PROSPECTUS                                                   RULE 424(B)(3)
                                                             COMM. NO. 333-51860


                                  PIRANHA, INC.

                         875,862 SHARES OF COMMON STOCK

         Three  holders  of  shares  of  Common  Stock  of  Piranha,  Inc.  (the
"Company")  named under "Selling  Stockholders"  on pages 36-37 are offering and
selling a maximum of 875,862  shares of Company  Common  Stock  pursuant to this
Prospectus.  These shares were acquired in private purchases during November and
December 2000.

         The  selling  stockholders  will  determine  when they will sell  their
shares and will sell  their  shares at current  market  prices or at  negotiated
prices at the time of the sale.  The Company will pay the  expenses  incurred to
register  the shares  for  resale,  but the  selling  stockholders  will pay any
underwriting  discounts,  concessions,  or brokerage commissions associated with
the sale of their shares. The selling  stockholders and the broker/dealers  that
they  utilize  may be deemed to be  "underwriters"  within  the  meaning  of the
securities  laws and any  commissions  received and any profits  realized on the
sale of their  shares  of  Common  Stock may be  considered  to be  underwriting
compensation.

         The  Company  will  not  receive  any of the  proceeds  of sales by the
selling  stockholders.  Securities  laws and Securities and Exchange  Commission
regulations  may require the selling  shareholders to deliver this Prospectus to
purchasers when they resell their shares of Common Stock.

         Shares  of  Company  Common  Stock are  traded in the  over-the-counter
market under the symbol  "BYTE." On December  13,  2000,  the last sale price of
Company Common Stock as reported in the over-the-counter  market was $2.9375 per
share.

          NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
           SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
           SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
               PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
                                CRIMINAL OFFENSE.

          INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.
                    SEE "RISK FACTORS" COMMENCING ON PAGE 5.

                The date of this Prospectus is December 28, 2000








No person has been authorized to give information or make any representation not
contained or incorporated by reference in this Prospectus in connection with the
offer made hereby. If given or made, such information or representation must not
be relied upon as having  been  authorized  by the  Company or any  underwriter,
agent or  dealer.  This  Prospectus  does not  constitute  an offer to sell or a
solicitation  of an offer to buy any of the  securities  offered  hereby  in any
jurisdiction  to any  person to whom it is  unlawful  to make such offer in such
jurisdiction.  Neither  the  delivery  of  this  Prospectus  nor any  sale  made
hereunder shall, under any circumstances,  create any implication that there has
been no change in the affairs of the Company since the date hereof.

                                TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS                                                     3

THE COMPANY                                                                    3

RISK FACTORS                                                                   5

PRICE RANGE OF COMMON STOCK                                                   14

DIVIDEND POLICY                                                               15

USE OF PROCEEDS                                                               15

MANAGEMENT'S PLAN OF OPERATIONS
FOR NEXT TWELVE MONTHS                                                        15

BUSINESS                                                                      17

MANAGEMENT                                                                    26

SELLING STOCKHOLDERS                                                          36

DESCRIPTION OF CAPITAL STOCK                                                  37

PLAN OF DISTRIBUTION                                                          38

LEGAL MATTERS                                                                 39

EXPERTS                                                                       39

AVAILABLE INFORMATION                                                         39

INDEX TO FINANCIAL STATEMENTS                                                F-1

                                       2



                           FORWARD-LOOKING STATEMENTS

         Statements   contained  in  or  incorporated  by  reference  into  this
Prospectus  which are not  historical in nature are  forward-looking  statements
within the  meaning of the  Private  Securities  Litigation  Reform Act of 1995.
Forward-looking  statements  involve  certain risks and  uncertainties  that may
cause  actual  future  results to differ  materially  from  those  contemplated,
projected,  estimated or budgeted in such  forward-looking  statements.  Factors
that may impact forward looking statements include,  but are not limited to, the
following:  (i) the effects of competition  from other companies  engaged in the
development of compression  technologies;  (ii) the capital  intensive nature of
the business of Piranha,  Inc (the "Company" or  "Piranha");  (iii) the economic
climate and growth in the business  sectors in which the Company does  business;
(iv) the  uncertainty  of the continued  development of the Internet as a viable
enterprise;  (v)  the  nature,   availability  and  projected  profitability  of
potential  projects  and  other  investments  available  to  the  Company;  (vi)
conditions  of capital  markets  and equity  markets;  and (vii) the  effects of
changes in governmental policies and regulatory actions.

                                   THE COMPANY

         Piranha is a  technology-based  company  with a line of  digital  asset
management  products and services  being  developed  for sale and/or  licensing.
Piranha is in the business of providing  enabling  technologies  in the areas of
data  compression,  product output routing,  universal file format  recognition,
data manipulation and custom application  feature  development in both the lossy
data  compression and lossless data compression  market segments.  Additionally,
Piranha  provides  digital  image  acquisition  services  which are  intended to
incorporate its core data compression  technologies.  Piranha's data compression
software  products and digital  asset  service are  designed to enhance  digital
workflow  processes and improve data transfer  speeds across the Internet and to
provide  high  quality  image  clarity at  compression  rates  which the Company
believes  are higher than those  presently  available  in the  marketplace  on a
variety of platforms.  These compression products are directed to digital images
and Internet  applications  such as full motion streaming video,  lossless image
and text string  compression,  and highly  compressed,  high  resolution  static
images.

         The  Company's  products are designed to support  business-to-business,
e-commerce and Internet related activities  associated with professional digital
archival    storage,     digital    workflow     optimization    and    advanced
business-to-consumer  on-line shopping applications.  Piranha technology and its
resulting  application  developments  are expected to provide a  methodology  to
support the emerging  e-commerce  market demand for solutions to the traditional
bottlenecks and time delays associated with the e-commerce  shopping  experience
that the Company believes are superior to those presently available. The Company
believes  that its products and services  provide  measurable  quantatitive  and
qualitative  advantages over related products and services.  Products  currently
available include:

                                       3



o        Piranha Net - This web based  product is  expected to allow  commercial
         web sites to  download  significantly  faster  than  what is  currently
         available.  Piranha Net  utilizes  Piranha's  proprietary  lossless and
         lossy data compression algorithms.

o        Piranha Byte- This  Streaming FTP lossless and modified bit "ultra high
         fidelity" data compression  product is used for downloading files to or
         from a server or  individual  user.  A  multitude  of file types can be
         delivered for archival or immediate use at  compression  rates and data
         transfer  speeds   substantially   greater  than  current   competitive
         products.  The first shipments of this product occurred during the week
         of June 19, 2000.

o        Piranha Stream - This product is a plug-in or browser-based full-motion
         video product with several audio codecs  available,  including  Piranha
         Audio  featuring  low  bandwidth  and high  quality.  Piranha  Stream's
         advanced  component  input  compression  process  produces  the highest
         quality  streaming video in the market place.  The first products using
         this technology were  distributed to stockholders at the annual meeting
         on August 18, 2000.

     Products that are expected to debut in the future:

o        An  e-commerce  application  covering  transaction,  data  mining,  and
         other e-commerce disciplines.

o        A product combining all Piranha technologies into one suite of tools to
         handle enterprise solutions for the largest customer. This product will
         include data base  interfacing  with Oracle and other  enterprise  data
         warehouse software.

o        An affordable software rental that offers a variety of solutions from a
         full  suite of  products  to a  smaller  version  designed  to meet the
         specific needs of the customer.

o        Increased  processing  power  delivered   through   custom   DSP   chip
         integration for tailored hardware/software solutions.

o        An advance image database product  providing   multifunctional   search
         capabilities.

         Piranha  products have been developed on the Linux operating system and
have been successfully ported to Microsoft and Apple operating platforms.

         Piranha is a Delaware  corporation with its principal executive offices
at 2425 N. Central Expressway, Suite 480, Richardson, Texas 75080. Its telephone
number is  972-739-0373.  It  principal  financial  offices are located at 33 N.
LaSalle  Street,  33rd  Floor,  Chicago,  Illinois  60602;  telephone  number is
312-664-7852.  It was  incorporated  in 1992 but did not  engage in its  current
business  operations  until December 1999.  Its prior business  operations,  the
retail  distribution of classic books,  ceased all material  operations in March
1996. See, "RISK FACTORS."

                                       4


                                  RISK FACTORS

     IN ADDITION TO THE OTHER  INFORMATION  CONTAINED  IN THIS  PROSPECTUS,  THE
FOLLOWING RISK FACTORS SHOULD BE CONSIDERED  CAREFULLY BEFORE DECIDING TO INVEST
IN COMMON  STOCK.  THIS  PROSPECTUS  CONTAINS  FORWARD-LOOKING  STATEMENTS  THAT
INVOLVED  RISKS AND  UNCERTAINTIES.  THE COMPANY'S  ACTUAL  RESULTS COULD DIFFER
MATERIALLY  FROM THOSE  ANTICIPATED  IN THESE  FORWARD-LOOKING  STATEMENTS  AS A
RESULT OF CERTAIN FACTORS, INCLUDING THOSE SET FORTH BELOW.

     LIMITED  OPERATING  HISTORY;  HISTORY OF LOSSES AND  ANTICIPATION OF FUTURE
LOSSES.  While the  Company was founded in 1992 it did not engage in its current
business  operations  until  December  1999  when it  became a  technology-based
company through the  acquisitions of IBP, Inc. and Zideo.com,  Inc. and obtained
the services,  among others, of its current Chief Executive  Officer,  President
and Chief  Operating  Officer,  Chief  Information  Officer  and  Chief  Science
Officer:  Messrs. Edward W. Sample, Don Ashley, Michael Steele and Carey Lotzer.
See,  "MANAGEMENT."  In February 2000 the Company changed its name from Classics
International Entertainment, Inc. to Piranha, Inc. As of September 30, 2000, the
Company had an  accumulated  deficit of  $24,319,882  and no net  earnings  from
operations. Accordingly, the Company has a limited operating history on which to
base an evaluation of its business and prospects.

     The Company and its  prospects  must be  considered  in light of the risks,
difficulties and  uncertainties  encountered by companies in the early stages of
development,  particularly  companies  operating  in new  and  rapidly  evolving
markets like the  Internet.  In order to achieve and sustain  profitability  the
Company  believes  that it will have to,  among  other  things (i)  successfully
develop,  market and sell compression techniques that are widely accepted by the
Internet  community,  (ii)  develop and extend the Piranha  brand,  (iii) obtain
broad  acceptance of its products,  (iv)  anticipate and adapt to the developing
Internet  market,  (v) respond  promptly and  adequately to changes in laws that
could  adversely  affect the Company's  business,  (vi) provide  compelling  and
unique services to Internet users,  (vii)  effectively  develop new and maintain
existing   relationships  with  customers,   (viii)   continuously   update  its
technology, (ix) adapt to meet changes in its markets and respond to competitive
developments and (x) attract, retain and motivate qualified personnel. There can
be no assurance  that the Company will be successful  in addressing  these risks
and failure to do so would have a  materially  adverse  effect on its  business,
results of operations and financial condition.

     For these and other  reasons,  and even though the Company hopes to achieve
positive  cash  flow for the  quarter  ended  March  31,  2001,  there can be no
assurance   that  this  will  occur  or  that  the  Company  will  ever  achieve
profitability or, if profitability is achieved, that it will be sustained.

         UNPREDICTABILITY  OF FUTURE REVENUES.  The Company's  limited operating
history  and the  emerging  nature of the  markets  in which it  competes  makes
prediction of future revenue growth difficult if not impossible. There can be no
assurance  that the  Company  will  generate  revenue or if  generated  that the

                                       5


Company will achieve or maintain profitability.  Accordingly, the Company cannot
predict what future growth may develop, if any.

         Furthermore,  the market for the  Company's  products and the long-term
acceptance  of the  Internet are  uncertain.  The Company  therefore  intends to
closely monitor its operating expenses while attempting,  among other things, to
(i) fund increased  sales and marketing  activities and (ii) develop and upgrade
technology. Such expenses are based in part on its expectations regarding future
revenues and to a substantial  degree such  expenses are readily  ascertainable.
While the Company hopes that future quarterly results of operations will reflect
positive  cash flow, if the Company is unable to increase its revenues it may be
unable to adjust  spending  patterns in a timely  manner to  compensate  for any
unexpected  revenue  shortfall  or may have to reduce  its  operating  expenses,
causing it to forego potential revenue  generating  activities,  either of which
could have a materially  adverse  effect on the Company's  business,  results of
operations and financial condition.

         DEPENDENCE ON KEY  EMPLOYEES.  The  Company's  success will depend to a
large degree on the efforts and abilities of a few key management employees.  In
particular,  the  Company  is  almost  exclusively  dependent  on the  continued
services and experience of Messrs.  Sample,  Ashley, Steele, Lotzer, and Berger.
The loss,  incapacity or  unavailability  of any of these persons at the present
time or in the foreseeable  future before qualified  replacements  were obtained
would have a materially  adverse effect on the Company's  future.  While Messrs.
Sample,  Ashley,  Steele and Lotzer are covered by employment contracts with the
Company and the Company  has secured key person life  insurance  policies on its
executive  officers,  competition for senior management,  experienced  marketing
personnel,  qualified  scientists and engineers and other  employees is intense,
and there can be no assurance  that the Company will be successful in attracting
and retaining such personnel.  The failure of the Company to successfully manage
its  personnel  requirements  would  have a  materially  adverse  effect  on the
Company's business, results of operations and financial condition.

         Furthermore, the Company may experience rapid growth, which would place
a significant  strain on the  Company's  managerial,  financial and  operational
resources.  The  Company  is  required  to manage  multiple  relationships  with
numerous outside parties. These REQUIREMENTS WILL BE EXACERBATED IN THE EVENT OF
FURTHER growth of the Company or in the number of third party relationships, and
there can be no assurance  that the  Company's  systems,  procedures or controls
will be adequate to support the Company's  operations or that Company management
will be able to  manage  any  growth  effectively.  To  effectively  manage  its
potential  growth,  the  Company  must  continue  to  implement  and improve its
operational,  financial and management  information systems and to expand, train
and manage its employee base.

         The Company's  management team has not worked together for any extended
period of time and are only now in the  process  of  integrating  as a  cohesive
group.  There  can be no  assurance  that  they  will be  able to work  together
effectively or  successfully  manage any growth  experienced by the Company.  In

                                       6


addition,  while certain  members of the Company's  management have had previous
experience in managing public companies and/or large operating  companies,  such
experience has not been in the Internet industry.  Accordingly,  there can be no
assurance  that they will quickly adapt to the Internet  marketplace or that the
Company will be able to effectively manage any expansion of its operations.

         INTENSE COMPETITION. The Company is in a highly competitive market. The
Company  competes with major  software  developers  as well as numerous  smaller
companies  producing one or more competitive  products.  The Company's  products
compete with those of PKZip, Stuffit,  WinZip,  Sorensson,  MPEG, Real, Cinepak,
Indeo  and  others.  Most if not all of the  Company's  existing  and  potential
competitors have longer operating  histories,  greater name recognition,  larger
customer  bases and  significantly  greater  financial,  technical and marketing
resources  than  the  Company.  Such  competitors  are  able to  undertake  more
extensive  marketing  campaigns for their brands,  adopt more aggressive pricing
policies and make more attractive  offers to potential  customers and employees.
Accordingly,  there can be no assurance that the Company will be able to compete
successfully  against its current or future competitors or that competition will
not have a  materially  adverse  effect on the  Company's  business,  results of
operations and financial condition.

         Competition  for  Internet  products  and  services is intense.  As the
market  for  e-commerce   grows,  the  Company  expects  that  competition  will
intensify.  Barriers to entry are minimal and competitors can offer products and
services  at a  relatively  low cost.  The market in which  Piranha  competes is
significantly  affected and is  characterized  by rapidly  changing  technology,
evolving industry standards,  frequent new product and service announcements and
enhancements,  other market  activities  of industry  participants  and changing
customer demands.  Accordingly, the Company's success will depend on its ability
to adapt to such  changes  and its  ability to  continually  improve  the speed,
performance,  features,  ease of use and reliability of its products in response
to both evolving demands of the marketplace and competitive  service and product
offerings.  Any failure to rapidly adapt in a changing  environment would have a
materially adverse effect on the Company's  business,  results of operations and
financial condition.

          The Company's  financial and operating  success  depends,  among other
things,  on the success of its  products  and  services.  If those  products and
services fail to keep pace with the rapid changes in technology and customer and
supplier demands, the Company may not become or remain profitable.  There can be
no assurance  that the products and services of the Company will achieve  market
acceptance or  commercial  success or that the Company will be  successful.  The
Company expects competition to persist and intensify in the future.

         The Company believes that the principal  competitive  factors affecting
companies  seeking  to  develop,  market  and sell  compression  technology  are
critical mass, technical competence, market acceptability,  functionality, brand
recognition,  market include speed of  implementation,  price,  knowledge of the
industry,  core  technology,  ability  to  implement  a solution  with  existing
technology  and  financial  capacity of its  potential  customers.  Although the

                                       7


Company believes that its solutions  currently compete favorably with respect to
several of these factors, the Company's market is relatively new and is evolving
rapidly.  The Company may not be able to maintain  any  significant  competitive
position  against  current  and  potential  competitors,  especially  those with
significantly  greater financial,  marketing,  service,  support,  technical and
other resources.

