SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

(Mark One)

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the fiscal year ended DECEMBER 31, 2000

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 [FEE REQUIRED]

         For the transition period from _______________________________
                           Commission File No. 0-21051

                           CAPITAL MEDIA GROUP LIMITED
                        ---------------------------------
              (Exact name of small business issuer in its charter)

                Nevada                                   87-0453100
---------------------------------------    -------------------------------------
     (State or other jurisdiction           (I.R.S. Employer Identification No.)
  of incorporation or organization)

          2 Rue du Nouveau Bercy
         94220, Charenton, France
-------------------------------------------              -----------------------
 (Address of principal executive offices)                      (Zip Code)

                               011-33-1-43-53-6999
                               -------------------
                           (Issuer's telephone number)

         SECURITIES REGISTERED UNDER SECTION 12(B) OF THE EXCHANGE ACT:

      TITLE OF EACH CLASS                        NAME OF EACH EXCHANGE ON
                                                     WHICH REGISTERED
         Not Applicable                                    None

         SECURITIES REGISTERED UNDER SECTION 12(G) OF THE EXCHANGE ACT:

                          Common Stock, $.001 par value

Check whether the Company (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the preceding 12 months (or for such
shorter periods that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. YES [X]
NO [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this Form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this form 10-KSB or any
amendment to this form 10-KSB. [ ]

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State Company's revenues for its most recent fiscal year: $ 2,787,500
Because there is only a limited market for the Company's Common Stock (the
"Common Stock"), the aggregate market value of the voting stock held by
non-affiliates of the Company cannot be determined with accuracy. As of May 21,
2001, there were 33,203,251 shares of the Common Stock issued and outstanding,
of which 3,757,453 shares were owned by non-affiliates of the Company.

The following documents are incorporated by reference:  None.

Transitional Small Business Disclosure Format.  YES ____   NO  X

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                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS.

GENERAL

         THE STATISTICAL AND OTHER INFORMATION CONTAINED IN THIS SECTION HAS
BEEN DERIVED FROM KABEL & SATELLITE, A PUBLICATION IN GERMANY FOCUSING ON THE
CABLE AND SATELLITE INDUSTRY. WE ALSO RECEIVE INFORMATION FROM DEUTSCHE TELEKOM,
PRIVATE CABLE OPERATORS, SATELLITE OPERATORS EUTELSAT AND TELEVISION 2000, THE
YEARLY REPORT FROM IP, SUPPORTING OUR DISTRIBUTION AND MARKET INFORMATION.

         The primary business of Capital Media Group Limited ("Capital Media",
"us," "we" or the "Company") is the broadcasting operation of Onyx Television
GmbH ("Onyx"), a music and entertainment television station in Germany dedicated
to adults. Onyx generates revenues primarily from the sale of advertising and
teleshopping space.

         Onyx commenced broadcast operations in January 1996. Its broadcasting
signal is currently received in approximately 11.5 million cable analog homes
in Germany and an indeterminate number of satellite homes (estimated to be
approximately 2.5 million) in Germany, France, Italy and other surrounding
countries.

         Onyx is currently broadcast from the facilities of AB Groupe ("AB
Groupe"), our majority shareholder. AB Groupe is a leading supplier of thematic
channels to the digital pay TV market in France. During the course of 2000, Onyx
and AB Groupe organized a 50/50 joint-venture ("Onyx+") to develop thematic
channels for the emerging digital cable television market in Germany. Onyx and
Onyx+ comprise the Company's Media activities. We had expected to launch our
digital channels during the fourth quarter of 2000. However, because of the slow
rate of conversion of existing cable homes to digital services, we have
postponed the launch of the Onyx+ digital channels. We have also undertaken a
significant restructuring of our Media activities in order to improve our
operating performance. Such restructuring involves cost reductions as well as a
more focused allocation of our resources and efforts to increase revenues.

         In that regard, Onyx recently entered into a three year teleshopping
deal with RTL Shop generating a significant annual minimum guaranteed revenue
level as payment for a three hour daily spot originated by RTL Shop, which is
also expected to generate additional audience for Onyx. This minimum guarantee
is directly linked to the level of distribution offered by Onyx. Onyx has also
recently hired an advertising sales executive with significant experience in the
German market in order to reinforce its sales team.

         Capital Media also owns all or substantially all of the capital stock
in three other companies comprising together our technology activities: (1)
Pixel Ltd. ("Pixel"), which specializes in computer graphics and 3D animation
for TV packaging, digital broadcasting and special effects; (2) TopCard SA
("TopCard"), a software development business which is focused in the development
of mass traffic applications based E-payment technology (including secured
authentication access and hybrid, contactless and infra-red smart-card
technology) and (3) Unimedia SA ("Unimedia"), which operates as the holding
Company for Pixel and TopCard.

         In September 2000, the Company decided to divest its technology
activities in order to focus its limited resources on its media business. The
Company expects to sell the assets of its technology businesses before the end
of 2001.

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         However, since its media activities are and will for the foreseeable
future, continue to lose money, the Company will require significant financing
over the next twelve months in order to remain a going-concern, the amount of
which will depend in part on the revenues generated by Onyx and on business
opportunities derived from the development of the German digital TV market in
the near future. While the Company will seek funding from its principal
shareholders and other sources, there can be no assurance that the Company will
be successful in securing the necessary funding to finance its operations
through 2001.

MEDIA ACTIVITIES - ONYX AND ONYX +

 ANALOGUE CABLE TELEVISION - ONYX and ONYX WEBSITE

         Onyx operates in the Analogue cable television market in Germany. The
channel is distributed via the services of several cable operators to which Onyx
pays carriage fees. Onyx's programming consists in a variety of music videos and
events and other programming appealing primarily to an audience ages 18-45
years.

         Programs are acquired from a variety of sources or produced internally.
Acquired programming includes music videos, concert footage and other live
performance material. Record companies and the music industry supply this
programming to Onyx for a variety of fees ranging from nominal handling charges
for videos to negotiated license fees for live footage. Onyx's internal
productions include interviews and topical specials that range from profiles of
specific artists to genre defined shows.

         Onyx also broadcasts infomercials (teleshopping) on its television
station. During the course of 2000, Onyx broadened the focus of its programming
format to increase its viewing audience. The Onyx music only format has been
progressively transformed into a "music entertainment" programming. While music
remained the core element of its programming, Onyx has progressively included
movies since September 2000 as well as other general entertainment shows in its
programming grid.

         In June 2000, Onyx launched its portal site, ONYXNet, which is
accessible on the world Wide Web at www.onyx.tv and combines background
information on the Onyx channel together with information of general interest
(weather reports, news, financial news, movie releases, etc.), personal services
(E-mail, SMS messages, discussion forums, etc.) and shopping. As of December 31
2000, ONYXNet had received over ten million hits and over one million pages were
being viewed on a monthly basis.

         In September 2000, Onyx entered into a Content Agreement with Kinowelt
Medien AG ("Kinowelt"). The core activities of Kinowelt, a Munich based Company
listed on the Frankfurt Neuer Market, include the production of movies, the
acquisition and distribution of television rights, the ownership and
exploitation of cinema multiplexes, the manufacturing and distribution of videos
and DVDs. Kinowelt is currently exploiting a large library of long feature
films, TV series and Digital TV programming, including premiere movies from
Warner, such as "Matrix", "The Fugitive" and "Wild Wild West".

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         In the beginning of 2001, Onyx was informed by certain local media
authorities that they may not view certain programming changes favorably such as
the inclusion of movies. As a result, and since the corresponding revenue level
was rather disappointing, Onyx agreed with Kinowelt to terminate their Content
Agreement in April 2001 rather than in September 2001, as originally planned.

