HOUSTON INTERWEB DESIGN INC (Form: 10KSB, Received: 11/22/2000 14:07:37)

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-KSB
FOR ANNUAL AND TRANSITION REPORTS PURSUANT
TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(MARK ONE)

[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE FISCAL YEAR ENDED JULY 31, 2000

[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD

COMMISSION FILE NUMBER 000-67871

HOUSTON INTERWEB DESIGN,INC.
(Exact Name of Registrant as Specified in Its Charter)

                  TEXAS                                76-0532709
     (State or other Jurisdiction of                (I.R.S. Employer
      Incorporation or Organization)               Identification No.)

1770 ST. JAMES PLACE, SUITE 420, HOUSTON,                 77056
                  TEXAS                                (Zip Code)
 (Address of Principal Executive Offices)

                               (713) 627-9494

Registrant's Telephone Number, Including Area Code

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

COMMON STOCK, NO PAR VALUE PER SHARE
(Title of Class)

Indicate by check mark whether the Company (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_]

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

Issuer had revenues of $1,077,236 for the 12 months ended July 31, 2000.

As of July 31, 2000 registrant had 18,265,050 shares of Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None.

HOUSTON INTERWEB DESIGN,INC.

ANNUAL REPORT ON FORM 10-KSB
FOR THE FISCAL YEAR ENDED JULY 31, 2000

PART I.....................................................................   3
  ITEM 1. BUSINESS.........................................................   3
  ITEM 2. PROPERTIES.......................................................  22
  ITEM 3. LEGAL PROCEEDINGS................................................  22
  ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..............  23

PART II....................................................................  23
  ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER
          MATTERS..........................................................  23
  ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS............................................  24
  ITEM 7. FINANCIAL STATEMENTS.............................................  26
  ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE.............................................  26

PART III...................................................................  26
  ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.....  26
  ITEM 10. EXECUTIVE COMPENSATION..........................................  27
  ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..  28
  ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................  28
  ITEM 13. EXHIBITS AND REPORT ON FORM 8-K.................................  29

SIGNATURES.................................................................  30

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Annual Report on Form 10-KSB constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements, other than statements of historical facts included in this Annual Report, regarding our strategy, future operations, financial position, estimated revenues, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this Annual Report, the words "will", "believe", "anticipate", "intend", "estimate", "expect", "project" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We cannot guarantee future results, levels of activity, performance or achievements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or strategic investments. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including the risks described in Part I "Business--Risk Factors", in Part II "Management's Discussion and Analysis" and elsewhere in this Annual Report. We do not assume any obligation to update any of the forward-looking statements we make.

PART I

ITEM 1. Business

RECENT DEVELOPMENTS

In August 2000, Interweb launched tonicandteas.com the first phase of a co- operation agreement with the State Administration of Health and Traditional Chinese Medicine (TCM) an Agency of the PRC. The company plans on completing phases 2 and 3 during the upcoming year.

In August 2000, Interweb launched listentochina.com an English version of the PRC government approved MP3 site, Beijing Artists On Line, for the promotion and distribution of Chinese music worldwide.

In October 2000, Interweb settled two of its three lawsuits filed against AMP3.com, LLC an interactive music Internet company. See ITEM 3 for more explanation.

In October 2000, Interweb purchased the remaining 50% of its Affiliate company Cyber-pitch.com, Inc. for stock and royalties.

GENERAL

Houston Interweb Design, Inc. ("Interweb") is a software developer and e- services consultancy providing Internet strategy consulting and sophisticated Internet-based solutions to International companies and startup businesses. We help our clients define Internet strategies to improve their competitive position and we design, architect, develop and implement solutions to execute those strategies. These solutions focus on large-scale and complex business-to- consumer and business-to-business electronic commerce, digital customer relationship management, supply chain optimization, electronic markets and Internet portals.

We believe that our main strength is our ability to leverage pre-existing technology to deliver high quality solutions, primarily on a fixed-price, fixed-time frame basis, through a rapid, effective and integrated process. Our services include digital business strategy development; experience modeling; creative design and technology development and systems integration.

We provide end-to-end solutions to our clients using multidisciplinary teams composed of business/legal strategists, creative specialists (graphic designers and hardcode programmers), technology professionals and program managers. We deliver our solutions primarily through five industry business units:

legal/medical/financial services; media, entertainment and travel; manufacturing, retail and distribution; political and government; and international services. Using this industry alignment helps us accurately define and deliver tailored solutions that effectively address the market dynamics and business opportunities that our clients face. We have been providing Internet solutions for over four years and have our main office in Houston, Texas and licensee/joint ventures in Mexico, China, Brazil, Panama, Colombia and Belgium/EU.

Our executive offices are located at 1770 St. James Place, Suite 420, Houston, Texas, 77056 and our telephone number is (713) 627-9494. Our stock is traded on the OTC Bulletin Board under the symbol "HITD". Our Internet address is http://www.houston-interweb.com. Unless the context otherwise requires, references in this Annual Report on Form 10-KSB to "Interweb", "we", "us" or "our" refer to Houston Interweb Design, Inc. and its subsidiaries.

INTERWEB'S SOLUTION

Our experience in managing start-up initiatives, our multidisciplinary approach to delivering solutions and our in-depth industry knowledge and partnership approach with clients enable us to rapidly deliver Internet strategies and solutions that help our clients transform or launch their businesses cost efficiently in a very short time period.

Large-Scale Program Management. Our methodology and program management approach builds upon over four years of experience implementing Internet solutions. During this time, the size and complexity of our Internet solutions have increased and we expect this trend to continue. During 2000, several of our Internet projects involved 8 or more team members. In addition, we often manage the entire client initiative, which requires the coordination of numerous third parties such as content providers, technology vendors, infrastructure experts and telecommunications firms. We believe our significant experience in managing large-scale, complex initiatives is essential to achieving high levels of client satisfaction and repeat business.

Multidisciplinary Approach. We deliver end-to-end Internet solutions by combining our four core services: digital business/legal strategy; creative design; technology development and systems integration. Multidisciplinary teams are able to quickly communicate new information, identify potential issues and implement solutions. Our integrated approach enables our clients to utilize a single Internet professional services firm to manage the delivery of an end-to- end solution.

In-Depth Industry Knowledge. We have extensive knowledge and experience in five industry sectors: legal/medical/financial services; media, entertainment and travel; manufacturing, retail and distribution; political and government; and international services. We believe this focus helps us accurately define and deliver tailored solutions that effectively address the market dynamics and business opportunities that our clients face. As the market for Internet professional services becomes more sophisticated, we believe that clients will increasingly demand in-depth industry expertise.

Partnering with Clients. Our culture and approach has always been based on working with our clients to understand and achieve their business objectives. Client representatives play an active and important role throughout the engagement and are integrated into our project teams. This client involvement helps ensure that the solutions accurately reflect our clients' objectives and have the support of critical client constituencies. In most cases, we further align our interests with our clients' interests by entering into fixed-price, fixed-time frame contracts. Occasionally we enter into bonus arrangements with our clients. These types of contracts and arrangements create incentives for us to complete the project within budgeted timeframes and in a cost-effective manner.

Rapid Delivery of Relevant Solutions. Rapid time-to-market is crucial to the effectiveness of an Internet solution. Each element of our solution helps reduce the time required to complete our client engagements and ensures the creation and delivery of strategies and solutions that are responsive to our clients' needs. Our four years of software development have created a large group of tools and subprograms proprietary to the company

that allow us to specifically tailor larger Internet solutions to each individual client. By delivering our services in an integrated fashion, we reduce time-consuming and costly handoffs of project tasks. Our experience in delivering large-scale projects gives us the program management expertise to quickly coordinate numerous aspects of complex engagements. Our industry knowledge reduces our learning curve on new engagements, helps us to develop industry best practices and allows us to implement solutions more efficiently. Substantial client involvement reduces delays caused by difficulties in obtaining critical information and resources from our client and helps ensure that the solution addresses our client's needs.

SERVICES

We provide the wide range of services required to identify, design, develop and deploy Internet strategies and solutions for International companies and startup businesses. Our services enable rapid delivery of complex solutions for business-to-consumer and business-to-business electronic commerce, digital customer relationship databases, supply chain optimization, electronic markets and Internet portals. The following descriptions highlight our core services.

. Digital Business/Legal Strategy. Our digital business/legal strategy development services enable our clients to launch, or transform their existing business into, Internet-based businesses. We help our clients define their Internet strategy, including immediate and long-term objectives for their customers, brands, business models and organizations. We also work with clients to develop or change management practices that help align their organizational structure and processes with their Internet strategies.

. Creative Design. We have extensive experience in developing visual and interactive content and creating electronic multimedia experiences that enhance and extend our clients' relationships with their customers. Our creative design services assess and analyze our clients' existing brands, identify opportunities and provide user-focused solutions that are appropriate and relevant to the customer-controlled Internet environment. We believe that this helps our clients build sustainable, long-term relationships with their customers.

. Technology Development and Systems Integration. Using our extensive in- depth knowledge of the Internet and emerging technologies, we translate strategic, creative and business requirements into sophisticated and functional technology platforms in short timeframes. Recognizing that technical infrastructure is the foundation for clients' Internet solutions, we develop infrastructures that are reliable, robust, secure and scalable. Our core technology services include the design, architecture and development of electronic commerce web sites, digital customer relations databases, supply chain inter-relational systems, electronic markets, auctions and exchanges and Internet portals.

. Integrated Engagement Leadership. The execution of large-scale, multidisciplinary Internet solutions in a fixed timeframe requires significant expertise in project and program management. Our integrated engagement leadership approach enables us to effectively manage the relationships, complexities and risks associated with large-scale, multidisciplinary engagements. This allows us to plan, scope, manage and deliver projects in a coordinated manner. We believe that our integrated engagement leadership results in more successful engagements and enhances client satisfaction with the entire process.

Our proprietary software provides a framework of functions, tools and multimedia products that we use to deliver our services. We believe that our proprietary code benefits our clients by providing an ability for us and our clients to work together efficiently and expeditiously as a team to understand and anticipate specific client needs; work effectively in short timeframes to meet deadlines; set clearly-defined prices for each phase of a project; and successfully manage the project and flow of information through each phase of the project.

DIVISIONS

Custom Web Site Development

The company develops high-end custom web sites, encompassing original graphics and innovative layouts. The company's business strategy is to develop and design web sites that achieve growth and organizational optimization for the company's customers by creating more efficient navigation, utilizing interactive databases, and by using proprietary technology to increase the likelihood of being found at or near the top of search engines. Management believes that its web site pricing is very competitive. The interactive databases enable customers to self-manage their web sites internally. Many of the company's proprietary scripting programs are adapted and included in individual web sites, allowing customers to manage, modify, and maintain their web sites with little or no programming knowledge. The company currently hosts over two hundred and fifty custom web sites which it has developed.

Siteblazer.com

The focus of SiteBlazer.com is to allow companies to build customized, updateable web sites, within minutes, at a reduced cost. SiteBlazer(TM) web sites are built with proprietary codes and automatically submitted to major search engines which allows the sites to be found near the top of major search engines under relevant keywords.

Currently the company hosts over 40,000 sites built utilizing SITEBLAZER(TM) technology. In addition to marketing web site services to individual companies, the company focuses on targeting affinity groups and offers an affinity group an efficient and cost effective means of representing its members on the Internet.

Siteblazer Network--Siteblazer.net

The SITEBLAZER(TM) network is a business-to-business and business-to- consumer web guide/search engine designed to increase sales for its customers. The SiteBlazer.com program allows a business to have a stand-alone customized web site and still be part of the SITEBLAZER(TM) network. The company believes that the SITEBLAZER(TM) network contains up-to-date information, as each web site must pay a monthly hosting fee in order to continue to be on the SITEBLAZER(TM) network. The company is populating the SITEBLAZER(TM) network with SiteBlazer.com web sites and expects to launch the SITEBLAZER(TM) network as a search engine. At the time of launch, the SITEBLAZER(TM) network will allow non-SiteBlazer.com web sites to be included in the SITEBLAZER(TM) network search engine for a nominal fee. Multiple SiteBlazer(TM) sites can be developed and submitted to search engines under different keywords to drive traffic to a company's main site. Several of our customers have multiple SiteBlazer(TM) sites.

Interactive Databases

The company has developed proprietary technology involving interactive databases. The interactive databases enable customers to self-manage their web sites internally. Many of the company's proprietary scripting programs are adapted and included in individual web sites, allowing customers to manage and modify their web sites. The company's interactive databases offer a cost- effective alternative to products and services offered by its competitors, and have been successfully implemented in a wide range of applications and by Fortune 500 companies, like Union Carbide and CSX. In many cases our customized interactive databases are less expensive, more user-friendly and easier to alter than off the shelf products.

PoliticalNet.Com and PoliticalTeam.com

PoliticalNet.Com and PoliticalTeam.com (Targeted Effective Advertising Medium) are one-stop political campaign sites that provide politicians, organizations and political groups a full range of Internet as well as brick and mortar products. Some products sold include automated dialers, automated phone calls, Cyber-Pitch(TM) cards, print graphic design, web site design, fax blasting and voter data. Currently the company hosts over 236

web sites for candidates and organizations. PoliticalNet.com utilizes SiteBlazer(TM) technology to deliver mass produced cost effective web sites. PoliticalNet recently licensed its site building tool to Politics On-line, and a Spanish version with specialized templates has been licensed to Electorales.com. The company is currently developing versions for the EU.

TonicsandTeas.com

In August 2000, the company launched phase one of its traditional Chinese Medicine Portal www.TonicsandTeas.com. The site contains herbal remedies prescribed for over 5000 years in China for the 40 most common ailments. Interweb has outsourced all fulfillment and billing through a strategic partnership. Phase two of the portal will include launching a large searchable database of information on Traditional Chinese Medicine (TCM) and an area for experts to exchange research and findings. Phase three will incorporate the production, manufacture and distribution of large quantities of herbs, remedies and natural pharmaceuticals in conjunction with Chinese companies and the PRC Agency TCM.

The government of China agreed to co-operate with the company on promoting its TCM industry. The PRC government will provide access to its vast databases of information, existing relationships with manufacturers as well as thousands of years old know-how in applying these remedies to every day medical conditions. China has over 2,600 TCM hospitals, with over 1,000 of those focusing on TCM-related research. There are also 28 TCM medical unions and over 2,000 factories producing TCM pharmaceuticals--many of which have recently been introduced in the West as herbal formulas and remedies, but used in China for treating various ailments over 5,000 years.

ListenToChina.com

Using its proprietary technology, the company launched ListenToChina.com in August 2000. ListenToChina.com is the first MP3 music site approved by the Chinese government to promote its thousands of artists worldwide. As a part of the cooperation agreement of Beijing Artists Online Co. Ltd., ListenToChina.com is the first phase of the project. This site is owned and operated solely by Interweb.

The joint venture, Beijing Artists Online Co. Ltd., is designed to provide Chinese artists with self-designed and updateable web pages that promote Chinese music, and allow listeners to download music of independent and professional Chinese artists. After the successful launch of www.ListenToChina.com, the joint venture will design a sister site in Chinese hosted in Beijing. Once the web presence in English and Chinese Languages is established, the joint venture will engage in the web site related music production, distribution, sales and advertising.

Cyber-Pitch.com(TM)

In October 2000 the company acquired 100 percent of Cyber-Pitch.com(TM). Cyber-Pitch.com focuses on design, marketing and production of interactive CD- ROM and writeable CD cards that when combined with InterWeb's pending business process technology takes marketing and advertising of products to a new level. Currently the company has built the prototype to be used by sports organizations. Cyber-Pitch.com(TM) is currently negotiating with several sports organizations to obtain access to sporting events and to use sports organizations' trademarks and logos on the CD cards. The CD cards are business card size and come in a variety of shapes (baseball, basketball, football, soccer, hockey etc.). Each card is a collectible item highlighting the accomplishments of a specific player. These cards are distributed for free at stadiums and other events and provide advertisers with perpetual advertising. The cards also allow holders to join a player specific or team specific fan club by signing up. These cards, in conjunction with the "e-fan" club membership, allow owners of sports teams to fill stadiums and increase concession sales with special offers. Fans also obtain access to special events and receive special discounts on future events and memoribilia.

Online Auction System

The company has developed an online auction system, which allows traditional sealed bids or bids that can be viewed online. The online auction system allows dealers to view and bid on items online with products being sold to the highest bidder. The system is available for immediate delivery upon customer's requests.

The company has developed the following applications: Online Accounting Financial Package, Campus Network, Hunting and Fishing.Com and Legal Net. During the 1999 fiscal year no activities took place in regards to the above applications. These applications are currently seeking strategic partners with specialized knowledge or expertise and existing relationships in each specific field prior to launch.

AFFILIATES

OTCNN.com--Over the Counter News Network

The company holds an equity interest of twenty percent (20%) in OTCnn.com. OTCnn.com is a daily online news source focusing exclusively on providing unbiased daily news coverage of the Over-The-Counter Bulletin Board (OTCBB) stock market. OTCnn's business model is not based on paid editorial content, making the unbiased news source similar to other leading sites such as CNBC.com, CNN.com and CBS MarketWatch.com.

Brazil InterWeb Design

The company holds an equity interest of thirty percent (30%) in Brazil InterWeb Design (BID). BID is licensed to use several software products developed by Interweb. BID leverages Houston Interweb's existing SiteBlazer(TM) technology with regional marketing expertise to provide web site design, hosting and maintenance to the Internet users in the growing Brazilian and Latin American markets. The company has a portfolio of complex Internet applications that it has designed for its U.S. customers. These applications and platforms can be used as such or with only minor modifications in Brazil, thus increasing BID's profit margins and its overall profitability.

Beijing Artists Online Co. Ltd

Beijing Artists Online Co. Ltd is a joint venture between Houston Interweb Design, Inc., Hainan Dingshen Investment Co. Ltd. and China Culture Information Net (PRC government entity). Interweb owns thirty three percent (33%) of the venture. Under the agreement, Chinese partners are responsible for management of the operation including music production, marketing and distribution within the PRC.

NetTrade Online, L.L.C.

The company continues to host and maintain NetTrade and is in negotiations to purchase the remaining interest. The Shanghai Chemical exchange has expressed interest in using a similar product for the 50,000+ chemical distributors in China.

ARFRA

The company owns a 30% interest in ARFRA, an Internet provider of pet medical records. ARFRA provides documented medical records detailing a pet's medical history in the event that an unexpected medical emergency should arise, or simply to provide a more organized record of a pet's medical history.

Commerce Partners

The company has several commerce partners that are licensed to market its products or refer customers to the company in exchange for a portion of collected revenues. Present commerce partners are Ehome.com, Erealty.com, Houston Chronicle, Politicsonline.com and electorales.com.

SALES AND MARKETING

The role of Interweb's marketing program is to create and sustain preference and loyalty for Interweb as a leading e-services/internet integrator. Interweb markets its products and services through marketing staff using both telemarketing, direct sales and licensee relationships. The corporate marketing Department has overall responsibility for communications, advertising, public relations and our web site.

Our marketing personnel undertake a variety of marketing activities, including sponsoring industry specific events, sponsoring and participating in targeted conferences and holding private meetings with individual companies. Our sales professionals are trained in all available products and services the company offers. Various media advertising and product and services listings in appropriate directories supplement direct sales efforts. We believe that the industry focus of our sales professionals and our business unit marketing personnel enhances their knowledge and expertise in these industries and will generate additional client engagements. The company has built and designed numerous web sites and internet solutions for several companies/firms in each of our industry groups. Familiarity with specialized solutions tailored to each of these groups allows us to leverage solutions already developed and easily complete projects.

We generally soft bid a project and work with our clients to develop and understand their needs. We then enter into written commitment letters or a hard bid with our clients after their goals and objectives have been clearly defined. These commitment letters typically contemplate that Interweb and the client will subsequently enter into a more detailed agreement, although the client's obligations under the commitment letter are not conditioned upon the execution of the later agreement. These written commitments and subsequent agreements contain varying terms and conditions specific to each client.

EMPLOYEES

Our key values are creating long term value for our clients; client-focused delivery; long-term relationships; creativity; openness; and professional growth.

To encourage the achievement of these values, we reward teamwork and promote individuals who demonstrate these values. We believe that our growth and success are attributable in large part to the high caliber of our employees and our commitment to maintain the values on which our success has been based.

There is significant competition for employees with the skills required to perform the services we offer. We believe that we have been successful in our efforts to attract and retain employees, in part because of our emphasis on cross-training, professional growth and our employee stock option plan. We intend to continue to recruit, hire and promote employees who share our values.

As of November 1, 2000, we had 21 full-time employees, comprised of 10 project personnel, 5 employees in general and administration and 6 employees in sales and marketing. None of our employees are subject to a collective bargaining agreement. We have entered into non-disclosure and non-competition agreements with our key personnel which provide that upon termination of employment with the company for any reason, the individual will not compete with the company for 2 years. We believe the non-compete covenants comply with state law, however the company can provide no assurances that a state court may determine not to enforce or only partially enforce such covenants. We believe that we have good relationships with our employees.

COMPETITION

The markets for the services we provide are highly competitive. We believe that we currently compete principally with strategy consulting firms, Internet professional services firms, systems integration firms, technology vendors and internal information systems groups. Many of the companies that provide services in our markets have significantly greater financial, technical and marketing resources than we do and generate greater revenues and have greater name recognition than we do. In addition, there are relatively low barriers to entry into our markets and we have faced, and expect to continue to face, competition from new entrants into our markets.

We believe that the principal competitive factors in our markets include:
ability to integrate strategy, experience modeling, creative design and technology services; quality of service, speed of delivery and price; industry knowledge; sophisticated project and program management capability; and Internet technology expertise and talent.