         The Company  continually strives to incorporate new technology into its
products.  Introducing new technology  involves numerous  technical  challenges,
substantial  amounts of personnel  resources and frequently  requires  months to
complete.  There can be no  assurance  that the Company  will be  successful  at
integrating  new  technology  on  a  timely  basis  or  without   degrading  the
responsiveness and speed of its existing products or that, once integrated, such
technology will function as expected.

         GOVERNMENT  REGULATION  AND  LEGAL  UNCERTAINTY.  The  Company  is  not
currently  subject to direct  regulation by any  government  agency,  other than
regulations applicable to businesses generally, and there are currently few laws
or regulations directly applicable to access to or distribute information on the
Internet. However, due to the Internet's increasing popularity and use, a number
of legislative  and  regulatory  proposals are under  consideration  by federal,
state, local and foreign governmental  organizations,  and it is possible that a
number of laws or  regulations  may be  adopted  with  respect  to the  Internet
relating to such issues as user privacy; user screening to prevent inappropriate
uses of the Internet by, for example,  minors or convicted criminals;  taxation;
infringement; pricing; content regulation; quality of products and services; and
intellectual property ownership and infringement.  The adoption of any such laws
or regulations  may decrease the growth in the use of the Internet,  which could
in turn decrease the demand for the Company's  products,  increase the Company's
cost of doing  business,  or otherwise  have a materially  adverse effect on the
Company's business, results of operations and financial condition. Moreover, the
applicability to the Internet of existing laws governing issues such as property
ownership,  copyright,  trademark,  trade secret, obscenity,  libel and personal
privacy is uncertain and  developing.  Any new  legislation  or  regulation,  or
application or interpretation of existing laws, could have a materially  adverse
effect on the Company's business, results of operations and financial condition.

         The Communications Decency Act of 1996 (the "CDA") was enacted in 1996.
Although  those  sections  of the CDA that,  among  things,  proposed  to impose
criminal penalties on anyone  distributing  indecent material to minors over the
Internet were held to be  unconstitutional  by the U.S. Supreme Court, there can
be no  assurance  that  similar  laws will not be  proposed  and  adopted in the
future.  Similar  types of  legislation  and the  manner  in  which  they may be
interpreted  and  enforced  cannot be fully  determined  and could  subject  the
Company to potential liability. Such legislation could also impact on the growth
of the Internet generally and decrease the demand for the Company's products.

         RISKS  ASSOCIATED  WITH BRAND  DEVELOPMENT.  The Company  believes that
establishing  and  maintaining  the  Piranha  brand is a critical  aspect of its
business and that the importance of brand  recognition  will increase due to the

                                       8


growing number of competitors and the minimal  barriers to entry.  Promotion and
enhancement  of the  Company's  brand will  depend,  in part,  on the  Company's
success in providing a high-quality  product which success cannot be ensured. If
the Company does not generate a  corresponding  increase in revenues as a result
of its branding efforts or otherwise fails to promote its brand successfully, or
if the Company incurs  excessive  expenses in an attempt to promote and maintain
its brand, its business,  results of operations and financial  condition will be
materially  and adversely  affected.  If customers do not perceive the Company's
products to be of high quality or if the Company  introduces  products or enters
into  business  ventures  that  are not  favorably  received  the  value  of the
Company's brand could be diluted.

         SECURITY  RISKS.  The Company may  experience  attempts by  experienced
programmers or "hackers" to penetrate the Company's network. A party who is able
to penetrate the Company's  network  security could  misappropriate  proprietary
information.  Advances in  computer  capabilities,  discoveries  in the field of
cryptography  and other  discoveries,  events,  or developments  could lead to a
compromise  of the systems that the Company  uses to protect  such  confidential
information.  If such a compromise  occurs,  it could have a materially  adverse
effect on the Company's business, results of operations and financial condition.
The  Company  may be required to expend  significant  capital and  resources  to
protect against the threat of security breaches or to alleviate  problems caused
by such breaches.  Concerns over the security of Internet  transactions  and the
privacy  of  users  may also  inhibit  the  growth  of the  Internet  generally,
particularly as a means of conducting commercial transactions. Security breaches
or the inadvertent  transmission of computer viruses could expose the Company to
a risk of loss or litigation and possible  liability.  There can be no assurance
that contractual  provisions attempting to limit the Company's liability in such
areas will be successful or  enforceable  or that other parties will accept such
contractual  provisions as part of the Company's agreements,  which could have a
materially adverse effect on the Company's  business,  results of operations and
financial condition.

         INTELLECTUAL PROPERTY. The Company regards its copyrights,  trademarks,
trade secrets and similar  intellectual  property as critical to its success and
attempts to protect its rights by relying on trademark,  service mark, copyright
and trade secret laws and restrictions on disclosure and transferring  title and
other methods. The Company has filed trademark applications for Piranha, Piranha
Byte,  Piranha  Stream,  Piranha Net and  Piranha  Web in the United  States and
trademark  applications for Piranha in Argentina,  Australia,  Bolivia,  Brazil,
Canada, China, European Union, India,  Indonesia,  Israel, Japan, Korea, Mexico,
New Zealand,  Philippines,  Poland, Russia, Singapore,  Taiwan and Venezuela. In
addition,  trademark applications are expected to be filed in several additional
overseas  venues.  There can be no assurance  that these steps will be adequate,
the Company will be able to secure trademark  registrations for all of its marks
in the United States or other  countries or third parties will not infringe upon
or  misappropriate  the  Company's  copyrights,  trademarks,  service  marks and
similar  proprietary  rights. The Company currently has no patents but has filed
for certain provisional  patents.  The Company is also examining whether further
patent  protection  will be sought.  There can be no assurance that patents will

                                       9


become  a  significant  part  of  the  Company's  intellectual  property  in the
foreseeable future. Effective trademark,  service mark, copyright,  trade secret
and  patent  protection  may not be  available  in every  country  in which  the
Company's  products  may be  distributed  and policing  unauthorized  use of the
Company's proprietary information will be difficult if not impossible.

         The Company generally enters into  confidentiality  agreements with its
employees and consultants and generally  controls access to and  distribution of
its documentation and other  proprietary  information.  It may be possible for a
third  party  to copy or  otherwise  obtain  and use the  Company's  proprietary
information without authorization to develop similar technology independently.

         Legal standards  relating to the validity,  enforceability and scope of
protection of certain  proprietary  rights in  Internet-related  businesses  are
uncertain  and still  evolving  and no  assurance  can be given as to the future
viability or value of any  proprietary  rights of the Company or other companies
within  this  market.  There can be no  assurance  that the  steps  taken by the
Company  will  prevent  misappropriation  or  infringement  of  its  proprietary
information.  Any such infringement or misappropriation  could have a materially
adverse  effect on the Company's  business,  results of operations and financial
condition

         In  addition,  litigation  may be  necessary  to enforce the  Company's
intellectual  property rights,  to protect its trade secrets or to determine the
validity and scope of the proprietary  rights of others.  Such litigation  might
result in substantial costs and diversion of resources and management  attention
and could have a materially adverse effect on the Company's business, results of
operations and financial condition.  Furthermore, there can be no assurance that
the Company's business  activities will not infringe upon the proprietary rights
of others or that other parties will not assert  infringement claims against the
Company. The Company may become subject to claims of alleged infringement of the
trademarks,  service  marks  and  other  intellectual  property  rights of third
parties.  Although  no such claims  have  occurred to date,  such claims and any
resultant  litigation  might  subject the Company to  significant  liability for
damages and might result in invalidation of the Company's proprietary rights and
even if not  meritorious  could be time  consuming  and  expensive to defend and
could result in the diversion of  management  time and  attention,  any of which
might have a  material  adverse  effect on the  Company's  business,  results of
operations and financial condition.

         CONTINUED  GROWTH OF THE  INTERNET.  The  Company's  future  success is
dependent  upon  continued  growth in the use of the  Internet.  There can be no
assurance  that the  number of  Internet  users  will  continue  to grow or that
commerce  over the Internet  will become more  widespread.  As is typical in the
case of a new and rapidly evolving  industry,  demand and market  acceptance for
recently  introduced  services are subject to a high level of  uncertainty.  The
Internet  may not prove to be a viable  commercial  marketplace  for a number of
reasons, including lack of acceptable security technologies,  lack of access and
ease of use,  congestion of traffic,  inconsistent  quality of service,  lack of
availability of cost-effective  service,  potentially  inadequate development of
the necessary  infrastructure,  excessive governmental  regulation,  uncertainty

                                       10


regarding   intellectual   property   ownership   or  timely   development   and
commercialization of performance improvements.

         The  Company's  success  will  depend in large part upon the  continued
development  of the Internet as a reliable  network with the necessary  security
and timely  development of complementary  products such as high speed modems for
providing  reliable  access.  Because  global  commerce  and online  exchange of
information  on the Internet and other  similar open wide area  networks are new
and evolving, it is difficult to predict with any assurance whether the Internet
will support increasing use or will prove to be a viable commercial marketplace.
The  Internet  has  experienced  and  is  expected  to  continue  to  experience
significant  growth in the  number of users and the  amount of  content.  To the
extent that the Internet  continues to  experience  increased  numbers of users,
frequency of use or increased  bandwidth  requirements of users, there can be no
assurance that the Internet  infrastructure  will continue to be able to support
the demands  placed on it by this  continued  growth or that the  performance or
reliability  of the Internet  will not be adversely  affected by this  continued
growth. In addition,  the Internet could lose its viability or effectiveness due
to delays and the  development  or adoption of new  standards  and  protocols to
handle increased levels of activities or due to increased government regulation.
There can be no assurance that the  infrastructure or complementary  products or
services necessary to make the Internet a viable commercial  marketplace will be
developed, or, if they are developed,  that the Internet will achieve broadening
acceptance.   If  the   necessary   infrastructure   standards,   protocols   or
complementary  products,  services or facilities  are not  developed,  or if the
Internet  does  not  become  a  viable  commercial  marketplace,  the  Company's
business,  results of  operations  and  financial  condition  will be materially
adversely  affected.  Even if such  infrastructure,  standards  or  protocols or
complementary  products,  services or facilities  are developed and the Internet
becomes a viable  commercial  marketplace,  there can be no  assurance  that the
Company will not be required to incur substantial expenditures in order to adapt
its products to the  ever-changing  technologies,  which could have a materially
adverse  effect on the Company's  business,  results of operations and financial
condition.

         RELIANCE ON THE INTERNET  BEING AN EFFECTIVE  INFORMATION  DISTRIBUTION
METHOD.  One of the  Companies  primary  assumptions  is that the Internet  will
increasingly  become a viable method of distributing  information whether in the
form of raw data,  media and/or  advertising.  The Company is  therefore  highly
dependent  on  the  Internet  continuing  to  develop  as  a  major  information
distribution  channel.  However,  the Internet  has not been in existence  for a
sufficient   period  of  time  to  gauge  its  effectiveness  as  compared  with
traditional distribution channels such as hard copy and telecommunications. Many
of  the  Company's  prospective  clients  are  believed  to  have  only  limited
experience with the Internet as an information distribution medium, have not yet
devoted a significant  portion of their budgets to  Internet-based  distribution
and may not find such a method to be effective for  distributing  information or
promoting their products and services relative to traditional approaches.

         The  adoption  of  Internet-based   information  distribution  methods,
particularly by those entities that have  historically  relied upon  traditional

                                       11


methods,  requires  the  acceptance  of a new  way of  conducting  business  and
exchanging   information.   Entities  that  already  have  invested  substantial
resources in other  methods of doing so may be reluctant to adopt a new strategy
that may limit or compete with their existing efforts. There can be no assurance
that the market for  Internet-based  information  distribution  will continue to
emerge or become sustainable.  If the market develops more slowly than expected,
the Company's  business,  results of operations and financial condition could be
materially and adversely affected.  Further, no established  standards have been
widely  accepted for the  measurement  of the  effectiveness  of  Internet-based
information  distribution and there can be no assurance that such standards will
develop sufficiently to support the Internet as an effective alternative.  There
can be no assurance that prospective  clients will accept the Company's or other
third-party measurement standards,  which could have a materially adverse effect
on the Company's business, results of operations and financial condition.

         CONTROL BY CERTAIN STOCKHOLDERS.  The Company's directors and executive
officers  beneficially own approximately 39% of the outstanding shares of Common
Stock.  As a  result,  these  stockholders,  if  they  act  as a  group,  have a
significant influence on all matters requiring  stockholder approval,  including
the election of directors and approval of  significant  corporate  transactions.
Such  control may have the effect of delaying or  preventing a change in control
of the Company,  impeding a merger,  consolidation,  takeover or other  business
combination involving the Company or discourage a potential acquiror from making
a tender offer or otherwise  attempting  to obtain  control of the Company which
could have a  materially  adverse  effect on the market  price of the  Company's
Common Stock.

         FUTURE CAPITAL NEEDS;  UNCERTAINTY OF FUTURE ADDITIONAL FINANCING.  The
Company currently anticipates that its available funds and resources,  including
product sales which  commenced the week of June 19, 2000,  will be sufficient to
meet its anticipated needs for working capital and capital  expenditures for the
next twelve months. The Company may need to raise additional funds in the future
in order to fund more aggressive  brand promotion and more rapid  expansion,  to
develop new or enhanced  products,  to respond to  competitive  pressures  or to
acquire complementary businesses or technologies. If additional funds are raised
through the issuance of equity or convertible  debt  securities,  the percentage
ownership of the  stockholders of the Company will be reduced,  stockholders may
experience  dilution  and  such  securities  may  have  rights,  preferences  or
privileges  senior to those of the rights of the Company's  Common Stock.  There
can be no  assurance  that  additional  financing  will be  available  on  terms
favorable to the Company,  or at all. If adequate funds are not available or not
available  on  acceptable  terms,  the  Company  may not be  able  to  fund  its
expansion,  promote its brand names as the Company  desires,  take  advantage of
unanticipated acquisition opportunities,  develop or enhance products or respond
to  competitive  pressures.  Any such  inability  could have a material  adverse
effect on the Company's business, results of operations and financial condition.

         ACQUISITION  RISKS.  As  part of its  business  strategy,  the  Company
expects to pursue the  acquisition of businesses,  services or  technologies  to

                                       12


complement its existing business and/or enhance its technological  capabilities.
There can be no  assurance,  however,  that the  Company  will be able to locate
suitable  acquisition  opportunities.  Future  acquisitions by the Company could
result  in  potentially  dilutive  issuances  of  equity  securities,  large and
immediate  write-offs,  the  incurrence of debt and  contingent  liabilities  or
amortization  expenses related to goodwill and other intangible  assets,  any of
which could materially and adversely affect the Company's results of operations.
Furthermore,  acquisitions  entail numerous risks and  uncertainties,  including
difficulties  in  the  assimilation  of  operations,  personnel,   technologies,
products and the  information  systems of the acquired  companies,  diversion of
management's   attention  from  other  business  concerns,   risks  of  entering
geographic  and  business  markets in which the Company has no or limited  prior
experience  and potential loss of key employees of acquired  organizations.  The
Company has made several material  acquisitions in the recent past. No assurance
can be given as to the  ability of the  Company to  successfully  integrate  any
businesses,  products,  technologies  or personnel that might be acquired in the
future,  and the failure of the Company to do so could have a materially adverse
effect on the Company's business, results of operations and financial condition.

         INTERNATIONAL  EXPANSION.  The  Company  may  determine  to expand  its
international  operations.  To do so the Company would likely have to enter into
relationships  with foreign  business  partners.  This strategy  contains risks,
including  difficulty  in managing  international  operations  due to  distance,
language and cultural differences;  inability to successfully market and operate
services in foreign  markets;  need to implement  business  strategy  quickly in
international  markets to obtain a significant share of the market; and the need
to  quickly  react to  changing  international  standards.  There are also risks
inherent  in doing  business on an  international  level,  including  unexpected
changes in regulatory requirements; trade barriers; difficulties in staffing and
managing  foreign  operations;  fluctuations in currency  exchange rates and the
introduction  of the  euro;  longer  payment  cycles  in  general;  problems  in
collecting accounts receivable; difficulty in enforcing contracts; political and
economic instability;  seasonal reductions in business activity in certain other
parts of the world; and potentially adverse tax consequences.

         LIMITED  PUBLIC  MARKET FOR COMMON  STOCK;  VOLATILITY  OF STOCK PRICE.
Prior to this offering there has been only a limited public market for shares of
Company Common Stock in the  over-the-counter  market. There can be no assurance
that a more  active  trading  market  for the Common  Stock  will  develop or be
sustained.

         Trading  in the  Company's  Common  Stock  has  been  subject  to  wide
fluctuations in price and such fluctuations are expected to continue in response
to numerous  factors such as variations in the Company's  results of operations,
changes in earnings estimates, announcements of technological innovations or new
solutions  by  the  Company  or  its  competitors,  general  conditions  in  the
technology  Internet sectors and in Internet-related  industries,  the operating
and  stock  price  performance  of  other  companies  that  investors  may  deem
comparable,  news  relating  to trends in the  Company's  markets and other risk
factors  discussed  elsewhere herein and other events or factors,  many of which
are beyond the Company's control.

                                       13


          In  addition,  the stock  market in  general  and the  technology  and
Internet  sectors in  particular  have  recently  experienced  extreme price and
volume  fluctuations  which have affected the market price for many companies in
industries  similar  or  related  to that of the  Company  and  which  have been
unrelated  to  the  operating  performance  of  these  companies.  These  market
fluctuations,  as well as general economic, political and market conditions, may
have a materially  adverse  effect on the market price of the  Company's  Common
Stock.  In the past,  following  periods of  volatility in the market price of a
company's  securities,   securities  class  action  litigation  has  often  been
instituted  against  such  companies.  Such  litigation,   if  instituted,   and
irrespective  of the outcome of such  litigation,  could  result in  substantial
costs  and a  diversion  of  management's  attention  and  resources  and have a
material  adverse  effect on the Company's  business,  results of operations and
financial condition.