         The Onyx new programming intends to maintain a high quality content and
technical presentation. Onyx also expects to work with AB Groupe in developing
programming that attracts new viewership and increases the frequency of viewing
for its current audience. We also plan to use the Onyx's web site to assist in
promoting the new programming among potential viewers.

         DIGITAL CABLE TELEVISION

         In late 1999, Onyx and AB Groupe were granted a license by the German
Media Authorities to broadcast five and seven digital cable channels,
respectively. In June 2000, AB Groupe and Onyx co-founded Onyx Plus GmbH
("Onyx+"), a 50/50 joint venture dedicated to the development and the broadcast
of thematic channels for the digital television market in Germany. AB Groupe and
Onyx contributed their licenses for a total of 12 channels to Onyx+. During the
course of 2000, Onyx+ prepared new formats and signed distribution contracts
with two German cable-operators for certain of these licensed channels. Indeed,
unlike the analogue cable television market where channels usually pay carriage
fees to cable operators, digital channels are expected to earn fees from cable
services.

         During 2000, we planned to use the analog channel and our web site to
promote the Onyx+ digital channels. Indeed, Onyx viewed the Internet as a way to
build an online community with brand loyalty generating additional marketing
strength and an additional source of revenues from E commerce activities.
Therefore, Onyx intensified its search for e-commerce partners and prepared
editorial materials to combine background information on the Analogue channel
together with information of general interest (weather, reports, news, financial
news, movie releases, etc.), personal services (E Mail, SMS messages, discussion
forums, etc.) and shopping.

         However, the launch of the Onyx+ channels in Germany initially planned
for September 2000 has been delayed because of the slower than expected
development of the digital television market in Germany.

         As a result, the development of OnyxNet and Onyx+ was recently put on
hold and the acquisition by Onyx+ of programming rights purchased and invoiced
by AB Groupe during the course of 2000 was suspended.

         Indeed, Digital Cable Television has only been introduced to German
television recently, and we cannot assure you that this type of programming will
be accepted by the German viewing market, nor that any of our digital channels,
if launched, will be successful. In addition, the development of this market
strongly depends upon progress made in current negotiations between Deutsche
Telekom and new cable operators, which were still experiencing significant
delays in early 2001, and on the conversion of the cable networks to digital.

         In June 2000, Onyx+, which was planning to broadcast its digital
channels directly from Germany, entered into a service agreement with Mediagate.
As a result of the numerous delays taken by the cable operators with respect to
the development of digital cable services in Germany combined with the failure
of certain conditions precedent to the use by Onyx+ of the services provided by
Mediagate, this agreement never became applicable. Mediagate has taken the
position that Onyx+ was obligated under the contract and has been invoicing
Onyx+ at a monthly rate of DM 430,000 (approximately $195,000) starting January
2001.

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         Onyx+ has and will continue to vigorously dispute these invoices.
Accordingly, there can be no assurance as to the outcome of Onyx's dispute with
Mediagate.

         TARGET MARKET AND DISTRIBUTION

         Our target audience in Germany for Onyx's programming is adults in the
18 to 45 year old age group. The target audience is believed to be one of the
largest demographic segments in Germany. At present, we believe that our target
audience is comprised of an estimated 35.5 million people, equating to
approximately 40% of the population. We believe that the members of our target
audience watch more television than any other demographic group in Germany. We
also believe that the purchasing power of our target audience is often high,
which we believe, should attract advertisers in the future for our programming.

         Germany is the largest cable television market in Europe, with a
population of over 82 million people and approximately 33.5 million households.
Analogue Cable television distribution systems covered approximately 24.2
million connected homes as of December 31, 2000. The German cable television
market is substantially built-out. As of December 31, 2000, cable television
systems covered approximately 77% of the households in Germany. Additionally,
as of December 31, 2000, Germany had approximately 12.7 million homes served by
direct-to-home Satellite Delivered Television Services and Satellite Master
Antenna Television systems.

         Onyx's cable distribution primarily results from negotiations with
various cable operators. Onyx was recently informed that the upgrade of the
cable network in North Rhein Wesphalia where Onyx has developed approximately
40% of its national analogue distribution may result in a proposition from the
main cable operator to transfer Onyx to their new digital service in 2003. Onyx
is currently evaluating the potential impact of these decisions on its
distribution and has entered into discussions with this cable operator. There
can be no assurance as to the outcome of these discussions and whether they will
be favorable for the Company.

         As of December 31, 2000, Onyx's broadcast signal was distributed to
approximately 11.5 million cable homes in Germany, compared to 6.7 million homes
as of August 31, 1997. On certain cable services, Onyx shares broadcasting time
with one or more channels therefore is not available throughout the day to
subscribers in these homes. In addition to cable distribution, Onyx's signal is
received by an indeterminate number of homes in Germany (estimated to be
approximately 2.5 million), which are covered by direct-to-home satellite
systems.

         Television is the fastest growing media in Germany, with advertising
revenues having increased from DM 1.4 billion ($0.9 billion) in 1984 to DM 13.6
billion ($6.3 billion) in 1999 and now represents over 40% of total German
advertising revenue. In comparison, press advertising represents approximately
50% of that total. Cable and satellite television programming's share of
television advertising revenue has increased to approximately 90% since its
introduction in Germany in 1984.

         ADVERTISING AND TELESHOPPING REVENUE

         Primarily all of Onyx's current revenues come from the sale of spot
advertising time and from teleshopping. We believe that these will continue to
be the main sources of revenues for the channel. In addition to providing access
to cable households in general, we believe that in the future, Onyx will be

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attractive to advertisers and teleshopping specialists because it offers a cost
effective means of reaching its target audience. We also believe that
distribution capacity, marketing and audience awareness and an effective
advertising sales force, are key to achieving success in the advertising sales
market.

         In February 2001, Onyx entered into a three year teleshopping deal with
RTL Shop generating a significant annual minimum guaranteed revenue level as
payment for a three hour daily spot originated by RTL Shop, which is also
expected to generate additional audience for Onyx.

         In 2001, Onyx hired an advertising sales executive with significant
experience in the German market in order to reinforce its sales team.

         The demand by advertisers for advertising time on Onyx is and may be
further affected in the future by general economic conditions, the demographic
characteristics of the audiences viewing Onyx's broadcasts, the activities of
its competitors, our ability to provide evidence to advertisers with regard to
the size of Onyx's actual viewing audience, and other factors, as well as trends
in the advertising industry. To date, Onyx has not yet obtained a substantial
amount of advertising revenue from commercials. We cannot assure you that Onyx
will ever achieve sufficient levels of advertising revenue to make the station
profitable and cash flow positive.

         GOVERNMENTAL REGULATION

         We must continue to obtain and maintain the approval of German Landes
Medienanstalten (Local Media Authorities or "LMAs") in order to distribute Onyx
through German cable systems. These LMAs have authority to approve programming
lineups for cable systems in the 16 German regions known as "Bundeslanders."
Members of the LMAs are appointed by local government. Onyx has been granted the
right or partial right to distribute programming through cable networks located
in all 16 Bundeslanders in Germany.

         The number of channels available to a cable system in Germany is
currently limited by Analogue technology to 30 to 35. In addition to its
discussions with individual cable operators, the distribution of Onyx is
dependent in part upon maintaining its approval and good relations with each of
the LMAs who have agreed to allow broadcast of Onyx on the cable system in their
area (both to maintain existing distribution and to seek additional distribution
on those cable systems). Because decisions on distribution are made annually by
each LMA, and because some of the changes recently made to our programming grid
may impact the decision of any particular LMA, we cannot assure you as to the
level of distribution which Onyx might obtain and maintain in any year and from
year to year.

         Onyx was reissued its broadcast license in the state of Nord-Rhine
Westphalia, which has allowed Onyx, as of October 1999, to move its headquarters
to Cologne, the leading city for media business in Germany.