We believe that we compete favorably when considering these factors and that our extensive experience in managing large-scale initiatives, multidisciplinary approach to delivering solutions, in-depth industry knowledge and partnership approach with clients distinguish us from our competitors.

RESEARCH AND DEVELOPMENT

The company develops and markets a variety of Internet related products and services, as well as a number of database software technologies. These industries are characterized by rapid technological development. The company believes that its future success will largely depend upon its ability to continue the enhancement of its existing products and services and the development of cutting edge products and services which complement existing ones. To date, all research and development activities have been charged to customers and recorded as "Cost of Revenues" on our income statement. In order to respond to rapidly changing competitive and technological conditions, the company expects to incur significant research and development expenses during the initial development phase of new products and services as well as on an on- going basis with established products.

INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS

We rely upon a combination of trade secrets, nondisclosure and other contractual arrangements, and copyright and trademark laws, to protect our proprietary rights. We enter into confidentiality agreements with our employees, generally require that our consultants and clients enter into such agreements, and limit access to and distribution of our proprietary information. There can be no assurance that the steps we take in this regard will be adequate to deter misappropriation of our proprietary information or that we will be able to detect unauthorized use and take appropriate steps to enforce our intellectual property rights.

Our business involves the development of technology solutions for specific client engagements. Ownership of these solutions is the subject of negotiation and is frequently assigned to the client, although we may retain a license for certain uses. Some clients have prohibited us from marketing the solutions developed for them for specified periods of time or to specified third parties and there can be no assurance that clients will not demand similar or other restrictions in the future. Issues relating to the ownership of and rights to use solutions can be complicated and there can be no assurance that disputes will not arise that affect our ability to resell or reuse such solutions.

Interweb currently has two patents pending, three additional patents being prepared and sixteen trademarks pending. The two pending patents are System and Method for Downloading Files filed on January 14, 2000 and Method of Disseminating Information and Data Collection filed on May 2, 2000. The sixteen pending trademarks are Jingle Banner(TM), Jingle(TM), Jingle Banner and Design(TM), SiteBlazer Network and Design(TM), Siteblazer Network(TM), SiteBlazer(TM) (International), Single Jingle(TM), PoliticalNet.com(TM), OTCNews.net(TM), OTCnn.com(TM), OTCnn.net(TM), OTCnewsnetwork.net(TM), OTC News Network, Inc.(TM), LegalNet(TM), LegalNet.com(TM), PoliticalTeam.com & Design(TM). The company believes that these patents and trademarks will become a valuable part of its intellectual property in the future.

The company pursues the registration of its trademarks in the United States and internationally. The company's application for the trademark of SITEBLAZER(TM) was approved for publication on November 5, 1999. The company has applied for the registration of the service mark and trademark SITEBLAZER(TM). The company is applying for a European Community Trademark for international protection of SITEBLAZER(TM) in every country in the European Community. Effective trademark, service mark, copyright and trade secret protection may not be available an every country in which the company's services are distributed or made

available through the Internet, and policing unauthorized use of the company's proprietary information is difficult.

During the fiscal period, the company researched and prepared an additional three patents. Two patents broaden applications of the two patents pending. The third is in a new area. The company believes it will be able to file for three additional patents. We are currently charging off to operations all expenses incurred in connection with our patents, trademarks and copyrights.

The company currently licenses certain technologies to other companies and utilizes an independent reseller to market and distribute the company's products and services. The company has entered into the following material agreements:

. In February 2000, the company granted a license as a part of the Cooperation Agreement of Beijing Artists Online Co. Ltd to utilize Interweb's software products and technology; to promote and develop Chinese culture; to promote and develop the China music industry; to provide artists and their audiences with an unprecedented, financially sustainable music distribution and entertainment platform.

. In March 2000, the company entered into a non-exclusive agreement with Hearst Newspaper Partnership, L.P. for design and development of Web Sites, banner ads and other Internet advertising solutions for advertising customers of the Houston Chronicle.

. In April 2000, the company entered into a non-exclusive software reseller agreement with Brazil Interweb (BID) to market and distribute software products manufactured by the company in Brazil.

. In July 2000, the company entered into a non-exclusive agreement with eRealty.com for the design and development of web sites for Service Providers of eRealty.

. In October 2000, the company entered into a non-exclusive agreement with eHome.com for the design and development of web sites for Service Providers of eHome.

RISK FACTORS

The following important factors, among others, could cause our actual results to differ materially from those contained in forward-looking statements made in this Annual Report on Form 10-KSB or presented elsewhere by management from time to time.

IF BUSINESSES DO NOT INCREASE THEIR USE OF THE INTERNET AS A MEANS FOR CONDUCTING COMMERCE, OUR REVENUES WILL BE ADVERSELY AFFECTED

Our future success depends heavily on the increased acceptance and use of the Internet as a means for conducting commerce. We focus our services on the development and implementation of Internet strategies and solutions. If commerce on the Internet does not continue to grow, or grows more slowly than expected, our revenue growth would slow or decline and our business, financial condition and results of operations would be materially adversely affected. Consumers and businesses may delay adoption of the Internet as a viable medium for commerce for a number of reasons, including:

. inadequate network infrastructure;

. delays in the development of Internet enabling technologies and performance improvements;

. delays in the development or adoption of new standards and protocols required to handle increased levels of Internet activity;

. delays in the development of security and authentication technology necessary to effect secure transmission of confidential information;

. changes in, or insufficient availability of, telecommunications services to support the Internet; and

. failure of companies to meet their customers' expectations in delivering goods and services over the Internet.

IF WE DO NOT ATTRACT AND RETAIN QUALIFIED PROFESSIONAL STAFF, WE MAY NOT BE ABLE TO ADEQUATELY PERFORM OUR CLIENT ENGAGEMENTS AND COULD BE LIMITED IN ACCEPTING NEW CLIENT ENGAGEMENTS

Our business is labor intensive and our success will depend in large part upon our ability to attract, retain, train and motivate highly skilled employees. Because of the rapid growth of the Internet, there is intense competition for employees who have strategic, experience modeling, creative design, technical and program management experience. In addition, the Internet has created many opportunities for people with the skills we seek to form their own companies or join startup companies and these opportunities frequently offer the potential for significant future financial profit through equity incentives which we cannot match. We may not be successful in attracting a sufficient number of highly skilled employees in the future, or in retaining, training and motivating the employees we are able to attract. Any inability to attract, retain, train and motivate employees could impair our ability to adequately manage and complete existing projects and to bid for or accept new client engagements.

IF WE DO NOT MANAGE OUR GROWTH EFFECTIVELY, OUR OPERATING RESULTS WILL BE ADVERSELY AFFECTED

Our growth has placed significant demands on our management and other resources. Our revenues increased approximately 8% from $.997 million in 1999 to $1.1 million in 2000. Our staff decreased from a high of 38 full-time employees at July 31, 1999 to 21 October 31, 2000. Increasing revenues and decreasing staff has placed an ever-increasing burden on the current staff. Our future success will depend on our ability to manage our growth effectively, including by:

. developing and improving our operational, financial and other internal systems;

. integrating and managing acquired businesses, joint ventures and strategic investments;

. training, motivating and managing our employees;

. estimating fixed-price fees and project timeframes accurately;

. maintaining high rates of employee utilization; and

. maintaining project quality and client satisfaction.

Our management has limited experience managing a business in today's highly competitive markets. If we are unable to manage our growth and projects effectively, the quality of our services and products, our ability to retain key personnel and our business, financial condition and results of operations may be materially adversely affected.

WE HAVE SIGNIFICANT FIXED OPERATING COSTS, WHICH MAY BE DIFFICULT TO ADJUST IN RESPONSE TO UNANTICIPATED FLUCTUATIONS IN REVENUES

A high percentage of our operating expenses, particularly personnel and rent, are fixed in advance of any particular quarter. As a result, unanticipated variations in the number, or progress toward completion, of our projects may cause significant variations in operating results in any particular quarter and could have a material adverse effect on operations for that quarter.

An unanticipated termination of a major project, a client's decision not to proceed with a project we anticipated, or the completion during a quarter of several major client projects could require us to maintain underutilized employees and could therefore have a material adverse effect on our business, financial condition and results of operations. Our revenues and earnings may also fluctuate from quarter to quarter based on such factors as:

. the contractual terms and timing of completion of projects;

. any delays incurred in connection with projects;

. the adequacy of provisions for losses and bad debts;

. the accuracy of our estimates of resources required to complete ongoing projects; and

. general economic conditions.

INTERNATIONAL EXPANSION OF OUR BUSINESS COULD RESULT IN FINANCIAL LOSSES DUE TO CHANGES IN FOREIGN ECONOMIC CONDITIONS OR FLUCTUATIONS IN CURRENCY AND EXCHANGE RATES

We expect to continue to expand our international operations. We currently have offices in Beijing, Rio, Sao Paulo Mexico City, Monterrey and Panama through joint ventures and have recently commenced a joint venture in Belgium. We have limited experience in marketing, selling and providing our services internationally. The company has limited its risk during start-up through these joint ventures with knowledge and expertise in these countries. International operations are subject to other inherent risks, including:

. recessions in foreign countries;

. fluctuations in currency exchange rates;

. the scheduled conversion to the euro by most European Union members;

. difficulties and costs of staffing and managing foreign operations;

. reduced protection for intellectual property in some countries;

. political instability or changes in regulatory requirements; and

. U.S. imposed restrictions on the import and export of technologies.

GOVERNMENT REGULATION

The Internet largely operates outside the scope of U.S. government regulation. Standards are set by an inter-related group of independent, non- profit bodies, but no U.S. agency or organization exerts formal regulatory control over the market.

We are subject to governmental regulation in the countries in which we conduct business. The countries currently include: China, Mexico, and Brazil. The types of governmental regulation to which our business is subject include regulation of currency conversion, regulation of telecommunications services, regulation of information and content, and regulation of electronic commerce.

REGULATION OF THE PRC INTERNET INDUSTRY

OVERVIEW

After the U.S., we expect PRC to become our largest and most important market. At present, there is no legislation in the PRC directly addressing the Internet businesses we are engaged in. However, certain areas related to the Internet, such as telecommunications, international connections for computer information networks, information security and censorship, as well as foreign investment in those areas, are covered in detail by a number of existing laws and regulations. Some of these existing laws and regulations, which may impact foreign investment in various Internet businesses in China, are promulgated by various governmental authorities, such as the Ministry of Information Industry ("MII") (formerly the Ministry of Posts and Telecommunications, or MPT), the State Administration for Industry and Commerce ("SAIC"), or the Ministry of Public Security.

The PRC legislature and regulatory authorities are currently in the process of preparing new legislation that will govern or affect the PRC Internet sector. For example, the SAIC is currently considering adopting new regulations governing online advertising. We cannot predict the timing and effects of such new regulations and may be adversely affected by one or more of the following:

. New laws or regulations, or different interpretation of existing laws and regulations;

. Pre-emption of provincial or local laws by national laws;

. Our ability to timely obtain the necessary administrative approvals and licenses;

. Our ability to comply with applicable administrative requirements;

. Content restrictions on our Internet properties;

. Confiscatory taxation;

. Restrictions on imports;

. Restrictions on foreign investments;

. Currency devaluations;

. Expropriation or nationalization of our operations, which could result in the total loss of ownership and control of any assets or operations that we develop in China; and

. Adoption of measures intended to reduce inflation, such as price controls.

There are substantial uncertainties regarding the proper interpretation of existing PRC laws and regulations relating to the Internet Industry and there are likely to be new PRC laws and regulations relating to the Internet sector adopted in the future. In particular, the PRC does not have a well-developed body of laws governing foreign enterprises, such as those relating to the permissible percentage of foreign investments. Official Chinese statements regarding these evolving policies have been conflicting and are subject to broad interpretation and modification.

The legal issues, risks and uncertainties relating to the PRC government laws and regulations generally relate to the legality of Beijing Artists Online's ownership structure, whether the PRC government will restrict or prohibit the distribution of content over the Internet, whether the imposition of additional regulatory requirements may result in our non-compliance with applicable law, whether we will be able to acquire future licenses or permits necessary to conduct our operations in the PRC. Some of these issues, risks and uncertainties include the following:

. Various officials of the MII have, during 1999, stated publicly that foreign investment is prohibited in the PRC Internet sector, including in Internet service providers and Internet content providers.

. Foreign investment is prohibited in businesses providing "value-added telecommunication services", including "computer information services" or "electronic mail box services". However, the relevant regulation is silent as to whether the Internet business is included in these businesses in which foreign investment is prohibited.

. The MII has stated recently that it intends to adopt new laws or regulations governing foreign investment in the PRC Internet sector in the near future. At this time, we do not know the timing or terms of these new laws or regulations or whether or how they will apply to us.

. According to press reports, under the agreement reached in November 1999 between China and the United States concerning the United States' support of China's entry into the World Trade Organization ("WTO"), foreign investment in PRC Internet services will be liberalized at the same rate as other key telecommunications services. In addition, according to press reports, key telecommunication services in the PRC will be subject to a foreign ownership limit of 49% for the first two years after China's entry into the WTO and 50% thereafter. We do not know if this agreement will in fact be implemented, the timing thereof, the terms of any new laws or regulations resulting from such implementation, or whether our Internet business in China will be subject to these foreign ownership limits.

. The MII has stated recently that the activities of Internet content providers are also subject to regulation by various PRC government authorities, depending on the specific activities conducted by the Internet content provider. According to press reports, various government authorities are in the process of preparing new laws and regulations that will govern these activities. The areas of regulation may include online advertising and online news reporting.

. A PRC wholly foreign-owned enterprise is prohibited from engaging in the business of providing or distributing advertisements as defined under the 1994 PRC Advertising Law. The relevant law is silent as to whether online advertising is covered by the law.

OWNERSHIP STRUCTURE AND RESTRICTIONS ON FOREIGN INVESTMENT

The MII has promulgated regulations restricting foreign investment in the telecommunications sector in China, including:

. Provisional Administrative Measures Regarding the Examination and Approval of Deregulated Telecommunication Operations (1993);

. Provisional Regulations for the Administration of the Deregulated Telecommunications Operations (1995); and

. Definitions of Various Deregulated Telecommunications Operations (1995).

These regulations prohibit a foreign person or entity, including any foreign investment enterprise established in the PRC, such as Beijing Artists Online, from investing in, or operating or participating in the operation of, any business that provides "value-added telecommunications services", which is defined to include, among other services, "computer information services" and "electronic mail box services". However, these regulations were promulgated and the definitions were adopted, prior to the general emergence of the

Internet in China, and the relevant regulation is silent as to whether our Internet business is included in these businesses in which foreign investment is prohibited.

Foreign investment in advertising companies is also restricted, and proposed investment projects in these areas must be approved on a project-by-project basis. Under the relevant restrictions, non-PRC investors are restricted from holding a majority of voting shares in an advertising company. No regulations have yet been adopted specifically governing online advertising in the PRC and the PRC laws and regulations are silent as to whether they cover online advertising. The SAIC, the PRC government agency regulating advertising activities, has not expressly issued regulations or rules stating that the Internet is considered and advertising media. However, if the SAIC were to do so, Beijing Artists Online, as a partially foreign owned enterprise in the PRC, could be required to apply to the SAIC for authorization to conduct advertising business in accordance with its rules. We cannot guarantee that such application, if required, would be approved by the relevant authorities. If we were unable to obtain required approvals, our ability to generate advertising revenues could be seriously restricted. If the relevant regulatory authorities were to take the position that our operations are in violation of existing regulations, we could be subjected to penalties, including being prohibited from engaging in online advertising and having our earnings from such activities confiscated. In addition, if we are deemed to be an "advertisement publisher", we will be held responsible for ensuring the content of an advertisement complies with the regulations of PRC laws.

The interpretation and application of existing PRC laws and regulations, the stated positions of the MII relating to the prohibition of foreign investments in PRC Internet companies, and the likely possibility of the introduction of new laws or regulations, have created substantial uncertainties regarding the legality of existing and future foreign investments in, and the businesses and activities of, PRC Internet businesses, including our business.

We cannot be sure that our current ownership structure and activities relating to Beijing Artists Online will be viewed by PRC regulatory authorities as in compliance with applicable PRC laws or regulations. Our Businesses in the PRC will be adversely affected if our business license is revoked as a result of non-compliance with the relevant regulations. It is possible that the relevant PRC authorities could, at any time, assert that any portion or all of our existing or future ownership structure and business in China violate existing or future PRC laws and regulations. In addition, new laws and regulations may be retroactively applied to us. For example, China's potential entry into the WTO will likely affect the terms of any new laws and regulations, and may result in the PRC government adopting a 49% or 50% limit on foreign investment in Internet businesses, including limits on foreign investments in PRC Internet content providers, as well as affect the interpretation of existing regulations relating to the PRC Internet sector.

INFORMATION SECURITY AND CENSORSHIP

The principal PRC regulations concerning information security and censorship are:

. The Law of the People's Republic of China on the Preservation of State Secrets (1988) and its implementing rules (1990);

. The Law of the People's Republic of China on State Security (1993) and its implementing rules (1994);

. Rules of the People's Republic of China for Protecting the Security of Computer Information Systems (1994);

. Notice Concerning Work Relating to the Filing of Computer Information Systems with International Connections (1996);

. Administrative Measures for Protecting the Security of Computer Information Network with International Connections (1997); and

. Regulations for the Protection of State Secrets for Computer Information Systems on the Internet (2000).

These regulations specifically prohibit the use of Internet infrastructure that results in a breach of public security or the provision of socially destabilizing content or transmission of state secrets.

. ""A breach of public security" includes breach of national security or disclosure of state secrets, infringement on state, social or collective interests or the legal rights and interests of citizens, and illegal or criminal activities.

. ""Socially destabilizing content" includes any action that incites defiance or violation of Chinese laws and regulations, incites subversion of state power and the overturning of the socialist system, fabricates or distorts the truth, spreads rumors or distorts social order, spreads feudal superstition, involves obscenities, pornography, gambling, violence, murder or horrific acts, or instigates criminal acts.

. ""State secrets" are defined as "matters that affect the security and interest of the state". The term covers such broad areas as national defense, diplomatic affairs, policy decisions on state affairs, national economic and social development, political parties and "other state secrets that the State Secrets Bureau has determined should be safeguarded".

China has enacted regulations governing Internet access and the distribution of news and other information. In the past, the PRC government has stopped the distribution of information over the Internet that it believes violated PRC laws ore regulations, including content that is obscene, incites violence, endangers national security, is contrary to the national interest or is defamatory. The Ministry of Public Security also has the authority to cause any local Internet service provider to block any web site maintained outside China at its sole discretion. In addition, the Propaganda Department of the Chinese Communist Party has been given the responsibility to censor news published in China to ensure, supervise and control proper political ideology.

The State Secrecy Bureau, which is directly responsible for the protection of state secrets of all PRC government and Chinese Communist Party organizations, is also authorized to block any web site it deems to be leaking state secrets or failing to meet the relevant regulations relating to the protection of state secrets in the distribution of online information. Specifically, Internet companies in China with bulletin board systems, chat rooms or new services must apply for the approval of the State Secrets Bureau. As the implementation rules for the regulations have not been issued, however, details concerning how Internet companies should comply with these regulations remain to be clarified.

The MII has also published implementing regulations that subject online information providers to potential liability for content included on their portals and the actions of subscribers and others using their systems, including liability for violation of Chinese laws prohibiting the distribution of content that clearly violates the laws, regulations or policies of the PRC and report content that we suspect may violate such laws, regulations or policies.

Because many Chinese laws, regulations and legal requirements with regard to the Internet are relatively new and untested, their interpretation and enforcement may involve significant uncertainty. In addition, the Chinese legal system is a civil law system in which decided legal cases have limited binding force as legal precedents. As a result, in many cases it is difficult for us to determine the type of content that may result in liability for a web site operator.

According to applicable regulations, Internet companies in China are required to complete security filing procedures with the local public security bureau and to regularly update the local public security bureau regarding information security and censorship systems for their web sites.

INTERNATIONAL CONNECTIONS FOR COMPUTER INFORMATION NETWORKS

The State Council and the MII have promulgated regulations governing international connections for PRC computer networks, including:

. Provisional Regulations of the People's Republic of China for the Administration of International Connections to Computer Information Networks (1997) and their Implementing Measures (1998);

. Measures for the Administration of International Connections to China's Public Computer Interconnected Networks (1996); and

. Reply Concerning the Verification and Issuance of Operating Permits for Business Relating to International Connections for Computer Information Networks and for Public Multimedia Telecommunications Business (1998).

Under these regulations, any entity seeking access to international connections for computer information networks in China, such as Beijing Artists Online, must comply with the following requirements:

. Be a PRC legal entity;

. Have the appropriate equipment, facilities and technical and administrative personnel;

. Have implemented and registered a system of information security and censorship; and

. Effect all international connections with an authorized Internet service provider in China.

ENCRYPTION SOFTWARE

In October 1999, the State Encryption Administration Commission promulgated the Regulations for the Administration of Commercial Encryption, which was followed in November 1999 by the Notice of the General Office of the State Encryption Administration Commission. Both of these regulations address the use in China of software with encryption functions. According to these regulations, encryption products purchased for use without the permission of the state encryption administration departments and foreign encryption products purchased for use must be reported. Violation of the encryption regulations may result in the issuance of a warning, levying of a penalty, confiscation of the encryption products and even criminal liabilities. Because these regulations do not specify what constitutes encryption products, and there are currently no official interpretations of, or detailed implementing rules for, these regulations, we are unsure as to whether or how they may apply to us.