         SHARES ELIGIBLE FOR FUTURE SALE. Sales of significant amounts of Common
Stock in the public market after the offering or the perception  that such sales
will occur could  materially and adversely affect the market price of the Common
Stock or the future ability of the Company to raise capital  through an offering
of its equity  securities.  Of the 11,292,476  shares of Common Stock issued and
outstanding  as of  November  30,  2000  (which  excludes  800,000 of the shares
covered by this  Registraton  Statement  which have been authorized for issuance
but not yet issued),  6,683,717  are eligible for  immediate  sale in the public
market without restriction (after giving effect to this Registration Statement).
The remaining  4,608,759 shares of Common Stock (including  75,862 of the shares
covered hereby until this  Registration  Statement is effective) are "restricted
securities"  as that  term is  defined  in Rule 144 under  the  Securities  Act.
Restricted  securities may be sold in the public market only if registered or if
they qualify for an exemption from  registration  under Rules 144, 144(k) or 701
promulgated  under the  Securities  Act. If a large  number of these  restricted
shares become free of their  restrictions and are sold in the public market such
sales  could  have a  materially  adverse  effect  on the  market  price for the
Company's Common Stock.

         ABSENCE OF DIVIDENDS.  The Company does not anticipate  paying any cash
dividends in the foreseeable  future.  See,  "DIVIDEND POLICY."

                           PRICE RANGE OF COMMON STOCK

         The  Company's  Common Stock is traded in the  over-the-counter  market
under the symbol  "BYTE." The  following  table sets forth the range of high and
low bid prices for the Common Stock for the periods shown (reflecting the 1:3.49
reverse  stock  split  effective  February  2000) as  reported  by the  National
Quotation Bureau:

                                                 High                    Low
           1998

     1st Quarter ........................      $ .140                $  .105
     2nd Quarter ........................        .105                   .070
     3rd Quarter ........................        .070                   .035
     4th Quarter ........................        .035                   .017

                                       14



            1999

     1st Quarter ........................       1.012                  1.012
     2nd Quarter ........................        .820                   .558
     3rd Quarter ........................       2.478                  2.408
     4th Quarter ........................      13.303                  8.404

            2000

    First Quarter.......................        65.00                  10.00
    Second Quarter......................        26.00                   7.50
    Third Quarter.......................        15.00                   6.938
    Fourth Quarter (to date)............         7.375                  2.75

         These prices  reflect  inter-dealer  prices,  without  retail  mark-up,
mark-down or commission and may not represent actual  transactions.  On December
13,  2000,  the last sale price of the Common  Stock as reported by the National
Quotation Bureau was $2.9375 per share. As of July 14, 2000, the Company had 232
stockholders of record.  As of November 30, 2000 there were 11,292,496 shares of
Common Stock issued and outstanding.

                                 DIVIDEND POLICY

         The Company has never paid cash  dividends  on its Common Stock and has
no  present  intention  to  pay  cash  dividends.  In  addition,  the  Company's
outstanding  preferred  stock  prohibits  the payment of cash  dividends  on its
Common Stock.  It is the Company's  intention to retain  earnings to finance the
expansion of its business.

                                 USE OF PROCEEDS

         The Company will not receive any of the proceeds  from the sales of the
Common Stock by the selling stockholders.  See "Selling  Stockholders" for those
holders of Company equity  securities  entitled to receive net proceeds from the
sales of the Common Stock.  Any proceeds  received by the Company would be added
to  working  capital.  The  selling  stockholders  will  receive  all of the net
proceeds  from the sale of the Common Stock  pursuant to this  Prospectus.  See,
"DESCRIPTION OF CAPITAL STOCK."

            MANAGEMENT'S PLAN OF OPERATION FOR THE NEXT TWELVE MONTHS

         Piranha is a  technology-based  company  with a line of  digital  asset
management  products and services  being  developed  for sale and/or  licensing.
Piranha is in the business of providing  enabling  technologies  in the areas of
data  compression,  product output routing,  universal file format  recognition,
data manipulation and custom application  feature  development in both the lossy
data  compression and lossless data compression  market segments.  Additionally,
Piranha  provides  digital  image  acquisition  services  which are  intended to
incorporate its core data compression  technologies.  Piranha's data compression
software  products and digital  asset  service are  designed to enhance  digital

                                       15


workflow  processes and improve data transfer  speeds across the Internet and to
provide  high  quality  image  clarity at  compression  rates  which the Company
believes  are higher than those  presently  available  in the  marketplace  on a
variety of platforms.  These compression products are directed to digital images
and Internet  applications  such as full motion streaming video,  lossless image
and text string  compression,  and highly  compressed,  high  resolution  static
images.

         The Company  needs to raise funds in the next twelve months in order to
meet its cash requirements and fund its current  operations as well as to engage
in more aggressive brand promotion and more rapid  expansion,  to develop new or
enhanced   products,   to  respond  to  competitive   pressures  or  to  acquire
complementary businesses or technologies. If additional funds are raised through
the issuance of equity or convertible debt securities,  the percentage ownership
of the stockholders of the Company will be reduced,  stockholders may experience
dilution and such securities may have rights,  preferences or privileges  senior
to those of the rights of the Company's Common Stock.  There can be no assurance
that  additional  financing will be available on terms favorable to the Company,
or at all. If adequate  funds are not  available or not  available on acceptable
terms,  the Company may not be able to meet its cash  requirements  and fund its
current  operations as well as to engage in more aggressive  brand promotion and
more  rapid  expansion,  to  develop  new or  enhanced  products,  to respond to
competitive  pressures or to acquire  complementary  businesses or technologies.
Any such  inability  would  have a  material  adverse  effect  on the  Company's
business, results of operations and financial condition.

         The Company is continuously involved in the development of new products
and  related  technology.   The  Company's  products  are  designed  to  support
business-to-business, e-commerce and Internet related activities associated with
professional  digital  archival  storage,   digital  workflow  optimization  and
advanced business-to-consumer on-line shopping applications.  Piranha technology
and its resulting application developments are expected to provide a methodology
to  support  the  emerging   e-commerce  market  demand  for  solutions  to  the
traditional  bottlenecks and time delays associated with the e-commerce shopping
experience that the Company believes are superior to those presently  available.
The  Company  believes  that  its  products  and  services  provide   measurable
quantatitive and qualitative  advantages over related products and services. For
products currently under development see "BUSINESS."

         The  Company  may  experience   rapid  growth,   which  would  place  a
significant  strain  on the  Company's  managerial,  financial  and  operational
resources.  The  Company  is  required  to manage  multiple  relationships  with
numerous outside parties. These requirements WILL BE EXACERBATED IN THE EVENT OF
FURTHER growth of the Company or in the number of third party relationships, and
there can be no assurance  that the  Company's  systems,  procedures or controls
will be adequate to support the Company's  operations or that Company management
will be able to  manage  any  growth  effectively.  To  effectively  manage  its
potential  growth,  the  Company  must  continue  to  implement  and improve its
operational,  financial and management  information systems and to expand, train
and manage its employee base.

                                       16


     To date, the Company has not incurred any significant  problems  associated
with the  inability  of  software  applications  and  operational  programs  not
properly recognizing calendar dates in the year 2000 in the following areas: (1)
accounting and reporting  systems,  (2) office automation and contact management
software,  (3) systems of third party  vendors  incorporated  into the Company's
developmental products, and (4) the Company's developmental products.

                                    BUSINESS

     The Company was formed in 1992. From 1996 through November 1999 the Company
essentially  was a  non-operating  entity,  even  though  two of its four  prior
subsidiaries  (First  Classics,  Inc. and Classics Media Group,  Inc.) remain in
existence. Beginning with the acquisition of Zideo.com, Inc. on December 8, 1999
and IBP, Inc. on December 30, 1999, the Company effectively changed its business
operations.  In February 2000 it changed its name to Piranha,  Inc.,  effected a
1:3.49  reverse  stock split and increased  its  authorized  Common Stock to 100
million shares.

     Piranha  is a  technology-based  company  with  a  line  of  digital  asset
management  products and services  being  developed  for sale and/or  licensing.
Piranha is in the business of providing  enabling  technologies  in the areas of
data  compression,  product output routing,  universal file format  recognition,
data manipulation and custom application  feature  development in both the lossy
data  compression and lossless data compression  market segments.  Additionally,
Piranha  provides  digital  image  acquisition  services  which are  intended to
incorporate its core data compression  technologies.  Piranha's data compression
software  products and digital  asset  service are  designed to enhance  digital
workflow  processes and improve data transfer  speeds across the Internet and to
provide  high  quality  image  clarity at  compression  rates  which the Company
believes  are higher than those  presently  available  in the  marketplace  on a
variety of platforms.  These compression products are directed to digital images
and Internet  applications  such as full motion streaming video,  lossless image
and text string  compression,  and highly  compressed,  high  resolution  static
images.

     The  Company's  products  are  designed  to  support  business-to-business,
e-commerce and Internet related activities  associated with professional digital
archival    storage,     digital    workflow     optimization    and    advanced
business-to-consumer  on-line shopping applications.  Piranha technology and its
resulting  application  developments  are expected to provide a  methodology  to
support the emerging  e-commerce  market demand for solutions to the traditional
bottlenecks and time delays associated with the e-commerce  shopping  experience
that the Company believes are superior to those presently available. The Company
believes  that its products and services  provide  measurable  quantatitive  and
qualitative  advantages over related products and services.  Products  currently
available include:

                                       17


o        Piranha Net - This web based  product is  expected to allow  commercial
         web sites to  download  significantly  faster  than  what is  currently
         available.  Piranha Net  utilizes  Piranha's  proprietary  lossless and
         lossy data compression algorithms.

o        Piranha Byte- This  Streaming FTP lossless and modified bit "ultra high
         fidelity" data compression  product is used for downloading files to or
         from a server or  individual  user.  A  multitude  of file types can be
         delivered for archival or immediate use at  compression  rates and data
         transfer  speeds   substantially   greater  than  current   competitive
         products.  The first shipments of this product occurred during the week
         of June 19, 2000.

o        Piranha Stream - This product is a plug-in or browser-based full-motion
         video product with several audio codecs  available,  including  Piranha
         Audio  featuring  low  bandwidth  and high  quality.  Piranha  Stream's
         advanced  component  input  compression  process  produces  the highest
         quality  streaming video in the market place.  The first products using
         this technology were  distributed to stockholders at the annual meeting
         on August 18, 2000.

     Products that are expected to debut in the future:

o        An  e-commerce  application  covering  transaction,  data  mining,  and
         other e-commerce disciplines.

o        A product combining all Piranha technologies into one suite of tools to
         handle enterprise solutions for the largest customer. This product will
         include data base  interfacing  with Oracle and other  enterprise  data
         warehouse software.

o        An affordable software rental that offers a variety of solutions from a
         full  suite of  products  to a  smaller  version  designed  to meet the
         specific needs of the customer.

o        Increased   processing   power   delivered   through  custom  DSP  chip
         integration for tailored hardware/software solutions.

o        An advance image database product  providing   multifunctional   search
         capabilities.

         Piranha  products have been developed on the Linux operating system and
have been successfully ported to Microsoft and Apple operating platforms.

         The Company maintains three separate websites:

o        www.piranha.com  for investor and general Company information.

o        www.zideo.com for Internet-related activities.

o        www.impact-s.com for the pre-press, printing and publishing industries.

                                       18


         Piranha  believes that it is different from current industry leaders in
that it is a  solutions-based  organization not limited to a specific  operating
platform,  to a  specific  type of data  file or to  either  video  or  audio or
lossless or lossy sciences.

Market Need

         The  Company's  product and  service  line is intended to fill what the
Company  believes  to be a  market  need for  digital  image  acquisition,  data
compression,  product output routing, custom user interfaces, and universal file
format recognition with particular applicability in five distinct problem areas:

o        Bandwidth  Limitations:   data pipes are too small to accommodate  huge
         multi-format data files. This is most notable in the  critical areas of
         video, audio, and high resolution graphics and pictures.

o        Digital Storage  Limitations:  vast amounts of audio,  video,  text and
         graphics have been converted  from their original  analog state to more
         manageable  digital  storage  files.  This  conversion  from  analog to
         digital has created enormous data storage requirements.

o        Data Transmission Speed: more speed, the most common cry in cyberspace.
         Ideally,  large  pipes and small data files would  result in  lightning
         speeds.  In  actuality  consumers  have small pipes and huge data files
         resulting in very slow data communication rates.

o        Security Concerns: digital information must be safely stored,  securely
         transmitted  and  accessible  to  encryption or safeguarding to protect
         privacy and provide assurances of safety.

o        Data Routing: ability to easily control the asset delivery and archival
         process with definable  network and Internet delivery addresses.

     The  Company  believes  that  a  technology   focusing  on  "digital  asset
management"  will address each of these five major  challenges and believes that
its preliminary  demonstrations have reflected significant improvements over the
technologies of current industry leaders.

Market Segments

                           Digital Workflow Solutions

         The Company's wholly-owned subsidiary,  Impact Solutions, Inc., focuses
upon providing digital workflow solutions  specifically directed toward lossless
and  modified  bit "ultra  high  fidelity"  data  compression  sciences  for the
pre-press,  printing  and  publishing  industries.  Over the last  decade  these
industries  have  started to consider  moving away from  traditional  consumable
materials to digital file handling.  Certain  printing and  publishing  industry

                                       19


organizations such as Time, Inc., R.R. Donnelley and Sons,  Quad/Graphics,  Inc.
and Quebecor World have begun  utilizing  digital  workflows in the last several
years.  Certain publications are using digital solutions to produce most, if not
all, of their product.

         The Company estimates,  however, that less than one-fourth of the pages
produced  by  publications  such as news  magazines  are  digital.  The  Company
believes that factors such as cost and evolving technologies will accelerate the
movement to the  digital  world  within  three to five years but that file size,
storage size,  transmission  costs and security concerns are major  impediments.
Piranha's expectations are that its compression technology will overcome certain
if not all of these hurdles.

         The Company  also  believes  that any  technology  it develops  will be
useful in other industries,  such as medical imaging  technology (which needs to
assemble,  track,  transmit,  archive and often  output high  resolution  x-ray,
sonograms  and  other  application-critical  high  fidelity  images  in a secure
environment)  as well as the  financial,  government,  insurance and real estate
industries  (which require large document storage  capabilities) and the banking
and financial  services  industries  (which require business to business support
for their transactional services).

         Major  competitors  in this market  segment  are  believed to be PKZip,
Aladdin  Industries,  Inc. and document workflows presented by such companies as
Adobe, AGFA and Heidelberg.

         As a result of the  acquisition  of JJT,  Inc.,  Impact  Solutions also
operates a digital  image capture  service.  JJT,  Inc.  provides  digital image
archive  services for several  clients  including the United  States  Library of
Congress, the New York Public Library and the University of Texas at Austin.

                         Digital Distribution Solutions

         Zideo.com,   Inc.,  another  Piranha   subsidiary,   is  the  Company's
Internet-directed   sales  and  marketing  organization  that  utilizes  Piranha
technologies  to provide a  streaming  media  encoding  service  bureau for such
source  material  as  music  videos,   movie  trailers,   pay-per-view   movies,
educational content,  e-greeting cards, gaming, video conferencing,  e-commerce,
and research and development for the entertainment industry.

         The Company  believes  its  technology  is suitable for  streaming  and
downloading  audio  and  video  on-demand  at ratios  and  resolution  qualities
previously not available. Zideo.com is also seeking to satisfy emerging needs in
the security, video-conferencing and distance learning arenas.

         Zideo.com is currently engaged in the following pre-marketing efforts:

o             Film & Video - Zideo.com  is  soliciting  content  providers  with
              materials  ranging from movie  trailers to  independent  films for

                                       20


              encoding   services   utilizing  the  Piranha   Stream   streaming
              audio/video  solution.  The Company  believes that Piranha  Stream
              provides  a  qualitative  and  quantitative  improvement  over the
              current industry leaders, Sorensson, Fronhoeffer and MPEG 4.

o             Web pages - Piranha products are also expected to be applicable to
              on-line  web  page  development  of  graphic,  animation  or image
              presentations.  The multiple discipline approach of Piranha Net is
              expected to allow for significantly  increased download speeds and
              dramatically reduced files sizes.

In addition, Zideo.com expects to continue development of technology that can be
applied to the Internet in the computer games area.

     The Zideo.com web site uses Cobalt RAQ3 web servers on twin OC3  backbones,
with a top tier connection. The Internet service provider is The Planet.com.

Business Development

     In  December  1999  the  Company  acquired  all of  the  capital  stock  of
Zideo.com, Inc., a wholly-owned subsidiary of Digibyte Corporation,  an Illinois
corporation,  for cash in the aggregate amount of $750,000. The Company acquired
Zideo in  order to  obtain  certain  licensing  rights  to  technology  owned by
DigiByte as well as to obtain the  Zideo.com  brandname and the  acquisition  of
certain personnel  associated with Zideo and DigiByte including Messrs.  Sample,
Ashley and Mr. Larry Greybill.