         In 1999, the German media authority began licensing proceedings for 70
nationwide digital cable channels. In September 1999, Onyx and AB Groupe
received licenses for an aggregate of 12 channels on the German digital cable
network. Onyx now must now obtain commitments from German cable operators to
provide our channels and programming. There can be no assurance that we will
obtain those commitments.

         Further, as the German digital cable television market develops and
Deutsche Telekom continues to divest parts of its cable network, it is possible
that certain LMA's may force the channel to transfer from the existing Analogue
services into the digital service. If this occurs, particularly in North Rhein

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Wesphalia, where Onyx has developed 40% of its national distribution, it would
significantly reduce Onyx's total distribution and thereby adversely affect the
Company.

         In addition, television broadcast operations in Germany are subject to
extensive government regulation. This governmental regulation controls, among
other things:

o        the issuance, renewal, transfer and ownership of station licenses,
o        the timing and content of programming,
o        the timing, content and amount of commercial advertising permitted, and
o        the determination of which stations will be permitted to broadcast on a
         particular cable system and the type of content which they are
         permitted to broadcast on those systems.

         Germany also has regulations requiring that a particular percentage of
programming be produced or originated in local markets, which may affect us in
the future. Further, Onyx may in the future seek to expand to other countries.
This expansion may subject Onyx to substantial additional government regulation
in these countries.

         Political initiatives which are being taken by the European Union to
increase the amount of European-produced programming which is being broadcast
may impact Onyx. These political initiatives could effect the types of
programming which Onyx may broadcast and the costs associated with this
programming. We cannot assure you as to the ultimate outcome of these matters
and their effect on Onyx.

         The German media authorities must approve any substantial change in the
ownership of Onyx or the ownership of its stockholders. These authorities will
examine the effect of any ownership change on the ownership concentration in the
overall German television industry. The failure of the German media authorities
to approve future changes in ownership would likely result in the suspension
and/or revocation of Onyx's broadcast licenses. A suspension and/or revocation
of Onyx's broadcast licenses would have an adverse effect on our financial
condition.

         COMPETITION

         Competition is intense among companies providing programming services
via cable television in Germany. Onyx must compete for both viewers and for the
right to distribute programming over the various cable television networks
throughout Germany. A number of German cable television networks provide
programming designed to reach Onyx's target audience. The competition for
viewers includes broadcast television stations, satellite and wireless
programming services, radio, print media and the Internet. In connection with
its music programming and teleshopping, we compete with other broadcast
operators which provide similar programming, including MTV/VH-1, NBC and
VIVA/VIVA2. Many of Onyx's competitors have significantly greater resources
than it does.

         This fast changing market has been recently made far more competitive
pursuant to the reinforcement of the market concentration around two actors,
Kirsch and Bertelsman, and the privatization of Deutsche Telekom Cable Network.
There can be no assurance that Onyx will be able to further increase the
development of its revenues nor to maintain its technical reach (distribution).

         Additionally, increased competition for viewers in the German cable
industry may result from the availability of additional channels and
programming. This availability has been made possible by technological advances,
such as digital compression technology, which allows cable systems to expand

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channel capacity, the deployment of fiber optic cable, which has the capacity to
carry a much greater number of channels than coaxial cable, and "multiplexing,"
in which programming services offer more than one feed of their programming. The
increased number of choices available to our target audience as a result of
these technological advances could impact the number of persons watching Onyx's
programming.

         AGREEMENTS WITH OUR MAJORITY SHAREHOLDER

         In October 1998, we entered into a two-year services agreement (the
"Services Agreement") with AB Groupe under which AB Groupe has provided
technical services to Onyx, including, among other services: (1) the use of
transponder capacity on a EUTELSAT satellite, (2) uplink facilities, (3) all
transmission services to the cable head ends of each of the German cable
television networks over which our programming is broadcast, and (4) the use of
a master control room and other transmission facilities required to operate
Onyx. Additionally, we received $60,000 per month in cash from AB Groupe which
we used to pay the transmitting costs of our broadcast signal over telephone
lines to decoders at the cable ends. In return for these services and these cash
payments, we issued 260,000 shares of Common Stock per month to AB Groupe
(having an agreed value of $260,000) until September 30, 2000.

         On December 26, 2000, in response to a request from AB Groupe, the
Company's majority shareholder, the Board increased its size and appointed the
following directors:

         -        Claude Berda, Chairman of AB Groupe,
         -        Denis Bortot, CEO of AB Groupe,
         -        Orla Noonan, Executive Vice President and Secretary of AB
                  Groupe,
         -        Richard Maroko, Executive Vice President of AB Groupe, and
         -        Jean-Michel Fava, Executive Vice President of AB Groupe.

         The appointment of these five new directors, together with
Jean-Francois Klein, CFO of AB Groupe and already a director of CMG, meant that
persons associated with AB Groupe held a majority of seats on our Board.

         On January 2, 2001, in connection with a decision made to allow AB
Groupe to assume operational control of Onyx and Onyx +, Michel Assouline
resigned as the managing Director of Onyx, and Onyx +. Jean-Francois Klein was
then appointed Managing Director of both Onyx and Onyx+. In January 2001, Orla
Noonan and Jean-Francois Klein from AB Groupe were appointed by the Board
Secretary-Director and Director of Capital Media (UK) Ltd, respectively.

         On February 26, 2001, AB Groupe agreed to continue to provide Onyx with
broadcasting services including the playout, the uplink and the transponder
facilities in exchange for a monthly payment of approximately $ 80,000
throughout 2001. The Board also authorized AB Groupe to provide Onyx with
certain executive management services for approximately $15,000 per month. The
Company believes that

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the fees which will be paid to AB Groupe will be at least as favorable to the
Company as those that would be obtained by the Company from unaffiliated third
parties.

         There are additional related party transactions in relation to certain
invoices billed by AB Groupe to Onyx and Onyx+ which are described in Item 10,
"Certain Relationships and Related Transactions" below.

         We believe that our relationship with AB Groupe will remain critical to
our business since AB Groupe continues to provide us with our broadcasting
services and our executive management, and is our partner in the development of
our future digital cable operations.

         CORE BUSINESS STRATEGY

         In light of the factors affecting our business as described above, the
Company has recently taken action reduce its operating expenses. The Company now
intends to:

         (i)      dispose of its technology activities,

         (ii)     continue to restructure its media activities to reduce costs,
                  and

         (iii)    focus the Company's resources on revenue generation.

Indeed, the new management of Onyx believes that it can increase revenues by
continuing to adapt Onyx's programming grid to attract more viewers among its
target audience and by more actively seeking revenue opportunities within the
advertising and teleshopping market as well as within the music industry.
Further the new Onyx's management intends to continue to position Onyx as a
music and entertainment channel for the Analogue cable market in Germany.
Additionally, Onyx may also consider launching certain of the Onyx+ thematic
channels if the digital subscriber base increases significantly and if the
financing required for such activities is available to the Company.

         CORPORATE STRUCTURE

         Onyx is a fully owned subsidiary (directly and indirectly) of the
Company. In October 2000, we invested additional funds in Onyx. As of December
31, 2000, we directly held 66.67% of Onyx, while our wholly owned subsidiary,
Capital Media (UK) Ltd ("CM(UK)"), held 33.33% of Onyx.

TECHNOLOGY ACTIVITIES

         UNIMEDIA SA

         During 1997, we acquired an 81.6% interest in Unimedia, a
development-stage company. We issued 702,690 shares of our common stock in this
acquisition. In June 2000, we agreed to purchase 123,020 newly issued shares of
Unimedia for a total subscription price of 12,302,000 French Francs, increasing
our stake in Unimedia to 98.33% of its outstanding shares.

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         As of today, Unimedia operates as a holding company for the Company's
interests in Pixel and TopCard.

         PIXEL LTD.

