company generated revenue of $672,000 for the period ending June 30, 1999 as compared to revenues of approximately $8,000 for the period ending June 30, 1998. The increase in revenues was primarily attributable to the inclusion of the operating results of Sportsmark, Ultimate Sports Publishing and Pickem in 1999. OPERATING EXPENSES. Total operating expenses were $1,390,000 as compared to approximately $148,000 in the period ended June 30, 1998, an increase of $1,242,000. Approximately $628,000 of this increase was attributable to the acquisitions of Sportsmark and Pick'em. PRIZES AND OTHER DIRECT COSTS. Expenses associated with providing prizes for contests and other direct costs increased to $242,000 from approximately $2,000 in the period ended June 30, 1998. Approximately $200,000 of the higher costs in 1999 were the result of publishing costs associated with the magazine publications. GENERAL AND ADMINISTRATIVE. Salaries and benefits increased $334,000 to $386,000 from $52,000 in the three month period in 1998, while consulting fees increased by $208,000 to $220,000 from $12,000 in the prior year period. These increases were the result of additional personnel and staff, mainly from the acquisitions of Sportsmark and Pick'em and consultants hired for game development, web design and for other services. Advertising expenses increased $66,000 to $88,000 from $22,000 in the prior year period. Other general and administrative costs increased by $343,000 the majority of which resulted from travel and other expenses which increased $180,000 to $186,000 as a result of an increase in sales staff, increased sales efforts and financing activities. Occupancy, telephone and legal and accounting costs at June 30, 1999 were $70,600. Depreciation was $4,000 in the three months ended June 30, 1999. Interest expense and bank charges equaled $4,000. Other general and administrative costs were $60,000 at June 30, 1998. AMORTIZATION OF PURCHASED INTANGIBLES, GOODWILL AND OTHER. Amortization of purchased intangibles was $1,296,000 and amortization of goodwill was $509,000 for the three months ended June 30, 1999 compared to no amortization of such amounts in the prior year period. The amortization was almost entirely related to the purchases of Sportsmark and Pickem. The Company plans to amortize the cost of these acquisitions as well as those of Ultimate Sports and SportsBuff over 24 months. The Company amortized $213,000 of costs related to stock based compensation resulting from stock options granted to officers, employees and directors. The compensation expense was calculated as the difference between the option exercise price and the market value of our common stock at the date of issuance. The options may be exercised at prices between $1.75 to $4.54 and vest over periods ranging from 18 to 24 months. ISN is amortizing the expense relating to the options over their vesting periods. Also, the Company expensed $51,000 of acquisition costs related to the purchase of SportsBuff and Ultimate Sports Publishing.

NET LOSS FROM OPERATIONS. The Company experienced a loss of $2,227,000 after the benefit of deferred taxes of $509,000 for the period ended June 30, 1999 as compared to a loss of $140,000 for the period ended June 30, 1998. Loss per share in the period ended June 30, 1999 was $ (.12) compared to $ (.03) in the prior year period. TOTAL ASSETS. The total assets of ISN as of June 30, 1999 totaled $23,932,000 compared to $298,000 at June 30, 1998. The increase in total assets was attributable to the net increase in purchased intangibles and goodwill of $20,700,000 resulting from the acquisition of SportsMark, Pickem Sports, SportsBuff and Ultimate Sports Publishing. See chart below for summary of assets acquired in the two transactions. Further increase in assets of $2,600,000 is from the funds raised from the sale of common stock not spent to date. <TABLE> <CAPTION> =================================================================================================================== As at As at June 22, 1999 June 30, 1999 Ultimate Sports Sportsbuff ------------------------------------------------------------------------------------------------------------------- <S> <C> <C> Net assets acquired at fair values: Working capital $ 0 $ (290,000) Equipment 0 36,000 Purchased intangibles 1,610,000 5,320,000 Goodwill 0 2,128,000 Deferred income taxes 0 (2,128,000) ----------- ----------- $ 1,610,000 $ 5,066,000 ------------ ------------ Funded by: Cash $ 860,000 $ 1,000,000 Shares of common stock 750,000 4,066,000 ----------- ----------- $ 1,610,000 $ 5,066,000 =================================================================================================================== </TABLE> FISCAL PERIOD ENDED MARCH 31, 1999 (AUDITED) AS COMPARED TO FISCAL PERIOD ENDED APRIL 30, 1998 (AUDITED) REVENUE. Revenue totaled $152,000 for the eleven months ended March 31, 1999 as compared to revenue of $77,000 for the period from April 28, 1997 (inception) to April 30, 1998. Approximately $67,000 of the revenue increase was attributable to the acquisitions of the Sportsmark and Pickem companies. The revenues include two months of operating results for Sportsmark and one month for Pickem. OPERATING EXPENSES. Total operating expenses were $1,733,000 in the eleven months ended March 31, 1999 compared to $720,000 in the period ended April 30, 1998. Increases in operating expenses relating to the acquisitions of the Sportsmark and Pickem companies were $260,000. PRIZE COMMITMENTS AND OTHER DIRECT EXPENSES. Expenses associated with providing prizes for contests were $250,000 in the eleven months ended March 31, 1999 compared to $41,000 in the period ended April 30, 1998. The increase in these expenses resulted from increases in the number of contests and the number of prizes awarded to contestants and other direct expenses. GENERAL AND ADMINISTRATIVE. Salaries and benefits expenses were $385,000 in the eleven months ended March 31, 1999 compared to $223,000 in the period ended April 30, 1998. Consulting fees were $267,000 in the eleven months ended March 31, 1999 compared to $67, 000 in period ended April 30, 1998. The higher expenses were the result of increases in personnel, particularly in sales and marketing, the addition of personnel costs associated with the acquisition of Sportsmark and Pickem and increased consulting fees paid for game developers and other services. Advertising expenses were $367,000 in the eleven months ended March 31, 1999 compared to $185,000 in the period ended April 30, 1998. Other general and administrative expenses totaled $464,000, including $78,000 for general expenses such as utilities, office supplies, etc, $72,000 for occupancy and telephone, $86,000 for legal and

accounting, $188,000 for travel and other, $23,000 for depreciation and $17,000 for interest and bank charges, in the eleven months ended March 31, 1999 compared to $204,000 in the period ended April 30, 1998.

AMORTIZATION OF PURCHASED INTANGIBLES, GOODWILL AND OTHER. Amortization of purchased intangibles and goodwill was $591,000 and $236,000, respectively, for the eleven months ended March 31, 1999 compared to none in the period ended April 30, 1998. The amortization was related to the purchases of Sportsmark and Pickem and the cost of these acquisitions as well as those of Ultimate Sports and SportsBuff are being amortized over 24 months. In the eleven months ended March 31, 1999, ISN recognized $632,000 of expense related to 970,000 stock options issued to consultants and outside entities for various services provided to the Company. This amount was calculated using the Black-Scholes options pricing model. The options may be exercised between $.40 and $1.75 per share. The Company also issued stock options to employees at $1.75 per share and recognized $20,000 of stock based compensation expense associated with these options. The expense was calculated as the difference between the option exercise price and the market value per share of ISN's common stock at the date of issuance, and is being amortized over the vesting period of the options. The Company recognized $144,000 of expense associated with the early conversion of convertible debentures due to mature in December 2002. This expense was calculated based on the difference between the conversion rate of $.40 per share actually used to convert the debentures to common stock as compared to the conversion rate of $1.75, contemplated in the debenture agreement. A further $546,000 of expenses were incurred associated with our transaction with BirchTree Capital and with other transaction related costs. NET LOSS FROM OPERATIONS. The Company experienced a loss of $3,514,000, after the benefit of $236,000 for deferred taxes for the eleven months ended March 31, 1999 as compared to a loss of $643,000 for the period from inception to April 30, 1998. The loss per share for the eleven months ending March 31, 1999 was $(.45) per share and for the period from inception to April 30, 1998 was $ (.17) per share. The increased loss per share attributable to expenses discussed above, were offset by an increase in the weighted average number of shares outstanding from 1,907,000 to 3,917,000. TOTAL ASSETS. The total assets of ISN as of March 31, 1999 totaled $16,715,000 compared to $131,000 at April 30, 1998. The increase in total assets was attributable to two areas of significance: - Increases in cash and cash equivalents of $2,919,000 due to the sale of common stock, which raised approximately $8,786,000 less operating losses and acquisition costs. - The purchased intangibles and goodwill from the acquisition of Sportsmark and Pickem totaled $10,228,000 and $4,091,000 respectively on which 1999 amortization was $827,000. These intangibles include trademarks, software licenses and intellectual properties as well as a $4,091,000 tax effect. See chart below for summary of assets acquired in the two transactions. <TABLE> <CAPTION> As at February 5, 1999 As at Sportsmark Group March 5, 1999 of Companies Pickem Sports, Inc. Combined <S> <C> <C> <C> Net assets acquired at fair value Working Capital ($129,000) $9,000 ($120,000) Equipment 28,000 12,000 40,000 Purchased Intangibles & Goodwill 5,572,000 8,747,000 14,319,000 Deferred income taxes (1,592,000) (2,499,000) (4,091,000) ----------------------------------------------------------------------- $3,879,000 $6,269,000 $10,148,000 ======================================================================= Funded by: Cash 1,254,000 3,000,000 4,254,000 Shares issued 2,625,000 3,269,000 5,894,000 $3,879,000 $6,269,000 $10,148,000 ======================================================================= </TABLE>

YEAR 2000 The Company has developed and acquired its computer systems with an objective to be Year 2000 compliant. ISN has engaged the services of qualified technicians to determine the extent to which it may be vulnerable to third party Year 2000 issues. As a relatively new corporation, all computer equipment purchased, in August 1997 and August 1998, is Year 2000 compliant. The internal software written by ISN's programmers is written with the long-date format included and consequently is Year 2000 compliant. ISN uses Microsoft software and has installed all the available "patches" to up-date this software. While Microsoft "patches" have been installed as they have become available from Microsoft, this affects less than .0005% of ISN's software and does not impact on the on-going operation of the Company. All of ISN's information technology equipment and non-related information technology equipment has been tested or verified to be compliant by the manufacturer. Verification was received by the manufacturer by providing a certificate or by reviewing manufacturers web sites for verification. The Company is in the process of installing patches or purchasing new equipment that will ensure Year 2000 compliance for any items and suppliers which were identified as non-compliant. All of the Company's material vendors have been contacted and have provided the Company with information as to their compliance. Based on these vendors' assurances, the Company believes that the vendors will be compliant by October 31, 1999. ISN has investigated its third party communications suppliers such as the telephone company and its Internet service provider and found that all are in the process of becoming Year 2000 compliant by October 31, 1999. Based upon current information, management believes that the necessary modifications have been made internally to effectively continue ISN into the Year 2000, however, management is continuing to monitor internal systems, and to assess the readiness of its systems, to ensure Year 2000 compliance. As a contingency, ISN has identified other communication suppliers who could provide the necessary service at a minimal cost to the Company, and a minimal effect on the operations of the Company. In the event no other communication suppliers can be found, there could be a material adverse effect on the Company and its operations. The Company has identified all Year 2000 issues and sees no significant problems with completing its readiness by October 31, 1999. Based upon current information, Management believes that all Year 2000 issues are insignificant in nature and do not adversely effect the total business operations of the Company. Since all Year 2000 issues are insignificant, the costs to address them are not extreme. The Company anticipates costs of becoming Year 2000 compliant to be in the range of $35,000 to $50,000. ITEM 3. DESCRIPTION OF PROPERTY The main administrative offices of the Company are located at 225 Richmond Street West, Suite 403, Toronto, Ontario, Canada M5V 1W2. The Company leases approximately 2,270 square feet of office space in Toronto. The lease expires on May 31, 2000 and requires lease payments of approximately $2,500 per month. The Company also operated administrative offices at 700-509 Richards St. Vancouver, British Columbia, Canada V6B 2Z6. At this location, the Company leases approximately 3,155 square feet of office space. The lease expires on September 30, 2000 and currently requires lease payments of $26,028.72 per year. The Company has formally closed the Vancouver offices, and is currently seeking a sublease tenant for the Vancouver office space. ISN California, Inc. operates at 3260 Hillview Ave., Palo Alto, California 94304. The lease is an oral, month to month lease and requires lease payments of approximately $640 per month. Sportsmark's offices are located at 10201 Southport Road S.W. Calgary, Canada T2W 4X9. Sportsmark leases approximately 3,516 square feet in Calgary. The lease expires on March 31, 2000 and requires lease payments of approximately $1,100 per month. ISN Wisconsin, Inc. operates at 625 57th St, Suite 700 Kenosha, Wisconsin 53140. ISN Wisconsin leases approximately 2,300 square feet. The lease is a three year lease which expires January 31, 2002, although ISN Wisconsin has an option to terminate the lease on January 31, 2000 with 120 day prior written notice to the landlord. The lease requires payments of approximately $1,725 per month.

ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT PRINCIPAL STOCKHOLDERS The following table sets forth certain information regarding beneficial ownership of the Company's Common Stock, as of March 31, 1999 by (i) each stockholder known by the Company to be the beneficial owner of more than five percent of the outstanding Common Stock, (ii) each director of the Company, (iii) each executive officer of the Company, and (iv) all directors and executive officers as a group. Unless otherwise indicated, the address for each stockholder is 225 Richmond Street West, Suite 403, Toronto, Ontario, Canada M5V 1W2. <TABLE> <CAPTION> ==================================================================================================================== Title of Class Names/Address of Beneficial Owner Amount and Nature of Beneficial Percent of Outstanding of shares Ownership Common Stock Beneficially Owned <S> <C> <C> <C> Common Andrew DeFrancesco 1,450,650 8.1% Chairman of the Board/President Common Patrick S. Earle 1,102,957 6.2% 700-509 Richards St. Vancouver, BC V6B 2Z6 Canada Common Kenneth Crema -0- 0% Director/Chief Executive Officer Common Geoff Ford 675,000 3.8% 10201 Southport Road S.W Director/Chief Operating Suite 633 Officer/Senior Vice-President Calgary, Alberta Canada T2W 4X9 Marketing and Sales Common Brett Lindros 280,000 1.6% Director Common David Toews -0- 0% Chief Financial Officer/Secretary Common Stephen Sadler -0- 0% Director Common Albert Gnat -0- 0% Director Common David Samuel -0- 0% Director Common Estimated all other shareholders 15,435,350 86.52% Common All executive Officers and Directors 2,405,650 13.48% as a Group (8 persons) ==================================================================================================================== </TABLE>

NOTES TO SECURITY OWNERSHIP (1) Directors, executive officers and 5% shareholders comprise 3,508,607 of the approximate total of 17,841,000 issued and outstanding shares of the Company as of March 31, 1999. By virtue of their direct ownership of the Common Stock of the Company, management positions and organizational efforts, may be deemed "control persons" of the Company, as those terms are defined in the Securities Act of 1933 (the "Act"), and the rules and regulations thereunder. (2) Management and insider shareholdings shown do not include 1,400,000 outstanding options to purchase common stock at the varying exercise prices from $.40 to $6.00 per share issued to the individuals named, until such time as said options are exercised. (3) Except for holdings of Mr. DeFrancesco, management shareholdings shown do not include 1,425,000 shares granted on July 22, 1999 to certain officers and directors as compensation for services rendered. ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS The directors and officers of Internet Sports Network are as follows: <TABLE> <CAPTION> NAME AGE OFFICE ----------------------------------------------- ------ <S> <C> <C> Andrew A. DeFrancesco 28 Chairman of the Board, President Ken Crema 36 Chief Executive Officer and Director David Toews 31 Chief Financial Officer and Secretary Geoff Ford 45 Chief Operating Officer and Director Brett Lindros 23 Director of Sports Media Properties Stephen Sadler 48 Director Albert Gnat 61 Director David Samuel 35 Director </TABLE> ANDREW A. DEFRANCESCO has served as Chairman of the Board and President of Internet Sports since March 1999. Prior to this time, he was an executive Vice-President at Dominick & Dominick Securities, Inc. Canada with responsibility for institutional equity sales and trading, and sourcing and structuring of equity and debt financing. Prior to joining Dominick in October, 1997, Mr. DeFrancesco held positions as Manager of Institutional Trading and Sales from April 1994 to April 1995 and Associate Director, Corporate Finance from April 1995 to July 1997, at C.M. Oliver & Company Limited. From March 1993 to March 1994, he served as an associate financial advisor at Midland Walwyn (now Merrill Lynch Canada). Mr. DeFrancesco received his Bachelor of Arts in Economics and Politics from the University of Western Ontario in 1992. KEN CREMA has served as Chief Executive Officer and a Director of Internet Sports since May 1999. Before joining us, Mr. Crema had been involved in Electronic Direct Marketing, a company he founded in 1987 as a provider of business solutions including customer service support, order processing and distribution services. Under Mr. Crema's direction as Chief Executive Officer and Chairman, Electronic Direct Marketing grew to over 900 employees to become an established private company, servicing clients including AT&T, Compaq and Microsoft. In 1998, Mr. Crema sold Electronic Direct Marketing to Teletech, a global customer care system integration company. Mr. Crema studied Business Administration at Sir Wilfred Laurier University in Waterloo, Ontario. DAVID TOEWS has served as Chief Financial Officer and Secretary of Internet Sports since June 1999. Prior to joining ISN, Mr. Toews was Vice President of Finance of EDM Electronic Direct Marketing Ltd./TeleTech Canada in Toronto Ontario. In this position he was responsible for all aspects of financial reporting, pricing and control for the Canadian operation of TeleTech Canada. From March 1996 to September 1997, Mr. Toews was Controller of Tee-Comm Electronics Inc. in Milton, Ontario. From 1990 to March, 1996, Mr. Toews was employed by Coopers & Lybrand, joining in the general practice and finishing his last year there as an audit manager. Mr. Toews holds a Bachelor of Commerce (Honours) from McMaster University in Hamilton, Ontario and earned the Chartered Accountant Designation in 1992.

GEOFF FORD has served as Chief Operating Officer and Director of Internet Sports since February 1999. Mr. Ford co-founded Sportsmark, Inc. in 1986 when the company created and introduced the first large scale commercial sports contests to the Canadian and American public. Mr. Ford concurrently ran his own consulting firm, Spectrum Information Systems Inc. from 1986 until 1992 when he sold his interests in the consulting firm to dedicate his full time to Sportsmark. Mr. Ford sold his interest in Sportsmark to Internet Sports & Entertainment Network, Inc. in 1999 and joined the Company in his current position. Mr. Ford graduated from the University of Calgary with a Bachelor of Commerce degree in 1977. BRETT LINDROS has served as Director of Sports Media Properties and Director of Internet Sports since May, 1999. Mr. Lindros is a former National Hockey League player and current co-host of "Be a Player! The Hockey Show" on The Sports Network. Mr. Lindros was born, and completed his high school education in London, Ontario, Canada. He entered the NHL immediately upon graduation. Drafted by the New York Islanders in 1994 in the first round, Mr. Lindros made great strides as an NHL player until a concussion injury stopped his career short in 1996. Mr. Lindros is using his experience and knowledge to continue his connection with hockey and the NHL. He brings to the board of directors not only his well-known name in hockey, but his knowledge of the game and its players. STEPHEN SADLER has served as a Director of Internet Sports since August 1999. Mr. Sadler was Chairman and Chief Executive Officer of Geac Computer Corporation Limited from 1987 to 1999. Mr. Sadler is a member of the board of directors of Open Text Corporation, Cyberplex Multimedia and TSB International and is currently the Chairman of Helix Investments. Mr. Sadler received his Applied Science and Engineering degree from the University of Toronto in 1974 and his Masters in Business Administration from York University in 1979. ALBERT GNAT has served as a Director of Internet Sports since August 1999. Mr. Gnat is partner at the firm Lang Michener Barristers and Solicitors in Toronto. Mr. Gnat has been with Lang Michener since 1974. Mr. Gnat holds board of director positions with CCL Industries, Inc., Geac Computer Corporation Limited, and Richtree, Inc. Mr. Gnat received his Bachelor of Science degree in Political Science and Economics from the University of Toronto in 1962 and his law degree from the University of Toronto in 1965. DAVID SAMUEL has served as a Director of Internet Sports since August 1999. Mr. Samuel is currently the Managing Director of Mosaic Venture Partners. Mr. Samuel served with TorStar Online from 1998 to August, 1999 as Vice President of Corporate Development. He served as the President of @Home Canada where he worked from 1995 to 1997. Mr. Samuel received his Masters in Business Administration from Harvard University in 1991 and his Honors Bachelor of Administration from the University of Western Ontario in 1987. ITEM 6. EXECUTIVE COMPENSATION The following table and attached notes sets forth the compensation of the Company's executive officers and directors during each of the fiscal years since inception of the Company. The remuneration described in the table does not include the cost to the Company of benefits furnished to the named executive officers, including premiums for health insurance, reimbursement of expenses, and other benefits provided to such individual that are extended in connection with the ordinary conduct of the Company's business. The value of such benefits cannot be precisely determined, but the executive officers named below did not receive other compensation in excess of the lesser of $25,000 or 10% of such officer's cash compensation. During the 1997-1998 fiscal year, beginning April 28, 1997 (inception) through April 30, 1998, no Officer or Director received any cash consideration for salary, nor any aggregate remuneration for health insurance and expenses, in excess of $40,000. During the 1998-1999 fiscal year, beginning May 1, 1998 through March 31, 1999, two directors received cash consideration for salary, in excess of $40,000. Patrick Earle received $96,000 and Roger Earle received $58,500.