BUSINESS LICENSE AND APPROVAL FOR FOREIGN INVESTMENT

Under current PRC law, the legal establishment of a technology company such as Beijing Artists Online must be approved by the relevant local Commission for Foreign Economic Relations and Trade.

If we were found to be in violation of any existing or future PRC laws, regulations or policies, the relevant PRC authorities would have broad discretion in dealing with such a violation, including, without limitation, the following:

. Levying fines;

. Revoking our business license;

. Requiring us to restructure our ownership structure or operations; and/or

. Requiring us to discontinue any portion or all of our Internet business or our investment in Beijing Artists Online;

. Require us to obtain licenses in order to commence or continue our business;

. Revoke or suspend any licenses we may have;

. Regulate the rates that we will be permitted to charge of telecommunications services; or

. Impose or change the tariffs or fees on our operations.

Any of these actions could have a material adverse effect on our business, results of operations and financial condition.

THE INCREASED SIZE AND COMPLEXITY OF THE SOLUTIONS WE ARE IMPLEMENTING MAKES IT MORE LIKELY THAT WE WILL FAIL TO SATISFY CLIENT EXPECTATIONS, WHICH WOULD DAMAGE OUR REPUTATION AND BUSINESS

The average dollar size of our solutions has grown significantly, while the timeframe for delivering solutions has generally decreased. As our client engagements become larger and more complex and must be completed in shorter timeframes, it becomes more difficult to manage the development process and the likelihood and consequences of any mistakes increase. Any inability by us to complete client solutions in a timely manner, any defects contained in the solutions we deliver and any other failure by us to achieve client expectations, would have a material adverse effect on our reputation with the affected client and generally within our industry and could have a material adverse effect on our business, results of operations or financial condition.

WE ENTER INTO FIXED-PRICE CONTRACTS AND COULD LOSE MONEY ON THESE CONTRACTS

Most of our projects are based on fixed-price, fixed-timeframe contracts, rather than contracts in which payment to us is determined on a time and materials basis. Our failure to accurately estimate the resources required for a project or our failure to complete our contractual obligations in a manner consistent with the project plan upon which our fixed-price, fixed-timeframe contract was based could adversely affect our overall profitability and could have a material adverse effect on our business, financial condition and results of operations. We have been required to commit unanticipated additional resources to complete projects in the past, which has resulted in losses on those contracts. We recognize that we will experience similar situations in the future and that the consequences could be more severe than in the past due to the increased size and complexity of our solutions. In addition, for some projects we may fix the price at an early stage of the process, which could result in a fixed price that turns out to be too low and therefore would adversely affect our profitability.

WE DEPEND HEAVILY ON A LIMITED NUMBER OF CLIENT PROJECTS, THE LOSS OF ANY WOULD ADVERSELY AFFECT OUR OPERATING RESULTS

We have derived, and believe that we will continue to derive, a significant portion of our revenues from a limited number of clients for whom we perform large projects. In 1999, our three largest clients accounted for approximately 39% of our revenues, with one client accounting for more than 19% of our revenues. In addition, revenues from a large client may constitute a significant portion of our total revenues in a particular quarter. The loss of any principal client for any reason, including as a result of the acquisition of that client by another entity, could have a material adverse effect on our business, financial condition and results of operations.

IF WE ARE UNABLE TO ACHIEVE ANTICIPATED BENEFITS FROM ACQUISITIONS, JOINT VENTURES AND STRATEGIC INVESTMENTS, OUR BUSINESS COULD BE ADVERSELY AFFECTED

During the past two years, we have completed two acquisitions and entered into several joint ventures. The anticipated benefits from these and future acquisitions, joint ventures and strategic investments may not be achieved. For example, when we acquire a company, we cannot be certain that customers of the acquired business will continue to do business with us or that employees of the acquired business will continue their employment or become well integrated into our operations and culture. The identification, consummation and integration of acquisitions, joint ventures and strategic investments requires substantial attention from management. The diversion of the attention of management relating to these activities, as well as any difficulties encountered in the integration process, could have an adverse impact on our business, financial condition and results of operations.

IF CLIENTS UNEXPECTEDLY TERMINATE THEIR CONTRACTS FOR OUR SERVICES, OUR BUSINESS COULD BE ADVERSELY AFFECTED

Some of our contracts can be canceled by the client with limited advance notice and without significant penalty. Termination by any client of a contract for our services could result in a loss of expected revenues and additional expenses for staff which were allocated to that client's project. The cancellation or a significant reduction in the scope of a large project could have a material adverse effect on our business, financial condition and results of operations.

OUR STOCK PRICE IS VOLATILE AND MAY RESULT IN SUBSTANTIAL LOSSES FOR INVESTORS

The trading price of our common stock could be subject to wide fluctuations in response to:

. quarterly variations in operating results and our achievement of key business metrics;

. changes in earnings estimates by securities analysts;

. any differences between reported results and securities analysts published or unpublished expectations;

. announcements of new contracts or service offerings by us or our competitors;

. market reaction to any acquisitions, joint ventures or strategic investments announced by us or our competitors; and

. general economic or stock market conditions unrelated to our operating performance.

In the past, securities class action litigation has often been instituted against companies following periods of volatility in the market price of their securities. This type of litigation could result in substantial costs and a diversion of management attention and resources.

IF WE DO NOT KEEP PACE WITH TECHNOLOGICAL CHANGES, OUR COMPETITIVE POSITION WILL SUFFER

Our markets and the technologies used in our solutions are characterized by rapid technological change. Failure to respond in a timely and cost-effective way to these technological developments would have a material adverse effect on our business, financial condition and results of operations. We expect to derive a substantial portion of our revenues from providing Internet solutions that are based upon leading technologies and that are capable of adapting to future technologies. As a result, our success will depend on our ability to offer services that keep pace with continuing changes in technology, evolving industry standards and changing client preferences. We may not be successful in addressing future developments on a timely basis. Our failure to keep pace with the latest technological developments would have a material adverse effect on our business, financial condition and results of operations.

WE FACE SIGNIFICANT COMPETITION IN MARKETS THAT ARE NEW AND RAPIDLY CHANGING

We believe that the principal competitive factors in our markets include:

. ability to integrate strategy, creative design and technology services;

. quality of service, speed of delivery and price;

. industry knowledge;

. sophisticated project and program management capability; and

. Internet technology expertise and talent.

We believe that our ability to compete also depends in part on a number of competitive factors outside our control, including:

. the ability of our competitors to hire, retain and motivate professional staff;

. the development by others of Internet services or software that is competitive with our solutions; and

. the extent of our competitors' responsiveness to client needs.

There can be no assurance that we will be able to compete successfully in our markets.

GOVERNMENT REGULATION COULD INTERFERE WITH THE ACCEPTANCE OF THE INTERNET AND ELECTRONIC COMMERCE, WHICH WOULD ADVERSELY AFFECT THE DEMAND FOR OUR SERVICES

Any new laws and regulations applicable to the Internet and electronic commerce that are adopted by federal, state or foreign governments could dampen the growth of the Internet and decrease its acceptance as a commercial medium. If this occurs, companies may decide in the future not to pursue Internet initiatives, which would decrease demand for our services. A decrease in the demand for our services would have a material adverse effect on our business, financial condition and results of operations.

IF WE ARE UNABLE TO PROTECT OUR PROPRIETARY METHODOLOGY, OUR BUSINESS COULD BE ADVERSELY AFFECTED

Our success depends, in part, upon our proprietary methodology and other intellectual property rights. We rely upon a combination of trade secrets, nondisclosure and other contractual arrangements, and copyright and trademark laws to protect our proprietary rights. We enter into confidentiality agreements with our employees, generally require that our consultants and clients enter into these agreements, and limit access to and distribution of our proprietary information. There can be no assurance that the steps we take in this regard will be adequate to deter misappropriation of our proprietary information or that we will be able to detect unauthorized use and take appropriate steps to enforce our intellectual property rights. In addition, although we believe that our services and products do not infringe on the intellectual property rights of others, there can be no assurance that infringement claims will not be asserted against us in the future, or that if asserted that any infringement claim will be successfully defended. A successful claim against us could materially adversely affect our business, financial condition and results of operations.

WE MAY NOT HAVE THE RIGHT TO RESELL OR REUSE SOLUTIONS DEVELOPED FOR SPECIFIC CLIENTS

A portion of our business involves the development of technology solutions for specific client engagements. Ownership of these solutions is the subject of negotiation and is sometimes assigned to the client, although we usually retain a license for certain uses. Some clients have prohibited us from marketing the applications developed for them for specified periods of time or to specified third parties and there can be no assurance that clients will not demand similar or other restrictions in the future. Issues relating to the ownership of and rights to use solutions can be complicated and there can be no assurance that disputes will not arise that affect our ability to resell or reuse these solutions. Any limitation on our ability to resell or reuse a solution could require us to incur additional expenses to develop new solutions for future projects.

OUR BOARD DIRECTORS AND OFFICERS HAVE SIGNIFICANT VOTING POWER AND MAY EFFECTIVELY CONTROL THE OUTCOME OF ANY STOCKHOLDER VOTE

Harry L. White, Lee A. Magness and Richard J. Finn, all board members and Executive Officers, together own approximately 72% of our common stock. As a result, they have the ability to substantially influence, and may effectively control the outcome of corporate actions requiring stockholder approval, including the election

of directors. This concentration of ownership may also have the effect of delaying or preventing a change in control of Interweb even if such a change of control would benefit other investors.

WE ARE DEPENDENT ON OUR KEY PERSONNEL

Our success will depend in large part upon the continued services of a number of key employees, including Messrs. White, Magness and Finn. Our employment contracts with Messrs. White, Magness and Finn expire in one year and our other key personnel are terminable at will by either party. The loss of the services of either of Messrs. White, Magness or Finn or of one or more of our other key personnel could have a material adverse effect on our business, financial condition and results of operations. In addition, if one or more of our key employees resigns from Interweb to join a competitor or to form a competing company, the loss of such personnel and any resulting loss of existing or potential clients to any such competitor could have a material adverse effect on our business, financial condition and results of operations. In the event of the loss of any personnel, there can be no assurance that we would be able to prevent the unauthorized disclosure or use of our technical knowledge, practices or procedures by such personnel.

OUR CORPORATE GOVERNANCE PROVISIONS MAY DETER A FINANCIALLY ATTRACTIVE TAKEOVER ATTEMPT

Provisions of our charter and by-laws may discourage, delay or prevent a merger or acquisition that stockholders may consider favorable, including transactions in which stockholders would receive a premium for their shares. These provisions include the following:

. any action that may be taken by stockholders must be taken at an annual or special meeting and may not be taken by written consent;

. stockholders must comply with advance notice requirements before raising a matter at a meeting of stockholders or nominating a director for election;

. a chairman of the board or a chief executive officer are the only ones who may call a special meeting of stockholders; and

. our board of directors has the authority, without further action by the stockholders, to fix the rights and preferences of and issue shares of preferred stock.

Provisions of Texas law may also discourage, delay or prevent someone from acquiring us or merging with us.

ITEM 2. Properties

The company currently leases approximately 9,867 square feet of office space in Houston, Texas. The lease expires in October 2001 and the monthly rental is currently $11,761. Management believes that its existing facilities are adequate to meet its current needs and to accommodate anticipated growth.

ITEM 3. Legal Proceedings

The Company filed suit on November 23, 1999 against AMP3.com, L.L.C. Cause No. 1999-58234; Houston Interweb Design, Inc. v. AMP3.com, L.L.C.; 190th Judicial District Court of Harris County, Texas. The cause of action is for breach of contract and requests payment for services and hosting plus interest and costs. The company settled this suit on October 12, 2000. The terms of the settlement agreement are confidential.

The Company filed suit in December 1999 against AMP3.com, L.L.C.; Cause No. 1999-60298; Houston Interweb Design, Inc. v. AMP3.com, L.L.C.; 234th Judicial District Court of Harris County, Texas. The causes of action include: trade secret misappropriation, breach of fiduciary duty, violation of various intellectual property rights, violations under the Texas Theft Liability Act and unfair competition. In addition to various damages, the suit requests a temporary restraining order, temporary injunction and permanent injunction prohibiting Defendants from misappropriating Plaintiff's "Jingle Banner(TM)" technology and using its SiteBlazer(TM)software. The company settled this suit on October 12, 2000. The terms of the settlement agreement are confidential.

The Company filed suit on November 23, 1999 against AMP3.com, L.L.C. and its officers/directors; Cause No. 1999-58235; Houston Interweb Design, Inc. v. AMP3.com, L.L.C. Nigel Brassington and Michael Sharp; 295th Judicial District Court of Harris County, Texas. The causes of action are for breach of fiduciary duty, negligence, gross negligence, and constructive fraud, fraud in a stock transaction, an accounting, and minority shareholder oppression. In addition to damages the suit also requests an injunction prohibiting Defendants from issuing or selling additional shares, selling, pledging or transferring shares of stock and selling or transferring assets. This case is set for trial on November 20, 2000.

The Company is also subject to various legal proceedings and claims that arise in the ordinary course of business. Management currently believes that resolving these matters will not have a material adverse impact on the Company's financial position or its results of operations.

ITEM 4. Submission of Matters to a Vote of Security Holders

None.

PART II

ITEM 5. Market For the Company's Common Equity and Related Stockholder Matters

MARKET PRICE OF COMMON STOCK

The stock commenced trading on January 31, 2000. Our common stock is quoted on the Over the Counter Bulletin Board or OTCBB National Market System under the symbol "HITD". The table below sets forth for the periods indicated the high and low intraday sale prices for our common stock.

                                                                 High   Low
                                                                ------ -----
2000
  First Quarter................................................ $   -- $  --
  Second Quarter (January 31, 2000 only)....................... $ 6.00 $5.00
  Third Quarter................................................ $10.75 $2.00
  Fourth Quarter............................................... $ 2.50 $0.63

On November 1, 2000, the last reported sale price of our common stock was $0.625 per share. As of November 1, 2000, there were approximately 350 holders of record of our common stock.

RECENT SALES OF UNREGISTERED SECURITIES

In September 1999, the company issued 30,000 shares of company common stock to an individual in connection with the purchase of TEAM Productions, Inc. The Company believes these transactions were exempt from registration pursuant to
Section 4(2) of the Securities Act as isolated transactions by an issuer not involving a public offering. This investor had extensive experience in the Internet industry and had such knowledge and experience in financial and business matters that it was able to evaluate the merits and risks of an investment in the company.

In October 1999, the Company issued 187,500 shares of company common stock to an accredited entity for $375,000. In addition, during the year the company issued 246,000 shares of Company common stock to various individuals and entities in exchange for services rendered. The Company believes these transactions were exempt from registration pursuant to Section 4(2) of the Securities Act as isolated transactions by an issuer not involving a public offering. As accredited investors these individuals were able to fend for themselves due to their exceptional business experience.

In January 2000, the Company issued 128,000 shares of company common stock to six accredited individuals for $350,000. The Company believes these transactions were exempt from registration pursuant to

Section 4(2) of the Securities Act as isolated transactions by an issuer not involving a public offering. As accredited investors these individuals were able to fend for themselves due to their exceptional business experience.

In May 2000, the company issued 200,000 shares of common stock in exchange for 33% ownership in Beijing Artists Online Co. Ltd. The Company believes this transaction is exempt from registration pursuant to Section 4(2) of the Securities Act as isolated transactions by an issuer not involving a public offering. Through the due diligence process this investor had access to the inner workings of the company which would provide it with the same kind of information as would be included in a registration statement. This investor had extensive experience in the Internet industry and had such knowledge and experience in financial and business matters that it was able to evaluate the merits and risks of an investment in the company.

During the year 3,750 warrants have been exercised at $1.50 per share purchase price as a part of employee stock option plan.

In April 2000, the company issued 50,000 shares of common stock in exchange for 30% ownership in Brazil Interweb Design. The Company believes this transaction is exempt from registration pursuant to Section 4(2) of the Securities Act as isolated transactions by an issuer not involving a public offering. Through the due diligence process this investor had access to the inner workings of the company which would provide it with the same kind of information as would be included in a registration statement. This investor had extensive experience in the Internet industry and had such knowledge and experience in financial and business matters that it was able to evaluate the merits and risks of an investment in the company.

On April 17, 2000 the Company settled one potential claim with PinkMonkey.com Inc. Under the settlement, 150,000 shares were to be returned to the company: 75,000 were to be cancelled immediately, and the remainder was to be placed in an escrow account to be cancelled in 90 days. The company believes that PinkMonkey.com will comply with these terms. In the event of non- compliance with this agreement and other agreements the company intends to litigate.

ITEM 6. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following analysis compares the financial condition of the company for the year ended July 31, 1999 as compared to the year ended July 31, 2000.

RESULTS OF OPERATIONS

Results of operations for the year ended July 31, 1999 compared with the results of operations for the year ended July 31, 2000.

Revenues increased from $994,876 for the year ended July 31, 1999 to $1,077,236 for the year ended July 31, 2000. The increase of $82,360 or 8% was primarily due to growth in web sites developed by the company.

Revenues from Non-affiliates increased from $422,947 for the year ended in July 31, 1999 to $772,207 for the year ended July 31, 2000. The increase of $349,260 or 83% was primarily due to growth in web sites developed for new customers.

Revenues from Affiliates decreased from $571,929 for the year ended in July 31, 1999 to $305,029 for the year ended July 31, 2000. The decrease of $266,900 or 47% was primarily due to reclassification of $219,800 affiliates revenue as a result of the acquisition of one hundred percent of Cyber-Pitch.com in October 2000.

Cost of revenues increased from $630,132 for the year ended in July 31, 1999 to $1,046,121 for the year ended July 31, 2000. The increase of $415,989 or 66% was due to higher number of employees and related salaries.

Selling expenses increased from $93,284 for the year ended in July 31, 1999 to $214,314 for the year ended July 31, 2000. The increase of $121,057 or 130% was due to increase in commission and advertising expense.

General and administrative expenses increased from $1,048,227 for the year ended in July 31, 1999 to $1,687,931 for the year ended July 31, 2000. The increase of $639,704 or 61% was primarily due to increases in legal expenses associated with patent and trademark filings, salary and benefits, rent and travel expenses.

Depreciation and amortization expenses increased from $9,916 for the year ended in July 31, 1999 to $126,893 for the year ended July 31, 2000. The increase of $116,977 or 1180% was primarily due to an increase in amortization of goodwill associated with the Axis Technologies and Team Productions acquisitions.

Bad debt expense decreased from $318,762 for the year ended July 31, 1998, to $302,088 for the year ended July 31, 1999. The bad debt of $302,088 is primarily due to the establishment of reserves for outstanding accounts receivable from AMP3.com, Inc., an affiliate in which the company owns a 20% interest.

Writedown of Investments for the year ended July 31, 2000 was $1,553,843. In accordance with FASB 121 "Investment Writedown", the following investments have been written off: Investment in Beijing Artists Online Co. Ltd for $1,200,000; Investment in Brazil Interweb for $116,000; Investment in Mexico Siteblazer Office for $7,500 and investment in Cyber-Pitch.com(TM) Inc. for $101,494.

The company had a net loss of $1,109,898 for the year ended July 31, 1999 compared to a net loss of $3,855,651 for the year ended July 31, 2000. The increased net loss of $2,825,615 or 134% is due primarily to non-cash expenses such as bad-debt expense of $302,088 and the one-time investment write off of $1,553,843.

Net loss per share of Common Stock increased from $(.07) for the year ended July 31, 1999 to $(.22) for the year ended July 31, 2000.

The company may in the future experience significant fluctuations in its results of operations. Such fluctuations may result in volatility in the price and/or value of the company's Common Stock. Results of operations may fluctuate as a result of a variety of factors, including demand for the company's design and creation of Internet web sites, the introduction of new products and services, the timing of significant marketing programs, the success of reseller and license agreements, the number and timing of the hiring of additional personnel, competitive conditions in the industry and general economic conditions. Shortfalls in revenues may adversely and disproportionately affect the company's results of operations because a high percentage of the company's operating expenses are relatively fixed. Accordingly, the company believes that period-to-period comparisons of results of operations should not be relied upon as an indication of future results of operations. There can be no assurance that the company will be profitable. Due to the foregoing factors, it is likely that in one or more future periods the company's operating results will be below the expectations of the investor.

The financial statements included herein have been prepared assuming the company will be able to continue as a going concern. As shown in the financial statements, the company incurred a net loss of $3,855,171 for the year ended July 31, 2000 and has incurred substantial losses since inception. Negative cash flows from operating activities were $670,274 for the year ended July 31, 2000. These factors, among others, raise doubts about the company's ability to generate sufficient cash flow to meet its obligations on a timely basis, to obtain additional financing or capital and to refinance its debt and ultimately attain profitable operations.

LIQUIDITY AND CAPITAL RESOURCES

As of July 31, 2000, the company's primary source of liquidity was $18,655 of cash and $54,569 of accounts receivable. The company's working capital deficit and shareholders' deficit was $168,594 and shareholders' equity of $339,825 at July 31, 1999 as compared to a working capital deficit of $1,307,244 and $988,009 at July 31, 2000.

Net cash used by operating activities during the year ended July 31, 1999 was $967,752 compared with net cash used in operating activities of $670,274 for the year ended July 31, 2000. The decrease in net cash used by operating activities was primarily due to accrued salaries and Common Stock issued as compensation.

Net cash used in investing activities for the year ended July 31, 1999, was $6,054 compared with net cash used in investing activities of $136,709 for the year ended July 31, 2000. The increase in the net cash used in investing activities is attributed to an increase in the purchase of property and equipment and investment in software R&D.