         On February 12, 1998, Unimedia acquired 100% of the outstanding stock
of Pixel, an Israeli Company. Pixel specializes in computer graphic and 3D
animation for TV packaging, digital broadcasting and special effects. In
addition, Pixel has a contractual relationship with Israel Cable Programming
Company Ltd., providing TV packaging and animation programming for the cable
operators in Israel, utilizing Pixel's digital editing systems located in Israel
Cable Programming's studio facilities.

         Pixel also owns a 47.5% interest in Henry Communication Ltd., a service
Company operated in a joint venture with Video Broadcast SB Ltd., an Israeli
broadcasting Company. In February 2001, Pixel sold its 47.5% interest in Henry
Communication in exchange for a cash payment of approximately $300,000 of which
$200,000 are expected to repay part of the debt due by Pixel to Unimedia.

         Pixel is not affiliated, directly or indirectly, with Pixar, the
Richmond, California digital animation studio run by Stephen Jobs.

         TOPCARD, S.A

         TopCard is developing secured access smart card technology required for
processing online transactions. TopCard has agreements to export its smart card
technology based turnkey solutions to Russia and China for use in securing
access to mobile phone applications and prepaid Internet services, respectively,
and is presently in a pilot project with the European Union to develop a secure
decrementing value card system (an electronic purse).

         In March 2000, we agreed to purchase 53,982 new issued shares of
TopCard for a total subscription price of 5,398,200 French Francs, increasing
our stake in TopCard to 98.66% of its outstanding shares.

         PROPOSED DISPOSAL OF TECHNOLOGY ACTIVITIES

         We have decided to allocate our limited financial resources to the
exclusive development of Onyx and Onyx+ which is the core business of our
majority shareholder. As a result, in February 2001, our Board determined to
sell Unimedia's interests in Topcard and Pixel, since these two subsidiaries
will need additional development funding which the Company does not currently
have. We expect to divest our technologies activities by December 31, 2001.
There can be no assurance that either of these businesses will be sold or on
what terms any such sale may occur. Furthermore it is expected that the
Company's headquarters operations in Unimedia will be closed once these sales
are completed.

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MINORITY INTERESTS

         INTEREST IN BLINK TV

         Blink TV ("Blink") is a specialized TV programming vehicle which
provides lifestyle programming on large video screens at UK concert events. This
programming consists of music videos, style and fashion, and extreme sports,
which are broadcast as a 30 minute segment immediately before live performances.
Blink has installed video screens and projection equipment at several major UK
concert venues.

         We previously owned a 50% interest in Blink. In December 1999, we sold
our 50% interest in Blink to RCL Communications for a nominal sum and converted
our (British Pounds) 130,000 (approximately $200,000) of existing loans to Blink
into new redeemable equity. Following this change we owned approximately 19% of
Blink, which was reduced to 17% in September 2000 when Blink converted certain
of its debt to equity. If successful in the future, Blink will have to repay the
monies that we converted into equity back to us. There can be no assurance that
this will ever occur.

PERSONNEL

         At December 31, 2000, we employed 62 persons, 35 of whom were employed
by Onyx, 5 of whom were employed by Onyx +, 16 of whom were employed by CMG,
Unimedia, TopCard and Pixel, and 6 of whom were employed in administrative,
financial and managerial positions on behalf of the combined operations. We
recently reduced our headcount by 15 employees in connection with our efforts to
cut costs. We believe that our relationship with our employees remains good.
None of our employees are covered by a collective bargaining agreement. However,
there can be no assurance as to the absence of litigation resulting from the
ongoing staff reduction.

ITEM 2   PROPERTIES.

         Our French subsidiary, Unimedia, has entered into an agreement with the
Company to allocate temporary office space and human resources to the Company.

         Unimedia leases office space in Charenton, France. Onyx leases
administrative offices in Cologne, Germany. TopCard leases office space in
Aix-en-Provence, France and Pixel leases offices in Tel Aviv, Israel. For
information regarding our financial obligations under our leases, see Note 8 to
Consolidated Financial Statements.

ITEM 3   LEGAL PROCEEDINGS.

         In June 1997, a former managing director of Onyx whose employment was
terminated brought suit in Germany for alleged wrongful early termination of his
employment. Onyx maintained that the action taken was lawful while in July 1998
the court ruled in favor of Onyx. The plaintiff appealed against the ruling and
claimed DM168,000 (US$86,000) in respect of his 1997 salary. The court is
currently considering new evidence put forward by Onyx which believes that it
has valid defenses to this claim. However, there can be no assurance as to the
outcome of the matter.

         In March 2000, Onyx paid $120,000 in full settlement of a dispute with
TV Strategies, a Dallas, Texas based television services Company, which alleged
that they had provided services to Onyx.

                                       12
<PAGE>

         Unimedia has two minority shareholders (Oradea and Roland Pardo) who
have unsuccessfully brought numerous legal actions against Unimedia and/or its
management, pursuant to one of which these minority shareholders were ordered by
a French court to pay damages in the amount of 55,000 French Francs to Unimedia
for having maintained abusive liens on all Unimedia's assets after Unimedia
settled their shareholder loans in July 1999.

         Oradea and R. Pardo have also brought a legal action through the Court
of England against Gilles Assouline with respect to their investments in both
Unimedia and ActivCard. The Court has favorably considered an application to
dismiss the claim filed by Gilles Assouline, who believes that he has strong and
valid defenses. However there can be no assurance as to the outcome of this
claim. The Company is indemnifying Mr. Assouline with respect to this matter.

         In August 2000, Gralec Establishment, a shareholder of the Company,
brought a legal action against Unimedia before a French court with respect to
alleged still existing rights of Gralec to purchase 50,000 ActivCard shares from
Unimedia at $13.00 each pursuant to an option granted in October 1996 and which
expired in February 1997. In October 2000, the Court dismissed Gralec's claim
and ordered Gralec to pay damages and legal fees in the amount of 60,000 French
Francs to Unimedia.

                                       13
<PAGE>

                                     PART II

ITEM 4.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS' MATTERS.

TRADING MARKET FOR THE COMPANY'S SECURITIES

         Our Common Stock is quoted on the Bulletin Board maintained by the
NASD. We do not believe that there is an active trading market for our Common
Stock at this time.

         The following table sets forth, for the calendar quarters indicated,
the range of high and low closing bid prices per share of our Common Stock. The
prices presented are bid prices, which represent prices between broker-dealers
and do not include retail mark-ups and mark-downs on any closing commission to
the broker dealer. The prices do not necessarily reflect actual transactions.

                                                       High              Low
                                                    ----------       -----------
1999
     - First Quarter                                  $1.87            $1.56
     - Second Quarter                                  1.72             1.41
     - Third Quarter                                   1.72             1.41
     - Fourth Quarter                                  2.50             0.50
2000
     - First Quarter                                   3.125            1.875
     - Second Quarter (to April 2000)                  2.50             2.187
     - Third Quarter                                   1.750            0.875
     - Fourth Quarter                                  1.125            0.080
2001
     - First quarter                                   0.344            0.094
     - Second Quarter (until May 18, 2001)             0.10             0.10

         As of the date of this Form 10-KSB, we have over 400 stockholders of
record. Additionally, we have at that date an indeterminable number of
stockholders who own their shares in street name through brokerage firms.

         Since our Common Stock is not quoted on the NASDAQ Small Cap Market,
the Common Stock is subject to certain regulations of the Securities and
Exchange Commission which impose sales practice requirements on broker-dealers
because the Common Stock has a market price of less than $5.00 per share. For
example, broker-dealers selling our securities are required, before effecting
any transaction, to provide their customers with a document which discloses the
risks of investing in the Common Stock. Furthermore, if the person purchasing
our securities is someone other than an accredited investor or an established
customer of the broker-dealer, the broker-dealer must also approve the potential
customer's account by obtaining information concerning the customer's financial
situation, investment experience and investment objectives. The broker-dealer
must also make a determination whether the transaction is suitable for the
customer and whether the customer has sufficient knowledge and experience in
financial matters to be reasonably expected to be capable of evaluating the
risks of transactions in our securities, which could limit the number of
potential purchasers of our securities. The additional burdens imposed

                                       14
<PAGE>

upon broker-dealers by these requirements may discourage broker-dealers from
effecting transactions in the Common Stock, which could severely limit the
market liquidity of the Common Stock.