     In December  1999,  the Company  acquired all of the capital  stock of IBP,
Inc.,  a  privately-held  corporation  owned by Messrs.  Steele and Lotzer,  the
Company's Chief Information Officer and Chief Science Officer, respectively. The
Company's  acquired  IBP to  obtain  certain  technology  regarding  proprietary
lossless  and lossy data  compression  algorithms.  None of the  technology  was
subject to a patent or trademark.

     In connection with the acquisition  Messrs.  Lotzer and Steele entered into
employment  agreements  with the  Company.  Mr.  Lotzer  entered into a two-year
employment  contract at an annual salary of $150,000 in year one and $200,000 in
year two. Mr. Lotzer is the Company's  Chief Science  Officer and is expected to
be appointed to the Board of Directors in an annual  alternation with Mr. Steele
at some time in the  future.  Mr.  Steele  entered  into a  two-year  employment
contract at an annual  salary of $150,000 per year.  Mr. Steele is the Company's
Chief Information Officer and has been appointed to the Board of Directors in an
annual alternation with Mr. Lotzer.

     In February 2000 the Company  acquired the services of Edward Falk,  Robert
Newton, Craig Westveer, Thomas Lenartz and Kevin Rahe through the acquisition of
Grand Rapids  Science  Group,  Inc.  (now known as Rogue River  Software  Group,
Inc.).  The  purpose  of the  acquisition  was to  add to the  expertise  of the
Company's  science group in the areas of graphic arts, image  processing,  color
sciences and database design and modeling.


                                       21


     In March 2000 the Company purchased all ordinary shares of Online Marketing
(UK) Ltd. from Mr. Alan Fairnington and Mr. Joseph H. Sherrill,  Jr. The primary
purpose of the  acquisition  was to obtain the services of Messrs.  Fairnington.
Mr. Sherrill is currently an independent director of the Company.

     In October  2000 the Company  purchased  all of the  outstanding  shares of
Comsight Imaging,  Inc. and acquired the services of Dr. Xiaolin Wu. The Company
entered  into a  three-year  employment  contract  with Dr.  Wu as  Director  of
Research and Development. Dr. Wu receives a base annual salary of $160,000.

     In November 2000 the Company  acquired the business and assets of JJT, Inc.
The primary purpose of this acquisition was to obtain the imaging  technology of
JJT, Inc. and the services of Mr. John T. Stokes.

     See, "MANAGEMENT."

Competition

     The Company is in a highly  competitive  market.  The Company competes with
major software developers as well as numerous smaller companies producing one or
more competitive  products.  The Company's products compete with those of PKZip,
Stuffit, WinZip,  Sorensson,  MPEG, Real, Cinepak, Indeo and others. Most if not
all of the Company's  existing and potential  competitors  have longer operating
histories,  greater name  recognition,  larger customer bases and  significantly
greater  financial,  technical and marketing  resources  than the Company.  Such
competitors are able to undertake more extensive  marketing  campaigns for their
brands,  adopt more aggressive  pricing policies and make more attractive offers
to potential  customers and  employees.  Accordingly,  there can be no assurance
that the  Company  will be able to compete  successfully  against its current or
future competitors or that competition will not have a materially adverse effect
on the Company's business, results of operations and financial condition.

     Competition  for Internet  products and services is intense.  As the market
for e-commerce  grows,  the Company  expects that  competition  will  intensify.
Barriers to entry are minimal,  and  competitors can offer products and services
at a  relatively  low  cost.  The  market  in  which  the  Company  competes  is
significantly  affected and is  characterized  by rapidly  changing  technology,
evolving industry standards,  frequent new product and service announcements and
enhancements,  other market  activities  of industry  participants  and changing
customer demands.  Accordingly, the Company's success will depend on its ability
to adapt to such  changes  and its  ability to  continually  improve  the speed,
performance,  features,  ease of use and reliability of its products in response
to both evolving demands of the marketplace and competitive  service and product
offerings.  Any failure to rapidly adapt in a changing  environment would have a
materially adverse effect on the Company's  business,  results of operations and
financial condition.


                                       22


          The Company's  financial and operating  success  depends,  among other
things,  on the success of its  products  and  services.  If those  products and
services fail to keep pace with the rapid changes in technology and customer and
supplier demands, the Company may not become or remain profitable.  There can be
no assurance  that the products and services of the Company will achieve  market
acceptance or  commercial  success or that the Company will be  successful.  The
Company expects competition to persist and intensify in the future.

         The Company believes that the principal  competitive  factors affecting
companies  seeking  to  develop,  market  and sell  compression  technology  are
critical mass, technical competence, market acceptability,  functionality, brand
recognition,  market include speed of  implementation,  price,  knowledge of the
industry,  core  technology,  ability  to  implement  a solution  with  existing
technology  and  financial  capacity of its  potential  customers.  Although the
Company believes that its solutions  currently compete favorably with respect to
several of these factors, the Company's market is relatively new and is evolving
rapidly.  The Company may not be able to maintain  any  significant  competitive
position  against  current  and  potential  competitors,  especially  those with
significantly  greater financial,  marketing,  service,  support,  technical and
other resources.

         The Company  continually strives to incorporate new technology into its
products.  Introducing new technology  involves numerous  technical  challenges,
substantial  amounts of personnel  resources and frequently  requires  months to
complete.  There can be no  assurance  that the Company  will be  successful  at
integrating  new  technology  on  a  timely  basis  or  without   degrading  the
responsiveness and speed of its existing products or that, once integrated, such
technology will function as expected.

Intellectual Property

         The  Company  regards its  copyrights,  trademarks,  trade  secrets and
similar intellectual property as critical to its success and attempts to protect
its rights by relying on  trademark,  service  mark,  copyright and trade secret
laws and  restrictions on disclosure and  transferring  title and other methods.
The Company has filed United States trademark applications for Piranha,  Piranha
Byte,  Piranha Stream,  Piranha Net, Piranha Web,  Webbot,  Netbot and trademark
applications for Piranha in numerous overseas venues.  There can be no assurance
that  these  steps will be  adequate,  that the  Company  will be able to secure
trademark  registrations  for all of its  marks in the  United  States  or other
countries or that third  parties will not infringe  upon or  misappropriate  the
Company's copyrights,  trademarks, service marks and similar proprietary rights.
The  Company  currently  has no patents  but has filed for  certain  provisional
patents. The Company is also examining whether further patent protection will be
sought. There can be no assurance that patents will become a significant part of
the  Company's  intellectual  property  in  the  foreseeable  future.  Effective
trademark,  service mark, copyright,  trade secret and patent protection may not
be available in every country in which the Company's products may be distributed
and policing unauthorized use of the Company's  proprietary  information will be
difficult if not impossible.


                                       23


         The Company generally enters into  confidentiality  agreements with its
employees and consultants and generally  controls access to and  distribution of
its documentation and other  proprietary  information.  It may be possible for a
third  party  to copy or  otherwise  obtain  and use the  Company's  proprietary
information   without   authorization   or   to   develop   similar   technology
independently.

         Legal standards  relating to the validity,  enforceability and scope of
protection of certain  proprietary  rights in  Internet-related  businesses  are
uncertain  and still  evolving  and no  assurance  can be given as to the future
viability or value of any  proprietary  rights of the Company or other companies
within  this  market.  There can be no  assurance  that the  steps  taken by the
Company  will  prevent  misappropriation  or  infringement  of  its  proprietary
information.  Any such infringement or misappropriation  could have a materially
adverse  effect on the Company's  business,  results of operations and financial
condition

         In  addition,  litigation  may be  necessary  to enforce the  Company's
intellectual  property rights,  to protect its trade secrets or to determine the
validity and scope of the proprietary  rights of others.  Such litigation  might
result in substantial costs and diversion of resources and management  attention
and could have a materially adverse effect on the Company's business, results of
operations and financial condition.  Furthermore, there can be no assurance that
the Company's business  activities will not infringe upon the proprietary rights
of others or that other parties will not assert  infringement claims against the
Company. The Company may become subject to claims of alleged infringement of the
trademarks,  service  marks  and  other  intellectual  property  rights of third
parties.  Although  no such claims  have  occurred to date,  such claims and any
resultant  litigation  might  subject the Company to  significant  liability for
damages and might result in invalidation of the Company's proprietary rights and
even if not  meritorious  could be time  consuming  and  expensive to defend and
could result in the diversion of  management  time and  attention,  any of which
might have a  material  adverse  effect on the  Company's  business,  results of
operations and financial condition.

Government Regulation and Legal Uncertainty

         The  Company  is not  currently  subject  to direct  regulation  by any
government agency,  other than regulations  applicable to businesses  generally,
and there are currently few laws or regulations directly applicable to access to
or  distribute  information  on the  Internet.  However,  due to the  Internet's
increasing  popularity and use, a number of legislative and regulatory proposals
are under  consideration  by  federal,  state,  local and  foreign  governmental
organizations,  and it is possible that a number of laws or  regulations  may be
adopted with respect to the  Internet  relating to such issues as user  privacy;
user  screening to prevent  inappropriate  uses of the Internet by, for example,
minors  or  convicted  criminals;  taxation;   infringement;   pricing;  content
regulation;   quality  of  products  and  services;  and  intellectual  property
ownership and  infringement.  The adoption of any such laws or  regulations  may
decrease the growth in the use of the Internet, which could in turn decrease the
demand  for the  Company's  products,  increase  the  Company's  cost  of  doing
business,  or  otherwise  have a  materially  adverse  effect  on the  Company's

                                       24


business,   results  of  operations  and  financial  condition.   Moreover,  the
applicability to the Internet of existing laws governing issues such as property
ownership,  copyright,  trademark,  trade secret, obscenity,  libel and personal
privacy is uncertain and  developing.  Any new  legislation  or  regulation,  or
application or interpretation of existing laws, could have a materially  adverse
effect on the Company's business, results of operations and financial condition.

         The Communications Decency Act of 1996 (the "CDA") was enacted in 1996.
Although  those  sections  of the CDA that,  among  things,  proposed  to impose
criminal penalties on anyone  distributing  indecent material to minors over the
Internet were held to be  unconstitutional  by the U.S. Supreme Court, there can
be no  assurance  that  similar  laws will not be  proposed  and  adopted in the
future.  Similar  types of  legislation  and the  manner  in  which  they may be
interpreted  and  enforced  cannot be fully  determined  and could  subject  the
Company to potential liability. Such legislation could also impact on the growth
of the Internet generally and decrease the demand for the Company's products.

Properties

         The  Company's  principal  executive  offices  are  located  at 2425 N.
Central Expressway,  Suite 480, Richardson, Texas 75080. Its principal financial
offices are located at 33 North LaSalle Street,  33rd Floor,  Chicago,  Illinois
60602. Its research and development facilities are located in Richardson,  Texas
and  additional  research and  development  offices are located in Grand Rapids,
Michigan.  Sales and marketing activities are conducted throughout the Company's
various offices and its Impact Solutions,  Inc. and Zideo.com, Inc. subsidiaries
located in Freehold, New Jersey, London, England and Richardson, Texas.

Legal Proceedings

         In July 1994, the Company discharged four officers of its Dream Factory
subsidiary.  The  officers who were  discharged  commenced  actions  against the
Company seeking damages arising out of the alleged wrongful termination of their
employment.  The Company subsequently settled the claims of two of the officers.
The Company has from time to time been engaged in settlement  negotiations  with
the two remaining  officers,  a husband and wife, and has accrued a provision of
$700,000 in its consolidated  financial statements.  No settlement  negotiations
are currently  taking place and the Company is preparing to go to trial in early
2001. The remaining cases are pending in Connecticut state court.


         The Company was a defendant in the case of Benjamin B. LeCompte, III, a
stockholder, v. Classics International Entertainment, Inc., in the United States
District Court for the Northern  District of Illinois,  Eastern  Division.  This
case  involved a claim by LeCompte  that the Company owed him 573,066  shares of
Common Stock  pursuant to an alleged  conversion of a promissory  note into said
shares. The note, in the principal amount of $200,000,  and the accrued interest
thereon, are included in the Company's  consolidated  financial  statements.  On
April 3, 2000,  this case was dismissed for lack of  jurisdiction.  On April 12,

                                       25


2000,  LeCompte filed an action against the Company in the Circuit Court of Cook
County,  Illinois,  asserting substantially the same claims as in the case which
was dismissed.  That action was dismissed on October 18, 2000.  Subsequently  an
amended  complaint was filed. The Company believes this action is without merit,
has filed another  motion to dismiss and intends to vigorously  defend itself in
this matter.

 Employees

         As of December 11, 2000, the Company  employed 68 full-time  employees,
31 of whom were employed in research and development,  16 in sales and marketing
and 21 in general and administrative capacities. None of the Company's employees
are subject to collective  bargaining  agreements and the Company  considers its
relationships with its employees to be good.

                                   MANAGEMENT

Directors, Executive Officers and Significant Employees

         The following table sets forth the names and positions of the Company's
executive officers,  directors and key employees. Each director serves until the
next annual  meeting of the  stockholders  or until  his/her  successor  is duly
elected and  qualified.  The Company's  executive  officers and key employee are
appointed by and serve at the discretion of the Board of Directors.

Name                       Birthday         Position

Edward W. Sample           9/19/51        Chairman, Chief Executive Officer  and
                                          Director

Richard S. Berger           2/1/34        Chief Financial Officer, Secretary and
                                          Director

R. Don Ashley             12/15/53        President and Chief Operating Officer

Michael Steele             8/18/55        Chief Information Officer and Director

Carey L. Lotzer           12/11/63        Chief Science Officer

Larry Greybill             5/25/44        President and Chief Operating Officer,
                                          Impact Solutions, Inc.

Nathan McClintock          3/17/50        President and Chief Operating Officer,
                                          Zideo.com, Inc.

Joseph H. Sherrill, Jr.    3/27/41        Director

                                       26


W. Barger Tygart           8/16/35        Director

     Mr.  Sample joined the Company in December 1999 after a 29 year career with
$30 billion  retailer,  JC Penney.  Most  recently  Sample  directed JC Penney's
participation in the Massachusetts  Institute of Technology "News in the Future"
consortium.  The News in the Future (NiF) research  consortium  provides a forum
for the MIT Media  Laboratory  and  member  companies  to  explore  and  exploit
technologies  that will affect the collection and  dissemination of news. Sample
is credited with a number of technology  "firsts" for the retailer,  such as: In
1999, under Sample's direction, JC Penney unveiled the "World's First Commercial
Electronic Ink Display" (USA Today,  5/3/99). Some of Mr. Sample's other notable
accomplishments  include:  the  introduction of the industry's first "web based"
kiosk  system;  the  implementation  of one of the  countries  largest  distance
learning  systems;  the introduction of a digital imaging capture system for the
retailer's   enormous   merchandise   operation;   the   implementation   of  an
international digital image transmission system for merchandise procurement, and
the first commercial  introduction of the Sony SEPS 2000 camera,  utilizing HDTV
technology, in 1992.

     Mr. Berger founded Classics International Entertainment, Inc. (now known as
Piranha,  Inc.) in 1992, and after making several  acquisitions,  took it public
through  an  IPO in  October  1993.  Mr.  Berger  served  in  various  executive
capacities  including the Company's  CEO,  CFO,  Secretary,  and Chairman of the
Board until  December  1999 when he  reorganized  the business into a technology
company.  Prior to 1992,  Mr.  Berger  served as a CEO, CFO, and Chairman of the
Board of several  companies while preparing them for public  offerings,  private
placements  and/or reverse mergers.  Some of the industries served by Mr. Berger
were  factoring  (account  receivable  financing and billing for  physicians and
dentists), cable television,  publishing,  environmental (waste water treatment,
contaminated soil removal),  machining (NASA space shuttle program),  retailing,
kiosk  development,  design and sales,  and high technology and Internet related
entities.

     Mr.  Ashley  joined  the  Company  in  January  2000  after  over 25  years
experience in the entertainment industry and has achieved exceptional success as
artist, technician and manager. As former president of the Texas Music Group, an
entertainment  content  provider,  Mr.  Ashley  worked  with  industry  leaders,
American Airlines,  McGraw Hill,  Southwest  Airlines and Convex Computers.  Mr.
Ashley was directly responsible for the design, implementation and management of
the post-production  services operation of the $46 million television operations
facility  within the 2 million  square foot World  Headquarters  of JC Penney in
Plano, Texas. Additionally,  Mr. Ashley has had a celebrated career in Marketing
and  Communications  with the $30 billion  retailer.  Mr.  Ashley  directed  the
technical  operations  team of the retail giant that managed the development and
implementation  of the co-op  advertising  system that supports JC Penney's $800
million advertising  program.  Mr. Ashley served as Vice President of Stonebriar
Communications,  Inc. a new media business  operating company of JCPenney.  Most
recently,  Mr.  Ashley  served as  President  and  Chief  Operating  Officer  of
Zideo.com, Inc.

                                       27


     Mr.  Steele was the  co-founder  of IBP,  Inc.,  a  technology  corporation
dealing in data compression  technology  built upon the Linux operating  system.
Previously,  Mr.  Steele served as a Financial  Planner with Texas  Instruments,
Financial  Analyst for W.R.Grace  and, since 1997,  Infrastructure  Building and
Project  Manager  for Ernst and Young.  Mr.  Steele has done  extensive  work in
compression  software sciences and has participated in professional  training in
Java, metrics development and documentation,  new product planning/enhancements,
business  plan and market  development.  Mr.  Steele  graduated  from Texas Tech
University, BS 1978, MS 1985. MS MIS at UTD (in progress).