Net cash provided by financing activities was $1,117,932 for the year ended July 31, 1999 compared with net cash provided by financing activities of $662,524 for the year ended July 31, 2000.

ITEM 7. Financial Statements

The financial statements prepared in accordance with Item 310 of Regulation S-B are included in this report commencing on Page F-1.

ITEM 8. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.

There have been no disagreements concerning matters of accounting principles or financial statement disclosure between the company and Mann, Frankfort, Stein and Lipp, P.C. or Malone and Bailey, PLLC of the type requiring disclosure hereunder.

PART III

ITEM 9. Directors, Executive Officers, Promoters and Control Persons

DIRECTORS AND EXECUTIVE OFFICERS

The company's directors and executive officers are:

             Name              Age                     Position
             ----              ---                     --------
Harry L. White................  42 Chairman, Chief Executive Officer, President,
                                    Treasurer and Secretary
Richard J. Finn...............  24 Chief Technical Officer and Director
Lee A. Magness................  37 Chief Financial Officer and Director
Daniel B. Nelson..............  42 General Counsel
Michael J. Minihan............  52 Director

Harry L. White has served as chairman, chief executive officer, president, secretary and treasurer of the company since inception. From December 1986 through February 1997, Mr. White worked at Air Products and Chemicals, a hydrogen production company, as the senior plant technician from December 1996 to February 1997. Mr. White also served as an ISO 9000 Manager from January 1994 to February 1997.

Richard J. Finn has served as chief technical officer and director of the company since inception. From December 1995 through February 1997, Mr. Finn served as the assistant webmaster for Neosoft, Inc., an Internet service provider. From August 1995 through December 1995, Mr. Finn served as the assistant network administrator of Cybersim, an Internet service provider. From October 1994 through August 1995, Mr. Finn served as an assistant network administrator for Triconex Systems, Inc.

Lee A. Magness has served as chief financial officer and director of the company since inception. Since August 1993, Mr. Magness has served as a financial consultant to various individuals and corporations. Prior to receiving his law degree from Thurgood Marshall School of Law, Mr. Magness served as a senior economic analyst at Transco Energy Corporation. Mr. Magness received a MBA in International Finance from Texas

A&M University in College Station, Texas in May 1986 and received a BBA in Accounting from Hardin-Simmons University in Abilene, Texas in May 1984.

Daniel B. Nelson was named General Counsel effective April 7, 2000. Mr. Nelson, formerly a partner and owner in Daniel B. Nelson & Associates and a partner in Wauson & Nelson, L.L.P has already been working with Houston InterWeb in a wide variety of legal projects. Mr. Nelson has over 14 years of experience practicing law. He has represented a wide variety of publicly traded corporate clients such as Travelers Insurance, Allstate Insurance and Horace Mann Insurance Co. Mr. Nelson is a member of Houston Bar Association, Bar Association of the Fifth Circuit, Texas Association of Defense Counsel and Defense Research Institute, and he has taught law as an adjunct professor of law at the University of Houston Law Center. Before his career in law, he has worked for AMF Tuboscope and Union Carbine in various positions

Michael J. Minihan has served as a director of the company since July 1999. From November 1997 until the present, Mr. Minihan has served as an asset manager and economist for The Markpoint Company, a Texas-based investment company. From April 1991 until October 1997, Mr. Minihan operated the Texas Insurance Agency, a state-wide independent property and casualty insurance agency. Mr. Minihan received a Bachelor of Science in Economics from St. Mary's University in 1972.

All executive officers of the company are chosen by the board of directors and serve at the board's discretion. There are no family relationships among the company's officers and directors. The company plans to reimburse directors for any expenses incurred in attending board of directors and Year 2000 board committee meetings.

ITEM 10. Executive Compensation

The following table sets forth information with respect to the chief executive officer of the company for the fiscal years ended July 31, 2000, July 31, 1999 and July 31, 1998. No other executive officers of the company received total annual salary and bonus for the fiscal years ended July 31, 1998 or July 31, 1997 in excess of $100,000.

Summary Compensation Table

                                                                 Long-Term
   Name and Principal    Fiscal                  Other Annual   Compensation    All Other
        Position          Year  Salary(2) Bonus Compensation(1)   Options    Compensation(3)
   ------------------    ------ --------- ----- --------------- ------------ ---------------
Harry L. White..........  2000  $120,000                                          $800
 Chief Executive          1999  $120,000                                          $800
 Officer and President    1998  $ 70,000                                          $800

Richard Finn............  2000  $120,000                                          $800
 Chief Technology
  Officer                 1999  $120,000                                          $800
                          1998  $ 70,000                                          $800

Lee Magness.............  2000  $120,000                                          $800
 Chief Financial Officer  1999  $120,000                                          $800
 and General Counsel      1998  $ 70,000                                          $800

(1) The named executive officers did not receive perquisites or other benefits valued in excess of 10% of the total reported annual salary and bonus.
(2) For the 2000 compensation, the above captioned officers received $44,334 each and the remaining total for the group of $227,000 was accrued. For 1999 compensation the above captioned officers received $59,000 each and the remaining total for the group of $183,000 was accrued. Since inception of the company in 1996, the company has accrued and not paid salaries of $500,000 plus vacation pay of $156,923.
(3) Although entitled to this compensation, Messrs. White, Finn and Magness have not drawn this compensation and it has not accrued.

Employment Agreements

In August 1996, Messrs. White, Finn and Magness entered into five year written employment contracts that provide for a base salary of $30,000 for the first year, $70,000 for the second year, and $120,000 annually for years three through five. In addition, these employment agreements entitle each of these individuals to an annual bonus of 1% of the company's earnings before income taxes and depreciation in excess of $5,000,000. In addition to salary, beginning in August 1998, Messrs. White, Finn and Magness were to each receive $600 per month as a car allowance and $200 per month for miscellaneous expenses. If the company terminates an employment contract with cause, such executive will not engage in certain activities in competition with the company for a period of six months following such termination. The company believes the non-compete covenants comply with state law, however, the company can provide you no assurances that a state court may determine not to enforce or only partially enforce such covenants.

Stock Options

In August 1998, the Board of Directors and stockholders adopted a stock option plan under which 500,000 shares of Common Stock have been reserved for issuance. In May 2000, the Board of Directors amended the stock option plan to increase the total reserved shares of Common Stock from 500,000 to 2,000,000. As of the date of hereof, options to purchase 735,000 shares of company Common Stock have been granted pursuant to the plan. The company does not have a defined benefit plan or any retirement or long-term incentive plans.

ITEM 11. Security Ownership of Certain Beneficial Owners and Management

The following table presents certain information regarding the beneficial ownership of all shares of the company Common Stock by (i) each person who owns beneficially more than five percent of the outstanding shares of Common Stock,
(ii) each director of the company, (iii) each named executive officer, and (iv) all directors and officers as a group.

                                                        Shares    Percentage
                                                     Beneficially of Voting
Name of Beneficial Owner(1)                             Owned       Power
---------------------------                          ------------ ----------
Harry L. White......................................   4,488,000     24.6%
Richard J. Finn.....................................   4,488,000     24.6%
Lee A. Magness......................................   4,207,500     23.0%
Michael J. Minihan..................................          --       --
All directors and officer as a group (4 persons)....  13,183,500     72.2%

(1) The business address of each individual is the same as the address of the company's principal executive offices.

ITEM 12. Certain Relationships and Related Transactions.

In May 1999, Mr. White resigned as a director of PinkMonkey.com.

In June 1999, Mr. Magness loaned the company $250,000 pursuant to a one-year promissory note which bears interest at 10% per annum. The company repaid the note in August 1999.

In July 1999, the company acquired certain assets and the client base of Axis Technologies, Inc., a web site provider, for consideration of 500,000 shares of company Common Stock and up to 125,000 shares of additional Common Stock provided certain net revenue goals or net cash flows are obtained. In connection with the acquisition, Michael J. Minihan joined the board of directors. This transaction was not deemed an acquisition of a "Business", accordingly; separate historical and pro forma financial statements were not filed with the SEC.

In September 1999, the company acquired all of the assets of Team Productions, Inc. from an employee in exchange for 30,000 shares of company Common Stock.

During the fiscal year 1999, Messrs. White, Finn and Magness loaned the company $13,784, $11,393, and $126,723 respectively. These loans bore interest at the rate of 10% per annum and remain outstanding as of July 31, 2000.

ITEM 13. Exhibits and Report on Form 8-K

Exhibit
  No.    Identification of Exhibit
-------  -------------------------
  3.1(2) Amended and Restated Articles of Incorporation

  3.2(2) Articles of Amendment to the Articles of Incorporation

  3.3(2) By-Laws of the company

  3.4(2) Articles of Correction to the Amended and Restated Articles of
         Incorporation

  3.5(2) Articles of Correction to the Articles of Amendment to the Articles
         of Incorporation

  4.1(2) Form of Specimen of Common Stock

 10.1(2) Letter Agreement between the company and PinkMonkey.com, Inc.

 10.2(2) Software License and Marketing Agreement between the company and
         Websource Media, L.L.C.

 10.3(2) Software Reseller Agreement between the company and Harry Bauge

 10.4(2) Letter Agreement between the company and Harry Bauge

 10.5(2) Agreement between the company and NetTrade Online, L.L.C.

 10.6(2) Employment Agreement between the company and Harry White

 10.7(2) Employment Agreement between the company and Richard Finn

 10.8(2) Employment Agreement between the company and Lee Magness

 10.9(2) Lease Agreement

10.10(1) Beijing Artists Online Co. Ltd. Co-operation Agreement

10.11(1) Software Reseller Agreement between the company and Brazil Interweb
         Design

10.12(1) Website/Banner Ad Development agreement between the company and
         Hearst Newspapers Partnership, L.P.

10.13(1) Website Development Agreement between the company and eRealty.com

10.14(1) Website Development Agreement between the company and eHome.com

 21.1(1) List of Subsidiaries

 27.1(1) Financial Data Schedule

(1) Filed herewith. (2) Filed as an Exhibit to the company's registration statement on Form SB-2 (File No. 67871) on June 15, 1999, and herein incorporated by reference.

On November 11, 2000, the company filed 8-K report concerning change of Auditors.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

THE COMPANY INTERWEB DESIGN, INC.

                                                   /s/ Harry L. White
                                          By:__________________________________
                                             Harry L. White
                                             President and Chief Executive
                                              Officer

DATE: November 14, 2000

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

              Signature                          Title                   Date
              ---------                          -----                   ----

        /s/ Harry L. White             President and Chief         November 14, 2000
______________________________________  Executive Officer
            Harry L. White

       /s/ Richard J. Finn             Chief Technical Officer,    November 14, 2000
______________________________________  and Director
           Richard J. Finn

        /s/ Lee A. Magness             Chief Financial Officer,    November 14, 2000
______________________________________  and Director
            Lee A. Magness

INDEPENDENT AUDITORS REPORT

To the Board of Directors and Stockholders Houston Interweb Design, Inc.
Houston, Texas

We have audited the accompanying balance sheet of Houston InterWeb Design, Inc. as of July 31, 2000 and the related statements of income, changes in stockholders' equity (deficit), 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. 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 overall accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Houston Interweb Design, Inc. as of July 31, 2000, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles.

Malone & Bailey, PLLC
Houston, Texas

October 31, 2000

F-1

INDEPENDENT AUDITORS REPORT

To the Board of Directors and Stockholders Houston Interweb Design, Inc.
Houston, Texas

We have audited the accompanying statements of income, changes in stockholders' equity (deficit) and cash flows of Houston InterWeb Design, Inc. for the year ended July 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.

In our opinion, the financial statements of Houston Interweb Design, Inc. referred to above present fairly, in all material respects, the results of its operations and its cash flows for the year ended July 31, 1999 in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the financial statements, the Company incurred a net loss of $1,109,898 for 1999 and has incurred substantial net losses since inception. Negative cash flows from operating activities were $967,752 for the year ended July 31, 1999. These factors, and the others discussed in Note 2, raise substantial about the Company's ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

Mann Frankfort Stein & Lipp, P.C.

Houston, Texas
September 20, 1999

F-2

HOUSTON INTERWEB DESIGN, INC.

BALANCE SHEET
July 31, 2000

Current Assets
  Cash                                                             $    18,655
  Accounts receivable--trade......................................      54,569
  Other...........................................................         725
                                                                   -----------
    Total Current Assets..........................................      73,950
                                                                   -----------
Furniture and computer equipment, net of accumulated depreciation
 of $28,760.......................................................      56,552
Goodwill, net of accumulated amortization of $101,840.............     261,250
Other.............................................................         707
                                                                   -----------
    Total Assets.................................................. $   392,459
                                                                   ===========
Current Liabilities
  Accounts payable................................................ $   266,788
  Accrued expenses................................................     274,858
  Due to affiliates...............................................     838,822
                                                                   -----------
    Total Current Liabilities.....................................   1,380,468
                                                                   -----------
Stockholders' Equity
  Preferred stock, $.01 par value, 5,000,000 shares authorized, no
   shares issued or outstanding Common stock, no par value,
   50,000,000 shares authorized, 18,265,050 shares issued and
   outstanding....................................................   4,830,537
  Subscription receivable.........................................      (7,050)
  Retained (deficit)..............................................  (5,811,496)
                                                                   -----------
    Total Stockholders' Equity (Deficit)..........................    (988,009)
                                                                   -----------
    Total Liabilities and Stockholders' Equity.................... $   392,459
                                                                   ===========

See accompanying Summary of Accounting Policies and Notes to Financial Statements.

F-3

HOUSTON INTERWEB DESIGN, INC.

INCOME STATEMENTS
For the Years Ended July 31, 2000 and 1999

                                                         2000         1999
                                                      -----------  -----------
Revenues
  Non-affiliates..................................... $   772,207  $   422,947
  Affiliates.........................................     305,029      571,929
                                                      -----------  -----------
    Total Revenues...................................   1,077,236      994,876
                                                      -----------  -----------
Operating Expenses
  Cost of revenues...................................   1,046,121      630,132
  Selling............................................     214,341       93,284
  General and administrative.........................   1,687,931    1,048,227
  Depreciation and amortization......................     126,893        9,916
  Bad debts..........................................     302,088      318,762
  Interest (income)..................................      (1,425)      (1,174)
  Interest expense...................................       3,095        8,125
                                                      -----------  -----------
    Total Operating Expenses.........................   3,378,564    2,107,272
                                                      -----------  -----------
Writedown of investments.............................   1,553,843
    Total Expenses...................................   4,932,407    2,107,272
Net (Loss) before Income Taxes.......................  (3,855,171)  (1,112,396)
Income tax (benefit).................................                   (2,498)
                                                      -----------  -----------
Net (Loss)........................................... $(3,855,171) $(1,109,898)
                                                      ===========  ===========
Income (loss) per common share....................... $      (.22) $      (.07)
Weighted average shares outstanding..................  17,827,425   16,181,595

See accompanying Summary of Accounting Policies and Notes to Financial Statements.

F-4

HOUSTON INTERWEB DESIGN, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
Years Ended July 31, 2000 and 1999

                             Common Stock
                         ---------------------  Subscrip.  Accumulated
                           Shares     Amount    Receivable  (Deficit)     Totals
                         ---------- ----------  ---------- -----------  ----------
Balances,
  July 31, 1998......... 16,029,000 $  754,000             $  (846,427) $  (92,427)
Shares issued for
  --cash................    764,133    904,200   $(7,050)                  897,150
  --services............     96,667                            145,000     145,000
Acquisition of Axis.....    500,000    500,000                             500,000
Net loss................                                    (1,109,898) (1,109,898)
                         ---------- ----------   -------   -----------  ----------
Balances,
  July 31, 1999......... 17,389,800  2,303,200    (7,050)   (1,956,325)    339,825
                         ---------- ----------   -------   -----------  ----------
Shares issued for
  --cash................    341,250    730,625                             730,625
  --services............    254,000    487,375                             487,375
Less:
  unearned portion......               (56,663)                            (56,663)
Acquisition of
  Beijing Artists.......    200,000  1,200,000                           1,200,000
  Team Productions......     30,000     60,000                              60,000
  Brazil Interweb.......     50,000    106,000                             106,000
Net loss................                                    (3,855,171) (3,855,171)
                         ---------- ----------   -------   -----------  ----------
Balances,
  July 31, 2000......... 18,265,050 $4,830,537   $(7,050)  $(5,811,496) $( 988,009)
                         ========== ==========   =======   ===========  ==========

See accompanying Summary of Accounting Policies and Notes to Financial Statements.

F-5

HOUSTON INTERWEB DESIGN, INC.

STATEMENTS OF CASH FLOWS
For the Years Ended July 31, 2000 and 1999

                                                         2000         1999
                                                      -----------  -----------
Cash Flows from Operating Activities
  Net (loss)......................................... $(3,855,171) $(1,109,898)
  Adjustments to reconcile net loss to net cash
   provided by operating activities
    Bad debts expense................................     301,608      304,519
    Depreciation and amortization....................     126,893        9,916
    Writedown in asset valuation.....................   1,553,843
    Loss on disposal of fixed assets.................                    1,385
    Deferred income tax expense (benefit)............                   (2,498)
    Common stock issued for services.................     430,712      145,000
  Changes in:
    Cash held in escrow..............................     250,000     (250,000)
    Accounts receivable--trade.......................    (230,123)    (369,562)
    Accounts receivable--affiliate...................       3,760       51,499
    Other current assets.............................       1,896        7,417
    Accounts payable.................................     152,616      126,461
    Accrued expenses.................................     209,769      (67,144)
    Customer deposits................................          --        2,153
    Due to affiliates................................     383,923      183,000
                                                      -----------  -----------
    Cash Flows (Used by) Operating Activities........    (670,274)    (967,752)
                                                      -----------  -----------
Cash Flows from Investing Activities
  Purchase of furniture and computer equipment.......     (34,736)      (5,954)
  Capitalized software development costs.............    (101,973)          --
  Investment in affiliate............................        (100)          --
                                                      -----------  -----------
    Cash Flows (Used by) Investing Activities........    (136,709)      (6,054)
                                                      -----------  -----------
Cash Flows from Financing Activities
  Sale of common stock...............................     730,625      897,150
  Net proceeds from (payments to) affiliates.........     (68,101)     250,000
  Net change in bank line of credit..................          --      (29,218)
                                                      -----------  -----------
    Cash Flows Provided by Financing Activities......     662,524    1,117,932
                                                      -----------  -----------
Net increase in cash.................................    (144,459)     144,126
Cash Balance--Beginning of Year......................     163,114       18,988
                                                      -----------  -----------
            --End of Year............................ $    18,655  $   163,114
                                                      ===========  ===========


SUPPLEMENTAL DISCLOSURES
  Interest paid...................................... $     2,084  $         0
  Income taxes paid..................................           0            0


NON-CASH DISCLOSURES
  Issuance of 500,000 common shares to acquire Axis
   Technologies Corporation..........................                  500,000

See accompanying Summary of Accounting Policies and Notes to Financial Statements.

F-6

HOUSTON INTERWEB DESIGN, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business. Houston Interweb Design, Inc. ("Company") was formed in August 1996 as a Texas corporation to design and create Internet web sites for customers. The Company uses internally-developed technology for this development, which it licenses to customers, to ensure that these web sites are available to the Internet user irrespective of the search engine used.

Estimates. In preparing financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenue and expenses in the income statement. Actual results could differ from those estimates.

Cash and Cash Equivalents include highly liquid investments, which are readily convertible into cash and have original maturities of three months or less.

Revenue is recognized when hardware, software are delivered or as services are performed. Bad debts are recognized when collection is deemed doubtful by management. Web site and software usage royalty income is recognized as it is earned according to each royalty agreement.

Furniture and computer equipment are carried at cost.

Depreciation is determined using the straight-line method based over their estimated useful lives of 3 to 5 years.

Software development costs are capitalized and amortized over the estimated useful lives of the software, not to exceed five years. Under the provisions of SOP 98-1, these costs include those incurred after feasibility is determined and until the project is substantially completed. Software maintenance is expensed as incurred.

Deferred income taxes are determined on the liability method. Timing differences between net income and taxable income as reported result mostly from depreciation timing differences.

Goodwill represents the excess of the purchase price over the fair value of acquired companies and is being amortized on a straight-line basis over 5 years in each case. During the fourth quarter of 2000, a portion of the balance of goodwill associated with the Axis Technologies Corporation acquisition was written off in accordance with Statement of Financial Accounting Standard 121. Under this standard, the Company evaluates any possible impairment of long- lived assets using estimates of discounted future cash flows.

Advertising costs are expensed as incurred.

Certain reclassifications were made to the prior year's financial statements to conform to the classifications used in the current year.

NOTE 2--GOING CONCERN

The Company's financial statements have been prepared assuming the Company will continue as a going concern. The Company experienced recurring net (losses) of $(3.8 million), $(1.1 million) and $(.8 million) and a net cash flow operating (deficit) surplus of $(670,000), $(968,000) and $3,000 in 2000, 1999 and 1998, respectively. The predecessor auditors concluded that the 1999 and 1998 losses and cash deficits raised doubts about the Company's ability to generate sufficient cash flows to meet its obligations on a timely basis and ultimately attain profitable operations.

F-7

HOUSTON INTERWEB DESIGN, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

Management, who collectively own 72% of the outstanding stock of the Company, have represented they will continue to fund these operating deficits. Based on this representation, no going concern qualification is included in the auditor's report for the current year.

NOTE 3--SOFTWARE DEVELOPMENT COSTS

In the current year, the Company entered into an agreement with two individuals to form a company named Cyber-pitch.com, Inc., with the Company retaining 50% ownership in exchange for contributing the development of interactive sports, travel and entertainment cards. These cards were developed and development costs of $101,973 were capitalized.