COMMON STOCK PURCHASE WARRANTS

         At the date of this Form 10-KSB, we had the following warrants to
purchase common shares outstanding:

Description                                                         Number
------------                                                        ------
Warrants to purchase Common Stock at $40.00 per share                 633,914
Warrants to purchase Common Stock at $31.25 per share                  51,119
Warrants to purchase Common Stock at $25.00 per share                 129,767
Warrants to purchase Common Stock at $1.00 per share                6,537,339

All of the outstanding warrants will expire on or before January 19, 2003. The
warrants listed above include 3,250,000 warrants issued to our directors,
executive officers and employees for their service to the Company.

COMMON STOCK PURCHASE OPTIONS

         At the date of this Form 10-KSB, the following options to purchase
common shares outstanding were granted and had vested:

<TABLE>
<CAPTION>
Description                                                  Number     Of which vested
------------                                                 ------     ---------------
<S>                                                         <C>             <C>
Options to purchase Common Stock at $25.00 per share         30,000          30,000
Options to purchase Common Stock at $ 5.70 per share         37,500          37,500
Options to purchase Common Stock at $ 3.50 per share        450,000         239,997
        Of which to non employee directors                   50,000               -
                                                         ------------------------------
                                          Total             517,500         307,497
</TABLE>

DIVIDEND POLICY

         The Company has never declared a cash dividend on its Common Stock. The
Board anticipates that for the foreseeable future earnings if any, will be
retained for use in the business, and no cash distributions will be made on the
Common Stock. The payment of future cash dividends, if any, will be at the
discretion of the Board and will depend upon earnings, financial requirements of
the Company and such other factors as the Board deems relevant.

                                       15
<PAGE>

ITEM 5.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

         THE FINANCIAL INFORMATION INCLUDED HEREIN SHOULD BE READ IN CONJUNCTION
WITH THE FINANCIAL STATEMENTS CONTAINED ELSEWHERE IN THIS ANNUAL REPORT ON FORM
10-KSB, INCLUDING THE NOTES THERETO. THIS FORM 10-KSB CONTAINS FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT, AND SECTION
21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, WHICH ARE INTENDED TO BE
COVERED BY THE SAFE HARBORS CREATED THEREBY. ALL STATEMENTS, OTHER THAN
STATEMENTS OF HISTORICAL FACT, INCLUDED IN THIS FORM 10-KSB THAT ADDRESS
ACTIVITIES, EVENTS OR DEVELOPMENTS THAT THE COMPANY EXPECTS, BELIEVES OR
ANTICIPATES WILL OR MAY OCCUR IN THE FUTURE ARE FORWARD-LOOKING STATEMENTS.
INVESTORS ARE CAUTIONED THAT ALL FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND
UNCERTAINTIES, INCLUDING, WITHOUT LIMITATION, THE ABILITY OF THE COMPANY TO
FINANCE ITS OPERATIONS AND MAINTAIN OR INCREASE THE DISTRIBUTION OF ONYX
TELEVISION ON GERMAN CABLE SYSTEMS, THE ABILITY TO INCREASE ONYX TELEVISION'S
ADVERTISING REVENUES, CHANGES IN COSTS OF PROGRAMMING, AND MATTERS RELATING TO
ONYX TELEVISION'S RELATIONSHIP WITH THE GERMAN MEDIA AUTHORITIES HAVING
JURISDICTION OVER ONYX TELEVISION, AS WELL AS GENERAL MARKET CONDITIONS AND
COMPETITION. FUTURE EVENTS AND ACTUAL RESULTS, FINANCIAL AND OTHERWISE, COULD
DIFFER MATERIALLY FROM THOSE SET FORTH IN OR CONTEMPLATED BY THE FORWARD-LOOKING
STATEMENTS HEREIN. ALTHOUGH THE COMPANY BELIEVES THAT THE ASSUMPTIONS UNDERLYING
THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN ARE REASONABLE, ANY OF THESE
ASSUMPTIONS COULD BE INACCURATE AND, THEREFORE, THERE CAN BE NO ASSURANCE THAT
THE FORWARD-LOOKING STATEMENTS INCLUDED IN THIS FORM 10-KSB WILL PROVE TO BE
ACCURATE. IN LIGHT OF THE SIGNIFICANT UNCERTAINTIES INHERENT IN THE
FORWARD-LOOKING STATEMENTS INCLUDED HEREIN, INCLUSION OF SUCH INFORMATION SHOULD
NOT BE REGARDED AS A REPRESENTATION BY THE COMPANY OR ANY OTHER PERSON THAT THE
OBJECTIVES AND PLANS OF THE COMPANY WILL BE ACHIEVED.

                                       16
<PAGE>

GENERAL

         The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries, Capital Media (UK) Limited ("CM(UK)")
and Onyx GmbH ("Onyx") and Onyx's 50% subsidiary Onyx Plus GmbH ("Onyx+"),
together with the Company's 98.33% owned subsidiary Unimedia SA ("Unimedia") and
Unimedia's wholly owned subsidiary, Pixel Limited ("Pixel"), and its 98.66%
owned subsidiary TopCard SA ("TopCard"). All inter-company accounts and
transactions have been eliminated in consolidation. Pixel's 47.5% interest in
Henry Communications Limited ("Henry") has been accounted for using the equity
method, after the elimination of all significant inter-company balances and
transactions.

         During 1999, we issued a significant amount of debt convertible into
common stock at $1.00 per share (substantially all of which was converted into
common stock on October 27, 1999 and thereafter). During 2000, we also issued a
substantial number of warrants to purchase shares of common stock at $1.00 per
share. Our Board, when determining to issue this debt and these warrants,
concluded that the conversion price of such debt (and the exercise price of
these warrants) was the fair value of our Common Stock at the date of grant.
While our Common Stock is quoted on the Bulletin Board maintained by the NASD,
there is currently only a limited market for our Common Stock, and no opinion on
the valuation of our Common Stock has been obtained from a third party. While we
believe that the fair value of our shares was equal to the price at which we
issued our convertible debt and warrants, in prior years, in determining the
fair value of options and warrants granted in 2000, we used the Black-Scholes
model at the dates of grants and recorded a corresponding charge in the
financial statements.

                                       17
<PAGE>

SELECTED FINANCIAL DATA

         THE FOLLOWING INFORMATION HAS BEEN DERIVED FROM THE FINANCIAL
STATEMENTS OF THE COMPANY. THE FINANCIAL STATEMENTS AS OF AND FOR THE FISCAL
YEARS ENDED DECEMBER 31, 2000 AND 1999 INCLUDED ELSEWHERE HEREIN HAVE BEEN
AUDITED BY PRICEWATERHOUSECOOPERS, THE COMPANY'S INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS. THIS SECTION SHOULD BE READ IN CONJUNCTION WITH THE COMPANY'S
CONSOLIDATED FINANCIAL STATEMENTS AND THE NOTES THERETO AND "MANAGEMENT'S
DISCUSSION AND ANALYSIS," WHICH ARE INCLUDED ELSEWHERE IN THIS FORM 10-KSB.