     Mr.  Lotzer was the  co-founder  of IPB,  Inc.,  a  technology  corporation
dealing in data compression  technology  built upon the Linux operating  system.
Mr.  Lotzer has over 13 years  experience in the area of  distributed  computing
environment systems as an architect and developer and, most recently, the senior
software  analyst at PrimeCo  PCS.  Mr.  Lotzer has served as Chief  Information
Officer of IT  Staffing  Solutions  and has  provided  consulting  services  for
companies  such as Fidelity  Investments,  Meridian  Oil,  Arco Oil and Gas, MCI
International,  America Airlines SABRE Decision Technologies, Reliance Comm/Tec,
Nations Bank, Union Pacific Resources Company,  Wal-Mart Inc., NEC America, AT&T
Long Distance  Services,  and Texas  Instruments.  Mr. Lotzer graduated from the
University of Texas at Dallas in August 1986 with Bachelor of Science degrees in
Geophysics and  Analytical  Mathematics  and brings  extensive  educational  and
skills sets to the Company.  Mr. Lotzer has had advanced  professional  training
in; Structured  Software Design Object Oriented Design  Methodology;  Structured
Software Design; PC-Based Simulation & Mathematical Modeling; Software Standards
and Code Ethics;  Advanced Application and Systems  Development.  Mr. Lotzer has
published a number of scientific papers including;

         o Fully  Automatic  Matched Triplet  Selection Using  Bernoulli's Eq.
         o Over-The-Air  Activation  Technologies  for  CDMA
         o A  Java  Real-Time Video/Audio CODEC with Bandwidth Auto-Sizing
         o Client / Server Software Examples with Mathematics
         o Detailed Design Description for Nexus, OTA, PRL and AKEY

         Mr.  Greybill  is a  veteran  of more  than 30 years as a  manager  and
executive in the printing and publishing industries. In his most recent position
as Director of the Seven Solutions Group for Seven  Worldwide,  Mr. Greybill was
responsible  for helping to define business needs and solutions for customers as
well as developing  new  business.  Mr.  Greybill was a project  manager for the
Associated  Press  for  Business  Development.  As a  project  manager  for AP's
communications department, he started and was responsible for the implementation
of AdSEND,  the delivery  service of digital ads to more than 1,400  sites.  Mr.
Greybill spent most of his career in the newspaper industry,  including 14 years
at the Chicago Tribune where he was associate  sports editor and features editor
before  moving  to  editorial  operations  where  he  was  responsible  for  the
implementation  of  digital  imaging  technology.  Mr.  Greybill  is a member of
Graphics  Communication  Association  planning committees for Spectrum (prepress
and  production)  and Primex (Print and  Publishing  Executives),  the NAA color

                                       28


reproduction  taskforce,  the Publisher's  Symposium  planning  committee in New
York, the American National Standards  Institute's TC130 committee,  which deals
with technical  specifications for the graphics arts industry,  as well as other
industry and community organizations. Mr. Greybill is a graduate of Penn State.

     Mr.  McClintock joins Zideo.com after most recently serving as an executive
of BankLeasing.com in Dallas, Texas.  BankLeasing.com,  a private company, has a
considerable sales and marketing  organization and has an outstanding reputation
and track  record in the  industry.  Prior to  BankLeasing.com,  Mr.  McClintock
directed the nationwide Gift Certificate operation for Dallas-based retailer, JC
Penney.   While  at  Penney,   Mr.  McClintock  was  also  responsible  for  the
establishment of the retailer's in-store entertainment  operation which involved
high level relationships with all leading music and entertainment companies. Mr.
McClintock was also responsible for source media relationships with the National
Football  League,  the Major League  Baseball  Association,  the National Hockey
League, the National Basketball Association, the World Soccer League and others.
For a 12 year period Mr.  McClintock  served as the Regional  Vice  President of
Primerica Corporation,  Atlanta, Georgia where he managed a 600 person sales and
marketing  organization  and won  numerous  awards  for  sales  performance  and
leadership.  From 1976 to 1980 Mr.  McClintock  served as the Chief of Staff for
the Governor of Mississippi and had the distinction of being one of the youngest
senior cabinet officers ever appointed in U.S. history.

     Joseph H. Sherrill,  Jr. is the retired  President and CEO of R.J. Reynolds
Asia Pacific. He retired in December 1994 from R.J. Reynolds International after
17 years overseas as a senior  executive.  Mr. Sherrill last served as President
and CEO of R.J. Reynolds Asia Pacific,  based in Hong Kong.  Previous  positions
included  Senior Vice  President  of  Marketing,  R.J.  Reynolds  International;
President and CEO of R.J. Reynolds Tabacos do Brazil;  and President and General
Manager of R.J.R.  Puerto Rico.  Prior  experience  included sales and marketing
research  positions in the domestic  company.  Since 1994, Mr. Sherrill has been
active as Board  Member,  advisor,  and  investor in numerous  small  companies.
Currently,   Mr.   Sherrill  serves  on  the  Board  of  Directors  of  Biocryst
Pharmaceuticals, Lineshark.com and several private companies.

     W. Barger Tygart is the retired Vice  Chairman of the Board,  President and
Chief  Operating  Officer of JCPenney.  Mr. Tygart joined the JCPenney  Company,
Inc. in 1960 advancing to increased  levels of  responsibility  in various store
and district positions and in 1976 was promoted to the company's New York Office
Headquarters.  In 1995,  Mr.  Tygart was elected to the  position of  President,
Chief  Operating  Officer and Vice  Chairman  of the Board and  remained in that
position until his retirement in 1998. Mr. Tygart  currently  serves as a member
of the Board of Directors of Burlington  Industries,  one of the world's largest
and most  diversified  manufacturers  of  softgoods  for  apparel  and  interior
furnishings.  Mr.  Tygart also is a member of the Board of  Directors of Monarch
Dental and is active as a consultant in a number of Internet related companies.

Executive Compensation

                                       29


         The  following  table sets forth for the Company's  executive  officers
noted  below  all cash  compensation  received,  being  the  total  compensation
received,  during the fiscal year ended December 31, 1999. No  compensation  was
paid or payable to any executive officer for the fiscal years ended December 31,
1997 or 1998 except for Mr.  Berger who  received  $8,000 in 1998 and $32,000 in
1997.

                                                       Annual Compensation

Name and Title                                       Salary             Other(a)

Edward W. Sample                                     $11,667            $ 22,378
Chairman and
Chief Executive Officer

Richard S. Berger                                         -0-                -0-
Chief Financial Officer
and Director

R. Don Ashley                                         10,000              10,646
President and
Chief Operating Officer

Carey Lotzer                                          27,500                 -0-
Chief Science Officer

Michael Steele                                        26,250                 -0-
Chief Information Officer
and Director
--------------------------------------------------------------------------
(a) Represents amounts received in connection with the Company's acquisition  of
Zideo.com.

            Mr. Sample has entered into a contract,  dated January 7, 2000, with
the Company which provides for his employment as Chief Executive  Officer for an
annual  salary of $140,000.  The contract  provides for a two-year term which is
automatically extended for additional one-year periods unless either the Company
or Mr. Sample elects not to renew.  Mr. Sample is entitled to participate in the
Company's  insurance  and  benefit  plans on  terms  available  to other  senior
executives and is reimbursed for expenses  reasonably incurred in performance of
his duties under the contract.  Under the contract the Company became  committed
to issue Mr. Sample  options to acquire  1,500,000  shares of Common Stock at an
exercise  price of $.01 per share and  additional  options to acquire  1,000,000
shares of Common  Stock at an exercise  price of $1.35 per share.  The  contract
provides the Company with  protection for its  intellectual  property rights and
Mr.  Sample  has agreed not to  compete  with the  Company  during his period of
employment and for a period of two years thereafter.


                                       30


            Mr. Ashley has entered into a contract,  dated January 7, 2000, with
the Company which provides for his  employment as President and Chief  Operating
Officer for an annual salary of $130,000.  The contract  provides for a two-year
term which is  automatically  extended for  additional  one-year  periods unless
either the Company or Mr. Ashley elects not to renew.  Mr. Ashley is entitled to
participate in the Company's  insurance and benefit plans on terms  available to
other senior  executives and is reimbursed for expenses  reasonably  incurred in
performance  of his duties  under the  contract.  Under the contract the Company
became committed to issue Mr. Ashley options to acquire 350,000 shares of Common
Stock at an exercise price of $.01 per share and  additional  options to acquire
350,000  shares of Common  Stock at an  exercise  price of $1.35 per share.  The
contract  provides the Company with  protection  for its  intellectual  property
rights and Mr.  Ashley has agreed  not to compete  with the  Company  during his
period of employment and for a period of two years thereafter.

            Mr.  Lotzer has entered  into a contract,  dated  November 16, 1999,
with the Company which provides for his employment as Chief Science  Officer for
an annual  salary of $150,000 in the first year and  $200,000 in the second year
plus discretionary additional compensation if the Company reaches certain levels
of gross sales. The two-year  contract is automatically  extended for additional
one-year  periods  unless  either the Company or Mr. Lotzer elects not to renew.
Mr. Lotzer is entitled to  participate  in the  Company's  insurance and benefit
plans on terms  available  to other  senior  executives  and is  reimbursed  for
expenses  reasonably  incurred in  performance of his duties under the contract.
The Company has agreed to purchase $2,500,000 worth of key man life insurance on
Mr.  Lotzer's  life with $700,000  payable on his death to his surviving  family
members.  Under the contract the Company  became  committed to issue Mr.  Lotzer
options to acquire  200,000 shares of Common Stock at an exercise price of $1.35
per share and 100,000  shares of Common Stock at an exercise  price of $5.00 per
share if certain  gross sales levels are met. The contract  provides the Company
with protection for its  intellectual  property rights and Mr. Lotzer has agreed
not to compete with the Company during his period of employment and for a period
of two years thereafter.

            Mr.  Steele has entered  into a contract,  dated  November 17, 1999,
with the Company which provides for his employment as Chief Information  Officer
for an annual  salary of  $150,000.  The contract  provides for a two-year  term
which is  automatically  extended for additional  one-year periods unless either
the  Company  or Mr.  Steele  elects not to renew.  Mr.  Steele is  entitled  to
participate in the Company's  insurance and benefit plans on terms  available to
other senior  executives and is reimbursed for expenses  reasonably  incurred in
performance of his duties under the contract. The Company has agreed to purchase
$2,500,000  worth of key man life  insurance on Mr.  Steele's life with $700,000
payable on his death to his  surviving  family  members.  Under the contract the
Company became  committed to issue Mr. Steele options to acquire  200,000 shares
of Common  Stock at an exercise  price of $1.35 per share and 100,000  shares of
Common  Stock at an  exercise  price of $5.00 per share if certain  gross  sales
levels are met.  The  contract  provides  the Company  with  protection  for its
intellectual  property  rights and Mr. Steele has agreed not to compete with the
Company  during  his  period  of  employment  and  for a  period  of  two  years
thereafter.

                                       31


         For the year 2000 each Company  director  will receive $ 3,000 for each
director's  meeting  attended  in  person  and $ 300 for each  director  meeting
attended by telephone  conference call as well as reasonable hotel,  airfare and
miscellaneous  expenses with a per diem meal allowance of $50. During the fiscal
years ended December 31, 1999, 1998 and 1997 no such fees were paid.

Stock Ownership of Management and Other Persons

         The following  table sets forth certain  information as of November 30,
2000 with respect to (1) each person  known by the Company to be the  beneficial
owner of more than five percent of its outstanding  shares of Common Stock,  (2)
of each  director and  executive  officer and (3) all  directors  and  executive
officers  as a group.  Except as shown below the address for each such person is
the Company's principal executive offices.  All shares reflected below are owned
of record and  beneficially by the named person or group and each such person or
group has sole  investment  power with  respect to all such  shares.  power with
respect to securities.

Name                                        Amount(1)        Percent of Class(1)

Edward W. Sample                         2,013,000 (2)                     17.1%

Richard S. Berger                        2,559,062 (3)                     20.8

R. Don Ashley                              525,000 (4)                      4.4

Michael Steele                             440,000 (5)                      3.9

Carey L. Lotzer                            760,000 (5)                      6.7

Joseph H. Sherrill, Jr.                    376,000 (6)                      3.3

W. Barger Tygart                            51,000 (4)                       .4

FAI General Insurance
Company Ltd.
Level 42, So. Bridge Street

Sydney NSW 2000 Australia                  853,041                          7.6

All executive officers and
directors as a group
(seven persons)                          6,724,062                         49.4
----------------------------------------------------------------
(1) The  numbers  and  percentages  shown  include  the  shares of Common  Stock
actually  owned as of November  30, 2000 and the shares of Common Stock that the
person or group had the right to acquire within 60 days of November 30, 2000. In

                                       32


calculating  the  percentage of  ownership,  all shares of Common Stock that the
identified  person or group had the right to acquire  within 60 days of November
30,  2000 upon the  exercise  of options  are deemed to be  outstanding  for the
purpose of computing the  percentage of the shares of Common Stock owned by such
person or  group,  but are not  deemed  to be  outstanding  for the  purpose  of
computing  the  percentage  of the  shares  of Common  Stock  owned by any other
person.

(2) Includes 500,000 shares  represented by stock options  exercisable within 60
days of November 30, 2000.

(3) Includes 1,000,000 shares represented by stock options exercisable within 60
days of November 30, 2000.  Number shown  excludes  shares owned by spouse as to
which  beneficial  ownership is  disclaimed.  (4) All shares are  represented by
stock  options  exercisable  within 60 days of November 30,  2000.  (5) Includes
100,000  shares  represented  by stock  options  exercisable  within  60 days of
November 30, 2000. (6) Of these shares,  51,000 are represented by stock options
exercisable  within 60 days of November 30, 2000.  Number shown excludes  10,000
shares owned by spouse as to which beneficial ownership is disclaimed.

The 2000 Stock Incentive Plan

         The 2000 Plan is administered by the Company's Stock Option  Committee,
currently  comprised  of Messrs.  Tygart and  Sherrill.  Officers  and other key
employees of the Company or any of its subsidiaries and Company  consultants and
advisors  are  eligible  to  participate  in the 2000  Plan.  The  selection  of
participants is within the discretion of the committee.  There are approximately
forty-five  employees  and others who are  eligible to  participate  in the 2000
Plan.

            The 2000 Plan  provides for the grant of any or all of the following
types of awards:  (1) stock  options,  including  incentive  stock  options  and
non-qualified  stock  options;  (2)  stock  appreciation  rights;  and (3) stock
awards,   including   restricted  stock.   Awards  may  be  granted  singly,  in
combination,  or in tandem, as determined by the committee. If there is a lapse,
expiration,  termination,  or  cancellation  of any option or right prior to the
issuance of shares or the payment of the equivalent thereunder, or if shares are
issued and thereafter are reacquired by the Company  pursuant to rights reserved
upon issuance  thereof,  those shares may again be used for new awards under the
2000 Plan.

         During April  2000  non-qualified  stock  options  were  granted to the
following  executive officers of the Company in the amounts noted: Mr. Sample  -
2,700,000;  Mr. Berger - 1,000,000,  Mr. Ashley - 800,000,  Mr. Steele - 300,000
and Mr. Lotzer - 300,000.

The Stock Option Plan for Non-Employee Directors

                                       33


     The  Director  Plan is also  administered  by the  Company's  Stock  Option
Committee.  Only  non-employee  directors  are  eligible to  participate  in the
Director Plan. No director may participate in any decision relating  exclusively
to an option  granted  to that  director.  Both  independent  Company  directors
currently participate.

     The  Director  Plan  provides  for the grant of two forms of  options:  (1)
election and annual  stock  options and (2) deferred  compensation  options.  If
there is a lapse,  expiration,  termination,  or  cancellation  of any option or
right  prior  to the  issuance  of  shares  or  the  payment  of the  equivalent
thereunder, or if shares are issued and thereafter are reacquired by the Company
pursuant to rights  reserved  upon issuance  thereof,  those shares may again be
used for new awards under the Director Plan.

     The Director Plan provides that each  non-employee  director of the Company
will be granted a non-qualified stock option to purchase 50,000 shares of Common
Stock upon  election or  appointment  to the Board of Directors  (the  "Election
Options").  Commencing  June 30,  2000  and  each  June  30th  thereafter,  each
non-employee  director  of the  Company  will be granted a  non-qualified  stock
option to  purchase  1,000  shares of Common  Stock (the  "Annual  Options").The
Director Plan also provides that each  non-employee  director of the Company may
elect to receive during any plan year or specified portion thereof non-qualified
stock options (the  "Deferred  Compensation  Options") in lieu of all or part of
the  retainers  and fees  payable  for service on the Board and the board of any
Company subsidiary or any of their committees.

     During  April  2000  Messrs.  Sherrill  and  Tygart  (as  well  as a  prior
non-employee  director) each were granted 50,000 Election  Options.  On June 30,
2000 each was also granted 1,000 Annual Options.

Board Committees

     The  Board  of  Directors  has  four  standing  committees:  The  Executive
Committee, The Personnel and Compensation Committee, The Stock Option Committee,
The Audit  Committee and The Corporate  Governance  Committee.  The functions of
these committees and their current members are described below.

     Executive  Committee.  This committee oversees the operations of the Board;
often acts on behalf of the board during on-demand activities that occur between
meetings,  and these  acts are  later  presented  for full  board  review.  This
committee also develops agenda items for Board Meetings. The Executive Committee
is comprised of Messrs. Sample (Chairman) and Berger.