The following table sets forth all compensation scheduled to be received for services rendered to the Company in all capacities during the 1999-2000 fiscal year by those persons who are the Company's executive officers and directors. No such individuals are scheduled to receive a total annual salary and bonus which exceeds $100,000 during the 1999-2000 fiscal year, ending March 31, 2000. <TABLE> <CAPTION> -------------------------------------------------------------------------------------------------------------------------------- Long Term Compensation ---------------------------------------------------- Annual Compensation Awards Payouts ---------------------------------------------------- ------------------------- ------------------------ Name and Principal Other annual Restricted Securities LTIP All other Position Year Salary Bonus Compen- Stock Underlying Payouts Compen- sation Awards(1) Options/SARs sation -------------------------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> <C> <C> <C> Andrew DeFrancesco Chairman, President 2000 0 0 None 500,000 450,000(2) None None (1) -------------------------------------------------------------------------------------------------------------------------------- Kenneth Crema Chief 2000 0 TBD None None 350,000(3) None None Executive Officer -------------------------------------------------------------------------------------------------------------------------------- Geoff Ford 2000 $75,000 TBD None 300,000 150,000(4) None None Director/Chief Operating Officer/ Senior Vice- President Marketing and Sales -------------------------------------------------------------------------------------------------------------------------------- Brett Lindros 2000 0 0 None 125,000 150,000(4) None None Director/ Director of Sports Media -------------------------------------------------------------------------------------------------------------------------------- David Toews Chief 2000 $73,000 TBD None None 150,000(5) None None Financial Officer/ Secretary -------------------------------------------------------------------------------------------------------------------------------- Stephen Sadler 2000 0 0 None None 50,000 None None -------------------------------------------------------------------------------------------------------------------------------- Albert Gnat 2000 0 0 None None 50,000 None None -------------------------------------------------------------------------------------------------------------------------------- David Samuel 2000 0 0 None None 50,000 None None -------------------------------------------------------------------------------------------------------------------------------- </TABLE> See financial statements for fiscal year detail of executive compensation. NOTES TO EXECUTIVE COMPENSATION (1) In order to maintain reduced operating overhead and provide incentives, certain officers, directors and employees received common stock in lieu of cash consideration for salaries accrued but not paid. Officers and directors of the Company were granted a total of 925,000 shares of restricted common stock in lieu of compensation pursuant to a July 22, 1999, board of directors meeting. Andrew DeFrancesco received 700,000 shares of common stock, in lieu of cash consideration, and at a cost basis of $.40 per share, for services rendered but not paid during the period April 27, 1997 through January 19, 1999. These shares were provided to Mr. DeFrancesco for his role in the BirchTree Capital Corp. transaction and not in his capacity as Chairman or President. (2) Reflects options granted by the Company to Andrew DeFrancesco in January 1999 to purchase 200,000 shares of Company Common Stock at the exercise price of $.40 per share with such options expiring on or before January 4, 2004; and options granted to Andrew DeFrancesco to purchase 250,000 shares of Company Common

Stock at the exercise price of $1.75 per share granted in January 1999. See "Options Outstanding" and "Certain Transactions". (3) Reflects options granted by the Company to Ken Crema in January 1999 to purchase 350,000 shares of Company Common Stock at the exercise price of $1.75 per share. See "Options Outstanding" and "Certain Transactions". (4) Reflects options granted by the Company to Geoff Ford, and Brett Lindros in February 1999 to purchase 150,000 shares of Company Common Stock at the exercise price of $1.75 per share; with such options expiring on or before March 25, 2004. See "Options Outstanding" and "Certain Transactions." (5) Reflects options to purchase 50,000 shares of common stock granted to David Toews as an incentive to accept service with the Company as Vice President of Finance and subsequently Chief Financial Officer in February, 1999 at the exercise price of $1.75 per share; with such options expiring on or before March 25, 2004. An additional 100,000 options at the exercise price of $4.275 were granted in June, 1999. The Company carries officers and directors liability insurance, disability and life insurance benefits, as well as health insurance. The health disability and life insurance benefits are available to employees of the Company only. Only three executive officers or directors are currently covered by employment agreements. The Company does not maintain any pension plan, profit sharing plan or similar retirement or employee benefit plans. Mr. Crema's relationship, while not subject to a formal agreement, is subject to a written memorandum wherein Mr. Crema is to receive no cash compensation until completion of the next round of private financing of a minimum of $5,000,000. Thereafter, Mr. Crema shall receive $10,000 per month. Like, Mr. Crema, Mr. DeFrancesco is scheduled to receive cash compensation of $10,000 per month upon completion of the next round of private financing of a minimum of $5,000,000. While the Company hopes to raise this sum in a private financing, there is no guarantee that the Company will be able to raise this sum, nor that this sum will be raised prior to the conclusion of 1999. Mr. Ford's employment agreement is for a term of three years. The terms of this agreement specifies a salary as disclosed herein above. <TABLE> <CAPTION> ----------------------------------------------------------- ---------- ------------ ------------------ Individual Grants As of March 31, 1999 Grant Date Value ----------------------------------------------------------- ---------- ------------ ------------------ Name Number of Percent of Exercise Expiration Grant date securities total or base Date present value $ underlying options/SARs price Options/SARs granted to ($/Sh) granted (#) employees in fiscal year ------------------------- ----------------- --------------- ---------- ------------ ------------------ <S> <C> <C> <C> <C> <C> Andrew DeFrancesco 200,000 5.9% $.40 2/28/04 $0 250,000 7.3% $1.75 3/25/04 $0 ------------------------- ----------------- --------------- ---------- ------------ ------------------ Ken Crema 350,000 10.4% $1.75 3/25/04 $0 ------------------------- ----------------- --------------- ---------- ------------ ------------------ Geoff Ford 150,000 4.4% $1.75 3/25/04 $0 ------------------------- ----------------- --------------- ---------- ------------ ------------------ Brett Lindros 150,000 4.4% $1.75 3/25/04 $0 ------------------------- ----------------- --------------- ---------- ------------ ------------------ David Toews 50,000 1.5% $1.75 3/25/04 $0 ------------------------- ----------------- --------------- ---------- ------------ ------------------ </TABLE>

ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS TRANSACTIONS WITH MANAGEMENT AND OTHERS In January 1999, Internet Sports Network, Inc., then a privately held Nevada corporation, entered into an agreement with BirchTree Capital Corporation, a Florida shell corporation with no operations which traded on the over the counter/bulletin board as "BICP" and its majority shareholder, Eric Littman. Pursuant to this agreement, BirchTree Capital Corporation issued in excess of 9,000,000 shares of stock to the shareholders of Internet Sports Network, Inc., the Nevada corporation. For the additional consideration of being permitted to retain 1,025,000 shares of common stock of BirchTree Capital Corporation and for the cash payment of $250,000, Mr. Littman agreed to cancel 3,975,000 shares of common stock held in his name. At the time of this transaction, the Company did not have sufficient cash resources to pay the consideration requested by Mr. Littman. Certain of ISN's shareholders, Benitz & Partners and Mark Valentine, agreed to pay the cash consideration portion to Mr. Littman in exchange for receiving an option to purchase 500,000 shares each of common stock held by Mr. Littman. Benitz & Partners and Mark Valentine also agreed to the cancellation of 350,000 shares each of their Internet Sports Network, a Nevada corporation, common stock. Effective January 19, 1999, the stockholders of Internet Sports Network, Inc. a Nevada corporation initiated the exchange of one hundred percent (100%) of their shares for an equal number of shares of common stock of BirchTree Capital Corporation. On February 1, 1999, BirchTree Capital Corporation changed its name to Internet Sports Network, Inc., a Florida corporation, and changed its OTC/BB symbol to ISNI. On February 22, 1999, Internet Sports Network, Inc., a Nevada corporation merged into Internet Sports Network, Inc. a Florida corporation with the Florida corporation being the surviving entity. The capitalization of the resulting company, Internet Sports Network, Inc., a Florida corporation was less than 1% of the issued and outstanding shares of common stock held by former BirchTree Capital Corporation shareholders and greater than 99% of the issued and outstanding shares of common stock held by former Internet Sports Network, Inc. a Nevada corporation. Former BirchTree shareholders held a total of 50,000 shares after the transaction consisting of 25,000 held by Mr. Littman and 25,000 held in the public float. This transaction provided the Company with access to a public market and quote for its securities. Officers and directors of the Company were granted options to purchase common stock at the exercise price of $.40 per share on January 5, 1999. The right to purchase 155,000 shares of common stock were granted to these officers and directors with a further 350,000 granted to consultants who later became officers and/or directors. Options to purchase 100,000 shares of ISN's common stock have been exercised, the remaining 405,000 may be exercised presently and expire on February 28, 2004. These options were granted as an incentive to continue service with the Company. ISN's directors were granted options to purchase common stock pursuant to an option agreement on January 19, 1999. This option agreement vested immediately and is exercisable over a five year period at the exercise price of $1.75 per share. The shares underlying the options are subject to piggyback and demand registration rights. These options were granted as an incentive to continue service with the Company ISN's officers were granted options to purchase common stock pursuant to an option agreement on February 1 and March 5, 1999. These options granted vest over a two year period commencing on March 26, 1999 and are exercisable over a five year period at an exercise price of $1.75. With the exception of those options granted to Mr. Ford and Mr. Gibson, which vest immediately, 25% of the options granted vest every six months commencing March 26, 1999 and ending March 26, 2001. Vesting is conditioned upon employment on the vesting date. If the Company are acquired, merged, or reorganized, or if the services of the officers are terminated without cause by the board of directors, all options vest immediately. These options have piggyback and demand registration rights. These options were granted as an incentive to continue service with the Company

In February 1999, the Company granted 250,000 options to purchase common stock at the exercise price of $1.75 to Dominick & Dominick Securities, Inc. as payment for financial services rendered to the Company since its inception in lieu of a payment of a fee. This option is exercisable for a period of two years commencing February 3, 1999 and ending February 2, 2001. Dominick & Dominick Securities, Inc. transferred 200,000 of the options to companies affiliated with Dominick or its affiliates resulting in Dominick holding 50,000 options. Also in February, 1999, 50,000 options were granted to Sandalwood Investments as compensation for consulting services. 250,000 options to purchase common stock were reserved to grant to individual professional athletes in exchange for their services. Of the athlete options, 50,000 options have been granted to Mr. Alex Rodriguez in exchange for services to be rendered to the Company. Mr. Rodriguez' options vest in 2000 and are exercisable for a two year period. The athlete options are granted to induce professional athletes to act as spokespersons for the Company. In June 1999, the Company entered into a settlement agreement with Mr. Patrick S. Earle, former director and President to terminate his employment with and director's position. This agreement requires us to pay Mr. Earle a cash consideration of $60,000. On July 22, 1999, the board of directors of the Company authorized the issuance of 1,750,000 shares of restricted common stock to certain directors and officers in lieu of compensation. The stock was valued at the market value on that date of $6.00 per share. On July 30, 1999, the Company entered into a settlement agreement with Mr. Neil Podmore, a former officer, to terminate employment. This agreement requires us to pay $50,000 to Mr. Podmore and to grant him options to purchase 54,000 common shares at an exercise price of $6.00 per share. ITEM 8. LEGAL PROCEEDINGS To the best knowledge of management, there are no other legal proceedings pending or threatened against the Company. ITEM 9. MARKET PRICE OF AND DIVIDENDS OF THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANTS' COMMON EQUITY AND OTHER STOCKHOLDERS MATTERS A. MARKET INFORMATION MARKET FOR THE ISSUER'S COMMON STOCK AND RELATED MATTERS The Company's common stock traded in the over-the-counter bulletin board market as ISNI since the BirchTree Capital Corporation/ISN merger of January 1999 until September 2, 1999. Thereafter, the Company has traded on the over the counter "pink sheets" as ISNI. The following table sets forth the high and low bid prices for the Company's common stock for each quarter within the last two fiscal years. Information is only available since January 1999. The prices below also reflect inter-dealer quotations, without retail mark-up, mark-down or commissions and may not represent actual transactions: <TABLE> <CAPTION> Quarter ended Low Bid High Bid ----------------------------------------------------- <S> <C> <C> March 31, 1999 $4.63 $4.75 June 30, 1999 $6.56 $6.63 July 22, 1999 $6.00 $6.25 </TABLE>

B. HOLDERS As of June 30, 1999, there were approximately 150 holders of Company Common Stock, as reported by the Company's transfer agent. C. DIVIDENDS The Company has not paid any dividends on its Common Stock. The Company currently intends to retain any earnings for use in its business, and therefore does not anticipate paying cash dividends in the foreseeable future. ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES. As part of the initial incorporation of Internet Sports Network in Nevada in April, 1997, the Company issued stock to certain of its founders at the stock's par value or $.001. This issuance consisted of 1,102,957 shares of common stock issued to Patrick Earle, 100,000 shares issued to Caulfield Management and 450,000 shares issued to Mr. Neil Podmore. The sale of these securities were exempt from registration on the basis of Section 3(a)(11) of the Securities Act of 1933 (the "Act"). The proceeds of this sale were used to fund incorporation and other start-up costs of the Company. In July 1997, the Company sold common stock at the price of $.02 per share to 22 investors all of whom were non-U.S. Residents, and of whom only 3 were non-accredited but sophisticated investors as defined under Regulation D of the Act. In connection with this issuance the Company relied upon an exemption available under Regulation S of the Act. The issuance consisted of a total of 1,767,500 shares of common stock with total proceeds raised of approximately $35,000. The funds were used for operations of the Company. In Fall of 1997, the Company sold common stock at the price of $.25 per share to 17 investors all of whom were accredited and all of whom were non-U.S. residents. All of these investors had a pre-existing shareholder and business relationship with the Company. In connection with this issuance, the Company relied upon an exemption available under Regulation S of the Act. The issuance consisted of 1,579,543 shares issued with 1,449,543 issued for net cash proceeds of approximately $361,000 and a further 130,000 issued in satisfaction of accounts payable amounting to $32,500, for a total of approximately $396,000. The proceeds were used for the operations of the Company. In November and December 1997, the Company sold convertible debentures, convertible to common stock at a rate of one share for every $1.50 principal amount of debenture, to five individuals pursuant to an offering relying upon Rule 506 of the Act. All of the investors were accredited investors. The Company raised a total of $196,500 selling 131 debentures. The proceeds of the offering were used to expand the Company's services and to begin a marketing program of these services. These investors agreed, on or about November, 1998 to convert their debentures to common stock of the Company at the conversion ratio of one share per $.40 of principal resulting in 491,250 shares issued. In June through September 1998, the Company offered common stock of the Company at a price of $.40 per share. The Company sold 2,001,000 shares of common stock to 22 investors raising approximately $801,000. The shares were sold to accredited investors only who were non-U.S. Residents in reliance on Rule 506 of the Act. The proceeds were used to fund Company operations. In late November-December 1998, the Company had entered into an agreement with Digital Data Networks to conduct a share exchange wherein Digital Data Networks, Inc. would be the surviving entity to be renamed Internet Sports Network, Inc. Pursuant to that agreement, Digital Data Networks and two directors of Digital Data Network, Inc. agreed to pay a total of $370,000 to the Company in exchange for shares of common stock at $.40 per

share. Digital Data Networks, Inc., while not an accredited investor, had access through its due diligence process to all material information regarding the Company. The directors were accredited investors who also had access to information by reason of their participation in the due diligence process. The Company relied upon an exemption available under 3(a)(11) of the Act. In late December, 1998, the Company realized that it would not have shareholder approval of the agreement with Digital Data Networks, Inc. Accordingly, and in accordance with the agreement with Digital Data Networks, Inc., the Company terminated the agreement with Digital Data Networks. As part of a settlement between the two companies, Digital Data Networks was reimbursed $70,000 for the costs it incurred in connection with the transaction and retained 150,000 shares of common stock. The rest of the common stock was returned to ISN and the full $370,000 was refunded. In early January, 1999, the Company issued a total of 650,000 shares to Brett and Eric Lindros for services rendered to the Company and to Colony Investments for financial advisory services rendered to the Company. The Company relied upon an exemption available under 3(a)(11) of the Act. All three investors are accredited investors. No funds were received in this transaction. In January 1999, the Company entered into a share exchange and merger agreement with BirchTree Capital Corp. In that agreement, the shareholders of the Company exchanged their shares for stock in BirchTree Capital Corp. The total newly issued shares contemplated to be issued under this agreement consisted of up to 9,085,229 shares of common stock of BirchTree Capital Corp. to be delivered to Internet Sports Network shareholders who delivered their stock for exchange. No funds were received in this transaction. In January 1999, the Company issued 700,000 shares of common stock to Mr. Andrew DeFrancesco. These shares were issued in exchange for services rendered by Mr. DeFrancesco in the BirchTree Capital Corporation transaction and were valued at $.40 per share. The Company relied on an exemption available under Regulation S of the Act. Mr. DeFrancesco is an accredited investor with a long history with the Company. No funds were received by the Company in this transaction. In March 1999, the Company offered up to $1,000,000 worth of common stock utilizing Rule 504 of Regulation D of the Securities Act of 1933 at the price of $1.75 per share. In this offering, 20 shareholders purchased a total of 571,000 shares of common stock at a total price of $999,425. The funds raised hereby were used to acquire SportsMark and to fund Company operations. On February 5, 1999, the Company acquired the SportsMark companies for 1,500,000 shares of common stock and cash. The SportsMark entities were accredited investors as that term is used in Regulation D of the Act. The Company relied upon Regulation S as an exemption to this offering. In February-April, 1999, the Company offered up to 4,571,429 shares of common stock for a total consideration of $6 million to $8 million to non-U.S. residents. Investors purchased common stock totaling a total of 4,454,472 shares for a total consideration of approximately $7,795,000. The proceeds were used to acquire SportsMark and Pickem and to fund operations of the Company. Effective March 5, 1999, the Company acquired Pickem Sports. In this acquisition the Company issued a total of 1,987,955 shares to 3 Pickem shareholders in exchange for all of the common stock of Pickem. the Pickem shareholders were accredited investors and the Company relied on the exemption available under 3(a)(11) of the Act for this issuance. In February-April 1999, the Company offered common stock to accredited U.S. residents only, relying upon an exemption available under Rule 506 of Regulation D of the Act. In this offering, a total of 31 investors acquired a total of 653,183 shares, for a total consideration of $1,143,070. The proceeds were used to fund the operations of the Company.

ITEM 11. DESCRIPTION OF SECURITIES COMMON STOCK The Company's Certificate of Incorporation authorizes the issuance of 50,000,000 shares of common stock, $.001 par value per share, of which approximately 17,841,000 shares were outstanding at March 31, 1999. Holders of shares of common stock are entitled to one vote for each share on all matters to be voted on by the stockholders. Holders of common stock have no cumulative voting rights. Accordingly, the holders of in excess of 50% of the aggregate number of shares of Common Stock outstanding will be able to elect all of the directors of the Company and to approve or disapprove any other matter submitted to a vote of all shareholders. See "Principal Shareholders." Holders of shares of common stock are entitled to share ratably in dividends, if any, as may be declared, from time to time, by the Board of Directors in its discretion, from funds legally available therefor. The Company does not currently anticipate paying any dividends on its Common Stock. In the event of a liquidation, dissolution or winding up of the Company, the holders of shares of common stock are entitled to share pro rata all assets remaining after payment in full of all liabilities. Holders of common stock have no preemptive rights to purchase the Company's common stock. There are no conversion rights or redemption or sinking fund provisions with respect to the common stock. All of the outstanding shares of common stock are fully paid and non-assessable. Shares of Common Stock are registered at the transfer agent and are transferable at such office by the registered holder (or duly authorized attorney) upon surrender of the Common Stock certificate, properly endorsed. No transfer shall be registered unless the Company is satisfied that such transfer will not result in a violation of any applicable federal or state securities laws. The Company's transfer agent is Interwest Transfer Company, whose address is 1981 E. Murray Holiday Road, Salt Lake City, UT 84117. OPTIONS As of March 31, 1999, the Company had authorized a total of 3,415,000 options; of which 2,550,000 were held by officers and directors of the Company at March 31, 1999 and of which 1,300,000 were held by now current officers and directors of the Company. See Stock Option Summary for number of options issued, exercise price, and expiration for each holder thereof. In general, each Option (i) entitles the holder thereof to purchase one share of Common Stock, (ii) will be exercisable for a period of (varied time), commencing (a varied number of) months from the final delivery by the Company of Common Stock (each Unit consisting of one share of Common Stock) sold in the offering and (iii) is detachable and separately transferable only during such exercise period.

ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS The Florida Corporation Law and the Company's Certificate of Incorporation and Bylaws authorize indemnification of a director, officer, employee or agent of the Company against expenses incurred by him or her in connection with any action, suit, or proceeding to which such person is named a party by reason of having acted or served in such capacity, except for liabilities arising from such person's own misconduct or negligence in performance of duty. In addition, even a director, officer, employee or agent of the Company who was found liable for misconduct or negligence in the performance of duty may obtain such indemnification if, in view of all the circumstances in the case, a court of competent jurisdiction determines such person is fairly and reasonably entitled to indemnification. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers, or persons controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the Commission, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. ITEM 13 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA In response to this item, the Company hereby incorporates the Financial Statements attached hereto as an Exhibit and states that the reporting of Supplementary Data is not applicable to the Company. ITEM 14. ACCOUNTANTS The Company has engaged Ernst & Young, LLP as its auditors as of May 19, 1999 replacing Davidson & Company who were dismissed as of that date. The decision to engage Ernst & Young, LLP was approved by the Board of Directors. There were no disagreements with Davidson & Company during the period ended April 30, 1998 or during the interim period until the date of their dismissal. Davidson & Company originally expressed an opinion under generally accepted auditing standards in Canada for the consolidated financial statements for the period from inception to April 30, 1998 which contained a Canada - United States reporting conflict with respect to a going concern uncertainty. Since the date of completion of their audit of the consolidated financial statements and initial issuance of their report thereon dated June 25, 1998, which contained a Canada - United States reporting conflict regarding the Company's ability to continue as a going concern, the Company, as discussed in Note 6 in the audited consolidated financial statements for the period ended March 31, 1999, has completed issuances of its common stock resulting in net proceeds of $8,800,000. Therefore, the conditions that raised substantial doubt about whether the Company will continue as a going concern no longer exist. Davidson & Company has subsequently issued an opinion under generally accepted auditing standards in the United States for the consolidated financial statements for the period from April 28, 1997 (inception) to April 30, 1998 with an explanatory paragraph as to the removal of the going concern certainty without reservation or reporting conflict which is dual dated as of June 25, 1998 and March 31, 1999. There was no adverse opinion or disclaimer of opinion. The opinion was not qualified due to uncertainty, audit scope, or accounting principles.