<TABLE>
<CAPTION>
                                                                ---------------------------------------
                                                                     Fiscal Year Ended December 31,
                                                                ---------------------------------------
                                                                    2000                        1999
                                                                -----------                 -----------
                                                                                            As Restated
                                                                                           (see note 16)
<S>                                                             <C>                         <C>
STATEMENT OF INCOME DATA                                              $                           $
Operating Revenues .........................................      2,787,500                   2,728,971
Operating Costs.............................................    (15,502,535)                (10,791,482)
                                                                -----------                 -----------
Operating Loss .............................................    (12,215,035)                 (8,062,511)

Equity in net loss of affiliates............................        (44,650)                     (8,075)
Financial income (expense) net..............................       (701,323)                (11,674,860)
Other income (expense)......................................        (97,340)                  1,808,895
                                                                -----------                 -----------
Loss from operations before taxation .......................    (13,558,438)                (17,936,551)
Tax provision (credit)......................................          9,689                      57,727
                                                                -----------                 -----------
                                                                (13,548,749)                (17,878,824)
                                                                -----------                 -----------
Minority interest...........................................        453,995                          --
                                                                -----------                 -----------
Net loss....................................................    (13,094,754)                (17,878,824)
                                                                ===========                 ===========
Net loss per share
              basic.........................................          (0.43)                     ($2.32)
                                                                ===========                 ===========
              diluted.......................................          (0.43)                     ($2.32)
                                                                ===========                 ===========

Weighted average number of shares outstanding - basic.......     30,670,751                   7,707,446
                                                                ===========                 ===========
Weighted average number of shares outstanding - diluted.....     30,670,751                   7,707,446
                                                                ===========                 ===========
</TABLE>

<TABLE>
<CAPTION>
                                                                        December 31,
                                                        ----------------------------------------------
                                                                 2000                    1999
                                                        -----------------------   --------------------
                                                                                      As Restated
                                                                                     (see note 16)
<S>                                                          <C>                     <C>
BALANCE SHEET DATA:
Working Capital/Deficit.............................         $(9,067,406)            $(5,034,416)
Total Assets........................................           5,497,037               5,085,093
Total Liabilities...................................         (11,971,492)             (6,710,275)
Minority Interest...................................             382,057                 402,477
Stockholder's Deficit ..............................          (6,474,455)             (2,027,659)
</TABLE>

                                       18
<PAGE>

As disclosed in Note 17 to the financial statements for the year ended December
31, 2000, the Company adopted the recognition provisions of SFAS 123 for
employee options. As a result, such recognition provisions are required to be
applied to all stock awards granted in the year of adoption. Accordingly, the
results of the first quarter ended March 31, 2000 and the second quarter ended
June 30, 2000 have been restated to reflect the adoption of FAS 123. In
addition, the results of the second quarter have been restated to reflect
additional expense related to an option grant to a nonemployee that was not
previously recorded. The quarterly results have also been restated to reflect
the amortization of debt discount associated with debt with detachable warrants
issued in 2000.

<TABLE>
<CAPTION>
                                                       As published ($)      As recalculated ($)
                                                       ----------------      -------------------
<S>                                                       <C>                    <C>
Three months ended March 31, 2000
Staff cost                                                  (657,889)            (2,251,737)
Operating loss                                            (1,797,735)            (3,391,583)
Financial expense                                           (855,281)              (873,281)
Loss from continuing operations before taxation           (2,708,411)            (4,320,259)
Net loss                                                  (2,708,713)            (4,320,561)
Net loss per share basic and diluted                          $(0.09)                $(0.15)
<CAPTION>
                                                       As published ($)      As recalculated ($)
                                                       ----------------      -------------------
<S>                                                       <C>                    <C>
Three months ended June 30, 2000
Staff cost                                                  (680,488)              (689,494)
Operating loss                                            (2,731,022)            (2,881,917)
Financial expense                                         (1,123,173)            (1,151,173)
Loss from continuing operations before taxation           (3,757,097)            (3,935,992)
Net loss                                                  (3,757,093)            (3,935,992)
Net loss per share basic and diluted                          $(0.12)                $(0.13)
<CAPTION>
                                                       As published ($)      As recalculated ($)
                                                       ----------------      -------------------
<S>                                                       <C>                    <C>
Three months ended September 30, 2000
Staff cost                                                  (657,349)              (657,349)
Operating loss                                            (2,417,852)            (2,417,852)
Financial expense                                             18,883                 (8,117)
Loss from continuing operations before taxation
  and minority interest                                   (2,427,569)            (2,454,569)
Net loss                                                  (2,340,145)            (2,367,145)
Net loss per share basic and diluted                          $(0.08)                $(0.08)
</TABLE>


                                       19
<PAGE>

RESULTS OF OPERATIONS

         YEARS ENDED DECEMBER 31, 2000 AND 1999

         Operating revenues for the year ended December 31, 2000 were
$2,787,500, an increase of $58,529 compared to operating revenues of $2,728,971
for 1999.

          Revenues at Onyx in 2000 totaled $2,089,764 compared to $1,816,016 for
the same period of 1999, an increase of 15.1%. Onyx+ had no revenue for the
year ended December 31, 2000 as no thematic channel was launched. The Onyx
management believed that the repositioning of Onyx, including the ongoing
changes in the Onyx programming and the launch of the Onyx+ digital channels,
combined with a specific alliance strategy with certain media companies and
cable operators, may contribute to maintaining its network distribution and
revenue opportunity. However, Onyx competes in the rapidly expanding and
competitive German cable market, and while Onyx expects its advertising revenues
to continue to increase in the future, there can be no assurance of such
favorable development. Additionally, while Onyx expects to maintain its existing
Analogue distribution, which is critical to selling advertising, there can be no
assurance of this fact. See Item 1 "Description of Business".

         In June 2000, Onyx+, which was planning to broadcast its digital
channels directly from Germany, entered into a service agreement with Mediagate.
As a result of the numerous delays taken by the cable operators with respect to
the development of digital cable services in Germany combined with the failure
of certain conditions precedent to the use by Onyx+ of the services provided by
Mediagate, this agreement never became applicable. Mediagate has taken the
position that Onyx+ was obligated under the contract and has been invoicing
Onyx+ at a monthly rate of DM 430,000 (approximately $195,000) starting January
2001.

         While Onyx+ has and will continue to vigorously dispute these invoices.
Accordingly, there can be no assurance as to the outcome of Onyx's dispute with
Mediagate.

         The French operations of Unimedia and TopCard reported a net loss of
$847,040 in 2000, compared to a loss of $205,394 for the same period in 1999.
The Israeli operations of Pixel reported a net loss of $116,953 in 2000 compared
to a profit of $19,795 for the same period in 1999.

         Operating costs, including staff costs, depreciation and amortization,
totaled $15,502,535 for fiscal 2000, compared to $10,791,482 for fiscal 1999.
The increase in operating costs is primarily due to the impact of options
granted to staff and directors to subscribe to a share capital increase
(approximately $1.7 million, which for accounting purposes are considered
commpensatory in nature), restructuring costs as well as changes made in the
Onyx operating structure including the launch of Onyx+ and the Onyx web site,
ONYXNet.

         Depreciation and amortisation for fiscal year 2000 was $1,508,445
compared to $1,089,381 for fiscal 1999.

         Financial expense for fiscal year 2000 was $701,323 including an
exchange loss of $443,993, compared to $11,648,371 for fiscal 1999, a decrease
of $10,967,048. This decrease is primarily due (i) to lower interest fees as the
Company was essentially funded through issuance of shares, and (ii) to lower

                                       20
<PAGE>

exchange losses as these losses were finally neutralized in October 2000
pursuant to the repayment of substantially all intercompany loans.

         As a result of the above factors, the Company had a loss from
operations of $13,094,754 for the year ended December 31, 2000, compared to a
loss of $17,878,824 for the same period in 1999, a decrease of $4,784,070,
despite the significant losses associated with the restructuring costs and
resulting from the launch of Onyx+ and ONYXNet.