     Personnel  and   Compensation   Committee.   This  committee   reviews  and
administers the Company's  annual and long-term  incentive  compensation  plans,
makes recommendations in areas concerning personnel relations,  and takes action
or makes  recommendations  with respect to the compensation of Company executive
officers,  including  those who are  directors.  The Personnel and  Compensation
Committee is comprised of Messrs. Tygart (Chairman), Sherrill and Steele.


                                       34


     Stock   Option   Committee.   This   committee  is   responsible   for  the
administration  of the  Company's  two stock  option  plans.  The  Stock  Option
Committee is comprised of Messrs. Tygart and Sherrill.

     Audit  Committee.  This committee  recommends to the Board of Directors for
stockholder  approval  the  independent  auditors  for the  annual  audit of the
Company's  consolidated  financial  statements.  The committee  also reviews the
independent  auditors' audit strategy and plans, the scope of their audit, their
fees,  the results of their  audits as well as  non-audit  services  and related
fees,  internal audit reports on the adequacy of internal  accounting  controls,
the Company's ethics program, the status of significant legal matters, the scope
of the internal  auditors' plans and budgets and the results of their audits and
the  effectiveness of the Company's  program for correcting audit findings.  The
Audit Committee is comprised of Messrs. Sherrill and Tygart.

     Corporate  Governance  Committee.   This  committee  considers  matters  of
corporate  governance and reviews  developments  in the governance  area as they
affect  relations  between  the  Company  and its  stockholders.  It also  makes
recommendations   to  the  Board  with   respect   to  the  size,   composition,
organization, responsibilities and functions of the Board and its directors, the
qualifications  of  directors,  candidates  for  election as  directors  and the
compensation of directors.  The Corporate  Governance  Committee is comprised of
Messrs. Sherrill (Chairman) and Tygart.

     For the year  2000  each  Company  director  will  receive $ 3,000 for each
director's  meeting  attended  in  person  and $ 300 for each  director  meeting
attended by telephone  conference call as well as reasonable hotel,  airfare and
miscellaneous  expenses with a per diem meal allowance of $50. During the fiscal
years ended December 31, 1999, 1998 and 1997 no such fees were paid.

Certain Transactions

     In  December  1999  the  Company  acquired  all of  the  capital  stock  of
Zideo.com,  Inc. for cash in the aggregate amount of $750,000.  A portion of the
purchase  price was used to pay back salaries due, inter alia,  Messrs.  Sample,
Ashley and Greybill. In connection with this acquisition Messrs.  Sample, Ashley
and Greybill also entered into employment contract with the Company as described
elsewhere herein.

     In December  1999,  the Company  acquired all of the capital  stock of IBP,
Inc.,  a  privately-held  corporation  owned by  Messrs.  Steele  and  Lotzer in
exchange for 1,000,000  shares of Company Common Stock.  In connection  with the
acquisition  Messrs.  Lotzer and Steele also entered into employment  agreements
with the Company as described elsewhere herein.

     In March 2000 the Company purchased all ordinary shares of Online Marketing
(UK) Ltd.  from  Messrs.  Fairnington  and  Sherrill  and others in exchange for
55,556  shares of Company  Common  Stock.  Mr.  Sherrill  is a  director  of the
Company.


                                       35


     In October  2000 the Company  purchased  all of the  outstanding  shares of
Comsight Imaging,  Inc. and acquired the services of Dr. Xiaolin Wu. The Company
entered  into a  three-year  employment  contract  with Dr.  Wu as  Director  of
Research and Development.

     In November 2000 the Company  acquired the business and assets of JJT, Inc.
The primary purpose of this acquisition was to obtain the imaging  technology of
JJT, Inc. and the services of Mr. John T. Stokes.

     SEE,  "BUSINESS-BUSINESS  DEVELOPMENT."  All persons referred to above also
received stock options.

Indemnification

     Pursuant to the Company's  Certificate of  Incorporation,  as amended,  the
Company has to the full extent  permitted by Section 145 of the Delaware General
Corporation  Law, as amended from time to time,  indemnified all persons whom it
may indemnify pursuant thereto including for liability under the Securities Act.
Insofar as indemnification  for liabilities arising under the Securities Act may
be permitted  for  directors,  officers and  controlling  persons of the Company
pursuant to the foregoing provisions or otherwise,  the Company has been advised
that  in  the  opinion  of  the   Securities  and  Exchange   Commission,   such
indemnification  is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.

                              SELLING STOCKHOLDERS

     The shares  offered  hereby are owned by and offered for the account of Mr.
Paul Stankowski, Mr. Jeffrey Blakemore and City National Bank of Taylor, Taylor,
Texas.  The Company  will not receive any of the  proceeds  from the sale of the
shares  sold by these  stockholders.  The Bank  acquired  its  75,862  shares in
November  2000 and Messrs.  Stankowski  and Blakemore  acquired  their shares in
December 2000..  Pursuant to the terms of the investment,  the Company agreed to
file a  registration  statement to register all such  shares.  Accordingly,  the
Company has caused to be prepared  and filed with the  Securities  and  Exchange
Commission the Registration Statement of which this Prospectus is a part.

     The Company  will pay all  expenses in  connection  with this  Registration
Statement, including, without limitation, registration and filing fees, printing
expenses,  and fees and  disbursements of counsel and  accountants.  All selling
expenses,  such as taxes,  selling  commissions,  and fees and disbursements for
seller's counsel will be paid by the selling stockholders.

     The following  sets forth for each selling  stockholders  (i) the number of
shares to be sold for his or its account,  (ii) the number shares owned prior to
this offering and (iii) the amount and percent of shares of Company Common Stock

                                       36


to be owned after this offering  (including  the 800,000  shares covered by this
Registraton  Statement  which  have been  authorized  for  issuance  but not yet
issued).

                         Number of Shares       Number of Shares Owned
         Name              To Be Sold     Prior to Offering   After Offering (%)

Paul Stankowski             500,000              540,000           40,000 (.33%)

Jeffrey Blakemore           300,000              329,000           29,000 (.23%)

City National Bank
of Taylor                    75,862               75,862                --- (0%)

                          DESCRIPTION OF CAPITAL STOCK

         The Company is authorized to issue 100,000,000  shares of Common Stock,
par value $.001 per share, and 5,000,000 shares of Preferred Stock in series. As
of November  30, 2000 there were  11,292,476  shares of Common  Stock issued and
outstanding and an aggregate of 423,000 shares of Preferred Stock outstanding.

         Holders of Common  Stock are  entitled  to cast one vote for each share
held of record at all stockholder  meetings for all purposes.  Holders of Common
Stock do not have  cumulative  voting rights in the election of directors and do
not have  preemptive  rights.  Holders of Common  Stock are  entitled to receive
ratably  such  dividends,  if any, as may be  declared  from time to time by the
Board of Directors in its sole discretion from funds legally available therefor.
Upon the liquidation,  dissolution or winding-up of the Company,  the holders of
shares of Common Stock would be entitled to share ratably in the distribution of
all  of  the  Company's  assets  remaining   available  for  distribution  after
satisfaction  of all of its  liabilities  and  obligations.  The Company has not
declared or paid any cash dividends on its capital stock since its inception and
does not  expect  to pay any cash  dividends  for the  foreseeable  future.  The
Company  currently  intends to retain  future  earnings,  if any, to finance the
operations and expansion of its business. All outstanding shares of Common Stock
are, and all shares of Common Stock to be  outstanding  upon  completion of this
offering will be, fully paid and non-assessable.

         The  Company's  transfer  agent  and  registrar  is  Continental  Stock
Transfer & Trust  Company,  New York,  New York.  The Company's  Common Stock is
traded in the over-the-counter market under the symbol "BYTE."

         The  Board of  Directors  is  authorized  to issue  from  time to time,
without shareholder authorization,  up to 5,000,000 shares of preferred stock in
one  or  more  designated  series,  with  such  voting,  dividend,   redemption,
conversion and exchange  provisions as are provided in the particular series. To
date the  Board  has  authorized  for  issuance  shares  of  Series A  through D
preferred  stock,  of which there are as of the date of this  Prospectus  10,000
shares of Series A issued  and  outstanding  and  owned by one  stockholder  and

                                       37


412,500 shares of Series B issued and outstanding and owned by one  stockholder.
The shares of Series C preferred  stock were converted to shares of Common Stock
in June 2000. No shares of Series D preferred stock were ever issued. The issued
and outstanding  shares of Preferred Stock are convertible  into an aggregate of
168,310  shares of  Company  Common  Stock.  None of the  outstanding  shares of
Preferred Stock carry any voting rights. No dividends or other distributions are
to be payable on the Common Stock unless  dividends are paid in full on any then
outstanding  preferred  stock  and all  sinking  fund  obligations  for any then
outstanding  preferred  stock,  if any,  are  fully  funded.  In the  event of a
liquidation or dissolution of the Company,  the  outstanding  shares of any then
outstanding preferred stock would have priority over the Common Stock to receive
the amount  specified in each particular  series out of the remaining  assets of
the  Company.  Any future  issuance  of  preferred  stock may have the effect of
deferring,  delaying  or  preventing  a change in  control  of the  Company,  or
decreasing  the market price of the Common Stock,  and may adversely  affect the
voting and other rights of the holders of Common Stock.

                              PLAN OF DISTRIBUTION

         This  Prospectus  relates to a total of 875,862  shares of Common Stock
currently outstanding. These shares may be sold from time to time by the selling
stockholders.  The Common Stock is being  registered to permit public  secondary
trading of the Common Stock by the selling  stockholders from time to time after
the date of this  Prospectus.  The Company  has agreed to bear all the  expenses
(other than selling commissions) in connection with the registration and sale of
the Common Stock covered by this Prospectus.

         The Common Stock offered by the selling  stockholders  pursuant to this
Prospectus may be sold from time to time by the selling  stockholders.  The sale
of the Common Stock offered hereby by the selling  stockholders  may be effected
in one or more transactions that may take place on the over-the-counter  market,
including ordinary `brokers' transactions,  privately negotiated transactions or
through  sales  to  one or  more  dealers  for  resale  of  such  securities  as
principals.  Usual and customary or  specifically  negotiated  brokerage fees or
commissions may be paid by the selling stockholders.

         The Company will not receive any of the  proceeds  from the sale of the
Common Stock by the selling stockholders.  The selling stockholders will receive
all of the net proceeds from the sale of their respective shares of Common Stock
and will pay all selling commissions,  if any, applicable to such sale of shares
of Common Stock.  The Company is responsible for all other expenses  incident to
the offer and sale of the Common Stock.

         In order to comply  with the  securities  laws of  certain  states,  if
applicable,  the Common  Stock will be sold in such  jurisdictions  only through
registered or licensed brokers or dealers.  In addition,  in certain states, the
Common  Stock may not be sold unless it has been  registered  or  qualified  for
resale by the selling  stockholder in the applicable  state or an exemption from
the registration or qualification requirement is available and complied with.


                                       38


         The  selling   stockholders   and  any   broker-dealers,   agents,   or
underwriters that participate with the selling  stockholders in the distribution
of Common Stock  offered  hereby may be deemed to be  "underwriters"  within the
meaning of the Securities Act.  Accordingly,  the selling  stockholders  will be
subject to the  prospectus  delivery  requirements  of the  Securities  Act. Any
commissions  paid or any discounts or  concessions  allowed to any such persons,
and any profits  received on the resale of the Common Stock  offered  hereby and
purchased by them,  may be deemed to be  underwriting  commissions  or discounts
under the Securities Act. The Company will not pay any  compensation to any NASD
member  in  connection  with  this  offering.  Brokerage  commissions,  if  any,
attributable to the sale of the Common Stock offered hereby will be borne by the
selling stockholders.

         The  selling  stockholders  also may  resell  all or a portion of their
shares of Common  Stock in open market  transactions  in reliance  upon Rule 144
under the  Securities  Act,  provided  they meet the criteria and conform to the
requirements of Rule 144.

                                  LEGAL MATTERS

         The  validity of the shares of  Common  Stock  offered  hereby  will be
passed  upon for the Company by Bruce P. Golden & Associates, Chicago, Illinois.
Mr. Golden owns of record and beneficially  8,596 shares of Company Common Stock
and has options to acquire an additional 100,000 shares of Company Common Stock.

                                     EXPERTS

         The  consolidated  financial  statements of the Company at December 31,
1999 and for each of the two  years  in the  period  ended  December  31,  1999,
appearing in this  Prospectus  and  Registration  Statement have been audited by
Feldman Sherb & Co., P.C.,  independent  auditors, as set forth in their reports
thereon  appearing  elsewhere  herein,  and are  included in reliance  upon such
reports  given upon the  authority  of such firm as experts  in  accounting  and
auditing.

                              AVAILABLE INFORMATION

         Piranha is subject to the informational  requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"),  and in accordance  therewith
files reports,  proxy  statements and other  information with the Securities and
Exchange Commission (the "SEC"). Reports, proxy statements and other information
concerning  Piranha can be inspected  and copied at the SEC's  Public  Reference
Room, 450 Fifth Street,  N.W.,  Washington,  DC 20549,  as well as the following
Regional  Offices of the SEC: 7 World Trade Center,  Suite 1300,  New York,  New
York 10048; and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago,  Illinois 60661-2511.  Copies of such material can be obtained from the
Public Reference Section of the SEC at 450 Fifth Street,  N.W.,  Washington,  DC
20549, at prescribed  rates. The public may obtain  information on the operation

                                       39


of the Public Reference Room by calling the SEC at 1-800-SEC-0330.  The SEC also
maintains a Web site that contains reports, proxy and information statements and
other  information  regarding  registrants,  such  as  the  Company,  that  file
electronically with the SEC. The address of such site is http://www.sec.gov.

         This Prospectus  constitutes a part of a Registration Statement on Form
SB-2  (together  with all amendments  and exhibits  thereto,  the  "Registration
Statement")  filed by  Piranha  with the SEC  under  the  Securities  Act.  This
Prospectus   does  not  contain  all  of  the  information  set  forth  in  such
Registration  Statement,  certain parts of which are omitted in accordance  with
the rules and  regulations  of the SEC.  Reference is made to such  Registration
Statement  and to the exhibits  relating  thereto for further  information  with
respect to Piranha. Any statements contained herein concerning the provisions of
any  document  filed as an exhibit to the  Registration  Statement  or otherwise
filed with the SEC or  incorporated  by  reference  herein  are not  necessarily
complete, and in each instance reference is made to the copy of such document so
filed  for a  more  complete  description  of the  matter  involved.  Each  such
statement is qualified in its entirety by such reference.






                                  PIRANHA, INC.

               FORMERLY CLASSICS INTERNATIONAL ENTERTAINMENT, INC.
                                AND SUBSIDIARIES

                          INDEX TO FINANCIAL STATEMENTS

INDEX TO FINANCIAL STATEMENTS                                                F-1

INDEPENDENT AUDITORS' REPORT                                                 F-2

CONSOLIDATED BALANCE SHEET                                                   F-3

CONSOLIDATED STATEMENTS OF OPERATIONS                                        F-4

CONSOLIDATED STATEMENTS OF CHANGES IN                                        F-5
STOCKHOLDERS' EQUITY

CONSOLIDATED STATEMENTS OF CASH FLOWS                                        F-6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                            F-7 - F-12












                                      F-1



                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of Piranha, Inc.,
Chicago, Illinois

         We have audited the accompanying consolidated balance sheet of Piranha,
Inc., (formerly Classics International Entertainment, Inc.and Subsidiaries)as of
December 31, 1999 and the related consolidated statements of operations, changes
in stockholders' equity and cash flows for the years ended December 31, 1999 and
1998.  These  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

         We conducted our audits 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  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 Piranha  Inc.,
(formerly  Classics  International  Entertainment  Inc. and  Subsidiaries) as of
December  31,  1999 and the results of their  operations  and cash flows for the
years ended  December 31, 1999 and 1998 in conformity  with  generally  accepted
accounting principles.