On October 27, 2000, the Company amended its agreement with these two individuals to acquire their 50% interest in exchange for $150,000 to be paid over a two-year period beginning when production commences, if any, plus warrants to purchase 1,000,000 shares of Company stock at the market value when production commences, if any, plus a $.10 per card royalty for up to 10 million cards. There is currently no immediate plans to begin production.

Because the present value of the amounts payable could exceed the $101,973 carrying value of the Company's capitalized investment in the project, the value has been written down to $0.

NOTE 4--MUSIC PORTAL WEBSITE

In January 1999, the Company agreed to build a music portal web site for AMP3.com, Inc. ("AMP3"), a privately-held company offering free music downloads from the Internet and sharing revenues with the artists. The site was built and running by February 1999. The Company received a 10% interest in AMP3 and an agreement to pay the current value of services performed by the Company. As of July 31, 1999, the Company had billed $301,301 and had been paid $64,141. The balance remaining of $237,160 was charged off as uncollectible in that year.

In November 1999, the Company sued AMP3 for non-payment of the prior $237,160 plus $258,401 billed since July 31, 1999. During settlement negotiations, another 10% of AMP3 was promised in exchange for re-launching the web site. The Company performed but has not received the shares. AMP3 is currently not operating and is believed insolvent, some assets are in the physical possession of the Company, and the Company is attempting to purchase the remaining assets and plans to re-launch the site as soon as possible.

The $258,401 has been charged to bad debts in the current year, and the web site is not valued for financial reporting purposes.

NOTE 5--CHINA JOINT VENTURE

In February 2000, the Company agreed to participate in a venture to create and operate a web site in mainland China (PRC) for music distribution and entertainment. The agreement called for the Company to receive a 33% interest in the venture, named Beijing Artists Online, in exchange for the technical web site creation and operation knowledge and about $360,000 in cash. A Hong Kong investment group is to receive a 59% interest for agreeing to contribute about $500,000. The remaining 8% is to be retained by the Chinese government in exchange for operating licenses and permission.

In May 2000, the Company revised the agreement to contribute 200,000 shares of Company stock in lieu of the $360,000. The stock was valued at the then current trading price of $6 per share. The Hong Kong group has contributed a portion of its promised amount. The Beijing office has opened but operations have not yet started.

F-8

HOUSTON INTERWEB DESIGN, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

Under the equity method of accounting for investments, the valuation of the initial carrying value is $264,000. However, because of substantial business uncertainty, the entire $1,200,000 initial purchase price is written off in the current year.

NOTE 6--RELATED PARTY TRANSACTIONS

The three principal shareholders are all full-time employees of the Company, with 5-year employment contracts guaranteeing an annual salary of $120,000 per year for the past 3 years. None of the three principals has ever drawn his full salary, so the unpaid difference is accrued as unpaid salary.

In addition, these three employment contracts grant five weeks of vacation each per year. Only a portion of this vacation has been taken by each during these past three years. Company vacation policy is to accrue unpaid vacation pay. As of July 31, 2000 and 1999, the Company has accrued $178,000 and $150,000, respectively, of which $150,000 and $120,000 is due to the three senior officers. The monies due the senior officers for both unpaid salaries and unpaid vacation pay are included in the caption "Due to Affiliates" as of July 31, 2000.

All sales to any entity in which the Company owns 20% or more are included under the caption "Revenues--Affiliates" on the income statement. For 2000 and 1999, these include the AMP3 billed revenues.

NOTE 7--INCOME TAXES

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are as follows:

                                                        2000       1999
                                                     ----------  --------
Deferred tax assets:
  Net operating loss carryforward................... $1,639,395  $559,319
  Cash to accrual difference........................    220,818    91,392
Less: valuation allowance........................... (1,860,213) (649,464)
                                                     ----------  --------
Total deferred tax asset............................          0     1,247
                                                     ----------  --------
Total deferred tax asset                             $        0  $  1,247
                                                     ----------  --------
Deferred tax liabilities:
  Tax over book depreciation........................          0    (1,247)
                                                     ----------  --------
Net deferred tax asset.............................. $        0  $      0
                                                     ==========  ========

The Company has net operating loss carryforwards of approximately $4,820,000 as of July 31, 2000, which expire through the year 2020.

The difference between the reported income tax expense (benefit) and the income tax expense (benefit) computed by multiplying the loss before income taxes by the federal statutory income tax rate is as follows:

                                                   2000        1999
                                                -----------  ---------
Current tax benefit computed at federal
 statutory tax rate............................ $(1,308,409) $(378,215)
Change in valuation allowance..................   1,308,409    359,091
Other..........................................                 16,626
                                                -----------  ---------
    Total income tax expense (benefit)......... $         0  $  (2,498)
                                                ===========  =========

F-9

HOUSTON INTERWEB DESIGN, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

NOTE 8--OPERATING LEASE

The Company leases 9,867 square feet of office space in Houston, Texas under a lease which expires October 31, 2001. The Company's minimum rental commitments under this lease are $141,129 for 2001 and $35,282 for 2002. Total rent expense for 2000 and 1999 was $148,462 and $73,626, respectively.

NOTE 9--STOCKHOLDERS' EQUITY

On August 19, 1998, the Company effected a stock split of 165 for 1. All references to shares issued have been restated for this split beginning July 31, 1998.

On September 2, 1998, the company amended its articles of incorporation to increase its authorized capital to 50,000,000 common shares of no par value, and 5,000,000 preferred shares with $.01 par value. No preferred shares have been issued to date. All references herein have been restated to reflect the amended amounts.

NOTE 10--CREDIT RISK CONCENTRATIONS

The Company extends credit to its customers on a regular basis. A significant portion of Company's receivables are from companies in the internet industry. Declines in this industry may make collection of these receivables doubtful.

NOTE 11--MAJOR CUSTOMERS AND VENDORS

During 2000 and 1999, revenues were recorded on sales to AMP3 of $301,301 and $258,401, or 30% and 24% of total revenues for those years, respectively. Additionally, sales to SourcePoint Capital ($168,759 or 17%), PGI International ($175,463 or 17%) and Pinkmonkey.com, Inc. ($112,305 or 11%) occurred in 1999. No other customers and no vendors accounted for 10% or more of sales or purchases during 2000 or 1999.

NOTE 12--STOCK OPTIONS AND WARRANTS

Beginning at inception, the Company adopted the disclosure requirements of FASB Statement 123, Accounting for Stock Based Compensation Plans. The Company's 1998 Incentive Stock Option Plan provides for the grant of incentive stock options qualifying under the Internal Revenue Code to officers and other employees of the Company and the grant of non-qualified options to directors, employees and consultants of the Company. In addition, the Company issues stock warrants from time to time to employees, consultants, stockholders and creditors as additional financial incentives. The plans and warrants issuances are administered by the Board of Directors of the Company, who have substantial discretion to determine which persons, amounts, time, price, exercise terms, and restrictions, if any. Both options and warrants carry certain anti-dilution provisions concerning stock dividends or splits, mergers and reorganizations. Options differ from warrants in that the option awards are non-transferable. In contrast, all warrants issued are assignable.

The Company uses the intrinsic value method of calculating compensation expense, as described and recommended by APB Opinion 25, and allowed by FASB Statement 123. During the years ended July 31, 2000 and 1999, no compensation expense was recognized for the issuance of these options and warrants, because no option prices were below market prices at the date of grant. In addition, options and no warrants have been exercised during these periods. As of July 31, 2000, all outstanding warrants are payments for consulting and professional services. The options are subject to 3-year vesting requirements and expire 5 and 10 years from their dates of grant.

F-10

HOUSTON INTERWEB DESIGN, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

Summary information on each are as follows:

                                    Weighted Average           Weighted Average
                           Options    Share Price    Warrants    Share Price
                           -------  ---------------- --------- ----------------
Year ended July 31, 1999:
  Granted and
   outstanding...........  288,000       $1.64         412,500      $1.03
Year ended July 31, 2000:
  Granted................  501,000         .71       1,980,000       2.11
  Exercised..............  ( 3,750)       1.50
  Forfeited..............  (50,250)       1.50
                           -------       -----       ---------      -----
Outstanding at July 31,
 2000....................  735,000       $1.05       2,392,500      $1.93
                           =======       =====       =========      =====

Additional disclosures as of July 31, 2000 are:

                                                               Options  Options
                                                                 at        at
                                                              $.69-$.76 $1.50-$2
                                                              --------- --------
Total options
  Number of shares...........................................  462,000  273,000
  Remaining life.............................................  9 years  8 years
Currently exercisable options
  Number of shares...........................................   76,900  132,600

                                                                       Warrants
                                                                          at
                                                                        $.69-$2
                                                                       ---------
Total warrants
  Number of shares.................................................... 2,392,500
  Remaining life......................................................   2 years
Currently exercisable warrants
  Number of shares.................................................... 2,392,500

Had compensation cost for the Company's stock-based compensation plan been determined based on the fair value at the grant dates for awards under those plans consistent with the Black-Scholes option-pricing model suggested by FASB Statement 123, the Company's net losses and loss per share would have been increased to the pro forma amount indicated below:

                                                                    2000    1999
                                                                   -------  ----
                                                                       (in
                                                                    thousands)
Net loss
  As reported..................................................... $(3,855) n/a
  Pro forma.......................................................  (3,999)
Net loss per share
  As reported..................................................... $  (.22)
  Pro forma.......................................................    (.22)

Variables used in the Black-Scholes option-pricing model include (1) 5.5% risk-free interest rate, (2) expected option life is the actual remaining life of the options as of each year end, (3) expected volatility is the actual historical stock price fluctuation volatility and (4) zero expected dividends.

The Company's stock began trading on a stock exchange on January 31, 2000. No calculation of the pro forma net loss was made for the prior year.

F-11

EXHIBIT 10.10

Cooperation Agreement

"Beijing Artists Online Co. Ltd."

Chapter 1 General Principles

3.1. In accordance with the Law of the People's Republic of China on Sino- foreign Co-operative Enterprises and the Implementation Rules thereof and relevant Chinese laws and regulations, Dinghshen Investment Co. Ltd., Houston Interweb Design, Inc. and China National Culture Net; adhering to the principles of equality and mutual benefit and following friendly consultation, agree to jointly invest in and establish a limited liability co-operative joint venture in Beifjing, the People's Republic of China ("China or PRC") and thereof enter into this moint venture Contract ("Contract") and signed formally by the three parties after China National Culture Net has establish its company.

Chapter 2 Parties to the Joint Venture

2.1. The Parties to the Joint Venture:
Hainan Dingshen Investment Co. Ltd. ("Party A"), registered in Hainan Province, PRC
Legal address: Room 1378, Sheg Fa Zhang Building, 22 Jinlong Rd., Haikou City, Hainan Province, PRC.

Legal representative: Zhong, Shi Yuan

Position: Chairman
Nationality: Chinese

Houston Interweb Design, Inc. ("Party B"), registered in the U.S.A. Legal address: 1770 St. James, Suite 420, Houston, TX 77056, USA Legal representative: Harry White Position: Chairman
Nationality: American

China Culture Information Net ("Party C"), registered in Beijing, PRC Legal address of the entity: No.10 Chao Yang Men Wai Da Jie, Beijing Legal representative: Sun Jia Zheng
Position: Minister of Ministry of Culture of PRC Nationality: Chinese

Chapter 3 Name and Address

3.1. In accordance with the Law of People's Republic of China on Sino-foreign Co-operative Enterprises and other relevant Chinese laws and regulations, Party A, Party B and Party C agree to jointly establish the Beijing Artists Online Limited Liability Company ("CJV").

3.2. The CJV's Chinese name is "name in Chinese laguauge"; The English name is "Artist Online Limited Liability Company". The legal address of the CJV is: 10/D Tower B., No. 17 Dongsanhuan Nan Rd., Chaoyang Qu, Beijing
100021, PRC

3.3. The CJV is a limited liability company. The CJV shall be liable for its debts with all its assets. The parties to this contract shall undertake responsibilities with their contributed capital.

3.4. The parties to the CJV agree to share the profits, undertake risks and responsibilities of the CJV in proportion to their contributed capital.

3.5. The CJV has the status of a legal person of the PRC, and is subject to the jurisdiction and protection of the laws of China.

Chapter 4 Objectives and Scope of Business

4.1. The business Objectives of the CJV is: to promote and develop Chinese culture through the use of new and advanced Internet technology both in China and overseas; to promote and develop China music industry; to provide artists and their audiences with an unprecedented, financially sustainable music distribution and entertainment platform.

4.2. The business scope of the CJV is, through use of world leading technology such as Siteblazer web site and data base technology, to provide artists with:

. Self design and updating of web pages, music and graphics uploading capacity;
. Instant access of web visit statistics such as number of downloading and views, as well as the source of visitors;
. A communication platform between artists and their audiences;
. Patent protected music and advertising jingle bell technology;
. A complete E-commerce platform;
. Scalable database platform to meet the increasing demand of the artists.

To engage in the website related music production, distribution, sales and advertising.

Chapter 5 Total Amount of Investment and Registered Capital

5.1. The total amount of investment of the CJV is RMB Twenty Million (RMB20,000,000).
5.2. The registered capital of CJV is RMB Ten Million (RMB10,000,000).
5.3. Capital Contribution and proportion of equity interest are as follows:

Party A shall contribute RMB5.3 Million and the expertise of business management, marketing and sales and other related technology and know- how, as the registered capital of the CJV, which shall account for fifty five percent (55%) of the registered capital

Party B shall contribute US Dollars equivalent to RMB2.7 Million and the non exclusive SiteBlazer technology, its further development, related know-how and technical support, as the registered capital of CJV, which shall account for thirty three percent (33%0 of the registered capital;

Party C shall contribute its expertise to provide culture consultant, to assist in the promoting and organizing of the web site of the CJV and other related works to the CJV, which shall account for eight percent (8%) of the registered capital.

5.4 Procedures to be accomplished before making capital injection

Only after all the procedures listed below have been completed in the order in which they are listed below, would Party A and B then inject the contributed in cash to the registered capital that they have subscribed. Until the accomplishment of all the procedures listed below, Party and B have no responsibility or obligation to inject any contribution in cash to the registered capital:

5.4.1. Approval of this Contract and Articles of Association of CJV ("AOA") by the board of directors of Hainan Dingshen Investment Co. Ltd.;

5.4.2. Approval of this Contract and AOA by the board of directors of Houston Interweb Design, Inc.;

5.4.3. Issuance by the Beijing Economic and Trade Commission ("Commission") of the approval to the project proposal, feasibility study report of this project, this Contract, AOA and other related documents. Other

necessary approval, license and certificate, which permit the use of Internet to carry out the objectives of the CJV and implementing the scope of business as defined herein.

5.4.4. Receipt by the CJV of the Business License of Enterprise Legal Person of PRC [duplicate copy] to be issued by the Administration for Industry and Commerce;

5.4.5. The CJV completes the tax registration, foreign exchange registration. Capital account and basic account have been opened with a designated bank.

5.4.6. The CJV has entered into technology transfer agreement with Party A and B and has been registered with relevant Chinese authorities. If any of the procedures mentioned above is not finished within six months from the date hereof, any Party shall has the right by notice in writing to the other Parties to terminate this Contract and the AOA, without any legal liabilities.

5.5 Means and time frame of capital contribution:
Party A and B shall obtain various approvals, permits and licenses necessary to the CJV as set forth in Article 5.4 above.

5.6 The amount of the capital contribution in cash shall be directly remitted to the capital account of the CJV to be opened with a designated bank.

5.7. The CJV shall not reduce the amount of its registered capital during the term of the CJV. As exclusion, with the unanimous approval of the Board of Directors and the approval of the original examination and approval authority, the CJV may reduce the registered capital of the CJV.

5.8. Assignment of equity interests

5.8.1. Without the prior consent in writing from the other two parties, no Party could transfer all or part of the contribution so subscribed or equity interest in the CJV. In case one Party intends to transfer its all or part of its contribution subscribed or equity, the other Parties shall have the pre- emptive right to purchase such contribution or equity in proportion to their contribution to the total registered capital. If only one party wants to exercise the pre-emptive right, this party can purchase all or partial shares transferred.

5.8.2. If the other two Parties waive the pre-emptive right, the Party in question could transfer its contribution to any third party. Such transfer must obtain consent from the other two Parties, and such consent shall not be unreasonably refused. The terms and conditions of such transfer shall be no favorable than those offered to the other Party.

5.9. In case one Party intends to transfer its all or part of its equity or contribution, in addition to complying with the stipulation in Article
5.8. above, it shall obtain approval from the original examination and approval authority and effect change of registration with the Administration for Industry and Commerce.

5.10. Without the prior consent in writing from the toher Parites, no Party may grant to any one mortgage, charge or any other form of security over its equity, contribution subscribed or any other interest in the CJV.

5.11. After the contribution has been made, a China-registered accountant shall be engaged by the CJV to verify such contribution and present a certificate of verification.

Chapter 6 Responsibilities of the Parties

6.1. Party A shall be responsible for the following matters:

6.1.1. To make the contribution and on time in accordance with the terms of the Contract;

6.1.2. To apply for all the approval to the Beijing Municipal Government and other relevant authorities in charge ofr approval in relation to this Contract and the CJV, including the operation permit of CJV, and to maintain the validation of the above approvals and permits through the term of the CJV;
6.1.3. To handle the procedures for registration and obtaining of business license of the CJV, etc.;
6.1.4. To provide qualified management personnel to be responsible for the CJV's business management and marketing and sales.
6.1.5. To be responsible for other obligations defined by this Contract and other matters entrusted by the CJV.

6.2. Party B shall be responsible for the following matters:
6.2.1. To make the capital contribution and on time in accordance with the Contract.
6.2.2. To provide qualified technical personnel to be responsible for the CJV's technology support and development, to provide training of technicians and business personnel of the CJVl; to maintain the CJV's technical advantage through out the whole JV period together with the Party A.
6.2.3. To be responsible for other obligations defined by this Contract and other matters entrusted by the CJV.

6.3 Party C shall be responsible for the following matters:
6.3.1. To assist in CJV in the promotion and organization of relevant business and to provide the company with the necessary consultant on culture matters.
6.3.2. "Beijing Artists Online Co. Ltd." Will form a cooperative partnership relationship, and host each other's web pages respectively.
6.3.3. To be responsible for other obligations defined by this Contract.

6.4. The services provided to the CJV by each Party shall be charged on the arm's length basis.

Chapter 7 Board of Directors

7.1. The date on which the CJV is granted its business license shall be the date of the establishment of the Board of Directors of the CJV ("Board of Directors").
7.2. The Board of Directors shall consist of five (5) directors, three (3) appointed by Party A, one (1) appointed by Party B and one (1) by Party C. The Chairman of the Board of Directors ("Chairman") shall be appointed by Party A and the Vice Chairman ("Vice Chairman") shall be appointed by Party B. The Chairman, Vice Chairman and directors shall each serve for a term of three (3) years, which shall be renewable if they continue to be appointed by the respective appointing Parties.
7.3. The Chairman and the Vice-Chairman each have one vote like other directors.
7.4. The Board of Directors shall be the highest authority in the CJV and be authorized to make decision on all fundamental issues concerning the CJV. It's main responsibilities and powers are as follows:
7.4.1. To make decision on and adjust the CJV's business and develeopment plan and investment plan;
7.4.2. To decide and approve important reports from the General Manager;
7.4.3. To decide the establishment of branches;
7.4.4. To amend the Article of Association of the CJV;
7.4.5. To decide through discussion the division of or merger with other economic organization of the CJV;
7.4.6. To engage the General Manager; and Deputy General Manager;
7.4.7. To decide and approve the increase or reduction of the registered capital of the CJV;
7.4.8. To discuss and decide the termination of the CJV and to be responsible for the work as to the termination and liquidation of CJV;
7.4.9. Other major decisions that should be made by the Board of Directors.

7.5. The Board of Directors shall be convened at least once a year. An interim meeting could be convened based upon a proposal made by more than one third of the total number of directors. Any party shall inform the Board of Directors and the other two parties in writing when it appoints or replaces its directors(s).

7.6. The meeting of the Board of Directors shall take place at address of the CJV unless the Board of Directors decides otherwise.

7.7. The Chairman shall be responsible for convening and presiding over the meeting of the Board of Directors. If the Chairman is absent, the Vice- Chairman shall convene and pressed over the meeting.
7.8. The Board of Directors shall, 30 days in advance of a schedule meeting, give all the directors a written notice, specifying the agenda, time and place of the meeting.
7.9. No meeting of the Board of Directors shall be validly convened of effective unless a quorum consisting of at least three directors or its delegation (in case of attending by a delegation, the Chairman shall be notified seven (7) days in advance). Any resolution adopted shall be invalid when the Board of Directors can't meet the quorum.
7.10. Minutes of all the meetings shall be made in detail in writing. All the directors or delegation thereof that attend the meeting shall sign on it. The minutes shall be made in English and Chinese, and shall be filed with the CJV.
7.11. The following matter must be decided by an unanimous vote of the directors present at a Board of Directors meeting ("Special Resolution");
7.11.1. Amendments to the Articles of Association of the CJV;
7.11.2. The increase, reduction and assignment of the registered capital of the CJV;
7.11.3. The division or merger with other economic organizations of the CJV;
7.11.4. Termination and dissolution of the CJV;

7.12. Other decisions on the topics require agreement of simple majority vote by the directors present at a Board of Directors meeting.

