ADULTSHOP.COM RELEASES CASH FLOW STATEMENT FOR Q1 2000/2001.

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PERTH, Jan 31 MediaNet International-AsiaNet - AdultShop.com Limited, Australia's first truly global adult 'e-tailer', today announced receipts from customers of AU$7.101 million for the second quarter ending December 31, 2000, an increase of 62% from AU$4.394 million in the first quarter of 2000/2001. Net operating cash outflows amounted to AU$3.574 million, with the increase in customer receipts being offset by increased working capital requirements. The cash reserves at the end of the quarter were AU$9.676 million.

"Our second quarter reflects the achievement of major milestones in our international Internet expansion and the consolidation of our leading position within the Australian adult industry," said Malcolm Day, Managing Director of AdultShop.com. "We have begun the establishment of AdultShop.com as a worldwide brand and are penetrating significant new markets in the United States and Europe. In Australia, the Company's recent acquisitions have strengthened both our online and offline operations."

Working Capital Requirements

The first quarter 2000/2001 saw the completion of AdultShop.com's acquisition of the wholesale businesses Calvista Australia Pty Ltd and Stell Bay Pty Ltd. Calvista is Australia's largest wholesaler of adult products, with warehouses in Melbourne, Sydney and Canberra. Stell Bay owns the Australian and New Zealand copyright to distribute the "PRIVATE" range of videos, DVDs and CD-ROMs. The addition of these strategic businesses to the AdultShop.com group was reflected in the combined working capital requirements of AU$6.724 million in the second quarter, up from AU$3.685 million in the previous quarter.

Having played an important role in this purchase decision, overall synergies in warehousing and joint business management systems have been identified, and measures aimed at realising such cost savings potential have been initiated.

Internet Marketing Expenditure