         The net loss per share for fiscal 2000 (basic and diluted) was $0.43,
compared to a net loss per share (basic and diluted) of $2.32 for fiscal 1999.
Weighted average shares outstanding (basic and diluted) were 30,670,751 for 2000
compared to 7,707,446 for 1999.

         As described in the Notes to the Financial Statements, a Stockholder's
Meeting was held on October 22, 1999, which resolved to effect a reverse split
of the Company's authorized capital on a one share for ten shares basis.
Accordingly, all references to the Company's shares of Common Stock are on a
post-split basis. The authorized capital of the Company remains 50,000,000
shares of Common Stock.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

         GENERAL

         The ownership, development and operation of media interests, and
particularly the operation of a television station, requires substantial capital
investment. To date, we have financed our capital requirements through sales of
our equity securities and through debt financing. Since inception through
December 31, 2000, we have incurred an accumulated deficit of approximately
$79.2 million, principally related to the launch and operation of Onyx. At
December 31, 2000, we had a negative working capital of $9.2 million and a
negative net worth of $6.5 million.

         Despite the Company's decision to restructure its Media activities and
to divest its Technology activities and related assets, the Company will require
significant financing over the next twelve months in order to remain a
going-concern, the amount of which will depend in part on the revenues generated
by the Company. There can be no assurance that the Company will be successful in
securing the necessary funds to finance its operation through 2001.

         SUBSIDIARIES

                   Onyx

         In a meeting held on September 25, 2000, the Board authorized a 38.9
million Euros capital injection into Onyx to be fully paid by the Company. In
October 2000, 36.5 million Euros were paid by the Company into the capital
reserve of Onyx and 2.4 million Euros of new Onyx shares were subscribed to by
the Company. These funds were borrowed temporarily from AB Groupe. After this
capital increase, the Company directly holds 66.67% of Onyx, while its wholly
owned subsidiary, Capital Media (UK) Ltd ("CM(UK)"), owns 33.33% of Onyx.

         Onyx used the proceeds of this capital infusion to settle primarily all
of its outstanding debts, including its inter-company debt to CM (UK). CM (UK),
in turn, used a substantial portion of these proceeds to repay its inter-company
debt due to the Company reducing CM (UK)'s indebtedness by more

                                       21
<PAGE>

than 80%. The executive officers and directors of the Company received a release
and were indemnified by the Company in connection with this debt reorganization.

                  Unimedia

         During an Extraordinary Meeting held on June 26, 2000, the Unimedia's
stockholders resolved to increase the capital stock of Unimedia by up to 12.3
million French Francs through the issuance of 123,020 new shares at a price of
100 French Francs per share, payable either in cash or by compensation of
existing loans. A subscription right to purchase an additional Unimedia share
was attached to each existing share. The Company exercised all of its
subscription rights and subscribed to 123,020 newly issued shares for a total
purchase price of 12,302,000 French Francs. The Company now holds 133,058
Unimedia shares, representing 98.33% of the outstanding capital stock of
Unimedia.

                  TopCard

         During an Extraordinary Meeting held on March 3, 2000, Topcard's
stockholders approved an increase in the capital stock of TopCard by up to 6
million French Francs through the issuance of 60,000 new shares at a price of
100 French Francs per share, payable either in cash or by compensation of
existing loans. A subscription right to purchase 7.46 shares of TopCard was
attached to each existing share. Unimedia exercised all its subscription rights
and subscribed 53,982 new issued shares for a total purchase price of 5,398,200
French Francs. Unimedia now holds 61,215 TopCard shares, representing 98.66% of
the outstanding capital stock of TopCard.

         EQUITY OFFERINGS BY THE COMPANY SINCE JANUARY 1999

         During the first half of 1998, Unimedia sold 154,000 shares of our
Common Stock to Gralec Establishment for an aggregate purchase price of
$500,000. We have registered the shares of Common Stock transferred to Gralec
pursuant to a registration rights agreement. We, however, failed to register the
Common Stock by November 30, 1999, as required under the registration rights
agreement. In order to extend the period during which registration of the Common
Stock could be completed, we agreed to (i) sell Gralec Establishment 220,000
shares of Common Stock for a purchase price equal to the net proceeds from the
sale of certain shares held by Unimedia (50,000 ActivCard shares), and (2) grant
Gralec Establishment an option to purchase 600,000 shares of our authorized but
unissued Common Stock at an exercise of $1.00 per share during a period of nine
(9) months. These additional shares and shares underlying the option have also
been registered. On January 19, 2000, all shares and options granted to Gralec
were effectively registered and the nine-month exercise period for the options
started on February 19, 2000 and ended on November 19, 2000. These options were
not exercised.

         As of the date of the Form 10-KSB, Unimedia continues to own 166,791
shares of our Common Stock, including 60,000 shares which have been pledged by
Unimedia to Bank Hapoalim to secure Unimedia's guarantee to that bank of certain
indebtedness of Pixel.

         In March 1999, AB Groupe agreed to fund an additional $6.0 million to
Capital Media for working capital, including the funds required to complete the
settlement of the Instar loan. Such amount was to be funded over a one-year
period in exchange for Common Stock valued for these purposes at $1.00 per
share.

                                       22
<PAGE>

         In May 1999, AB Groupe and Superstar Ventures ("Superstar"), which is
beneficially owned by one of our Directors, David Ho, made a loan to Capital
Media in the aggregate amount of $300,000, the proceeds of which were used to
fund the settlement of the Fontal loan. The loan is due in two years and bears
interest at the rate of 10% per annum. In connection with the loan, Capital
Media granted the lenders a two-year warrant to purchase 300,000 shares of the
Common Stock at an exercise price of $1.00 per share.

         In September 1999, AB Groupe provided a guarantee to a bank for half of
a DM 3 million (approximately $1.6 million) bank facility obtained by Onyx. In
connection with the guarantee, we granted AB Groupe a warrant exercisable for
two years to purchase 810,000 shares of Common Stock at an exercise price of
$1.00 per share. In the event the bank guarantee is called upon, we will be
obligated to issue to AB Groupe such number of shares of Common Stock at $1.00
per share as is equal to the amount paid by AB Groupe under its guarantee.

         On October 27, 1999, $22.6 million, which represented substantially all
of the convertible debt due to AB Groupe and Superstar, was converted into
Common Stock. Following conversion, AB Groupe and David Ho (who beneficially
owns Superstar) owned 50.4% and 34.0%, respectively, of our outstanding Common
Stock. In December 1999, AB Groupe received an additional 841,584 shares of
Common Stock in consideration for (i) $400,000 for services provided (ii)
$120,000 cash advanced in November and December 1999 under the August 1998
agreement described above, (iii) $200,000 paid with respect of the settlement of
the Instar Loan and (iv) $121,584 of cash received. In March 2000, AB Groupe
received an additional 700,000 shares of Common Stock in consideration for
$600,000 services provided under the August 1998 agreement described above and
$100,000 being the final Instar Loan installment made by AB Groupe on our behalf
under the March 1999 agreement described above.

         In December 1999, AB Groupe made a loan to the Company of $500,000 for
general working capital purposes. The loan is due in December 2001 and bears
interest at the rate of ten percent (10%) per year. In connection with the loan,
the Company granted AB Groupe a warrant exercisable until December 2001 to
purchase 500,000 shares of Common Stock at an exercise price of $1.00 per share.

         In January 2000, AB Groupe and Superstar made loans to the Company in
the aggregate of $1,000,000. The proceeds were in part used to increase the
capital investments in Onyx by $465,000 and TopCard (through Unimedia) by
$225,000. The loan is due in January 2002 and accrues interest at the rate of
ten percent (10%) per year. In connection with the loan, the Company granted AB
Groupe and Superstar a warrant exercisable until January 2002 to purchase
1,000,000 shares of the Common Stock at an exercise price of $1.00 per share.