Chapter 8 Business Management Organization

8.1. The CJV will have a business management organization which is comprised of general management office, a finance department and operation department. This organization will have a General Manager, two Deputy General Manager, who will be responsible for the daily operation and management under the leaedership of the Board of Directors.
8.2. The General Manager (of the CJV) shall be nominated by Party A, the first Deputy General Manager shall be nominated by Party B and the second Deputy General Manager shall be nominated by Party C and all of them shall be appointed by the Board of Directors. They shall each serve for a term of three (3) years, which shall be renewable if the continue to be appointed by the Board of Directors.
8.3. The General Manager shall not hold a concurrent position of senior management in other economic organizations, and shall no involve in activities of other economic organizations in business competition with the CJV.
8.4. The CJV will have a Chief Accountant ("Chief Accountant") which is to be appointed by the General Manager. The Chief Accountant shall be subject to leadership of and report to the General Manager. The First Deputy General Manager shall be responsible for the company's technology development and support, and report to the General Manager. The Second Deputy General Manager shall be responsible for the company's general administration, labor insurance and union, and report to the General Manager.
8.5. The Chief Accountant is responsible for directing the work of finance and accounting of the CJV, organizing the overall economic accounting of the CJV and implementing economic responsibility system. Chief Engineer is to be recommended by Party B and to be appointed by the General Manager.
8.6. The General Manager (including the First and Second Deputy General Manager) who asks for resignation shall submit a 3 months written request to the Board of Directors. General Manager, First and Second Deputy General Manager, Chief Engineer, Chief Accountant, may be dismissed by the Board of Directors at any time in case the above personnel is incapable of performing his/her work tasks, commits corruption or seriously neglects the duties of the position. The candidates for the vacated position shall be nominated by the original nomination party and to be appointed by the Board of Directors.

Chapter 9 Employees and Labor Management

9.1. In accordance with the Regulations on Labor Management of the Foreign Investment Enterprises and other relevant regulations, the employment, recruitment, dismissal, labor protection, labor discipline, payment, labor insurance, welfare, awards and punishment etc. of all employees of the CJV shall be, following the Board of Directors' policy, set forth in the collective or

individual labor contracts to be entered into by the CJV with the trade union or each of the employees, which shall be submitted to the local labor management authority for filing.

9.2. The hiring of General Manager, First and Second Deputy General Manager, Chief Engineer, Chief Accountant, their salaries, social insurance, welfare, and the standard of traveling expense, etc., shall be decided by the Board of Directors according to the stipulations of this Contract and by the simple majority vote of the Board of Directors.

9.3. The General Manager has the power to take discipline actions, such as issuing warning, recording of a demerit, reduction of salary, to the employees who break the labor discipline and regulations of the CJV, and is authorized to dismiss them in serious case.

Chapter 10 Taxes, Financial and Auditing Matters

10.1. The CJV shall pay taxes in accordance with the stipulations of Chinese laws and other relative regulations.
10.2. The employees of the CJV shall pay individual income tax in accordance with the Law of Individual Income Tax of the PRC.
10.3. The reserve fund, expansion fund and staff welfare and bonuses fund shall be set aside by the CJV in accordance with the stipulations in the Law of the PRC on Sino-foreign Co-operative Enterprises. The ratio of allocation to be set aside each year shall be decided by the Board of Directors.
10.4. The CJV shall establish and implement the financial, accounting and auditing systems in accordance with the stipulation of the Chinese laws and regulations on finance, accounting and audit.
10.5. Financial audit of the CJV shall be conducted by a Chinese certified public accountant and reports shall be submitted to the Board of Directors and the General Manager.
10.6. Any Party has the right to engage an auditor to check and examine the accounting books of the CJV at its own expenses. The CJV shall provide convenience for such check and examination. The expenses shall be borne by the engaging Party.
10.7. All the matters related to foreign exchange of the CJV shall be handled in accordance with the stipulation of the Regulation of PRC on Foreign Exchange Control and relevant regulations and the stipulations thereof.

Chapter 11 Profit Distribution

11.1   After the payment of income tax pursuant to the tax laws and the
       allocation of the three funds to be decided by the Board of Directors,
       the Board of Directors shall decide the amount of profits to be
       distributed and the time for distribution. The portion payable to Party B
       will be converted into foreign exchange by the CJV and paid into such
       account(s) as designated by Party B.
11.2   Until the deficit of last year is made up for, the CJV shall not
       distribute its profits. The remaining profits of last year could be
       distributed together with the profit of this fiscal year.


                      Chapter 12  Trade Union Organization

12.1. Employees of the CJV shall have the right to establish trade union organization, carry out activities and allocation of union fees in accordance with the stipulations of the Trade Union Law of the PRC.

Chapter 13 Term and Termination

13.1. The Term of the CJV shall be thirty (30) years and will start from the date of issuance of the business license.
13.2. In case all the Parties agree to extend the term of the CJV, following a Special Resolution adopted by the Board of Directors, an application for such extension shall be submitted to the original examination and approval authority 180 days prior to the expiry of the term. An extension of the term

shall take effect only after approval by the original examination and approval authority and amendment of registration shall be effected with the administration of industry and commerce.
13.3. Early termination of this Contract could be made in case parties all agree that it is in the maximum interest of all the parties. The early termination of this Contract shall be subject to the Special Resolution by the Board of Directors meeting and the approval from the original examination and approval authority.

13.4. Upon the occurrence of any of the events described below, any Party could notify in writing the other Party of requesting to terminate this Contract:
13.4.1. Any Party seriously break this Contract or the AOA and fails to cure its default within 60 days after receiving a written request from the non- defaulting Party to cure such default;
13.4.2. The aggregate losses of the CJV are beyond the extent acceptable to any contracting Party, and each Party could not come to a written agreement as for the recapitalization of the CJV;
13.4.3. One Party goes bankrupt or is involved in court proceeding for its liquidation or dissolution or not able to continue operation or repay its liabilities;
13.4.4. One Party fails to transfer its terms of co-operation or contribution in accordance with the stipulation of this contract;
13.4.5. All of substantial part of the CJV's assets has been appropriated or confiscated by the State authority resulting in the CJV's inability to continue its operation;
13.4.6. The competent authority of or any examination and approval department of any Party requires to revise the terms of this Contract and such revision will have material adverse impact on the CJV or either Party;
13.4.7. Occurrence of unexpected accident results in the CJV's inability to operate effectively. In case any Party issue the notice requiring the termination of the Contract, all Parties shall consult with each other within two months of the issuance of the notice, trying to solve this cause for such request of termination. If all Parties can not reach an agreement on solution within the two months, Article 13.5 below could be applied.

13.5. Any non-defaulting Party could give notice to the other Party ("Acquisition Notice") offer to purchase the contribution or terms of co-operation to the CJV by such Party. To ensure the continuous operation of the CJV, the acquisition shall be conducted in accordance with the following:
13.5.1. In case all Parties come to an agreement on satisfying terms and conditions of the acquisition, the acquisition shall be conducted in accordance with the stipulation in Article 13.5.4.
13.5.2. In case the two Parties fail to come to an agreement on terms and conditions of the acquisition acceptable to all Parties withn 4 weeks from Acquisition Notice given by one Party, the terms and conditions of acquisition shall be determined in accordance with Article 13.5.3 below.
13.5.3. Each Party of the CJV shall appoint respectively an accountant or valuator dully qualified in China to evaluate the value of the CJV jointly. The appointment by each Party must be informed to the other Party in writing within 6 weeks after the Acquisition Notice. Any Party who fails to appoint an account or valuator will be deemed to waive the right of appointment. The valuation shall be completed within 4 weeks. During the process of evaluation, the CJV shall keep on operating of the CJV. The plan of evaluation should base upon the continuous operation and economic effect of the CJV.
13.5.4. The terms and condiditon of the acquisition determined in accordance with the stipulation if Article 13.5.1. pr Article 13.5.3. shall be implemented within 30 days of signing of the acquisition contract by the Parties and obtaining of necessary governmental approval(s) thereto.
13.5.5. If all Parties fail to reach an acquisition contract according to the above regulations, or fail to obtain the governmental approval within 30 days after signing of such contracts, or the buying Party fails to pay the acquisition price in full in accordance with the terms and conditions of the acquisition contract, the CJV shall be liquidated in accordance with the stipulation in Chapter 14.

Chapter 14 Liquidation

14.1. In case the CJV can not keep operating continuously in accordance with the stipulation in Article 13, the CJV shall dissolute, and undergo liquidation under the direction of the liquidation committee.
14.2. At the time of expiry of the term of the CJV or the early termination of the CJV, the Board of Directors shall propose the liquidation procedures, priniciples and candidates for the liquidation committee to form the liquidation committee and liquidate all assets of the CJV.
14.3. The task of the liquidation committee is to conduct thorough examination of the CJV's assets, credits and debts, work out balance sheet and assets list and develop a liquidation plan and submit for approval to the Board of Directors.
14.4. After Liquidation, the CJV shall submit a report to the original examination and approval authority and go through the formalities with the orginal registration authority for cancellation of the CJV, return the business license and make a public announcement.

Chapter 15 The Amendment, Alteration and Liabilities for Breach

15.1. The Amendment to this Contract and appendix hereto shall require the agreement in writing by all the Parties and the approval from the original examination and approval authority for going into effect.
15.2. In case this Contract and/or the appendix hereto cannot be performed or fully performed due to any Party's fault, such Party shall be responsible for the liabilities of the breach. If such failure to perform this Contract is attributable to all the parties, the Parties shall share the responsibilities according to the actual circumbstancses.

Chapter 16 Force Majeure

16.1. Should any Party be prevented from performing in whole or in part this Contract by force majeure such as earthquake, typhoon, flood, fire and war and other unforeseen events, and their occurrence and consequences are unpreventable and unavoidable, the prevented Party shall notify the other Party of the circumstance of the events by cable or telex without any delay and within 15 days thereafter provide the detailed information of the events and a valid certificate of evidence issued by the relevant public notary office for explaining the reason of its inability to perform in whole or in part or delay in performing this Contract. If an event of force major occurs, the prevented Party shall not be responsible for any loss or increased costs which the other Party may sustain by reason of such failure or delay of performance. The prevented Party shall take appropriate measures to minimize or remove the effect of force majeure and within the shortest possible time, attempt to resume performance of the obligation affected by the event of force majeure. All Parties shall, through consultations, decided whether to modify or terminate this Contract according to the effects of the events on the performance of the contract.

Chapter 17 Applicable Law

17.1. The formation of this Contract, its validity, interpretation, performance and settlement of disputes shall be governed by relative laws of the PRC but international practice shall be applied in the situations where Chinese laws is silent.

Chapter 18 Settlement of Disputes

18.1. Any disputes arising from the performance of or relevant to this Contract shall be settled through friendly consultations among all the Parties. In case no settlement could be reached through friendly consultations, the disputes should be submitted to the China International Economic and Trade Arbitration Commission for arbitration in accordance with the Commission's rules in effect at that time. The languages of the arbitration shall be Chinese and English. The arbitral award is final and binding upon both Parties.
18.2. During arbitration, the Contract shall continue to be performed, except for the matters under arbitration.

18.3. The non-disputing party may choose to join one of the disputing parties or not to participate in the arbitration.

Chapter 19 Languages

19.1. The Contract is written in both Chinese and English. Both language versions shall be equally authentic. There are ten (10) originals of this contract in each language version. Each Party shall keep two each of the both versions, and the remaining four shall be retained by the CJV and submitted to the relevant departments.

Chapter 20 Effectiveness of the Contract and Miscellaneous

20.1. For use by the CJV of any name or mark (including but not limited to trade marks and service marks) which is the property of Party A, Party B or their associated companies or on which Party A, Party B or their associated companies are entitled to grant a license or a sub-license, the CJV shall enter into a license agreement with Party A, Party B or their associated companies (as the case may be) separately.
20.2. Each Party shall keep secret any business or technical information of confidential nature of the CJV of the other Party that comes to its knowledge. Any Party that intends to make any announcement on the matters in relation to the CJV shall obtain prior consent of the other Parties.
20.3. Each Party shall be responsible for the costs in incurs in relation to preparation and execution of this Contract.
20.4. If the telegraph, fax or telex is used by either Party to sent a notice on any matters concerning the Parties' rights and obligations, these communications shall be followed by courier or mail for confirmation by the sender. Except otherwise notified by such Party, the legal address of one Party as specified above herein shall be used for all communications purposes relating to this Contract addressed to such Party.
20.5. If there are other matters to be decided, both Parties could enter into supplementary contract, which shall come into effect on the date of approval by the examination and approval authority.
20.6. IN WITNESS WHEREOF, this Contract was executed by the legal/authorized representatives of the Parties.

For and on behalf of            Signature and the Seal
Party A
For and on behalf of            Signature and the Seal
Party B

For and on behalf of            Signature and the Seal
Party C


February 21, 2000

EXHIBIT 10.11

SOFTWARE RESELLER AGREEMENT

THIS AGREEMENT is entered into as of April 14, 2000, by and between HOUSTON INTERWEB DESIGN, INC., a Texas corporation ("Interweb") and Daniel Ferreira and Robert Colvin, dba Brasil Interweb, a Brazilian Corporation ("Reseller").

WHEREAS, Interweb has the right to license the Software Product(s); and

WHEREAS, the parties desire that Interweb license to Reseller the right to market and distribute Software Product(s) manufactured and hosted by Interweb, such distribution to be authorized on a standalone basis, subject to the terms and conditions hereof;

NOW, THEREFORE, in consideration of the foregoing, and in reliance on the mutual agreements contained herein, the parties agree as follows:

1. DEFINITIONS

1.1 "Software Product(s)." Interweb's computer program(s) in Object Code form as listed and described in Interweb's attached Confidential Product and Price List Exhibit, together with associated Documentation, and any fixes, updates, or upgrades which are delivered to Reseller by Interweb under this initial Agreement or under any other agreement or arrangement between the parties.

1.2 "Documentation." User's guides for the Software Product(s).

1.3 "Object Code." The representation of Software Product(s) in the binary instruction code form suitable for execution by a computer.

1.4 "Source Code." The representation of Software Product(s) in a relatively high-level computer programming language.

1.5 "Distributors." Distributors, wholesalers, and retailers of computer and/or software products.

1.6 "End-Users." Customers who acquire Software Product(s) for their internal use and not for redistribution, remarketing, time-sharing, or service bureau use.

1.7 "Field of Use." All industries.

1.8 "End-User License Terms." Terms and conditions described in the attached End-User License Terms Exhibit to be incorporated into an End-User license agreement by Reseller for use in the distribution of Software Product(s).

1.9 "Proprietary Rights." Any and all rights in and with respect to patents, copyrights, Confidential Information, know-how, trade secrets, moral rights, contract or licensing rights, confidential and proprietary information protected under contract or otherwise under law, and other similar rights or interests in intellectual or industrial property.

1.10 "Indemnify." To fully defend and indemnify the designated party to be indemnified, its officers, directors, employees, agents and other representatives, and to pay any and all liabilities, losses and damages (including awards of court costs and attorneys' fees) resulting from the subject claim.

1.11 "Confidential Information." Information (i) relating to the architecture, design, and coding methodology embodied in the Software Product(s); (ii) embodied herein regarding the terms and conditions of this Agreement; and (iii) disclosed by one party to the other regarding past, present, or future marketing and business plans, customer lists, and lists of prospective customers.

1.11.1 "Confidential Information" includes all tangible materials which contain the information described above, including without limitation, written or printed documents and electronic media.

1.11.2 "Confidential Information" does not include (i) information which is or becomes generally known or available through no act or failure to act by the receiving party; (ii) is already known by the receiving party as evidenced by its written records, (iii) is rightfully furnished to the receiving party by a third party without restriction or disclosure; or (iv) is independently developed by the receiving party without reference to Confidential Information.

1.12 "Technical Support Terms." Those terms and conditions set forth in the attached Technical Support Terms Exhibit, and by reference incorporated herein.

1.13 "Territory." Brazil, S.A.

1.14 "Effective Date." The date of execution hereof by both parties as specified in the preamble hereof.

2. LICENSE AND RESTRICTIONS

2.1 Grant of License. Subject to the limitations and restrictions provided in this Section 2 and to the other terms and conditions of this Agreement, Interweb hereby grants, and Reseller hereby accepts, the limited right and license:

2.1.1 Use License - to practice, use, and operate the Software Product(s) and only those of Interweb's Proprietary Rights embodied therein which are necessary for purposes of the reasonable exercise and enjoyment of the limited rights granted herein.

2.1.2 Distribution License - to distribute and display the Software Product(s) on a standalone basis as authorized herein, only in Object Code form, only as limited by the Field of Use, and only to End-Users located within the Territory through a single tier of distribution consisting only of sales personnel with face-to-face contact with End-Users.

2.1.3 End-User Sublicenses - to grant sublicenses for Software Product(s) only to End-Users, only for purposes of use and not for redistribution, only in conformity with the Sublicense Terms, and only in written form and signed by the Reseller.

2.2 Non-Exclusive License. The license granted herein is non- exclusive. Interweb may distribute the Software Product(s) both on a standalone basis and as combined with other software without restriction.

2.3 Exclusive Dealing Restriction. During the term hereof, Reseller shall not distribute, or act as an agent or representative of any developer, publisher, or manufacturer, of software programs that are functionally comparable or intended, by applicable marketing and promotional programs directed to such products, to compete directly with the Software Product(s).

2.4 Internal Use of Software Product(s). Reseller may use the Software Product(s) to process Reseller's own internal data without restriction. Reseller is not authorized to process data for third parties.

2.5 Restriction on Promotional Copies. Notwithstanding anything to the contrary contained herein, distribution of promotional or demonstration copies of Software Product(s) by Reseller without payment of fair market value in money is not authorized, except for a maximum of the lesser of (i) five percent (5%) of copies distributed, or (ii) 50 copies per year during the term hereof.

2.6 Trademark Rights; Product Naming.

2.6.1 Reseller is hereby granted the limited right and license to reproduce Interweb's trademark(s) associated with the Software Product(s) on marketing materials and advertising for the Software Product(s), subject to a right of prior approval by Interweb for purposes of determining accuracy and correctness. Reseller shall not otherwise use such trademarks for any purpose without the prior written approval of Interweb.

2.6.2 Reseller is not authorized (i) to alter or modify Interweb's trademark(s) associated with the Software Product(s), or (ii) to market or distribute the Software Product(s) under any other product name or trademark.

2.7 Export. Software Product(s), including associated technical data, are subject to United States export control laws, and may be subject to export or import regulation in other countries. If Reseller is authorized to distribute Software Product(s) outside the United States at any time during the term hereof, Reseller agrees to comply strictly with all such regulations, and acknowledges that it has the responsibility to obtain such licenses to export, re-export, or import Software Product(s). Reseller shall, at its own expense, obtain and arrange for the maintenance in full force and effect of all governmental approvals, consents,

licenses, authorizations, declarations, filings and registrations as may be necessary or advisable for the performance of the terms and conditions of this Agreement, including without limitation, fair trade approvals.

2.8 Retained Rights. All rights that are not expressly granted to Reseller herein are retained by Interweb.

3. INTERWEB'S MARKETING AND SUPPORT RESPONSIBILITIES

3.1 Duties of Interweb. Interweb shall at its expense unless otherwise provided:

            3.1.1  Manufacture Software Product units and host sites for
Reseller.

            3.1.2  Provide to Reseller two (2) days (consisting of 8 hours each)

and up to 40 hours tech training/support of training at Interweb's facility or at a mutually agreeable location regarding the use and operation of the Software Product(s), all travel and lodging expenses to be the sole responsibility of Reseller; additional training, if requested by Reseller, will be provided at Interweb's then-current rates for consulting services.

3.1.3 Provide technical support only to Reseller in accordance with the Technical Support Terms. Interweb shall charge fees for technical support as provided in the Technical Support Terms.

3.2 Standard of Performance. Interweb shall use reasonable efforts to perform the marketing and support responsibilities described above.

4. RESELLER'S MARKETING AND SUPPORT RESPONSIBILITIES

4.1 Duties of Reseller. Reseller shall at its expense unless otherwise provided:

4.1.1 Design and print product advertising and collateral materials for the Software Product(s).

4.1.2 Develop and implement positioning strategies for the Software Product(s).

4.1.3 Provide to Interweb within thirty (30) days of the Effective Date a written marketing plan describing the projected sales for Software Product(s) for the initial term hereof together with the strategies and tactics for achieving the projected results.

4.1.4 Provide suitable press releases and public relations efforts for the initial launch of Software Product(s), together with ongoing public relations activities.

4.1.5 Promote, market, and distribute the Software Product(s) only through sales personnel with face-to-face contact with End-Users; sales personnel may be employees and/or sales agents selected by Reseller.

4.1.6 Comply with all limitations and restrictions on marketing and distribution provided in Section 2.

4.2 Standard of Performance. Reseller shall use its reasonable efforts to perform the marketing and support responsibilities described above.

5. PAYMENT, AND TAXES

5.1 This Agreement Controls. Notwithstanding the content of Reseller's purchase orders, this Agreement shall take precedence over such purchase order, and any conflicting, inconsistent, or additional terms of Reseller's purchase order shall be null and void.

5.2 Price and Payment.

5.2.1 Price; Resale Prices. Subject to the terms and conditions set forth in the Confidential Product and Price List, Reseller shall pay the price per unit for the Software Product(s) as indicated on the Confidential Product and Price List. Retail prices indicated by Interweb from time-to-time are binding on Reseller, and Reseller is free to determine its own resale pricing structure by bundling individual components as long as the minimum levels of each upsell/enhancement as defined on Attachment A are maintained.