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

New York , NY
April 3, 2000








                                      F-2



        PIRANHA, INC, FORMERLY CLASSICS INTERNATIONAL ENTERTAINMENT, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

                                DECEMBER 31, 1999

                                     ASSETS

CURRENT ASSETS

     Cash                                                   $        333,879
     U.S. Government Securities                                    1,291,508
     Stock subscriptions receivable                                  800,000
     Prepaid expenses                                                 13,395
                                                                 -----------

              TOTAL CURRENT ASSETS                                 2,438,782

PROPERTY AND EQUIPMENT                                                48,243

INTANGIBLES                                                       11,538,125

                                                                 -----------
                                                            $     14,025,150

                                                                 ===========



                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

     Accounts payable                                       $      1,388,225
     Dividends payable                                               652,650
     Accrued liabilities                                           1,125,954
     Stockholder loans and other notes payable                       827,161
                                                                 -----------
              TOTAL CURRENT LIABILITIES                            3,993,990

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:

     Preferred stock                          $      2,012,488
     Common stock, $.001 par  value,
     100,000,000 shares authorized;

     6,695,455 shares issued and outstanding             6,695
     Additional paid-in capital                     26,192,299
     Stock subscription receivable                     (44,500)
     Accumulated deficit                           (18,135,822)

                                                   ------------
              TOTAL STOCKHOLDERS' EQUITY                          10,031,160

                                                                  ----------
                                                                  14,025,150
                                                                  ==========





               See notes to the consolidated financial statements

                                      F-3






                         PIRANHA, INC, AND SUBSIDIARIES

     (FORMERLY CLASSICS INTERNATIONAL ENTERTAINMENT, INC. AND SUBSIDIARIES)


                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                     YEAR ENDED DECEMBER 31,
                                                                     -----------------------
                                                                        1999          1998
                                                                 -------------  -----------
                                                                                C>


REVENUES                                                       $         0       $     0

COSTS AND EXPENSES

 General and administrative                                          360,164
 Provision for settlement of litigation                              700,000
 Interest expense - net                                               44,741
 Depreciation                                                            422
                                                                 -------------  ------------
        TOTAL COSTS AND EXPENSES                                   1,105,327           0

Loss from continuing operations                                   (1,105,327)          0

Loss from discontinued operations                                        0         (21,882)

Extraordinary gain - extinguishment of debt                           51,132       218,515
                                                                  -------------  ------------
Net gain (loss)                                                   (1,054,195)      196,633

Preferred stock dividends                                           (163,800)     (163,800)
                                                                  -------------  ------------

Net income (loss) applicable to common stock                   $  (1,217,995)    $  32,833
                                                                  =============  ===========


Basic and Diluted Income (Loss) Per Common Share:

Loss from continuing operations                                $        (0.29)   $    (0.04)

Loss from discontinued operations                                        0.00          0.00

Extraordinary gain - extinguishment of debt                              0.01          0.05

                                                                    -------------  ------------
Net income (loss) per common share - basic and diluted         $        (0.28)   $     0.01
                                                                    =============  ============


Weighted average common shares outstanding                           4,415,577     4,406,566
                                                                    =============  ============





                      See notes to the consolidated financial statements


                                      F-4



                         PIRANHA, INC. AND SUBSIDIARIES
     (FORMERLY CLASSICS INTERNATIONAL ENTERTAINMENT, INC. AND SUBSIDIARIES)
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY







                                                                          Additional
                                      Preferred        Common Stock       Paid-in     Subscription    Accumulated
                                        Stock        Shares     Amount    Capital     Receivable       Deficit           Total
                                      ----------   ---------- ---------  ------------ ----------      ------------     ------------
                                                                                                   

BALANCE -  JANUARY 1, 1998         $  2,012,488  $15,378,916  $ 15,379  $ 12,495,490   $ (44,500)   $  (16,950,660) $    (2,471,803)

Effect of reverse stock split                     10,972,350   (10,972)       10,972

Net income                                                                                                 196,633          196,633

                                     ----------   ----------  ----------  -----------  ----------    -------------    --------------
Restated -  January 1, 1998           2,012,488    4,406,566     4,407    12,506,462     (44,500)      (16,950,660)      (2,471,803)

Preferred dividends                                                                                       (163,800)        (163,800)

Net income                                                                                                 196,633          196,633

                                     ----------   ----------  ----------  -----------  ----------    -------------    --------------
BALANCE -  DECEMBER 31, 1999          2,012,488    4,406,566      4,407   12,506,462     (44,500)      (16,917,827)      (2,438,970)

 Stock issuances - acquistion                      1,000,000      1,000                                                  10,487,125

 Stock issuances - cash                            1,288,889      1,288    3,198,712                                      3,200,000

 Preferred dividends                                                                                     (163,800)         (163,800)

 Net loss                                                                                              (1,054,195)       (1,054,195)
                                    ------------------------------------------------------------------------------------------------
Balance - December 31, 1999       $ 2,012,488    $ 6,695,455    $ 6,695  $26,192,299   $(44,500)     $(18,135,822)      $10,031,160
                                    =========      =========      =====   ==========    ========       ==========        ==========




                 See notes to consolidated financial statements

                                       F-5




                         PIRANHA, INC. AND SUBSIDIARIES
     (FORMERLY CLASSICS INTERNATIONAL ENTERTAINMENT, INC. AND SUBSIDIARIES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS



                                                                                           YEAR ENDED DECEMBER 31,
                                                                                      -----------------------------------
                                                                                           1999               1998
                                                                                      ----------------   ----------------


                                                                                                          

CASH FLOWS FROM OPERATING ACTIVITIES:

   Net income (loss)                                                                $      (1,054,195) $         196,633
   Depreciation                                                                                   422
   Loss from discontinued operations                                                                              21,882
   Provision for settlement of debt                                                           700,000
   Extraordinary gain -extinguishment of debt                                                 (51,132)          (218,515)
   Adjustments to reconcile net income (loss) to net cash used in operations:

     Increase in prepaid expenses                                                             (13,395)
     Increase in accounts payable and accrued liabilities                                      67,036
                                                                                      ----------------   ----------------


NET CASH USED IN OPERATING ACTIVITIES                                                        (351,264)                 0
                                                                                      ----------------   ----------------


CASH FLOWS USED IN INVESTING ACTIVITIES:

  Purchase of property and equipment                                                          (48,665)
  Cash payments in connection with acquisitions                                              (400,000)

                                                                                      ----------------   ----------------

      TOTAL CASH FLOWS USED IN INVESTING ACTIVITIES                                          (448,665)                 0
                                                                                      ----------------   ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:

  Investment in U.S. Government Securities                                                 (1,291,508)
  Increase in stockholder loans and other notes payable                                        25,316
  Proceeds from the sale of common stock                                                    2,400,000
                                                                                      ----------------   ----------------
      TOTAL CASH FLOWS FROM FINANCING ACTIVITES                                             1,133,808                  0

NET INCREASE IN CASH                                                                          333,879                  0

CASH AT BEGINNING OF YEAR                                                                           0                  0
                                                                                      ----------------   ----------------

CASH AT END OF YEAR                                                                 $         333,879  $               0
                                                                                      ================   ================


SUPPLEMENTAL DISCLOSURE OF CASH FLOW  INFORMATION:

No cash paid during the year for interest and income taxes                          $               0  $               0
                                                                                      ================   ================


SUPPLEMENTAL DISCLOSURE OF CASH FLOW  INFORMATION:

  Issuance of stock and notes for acquisitions                                      $      11,138,125  $               0
                                                                                      ================   ================

  Issuance of stock for subscriptions receivable                                    $         800,000  $               0
                                                                                      ================   ================



          See notes to the consolidated financial statements


                                      F-6




                     YEARS ENDED DECEMBER 31, 1999 AND 1998
1.       THE COMPANY
                    Piranha,  Inc.  (previously known as Classics  International
               Entertainment,  Inc.) (the "Company") was incorporated  under the
               laws of the State of Delaware on November 20, 1992. By 1994,  the
               Company had four subsidiaries:  Moondog's,  Inc., which on August
               5, 1997,  filed for protection  under Chapter 7 of the Bankruptcy
               laws;  Dream  Factory,  Inc.,  which on May 2,  1996,  filed  for
               protection   under  Chapter  7  of  the  Bankruptcy  Laws;  First
               Classics,  Inc., the holder of a license for the exclusive use of
               the  Classics  Illustrated  copyrights,  trade  names  and  other
               intangibles, excluding non-print media rights; and Classics Media
               Group, Inc., the exclusive  licensee of the Classics  Illustrated
               properties for non-print media purposes.

                    The Dream Factory, Inc. and Moondog's, Inc. Bankruptcy cases
               were brought to closure in  September,  1996 and  January,  1997,
               respectively.  First Classics,  Inc. has limited activity,  while
               Classics Media Group, Inc. is currently dormant.

                    The  Company  essentially  has been a  non-operating  entity
               since  it  discontinued  its  operations  at  the  end  of  1996.
               Beginning  with the  acquisition of Zideo on December 8, 1999 and
               IBP, Inc. on December 30, 1999, the Company  effectively  changed
               its business emphasis.

                    Upon changing its name to Piranha, Inc.(TM), the Company has
               become  a  technology  company  with  a  line  of  digital  asset
               management  products being  developed for sale and/or  licensing.
               The data compression software products  under the new Piranha(TM)
               brand are designed to improve Internet speed and to provide image
               clarity at high compression rates.

                    In January,  2000 the Board of  Directors  received  written
               consents from a majority of stockholders authorizing (i) a change
               in the name from  Classics  International  Entertainment  Inc. to
               Piranha,  Inc.,  (ii) an increase in the authorized  Common Stock
               from 30,000,000 shares to 100,000,000 shares, and (iii) a reverse
               stock split so that each 3.49  outstanding  shares were converted
               into one share of Common Stock outstanding.

                    Through  February 25, 2000 quotes for the  Company's  Common
               Stock were  available  under the symbol CIEI.  Effective with the
               Reverse  Stock  Split  on  February  28,  2000,  quotes  for  the
               Company's  Common  Stock were  available  under the symbol  BYTE.
               These financial  statements and the notes herein give retroactive
               effect to the reverse stock split.

2.       SIGNIFICANT ACCOUNTING POLICIES

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

                    b.  Use  of  Estimates  -  The   preparation   of  financial
               statements  in  conformity  with  generally  accepted  accounting
               principles  requires management to make estimates and assumptions
               that affect the amounts reported in the financial  statements and
               disclosure of contingent  assets and  liabilities  at the date of
               the financial statements.  Actual results could differ from these
               estimates.

                    c. Net  Income  (Loss) Per Share - Basic  income  (loss) per
               share was computed using the weighted average number of shares of
               outstanding   common  stock.   Diluted  per  share  amounts  when
               applicable  also  include  the effect of  dilutive  common  stock
               equivalents from the assumed exercise of stock options.

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

                    e.   Amortization  of  Intangibles  -  Amortization  of  the
               algorithms  underlying the acquired  intellectual  property/trade
               secrets,  as well as the brand name,  and other trade secrets and
               intangibles,  are recognized over a five year period beginning in
               the month of first commercial application.

                    f. Property and Equipment - Property and equipment is stated
               at cost.  Depreciation is computed using the straight-line method
               over the  estimated  useful lives.  Depreciation  expense for the
               years  ended  December  31,  1999  and  1998  was  $422  and  $0,
               respectively.
                                       F-7


                    g. Long-lived Assets - The Company reviews long-lived assets
               for impairment whenever  circumstances and situations change such
               that there is an indication that the carrying  amounts may not be
               recovered.  At December 31, 1999 the Company  believes that there
               has been no impairment of its long-lived assets.

                    h. Stock Based Compensation - The Company accounts for its
               stock  option plan under APB Opinion No. 25 "Accounting for Stock
               Issued to Employees," ("APB 25"). The  Company  has also  adopted
               Statement of Accounting Standards No. 123, "Accounting for  Stock
               Based Compensation," (SFAS 123 ) for disclosure purposes, and has
               adopted the proforma disclosure requirements of  SFAS 123, which
               was not applicable in 1999 and 1998.

3.       ACQUISITIONS

         a.  ACQUISITION OF IBP, INC.

               On December  30,  1999,  the Company  acquired all of the capital
          stock of IBP through a merger of its subsidiary  with and into IBP. As
          a result of the acquisition,  IBP became a wholly-owned  subsidiary of
          the  Company.  The two  stockholders  of IBP  received an aggregate of
          1,000,000   shares  of  Common  Stock  in  exchange  for  all  of  the
          outstanding  capital stock of IBP. The purchase  price of  $10,788,125
          consisted of the  assumption of  liabilities in the amount of $100,000
          and the issuance of the aforementioned stock, valued at $10,688,125.


               In connection  with the  acquisition,  the Company entered into a
          two year employment agreement with each of the selling stockholders of
          IBP at an annual  salary to each  individual  of $150,000 in the first
          year  and  $200,000  in the  second  year.  In  addition, the  Company
          committed  to grant the sellers  options to purchase an  aggregate  of
          400,000  performance  based stock options at the strike price of $1.35
          per share as well as 200,000 incentive based stock options at a strike
          price of $5.00 per share.  The  options,  when  granted, may result in
          compensation  expense  being  recorded to the extent the market price,
          when granted, exceeds the excise price.

                                      F-8

         b. ACQUISITION OF ZIDEO.COM, INC.

               On December 8, 1999 the Company acquired all of the capital stock
          of Zideo.com, Inc. ("Zideo") from DigiByte Corporation ("DigiByte") of
          Chicago, Illinois. The purchase price of $750,000 consisted of cash in
          the amount of $250,000 and a note for $500,000,  of which $100,000 was
          paid by December 31, 1999; the balance was paid in full as of February
          16, 2000.

               The   aforementioned   acquisitions   resulted   in  the  Company
          acquiring intangible assets consisting of data compression technology
          of  approximately $11,5000.   The  acquired companies had no  previous
          revenue  nor net  income or loss and  therefore  pro  forma  financial
          information as if the companies were combined at the beginning of 1998
          are not presented.

4.       ACCRUED LIABILITIES

                  At December 31,  1999,  accrued  liabilities  consisted of the
          following:

          Consulting fees                                             $  134,583

          Interest                                                       142,900

          Provision for settlement of litigation                         700,000

          Other                                                          148,471
                                                                      ----------
            TOTAL                                                     $1,125,954
                                                                      ==========

5.       STOCKHOLDER'S LOANS AND OTHER NOTES PAYABLE

                  At  December  31,  1999,  stockholder  loans and  other  notes
          payable consisted of the following:

          Stockholder loans, interest free,
          unsecured and payable on demand                               $ 95,161

          Notes  payable  with  interest  at 12% per annum,
          unsecured  and payable on demand                               332,000

          Acquisition  note payable with  interest
          at 4% per annum,  secured and payable in two
          installments, due in January and February, 2000                400,000
                                                                        --------

            TOTAL                                                      $ 827,161
                                                                       =========
                                      F-9


6.       PREFERRED STOCK

                  At December 31, 1999,  Preferred  Stock consisted of 5,000,000
         authorized shares of which the following were issued and outstanding:




                                                                   Common Shares
                                                                     Issuable on
            Preferred Stock                   Amount                 Conversion
          -----------------                 ----------             -------------


          Series A, 9% cumulative,
          convertible, redeemable; 220,000
          shares issued and outstanding
                                            $1,100,000                    63,038

          Series  B, 9%  cumulative,
          convertible, redeemable; 412,500
          shares issued and outstanding
                                               529,988                   165,445


          Series C, 4% cumulative,
          convertible, redeemable; 500
          shares issued and outstanding
                                               382,500                   229,227
                                             ---------                   -------


            TOTAL                         $  2,012,488                   555,950
                                             =========                   =======



                  At December 31, 1999,  the Company had 555,950  common  shares
         reserved for issuance upon conversion of Preferred Stock.

7.       EMPLOYEE STOCK OPTION PLAN

                  In November 1992, the Company  adopted the 1992 Employee Stock
         Option Plan (the "Option Plan"). The Option Plan provides for the grant
         of options to qualified employees (including officers and directors) of
         the Company to  purchase an  aggregate  of  1,000,000  shares of Common
         Stock.  The Option Plan is  administered by the Board of Directors or a
         committee of the Board of  Directors  (the  "Option  Committee")  whose
         members are not entitled to receive  options under the Option Plan. The
         Option Committee has complete  discretion to select the optionee and to
         establish  the terms and  conditions  of each  option,  subject  to the
         provisions  of the Option Plan.  Options  granted under the Option Plan
         may or may not be "incentive  stock  options" as defined in Section 422
         of the Code ("Incentive  Options") depending upon the terms established
         by the Option Committee at the time of grant, but the exercise price of
         options  may not be less  than  100% of the  fair  market  value of the
         Company's Common Stock as of the date of grant (110% of the fair market
         value if the grant is an Incentive  Option to an employee who owns more
         than 10% of the outstanding Common Stock). Options may not be exercised
         more than ten years after the grant.  Options  granted under the Option
         Plan are not  transferable  and may be exercised only by the respective
         grantees  during  their  lifetimes  or by  their  heirs,  executors  or
         administrators  in the event of death.  Under the Option  Plan,  shares
         subject to canceled or terminated options are reserved for subsequently
         granted  options.  The number of options  outstanding  and the exercise
         price  thereof  are  subject  to  adjustment  in the  case  of  certain
         transactions such as mergers, recapitalizations,  stock splits or stock
         dividends. No options are outstanding as of December 31, 1999.

                                      F-10



8.       INCOME TAXES

                  The following is a reconciliation  of income taxes and amounts
         computed  using the U.S.  Federal  statutory rate and the effective tax
         rate for the years ended December 31, 1999 and 1998:



                                                      1999               1998
                                                   ----------          -------


             Consolidated pre-tax income (loss)   $(1,054,000)       $ (197,000)
                                                    ==========         ========


         Tax (benefit) at Federal statutory rate      369,000           69,000

         Effect of permanent differences                8,000             0

         Effect of temporary differences              277,000            6,000

         Tax benefit not recognized                   654,000           75,000
                                                     --------          -------
         Taxes per financial statements            $     -           $    -
                                                     ========          =======



                  The Company has adopted  Statements  of  Financial  Accounting
         Standards No. 109,  "Accounting for Income Taxes". Under this standard,
         the Company  records as an asset its net  operating  loss  carryforward
         ("NOL")  based upon current tax returns,  and  establishes  a valuation
         allowance  to the extent of any NOL which will not be  utilized  in the
         foreseeable future.

                  At this time,  the Company  can not  reliably  predict  future
         profitability.  Accordingly, the deferred tax asset has been reduced in
         its entirety by the valuation allowance.

                  As of December 31, 1999,  the Company had net  operating  loss
         carry forwards of approximately  $14,600,000  expiring beginning in the
         year 2007. A significant portion of these carry forwards are subject to
         limitations on annual  utilization due to "equity  structure shifts" or
         "owner shifts"  involving "5 percent  stockholders"  (as defined in the
         Internal  Revenue Code),  which result in more than a 50 percent change
         in ownership.