ITEM 15 FINANCIAL STATEMENTS AND EXHIBITS (a) - Consolidated financial statements for the Company for the period from inception, April 28, 1997 to April 30, 1998 and for the eleven months ending March 31, 1999. - Consolidated Pro-forma financial statements (unaudited) for the Company for the eleven months ended March 31, 1999 - Classroom 2000 Inc. financial statements for the one month ended January 31, 1999, and the years ended December 31, 1998 and 1997. - SportsMark, Inc. financial statements for the two months ended January 31, 1999, and the years ended November 30 1998 and 1997. - SportsMark Promotions, Inc. financial statements for the one month ended January 31, 1999, and the years ended December 31, 1998 and 1997. - Pickem Sports, Inc. financial statements for the periods ending December 31, 1997 and 1998.* - Consolidated financial statements (unaudited) for the Company for the three months ending June 30, 1999 and 1998. - Innovation Partners, Inc. d.b.a. SportsBuff financial statements for the year ending December 31, 1998. - Consolidated Pro-forma financial statements (unaudited) for the Company for the three month period ending June 30, 1999. - Innovation Partners, Inc. d.b.a. SportsBuff financial statements (unaudited) for the six month period ending June 30, 1999. (b) Exhibits 2.1 Agreement for the Exchange of Common Stock between Birch Tree Capital Corp. and Eric P. Littman, and Internet Sports Network, Inc.* 2.2 Share Purchase Agreement between Internet Sports Network, Inc. and SportsMark Inc., SportsMark Promotions, Inc. & Classroom 2000 Inc. and Assets of SMP SportsMark Promotions International, Inc. * 2.3 Merger Agreement between Torsten Heycke, Rafael Furst, Perry Friedman, Pickem Sports, Inc., and Internet Sports Network, Inc.* 2.4 Agreement for the Purchase of Certain Assets of Ultimate Sports Publishing, Inc. By and Between National Publisher Services, Inc. And Internet Sports Network, Inc.* 2.5 Agreement and Plan of Merger between Innovation Partners, Inc. and Internet Sports Network, Inc.* 3(i) Articles of Incorporation and Amendments of Internet Sports Network, Inc.* 3(ii) Bylaws of Internet Sports Network, Inc.* 4.1 Form of Consultant's Option Agreement and Certificate* 4.2 Form of Officer/Director Option Agreement and Certificate* 4.3 Common Stock Certificate Specimen* 10.1 Lease for Toronto office* 10.2 Lease for Vancouver office* 10.3 Employment Agreement for Bill Gibson* 10.4 Employment Agreement for Geoff Ford* 10.5 Settlement Agreement with Digital Data Networks* 10.6 Settlement Agreement with Patrick S. Earle* 10.7 Settlement Agreement with Neil Podmore* 16. Letter from Davidson & Company 21 List of Subsidiaries of Company* *Previously filed

SIGNATURES In accordance with Section 12 of the Securities Exchange Act of 1934, the Registrant caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized. INTERNET SPORTS NETWORK, INC. By: /s/ Ken Crema --------------------------- Ken Crema Its: Chief Executive Officer <TABLE> <CAPTION> Signature Title Date --------- ----- ---- <S> <C> <C> /s/ Ken Crema Chief Executive Officer, Director October 21, 1999 ------------------------- Ken Crema /s/ Andrew DeFrancesco Chairman of the Board, President October 21, 1999 ------------------------- Andrew DeFrancesco /s/ Geoff Ford Director, Chief Operating Officer October 21, 1999 ------------------------- Senior Vice President Geoff Ford Marketing and Sales /s/ Brett Lindros Director, Director of Sports Media October 21, 1999 ------------------------- Relations Brett Lindros /s/ David Toews Chief Financial Officer, Secretary October 21, 1999 ------------------------- David Toews /s/ Albert Gnat Director October 21, 1999 ------------------------- Albert Gnat /s/ David Samuel Director October 21, 1999 ------------------------- David Samuel /s/ Stephen Sadler Director October 21, 1999 ------------------------- Stephen Sadler </TABLE>

CONSOLIDATED FINANCIAL STATEMENTS INTERNET SPORTS NETWORK, INC. MARCH 31, 1999

AUDITORS' REPORT To the Shareholders of INTERNET SPORTS NETWORK, INC. We have audited the accompanying consolidated balance sheet of INTERNET SPORTS NETWORK, INC. as of March 31, 1999, and the related consolidated accompanying statements of operations and comprehensive loss, shareholders' equity and cash flows for the 11 months ending March 31, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards in the United States. 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 our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of March 31, 1999 and the consolidated results of its operations and its cash flows for the 11 months ending March 31, 1999 in conformity with generally accepted accounting principles in the United States. Toronto, Canada, "Ernst & Young LLP" June 11, 1999. Chartered Accountants

DAVIDSON & COMPANY Chartered Accountants A Partnership of Incorporated Professionals -------------------------------------------------------------------------------- AUDITORS' REPORT To the Shareholders of Internet Sports Network, Inc. We have audited the consolidated balance sheet of Internet Sports Network, Inc. (A Development Stage Company) as at April 30, 1998 and the consolidated statements of operations, cash flows and shareholders' equity for the period from April 28, 1997 (Inception) to April 30, 1998. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards in the United States. Those standards require that we plan and perform an audit to obtain reasonable assurance 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. Since the date of completion of our audit of the accompanying financial statements and initial issuance of our report thereon dated June 25, 1998, which report contained Canada - U.S. reporting conflict regarding the Company's ability to continue as a going concern, the Company, as discussed in Note 6, has completed issuances of its common stock resulting in net proceeds of $8,800,000. Therefore, the conditions that raised substantial doubt about whether the Company will continue as a going concern no longer exist. In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at April 30, 1998 and the results of its operations, cash flows and shareholders' equity for the period from April 28, 1997 (Inception) to April 30, 1998 in accordance with generally accepted accounting principles in the United States. "DAVIDSON & COMPANY" Vancouver, Canada Chartered Accountants June 25, 1998 except for Note 6, as to which the date is March 31, 1999 A Member of Accounting Group International ------------------------------------------ Suite 1200, Stock Exchange Tower, 609 Granville Street, P.O. Box 10372, Pacific Centre, Vancouver, BC, Canada, V7Y 1G6 TELEPHONE (604) 687-0947 FAX (604) 687-6172

INTERNET SPORTS NETWORK, INC. CONSOLIDATED BALANCE SHEET (All dollar and share amounts in thousands, except per share data) ================================================================================ <TABLE> <CAPTION> MARCH 31, APRIL 30, 1999 1998 -------------------------------------------------------------------------------------- (U. S. Dollars) <S> <C> <C> ASSETS Current Cash and cash equivalents $ 2,928 $ 9 Receivables 182 31 Prepaid expenses 29 45 -------- -------- 3,139 85 Purchased intangibles, net (Note 3) 9,637 - Goodwill, net (Note 3) 3,855 - Equipment, net (Note 4) 84 46 -------- -------- $ 16,715 $ 131 ====================================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable $ 171 $ 95 Accrued liabilities 80 72 Accrued prize commitments 31 - Accrued commission on stock issuance 57 - -------- -------- 339 167 Deferred income taxes (Note 7) 3,855 - Convertible debentures (Note 5) - 196 -------- -------- 4,194 363 -------- -------- Commitments (Note 9) Shareholders' equity (Note 6) Common stock and additional paid-in capital, $0.001 par value, 50,000 shares authorized (1998 - 20,000) 17,841 outstanding (1998 - 5,000) 17,127 425 Share subscriptions receivable for 1,703 shares subscribed - (14) Deferred compensation (449) - Accumulated deficit (4,157) (643) -------- -------- 12,521 (232) -------- -------- $ 16,715 $ 131 ====================================================================================== </TABLE> The accompanying notes are an integral part of these consolidated financial statements.

INTERNET SPORTS NETWORK, INC. CONSOLIDATED STATEMENT OF OPERATIONS and COMPREHENSIVE LOSS (All dollar and share amounts in thousands, except per share data) ================================================================================ <TABLE> <CAPTION> FISCAL YEAR APRIL 28, 1997 (INCEPTION) 11 MONTHS ENDING THROUGH MARCH 31, 1999 APRIL 30, 1998 ----------------------------------------------------------------------------------- (U.S. Dollars) <S> <C> <C> REVENUES $ 152 $ 77 ------- ------- EXPENSES Prize commitments and other direct costs 250 41 Wages and salaries 385 223 Consulting fees 267 67 Advertising 367 185 Depreciation 23 8 Interest and bank charges 17 9 General and administrative 424 187 Amortization of purchased intangibles 591 - Amortization of goodwill 236 - Debt conversion inducement (Note 5) 144 - Options granted for services provided 632 - Amortization of deferred compensation 20 - Recapitalization and due diligence costs 546 - ------- ------- Total expenses 3,902 720 ------- ------- Loss before income taxes (3,750) (643) Deferred income tax recovery (Note 7) 236 - ------- ------- Net loss and comprehensive loss $(3,514) $ (643) =================================================================================== BASIC AND DILUTED NET LOSS PER SHARE $ (0.45) $ (0.17) =================================================================================== WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 7,833 3,813 =================================================================================== </TABLE> The accompanying notes are an integral part of these consolidated financial statements.

INTERNET SPORTS NETWORK, INC. CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (All dollar and share amounts in thousands, except per share data) ================================================================================ <TABLE> <CAPTION> COMMON STOCK AND ADDITIONAL STOCK NUMBER PAID IN SUBSCRIPTIONS DEFERRED ACCUMULATED OF SHARES CAPITAL RECEIVABLE COMPENSATION DEFICIT TOTAL -------------------------------------------------------------------------------------------------------------------------------- (U.S. Dollars) <S> <C> <C> <C> <C> <C> <C> Founders' shares subscribed upon inception on April 28, 1997 for $0.001 per share 1,653 $ 2 $ (2) $ - $ - $ - Shares issued for cash 3,217 398 (12) - - 386 Shares issued in exchange for amounts payable 130 33 - - - 33 Share issuance costs - (8) - - - (8) Net loss - - - - (643) (643) -------- -------- -------- -------- -------- -------- Balance at April 30, 1998 5,000 425 (14) - (643) (232) Shares issued in exchange for convertible debentures 491 362 - - - 362 Shares issued in exchange for amounts payable 93 37 - - - 37 Existing outstanding shares of BTC on January 19, 1999 1,050 - - - - - Shares cancelled in conjunction with recapitalization of the Company (700) - - - - - Shares issued on acquisition of Sportsmark Group of Companies 1,500 2,625 - - - 2,625 Shares issued on acquisition of Pickem Sports, Inc. 1,868 3,269 - - - 3,269 Shares issued for services 1,500 522 - - - 522 Shares issued for cash 7,039 9,249 - - - 9,249 Deferred compensation related to stock options - 469 - (469) - - Amortization of deferred compensation related to stock options - - - 20 - 20 Options granted for services provided - 632 - - - 632 Payment of subscription receivable - - 14 - - 14 Share issuance costs - (463) - - - (463) Net loss - - - - (3,514) (3,514) -------- -------- -------- -------- -------- -------- Balance at March 31, 1999 17,841 $ 17,127 $ - $ (449) $ (4,157) $ 12,521 ================================================================================================================================ </TABLE> The accompanying notes are an integral part of these consolidated financial statements.

INTERNET SPORTS NETWORK, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (All dollar and share amounts in thousands, except per share data) <TABLE> <CAPTION> ============================================================================================================= FISCAL YEAR APRIL 28, 1997 (INCEPTION) 11 MONTHS ENDING THROUGH MARCH 31, 1999 APRIL 30, 1998 ------------------------------------------------------------------------------------------------------------- <S> <C> <C> OPERATING ACTIVITIES (U.S. Dollars) Net loss $(3,514) $(643) Adjustment to reconcile net loss to net cash used in operating activities: Depreciation 23 8 Amortization of deferred compensation 20 - Amortization of purchased intangibles 591 - Amortization of goodwill 236 - Deferred income tax recovery (236) - Debt conversion inducement 144 - Options granted for services provided 632 - Shares issued for services 522 - Changes in other operating assets and liabilities: Increase in receivables (142) (31) Decrease (increase) in prepaid expenses 16 (45) Increase in accounts payable 72 128 Increase in accrued liabilities 30 72 ------- ----- Net cash used in operating activities (1,606) (511) ------- ----- INVESTING ACTIVITIES Purchase of Sportsmark Group of Companies (1,254) - Purchase of Pickem Sports, Inc. (3,000) - Purchase of equipment (21) (54) ------- ----- Net cash used in investing activities (4,275) (54) ------- ----- FINANCING ACTIVITIES Proceeds from sale of convertible debentures - 196 Proceeds from sale of capital stock, net of share issuance costs ($463; April 30, 1998 - $8) 8,800 378 ------- ----- Net cash provided by financing activities 8,800 574 ------- ----- NET INCREASE IN CASH AND CASH EQUIVALENTS 2,919 9 CASH AND CASH EQUIVALENTS: Beginning of period 9 - ------- ----- End of period $ 2,928 $ 9 ============================================================================================================= SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS: INVESTING ACTIVITIES Net assets of Pickem Sports, Inc. acquired for shares $(3,269) $ - Net assets of Sportsmark Group of Companies acquired for shares (2,625) - FINANCING ACTIVITIES Common stock issued in exchange for convertible debentures 196 - Shares issued on acquisition of Pickem Sports, Inc. 3,269 - Shares issued on acquisition of Sportsmark Group of Companies 2,625 - Shares issued for services 522 - Accrued interest settled for shares 22 - Common stock issued in exchange for accounts payable paid by shareholder 37 33 ============================================================================================================= Cash interest paid $ 10 - Cash taxes paid - - ============================================================================================================= </TABLE> The accompanying notes are an integral part of these consolidated financial statements.

INTERNET SPORTS NETWORK, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (All dollar and share amounts in thousands, except per share data) ================================================================================ NOTE 1. NATURE AND CONTINUANCE OF OPERATIONS Internet Sports Network, Inc. ("ISN" or the "Company") was incorporated on April 28, 1997 (Inception) under the laws of the State of Nevada, United States and its principal business activities include the development and marketing of sports contest organization services administered through the Internet. Substantially all of the Company's operations are conducted by its wholly-owned subsidiaries in the United States and Canada. Pursuant to the recapitalization of the Company, the Purchase of Birch Tree Capital Corp. net assets and subsequent merger, the state of incorporation has changed to Florida, United States. During the fiscal period ended April 30, 1998, the Company was considered to be in the development stage. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES RECAPITALIZATION OF THE COMPANY AND PURCHASE OF BIRCH TREE CAPITAL CORP. NET ASSETS Effective January 19, 1999, Birch Tree Capital Corp. ("BTC") acquired all the shares of ISN pursuant to an Agreement for the Exchange of Common Stock (the "Agreement"). BTC was formed on October 6, 1996 as a holding company, whose shares were quoted on the OTC Electronic Bulletin Board. At the time of the merger, BTC had no assets or liabilities. Pursuant to the Agreement, ISN's common shareholders received an aggregate of approximately 9,085 shares of the restricted common stock of BTC, representing approximately 90% of the common stock outstanding upon consummation of the transaction. Accordingly, this has been accounted for as a recapitalization of the Company and the acquisition of the net assets of BTC. The legal parent company, BTC, was deemed to be a continuation of ISN, and accordingly, these consolidated financial statements are a continuation of the financial statements of ISN, the legal subsidiary and not the legal parent. In these consolidated financial statements the comparative figures are those of ISN. After the acquisition, BTC and ISN merged, and the merged entity changed its name to Internet Sports Network, Inc. As a result of the transaction, ISN's year end was changed to March 31. The acquisition has been accounted for using the purchase method with the cost of the purchase being a nominal value of $1. Costs related with the BTC transaction totalling $351, including commission of $280 and legal fees, have been charged to the consolidated statement of operations and comprehensive loss. Due diligence costs with respect to proposed transactions which were not completed totalling $145, which includes a $130 settlement fee to Digital Data Networks, have been charged to the consolidated statement of operations and comprehensive loss. Costs associated with the acquisitions of the Sportsmark Group of Companies and Pickem Sports, Inc. totaling $50 are also included in the Statement of Operations and Comprehensive loss. BUSINESS COMBINATIONS The business combinations have been accounted for under the purchase method of accounting, and the Company includes the results of operations of the acquired business from the date of acquisition. Net assets of the companies acquired are recorded at their fair value at the date of acquisition. The excess of the purchase price over the fair value of net assets acquired is included in purchased intangibles and goodwill in the accompanying consolidated balance sheet.

INTERNET SPORTS NETWORK, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (All dollar and share amounts in thousands, except per share data) ================================================================================ NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONT'D...) PRINCIPLES OF CONSOLIDATION These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. CASH AND CASH EQUIVALENTS The Company has defined cash and cash equivalents to include cash and time deposits with original maturities of 90 days or less. CONCENTRATIONS OF CREDIT RISK Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of its holdings of cash held by one deposit taking institution. The Company manages its credit risk by depositing its cash in high-quality, regulated deposit taking institutions. PURCHASED INTANGIBLES AND GOODWILL Purchased intangibles consist primarily of software, licenses, customer lists, trademarks and contest agreements. Purchased intangibles of approximately $9,637 are stated net of total accumulated amortization of $591 at March 31, 1999 in the accompanying consolidated balance sheet. Purchased intangibles are being amortized on a straight-line basis principally over two years. Goodwill of approximately $3,855 is stated net of total accumulated amortization of $236 at March 31, 1999 in the accompanying consolidated balance sheet. Goodwill is being amortized on a straight-line basis principally over two years. LONG-LIVED ASSETS In accordance with Financial Accounting Standards Board ("FASB") Statement of Financial Accounting Standard ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of", the carrying value of intangible assets and other long-lived assets is reviewed on a regular basis for the existence of facts or circumstances, both internally and externally, that may suggest impairment. To date, no such impairment has been indicated. Should there be an impairment in the future, the Company will measure the amount of the impairment based on discounted expected future cash flows from the impaired assets. The cash flow estimates that will be used will contain management's best estimates, using appropriate and customary assumptions and projections at the time.

INTERNET SPORTS NETWORK, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (All dollar and share amounts in thousands, except per share data) ================================================================================ NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONT'D....) ADVERTISING COSTS The cost of advertising is expensed as incurred. STOCK-BASED COMPENSATION The Company has elected to follow Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees", and related interpretations, in accounting for its employee stock options rather than the alternative fair value accounting allowed by SFAS No. 123, "Accounting for Stock-Based Compensation". APB No. 25 provides that the compensation expense relative to the Company's employee stock options is measured based on the intrinsic value of the stock option. SFAS No. 123 requires companies that continue to follow APB No. 25 to provide a pro forma disclosure of the impact of applying the fair value method of SFAS No. 123. The Company accounts for options granted to non-employees, by applying the fair value accounting as prescribed by SFAS No. 123. The fair value of options granted to non-employees is estimated at the date of grant using a Black-Scholes option pricing model. SEGMENT AND GEOGRAPHIC INFORMATION The Company operates in one principal business segment across domestic and international markets. International sales, including export sales from the United States to Canada, represented approximately 82% and 100% of net sales for the periods ended March 31, 1999 and April 30, 1998, respectively. No other foreign country or geographic area accounted for more than 10% of net sales in any of the periods presented. There were no transfers between geographic areas during the periods ended March 31, 1999 and April 30, 1998. Capital assets and purchased intangibles in the United States equalled approximately $12,457 and nil in fiscal 1999 and 1998, respectively. The remaining capital assets and purchased intangibles are in Canada. COMPREHENSIVE INCOME (LOSS) As of May 1, 1998, the Company adopted SFAS No. 130, "Reporting Comprehensive Income", which establishes standards for the reporting and display of comprehensive income (loss) and its components in the consolidated financial statements. There are no items of comprehensive income (loss) that require additional reporting. FOREIGN CURRENCY TRANSLATION The unit of measurement of the Company is the Canadian dollar while its reporting currency is the United States dollar. The assets and liabilities of the Canadian subsidiaries are translated using the exchange rate in effect at period end, and revenues and expenses are translated at the average rate during the period. Exchange gains or losses on translation of the Company's net equity investments in these subsidiaries are deferred as a separate component of other comprehensive income. The translation adjustments as at March 31, 1999 and April 30, 1998 were insignificant.