5.2.2 Payment Terms. Payment terms are in full on the 10th day of each month if such day is a business day and on the next business day after the 10th if such date is a weekend or holiday. Payment is calculated on the gross revenues received in each month and subject to the pricing provisions above in 5.2.1 and in the Confidential Product and Price List. Interweb reserves the right in its reasonable commercial judgment to place Reseller on credit hold, in which event Interweb will promptly inform Reseller, and Interweb may suspend Reseller orders.

5.2.3 Taxes and Duties. The prices stated are exclusive of income taxes, sales or use taxes, ad valorem taxes, duties, licenses, or levies imposed on the production, storage, sale, transportation or use of the Software Product(s). Reseller shall pay all such charges either as levied by taxing authorities or as invoiced by Interweb, or, in lieu thereof, Reseller shall provide an exemption certificate acceptable to the relevant taxing authorities.

6. WARRANTIES

6.1 Interweb's Limited Performance Warranty. For a period of ninety
(90) days commencing with the date of purchase by the End-User, Interweb warrants that the unmodified Software Product(s) shall (i) perform substantially in accordance with any provided Documentation, and (ii) be free of defects in materials and workmanship. Reseller's sole and exclusive remedy for breach of this warranty shall be limited to the prompt repair or replacement of the affected Software Product unit at Interweb's expense.

6.2 Disclaimer. TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, INTERWEB DISCLAIMS ALL OTHER WARRANTIES, EXPRESS AND IMPLIED, INCLUDING WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

6.2.1 SPECIFICALLY, INTERWEB MAKES NO REPRESENTATION OR WARRANTY THAT ANY SOFTWARE PRODUCT IS FIT FOR ANY PARTICULAR PURPOSE, AND ANY IMPLIED WARRANTY OF MERCHANTABILITY IS LIMITED TO THE DURATION OF THE LIMITED WARRANTY COVERING THE DELIVERABLES ONLY, AND IS OTHERWISE HEREBY EXPRESSLY DISCLAIMED. BECAUSE SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OR LIMITATION OF IMPLIED WARRANTIES, THE ABOVE LIMITATION MAY NOT APPLY.

6.2.2 RESELLER EXPRESSLY ACKNOWLEDGES THAT NO REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS AGREEMENT HAVE BEEN MADE RESPECTING THE GOODS OR SERVICES TO BE PROVIDED HEREUNDER, AND THAT RESELLER HAS NOT RELIED ON ANY REPRESENTATION NOT EXPRESSLY SET OUT HEREIN.

6.3 Reseller's Performance Warranty. Reseller is free to offer separate and additional warranty terms regarding the Software Product(s)in Reseller's name only, but Reseller shall not bind Interweb to such additional terms.

6.4 Rights Warranties.

6.4.1 Right to Contract and License. Interweb has the authority to enter into this Agreement and the right to grant the rights and licenses granted to Reseller herein without breach of obligation to any third party; and the performance of this Agreement will not breach any obligation to any third party.

6.4.2 No Encumbrances. Interweb hereby represents and warrants that the Software Product(s), and any prior or subsequent versions thereof (including any components thereof), as of the Effective Date and throughout the term hereof is not pledged, covered, collaterally assigned as security, or otherwise affected in any way by any bank loan, equipment financing, lending, or security arrangement, or other such arrangement which is entered into by or binding upon Interweb in any way.

6.4.3 Right to Quiet Enjoyment. Interweb hereby represents and warrants that the Reseller, and any prior or subsequent versions thereof (including any components thereof), as of the Effective Date and throughout the term hereof, does not contain any virus, Trojan horse, worm, or other software routine designed to permit unauthorized access to the associated computer system, or to disable, erase or otherwise damage software, hardware, or data, or to perform other similar actions; and does not contain or implement any back door, time bomb, software lockout key or device, drop dead device, or other software routine designed to disable a computer program, either automatically with the passage of time or under the positive control of a person other than Reseller.

7. INDEMNIFICATION

7.1 Reseller's Indemnity For Product Liability and Software Product Warranties. Subject to the terms and conditions provided herein regarding all Indemnities, Reseller shall Indemnify Interweb from and against any product liability or warranty claim regarding the Software Product(s) as a component of Software Product(s).

7.2 Rights Indemnities. Subject to the terms and conditions provided herein regarding all Indemnities, Interweb shall Indemnify Reseller against any breach by Interweb of any of the rights warranties stated above.

7.3 Infringement Indemnity of Reseller. Subject to the terms and conditions hereof, Reseller shall Indemnify Interweb against any claim that any material which Reseller combines or bundles with the Software Product(s) or derivative works based thereon created by Reseller infringes any Proprietary Right of a third party.

7.4 Infringement Indemnity of Interweb. Subject to the terms and conditions hereof, Interweb shall Indemnify Reseller against any claim that the Software Product(s) used by Reseller within the scope of this Agreement infringes any Proprietary Right of a third party.

7.5 Infringement Indemnity Terms and Conditions. The infringement Indemnities shall not apply to the extent that any third party's infringement claim is based upon modifications, enhancements and other revisions to the material which have been made by Indemnified party or by parties operating under license from or authorization by the Indemnified party. In the event of any ruling of infringement by a court of competent jurisdiction, or if the Indemnifying party reasonably believes such a ruling is likely, the Indemnifying party shall, at its expense and after notice to and consultation with the Indemnified party, at the Indemnifying party's option either:

7.5.1 modify the subject infringing material so as not to infringe, or replace such infringing material with a material that does not infringe; provided, however, that any modified or replacement material provided by Interweb shall have the same functionality, operating characteristics, compatibility and interoperability as the infringing material being modified or replaced; or

7.5.2 if Reseller is the Indemnified party, Interweb shall obtain a license for Reseller to continue using the subject material, free of any future liability from the claiming party.

7.6 Conditions to All Indemnities. All Indemnities are subject to the following conditions:

7.6.1 The Indemnified party notifies the Indemnifying party in writing within thirty (30) days of being apprised of the claim.

7.6.2 The Indemnifying party has sole control of the defense and all related settlement negotiations, subject to the right of Indemnified party to participate in and monitor such defense, at its own cost and option and through its own counsel, for the purpose of consulting with the Indemnifying party's counsel.

7.6.3 The Indemnified party provides the Indemnifying party with the assistance, information, and authority necessary to perform as required above, provided that reasonable costs and expenses incurred by the Indemnified party in providing such assistance and information will be reimbursed by the Indemnifying party.

8. LIMITATION OF LIABILITY

8.1 Interweb's Limitation of Actual Damages. Except for rights and infringement Indemnities, Interweb's liability to Reseller for actual damages from any cause whatsoever, and regardless of the form of the action, whether in contract, tort (including negligence), product liability or otherwise, will be limited to the amounts paid to Interweb hereunder.

8.2 Disclaimer. NEITHER PARTY WILL BE LIABLE TO THE OTHER IN ANY EVENT FOR ANY SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES (INCLUDING ANY DAMAGES FOR LOSS OF BUSINESS PROFITS, BUSINESS INTERRUPTION, OR LOSS OF BUSINESS INFORMATION), EVEN IF INFORMED OF THE POSSIBILITY THEREOF IN ADVANCE. BECAUSE SOME STATES DO NOT ALLOW THE EXCLUSION OR LIMITATION OF LIABILITY FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES, THE ABOVE LIMITATIONS MAY NOT APPLY.

9. PROPRIETARY RIGHTS

9.1 Title to Software Product(s). Under this Agreement, Reseller acquires only a license for the Software Product(s) and does not acquire any rights of ownership of any Proprietary Rights embodied therein. All right, title and interest in and to the Proprietary Rights embodied in the Software Product(s) shall at all times remain the property of Interweb or its licensors.

9.2 Confidential Information. Each party acknowledges that the other party may disclose its Confidential Information to the other in the performance of this Agreement. Each party further acknowledges the other party's assertion that the other party's Confidential Information is deemed to include valuable trade secrets and confidential business information proprietary to the other party and/or third parties. Accordingly, each party shall (i) take reasonable steps to keep the Confidential Information disclosed by the other party confidential, and (ii) use and disclose such Confidential Information only with the receiving party's employees and contractors who have a need to know and only for the purposes of fulfilling this Agreement, or for purposes of disclosure to affiliated companies and professional advisors for the purpose of disclosing the party's internal business.

9.3 Confidentiality of Software Product(s). Specifically regarding the Software Product(s), Reseller acknowledges Interweb's claim that the Software Product(s) embodies valuable trade secrets proprietary to Interweb. Accordingly, Reseller shall take reasonable measures to protect the Software Product(s) from unauthorized access, disclosure, and use, including without limitation, the placement of any Proprietary Rights notice on the Software Product(s) that is reasonably requested by Interweb. Reseller shall not:

9.3.1 Distribute, transfer, loan, rent, or provide access to the Software Product(s), except as provided herein.

9.3.2 Remove or add any Proprietary Rights notice associated with the Software Product(s) without the express written permission of Interweb.

9.3.3 Disassemble or decompile the Software Product(s) for any purpose.

9.4 Injunctive Relief. The parties hereby agree that any breach of this Section regarding Proprietary Rights would constitute irreparable harm, and that the aggrieved party shall be entitled to specific performance and/or injunctive relief in addition to other remedies at law or in equity.

10. TERM AND TERMINATION

10.1 Term of Agreement. The initial term of this Agreement shall commence as of the Effective Date hereof and shall continue for a period of one
(1) year. In

the event of change in control of Brazil Interweb, HIWD shall have the right to unilaterally terminate this license.

10.2 Renewal. The initial term hereof shall automatically renew for successive one (1) year terms upon reseller attaining either of the following sales levels; (1) 500 sites sold, or (2) average daily sales of at least 10 sites (over 22 sales days for a total of 220 sites sold) in the month prior to the start of new annual term. Upon renewal, Interweb will set new average daily sales numbers and annual minimum sales levels to be met in the following year and such amounts shall not be unreasonable taking into consideration the then current year sales levels and in no event shall such new levels be higher than 200% of the previous years levels. Both the initial term and any renewal term are subject to earlier termination as otherwise provided herein.

10.3 Automatic Termination. Unless Interweb promptly after discovery of the relevant facts notifies Reseller to the contrary in writing, this Agreement will terminate immediately without notice upon the institution of insolvency, bankruptcy, or similar proceedings by or against Reseller, any assignment or attempted assignment by Reseller for the benefit of creditors, or any appointment, or application for such appointment, of a receiver for Reseller.

10.4 Termination by Interweb for Cause. Interweb may terminate this Agreement and all licenses granted herein for a material breach by Reseller which remains uncured after thirty (30) days from receipt by Reseller of written notice describing the nature of the breach.

10.5 Termination by Reseller for Cause. Reseller may terminate this Agreement for a material breach by Reseller which remains uncured after thirty
(30) days from receipt by Interweb of written notice describing the nature of the breach.

10.6 Acknowledgment and Waiver. The parties acknowledge that the provisions of this Section are essential, fair, and reasonable, and that the occurrence of any of the events described herein shall constitute good, just, and sufficient cause for the termination or nonrenewal of this Agreement. The parties further acknowledge that any amounts spent in the performance of this Agreement shall be spent with the understanding that this Agreement may not be renewed. Accordingly, each party hereby waives any claim against the other for loss or damage of any kind (including, without limitation, damages or other compensation for unjust enrichment, loss of prospective profits, reimbursement for expenditures or investments made, or commitments entered into or goodwill), due to failure of the parties to renew this Agreement or upon expiration to make a similar agreement.

10.7 Inventory Sell-Down Period. Upon the expiration hereof, but not in cases of termination by Interweb for cause, Reseller may continue to distribute its then-current inventory of Software Product(s), but in no event no longer than three (3) months after expiration or termination. During this period, the provisions of this Agreement shall continue in force to the extent required for the limited purpose of permitting OEM to distribute its current inventory of Software Product(s).

10.8 Continuing Obligations. The following obligations shall survive the expiration or termination hereof and the distribution grace period provided above: (i) any and all limitations of liability and Indemnities granted by either party herein, (ii) any covenant granted herein for the purpose of protecting the Proprietary Rights of either party or any remedy for breach thereof, (iii) the payment of taxes, duties, or any money to Interweb hereunder, and (iv) the payment of compensation for monthly hosting fees.

11. GENERAL PROVISIONS

11.1 Notices. All notices shall be given in writing and shall be effective when either (i) served by personal delivery, (ii) upon receipt of mail sent as certified mail, return receipt requested, or (iii) upon receipt of facsimile transmission if verified by a written or electronic record of the transmission, provided that any such communication is addressed to the parties at their respective

addresses and/or facsimile numbers set forth below, or to such other address or numbers as either party may later specify by written notice or provide as part of the performance of this Agreement.

If to Interweb:

Houston Interweb Design, Inc.

1770 St. James
Suite 420
Houston, TX 77056
Contact: Lee Magness
Telephone: (713) 627 - 9494 Facsimile: (713) 627 - 2744

If to Reseller:

Daniel Ferreira or Robert Colvin

Rua Maestro Francisco Braga No. 175 Apto. 409 Copacabana
Rio De Janiero, RJ. Brasil,S.A.

Telephone: (011) 55-21-255-1937

Facsimile: (011) 55-21-255-9331 Cel. (011) 5511-9132-4037

11.2 Merger; Amendment. This Agreement shall not be considered an offer by either party, and it shall not be effective until signed by both parties. This Agreement constitutes the entire understanding of the parties with respect to the subject matter of this Agreement and merges all prior communications, understandings, and agreements. This Agreement may be modified only by a written agreement signed by the parties.

11.3 Independent Contractors. The relationship of the parties is that of independent contractor, and nothing herein shall be construed to create a partnership, joint venture, franchise, employment, or agency relationship between the parties. Reseller shall have no authority to enter into agreements of any kind on behalf of Interweb and shall not have the power or authority to bind or obligate Interweb in any manner to any third party.

11.4 Severability. If any provision of this Agreement shall be held by a court of competent jurisdiction to be contrary to law or public policy, the remaining provisions shall remain in full force and effect.

11.5 No Implied Waivers. The failure of either party to enforce at any time any of the provisions hereof shall not be a waiver of such provision, or any other provision, or of the right of such party thereafter to enforce any provision hereof.

11.6 Governing Law. This Agreement shall be construed under the laws of the State of Texas, without regard to its principles of conflicts of law.

11.7 Force Majeure. Neither party shall be liable for damages for any delay or failure of delivery arising out of causes beyond their reasonable control and without their fault or negligence, including, but not limited to, Acts of God, acts of civil or military authority, fires, riots, wars, or embargoes.

11.8 Multiple Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each one of which shall be deemed an original, but all of which shall constitute one and the same instrument.

11.9 Assignment. Reseller shall not assign this Agreement or any right or interest under this Agreement, nor delegate any work or obligation to be performed under this Agreement, without Interweb's prior written consent. Any attempted assignment or delegation in contravention of this provision shall be void and ineffective and shall be deemed to be a material breach hereof.

11.10 Change of Control. In the event of the direct or indirect taking over or assumption of control or merger of Reseller or substantially all of its assets by

any government authority or other third party, Interweb shall have the right to terminate this Agreement upon first giving written notice to Reseller.

11.11 Attached Exhibit(s). This Agreement includes the attached exhibit(s) listed below, which are hereby incorporated in this Agreement by reference.

Confidential Product and Price List Exhibit A Sublicense Terms Exhibit B Technical Support Terms Exhibit C

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed below.

HOUSTON INTERWEB DESIGN, INC.           Reseller:


By: /s//Harry White              By: /s//Daniel Ferreira
    --------------------------       -------------------------------
     Harry White - CEO                Daniel Ferreira

Title:                            Title:
    --------------------------      -------------------------------


Date: April 14, 2000                Date: April 14, 2000
    --------------------------      -------------------------------

EXHIBIT 10.12

Website/Banner Ad Development Agreement

This Agreement is between the Houston Chronicle Publishing Company, a division of Hearst Newspapers Partnership, L.P. ("Chronicle") and Houston InterWeb Design, Inc. ("HIDI") for the design and development of websites and banner ads for advertising customers of the Houston Chronicle.

1. Scope of Services. The Chronicle will identify and refer to certain Advertising Customers ("Customers") of the Houston Chronicle who desire assistance in the design and development of websites, banner advertisements, or other internet advertising solutions. HIDI shall provide to the Chronicle and the Customer customized internet advertising solutions as required by the Customer, including but not limited to the following:

(a) The design, development, implementation, operation, maintenance and updating of Customer-branded stand-alone Web Sites on the World Wide Web portion of the internet ("Customer Sites");

(b) The design, development and implementation of Customer-branded banner advertisements for use on the World Wide Web portion of the internet, whether on the Customer Sites or on other sites; and

(c) Such other customized internet advertising solutions as may be specifically agreed between each Customer, the Chronicle and HIDI in separate Tasking Letters to be negotiated with each Customer.

(d) Any ongoing maintenance or modifications associated with the above-referenced services, and all upgrades, enhancements, developments and new revisions to the products and software related to the development of Customer's Sites.

(e) The Site shall incorporate certain materials provided by HIDI which include, without limitation, computer software (in object or source code form), script, programming code, data, information, HTML code, trademarks, images, illustrations, graphics, multimedia files and/or text ("HIDI Content"). The Site shall also incorporate the materials, if any, provided by the Chronicle and Customers, including, without limitation, trade or service marks, images, illustrations, graphics, multimedia files and/or text (Chronicle Content"), provided that Chronicle and Customers deliver such Chronicle Content to HIDI promptly and in such media and/or electronic file format(s) designated in the Specifications or Tasking Letter.

2. Rates. HIDI's services will be billed to the Chronicle at the rates set forth on Exhibit A attached hereto. Rates for customized or non-scheduled services shall be billed on terms and conditions as may be separately agreed in a Tasking Letter between Customer, Chronicle and HIDI. HIDI agrees to keep the rates it charges to the Chronicle under this Agreement confidential.

3. Invoicing. All Customer invoicing shall be handled by the Chronicle. HIDI shall not bill any Customer directly, but shall instead separately submit to the Chronicle an invoice in intervals of not less than thirty days for HIDI's services on all Customer accounts under this Agreement, itemized by Customer.

4. Term. The term of the Agreement shall be for a period of one year, commencing on January 1, 2000 and ending on December 31, 2000. The Agreement shall be terminable by either party on thirty days written notice with or without cause, and terminable by either party immediately for cause, which shall include, but not be limited to, non-payment, default in services, or any material breach of the Agreement. The Agreement shall also terminate if an administrator, receiver or liquidator is appointed in connection with HIDI, or HIDI is otherwise bankrupt, files for bankruptcy or is insolvent.

5. Rights in Data and Works.

(a) Exclusive of Chronicle Content, HIDI shall retain all right, title and interest (including copyright and other proprietary or intellectual property rights) in HIDI Content, all legally protectable elements, or derivative works thereto, whether or not paid for wholly or in part by Chronicle or Customer, and whether or not developed in conjunction with Chronicle or Customer.

(b) All copyrights, trademarks, trade dress and other proprietary rights in text, data, images or related materials furnished by the Chronicle ("Chronicle Materials") are exclusively owned by the Chronicle, and all rights are expressly reserved by the Chronicle. Neither HIDI nor the Customer shall have the right to use any Chronicle trademarks, trade names, slogans or logos without the Chronicle's prior written approval.

(c) All wording, production and sponsorship of Customer banner ads to be displayed on the Chronicle's web site shall be subject to and consistent with the Chronicle's reasonable advertising standards.

(d) Chronicle shall retain all right, title and interest (including copyright and other proprietary or intellectual property rights) in the Chronicle Content.

(e) HIDI may place copyright and/or proprietary notices, including hypertext links within the HIDI Content as incorporated within and on the Site. Chronicle or Customer may not alter or remove such notices without HIDI's written permission.

(f) Chronicle or Customer shall not provide to HIDI any Content that may be obscene, defamatory, harassing, grossly offensive, malicious, or that actually or potentially infringes or misappropriates the copyright, trademark, or proprietary or intellectual property right of any person.

6. Warranties.

(a) HIDI warrants that all services to be performed under the Agreement will be rendered using sound, professional practices and in a competent and professional manner by knowledgeable, trained and qualified personnel using the most current and up-to-date technology commercially available, subject to the prior written approval of Customer.

(b) HIDI warrants that all Deliverables developed by HIDI for any Customer hereunder shall conform to all specifications provided in the Tasking Letter for each such Customer, and will operate materially in accordance with those specifications upon delivery. Except as expressly otherwise provided in any such Tasking Letter or in this Agreement, HIDI does not warrant that its services or Deliverables will be uninterrupted or error free.

(c) HIDI warrants that all software provided by HIDI and all Deliverables shall be Year 2000 Compliant. All Customer Sites developed by HIDI will be virus-free on delivery and will be accessible by Internet users twenty-four (24) hours per day, seven (7) days per week, provided however, in the event the host site used by HIDI is non-operational, HIDI will not be in breach of this Agreement so long as HIDI acts in a prudent and customarily reasonable manner to work to restore access and the service interruption does not last longer than 10 hours on any single interruption. In the event problems with HIDI's host site become persistent, the Chronicle shall have the right to insist that HIDI change its host site to a mutually agreeable provider.

(d) Chronicle represents and warrants to HIDI that: (i) Chronicle has the power and authority to enter into and perform its obligations under this Agreement; (ii) Chronicle and Customer Content does not and shall not contain any content, materials, link, advertising or services that actually or potentially violate any applicable law or regulation or infringe or misappropriate any proprietary, intellectual property, contract or tort right of any person; and (iii) Chronicle and Customer own their respective Content and all proprietary or intellectual property rights therein, or has express written authorization from the owner to copy, use and display the Content on and within the Site.