9.       RELATED PARTY TRANSACTIONS

                  The  Company  was  provided  with  office  and  administrative
         facilities under an informal arrangement with a principal  shareholder.
         Amounts  charged to operations  for such services in 1999 and 1998 were
         $7,500 and $10,500, respectively.

                                      F-11


10.      LICENSE AGREEMENTS

                  The  Company  has the  exclusive  and  perpetual  right to use
         certain trade names, copyrights, logos, trademarks and other intangible
         property  related to  Classics  Illustrated  and  Classics  Illustrated
         Juniors.  The Company is  obligated to remit  royalties  ranging from 3
         percent to 10 percent,  with a minimum of $3,000 per annum, of revenues
         derived from such rights.

11.      LITIGATION

                  In July 1994,  the  Company  discharged  four  officers of its
         Dream Factory subsidiary. The officers who were discharged commenced an
         action against the Company  seeking  damages arising out of the alleged
         wrongful  termination  of their  employment.  The Company  subsequently
         settled  the  claims of two  officers  for  $600,000.  The  Company  is
         currently  engaged  in  settlement   negotiations  with  the  remaining
         officers,  and has accrued a provision of $700,000 in the  accompanying
         consolidated financial statements, but will vigorously defend this case
         in the absence of a settlement, and believes that it is without merit.

                  The  Company  was a  defendant  in the  case  of  Benjamin  B.
         LeCompte,  III v. Classics  International  Entertainment,  Inc., in the
         United  States  District  Court for the Northern  District of Illinois,
         Eastern  Division.  This case  involved  a claim by  LeCompte  that the
         Company owed him 573,066  shares of Common Stock pursuant to an alleged
         conversion  of a  promissory  note into said shares.  The note,  in the
         principal  amount of $200,000,  and the accrued interest  thereon,  are
         included in the accompanying  consolidated financial statements.  As of
         April 3, 2000 this case has been dismissed for a lack of jurisdiction.

12.      EXTRAORDINARY GAIN - EXTINGUISHMENT OF DEBT

                  In  January  1998,   Moondog's   bankruptcy  case  was  closed
         resulting  in  the   cancellation  of  liabilities  of  $218,515.   The
         transaction  is  reflected  in  the  1998  financial  statements  as an
         extraordinary gain from the extinguishment of debt.

                  In October  1999,  the  Company  settled  certain  outstanding
         accounts  payable for $15,000,  resulting in an  extraordinary  gain of
         $51,132 from the extinguishment of debt.

13.      STOCK SUBSCRIPTIONS RECEIVABLE

               Stock subscriptions  receivable at December 31, 1999 of $800,000,
          were collected in full as of March 14, 2000.

14.      CONCENTRATION OF RISK

               The company  maintained  cash balances in excess of the Federally
          insured ("FDIC") limit of $100,000.  Such excess approximated $230,000
          at December 31, 1999.

15.      SUBSEQUENT EVENT

               On March 23,  2000,  851,421  shares of Common  Stock were issued
          upon  the  exercise  of  warrants.   There  are  additional   warrants
          outstanding  which  provide for the issuance of 143,267  shares,  upon
          exercise,  at a price of $1.74 per  share.  These  warrants  expire in
          February 2001.

                                      F-12









                    INDEX TO QUARTERLY REPORT ON FORM - 10QSB

                                                                        PAGE NO.

PART I   FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements

                    Balance Sheet                                           F-14

                    Statements of Operations                                F-15

                    Statements of Cash Flows                                F-16

                    Notes to Consolidated Financial Statements       F-17 - F-19











                                      F-13


PIRANHA, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                               SEPTEMBER 30, 2000
                               (UNAUDITED)

                                     ASSETS

CURRENT ASSETS
     Cash                                                  $            958,147
     U.S. Government securities                                       1,061,343
     Marketable securities                                              167,900
     Accounts receivable                                                943,015
     Prepaid expenses and deposits                                      285,281
                                                              ------------------
             TOTAL CURRENT ASSETS                                     3,415,686

PROPERTY AND EQUIPMENT, NET                                           1,843,453

GOODWILL                                                              1,750,000

INTANGIBLE AND OTHER ASSETS                                          11,555,638
                                                              ------------------
                                                           $         18,564,777
                                                              ==================



                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
     Accounts payable                                      $            848,316
     Dividends payable                                                  207,206
     Accrued liabilities                                              1,030,584
     Deferred income                                                    791,667
     Stockholder loans and other notes payable                          254,579
                                                              ------------------
             TOTAL CURRENT LIABILITIES                                3,132,352
                                                              ------------------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
     Preferred stock                                                    462,500
     Common stock, $.001 par  value, 100,000,000 shares authorized;
              9,478,881 shares issued and outstanding                     9,479
     Additional paid-in capital                                      39,324,828
     Stock subscription receivable                                      (44,500)
     Accumulated deficit                                            (24,319,882)
                                                              ------------------
             TOTAL STOCKHOLDERS' EQUITY                              15,432,425
                                                              ------------------
                                                           $         18,564,777
                                                              ==================



               See notes to the consolidated financial statements

                                      F-14






                         PIRANHA, INC, AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

                                                                     THREE MONTHS ENDED           NINE MONTHS ENDED
                                                                                SEPTEMBER 30,                 SEPTEMBER 30,
                                                                         -------------------------   -------------------------------
                                                                             2000           1999          2000           1999
                                                                         ------------   ----------   -------------   -----------

                                                                                                       


   REVENUES                                                              $    290,258   $             $    338,343   $
                                                                         ------------   ----------    ------------   ------------

   COSTS AND EXPENSES

     General and administrative                                             2,393,266                    6,184,636
     Depreciation                                                              40,848                       90,556
                                                                         ------------   -----------   ------------   -----------
        Total Costs and Expenses                                            2,434,114                    6,275,192
                                                                         ------------   -----------   ------------   -----------

   Loss before other expense                                               (2,143,856)                  (5,936,849)

     Loss on marketable securities, net                                      (203,752)                    (173,065)
     Interest expense                                                         (10,260)                     (31,840)
                                                                         ------------   -----------   ------------   -----------
   Loss from continuing operations                                         (2,357,868)                  (6,141,754)

   Loss from discontinued operations                                                0        (7,139)             0       (21,321)
                                                                         ------------   -----------   ------------   -----------

   Net loss                                                                (2,357,868)       (7,139)    (6,141,754)      (21,321)

   Preferred stock dividends                                                  (10,406)      (40,950)       (42,306)     (122,850)
                                                                         ------------   -----------   ------------   -----------

   Net loss applicable to common stock                                   $ (2,368,274)  $   (48,089)  $ (6,184,060)  $  (144,171)
                                                                          ============   ===========   ============   ===========



   Basic and Diluted Loss Per Common Share:

   Loss from continuing operations                                       $      (0.25)  $     (0.01)  $      (0.71)  $     (0.02)

   Loss from discontinued operations                                             0.00          0.00           0.00          0.00

   Net loss per common share
                                                                          ------------   -----------   ------------   -----------
         - basic and diluted                                             $      (0.25)  $     (0.01)  $      (0.71)  $     (0.02)
                                                                          ============   ===========   ============   ===========

   Weighted average common shares outstanding                                9,296,590     4,979,632      8,698,986     4,979,632
                                                                          ============   ===========   ============   ===========




               See notes to the consolidated financial statements

                                      F-15



                         PIRANHA, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)




                                                                                        NINE MONTHS ENDED SEPTEMBER 30,
                                                                                       ----------------------------------
                                                                                            2000               1999
                                                                                       ----------------   ---------------
                                                                                                

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                                           $      (6,141,754) $        (21,321)
  Adjustments to reconcile net loss
   to net cash used in operations:
   Depreciation                                                                                 90,556
   Loss on sale of securities                                                                  173,065
   Loss from discontinued operations                                                                              21,321
  Changes in assets and liabilities:
     Increase in accounts receivable                                                          (943,015)
     Increase in prepaid expenses                                                             (271,886)
     Decrease in accounts payable and accrued liabilities                                     (463,874)
     Increase is deferred revenue                                                              791,667
                                                                                       ----------------   ---------------
NET CASH USED IN OPERATING ACTIVITIES                                                       (6,765,241)                0
                                                                                       ----------------   ---------------
CASH FLOWS USED IN INVESTING ACTIVITIES:
  Acquisition of property and equipment                                                     (1,885,766)
  Investment in marketable securities                                                         (378,215)
  Proceeds from  the sale of U.S. Government securities                                        267,415
                                                                                       ----------------   ---------------
      NET CASH FLOWS USED IN INVESTING ACTIVITIES                                           (1,996,566)                0
                                                                                       ----------------   ---------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Collection of stock subscription receivable                                                  800,000
  Acquisition of intangibles                                                                   (17,513)
  Payment of stockholder loans and other notes payable                                        (572,582)
  Proceeds from issuance of common stock                                                     9,176,170
                                                                                       ----------------   ---------------
      NET CASH FLOWS FROM FINANCING ACTIVITES                                                9,386,075                 0
                                                                                       ----------------   ---------------
NET INCREASE IN CASH                                                                           624,268                 0

CASH AT BEGINNING OF YEAR                                                                      333,879                 0
                                                                                       ----------------   ---------------
CASH AT END OF PERIOD                                                                $         958,147  $              0
                                                                                       ================   ===============



SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

  Cash paid during the period for interest                                           $           2,210  $              0
                                                                                       ================   ===============
  Cash paid during the period for income taxes                                       $               0  $              0
                                                                                       ================   ===============

NON-CASH FINANCING AND INVESTING ACTIVITIES:

  Issuance of common stock upon conversion of accounts payable                       $         171,405   $             0
                                                                                       ================   ===============
  Issuance of common stock for acquisitions                                          $       1,750,000   $             0
                                                                                       ================   ===============
  Issuance of common stock upon conversion of preferred stock                        $       2,037,750   $             0
                                                                                       ================   ===============




               See notes to the consolidated financial statements

                                      F-16






                         PIRANHA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               SEPTEMBER 30, 2000

                                   (UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION:

The accompanying  unaudited financial  statements reflect all adjustments which,
in the opinion of management, are necessary for a fair presentation of financial
position and the results of operations for the interim  periods  presented.  The
results of operations for any interim periods are not necessarily  indicative of
the results attainable for a full fiscal year.

These  statements  have been prepared by the Company and are unaudited.  Certain
information and footnote  disclosures  normally included in financial statements
prepared in accordance with generally accepted  accounting  principals have been
omitted. As such, these financial  statements should be read in conjunction with
the audited  financial  statements  and notes thereto  included in the Company's
Annual Report on Form 10-KSB for the year ended December 31, 1999.

NOTE 2 - LITIGATION

In July  1994,  the  Company  discharged  four  officers  of its  Dream  Factory
subsidiary.  The  officers who were  discharged  commenced  actions  against the
Company seeking damages arising out of the alleged wrongful termination of their
employment.  The Company subsequently settled the claims of two of the officers.
The Company has from time to time been engaged in settlement  negotiations  with
the two remaining  officers,  a husband and wife, and has accrued a provision of
$700,000 in its consolidated  financial statements.  No settlement  negotiations
are currently  taking place and the Company is preparing to go to trial in early
2001. These remaining cases are pending in Connecticut state court.

The  Company  was a  defendant  in the case of  Benjamin  B.  LeCompte,  III,  a
stockholder, v. Classics International Entertainment, Inc., in the United States
District Court for the Northern  District of Illinois,  Eastern  Division.  This
case  involved a claim by LeCompte  that the Company owed him 573,066  shares of
Common Stock  pursuant to an alleged  conversion of a promissory  note into said
shares. The note, in the principal amount of $200,000,  and the accrued interest
thereon, are included in the accompanying  consolidated financial statements. On
April 3, 2000,  this case was dismissed for lack of  jurisdiction.  On April 12,
2000,  LeCompte filed an action against the Company in the Circuit Court of Cook
County,  Illinois,  asserting substantially the same claims as in the case which
was dismissed.  That action was dismissed on October 18, 2000.  Subsequently  an
amended  complaint was filed. The Company believes this action is without merit,
and intends to vigorously defend itself in this matter.

The Company is subject to various  federal,  state and local laws  affecting its
business,  and believes that it is in material  compliance  with all  applicable
laws and regulations.

                                       F-17




NOTE 3 - PREFERRED STOCK

At September 30, 2000 Preferred Stock consisted of 5,000,000  authorized  shares
of which the following were issued and outstanding:


                                                                   Common Shares
 Preferred Stock                                         Amount      Issuable on
                                                                     Conversion
------------------------------------------------------ ------------ -----------
Series  A, 9%  cumulative,  convertible,  redeemable;
10,000 shares issued and outstanding                    $ 50,000           2,866
------------------------------------------------------ ------------ ------------
Series  B, 9%  cumulative,  convertible,  redeemable;
412,500 shares issued and outstanding                    412,500         165,445
------------------------------------------------------ ------------ ------------
            TOTAL                                   $    462,500         168,311
                                                         =======         =======

NOTE 4 - CHANGES IN COMMON STOCK

During the period  covered by this Report an aggregate  of  2,783,426  shares of
Company  Common  Stock were  offered  and sold  without  registration  under the
Securities Act of 1933, as amended ("Act"), as not involving any public offering
in reliance upon the exemption  from  registration  contained in Section 4(2) of
the Act.

On January 21, 2000,  an aggregate of 57,307  shares of Common Stock were issued
on  conversion  of  200,000  shares  of the  Company's  Series A 9%  Convertible
Cumulative Redeemable Preferred Stock.

On February 24, 2000,  89,892 shares of Common  Stock,  the fair market value of
which was one million dollars  ($1,000,000),  were issued in exchange for all of
the capital stock of Rogue River Software,  Inc.,  formerly Grand Rapids Science
Group, Inc.

On March 24, 2000, 55,556 shares of Common Stock, the fair market value of which
was seven hundred fifty thousand dollars ($750,000), were issued in exchange for
all of the capital stock of On-Line Marketing, Inc.

During March 2000, an aggregate of 851,421 shares of Common Stock were issued on
exercise of the Company's outstanding Class A and Class B warrants.

On March 31, 2000, an aggregate of 836,000 shares of Common Stock were issued to
various  parties  pursuant  to the receipt of five  million  two hundred  eighty
thousand dollars ($5,280,000) in cash during the quarter.

On March 13, 2000 an aggregate  of 2,866 shares of Common Stock were  authorized
for  issuance  on  conversion  of  10,000  shares of the  Company's  Series A 9%
Convertible Cumulative Redeemable Preferred Stock.

On March 15, 2000 an aggregate of 10,000 shares of Common Stock were  authorized
for   issuance  to  Piranha   Propellers   in  exchange   for  the  domain  name
"piranha.com."

On March 15, 2000 an aggregate of 10,500 shares of Common Stock were  authorized
for issuance to two individuals for services previously rendered.

In May 2000 an  aggregate  of 133,333  shares of Common Stock were issued to The
Interpublic Group of Companies, Inc.

On or about June 15, 2000 an  aggregate  of 324,224  shares of Common Stock were
issued to an individual  on conversion of $500,000 of the Company's  Series C 4%
Convertible Cumulative Redeemable Preferred Stock.

On June 19, 2000 an  aggregate  of 19,500  shares of Common Stock were issued to
four  persons or entities in exchange  for the  cancellation  of amounts due for
services.

                                      F-18


In August,  2000 an  aggregate  of 20,000  shares of Common Stock were issued in
exchange for $100,000 cash which was received by the Company in May, 2000.

In August,  2000 an aggregate  of 372,827  shares of Common Stock were issued to
various parties in exchange for $2,796,170 cash.

NOTE 5 - SUBSEQUENT EVENTS

In October,  2000,  the Company  acquired  all of the capital  stock of Comsight
Imaging,  Inc. in exchange for 47,733 shares of the Company's  common stock, the
fair market  value of which was  $319,498  and three  hundred  thousand  dollars
($300,000)  in cash,  of which  $150,000  had been  paid as a  deposit  prior to
September 30, 2000. Of the 47,733 shares,  37,733 shares were issued at the time
of this  report,  and 10,000  shares were  authorized  for  issuance on or about
January 2, 2001.

In connection with the Comsight Imaging, Inc. acquisition, the Company committed
to grant a principal of Comsight  performance based stock options to purchase up
to  40,000  shares  of  Common  Stock at a price of $7.50  per  share as well as
incentive  based stock  options to purchase  50,000  shares of common stock at a
price of $5.00 per share,  each of which is dependent upon the Company achieving
certain sales volumes.

In October,  2000 the Company issued  1,500,000 shares of Common Stock to Edward
W. Sample, the Company's Chairman and CEO, and 150,000 shares of Common Stock to
two other employees, pursuant to the exercise of non-qualified stock options.

In  November,  2000 the  Company  acquired  all of the  assets of JJT,  Inc.  in
exchange for 50,000 shares of the Company's  Common Stock, the fair market value
of which was $300,000,  and the  assumption of JJT's bank debt.  The Company has
agreed to repay the bank debt by the issuance of 75,862  shares of Common Stock,
the fair market value of which was $455,172 on the date of the  agreement.  Such
shares have been authorized for issuance, but have not yet been issued.

                                      F-19












                                  PIRANHA, INC.

                             SHARES OF COMMON STOCK

                            PAR VALUE $.001 PER SHARE