INTERNET SPORTS NETWORK, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (All dollar and share amounts in thousands, except per share data) ================================================================================ NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONT'D....) EQUIPMENT Equipment is recorded at cost less accumulated depreciation. Depreciation is provided over the estimated useful lives of the assets using the declining balance basis at the following rates: <TABLE> <S> <C> Office equipment and furniture 20% Computer equipment 30% </TABLE> REVENUE RECOGNITION The Company earns revenue from membership and other fees received for Internet-based sports information and sports contest organization services. Membership fees are received prior to the beginning of a particular sport season or event and recorded as deferred income until recognized in income ratably over the season or upon completion of the event. Other fees received for Internet-based sports information and sports contest organization services are recognized in income ratably over the season or upon completion of the event. There was no deferred revenue recorded on the consolidated balance sheets as at March 31, 1999 and April 30, 1998. PRIZE AWARDS Members, as well as non-members, are entitled to enter into contests provided by the Company. Prizes are awarded upon completion of the sports season or event and are paid by the Company or the contest's sponsors. Prize awards are fixed in amount and determinable prior to commencement of the season or event and are expensed at the commencement of the season or event to which they relate. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company's financial instruments consist primarily of cash and cash equivalents, receivables, accounts payable, accrued liabilities, accrued prize commitments and accrued commission on stock issuance. It is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The carrying amounts of these current assets and liabilities approximate their fair values due to their immediate or short-term nature. INCOME TAXES Income taxes are accounted for utilizing the liability method. Deferred income taxes are provided to represent the tax consequence on future years for temporary differences between the financial reporting and tax basis of assets and liabilities. Deferred income taxes are measured utilizing enacted tax rates expected to be in effect in the years in which the temporary differences are expected to reverse. A valuation allowance has been provided for the total amount of deferred tax assets that would otherwise be recorded for income tax benefits primarily relating to operating loss carryforwards, as realization cannot be determined to be more likely than not. LOSS PER SHARE Basic loss per share excludes any dilutive effects of options and convertible debentures. Basic loss per share is computed using the weighted-average number of common shares outstanding during the period and includes common shares issued subsequent to the period end for which all consideration had been received prior to the

INTERNET SPORTS NETWORK, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (All dollar and share amounts in thousands, except per share data) ================================================================================ period end and which no other contingencies existed. Diluted loss per share is equal to the basic loss per share

INTERNET SPORTS NETWORK, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (All dollar and share amounts in thousands, except per share data) ================================================================================ NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONT'D...) as the effect of the stock options and convertible debentures is anti-dilutive. There are no other dilutive common stock equivalent shares outstanding during the period. Common stock equivalent shares are excluded from the computation if their effect is anti-dilutive. EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS New accounting pronouncements having relative applicability to the Company include Statements of Financial Accounting Standards No. 132, "Employers' Disclosures about Pensions and Other Post-retirement Benefits", effective for fiscal years beginning after December 15, 1998 and No. 133, "Accounting for Derivative Instruments and Hedging Activities", effective for fiscal years beginning after June 15, 2000. SFAS No. 132 revises employers' disclosures about pension and other post-retirement benefit plans. SFAS No. 133 requires that all derivative instruments be recorded on the consolidated balance sheet at their fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designed as part of a hedge transaction and, if it is, the type of hedge transaction. The Company does not expect that the adoption of SFAS Nos. 132 and 133 will have a material impact on its consolidated financial statements because the Company does not provide for pension or other post-retirement benefits, nor does it currently hold any derivative instruments. Adoption of these statements will not impact the Company's financial position, results of operations or cash flows and any effect will be limited to the form and content of disclosures. Additionally, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants issued Statement of Position 98-1, "Accounting for the Cost of Computer Software Developed or Obtained for Internal Use" and Statement of Position 98-5, "Reporting on the Costs of Start-up Activities", which are effective for fiscal years beginning after December 15, 1998. Adoption of these standards is not expected to have a material impact on the Company's financial position, results of operations or cash flows. NOTE 3. BUSINESS COMBINATIONS Effective February 5, 1999, the Company acquired 100% of the shares of three companies under common ownership and software license rights from a fourth company (the "Sportsmark Group of Companies"). The Sportsmark Group of Companies conduct and administer sports contest services for their clients. Effective March 5, 1999, the Company acquired 100% of the shares of Pickem Sports, Inc. ("Pickem"). The business of Pickem consisted of adaptable software to support the Company's growth in sports pools run through the Internet.

INTERNET SPORTS NETWORK, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (All dollar and share amounts in thousands, except per share data) ================================================================================ NOTE 3. BUSINESS COMBINATIONS (CONT'D....) The transactions are summarized as follows: <TABLE> <CAPTION> ========================================================================================== As at February 5, 1999, As at Sportsmark Group March 5, 1999, of Companies Pickem Sports, Inc. ------------------------------------------------------------------------------------------ <S> <C> <C> Net assets acquired at fair values: Working capital $ (129) $ 9 Equipment 28 12 Purchased intangibles 3,980 6,248 Goodwill 1,592 2,499 Deferred income taxes (1,592) (2,499) ------- ------- $ 3,879 $ 6,269 ========================================================================================== Funded by: Cash $ 1,254 $ 3,000 Shares of common stock 2,625 3,269 ------- ------- $ 3,879 $ 6,269 ========================================================================================== </TABLE> Purchased intangibles related to the acquisition of the Sportsmark Group of Companies consist of developed contest software, licenses, participant lists, customer lists, trademarks and domain names. Purchased intangibles related to the acquisition of Pickem consist of developed contest software, customer contracts, client lists, contest agreements, trademarks and domain names. The unaudited pro forma combined consolidated financial information for the aggregate of the Sportsmark Group of Companies and Pickem acquisitions described above and accounted for under the purchase method of accounting, as though the acquisitions had occurred on May 1, 1998, would have resulted in net sales of $2,053; loss before income taxes of $8,624; net loss of $6,750; and basic and diluted loss per share of $0.63 for the period ended March 31, 1999. The pro forma net loss includes amortization of purchased intangibles and goodwill of $6,562 for the period ended March 31, 1999. This unaudited pro forma combined consolidated financial information is presented for illustrative purposes only and is not necessarily indicative of the consolidated results of operations in future periods or the results that actually would have been realized had the Company been a combined company during the specified period.

INTERNET SPORTS NETWORK, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (All dollar and share amounts in thousands, except per share data) ================================================================================ NOTE 4. EQUIPMENT Equipment consists of the following: <TABLE> <CAPTION> ================================================================================ MARCH 31, APRIL 30, 1999 1998 -------------------------------------------------------------------------------- <S> <C> <C> Computer equipment $ 83 $ 33 Office equipment and furniture 32 21 ---------- ---------- 115 54 Less accumulated depreciation (31) (8) ----------- ---------- Equipment, net $ 84 $ 46 ================================================================================ </TABLE> NOTE 5. CONVERTIBLE DEBENTURES Convertible debentures bear interest, payable quarterly, at the rate of 10% per annum and were to mature on December 12, 2002. The debentures could have been prepaid at any time without penalty. Commencing in December 1998, each debenture was convertible, at the option of the holder, unless previously redeemed or repurchased, at a convertible rate of one share of common stock per $1.50 principal amount of debenture. In order to facilitate the recapitalization of the Company and purchase of the net assets of BTC, the Company offered to exchange the principal amount of debentures for shares of the Company's common stock at a per share price of $0.40 resulting in the issuance of approximately 491 common shares. The value of shares issued on conversion of the debentures includes the inducement provided to the debenture holders of $144 and $22 of accrued interest which had been previously charged to the consolidated statement of operations and comprehensive loss was forfeited by the debenture holders on conversion.

INTERNET SPORTS NETWORK, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (All dollar and share amounts in thousands, except per share data) ================================================================================ NOTE 6. SHAREHOLDERS' EQUITY COMMON STOCK The authorized share capital of ISN which, for accounting purposes, is deemed to have acquired BTC effective January 19, 1999, consisted of 20,000 common shares with a par value of $0.001. Changes in the capital stock of ISN to January 19, 1999, the effective date of the transaction with BTC, were as follows: <TABLE> <CAPTION> NUMBER COMMON STOCK AND OF SHARES PAID-IN CAPITAL $ ------------------------------------------------------------------------------------------- <S> <C> <C> Founders' shares subscribed upon inception on April 25, 1997 for $0.001 per share, net of subscription receivable 1,653 -- Shares issued for cash, net of subscription receivable 3,217 386 Shares issued in exchange for amounts payable 130 33 Share issuance costs -- (8) ------------------------------------------------------------------------------------------- Balance at April 30, 1998 5,000 411 Shares issued in exchange for convertible debentures (Note 5) 491 362 Shares issued in exchange for amounts payable 93 37 Shares issued for services 1,500 522 Shares issued for cash 2,001 801 ------------------------------------------------------------------------------------------- BALANCE JANUARY 19, 1999 9,085 2,133 =========================================================================================== </TABLE> During June and July 1997, ISN offered for sale to a group of initial investors, 1,768 shares of its common stock at a per share price of $0.02. Commencing in July 1997, ISN issued approximately 1,449 shares of its common stock at a per share price of $0.25. During the period ended January 19, 1999, 1,500 shares were issued for services rendered at prices ranging from $0.28 to $0.40 per share. Included in this total are 950 shares issued to officers and directors of ISN for marketing and financing services. AS AT JANUARY 19, 1999 For accounting purposes, the share capital of the continuing consolidated entity as at January 19, 1999 is computed as follows: <TABLE> <CAPTION> $ -------------------------------------------------------------------------------- <S> <C> Existing share capital and paid-in capital of ISN, January 19, 1999 2,133 Ascribed value of the shares of BTC -- -------------------------------------------------------------------------------- SHARE CAPITAL AT JANUARY 19, 1999 2,133 ================================================================================ </TABLE>

INTERNET SPORTS NETWORK, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (All dollar and share amounts in thousands, except per share data) ================================================================================ NOTE 6. SHAREHOLDERS' EQUITY (CONT'D...) As a result of the business combination, ISN became a wholly-owned subsidiary of BTC. For accounting purposes, at January 19, 1999, the outstanding shares of the continuing consolidated entity consisted of the number of BTC shares issued to that date with an ascribed value equal to the share capital of the continuing consolidated entity as computed above. As part of the BTC transaction the authorized share capital of the Company was increased to 50,000 common shares with a par value of $0.001. As a result, the number of outstanding shares of BTC as at January 19, 1999 is computed as follows: <TABLE> <CAPTION> NUMBER OF SHARES --------------------------------------------------------------------------------------------------- <S> <C> Existing outstanding shares of BTC, January 19, 1999 1,050 Share transactions related to the business combination Issued to ISN shareholders 9,085 --------------------------------------------------------------------------------------------------- OUTSTANDING COMMON SHARES AT JANUARY 19, 1999 10,135 =================================================================================================== </TABLE> TO MARCH 31, 1999 <TABLE> <CAPTION> NUMBER COMMON STOCK AND OF SHARES PAID-IN CAPITAL $ --------------------------------------------------------------------------------------------------- <S> <C> <C> BALANCE JANUARY 19, 1999 10,135 2,133 Shares issued for cash, net of subscription receivable 5,038 8,462 Shares cancelled (700) -- Shares issued on acquisition of Sportsmark Group of Companies 1,500 2,625 Shares issued on acquisition of Pickem Sports, Inc. 1,868 3,269 Deferred compensation related to stock options -- 469 Options granted for services -- 632 Share issuance costs -- (463) --------------------------------------------------------------------------------------------------- BALANCE MARCH 31, 1999 17,841 17,127 =================================================================================================== </TABLE> Included in the shares outstanding as at March 31, 1999 are 561 shares to be issued for which all consideration has been received and which no other contingencies exist. STOCK OPTIONS Generally, options are granted by the Company's Board of Directors at an exercise price of not less than the fair market value of the Company's common stock at the date of grant. Options are generally granted with a term of five years from the date of issuance. Option vesting is varied ranging from the date of issuance to 2 years. The exercise price for options granted prior to the transaction with BTC was equal to the price of shares issued through private placements in effect at the date of grant. Subsequent to the transaction with BTC, the exercise price for options remained equal to the private placement price, which represented a discount to the quoted market price.

INTERNET SPORTS NETWORK, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (All dollar and share amounts in thousands, except per share data) ================================================================================ NOTE 6. SHAREHOLDERS' EQUITY (CONT'D...) During the period ended March 31, 1999, the Company issued 970 options to parties other than employees and directors for services rendered. The fair value of these options of $632 was charged to operations. STOCK OPTION ACTIVITY The following table summarizes the Company's stock option activity: <TABLE> <CAPTION> ============================================================================================== NUMBER OF WEIGHTED AVERAGE SHARES EXERCISE PRICE ---------------------------------------------------------------------------------------------- <S> <C> <C> Balance at inception and April 30, 1998 - $ - Options granted and assumed 3,415 1.51 Options exercised 50 .80 ----------- ------------- March 31, 1999 3,365 $ 1.52 ============================================================================================== </TABLE> The following table summarizes information about options outstanding and options exercisable at March 31, 1999: <TABLE> <CAPTION> =================================================================================================== OPTIONS OUTSTANDING OPTIONS EXERCISABLE ---------------------------------------------------------------- ------------------------------- WEIGHTED AVERAGE OPTIONS REMAINING CONTRACTUAL OPTIONS WEIGHTED AVERAGE EXERCISE PRICE OUTSTANDING LIFE EXERCISABLE EXERCISE PRICE -------------- ----------- --------------------- ----------- --------------- <S> <C> <C> <C> <C> $ 0.40 575 5.0 years 575 $ 0.40 1.75 2,790 4.7 years 2,200 1.75 --------------------------------------------------------------------------------------------------- $ 0.40 - 1.75 3,365 4.8 years 2,775 $ 1.47 =================================================================================================== </TABLE> Subsequent to period end, 450 options were granted. The intrinsic value of the options at the date of grant was $1,277. These options vest at various intervals through June 2001. DEFERRED COMPENSATION The Company recorded aggregate deferred compensation of $469 during the period ended March 31, 1999. The amount recorded represents the difference between the grant price and the fair value of the Company's common stock for shares subject to options granted in fiscal 1999. Options granted below fair market value and the associated weighted average exercise price per share were 150 and $1.75 during fiscal 1999. The amortization of deferred compensation will be charged to operations over the vesting period of the options, which is 2 years. Total amortization recognized in fiscal 1999 was $20. No options were granted in fiscal 1998.

INTERNET SPORTS NETWORK, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (All dollar and share amounts in thousands, except per share data) ================================================================================ NOTE 6. SHAREHOLDERS' EQUITY (CONT'D...) PRO FORMA DISCLOSURE The Company follows the intrinsic value method in accounting for its stock options. Had compensation cost been recognized based on the fair value at the date of grant from options granted in fiscal 1999, the pro forma amounts of the Company's net loss and net loss per share for fiscal 1999 would have been as follows: <TABLE> <S> <C> Net loss as reported $(3,514) Net loss - pro forma $(5,559) Basic and diluted loss per share as reported $(0.45) Basic and diluted loss per share - pro forma $(0.71) </TABLE> The fair value for each option granted was estimated at the date of grant using a Black-Scholes option pricing model, assuming no expected dividends and the following weighted average assumptions: <TABLE> <S> <C> Average risk-free interest rates 5.0% Average expected life (in years) 5.0 Volatility factor 75.0% </TABLE> The weighted average fair value of options granted during fiscal 1999 was $1.25. NOTE 7. INCOME TAXES Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A reconciliation of the combined federal and state income tax expense to the Company's income tax expense is as follows: <TABLE> <CAPTION> ====================================================================================================== MARCH 31, APRIL 30, 1999 1998 ------------------------------------------------------------------------------------------------------ <S> <C> <C> Tax recovery at combined federal and state rates $ (1,196) $ (218) Higher effective rate attributable to income taxes of other countries $ (386) $ (70) Tax effect of expenses that are not deductible for income tax purposes 714 33 Valuation allowance 868 255 --------- ---------- $ - $ - ====================================================================================================== </TABLE>

INTERNET SPORTS NETWORK, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (All dollar and share amounts in thousands, except per share data) ================================================================================ At March 31, 1999, the Company had net operating loss carryforwards of approximately $2,497. Substantially all of these carryforwards relate to the Canadian subsidiaries and will begin to expire at various times starting in 2004.

INTERNET SPORTS NETWORK, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (All dollar and share amounts in thousands, except per share data) ================================================================================ Significant components of the Company's deferred income tax assets are approximately as follows: <TABLE> <CAPTION> ================================================================================================ MARCH 31, APRIL 30, 1999 1998 ------------------------------------------------------------------------------------------------ <S> <C> <C> Net operating loss carryforwards $ 2,497 $ 570 ============ ============ Total deferred income tax assets $ 1,123 $ 255 Valuation allowance for deferred income tax assets (1,123) (255) ------------ ----------- Net deferred income tax assets $ - $ - ================================================================================================ A continuity of the valuation allowance is as follows: ================================================================================================ <CAPTION> MARCH 31, APRIL 30, 1999 1998 ------------------------------------------------------------------------------------------------ <S> <C> <C> Opening balance $ 255 $ - Valuation allowance on deferred income tax asset 868 255 ------------- ------------- Closing balance $ 1,123 $ 255 ================================================================================================ </TABLE> Deferred income tax credits at March 31, 1999 reflect the differences between the financial reporting and tax values of the purchased intangibles. The deferred tax recovery in the consolidated statement of operations and comprehensive loss relates to the amortization of the deferred income tax liability which resulted from the Company's acquisitions during 1999. NOTE 8. RELATED PARTY TRANSACTIONS During the period ended April 30, 1998, the Company paid or accrued approximately $49,000 of consulting fees for financial services provided by one of the Company's directors and $54,000 of wages to the Company's Chief Executive Officer, who is also one of the Company's directors and largest shareholder. One of the Company's shareholders has, from time to time, paid directly to third party vendors certain of the Company's expenditures. These amounts paid on behalf of the Company are recorded as non-cash reductions of accounts payable. During the eleven-month period ended March 31, 1999 and the period ended April 30, 1998, an officer and director of the Company received approximately 93,000 and 130,000 shares of the Company's common stock in exchange for amounts owed for expenditures made on behalf of the Company, which approximated $37,000 and $33,000, respectively.

INTERNET SPORTS NETWORK, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (All dollar and share amounts in thousands, except per share data) ================================================================================ NOTE 9. COMMITMENTS The Company leases premises, office equipment and an automobile under the terms of operating leases. The leases provide for future minimum annual lease payments as follows: <TABLE> <S> <C> 2000 $ 187 2001 73 2002 18 2003 5 2004 and thereafter - ------------- $ 283 ============= </TABLE> NOTE 10. COMPARATIVE CONSOLIDATED FINANCIAL STATEMENTS The comparative consolidated financial statements have been reclassified from statements previously presented to conform to the presentation of the March 31, 1999 consolidated financial statements.

PRO-FORMA FINANCIAL STATEMENTS (UNAUDITED) 11 MONTHS ENDED MARCH 31, 1999 <TABLE> <CAPTION> ISN SportsMark California As Reported Group (Pickem) Sportsbuff Proforma Adj Note Pro Forma <S> <C> <C> <C> <C> <C> <C> <C> REVENUE 152,000 1,558,000 179,000 1,212,000 - 3,101,000 EXPENSES Prize Commitments and other 250,000 628,000 35,000 606,000 - 1,519,000 direct Costs Other Costs and Expenses 1,622,000 504,000 120,000 537,000 187,000 E,F 2,970,000 Interest and Bank charges 17,000 4,000 - 5,000 - 26,000 Promotion and Advertising 367,000 55,000 (1,000) 1,000 - 422,000 Amortization of Capital Assets 23,000 8,000 15,000 28,000 - 74,000 Stock compensation, stock option 796,000 and Debenture related costs 796,000 - - - - Amortization of purchased 827,000 - - - 9,165,000 A,B,D,G 9,992,000 Intangibles and goodwill ---------------------------------------------------------------------- --------------- NET LOSS BEFORE TAXES (3,750,000) 359,000 10,000 35,000 (9,352,000) (12,698,000) Deferred income Tax Expense (recovery) (236,000) 8,000 (1,000) - (2,571,000) H (2,800,000) ---------------------------------------------------------------------- --------------- NET INCOME (LOSS) (3,514,000) 351,000 11,000 35,000 (6,781,000) (9,898,000) ====================================================================== =============== <CAPTION> As at March 31, 1999 ISN SportsMark California As Reported Group (Pickem) SportsBuff Proforma Adj Note Pro Forma <S> <C> <C> <C> <C> <C> <C> <C> ASSETS Current Assets Cash and cash equivalents 2,928,000 - - 114,000 (1,000,000) C 2,042,000 Other Current Assets 211,000 - - 103,000 - 314,000 ---------------------------------------------------------------------- ------------- Total Current Assets: 3,139,000 - - 217,000 (1,000,000) 2,356,000 Purchased intangibles and 13,492,000 351,000 11,000 - (2,043,000) A,B,C,D,G 11,811,000 goodwill, net Equipment, net 84,000 - - 31,000 - 115,000 ---------------------------------------------------------------------- ------------- TOTAL ASSETS 16,715,000 351,000 11,000 248,000 (3,043,000) 14,282,000 ====================================================================== ============= Total current Liabilities 339,000 - - 234,000 50,000 F 623,000 Deferred Income Taxes 3,855,000 - - - (536,000) H 3,319,000 ---------------------------------------------------------------------- ------------- TOTAL LIABILITIES 4,194,000 - - 234,000 (486,000) 3,942,000 ---------------------------------------------------------------------- ------------- Shareholder's Equity Share Capital 17,127,000 - - 8,000 4,058,000 C 21,193,000 Deferred Compensation (449,000) - - - - (449,000) Accumulated Deficit (4,157,000) 351,000 11,000 6,000 (6,615,000) E,C (10,404,000) ---------------------------------------------------------------------- ------------- Total Shareholder's Equity 12,521,000 351,000 11,000 14,000 (2,557,000) 10,340,000 ---------------------------------------------------------------------- ------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 16,715,000 351,000 11,000 248,000 (3,043,000) 14,282,000 ====================================================================== ============= </TABLE>

NOTES TO THE CONSOLIDATED PRO-FORMA FINANCIAL STATEMENTS FOR THE ELEVEN MONTHS ENDED MARCH 31, 1999: The consolidated pro-forma statement of operations includes the operating results of the Sportsmark Group of Companies for the first 9 months of the period and Pickem for the first 10 months of the period. It also includes the operating results of Sportsbuff for the full 11 months of the period. The balance sheet information also includes the purchase equation for Sportsbuff, as it had been acquired after March 31, 1999. The following is a description of the proforma adjustments referenced in the consolidated proforma financial statements: A. Recording 9 months of additional amortization of purchased intangibles and goodwill arising from the Sportsmark Group acquisition totaling $1,493,000 and $597,000 respectively. Also recording the additional amortization of the deferred income tax liability of $597,000. B. Recording 10 months of additional amortization of purchased intangibles and goodwill arising from the Pickem Sports acquisition totaling $2,604,000 and $1,041,000 respectively. Also recording the additional amortization of the deferred income tax liability of $1,041,000. C. Recording the acquisition of Sportsbuff, including purchased intangibles and goodwill of $5,087,000 and $2,035,000 respectively, the related deferred income tax liability of $2,035,000, paid for with $1,000,000 cash and $4,066,000 in common stock. Also eliminating the capital stock of $8,000 and accumulated deficit of $29,000 of Sportsbuff at the start of the period. D. Recording 11 months of amortization of the Sportsbuff purchased intangibles and goodwill totaling $2,331,000 and $933,000 respectively. Also recording the additional amortization of the deferred income tax liability of $933,000. E. Recording $137,000 of additional wages and benefits expense to reflect amounts taken as dividends by Sportsmark during the period before the acquisition. F. Accrual of $50,000 of acquisition costs associated with the purchase of Sportsbuff. G. Recording and amortization of purchased intangible variance of $362,000 (shown in the Sportsmark Group and ISN California (Pickem) columns) and $166,000 respectively had the acquisitions occurred at the beginning of the year. H. The deferred income tax liability and the goodwill arose as a result of the differences between the financial reporting and tax values of the purchased intangibles acquired through the Sportsmark Group, Sportbuff and Pickem acquisitions. The deferred income tax liability is amortized into income over the same period as the goodwill.