(e) EXCEPT AS EXPRESSLY STATED AT SECTION 6(a-c), DEVELOPER MAKES NO OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND/OR FITNESS FOR A PARTICULAR PURPOSE, CONCERNING THE SUBJECT MATTER OF THIS AGREEMENT.

7. Non-Solicitation Agreement.

(a) Each party agrees that it will not attempt to hire any employee of the other as an employee or subcontractor during the term of the Agreement or for a period of one year after the Agreement has terminated, unless agreed to in writing by both parties.

(b) HIDI shall not solicit or attempt to contract directly with any Customer for any advertising or internet design services at any time during the term of the Agreement or for a period of one (1) year after termination of the Agreement. HIDI acknowledges that the Customers hereunder are Customers of the Chronicle.

8. Non-Exclusivity. The Chronicle and HIDI agree that this Agreement is non- exclusive. The Chronicle may contract with other companies to provide similar services to its customers. Similarly, HIDI may provide similar services to customers who were not introduced to HIDI by the Chronicle. The terms of this Agreement shall apply to any Chronicle customer who is introduced by the Chronicle to HIDI.

9. Confidentiality. Each party shall agree not to use, disclose, sell, transfer or display the confidential information of the other party. "Confidential information" means proprietary information of a party not generally known by non-party personnel, used in that party's business, and the disclosure of which would be detrimental to that party. Confidential information shall include computer scripts, software, financial, marketing and business information, customer data, strategic plans and business plans, and the like. HIDI agrees and acknowledges that the rates it charges to the Chronicle under this Agreement are confidential. Upon termination or expiration of this Agreement, each party shall immediately deliver to the disclosing party all confidential information and shall cease all use of the confidential information.

10. Indemnification.

(a) Chronicle agrees to indemnify, hold harmless and defend HIDI and its directors, officers, employees and agents from and against any action, claim, demand or liability, including reasonable attorney's fees and costs, arising from or relating to: (i) Chronicle's breach of this Agreement; (ii) the negligence or willful misconduct of Chronicle; or
(iii) any allegation that the Chronicle or Customer Content infringes a third person's copyright or trademark right, or misappropriates a third persons trade secret. Chronicle agrees that HIDI shall have the right to participate in and control the defense of any such claim through counsel of its own choosing.

(b) HIDI agrees to indemnify, hold harmless and defend Chronicle and its directors, officers, employees and agents from and against any action, claim, demand or liability, including reasonable attorney's fees and costs, arising from or relating to any allegation that the HIDI Content infringes a third person's copyright or trademark right, or misappropriates a third person's trade secrets.

11. Independent Contractor. The relationship of the parties shall be that of an independent contractor. HIDI has the right to control the manner and means of performing its services and delivering the Deliverables, and HIDI shall bear all expenses attendant thereto. No agency shall be created by the Agreement. Neither party has the power or authority to represent, act for, bind, or otherwise create or assume any obligation on behalf of the other party for any purpose whatsoever.

12. Insurance. HIDI shall maintain throughout the term of the Agreement a commercial general liability policy in an amount of not less that $5,000,000 covering all software, services and other Deliverables to be provided and performed hereunder. HIDI shall furnish the Chronicle with satisfactory proof of insurance in compliance with this provision.

13. Notice. Any notice required to be given under this Agreement shall be in writing and shall be duly served when it shall be hand delivered to the addresses set forth below, or three (3) days after mailing if written notice has been deposited, duly registered or certified, return receipt requested, in a post office or official depository under the care and custody of the United States Postal Service addressed to the other party at the following addresses:

To:       Houston InterWeb Design, Inc.       To:  The Houston Chronicle
          1770 St. James, Suite 420
          Houston, Texas 77056              Attn:  Ralph Harrington
                                                   801 Texas Avenue

Attn: Harry White, CEO Houston, Texas 77002

14. General Terms and Conditions.

(a) The Agreement shall be governed by Texas law. Venue of any dispute relating to this Agreement shall be in Houston, Harris County, Texas

(b)The Agreement is not assignable by either party without the express written consent of all parties.

(c) Conditions of force majeure shall excuse any delay or non- compliance beyond the party's control, upon prompt notice.

(d) Any partial invalidity of any term of the Agreement shall not affect the remainder of the Agreement.

(e) This Agreement is the complete and entire agreement of the parties, superceding any previous agreements or discussions, and no supplements or amendments shall be recognized except as in writing and signed by both parties.

SIGNED at Houston, Texas, this 3 day of March, 2000.

HOUSTON CHRONICLE PUBLISHING COMPANY

By:  /s/
     -------------------------------------
Name:
     -------------------------------------
Title:
     -------------------------------------

HOUSTON INTERWEB DESIGN, INC.

By:  /s// Harry White
     -------------------------------------
Name:  Harry White
Title:  CEO

EXHIBIT 10.13

Website Development Agreement

This Agreement is between eRealty.com ("eRealty") and Houston InterWeb Design, Inc. ("HIWD") for the design and development of websites for Service Providers of eRealty.

1. Scope of Services. eRealty will identify and refer to HIWD certain Service Providers ("Customers") of eRealty who desire assistance in the design and development of websites or other internet advertising solutions. HIWD shall provide to eRealty and the Customer customized internet advertising solutions as required by the Customer, including but not limited to the following:

(a) The design, development, implementation, operation, maintenance and updating of Customer-branded stand-alone Web Sites on the World Wide Web portion of the internet ("Customer Sites");

(b) Such other customized internet advertising solutions as may be specifically agreed between each Customer and HIWD in separate agreements to be negotiated with each Customer.

(c) Any ongoing maintenance or modifications associated with the above-referenced services, and all upgrades, enhancements, developments and new revisions to the products and software related to the development of Customer's Sites, provided the sites are hosted on HIWD servers.

(d) The Site shall incorporate certain materials provided by HIWD which include, without limitation, computer software (in object or source code form), script, programming code, data, information, HTML code, trademarks, images, illustrations, graphics, multimedia files and/or text ("HIWD Content"). The Site shall also incorporate the materials, if any, provided by eRealty and Customers, including, without limitation, trade or service marks, images, illustrations, graphics, multimedia files and/or text (eRealty Content"), provided that eRealty and Customers deliver such eRealty Content to HIWD promptly and in acceptable media and/or electronic file format(s).

2. Rates. HIWD's services will be billed to eRealty's Service Providers at the rates set forth on Exhibit A attached hereto. Rates for customized or non-scheduled services shall be billed on terms and conditions as may be separately agreed between Customer and HIWD. HIWD agrees to keep the rates it charges to eRealty under this Agreement confidential.

In consideration for the services to be performed by eRealty, HIWD will agree to pay eRealty a commission as follows:

1. ***% of the set-up fees collected for the sale of each basic three page SiteBlazer site or additional SiteBlazer features and any recurring monthly hosting fees, or

2. ***% commission on fees collected for the referral of all custom design services up to $**********, or

3. ***% commission on fees collected for the referral of all custom design services from $********* to $*********, or

4. ***% commission on fees collected for the referral of all custom design services from $********* and up.

3. Invoicing. All Customer invoicing shall be handled by HIWD

4. Term. The term of the Agreement shall be for a period of one year, commencing on July 15, 2000 and shall automatically renew for successive one year terms unless earlier terminated as provided herein. The Agreement shall be terminable by either party on thirty days written notice with or without cause, and terminable by either party immediately for cause, which shall include, but not be limited to, non-payment, default in services, or any material breach of the Agreement. The Agreement shall also terminate if an administrator, receiver or liquidator is appointed in connection with HIWD, or HIWD is otherwise bankrupt, files for bankruptcy or is insolvent.

5. Rights in Data and Works.

(a) Exclusive of eRealty Content, HIWD shall retain all right, title and interest (including copyright and other proprietary or intellectual property rights) in HIWD Content, all legally protectable elements, or derivative works thereto, whether or not paid for wholly or in part by eRealty or Customer, and whether or not developed in conjunction with eRealty or Customer.

(b) All copyrights, trademarks, trade dress and other proprietary rights in text, data, images or related materials furnished by eRealty

("eRealty Materials") are exclusively owned by eRealty , and all rights are expressly reserved by eRealty . Neither HIWD nor the Customer shall have the right to use any eRealty trademarks, trade names, slogans or logos without eRealty 's prior approval.

(c) eRealty shall retain all right, title and interest (including copyright and other proprietary or intellectual property rights) in eRealty Content.

(d) HIWD may place copyright and/or proprietary notices, including hypertext links within the HIWD Content as incorporated within and on the Site. eRealty or Customer may not alter or remove such notices without HIWD's written permission.

(e) eRealty or Customer shall not provide to HIWD any Content that may be obscene, defamatory, harassing, grossly offensive, malicious, or that actually or potentially infringes or misappropriates the copyright, trademark, or proprietary or intellectual property right of any person.

6. Warranties.

(a) HIWD warrants that all services to be performed under the Agreement will be rendered using sound, professional practices and in a competent and professional manner by knowledgeable, trained and qualified personnel.

(b) HIWD warrants that all Deliverables developed by HIWD for any Customer hereunder shall conform to all specifications provided in the agreement with each such Customer, and will operate materially in accordance with those specifications upon delivery. Except as expressly otherwise provided in any such agreement or in this Agreement, HIWD does not warrant that its services or Deliverables will be uninterrupted or error free.

(c) HIWD warrants that all software provided by HIWD and all Deliverables shall be Year 2000 Compliant. All Customer Sites developed by HIWD will be virus-free on delivery and will be accessible by Internet users twenty-four (24) hours per day, seven (7) days per week, provided however, in the event the host site used by HIWD is non-operational, HIWD will not be in breach of this Agreement so long as HIWD acts in a prudent and customarily reasonable manner to work to restore access.

(d) eRealty represents and warrants to HIWD that: (i) eRealty has the power and authority to enter into and perform its obligations under this Agreement; (ii) eRealty and Customer Content does not and shall not contain any content, materials, link, advertising or services that actually or potentially violate any applicable law or regulation or infringe or misappropriate any proprietary, intellectual property, contract or tort right of any person; and (iii) eRealty and Customer own their respective Content and all proprietary or intellectual property rights therein, or has express written authorization from the owner to copy, use and display the Content on and within the Site.

(e) EXCEPT AS EXPRESSLY STATED AT SECTION 6(a-c), HIWD MAKES NO OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND/OR FITNESS FOR A PARTICULAR PURPOSE, CONCERNING THE SUBJECT MATTER OF THIS AGREEMENT.

7. Non-Solicitation Agreement. Each party agrees that it will not attempt to hire any employee of the other as an employee or subcontractor during the term of the Agreement or for a period of one year after the Agreement has terminated, unless agreed to in writing by both parties.

8. Exclusivity. eRealty and HIWD agree that this Agreement is non-exclusive as it relates to HIWD and the services it provides hereunder. HIWD may provide

similar services to customers who were not introduced to HIWD by eRealty. eRealty may not engage companies providing similar services as HIWD, during the term of the agreement, to provide the same or similar services comtemplated by the agreement. HIWD will be the exclusive provider of web design, development and hosting services to eRealty's Service Providers.

9. Confidentiality. Each party shall agree not to use, disclose, sell, transfer or display the confidential information of the other party. "Confidential information" means proprietary information of a party not generally known by non-party personnel, used in that party's business, and the disclosure of which would be detrimental to that party. Confidential information shall include computer scripts, software, financial, marketing and business information, customer data, strategic plans and business plans, and the like. HIWD agrees and acknowledges that the rates it charges to eRealty under this Agreement are confidential. Upon termination or expiration of this Agreement, each party shall immediately deliver to the disclosing party all confidential information and shall cease all use of the confidential information.

10. Indemnification.

(a) eRealty agrees to indemnify, hold harmless and defend HIWD and its directors, officers, employees and agents from and against any action, claim, demand or liability, including reasonable attorney's fees and costs, arising from or relating to: (i) eRealty's breach of this Agreement; (ii) the negligence or willful misconduct of eRealty; or (iii) any allegation that eRealty or Customer Content infringes a third person's copyright or trademark right, or misappropriates a third persons trade secret. eRealty agrees that HIWD shall have the right to participate in and control the defense of any such claim through counsel of its own choosing.

(b) HIWD agrees to indemnify, hold harmless and defend eRealty and its directors, officers, employees and agents from and against any action, claim, demand or liability, including reasonable attorney's fees and costs, arising from or relating to any allegation that the HIWD Content infringes a third person's copyright or trademark right, or misappropriates a third person's trade secrets.

11. Independent Contractor. The relationship of the parties shall be that of an independent contractor. HIWD has the right to control the manner and means of performing its services and delivering the Deliverables, and HIWD shall bear all expenses attendant thereto. No agency shall be created by the Agreement. Neither party has the power or authority to represent, act for, bind, or otherwise create or assume any obligation on behalf of the other party for any purpose whatsoever.

12. Notice. Any notice required to be given under this Agreement shall be in writing and shall be duly served when it shall be hand delivered to the addresses set forth below, or three (3) days after mailing if written notice has been deposited, duly registered or certified, return receipt requested, in a post office or official depository under the care and custody of the United States Postal Service addressed to the other party at the following addresses:

To:        Houston InterWeb Design, Inc.       To:    eRealty.com
               1770 St. James, Suite 420
               Houston, Texas 77056                   Houston, Texas 77025

Attn: Harry White, CEO Attn:

13. General Terms and Conditions.

(a) The Agreement shall be governed by Texas law. Venue of any dispute relating to this Agreement shall be in Houston, Harris County, Texas

(b)The Agreement is not assignable by either party without the express written consent of all parties.

(c) Conditions of force majeure shall excuse any delay or non- compliance beyond the party's control, upon prompt notice.

(d) Any partial invalidity of any term of the Agreement shall not affect the remainder of the Agreement.

SIGNED at Houston, Texas, this 26 day of July, 2000.

ERealty.com

Name:  /s/
       -------------------------------------
Title: President and CEO

HOUSTON INTERWEB DESIGN, INC.

Name:  /s/ Harry White
       -------------------------------------
       Harry White
Title: CEO

EXHIBIT 10.14
Website Development Agreement

This Agreement is between eHome.com ("eHome") and Houston InterWeb Design, Inc. ("HIWD") for the design and development of websites for Service Providers of eHome.

1. Scope of Services. eHome will identify and refer to HIWD certain Service Providers ("Customers") of eHome who desire assistance in the design and development of websites or other internet advertising solutions. HIWD shall provide to eHome and the Customer customized internet advertising solutions as required by the Customer, including but not limited to the following:

(a) The design, development, implementation, operation, maintenance and updating of Customer-branded stand-alone Web Sites on the World Wide Web portion of the internet ("Customer Sites");

(b) Such other customized internet advertising solutions as may be specifically agreed between each Customer and HIWD in separate agreements to be negotiated with each Customer.

(d) The Site shall incorporate certain materials provided by HIWD which include, without limitation, computer software (in object or source code form), script, programming code, data, information, HTML code, trademarks, images, illustrations, graphics, multimedia files and/or text ("HIWD Content"). The Site shall also incorporate the materials, if any, provided by eHome and Customers, including, without limitation, trade or service marks, images, illustrations, graphics, multimedia files and/or text (eHome Content"), provided that eHome and Customers deliver such eHome Content to HIWD promptly and in acceptable media and/or electronic file format(s).

2. Rates. HIWD's services will be billed to eHome's Service Providers at the rates set forth on Exhibit A attached hereto. Rates for customized or non-scheduled services shall be billed on terms and conditions as may be separately agreed between Customer and HIWD. HIWD agrees to keep the rates it charges to eHome under this Agreement confidential.

In consideration for the services to be performed by eHome, HIWD will agree to pay eHome a commission as follows:

5. ***% of the set-up fees collected for the sale of each basic three page SiteBlazer site or additional SiteBlazer features and any recurring monthly hosting fees, or

6. ***% commission on fees collected for the referral of all custom design services up to $**********, or

7. ***% commission on fees collected for the referral of all custom design services from $********* to $*********, or

8. ***% commission on fees collected for the referral of all custom design services from $********* and up.

3. Invoicing. All Customer invoicing shall be handled by HIWD

5. Rights in Data and Works.

(a) Exclusive of eHome Content, HIWD shall retain all right, title and interest (including copyright and other proprietary or intellectual property rights) in HIWD Content, all legally protectable elements, or derivative works thereto, whether or not paid for wholly or in part by eHome or Customer, and whether or not developed in conjunction with eHome or Customer.

(b) All copyrights, trademarks, trade dress and other proprietary rights in text, data, images or related materials furnished by eHome ("eHome Materials") are exclusively owned by eHome , and all rights are expressly reserved by eHome . Neither HIWD nor the Customer shall have the right to use any eHome trademarks, trade names, slogans or logos without eHome 's prior approval.

(c) eHome shall retain all right, title and interest (including copyright and other proprietary or intellectual property rights) in eHome Content.

(d) HIWD may place copyright and/or proprietary notices, including hypertext links within the HIWD Content as incorporated within and on

the Site. eHome or Customer may not alter or remove such notices without HIWD's written permission.

(e) eHome or Customer shall not provide to HIWD any Content that may be obscene, defamatory, harassing, grossly offensive, malicious, or that actually or potentially infringes or misappropriates the copyright, trademark, or proprietary or intellectual property right of any person.

6. Warranties.

(d) eHome represents and warrants to HIWD that: (i) eHome has the power and authority to enter into and perform its obligations under this Agreement; (ii) eHome and Customer Content does not and shall not contain any content, materials, link, advertising or services that actually or potentially violate any applicable law or regulation or infringe or misappropriate any proprietary, intellectual property, contract or tort right of any person; and (iii) eHome and Customer own their respective Content and all proprietary or intellectual property rights therein, or has express written authorization from the owner to copy, use and display the Content on and within the Site.

8. Exclusivity. eHome and HIWD agree that this Agreement is non-exclusive as it relates to HIWD and the services it provides hereunder . HIWD may provide similar services to customers who were not introduced to HIWD by eHome. eHome may not engage companies providing similar services as HIWD, during the term of the agreement, to provide the same or similar services comtemplated by the agreement. HIWD will be the exclusive provider of web design, development and hosting services to eHome's Service Providers.

software, financial, marketing and business information, customer data, strategic plans and business plans, and the like. HIWD agrees and acknowledges that the rates it charges to eHome under this Agreement are confidential. Upon termination or expiration of this Agreement, each party shall immediately deliver to the disclosing party all confidential information and shall cease all use of the confidential information.

10. Indemnification.

(a) eHome agrees to indemnify, hold harmless and defend HIWD and its directors, officers, employees and agents from and against any action, claim, demand or liability, including reasonable attorney's fees and costs, arising from or relating to: (i) eHome's breach of this Agreement; (ii) the negligence or willful misconduct of eHome; or (iii) any allegation that eHome or Customer Content infringes a third person's copyright or trademark right, or misappropriates a third persons trade secret. eHome agrees that HIWD shall have the right to participate in and control the defense of any such claim through counsel of its own choosing.

(b) HIWD agrees to indemnify, hold harmless and defend eHome and its directors, officers, employees and agents from and against any action, claim, demand or liability, including reasonable attorney's fees and costs, arising from or relating to any allegation that the HIWD Content infringes a third person's copyright or trademark right, or misappropriates a third person's trade secrets.

To:        Houston InterWeb Design, Inc.         To:    eHome.com
               1770 St. James, Suite 420
               Houston, Texas 77056                         Houston, Texas 77025

Attn: Harry White, CEO Attn:

13. General Terms and Conditions.

(a) The Agreement shall be governed by Texas law. Venue of any dispute relating to this Agreement shall be in Houston, Harris County, Texas

(b)The Agreement is not assignable by either party without the express written consent of all parties.

(c) Conditions of force majeure shall excuse any delay or non- compliance beyond the party's control, upon prompt notice.

(d) Any partial invalidity of any term of the Agreement shall not affect the remainder of the Agreement.

SIGNED at Houston, Texas, this 20 day of October , 2000.

EXHIBIT 21.1

                                               Charter        Percent
Name                     Inc. Date    State     Number       Ownership
AMP3.com, LLC             02/18/99     TX     7047354-22        20%
Politicalnet.com, Inc.    12/16/99     TX     01562214         100%
OTC News Network, Inc.    12/16/99     TX     01562213          20%
TonicsandTeas.com, Inc    07/13/00     TX     01590176         100%
CyberPitch.com            01/19/00     TX     01566626          50%

ARTICLE 5

THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM HOUSTON INTERWEB DESIGN, INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.


PERIOD TYPE	YEAR
FISCAL YEAR END	JUL 31 2000
PERIOD START	AUG 01 1999
PERIOD END	JUL 31 2000
CASH	18,655
SECURITIES	0
RECEIVABLES	54,569
ALLOWANCES	0
INVENTORY	0
CURRENT ASSETS	73,950
PP&E	85,312
DEPRECIATION	28,760
TOTAL ASSETS	392,459
CURRENT LIABILITIES	1,380,468
BONDS	0
PREFERRED MANDATORY	0
PREFERRED	0
COMMON	(988,009)
OTHER SE	0
TOTAL LIABILITY AND EQUITY	392,459
SALES	1,077,236
TOTAL REVENUES	1,077,236
CGS	0
TOTAL COSTS	1,260,462
OTHER EXPENSES	3,368,667
LOSS PROVISION	302,088
INTEREST EXPENSE	1,670
INCOME PRETAX	(3,855,171)
INCOME TAX	0
INCOME CONTINUING	0
DISCONTINUED	0
EXTRAORDINARY	0
CHANGES	0
NET INCOME	(3,855,171)
EPS BASIC	(0.22)
EPS DILUTED	(0.22)