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July 12, 2000

Dear Shareholder:

As we enter the second half of the year, I wanted to take this opportunity to provide an update on the activities of and highlight some of our accomplishments during 2000.

First, I remain extremely optimistic that the three-dimensional technology sector will become increasingly important to users, other ISPs and advertisers as they seek to take advantage of the Internet. With proven technology, an expanding user base and strong partner relationships, is well positioned to benefit.

We have taken significant steps during the first half of 2000:

  • Extended our contract with Road Runner, the high speed, broadband Internet service jointly owned by Time Warner, MediaOne Group, Microsoft, Compaq Corp., and Advance/Newhouse;
  • Contracted with 24/7 Media to sell advertising space and have received placements from more than four dozen advertisers in the first month;
  • Added to our management team in the advertising sales, e-Commerce and finance areas;
  • Completed our first advertising/brand awareness campaign which increased the user base for our 3D entertainment portal significantly;
  • Hosted the first live 3D avatar chat, following the broadcast of exclusive Hanson concert;
  • Raised $3.7 million through a private placement in the UK;
  • Delivered the first in a series of "worlds" for e-eNewMedia in the PanAsian market, and
  • Increased our e-Commerce offerings to 40 stores.

Our plans for the second half are equally ambitious. We believe that the 24/7 contract will begin to provide advertising revenue that will impact the third and fourth quarters. We believe that new systems as well as a more aggressive merchandising and advertising program for our e-Commerce stores will show growth in that area. And we expect that distribution of more than 1.3 million CDs in July and August via Teen Magazine and Yahoo Internet Life will add to our user base.

We are also carrying out a continuing media relations program that has produced coverage in print and on-line publications and in broadcast media, including Silicon Alley Investor, Rolling Stone, Wall Street Reporter,, CNNfn and These can be accessed through our website

Although I am displeased with shareholder value, I believe the market will recognize our true value as the results of our new efforts emerge and markets recover for our sector. All in all, I am very pleased with the progress that we have made operationally during the year. While we still have many challenges ahead, the increased availability of broadband as well as the increasing search by advertisers for new and more robust ways to promote their products are both trends that bode well for us and are beginning to show results.

Yours truly,

Steven G. Chrust,


Forward Looking Statements. Except for any historical information contained herein, the matters discussed contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements. These risks and uncertainties are described in the company’s filings with the SEC. Given these uncertainties; prospective investors are cautioned not to place undue reliance on such forward-looking statements. The company disclaims any obligation to update any such factors or to announce publicly the results of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.