CLASSROOM 2000 INC. FINANCIAL STATEMENTS JANUARY 31, 1999

AUDITORS' REPORT To the Shareholder of Classroom 2000 Inc. We have audited the balance sheet of CLASSROOM 2000 INC. as at January 31, 1999 and the statements of earnings and retained earnings and cash flows for the one month period then ended. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance 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. In our opinion, these financial statements present fairly, in all material respects, the financial position of the company as at January 31, 1999 and the results of its operations and its cash flows for the one month period then ended in accordance with generally accepted accounting principles. "Hudson & Company" Calgary, Alberta HUDSON & COMPANY June 4, 1999 Chartered Accountants

CLASSROOM 2000 INC. BALANCE SHEET JANUARY 31, 1999 <TABLE> <CAPTION> ------------------------------------------------------------------------------- ASSETS <S> <C> CURRENT Cash $ 2,212 ------------------------------------------------------------------------------- LIABILITIES CURRENT Accounts payable $ 6,067 Due to affiliated company (Note 3) 13,998 ------- 20,065 DUE TO SHAREHOLDER (Note 4) 56,700 ------- 76,765 ------- SHAREHOLDER'S EQUITY SHARE CAPITAL (Note 5) 100 RETAINED EARNINGS (DEFICIT) (74,653) ------- (74,553) ------- $ 2,212 =============================================================================== </TABLE> APPROVED ON BEHALF OF THE BOARD: , Director --------------------------------- , Director ---------------------------------

CLASSROOM 2000 INC. STATEMENT OF EARNINGS AND RETAINED EARNINGS FOR THE ONE MONTH PERIOD ENDED JANUARY 31, 1999 <TABLE> <CAPTION> ------------------------------------------------------------------------------- <S> <C> REVENUE $ 152 --------- EXPENSES Interest and bank charges 518 Office 4,972 --------- 5,490 --------- NET EARNINGS (LOSS) (5,338) RETAINED EARNINGS (DEFICIT), beginning of period (69,315) --------- RETAINED EARNINGS (DEFICIT), end of period $ (74,653) =============================================================================== </TABLE>

CLASSROOM 2000 INC. STATEMENT OF CASH FLOWS FOR THE ONE MONTH PERIOD ENDED JANUARY 31, 1999 <TABLE> <CAPTION> ----------------------------------------------------------------------- <S> <C> CASH FLOWS FROM OPERATING ACTIVITIES Net earnings (loss) $ (5,338) Net change in non-cash working capital balances (854) ---------- Cash flows from (used in) operating activities (6,192) ---------- CASH FLOWS FROM FINANCING ACTIVITIES Advances from affiliated companies 4,972 ---------- INCREASE (DECREASE) IN CASH (1,220) CASH, beginning of period 3,432 ---------- CASH, end of period $ 2,212 ======================================================================= </TABLE>

CLASSROOM 2000 INC. NOTES TO FINANCIAL STATEMENTS JANUARY 31, 1999 1. GENERAL Classroom 2000 Inc., is a privately owned company which was incorporated on June 17, 1997 under the Alberta Business Corporations Act. 2. SIGNIFICANT ACCOUNTING POLICY REVENUE RECOGNITION The company earns revenue from membership and other fees received from newspaper, magazine and internet-based sports information and sports contest organization services. Membership fees are received prior to the beginning of a particular sport season or event and recorded as deferred income until recognized in income ratably over the season or upon completion of the event CHANGE IN ACCOUNTING POLICY The company has changed its policy for the accounting of revenue recognition from recording revenues as received to the policy stated above. This change in accounting policy has not been applied retroactively, as the impact of the change on prior periods is not significant. 3. DUE TO AFFILIATED COMPANY During the period the company had the following transactions with Sportsmark Inc. which has certain shareholders who are also shareholders of Sportsmark Holdings Inc.: <TABLE> <CAPTION> <S> <C> Balance , beginning of the period $ 9,026 Advances 7,079 Repayments (2,107) -------- Balance, end of period $ 13,998 ======== </TABLE> 4. DUE TO SHAREHOLDER Sportsmark Holdings Inc. advanced the company $56,700 with no fixed terms of repayment. 5. SHARE CAPITAL <TABLE> <S> <C> AUTHORIZED Unlimited number of Class A voting shares Unlimited number of Class B non-voting shares Unlimited number of Class C non-voting shares ISSUED 100 Class A voting shares $ 100 -------- </TABLE>

CLASSROOM 2000 INC. NOTES TO FINANCIAL STATEMENTS JANUARY 31, 1999 6. INCOME TAXES The company has non-capital income tax loss carry forwards of approximately $68,616 and charitable donations carry forwards of $2,635 available to apply against future years taxable income. The charitable donations expire in 2002 and the non-capital income tax loss carry forwards expire as follows: <TABLE> <S> <C> 2004 $ 63,098 2006 5,518 ----------- $ 68,616 =========== </TABLE> 7. SUBSEQUENT EVENTS Effective February 1, 1999, the 100 Class A voting shares were sold to Internet Sports Network, Inc. which is an unrelated company. 8. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE The year 2000 Issue arises because many computerized systems use two digits rather than four to identify a year. Date-sensitive systems may recognize the year 2000 as 1900 or some other date, resulting in errors when information using year 2000 dates is processed. In addition, similar problems may arise in some systems which use certain dates in 1999 to represent something other than a date. The effects of the Year 2000 Issue may be experienced before, on, or after January 1, 2000, and if not addressed, the impact on operations and financial reporting may range from minor errors to significant systems failure which could affect an entity's ability to conduct normal business operations. It is not possible to be certain that all aspects of the Year 2000 Issue affecting the entity, including those related to the efforts of customers, suppliers, or other third parties, will be fully resolved. 9. FINANCIAL INSTRUMENTS The company's financial instruments consist of cash, due to affiliated companies, due to shareholder and accounts payables. Unless otherwise noted, it is management's opinion that the company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair value of these financial instruments approximate carrying values, unless otherwise noted. 10. COMPARATIVE FIGURES Comparative figures for the one month period ended January 31, 1998 are not shown as this information was not readily obtainable.

CLASSROOM 2000 INC. FINANCIAL STATEMENTS DECEMBER 31, 1998 AND 1997

AUDITORS' REPORT To the Shareholder of Classroom 2000 Inc. We have audited the balance sheets of CLASSROOM 2000 INC. as at December 31, 1998 and December 31, 1997 and the statements of earnings and retained earnings and cash flows for the years then ended. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance 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. In our opinion, these financial statements present fairly, in all material respects, the financial position of the company as at December 31, 1998 and December 31, 1997 and the results of its operations and its cash flows for the years then ended in accordance with generally accepted accounting principles. "Hudson & Company" Calgary, Alberta HUDSON & COMPANY June 4, 1999 Chartered Accountants

CLASSROOM 2000 INC. BALANCE SHEETS <TABLE> <CAPTION> DECEMBER 31 1998 1997 --------------------------------------------------------------------------------------------------------------------------- ASSETS <S> <C> <C> CURRENT Cash $ 3,432 $ 33,218 =========================================================================================================================== LIABILITIES CURRENT Accounts payable $ 6,921 $ 24,437 Due to affiliated companies (Note 3) 9,026 37,450 --------------------------------------- 15,947 61,887 DUE TO SHAREHOLDER (Note 4) 56,700 41,700 --------------------------------------- 72,647 103,587 --------------------------------------- SHAREHOLDER'S EQUITY SHARE CAPITAL (Note 5) 100 100 RETAINED EARNINGS (DEFICIT) (69,315) (70,469) --------------------------------------- (69,215) (70,369) --------------------------------------- $ 3,432 $ 33,218 =========================================================================================================================== </TABLE> APPROVED ON BEHALF OF THE BOARD: , Director --------------------------------- , Director ---------------------------------

CLASSROOM 2000 INC. STATEMENTS OF EARNINGS AND RETAINED EARNINGS <TABLE> <CAPTION> YEARS ENDED DECEMBER 31 1998 1997 --------------------------------------------------------------------------------------------------------------------------- <S> <C> <C> REVENUE $ 220,435 $ 69,473 --------------------------------------- EXPENSES Advertising and promotion 42,443 17,798 Consulting 1,233 35,000 Interest and bank charges 2,034 1,354 Office 104,963 62,299 Professional fees 33,152 4,985 Salaries 35,456 18,506 --------------------------------------- 219,281 139,942 --------------------------------------- NET EARNINGS (LOSS) 1,154 (70,469) RETAINED EARNINGS (DEFICIT), beginning of year (70,469) - --------------------------------------- RETAINED EARNINGS (DEFICIT), end of year $ (69,315) $ (70,469) =========================================================================================================================== </TABLE>

CLASSROOM 2000 INC. STATEMENTS OF CASH FLOWS <TABLE> <CAPTION> YEARS ENDED DECEMBER 31 1998 1997 --------------------------------------------------------------------------------------------------------------------------- <S> <C> <C> CASH FLOWS FROM OPERATING ACTIVITIES Net earnings (loss) $ 1,154 $ (70,469) Net change in non-cash working capital balances (42,831) 24,437 --------------------------------------- Cash flows (used in) operating activities (41,677) (46,032) --------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES Advances from shareholders 15,000 41,700 Advances from (payments to) affiliated companies (3,109) 37,450 Issuance of share capital - 100 --------------------------------------- Cash flows from financing activities 11,891 79,250 --------------------------------------- INCREASE (DECREASE) IN CASH (29,786) 33,218 CASH, beginning of year 33,218 - --------------------------------------- CASH, end of year $ 3,432 $ 33,218 =========================================================================================================================== </TABLE>

CLASSROOM 2000 INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 and 1997 1. GENERAL Classroom 2000 Inc., is a privately owned company which was incorporated on June 17, 1997 under the Alberta Business Corporations Act. 2. SIGNIFICANT ACCOUNTING POLICY REVENUE RECOGNITION The company earns revenue from membership and other fees received from newspaper, magazine and internet-based sports information and sports contest organization services. Membership fees are received prior to the beginning of a particular sport season or event and recorded as deferred income until recognized in income ratably over the season or upon completion of the event CHANGE IN ACCOUNTING POLICY The company has changed its policy for the accounting of revenue recognition from recording revenues as received to the policy stated above. This change in accounting policy has not been applied retroactively, as the impact of the change on prior periods is not significant. 3. DUE TO AFFILIATED COMPANIES During the year the company had the following transactions with Sportsmark Inc. which has certain shareholders who are also shareholders of Sportsmark Holdings Inc.: <TABLE> <CAPTION> 1998 1997 ------------------------------- <S> <C> <C> Balance, beginning of year $ 37,450 $ - Management fees and GST - 37,450 Advances 59,819 15,601 Repayments (88,243) (15,601) -------------------------------- Balance, end of year $ 9,026 $ 37,450 -------------------------------- </TABLE> During the year the company had the following transactions with Sportsmark Promotions Inc. which is owned by the shareholder of the company: <TABLE> <CAPTION> 1998 1997 ------------------------------ <S> <C> <C> Balance, beginning of year $ - $ - Advances 10,369 - Repayments (10,369) - ------------------------------- Balance, end of year $ - $ - ------------------------------- </TABLE>

NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 and 1997 4. DUE TO SHAREHOLDER During the year the company had the following transactions with Sportsmark Holdings Inc.: <TABLE> <CAPTION> 1998 1997 ------------------------------- <S> <C> <C> Balance, beginning of year $ 41,700 $ - Advances 50,000 41,700 Repayments (35,000) - ------------------------------- Balance, end of year $ 56,700 $ 41,700 ------------------------------- </TABLE> 5. SHARE CAPITAL <TABLE> <CAPTION> 1998 1997 ------------------------------ <S> <C> <C> AUTHORIZED Unlimited number of Class A voting shares Unlimited number of Class B non-voting shares Unlimited number of Class C non-voting shares ISSUED 100 Class A voting shares $ 100 $ 100 ------------------------------ </TABLE> 6. INCOME TAXES The company has non-capital income tax loss carry forwards of approximately $63,098 and charitable donations carry forwards of $2,635 available to apply against future years taxable income. These carry forwards expire as follows: <TABLE> <CAPTION> Expires Amount ------- -------- <S> <C> <C> Charitable donations 2002 $ 2,635 Non-capital income tax loss 2004 $63,098 </TABLE> 7. SUBSEQUENT EVENTS Effective February 1, 1999, the 100 Class A voting shares were sold to Internet Sports Network, Inc. which is an unrelated company.

NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 and 1997 8. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE The year 2000 Issue arises because many computerized systems use two digits rather than four to identify a year. Date-sensitive systems may recognize the year 2000 as 1900 or some other date, resulting in errors when information using year 2000 dates is processed. In addition, similar problems may arise in some systems which use certain dates in 1999 to represent something other than a date. The effects of the Year 2000 Issue may be experienced before, on, or after January 1, 2000, and if not addressed, the impact on operations and financial reporting may range from minor errors to significant systems failure which could affect an entity's ability to conduct normal business operations. It is not possible to be certain that all aspects of the Year 2000 Issue affecting the entity, including those related to the efforts of customers, suppliers, or other third parties, will be fully resolved. 9. FINANCIAL INSTRUMENTS The company's financial instruments consist of cash, due to affiliated companies, due to shareholder and accounts payable. Unless otherwise noted, it is management's opinion that the company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair value of these financial instruments approximate carrying values, unless otherwise noted. 10. COMPARATIVE FIGURES Certain changes have been made to the comparative figures to correspond with current year presentation.

SPORTSMARK INC. FINANCIAL STATEMENTS JANUARY 31, 1999

AUDITORS' REPORT To the Shareholders of Sportsmark Inc. We have audited the balance sheet of SPORTSMARK INC. as at January 31, 1999 and the statements of earnings and retained earnings and cash flows for the two month period then ended. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance 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. In our opinion, these financial statements present fairly, in all material respects, the financial position of the company as at January 31, 1999 and the results of its operations and its cash flows for the two month period then ended in accordance with generally accepted accounting principles. "Hudson & Company" Calgary, Alberta HUDSON & COMPANY June 11, 1999 Chartered Accountants

SPORTSMARK INC. BALANCE SHEET JANUARY 31, 1999 <TABLE> ============================================================================ ASSETS CURRENT <S> <C> Accounts receivable $ 174,428 Prepaid expenses 1,284 -------------- 175,712 CAPITAL ASSETS (Note 3) 40,940 -------------- $ 216,652 ============================================================================ LIABILITIES CURRENT Bank indebtedness $ 38,229 Accounts payable 93,971 Deferred revenue 233,000 -------------- 365,200 Due to affiliated companies (Note 4) 299,352 -------------- 664,552 -------------- SHAREHOLDERS' EQUITY SHARE CAPITAL (Note 5) 2 RETAINED EARNINGS (DEFICIT) (447,902) -------------- (447,900) -------------- $ 216,652 ============================================================================ </TABLE> APPROVED ON BEHALF OF THE BOARD: _________________________________, Director _________________________________, Director

SPORTSMARK INC. STATEMENT OF EARNINGS AND RETAINED EARNINGS FOR THE TWO MONTH PERIOD ENDED JANUARY 31, 1999 <TABLE> ---------------------------------------------------------------------------- <S> <C> REVENUE $ 273,212 --------------- EXPENSES Amortization 2,011 Automobile (294) Computer processing 10,462 Entertainment 2,786 Interest and bank charges 3,107 Office 3,395 Postage 39,005 Professional fees 4,075 Rent 8,572 Telephone 4,964 Travel, advertising and promotion 11,796 Wages and consulting 82,531 --------------- 172,410 =============== NET EARNINGS (LOSS) 100,802 RETAINED EARNINGS (DEFICIT), beginning of period (548,704) --------------- RETAINED EARNINGS (DEFICIT), end of period $ (447,902) ============================================================================ </TABLE>

SPORTSMARK INC. STATEMENT OF CASH FLOWS FOR THE TWO MONTH PERIOD ENDED JANUARY 31, 1999 <TABLE> ---------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES <S> <C> Net earnings (loss) $ 100,802 Item not affecting cash Amortization 2,011 --------------- 102,813 Net change in non-cash working capital balances (293,934) --------------- Cash flows (used in) operating activities (191,121) --------------- CASH FLOWS FROM INVESTING ACTIVITY Purchase of capital assets (4,385) --------------- CASH FLOWS FROM FINANCING ACTIVITY Payments to affiliated companies (17,692) --------------- DECREASE IN CASH (213,198) CASH, beginning of period 174,969 --------------- CASH (DEFICIENCY), end of period $ (38,229) ============================================================================ </TABLE>

SPORTSMARK INC. NOTES TO FINANCIAL STATEMENTS JANUARY 31, 1999 1. GENERAL Sportsmark Inc., is a privately owned company which was incorporated on October 20, 1986 under the Alberta Business Corporations Act. 2. SIGNIFICANT ACCOUNTING POLICIES REVENUE RECOGNITION The company earns revenue from membership and other fees received from newspaper, magazine and internet-based sports information and sports contest organization services. Membership fees are received prior to the beginning of a particular sport season or event and recorded as deferred income until recognized in income ratably over the season or upon completion of the event CHANGE IN ACCOUNTING POLICY The company has changed its policy for the accounting of revenue recognition from recording revenues as received to the policy stated above. This change in accounting policy has been applied retroactively. As a result of this retroactive restatement, the opening deficit has been increased by $389,000, revenue for the period has been increased by $156,000 and deferred revenue has been increased by $233,000. CAPITAL ASSETS Capital assets are recorded at cost and are amortized using the following annual rates and method: <TABLE> <S> <C> Office equipment - 20% declining balance Computer equipment - 30% declining balance </TABLE> FOREIGN EXCHANGE Assets, liabilities, revenue or expenses arising from foreign transactions are translated into Canadian dollars by the use of the exchange rate in effect at that date. At period end monetary items denominated in foreign currency are adjusted to reflect the exchange rate in effect at the period end date and any gain or loss which results is included in the net earnings for that period. 3. CAPITAL ASSETS <TABLE> <CAPTION> Accumulated Net Book Cost Amortization Value -------------------------------------------------- <S> <C> <C> <C> Office equipment $ 20,676 $ 16,909 $ 3,767 Computer equipment 167,351 130,178 37,173 -------------------------------------------------- $ 188,027 $ 147,087 $ 40,940 ================================================== </TABLE>

SPORTSMARK INC. NOTES TO FINANCIAL STATEMENTS JANUARY 31, 1999 4. DUE TO AFFILIATED COMPANIES During the period the company had the following transactions with Sportsmark Holdings Inc. which is owned by certain individuals who are shareholders of the company: <TABLE> <S> <C> Balance, beginning of period $ (317,044) Foreign exchange adjustment 3,695 -------------- Balance, end of period $ (313,349) ============== </TABLE> During the period the company had the following transactions with Sportsmark Promotions Inc. which is owned by Sportsmark Holdings Inc.: <TABLE> <S> <C> Balance, beginning of period $ - Advances 53,970 Payments received (53,970) ------------- Balance, end of period $ - ============= </TABLE> During the period the company had the following transactions with Classroom 2000 Inc. which is owned by Sportsmark Holdings Inc.: <TABLE> <S> <C> Balance, beginning of period $ - Advances 14,369 Payments received (372) ------------- Balance, end of period $ 13,997 ============= </TABLE> 5. SHARE CAPITAL AUTHORIZED 50 Class A common voting shares without nominal or par value 50 Class B common non-voting shares without nominal or par value Unlimited number of Class C common voting shares Unlimited number of Class D preferred non-voting shares with a fixed non-cumulative dividend at the rate of .375% and redeemable at $1,000 per share <TABLE> ISSUED <S> <C> <C> 100 Class C common voting shares $ 1 1,200 Class D preferred non-voting shares 1 ------------ $ 2 ============ </TABLE>

SPORTSMARK INC. NOTES TO FINANCIAL STATEMENTS JANUARY 31, 1999 6. INCOME TAX The company has non-capital income tax loss carry forwards of approximately $257,274 available to apply against future years taxable income. These non-capital losses expire as follows: <TABLE> <S> <C> 2003 $ 60,521 2004 60,034 2005 85,108 2006 51,611 </TABLE> Deferred income taxes arising from deferred revenue and income tax loss carry forwards have not been given recognition in these statements. The total estimated net deferred income tax asset not recorded is $7,000 7. COMMITMENTS The minimum rentals payable under long-term operating leases, exclusive of certain operating costs for which the company is responsible are as follows: <TABLE> <S> <C> 1999 $ 66,957 2000 28,086 2001 9,708 -------------- $ 104,751 ============== </TABLE> 8. SUBSEQUENT EVENTS Effective February 1, 1999, the 100 Class C common voting shares and 1200 Class D preferred non-voting shares were sold to Internet Sports Network, Inc. which is an unrelated company. 9. FINANCIAL INSTRUMENTS The company's financial instruments consist of cash, due to affiliated companies and accounts payables. Unless otherwise noted, it is management's opinion that the company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair value of these financial instruments approximate carrying values, unless otherwise noted.

SPORTSMARK INC. NOTES TO FINANCIAL STATEMENTS JANUARY 31, 1999 10. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE The year 2000 Issue arises because many computerized systems use two digits rather than four to identify a year. Date-sensitive systems may recognize the year 2000 as 1900 or some other date, resulting in errors when information using year 2000 dates is processed. In addition, similar problems may arise in some systems which use certain dates in 1999 to represent something other than a date. The effects of the Year 2000 Issue may be experienced before, on, or after January 1, 2000, and if not addressed, the impact on operations and financial reporting may range from minor errors to significant systems failure which could affect an entity's ability to conduct normal business operations. It is not possible to be certain that all aspects of the Year 2000 Issue affecting the entity, including those related to the efforts of customers, suppliers, or other third parties, will be fully resolved. 11. COMPARATIVE FIGURES Comparative figures for the two month period ended January 31, 1998 are not shown as the information was not readily obtainable.

SPORTSMARK INC. FINANCIAL STATEMENTS NOVEMBER 30, 1998 AND 1997

AUDITORS' REPORT To the Shareholders of Sportsmark Inc. We have audited the balance sheets of SPORTSMARK INC. as at November 30, 1998 and November 30, 1997 and the statements of earnings and retained earnings and cash flows for the years then ended. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance 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. In our opinion, these financial statements present fairly, in all material respects, the financial position of the company as at November 30, 1998 and November 30, 1997 and the results of its operations and its cash flows for the years then ended in accordance with generally accepted accounting principles. "Hudson & Company" Calgary, Alberta HUDSON & COMPANY June 11, 1999 Chartered Accountants

SPORTSMARK INC. BALANCE SHEETS <TABLE> <CAPTION> NOVEMBER 30 1998 1997 ----------------------------------------------------------------------------------------------- ASSETS <S> <C> <C> CURRENT Cash $ 174,969 $ 102,498 Accounts receivable 95,161 103,535 Prepaid expenses 2,635 - --------------------------------------- 272,765 206,033 CAPITAL ASSETS (Note 3) 38,565 47,497 --------------------------------------- $ 311,330 $ 253,530 =============================================================================================== LIABILITIES CURRENT Accounts payable $ 153,988 $ 154,013 Deferred revenue 389,000 493,000 --------------------------------------- 542,988 647,013 DUE TO AFFILIATED COMPANIES (Note 4) 317,044 164,124 --------------------------------------- 860,032 811,137 --------------------------------------- SHAREHOLDERS' EQUITY SHARE CAPITAL (Note 5) 2 2 RETAINED EARNINGS (DEFICIT) (548,704) (557,609) --------------------------------------- (548,702) (557,607) --------------------------------------- $ 311,330 $ 253,530 =============================================================================================== </TABLE> APPROVED ON BEHALF OF THE BOARD: _________________________________, Director _________________________________, Director

SPORTSMARK INC. STATEMENTS OF EARNINGS AND RETAINED EARNINGS <TABLE> <CAPTION> YEARS ENDED NOVEMBER 30 1998 1997 ------------------------------------------------------------------------------------------------ <S> <C> <C> REVENUE $ 1,268,305 $ 1,391,780 --------------------------------------- EXPENSES Amortization 14,626 17,795 Automobile 604 4,352 Computer processing 233,045 248,424 Entertainment 4,608 6,425 Interest and bank charges 16,471 8,217 Office 80,977 134,719 Postage 198,945 187,914 Professional fees 12,810 128,776 Rent 52,120 52,268 Royalties 16,453 - Telephone 90,961 92,721 Travel, advertising and promotion 55,777 104,864 Wages and consulting 482,003 477,436 --------------------------------------- 1,259,400 1,463,911 --------------------------------------- NET EARNINGS (LOSS) 8,905 (72,131) RETAINED EARNINGS (DEFICIT), beginning of year (557,609) (485,478) --------------------------------------- RETAINED EARNINGS (DEFICIT), end of year $ (548,704) $ (557,609) ================================================================================================ </TABLE>

SPORTSMARK INC. STATEMENTS OF CASH FLOWS <TABLE> <CAPTION> YEARS ENDED NOVEMBER 30 1998 1997 -------------------------------------------------------------------------------------------------------- <S> <C> <C> CASH FLOWS FROM OPERATING ACTIVITIES Net earnings (loss) $ 8,905 $ (72,131) Item not affecting cash Amortization 14,626 17,795 -------------------------------------- 23,531 (54,336) Net change in non-cash working capital balances (98,285) (72,056) -------------------------------------- Cash flows (used in) operating activities (74,754) (126,392) -------------------------------------- CASH FLOWS FROM INVESTING ACTIVITY Purchase of capital assets (5,694) (13,073) -------------------------------------- CASH FLOWS FROM FINANCING ACTIVITY Advances from (payments to) affiliated companies 152,919 (29,722) -------------------------------------- INCREASE (DECREASE) IN CASH 72,471 (169,187) CASH, beginning of year 102,498 271,685 -------------------------------------- CASH, end of year $ 174,969 $ 102,498 ======================================================================================================== </TABLE>

SPORTSMARK INC. NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 1998 and 1997 1. GENERAL Sportsmark Inc., is a privately owned company which was incorporated on October 20, 1986 under the Alberta Business Corporations Act. 2. SIGNIFICANT ACCOUNTING POLICIES REVENUE RECOGNITION The company earns revenue from membership and other fees received from newspaper, magazine and internet-based sports information and sports contest organization services. Membership fees are received prior to the beginning of a particular sport season or event and recorded as deferred income until recognized in income ratably over the season or upon completion of the event CHANGE IN ACCOUNTING POLICY The company has changed its policy for the accounting of revenue recognition from recording revenues as received to the policy stated above. This change in accounting policy has been applied retroactively. As a result of this retroactive restatement, the opening deficit has been increased by $493,000 (1997 - $514,000), revenue for the year has been increased by $104,000 (1997 - $21,000) and deferred revenue has been increased by $389,000 (1997 - $493,000). CAPITAL ASSETS Capital assets are recorded at cost and are amortized using the following annual rates and method: Office equipment - 20% declining balance Computer equipment - 30% declining balance FOREIGN EXCHANGE Assets, liabilities, revenue or expenses arising from foreign transactions are translated into Canadian dollars by the use of the exchange rate in effect at that date. At year end monetary items denominated in foreign currency are adjusted to reflect the exchange rate in effect at the year end date and any gain or loss which results is included in the net earnings for that year. 3. CAPITAL ASSETS <TABLE> <CAPTION> 1998 1997 ------------------------------------------------------------------------------ Accumulated Cost Amortization Net Book Value ------------------------------------------------------------------------------ <S> <C> <C> <C> <C> Office equipment $ 20,675 $ 16,776 $ 3,899 $ 42,803 Computer equipment 162,966 128,300 34,666 4,694 ------------------------------------------------------------------------------ $ 183,641 $ 145,076 $ 38,565 $ 47,497 ============================================================================== </TABLE>

SPORTSMARK INC. NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 1998 and 1997 4. DUE TO AFFILIATED COMPANIES During the year the company had the following transactions with Sportsmark Holdings Inc. which is owned by certain individuals who are shareholders of the company: <TABLE> <CAPTION> 1998 1997 -------------------------------- <S> <C> <C> Balance, beginning of year $ (201,574) $ (193,846) Advanced during the year (100,000) - Foreign exchange adjustment (15,470) (7,728) -------------------------------- Balance, end of year $ (317,044) $ (201,574) ================================ </TABLE> During the year the company had the following transactions with Sportsmark Promotions Inc. which is owned by Sportsmark Holdings Inc.: <TABLE> <CAPTION> 1998 1997 -------------------------------- <S> <C> <C> Balance, beginning of year $ - $ - Revenue 134,758 81,750 Advances 27,009 - Payments received (161,767) (81,750) -------------------------------- Balance, end of year $ - $ - ================================ </TABLE> During the year the company had the following transactions with Classroom 2000 Inc. which is owned by Sportsmark Holdings Inc.: <TABLE> <CAPTION> 1998 1997 -------------------------------- <S> <C> <C> Balance, beginning of year $ 37,450 $ - Revenue and GST - 37,450 Advances 51,149 - Payments received (88,599) - -------------------------------- Balance, end of year $ - $ 37,450 ================================ </TABLE>

SPORTSMARK INC. NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 1998 and 1997 5. SHARE CAPITAL <TABLE> <CAPTION> 1998 1997 ------------------------------- AUTHORIZED 50 Class A common voting shares without nominal or par value 50 Class B common non-voting shares without nominal or par value Unlimited number of Class C common voting shares Unlimited number of Class D preferred non-voting shares with a fixed non-cumulative dividend at the rate of .375% and redeemable at $1,000 per share ISSUED <S> <C> <C> 100 Class C common voting shares $ 1 $ 1 1,200 Class D preferred non-voting shares 1 1 ------------------------------ $ 2 $ 2 ============================== </TABLE> 6. INCOME TAX The company has non-capital income tax loss carry forwards of approximately $205,663 available to apply against future years taxable income. The non-capital losses expire as follows: <TABLE> <S> <C> 2003 $ 60,521 2004 60,034 2005 85,108 </TABLE> Deferred income taxes arising from deferred revenue and income tax loss carry forwards have not been given recognition in these statements. The total estimated net deferred income tax asset not recorded is $37,000 (1998 - $74,000) 7. COMMITMENTS The minimum rentals payable under long-term operating leases, exclusive of certain operating costs for which the company is responsible are as follows: <TABLE> <S> <C> 1999 $ 80,195 2000 28,086 2001 9,708 --------------- $ 117,989 =============== </TABLE> 8. SUBSEQUENT EVENTS Effective February 1, 1999, the 100 Class C common voting shares and 1200 Class D preferred non-voting shares were sold to Internet Sports Network, Inc. which is an unrelated company.

SPORTSMARK INC. NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 1998 and 1997 9. FINANCIAL INSTRUMENTS The company's financial instruments consist of cash, accounts receivables, due to affiliated companies and accounts payables. Unless otherwise noted, it is management's opinion that the company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair value of these financial instruments approximate carrying values, unless otherwise noted. 10. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE The year 2000 Issue arises because many computerized systems use two digits rather than four to identify a year. Date-sensitive systems may recognize the year 2000 as 1900 or some other date, resulting in errors when information using year 2000 dates is processed. In addition, similar problems may arise in some systems which use certain dates in 1999 to represent something other than a date. The effects of the Year 2000 Issue may be experienced before, on, or after January 1, 2000, and if not addressed, the impact on operations and financial reporting may range from minor errors to significant systems failure which could affect an entity's ability to conduct normal business operations. It is not possible to be certain that all aspects of the Year 2000 Issue affecting the entity, including those related to the efforts of customers, suppliers, or other third parties, will be fully resolved.

SPORTSMARK PROMOTIONS INC. FINANCIAL STATEMENTS JANUARY 31, 1999

AUDITORS' REPORT To the Shareholder of Sportsmark Promotions Inc. We have audited the balance sheet of SPORTSMARK PROMOTIONS INC. as at January 31, 1999 and the statements of earnings and retained earnings and cash flows for the one month period then ended. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance 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. In our opinion, these financial statements present fairly, in all material respects, the financial position of the company as at January 31, 1999 and the results of its operations and its cash flows for the one month period then ended in accordance with generally accepted accounting principles. "Hudson & Company" Calgary, Alberta HUDSON & COMPANY June 7, 1999 Chartered Accountants

SPORTSMARK PROMOTIONS INC. BALANCE SHEET JANUARY 31, 1999 <TABLE> <CAPTION> -------------------------------------------------------------------------------- ASSETS CURRENT <S> <C> Cash $ 23,104 Due from affiliated companies (Note 3) 78,256 ---------------- 101,360 INCORPORATION COSTS 936 ---------------- $ 102,296 ================================================================================ LIABILITIES CURRENT Accounts payable $ 11,340 Deferred revenue 3,000 ---------------- 14,340 ---------------- SHAREHOLDER'S EQUITY SHARE CAPITAL (Note 5) 100 RETAINED EARNINGS 87,856 ---------------- 87,956 ---------------- $ 102,296 ================================================================================ </TABLE> APPROVED ON BEHALF OF THE BOARD: _________________________________, Director _________________________________, Director

SPORTSMARK PROMOTIONS INC. STATEMENT OF EARNINGS AND RETAINED EARNINGS FOR THE ONE MONTH PERIOD ENDED JANUARY 31, 1999 <TABLE> <CAPTION> -------------------------------------------------------------------------------- <S> <C> REVENUE $ 1,000 EXPENSES Office 97 -------------- NET EARNINGS (LOSS) 903 RETAINED EARNINGS, beginning of period 86,953 -------------- RETAINED EARNINGS, end of period $ 87,856 ================================================================================ </TABLE>

SPORTSMARK PROMOTIONS INC. STATEMENT OF CASH FLOWS FOR THE ONE MONTH PERIOD ENDED JANUARY 31, 1999 <TABLE> <CAPTION> -------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES <S> <C> Net earnings $ 903 Net change in non-cash working capital balances (65,743) ---------------- Cash flows (used in) operating activities (64,840) ---------------- CASH FLOWS FROM FINANCING ACTIVITIES Advances from shareholder 2,000 Payments to affiliated companies (169,984) ---------------- Cash flows from (used in) financing activities (167,984) ---------------- DECREASE IN CASH (232,824) CASH, beginning of period 255,928 ---------------- CASH, end of period $ 23,104 ================================================================================ </TABLE>

SPORTSMARK PROMOTIONS INC. NOTES TO FINANCIAL STATEMENTS JANUARY 31, 1999 1. GENERAL Sportsmark Promotions Inc., is a privately owned company which was incorporated on June 24, 1992 under the State of Delaware and which operates in the State of Arizona. As the company was incorporated in the United States of America and has all of its operations in the United States of America the financial statements are reported in United States dollars. 2. SIGNIFICANT ACCOUNTING POLICY REVENUE RECOGNITION The company earns revenue from membership and other fees received from newspaper, magazine and internet-based sports information and sports contest organization services. Membership fees are received prior to the beginning of a particular sport season or event and recorded as deferred income until recognized in income ratably over the season or upon completion of the event. CHANGE IN ACCOUNTING POLICY The company has changed its policy for the accounting of revenue recognition from recording revenues as received to the policy stated above. This change in accounting policy has been applied retroactively. As a result of this retroactive restatement, retained earnings has been decreased by $4,000, revenue for the period has been increased by $1,000 and deferred revenue has been increased by $3,000. 3. DUE FROM AFFILIATED COMPANIES During the period, the company had the following transactions with Sportsmark Promotions International Inc. which is owned by Sportsmark Holdings Inc.: <TABLE> <S> <C> Balance , beginning of period $ (91,728) Advances 24,422 Repayments 145,562 ------------- Balance, end of period $ 78,256 ============= </TABLE> During the period, the company had the following transactions with Sportsmark Inc. which has certain shareholders who are also shareholders of Sportsmark Holdings Inc.: <TABLE> <S> <C> Balance , beginning of period $ - Advances 52,127 Repayments (52,127) ------------- Balance, end of period $ - ============= </TABLE> 4. DUE FROM SHAREHOLDER During the period, the company had the following transactions with Sportsmark Holdings Inc.: <TABLE> <S> <C> Balance , beginning of period $ 2,000 Repayments (2,000) -------------- Balance, end of period $ - ============== </TABLE>

SPORTSMARK PROMOTIONS INC. NOTES TO FINANCIAL STATEMENTS JANUARY 31, 1999 5. SHARE CAPITAL AUTHORIZED 10,000 voting shares ISSUED 100 voting shares $ 100 =========== 6. INCOME TAXES The company has net operating loss carry forwards of approximately $16,928 which are available to apply against future years taxable income in the State of Arizona. These carry forwards expire in 2003. 7. SUBSEQUENT EVENTS Effective February 1, 1999, the 100 voting shares were sold to Internet Sports Network, Inc. which is an unrelated company. 8. FINANCIAL INSTRUMENTS The company's financial instruments consist of cash, due from affiliated companies and accounts payables. Unless otherwise noted, it is management's opinion that the company is not exposed to significant interest, currency or credit risk arising from these financial instruments. The fair value of these financial instruments approximate carrying values, unless otherwise noted. 9. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE The year 2000 Issue arises because many computerized systems use two digits rather than four to identify a year. Date-sensitive systems may recognize the year 2000 as 1900 or some other date, resulting in errors when information using year 2000 dates is processed. In addition, similar problems may arise in some systems which use certain dates in 1999 to represent something other than a date. The effects of the Year 2000 Issue may be experienced before, on, or after January 1, 2000, and if not addressed, the impact on operations and financial reporting may range from minor errors to significant systems failure which could affect an entity's ability to conduct normal business operations. It is not possible to be certain that all aspects of the Year 2000 Issue affecting the entity, including those related to the efforts of customers, suppliers, or other third parties, will be fully resolved. 10. COMPARATIVE FIGURES Comparative figures for the one month period ended January 31, 1998 are not shown as the information was not readily obtainable.

SPORTSMARK PROMOTIONS INC. FINANCIAL STATEMENTS DECEMBER 31, 1998 AND 1997

AUDITORS' REPORT To the Shareholder of Sportsmark Promotions Inc. We have audited the balance sheets of SPORTSMARK PROMOTIONS INC. as at December 31, 1998 and December 31, 1997 and the statements of earnings and retained earnings and cash flows for the years then ended. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance 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. In our opinion, these financial statements present fairly, in all material respects, the financial position of the company as at December 31, 1998 and December 31, 1997 and the results of its operations and its cash flows for the years then ended in accordance with generally accepted accounting principles. "Hudson & Company" Calgary, Alberta HUDSON & COMPANY June 7, 1999 Chartered Accountants

SPORTSMARK PROMOTIONS INC. <TABLE> <CAPTION> BALANCE SHEETS DECEMBER 31 1998 1997 ------------------------------------------------------------------------------------------------------ ASSETS <S> <C> <C> CURRENT Cash $ 255,928 $ 375,469 Due from shareholder (Note 4) 2,000 2,000 --------------------------------------- 257,928 377,469 INCORPORATION COSTS 936 936 --------------------------------------- $ 258,864 $ 378,405 ====================================================================================================== LIABILITIES CURRENT Accounts payable $ 76,083 $ 134,428 Deferred revenue 4,000 6,000 Income taxes payable - 1,405 Due to affiliated companies (Note 3) 91,728 134,593 --------------------------------------- 171,811 276,426 --------------------------------------- SHAREHOLDER'S EQUITY SHARE CAPITAL (Note 5) 100 100 RETAINED EARNINGS 86,953 101,879 --------------------------------------- 87,053 101,979 --------------------------------------- $ 258,864 $ 378,405 ====================================================================================================== </TABLE> APPROVED ON BEHALF OF THE BOARD: _________________________________, Director _________________________________, Director

SPORTSMARK PROMOTIONS INC. STATEMENTS OF EARNINGS AND RETAINED EARNINGS <TABLE> <CAPTION> YEARS ENDED DECEMBER 31 1998 1997 ------------------------------------------------------------------------------------------------- <S> <C> <C> REVENUE $ 52,728 $ 128,590 --------------------------------------- EXPENSES Consulting fees 50,000 101,000 Interest and bank charges - 851 Office 186 268 Professional fees 17,468 1,429 --------------------------------------- 67,654 103,548 --------------------------------------- Earnings (loss) before income taxes (14,926) 25,042 INCOME TAXES - 1,405 --------------------------------------- NET EARNINGS (LOSS) (14,926) 23,637 RETAINED EARNINGS, beginning of year 101,879 78,242 --------------------------------------- RETAINED EARNINGS, end of year $ 86,953 $ 101,879 ================================================================================================= </TABLE>

SPORTSMARK PROMOTIONS INC. STATEMENTS OF CASH FLOWS <TABLE> <CAPTION> YEARS ENDED DECEMBER 31 1998 1997 ----------------------------------------------------------------------------------------------------- <S> <C> <C> CASH FLOWS FROM OPERATING ACTIVITIES Net earnings (loss) $ (14,926) $ 23,637 Net change in non-cash working capital balances (61,750) (25,611) ---------------------------------------- Cash flows (used in) operating activities (76,676) (1,974) ---------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES Advances from (payments to) affiliated companies (42,865) 85,576 ---------------------------------------- INCREASE (DECREASE) IN CASH (119,541) 83,602 CASH, beginning of year 375,469 291,867 ---------------------------------------- CASH, end of year $ 255,928 $ 375,469 ==================================================================================================== </TABLE>

SPORTSMARK PROMOTIONS INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 and 1997 1. GENERAL Sportsmark Promotions Inc., is a privately owned company which was incorporated on June 24, 1992 under the State of Delaware and which operates in the State of Arizona. As the company was incorporated in the United States of America and has all of its operations in the United States of America the financial statements are reported in United States dollars. 2. SIGNIFICANT ACCOUNTING POLICY REVENUE RECOGNITION The company earns revenue from membership and other fees received from newspaper, magazine and internet-based sports information and sports contest organization services. Membership fees are received prior to the beginning of a particular sport season or event and recorded as deferred income until recognized in income ratably over the season or upon completion of the event. CHANGE IN ACCOUNTING POLICY The company has changed its policy for the accounting of revenue recognition from recording revenues as received to the policy stated above. This change in accounting policy has been applied retroactively. As a result of this retroactive restatement, opening retained earnings has been decreased by $6,000 (1997 - $25,000), revenue for the year has been increased by $2,000 (1997 - $19,000) and deferred revenue has been increased by $4,000 (1997 - $6,000). 3. DUE TO AFFILIATED COMPANIES During the year the company had the following transactions with Sportsmark Inc. which has certain shareholders who are also shareholders of Sportsmark Holdings Inc.: <TABLE> <CAPTION> 1998 1997 ---------------------------------- <S> <C> <C> Balance, beginning of year $ 49,735 $ - Consulting fees 50,000 101,000 Advances 10,228 8,735 Repayments (109,963) (60,000) ---------------------------------- Balance, end of year $ - $ 49,735 ================================= </TABLE> During the year the company had the following transactions with Sportsmark Promotions International Inc. which is owned by Sportsmark Holdings Inc.: <TABLE> <CAPTION> 1998 1997 --------------------------------- <S> <C> <C> Balance, beginning of year $ 84,858 $ 49,017 Revenue 50,728 109,590 Advances 290,211 183,812 Repayments (334,069) (257,561) ---------------------------------- Balance, end of year $ 91,728 $ 84,858 ================================== </TABLE> During the year the company had the following transactions with Classroom 2000 Inc. which is owned by Sportsmark Holdings Inc.: <TABLE> <CAPTION> 1998 1997 --------------------------------- <S> <C> <C> Balance, beginning of year $ - $ - Advances 7,000 - Repayments (7,000) - ---------------------------------- Balance, end of year $ - $ - ================================== </TABLE>

SPORTSMARK PROMOTIONS INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 and 1997 4. DUE FROM SHAREHOLDER In a prior year the company advanced Sportsmark Holdings Inc. $2,000, with no fixed terms of repayment. 5. SHARE CAPITAL <TABLE> <CAPTION> 1998 1997 -------------------------------- <S> <C> <C> AUTHORIZED 10,000 voting shares ISSUED 100 voting shares $ 100 $ 100 ================================ </TABLE> 6. INCOME TAXES The company has net operating loss carry forwards of approximately $16,928 which are available to apply against future years taxable income in the State of Arizona. These carry forwards expire in 2003. 7. SUBSEQUENT EVENTS Effective February 1, 1999, the 100 voting shares were sold to Internet Sports Network, Inc. which is an unrelated company. 8. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE The year 2000 Issue arises because many computerized systems use two digits rather than four to identify a year. Date-sensitive systems may recognize the year 2000 as 1900 or some other date, resulting in errors when information using year 2000 dates is processed. In addition, similar problems may arise in some systems which use certain dates in 1999 to represent something other than a date. The effects of the Year 2000 Issue may be experienced before, on, or after January 1, 2000, and if not addressed, the impact on operations and financial reporting may range from minor errors to significant systems failure which could affect an entity's ability to conduct normal business operations. It is not possible to be certain that all aspects of the Year 2000 Issue affecting the entity, including those related to the efforts of customers, suppliers, or other third parties, will be fully resolved.

SPORTSMARK PROMOTIONS INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 and 1997 9. FINANCIAL INSTRUMENTS The company's financial instruments consist of cash, due from shareholder, due to affiliated companies and accounts payables. Unless otherwise noted, it is management's opinion that the company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair value of these financial instruments approximate carrying values, unless otherwise noted. 10. COMPARATIVE FIGURES Certain changes have been made to the comparative figures to correspond with current year presentation.

CONSOLIDATED FINANCIAL STATEMENTS INTERNET SPORTS NETWORK, INC. (UNAUDITED) JUNE 30, 1999

<TABLE> <CAPTION> INTERNET SPORTS NETWORK INC. CONSOLIDATED BALANCE SHEET AS AT JUNE 30 (unaudited) (unaudited) 1999 1998 ----- ---- <S> <C> <C> ASSETS CURRENT ASSETS Cash 2,600,782 202,094 Accounts Receivable 239,554 3,196 Prepaid Expenses and other Deferred Charges 38,342 105,949 -------------------------------------- TOTAL CURRENT ASSETS: 2,878,679 311,240 Capital Assets, net (note 3) 290,278 43,731 - Other Assets 18,203 (13,161) - Intangible Assets, net (note 2) 15,271,754 - Goodwill (note 2) 5,473,000 - -------------------------------------- TOTAL ASSETS 23,931,914 341,810 ====================================== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts Payable 572,243 52,912 Accrued Liabilities 138,931 91,702 Accrued Sportsbuff Purchase 1,000,000 - -------------------------------------- TOTAL CURRENT LIABILITIES 1,711,173 144,614 Convertible Debentures - 196,500 Deferred Income Taxes 5,473,000 - -------------------------------------- TOTAL LIABILITIES 7,184,173 341,114 -------------------------------------- SHAREHOLDERS' EQUITY (NOTE 4) Share Capital 24,645,895 786,226 Deferred Compensation (1,513,167) - Accumulated Deficit (6,384,988) (785,530) -------------------------------------- TOTAL SHAREHOLDERS' EQUITY 16,747,740 696 -------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 23,931,914 341,810 ====================================== </TABLE>

INTERNET SPORTS NETWORK INC. CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE THREE MONTHS ENDING JUNE 30 <TABLE> <CAPTION> (unaudited) (unaudited) 1999 1998 ----- ---- <S> <C> <C> REVENUE 672,231 8,508 -------------------------------------- EXPENSES Prize Commitments and other direct costs 241,473 2,230 Salaries and benefits 386,356 53,385 Consulting fees 220,031 11,818 Advertising 87,570 22,040 General and Administrative 138,026 - Product development costs - 4,947 Rent & Occupancy 23,108 5,436 Telephone 26,255 3,581 Legal and Accounting 21,633 3,738 Travel & Entertainment 186,244 41,341 Interest and Bank charges 4,053 284 -------------------------------------- TOTAL EXPENSES 1,334,750 148,799 -------------------------------------- NET OPERATING INCOME (LOSS) (662,518) (140,292) - Depreciation 4,327 2,000 Amortization of Purchased Intangibles/Goodwill 1,805,379 - Debt conversion inducement - - Options granted for services provided - - Amortization of Stock Compensation 212,833 - Acquisition Costs 51,404 - -------------------------------------- NET INCOME (LOSS) BEFORE TAXES (2,736,462) (142,292) - Deferred Income Tax Expense (Recovery) (509,046) -------------------------------------- NET INCOME (LOSS) (2,227,416) (142,292) ====================================== Net Loss per Share $(0.12) $(0.03) ====================================== Weighted Average Shares Outstanding 18,620,791 5,000,000 ====================================== </TABLE>

<TABLE> <CAPTION> INTERNET SPORTS NETWORK, INC. CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Unaudited) (All dollar and share amounts in thousands, except per share data) =================================================================================================================== Common Stock and Additional Number Paid in Deferred Accumulated Of Shares Capital Compensation Deficit Total --------- ------- ------------ ------- ----- <S> <C> <C> <C> <C> <C> Balance at March 31, 1999 17,841 17,127 (449) (4,157) 12,521 Shares issued on acquisition of Ultimate 125 750 - - 750 Sports Publishing Shares issued in acquisition of Innovation 616 4,066 - - 4,066 Partners Inc. Shares issued for cash 843 1,476 - - 1,476 Deferred compensation related to stock - 1,277 (1,277) - - options Amortization of deferred compensation - - 213 - 213 related to stock options Share issuance costs - (50) - - (50) Net loss - - - (2,227) (2,227) ------------------------------------------------------------------------------------- Balance at June 30, 1999 19,425 24,646 (1,513) (6,384) 12,521 ------------------------------------------------------------------------------------- </TABLE>

<TABLE> <CAPTION> INTERNET SPORTS NETWORK, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (All dollar and share amounts in thousands, except per share data) =================================================================================================================== 3 MONTHS ENDING JUNE 30, 1999 ------------------------------------------------------------------------------------------------------------------ <S> <C> OPERATING ACTIVITIES (U.S. Dollars) Net loss $ (2,227) Adjustment to reconcile net loss to net cash used in operating activities: Depreciation 4 Amortization of deferred compensation 213 Amortization of purchased intangibles and goodwill 1,805 Deferred income tax recovery (509) Changes in other operating assets and liabilities: Increase in receivables (34) Increase in prepaid expenses (9) Increase in other assets (18) Increase in accounts payable 49 Decrease in accrued liabilities (29) ------------------ Net cash used in operating activities (755) ------------------ INVESTING ACTIVITIES Purchase of Ultimate Sports Publishing (860) Cash acquired with Sportsbuff 36 Purchase of equipment (174) ----------------- Net cash used in investing activities (998) ----------------- FINANCING ACTIVITIES Proceeds from sale of capital stock, net of share issuance costs ($50) 1,426 ----------------- Net cash provided by financing activities 1,426 ----------------- NET INCREASE IN CASH AND CASH EQUIVALENTS (327) CASH AND CASH EQUIVALENTS: Beginning of period 2,928 ----------------- End of period $ 2,601 =================================================================================================================== SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS: INVESTING ACTIVITIES Net assets of Ultimate Sports Publishing acquired for shares (750) Net assets of Sportsbuff acquired for shares (4,066) FINANCING ACTIVITIES Shares issued on acquisition of Ultimate Sports Publishing 750 Shares issued on acquisition of Sportsbuff 4,066 =================================================================================================================== Cash interest paid $ 4 Cash taxes paid - =================================================================================================================== The accompanying notes are an integral part of these consolidated financial statements. </TABLE>

INTERNET SPORTS NETWORK, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) For the three months ended June 30, 1999 (All dollar and share amounts in thousands, except per share data) =============================================================================== NOTE 1. SIGNIFICANT ACCOUNTING POLICIES PURCHASED INTANGIBLES AND GOODWILL Purchased intangibles consist primarily of software, licenses, customer lists, trademarks and contest agreements. Purchased intangibles of approximately $15,272 are stated net of total accumulated amortization of $1,887 at June 30, 1999 in the accompanying consolidated balance sheet. Purchased intangibles are being amortized on a straight-line basis principally over two years. Goodwill of approximately $5,473 is stated net of total accumulated amortization of $745 at June 30, 1999 in the accompanying consolidated balance sheet. Goodwill is being amortized on a straight-line basis principally over two years. STOCK-BASED COMPENSATION The Company has elected to follow Accounting Principles Board ["APB"] Opinion No. 25, "Accounting for Stock Issued to Employees", and related interpretations, in accounting for its employee stock options rather than the alternative fair value accounting allowed by SFAS No. 123, "Accounting for Stock-Based Compensation". APB No. 25 provides that the compensation expense relative to the Company's employee stock options is measured based on the intrinsic value of the stock option. SFAS No. 123 requires companies that continue to follow APB No. 25 to provide a pro forma disclosure of the impact of applying the fair value method of SFAS No. 123. SEGMENT AND GEOGRAPHIC INFORMATION The Company operates in one principal business segment across domestic and international markets. International sales, including export sales from the United States to Canada, represented approximately 23% of net sales for the three months ended June 30, 1999. No other foreign country or geographic area accounted for more than 10% of net sales in any of the periods presented. There were no transfers between geographic areas during the period ended June 30, 1999. Capital assets and purchased intangibles in the United States equal approximately $17,771. The remaining capital assets and purchased intangibles are in Canada. FOREIGN CURRENCY TRANSLATION The unit of measurement of the Company is the Canadian dollar while its reporting currency is the United States dollar. The assets and liabilities of the Canadian subsidiaries are translated using the exchange rate in effect at period end, and revenues and expenses are translated at the average rate during the period. Exchange gains or losses on translation of the Company's net equity investments in these subsidiaries are deferred as a separate component of other comprehensive income. The translation adjustments as at June 30, 1999 was insignificant. EQUIPMENT Equipment is recorded at cost. Amortization is provided over the estimated useful life of the asset using the declining balance basis at the following rates: Office equipment and furniture 20% Computer equipment 30%

NOTE 1. SIGNIFICANT ACCOUNTING POLICIES (CONT'D....) REVENUE RECOGNITION The Company earns revenue from membership and other fees received for Internet-based sports information and sports contest organization services. Membership fees are received prior to the beginning of a particular sport season or event and recorded as deferred income until recognized in income ratably over the season or upon completion of the event. Other fees received for Internet-based sports information and sports contest organization services are recognized in income ratably over the season or upon completion of the event. PRIZE AWARDS Members, as well as non-members, are entitled to enter into contests provided by the Company. Prizes are awarded upon completion of the sports season or event and are paid by the Company or the contest's sponsors. Prize awards are fixed in amount and determinable prior to commencement of the season or event and are expensed at the commencement of the season or event to which they relate. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company's financial instruments consist primarily of cash and cash equivalents, receivables, accounts payable, accrued liabilities, accrued prize commitments and accrued commission on stock issuance. It is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The carrying amounts of these current assets and liabilities approximates their fair values due to their immediate or short-term nature. INCOME TAXES Income taxes are accounted for utilizing the liability method. Deferred income taxes are provided to represent the tax consequence on future years for temporary differences between the financial reporting and tax basis of assets and liabilities. Deferred income taxes are measured utilizing enacted tax rates expected to be in effect in the years in which the temporary differences are expected to reverse. A valuation allowance has been provided for the total amount of deferred tax assets that would otherwise be recorded for income tax benefits primarily relating to operating loss carryforwards, as realization cannot be determined to be more likely than not. LOSS PER SHARE Basic loss per share excludes any dilutive effects of options and convertible debentures. Basic loss per share is computed using the weighted-average number of common shares outstanding during the period and includes common shares issued subsequent to the period end for which all consideration had been received prior to the period end and which no other contingencies existed. Diluted loss per share is equal to the basic loss per share as the effect of the stock options and convertible debentures is anti-dilutive. There are no other dilutive common stock equivalent shares outstanding during the period. Common stock equivalent shares are excluded from the computation if their effect is anti-dilutive.

NOTE 2. BUSINESS COMBINATIONS Effective June 22, 1999, the Company acquired certain assets of National Publisher Services consisting of the Ultimate Sports Publishing division. ("Ultimate Sports"). Ultimate Sports publishes annual sports magazines. Effective June 30, 1999, the Company acquired 100% of the shares of Innovation Partners Inc, (d/b/a Sportsbuff), ("Sportsbuff"). The business of Sportsbuff is to conduct and administer sports contest services for its clients. The transactions are summarized as follows: <TABLE> <CAPTION> =================================================================================================================== As at As at June 22, 1999, June 30, 1999, Ultimate Sports Sportsbuff ------------------------------------------------------------------------------------------------------------------- <S> <C> <C> Net assets acquired at fair values: Working capital $ 0 $ (290) Equipment 0 36 Purchased intangibles 1,610 5,320 Goodwill 0 2,128 Deferred income taxes 0 (2,128) ----------- ----------- $ 1,610 $ 5,066 ------------ ------------ Funded by: Cash $ 860 $ 1,000 Shares of common stock 750 4,066 ----------- ----------- $ 1,610 $ 5,066 =================================================================================================================== </TABLE> Purchased intangibles related to the acquisition of Sportsbuff consists of developed contest software, licenses, participant lists, customer lists, trademarks and domain names. Purchased intangibles related to the acquisition of Ultimate Sports consist of trademarks, customer contracts, client lists, and domain names. NOTE 3. EQUIPMENT Equipment consists of the following: <TABLE> <CAPTION> =================================================================================================================== MARCH 31, 1999 ------------------------------------------------------------------------------------------------------------------ <S> <C> Computer equipment $ 283 Office equipment and furniture 42 ------------- 325 Less accumulated depreciation (35) ------------- Equipment, net $ 290 =================================================================================================================== </TABLE>

NOTE 4. SHAREHOLDERS' EQUITY <TABLE> <CAPTION> COMMON STOCK COMMON NUMBER STOCK AND OF SHARES PAID-IN CAPITAL $ ------------------------------------------------------------------------------------------------------------------- <S> <C> <C> BALANCE MARCH 31, 1999 17,841 17,127 Shares issued for cash 843 1,476 Shares issued on acquisition of Sportsbuff 616 4,066 Shares issued on acquisition of Ultimate Sports 125 750 Deferred compensation related to stock options -- 1,277 Share issuance costs -- (50) ------------------------------------------------------------------------------------------------------------------- BALANCE JUNE 30, 1999 19,425 24,646 =================================================================================================================== </TABLE> STOCK OPTIONS Generally, options are granted by the Company's Board of Directors at an exercise price of not less than the fair market value of the Company's common stock at the date of grant. Options are generally granted with a term of five years from the date of issuance. Option vesting is varied ranging from the date of issuance to 2 years. STOCK OPTION ACTIVITY The following table summarizes the Company's stock option activity: <TABLE> =================================================================================================================== NUMBER OF WEIGHTED AVERAGE SHARES EXERCISE PRICE ------------------------------------------------------------------------------------------------------------------ <S> <C> <C> Balance at March 31, 1999 3,365 $ 1.52 Options granted and assumed 700 5.01 Options exercised 0 - ----- ---------- March 31, 1999 4,065 $ 2.12 =================================================================================================================== </TABLE> The following table summarizes information about options outstanding and options exercisable at June 30, 1999: <TABLE> <CAPTION> =================================================================================================================== OPTIONS OUTSTANDING OPTIONS EXERCISABLE ------------------------------------------------- -------------------------------- WEIGHTED AVERAGE OPTIONS REMAINING CONTRACTUAL OPTIONS WEIGHTED AVERAGE EXERCISE PRICE OUTSTANDING LIFE EXERCISABLE EXERCISE PRICE -------------- ----------- ------------ -------------------------------- <S> <C> <C> <C> <C> $ 0.40 575 4.7 years 575 $ 0.40 1.75 2,815 4.4 years 2,270 1.75 4.28 200 4.9 years 0 4.28 4.54 150 4.8 years 0 4.54 5.00 50 2.8 years 25 5.00 6.00 250 5.0 years 0 6.00 7.00 25 2.8 years 0 7.00 ---------------------------------------------------------------------------------------------------------- $ 0.40 - 7.00 4,065 4.5 years 2,870 $ 1.51 =================================================================================================================== </TABLE>

NOTE 4. SHAREHOLDERS' EQUITY (CONT'D...) DEFERRED COMPENSATION The Company recorded aggregate deferred compensation of $1,277 during the three months ended June 30, 1999, accumulated $1,746 since inception. The amount recorded represents the difference between the grant price and the fair value of the Company's common stock for shares subject to options granted during the period. Options granted below fair market value and the associated weighted average exercise price per share were 450 and $4.46 during the period. The amortization of deferred compensation is charged to operations over the vesting period of the options, which is 2 years. Total amortization recognized in the three months ending June 30, 1999 was $213. NOTE 5. RELATED PARTY TRANSACTIONS During the three months ended June 30, 1999, the Company paid or accrued approximately $46,000 of consulting fees for financial services provided by one of the Company's directors $16,000 of wages to the Company's Chief Executive Officer, who is also one of the Company's directors and approximately $15,000 of wages to the Company's Chief Operating Officer, who is also of the Company's directors. NOTE 6. COMMITMENTS The Company leases premises, office equipment and an automobile under the terms of operating leases. The leases provide for future minimum annual lease payments as follows: <TABLE> <S> <C> 2000 $ 187 2001 73 2002 18 2003 5 2004 and thereafter - --------------- $ 283 =============== </TABLE>

FINANCIAL STATEMENTS INNOVATION PARTNERS INC. DECEMBER 31, 1998

INDEPENDENT AUDITORS' REPORT To the Shareholders of INNOVATION PARTNERS INC. We have audited the accompanying balance sheet of INNOVATION PARTNERS INC. as of December 31, 1998, and the related accompanying statements of operations and comprehensive loss, shareholders' deficiency and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards in the United States. 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 our audit provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 1998 and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles in the United States. Toronto, Canada, "Ernst & Young LLP" September 3, 1999. Chartered Accountants

INNOVATION PARTNERS INC. BALANCE SHEET [Expressed in U.S. dollars] As at December 31 <TABLE> <CAPTION> 1998 $ --------------------------------------------------------------------------- <S> <C> ASSETS CURRENT Cash and cash equivalents 97,576 Accounts receivable 42,168 --------------------------------------------------------------------------- 139,744 Equipment, net [NOTE 3] 28,305 --------------------------------------------------------------------------- 168,049 =========================================================================== LIABILITIES AND SHAREHOLDERS' DEFICIENCY CURRENT Accounts payable 81,497 Accrued prizes payable 143,675 Deferred revenue 3,658 Loans payable 15,424 Stock repurchase agreement payable [NOTE 4] 14,400 --------------------------------------------------------------------------- 258,654 --------------------------------------------------------------------------- SHAREHOLDERS' DEFICIENCY Capital stock Authorized 9,000 common shares with par value of $1 Issued 8,190 common shares 8,190 Additional paid-in capital 36,764 Deficit (135,559) --------------------------------------------------------------------------- (90,605) --------------------------------------------------------------------------- 168,049 =========================================================================== </TABLE> THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

INNOVATION PARTNERS INC. STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS [Expressed in U.S. dollars] Year ended December 31 <TABLE> <CAPTION> 1998 $ ----------------------------------------------------------------------------- REVENUE 1,257,255 ----------------------------------------------------------------------------- <S> <C> EXPENSES Prize commitments and other direct costs 283,036 Wages and salaries 222,559 Advertising 128,747 Postage and production costs 97,278 Write-off of bad debts 69,437 Printing and reproduction 68,111 Travel and entertainment 53,578 Licensing fees 37,172 Depreciation 32,630 Telephone 32,253 Internet services 27,971 Interest and bank charges 4,945 General and administrative 272,882 ----------------------------------------------------------------------------- 1,330,599 ----------------------------------------------------------------------------- NET LOSS AND COMPREHENSIVE LOSS (73,344) ============================================================================= </TABLE> THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

INNOVATION PARTNERS INC. STATEMENT OF SHAREHOLDERS' DEFICIENCY [Expressed in U.S. dollars] Year ended December 31 <TABLE> <CAPTION> 1998 --------------------------------------------------------- ADDITIONAL CAPITAL PAID-IN STOCK CAPITAL DEFICIT TOTAL $ $ $ $ --------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> BALANCE, BEGINNING OF YEAR 9,000 57,554 (62,215) 4,339 Stock redemptions (810) (20,790) -- (21,600) Net loss for the year -- -- (73,344) (73,344) --------------------------------------------------------------------------------------------------- BALANCE, END OF YEAR 8,190 36,764 (135,559) (90,605) =================================================================================================== </TABLE> THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

INNOVATION PARTNERS INC. STATEMENT OF CASH FLOWS [Expressed in U.S. dollars] Year ended December 31 <TABLE> <CAPTION> 1998 $ ---------------------------------------------------------------------------- <S> <C> OPERATING ACTIVITIES Net loss (73,344) Adjustment to reconcile net loss to cash provided by operating activities: Depreciation 32,630 Changes in non-cash working capital balances related to operations Accounts receivable (42,168) Accounts payable (58,530) Accrued prizes payable 143,675 Deferred revenue 3,658 ---------------------------------------------------------------------------- CASH PROVIDED BY OPERATING ACTIVITIES 5,921 ---------------------------------------------------------------------------- INVESTING ACTIVITIES Purchase of equipment (41,427) ---------------------------------------------------------------------------- CASH USED IN INVESTING ACTIVITIES (41,427) ---------------------------------------------------------------------------- FINANCING ACTIVITIES Repayment of loans payable (48,493) Repayment of stock repurchase agreements payable (7,200) ---------------------------------------------------------------------------- CASH USED IN FINANCING ACTIVITIES (55,693) ---------------------------------------------------------------------------- NET DECREASE IN CASH DURING THE YEAR (91,199) Cash and cash equivalents, beginning of year 188,775 ---------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS, END OF YEAR 97,576 ============================================================================ SUPPLEMENTAL DISCLOSURE Cash interest paid 3,401 Cash taxes paid -- NON-CASH TRANSACTIONS Stock redemption agreements Capital stock (810) Additional paid in Capital (20,790) Stock redemption agreement payable 21,600 ============================================================================ </TABLE> THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

INNOVATION PARTNERS INC. NOTES TO FINANCIAL STATEMENTS [Expressed in U.S. dollars] 1. NATURE AND CONTINUANCE OF OPERATIONS Innovation Partners Inc., doing business as Sports Buff, was incorporated in 1993 under the laws of the State of Wisconsin and its principal business activities include conducting and administering sports contest services through the Internet and the newspaper media. 2. SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. CONCENTRATION OF CREDIT RISK Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of its holdings of cash held by deposit taking institutions. The Company manages its credit risk by depositing its cash in high-quality, regulated deposit taking institutions. LONG-LIVED ASSETS In accordance with Financial Accounting Standards Board ["FASB"] Statement of Financial Accounting Standard ["SFAS"] No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of", the carrying value of fixed assets and other long-lived assets is reviewed on a regular basis for the existence of facts or circumstances, both internally and externally, that may suggest impairment. To date, no such impairment has been indicated. Should there be an impairment in the future, the Company will measure the amount of the impairment based on discounted expected future cash flows from the impaired assets. The cash flow estimates that will be used will contain management's best estimates, using appropriate and customary assumptions and projections at the time. ADVERTISING COSTS The cost of advertising is expensed as incurred.

COMPREHENSIVE INCOME (LOSS) The Company adopted SFAS No. 130, "Reporting Comprehensive Income", which establishes standards for the reporting and display of comprehensive income and its components in the financial statements. There are no items of comprehensive income (loss) that require additional reporting. EQUIPMENT Equipment is recorded at cost less accumulated depreciation. Depreciation is provided over the estimated useful lives of the assets using the declining balance basis at the following annual rates: Office equipment and furniture 20% Computer equipment 30% REVENUE RECOGNITION The Company earns revenue from membership and other fees received for sports contest organization services. Membership fees are received prior to the beginning of a particular sport season or event and recorded as deferred income until recognized in income ratably over the season or upon completion of the event. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company's financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable and accrued prizes payable. It is management's opinion that the Company is not exposed to significant interest currency or credit risks arising from these financial instruments. The carrying values of these current assets and liabilities approximate their fair values due to their immediate or short-term nature. INCOME TAXES The Company is an S Corporation for corporate income tax purposes. Under this election, taxable income and tax attributes pass through the Company to the personal income tax returns of the shareholders. Accordingly, income taxes have not been recorded in the Company's financial statements for the year ended December 31,1998.

EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS New accounting pronouncements having relative applicability to the Company include Statements of Financial Accounting Standards No. 132, "Employers' Disclosures about Pensions and Other Post-retirement Benefits", effective for fiscal years beginning after December 15, 1998 and No. 133, "Accounting for Derivative Instruments and Hedging Activities", effective for fiscal years beginning after June 15, 2000. SFAS No. 132 revises employers' disclosures about pension and other post-retirement benefit plans. SFAS No. 133 requires that all derivative instruments be recorded on the balance sheets at their fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designed as part of a hedge transaction and, if it is, the type of hedge transaction. The Company does not expect that the adoption of SFAS Nos. 132 and 133 will have a material impact on its financial statements because the Company does not provide for pension or other post-retirement benefits, nor does it currently hold any derivative instruments. Adoption of these statements will not impact the Company's financial position, results of operations or cash flows and any effect will be limited to the form and content of disclosures. Additionally, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants issued Statement of Position 98-1, "Accounting for the Cost of Computer Software Developed or Obtained for Internal Use" and Statement of Position 98-5, "Reporting on the Costs of Start-up Activities", which are effective for fiscal years beginning after December 15, 1998. Adoption of these standards is not expected to have a material impact on the Company's financial position, results of operations or cash flows. 3. EQUIPMENT Equipment consists of the following: <TABLE> <CAPTION> 1998 $ ------------------------------------------------------------------------------ <S> <C> Computer equipment 96,143 Office equipment and furniture 13,853 ------------------------------------------------------------------------------ 109,996 Less accumulated depreciation 81,691 ------------------------------------------------------------------------------ EQUIPMENT, NET 28,305 ============================================================================== </TABLE>

4. STOCK REDEMPTION AGREEMENTS In August 1998, two shareholders elected to redeem all or a portion of their shares of capital stock. The Company purchased and immediately cancelled 810 shares of capital stock at a purchase price of $26.67 from the two shareholders. The proceeds were agreed to be repayable by the Company in twelve equal monthly installments. At December 31, 1998, $14,400 representing the final eight monthly payments of $1,800, pursuant to the stock redemption agreements was outstanding. 5. SUBSEQUENT EVENT Effective June 30, 1999, the Company was merged with ISN Wisconsin, with ISN Wisconsin being the surviving entity. ISN Wisconsin is a wholly-owned subsidiary of Internet Sports Network Inc. a Florida Corporation.

Pro Forma results include the results of operations for SportsBuff for the 3 month period ending June 30, 1999, as if the acquisition had occurred at the beginning of the period. The accompanying unaudited proforma consolidated statement of operations is presented for the quarter ended June 30, 1999 and gives effect to the acquisition as if it had occurred at April 1, 1999: PRO-FORMA STATEMENTS 3 MONTHS ENDED JUNE 30, 1999 <TABLE> <CAPTION> ISN Pro Forma As Reported Wisconsin Total Adjustments Note ProForma REVENUE $ 672,231 $ 237,938 $ 910,169 - $ 910,169 --------------------------------------------------------- --------------- <S> <C> <C> <C> <C> <C> EXPENSES Prize Commitments and other direct costs 241,473 276,178 517,650 - 517,650 Salaries and benefits 386,356 62,676 449,032 - 449,032 Consulting fees 220,031 5,370 225,401 - 225,401 Advertising 87,570 942 88,512 - 88,512 General and Administrative 138,026 62,380 200,407 - 200,407 Rent and Occupancy 23,108 6,900 30,008 - 30,008 Telephone 26,255 2,884 29,139 - 29,139 Legal and Accounting 21,633 4,549 26,182 - 26,182 Travel and Entertainment 186,244 10,242 196,487 - 196,487 Interest and Bank charges 4,053 1,520 5,573 - 5,573 --------------------------------------------------------- --------------- TOTAL EXPENSES 1,334,750 433,641 1,768,391 - 1,768,391 --------------------------------------------------------- --------------- Net Operating Income (Loss) (662,518) (195,703) (858,222) - (858,222) Depreciation 4,327 2,439 6,766 - 6,766 Amortization of Purchased Intangibles/Goodwill 1,805,379 - 1,805,379 931,040 A 2,736,419 Amortization of Stock Compensation 212,833 - 212,833 - 212,833 Acquisition Costs 51,404 - 51,404 - 51,404 --------------------------------------------------------- --------------- Net Income (Loss) before taxes (2,736,462) (198,142) (2,934,604) (931,040) (3,865,644) Deferred Income Tax Expense (Recovery) (509,046) - (509,046) (266,000) A (775,046) --------------------------------------------------------- --------------- NET INCOME (LOSS) (2,227,416) (198,142) (2,425,558) (665,040) (3,090,598) ========================================================= =============== Net Loss per Share (0.16) =============== Weighted Average Shares Outstanding 18,620,791 616,060 19,236,851 19,236,851 ========================================================= =============== </TABLE>

A. Pro Forma adjustments consist of the effects of amortizing the purchased intangibles and related goodwill on the acquisition of Sportsbuff from the start of the period. Amortization is being calculated on a straight line basis over two years.

FINANCIAL STATEMENTS INNOVATION PARTNERS INC. (Unaudited) JUNE 30, 1999

INNOVATION PARTNERS INC. BALANCE SHEET (UNAUDITED) [Expressed in U.S. dollars] As at June 30 <TABLE> <CAPTION> 1999 $ ----------------------------------------------------------------------------------------------------- <S> <C> ASSETS CURRENT Cash and cash equivalents 36,247 Accounts receivable 26,327 ----------------------------------------------------------------------------------------------------- 62,574 Equipment, net [NOTE 3] 35,694 ----------------------------------------------------------------------------------------------------- 98,268 ===================================================================================================== LIABILITIES AND SHAREHOLDERS' DEFICIENCY CURRENT Accounts payable 146,912 Accrued prizes payable 121,400 Loans payable 77,079 Stock repurchase agreement payable [NOTE 4] 7,200 ----------------------------------------------------------------------------------------------------- 352,591 ----------------------------------------------------------------------------------------------------- SHAREHOLDERS' DEFICIENCY Capital stock Authorized 9,000 common shares with par value of $1 Issued 8,190 common shares 8,190 Additional paid-in capital 36,764 Deficit (299,277) ----------------------------------------------------------------------------------------------------- (254,323) ----------------------------------------------------------------------------------------------------- 98,268 ===================================================================================================== </TABLE> THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

INNOVATION PARTNERS INC. STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED) [Expressed in U.S. dollars] Six months ended June 30 <TABLE> <CAPTION> 1999 $ ----------------------------------------------------------------------------------------------------- <S> <C> REVENUE 382,889 ----------------------------------------------------------------------------------------------------- EXPENSES Prize commitments and other direct costs 142,276 Wages and salaries 135,872 Advertising 97,274 Postage and production costs 24,732 Write-off of bad debts 12,987 Printing and reproduction 14,593 Travel and entertainment 13,693 Licensing fees 10,900 Depreciation 4,154 Telephone 6,186 Internet services 6,784 Interest and bank charges 876 General and administrative 76,280 ----------------------------------------------------------------------------------------------------- 546,607 ----------------------------------------------------------------------------------------------------- NET LOSS AND COMPREHENSIVE LOSS (163,718) ===================================================================================================== </TABLE> THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

INNOVATION PARTNERS INC. STATEMENT OF SHAREHOLDERS' DEFICIENCY (UNAUDITED) [Expressed in U.S. dollars] Six months ended June 30 <TABLE> <CAPTION> 1999 ---------------------------------------------------------- ADDITIONAL CAPITAL PAID-IN STOCK CAPITAL DEFICIT TOTAL $ $ $ $ ----------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> BALANCE, BEGINNING OF YEAR 8,190 36,764 (135,559) (90,605) Stock redemptions -- -- -- -- Net loss for the year -- -- (163,718) (163,718) ----------------------------------------------------------------------------------------------------- BALANCE, END OF YEAR 8,190 36,764 (299,277) (254,323) ===================================================================================================== </TABLE> THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

INNOVATION PARTNERS INC. STATEMENT OF CASH FLOWS (UNAUDITED) [Expressed in U.S. dollars] Six months ended June 30 <TABLE> <CAPTION> 1999 $ ----------------------------------------------------------------------------------------------------- <S> <C> OPERATING ACTIVITIES Net loss (163,718) Adjustment to reconcile net loss to cash provided by operating activities: Depreciation 4,154 Changes in non-cash working capital balances related to operations Accounts receivable 15,841 Accounts payable 65,415 Accrued prizes payable (22,275) Deferred revenue (3,658) ----------------------------------------------------------------------------------------------------- CASH PROVIDED BY OPERATING ACTIVITIES (104,241) ----------------------------------------------------------------------------------------------------- INVESTING ACTIVITIES Purchase of equipment (11,543) ----------------------------------------------------------------------------------------------------- CASH USED IN INVESTING ACTIVITIES (11,543) ----------------------------------------------------------------------------------------------------- FINANCING ACTIVITIES Increase in loans payable 61,655 Repayment of stock repurchase agreements payable (7,200) ----------------------------------------------------------------------------------------------------- CASH USED IN FINANCING ACTIVITIES 54,455 ----------------------------------------------------------------------------------------------------- NET DECREASE IN CASH DURING THE YEAR (61,329) Cash and cash equivalents, beginning of year 97,576 ----------------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS, END OF YEAR 36,247 ===================================================================================================== SUPPLEMENTAL DISCLOSURE Cash interest paid 1,200 Cash taxes paid -- ----------------------------------------------------------------------------------------------------- NON-CASH TRANSACTIONS None ===================================================================================================== </TABLE> THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

INNOVATION PARTNERS INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) [Expressed in U.S. dollars] Six months ending June 30, 1999 1. NATURE AND CONTINUANCE OF OPERATIONS Innovation Partners Inc., doing business as Sports Buff, was incorporated in 1993 under the laws of the State of Wisconsin and its principal business activities include conducting and administering sports contest services through the Internet and the newspaper media. 2. SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. CONCENTRATION OF CREDIT RISK Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of its holdings of cash held by deposit taking institutions. The Company manages its credit risk by depositing its cash in high-quality, regulated deposit taking institutions. LONG-LIVED ASSETS In accordance with Financial Accounting Standards Board ["FASB"] Statement of Financial Accounting Standard ["SFAS"] No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of", the carrying value of fixed assets and other long-lived assets is reviewed on a regular basis for the existence of facts or circumstances, both internally and externally, that may suggest impairment. To date, no such impairment has been indicated. Should there be an impairment in the future, the Company will measure the amount of the impairment based on discounted expected future cash flows from the impaired assets. The cash flow estimates that will be used will contain management's best estimates, using appropriate and customary assumptions and projections at the time. ADVERTISING COSTS The cost of advertising is expensed as incurred. 1

COMPREHENSIVE INCOME (LOSS) The Company adopted SFAS No. 130, "Reporting Comprehensive Income", which establishes standards for the reporting and display of comprehensive income and its components in the financial statements. There are no items of comprehensive income (loss) that require additional reporting. EQUIPMENT Equipment is recorded at cost less accumulated depreciation. Depreciation is provided over the estimated useful lives of the assets using the declining balance basis at the following annual rates: Office equipment and furniture 20% Computer equipment 30% REVENUE RECOGNITION The Company earns revenue from membership and other fees received for sports contest organization services. Membership fees are received prior to the beginning of a particular sport season or event and recorded as deferred income until recognized in income ratably over the season or upon completion of the event. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company's financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable and accrued prizes payable. It is management's opinion that the Company is not exposed to significant interest currency or credit risks arising from these financial instruments. The carrying values of these current assets and liabilities approximate their fair values due to their immediate or short-term nature. INCOME TAXES The Company is an S Corporation for corporate income tax purposes. Under this election, taxable income and tax attributes pass through the Company to the personal income tax returns of the shareholders. Accordingly, income taxes have not been recorded in the Company's financial statements for the six months ended June 30, 1999. 2

EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS New accounting pronouncements having relative applicability to the Company include Statements of Financial Accounting Standards No. 132, "Employers' Disclosures about Pensions and Other Post-retirement Benefits", effective for fiscal years beginning after December 15, 1998 and No. 133, "Accounting for Derivative Instruments and Hedging Activities", effective for fiscal years beginning after June 15, 2000. SFAS No. 132 revises employers' disclosures about pension and other post-retirement benefit plans. SFAS No. 133 requires that all derivative instruments be recorded on the balance sheets at their fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designed as part of a hedge transaction and, if it is, the type of hedge transaction. The Company does not expect that the adoption of SFAS Nos. 132 and 133 will have a material impact on its financial statements because the Company does not provide for pension or other post-retirement benefits, nor does it currently hold any derivative instruments. Adoption of these statements will not impact the Company's financial position, results of operations or cash flows and any effect will be limited to the form and content of disclosures. Additionally, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants issued Statement of Position 98-1, "Accounting for the Cost of Computer Software Developed or Obtained for Internal Use" and Statement of Position 98-5, "Reporting on the Costs of Start-up Activities", which are effective for fiscal years beginning after December 15, 1998. Adoption of these standards is not expected to have a material impact on the Company's financial position, results of operations or cash flows. 3. EQUIPMENT Equipment consists of the following: <TABLE> <CAPTION> 1999 $ ----------------------------------------------------------------------------------------------------- <S> <C> Computer equipment 98,686 Office equipment and furniture 13,853 ----------------------------------------------------------------------------------------------------- 112,539 Less accumulated depreciation 85,845 ----------------------------------------------------------------------------------------------------- EQUIPMENT, NET 35,694 ===================================================================================================== </TABLE> 3

4. STOCK REDEMPTION AGREEMENTS In August 1998, two shareholders elected to redeem all or a portion of their shares of capital stock. The Company purchased and immediately cancelled 810 shares of capital stock at a purchase price of $26.67 from the two shareholders. The proceeds were agreed to be repayable by the Company in twelve equal monthly installments. At June 30, 1999, $7,200 representing the final four monthly payments of $1,800, pursuant to the stock redemption agreements was outstanding. 5. SUBSEQUENT EVENT Effective June 30, 1999, the Company was merged with ISN Wisconsin, with ISN Wisconsin being the surviving entity. ISN Wisconsin is a wholly-owned subsidiary of Internet Sports Network Inc. a Florida Corporation. 4


EXHIBIT 16 LETTER FROM DAVIDSON & COMPANY

[Letterhead] October 21, 1999 SECURITIES AND EXCHANGE COMMISSION 450 Fifth Street, NW Washington, DC USA 20549 Dear Sirs: RE: INTERNET SPORTS NETWORK INC. (THE "COMPANY") We were the previous principal auditors of the above Company. On June 25, 1998, we reported on the financial statements of the Company for the period from inception to April 30, 1998, and subsequently issued an audit opinion under generally accepted auditing standards in the United States with an explanatory paragraph as to the removal of the going concern certainty without reservation or reporting conflict which is dual dated as of June 25, 1998 and March 31, 1999. On May 19, 1999, we were dismissed as auditors for the Company. We have reviewed the second amendment to the Form 10 registration statement (the "Form 10") filed by the Company and agree with the statements disclosed by the Company under item 14, Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. There was no adverse opinion or disclaimer of opinion. The opinion was not qualified due to uncertainty, audit scope or accounting principles. We consent to the use of our report and to the reference to our firm in the registration statement on Form 10. Yours very truly, "DAVIDSON & COMPANY" DAVIDSON & COMPANY Chartered Accountants cc: Internet Sports Network, Inc.