         In March 2000, AB Groupe loaned the Company an additional $1,000,000
for working capital. The loan is due in March 2002 with interest of ten percent
(10%) per annum. In connection with the loan, we granted AB Groupe a warrant
exercisable in March 2002 to purchase 1,000,000 shares of Common Stock at an
exercise price of $1.00 per share.

         In March 2000, the Company granted the right to purchase up to 6.5
million shares on or before December 31, 2000 to certain shareholders including
the management as detailed below:

                                       23
<PAGE>

<TABLE>
<CAPTION>
  Purchase Price        Gilles Assouline     Michel Assouline   Jean-Francois Klein   David Ho          Total
<S>                        <C>                  <C>                  <C>             <C>              <C>
$1 per share                 750,000            1,100,000              750,000         750,000        3,350,000
$1.50 per share              250,000              300,000              250,000         250,000        1,050,000
$2 per share                 250,000              300,000              250,000         250,000        1,050,000
$2.50 per share              250,000              300,000              250,000         250,000        1,050,000
                           ---------            ---------            ---------       ---------        ---------
Total                      1,500,000            2,000,000            1,500,000       1,500,000        6,500,000
                           =========            =========            =========       =========        =========
</TABLE>

        The terms and conditions of this proposed share issuance were
recommended by the audit committee of the Company's board on March 17, 2000. In
concluding this price to be the fair value for the shares, the audit committee
took into consideration the level of funding of the Company required until the
end of 2000 and the poor level of trading activity of the Company's shares on
the market (making, in their view, the market price of the Common Stock
unreliable as a factor in determining value).

        The Board held a meeting on April 21, 2000 and authorized the issuance
of up to 500,000 shares to each of AB Groupe and Superstar at $1.50 each prior
to the end of July 2000. Of these shares, 780,000 shares were effectively issued
and paid. AB Groupe and Superstar purchased 480,000 new shares and 300,000
shares respectively, out of which an aggregate number of 280,000 shares were
effectively subscribed prior to June 30, 2000 and 500,000 shares were
effectively subscribed in July 2000.

         In May 2000, the Board proposed to issue 1,000,000 Company shares to
Roger Orf, a director of the Company, at a purchase price of $2.50 per share
prior to July 31, 2000. Roger Orf did not purchase these shares.

         In August 2000 and in September 2000, AB Groupe sent $278,123 (DM
600,000) and $133,509 (DM 300,000) respectively on behalf of the Company for
same to participate in a capital increase in Onyx.

         On September 25, 2000 the Board of the Company authorized a euro 38.9
million capital injection into Onyx to be funded through (i) a short term loan
from AB Groupe in the amount of euro 36,200,000 and (ii) the exercise by AB
Groupe of 2.6 million vested warrants at $1 each resulting in the issue of 2.6
million new shares of the Company's Common Stock pursuant to an agreement
entered between the Company and AB Groupe on October 20, 2000. 36.5 million
Euros were wired by the Company into the Onyx capital reserve and 2.4 million
Euros of new Onyx shares were subscribed by the Company for a total funding
consideration of 38.9 million Euros in the aggregate. After this capital
increase, the Company directly owned 66.7% of Onyx while its wholly owned
subsidiary CM (UK), owned 33.33% of Onyx.

         On September 25, 2000, Superstar also exercised 650,000 warrants and
650,000 shares of Common Stock were issued by the Company to Superstar.

         In October 2000, FA Television Holdings LLC, a joint venture Company
among Allied Capital, Gilles Assouline and Michel Assouline, subscribed for the
purchase of 480,000 shares of the Company at $1.50 each and 120,000 shares at
$1.00 for an aggregate purchase price of $840,000 with all such shares being
issued from the 6.5 million shares reserved for certain shareholders including
the management in March 2000. In October 2000, 600,000 new shares of the Company
were issued to FA Television Holdings LLC. By a board decision of September 25,
2000, the Company agreed to register these shares.

         In December 2000, AB Groupe notified the Company that it had decided
not to exercise the 2.6 million warrants at $1 as scheduled in the agreement
dated October 20, 2000. The Company disputes this and believes that an agreement
had been reached with AB Groupe for the exercise of the 2.6 million warrants at
the time the funds were received. However, until the dispute is settled, the
$2.6 million received from AB Groupe is being treated as a loan in the Company's
accounts.


                                       24
<PAGE>

         In February 2001, the Company accepted a funding proposal from AB
Groupe to loan the Company $800,000, which funds were required to support the
Company's operations. The loan bears interest at 10% per annum and was due on
April 30, 2001. Since the loan was not repaid by that date, it is convertible
into shares of Common Stock at a conversion price of US $0.60 per share. The
Company is currently exploring alternative funding solutions and available
capital formation options to repay this loan and to otherwise meet the Company's
working capital requirements.

         David Ho a director and 31.3% beneficial owner of the Company, has
disputed certain recent actions taken by the Company and the propriety of
certain recent actions taken by AB Groupe with respect to the Company, including
actions relating to the management, the funding and the operations of the
Company and to the provision of services to the Company (including charges
therefor). AB Groupe strongly disagrees with David Ho's allegations. The
Company, AB Groupe and David Ho have discussed these issues in an effort to
resolve them to the satisfaction of all parties. To date, this dispute has not
been resolved but has not resulted in any litigation. However, there can be no
assurance that litigation will not result in the future nor that this dispute
will not have an adverse impact on the Company.

         AB Groupe and David Ho currently beneficially own 53.60% and 31.29%
respectively, of the 33,203,251 shares outstanding of Common Stock as at
December 31, 2000.

         LIQUIDITY AND CAPITAL RESOURCES

         The Company believes that additional capital will be required, along
with anticipated revenues, to fund operations for the next 12 months. The
Company will seek funding from its principal shareholders and other sources,
although there can be no assurance that the necessary funding will become
available, particularly in light of certain disputes (see above). Further,
required amounts of funding will be impacted in part by the level of revenues
achieved, particularly at Onyx. The Company will likely issue additional shares
of Common Stock, or shares of the capital stock of its subsidiaries, or
additional debt instruments, to meet its working capital requirements.

                                       25
<PAGE>

                                    BUSINESS

<TABLE>
<CAPTION>
ITEM 6.  FINANCIAL STATEMENTS
                                                                                                        PAGE
-------------------------------------------------------------------------------------------------------------
<S>                                                                                                     <C>
Years ended December 31, 2000 and 1999
         Independent Accountant's Report of PricewaterhouseCoopers to the Board of Directors and
                  Stockholders of Capital Media Group Limited...................................        F-2
         Consolidated Balance Sheet at December 31, 2000 and 1999...............................        F-3
         Consolidated Statement of Operations for the years ended December 31, 2000 and 1999....        F-4
         Consolidated Statement of Changes in Stockholders' Equity for the years ended December
                  31, 2000 and 1999.............................................................        F-5
         Consolidated Statement of Cash Flows for the years ended December 31, 2000 and 1999....        F-6
         Notes to the Consolidated Financial Statements.........................................        F-7
</TABLE>

                                       26
<PAGE>

                                    PART III

ITEM 7.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

         The following persons presently serve as our directors and executive
officers:

NAME                      Age       Position
----                      ---       --------
Gilles Assouline          45        Chairman, President, Chief Executive Officer
Jean-Francois Klein       35        Director and Chief Financial Officer
Michel Assouline          41        Director
Claude Berda*             54        Director
Denis Bortot*             47        Director
Jean-Michel Fava*         54        Director
David Ho                  51        Director
Patrick Ho                44        Director
Richard Maroko*           36        Director
Orla Noonan*              31        Director
Roger Orf                 49        Director

* These persons were designated by AB Groupe to serve as directors and were
elected to the Board on December 26, 2000. Each such person is an affiliate of
AB Groupe and serves as a nominee of AB Groupe.

BUSINESS EXPERIENCE OF DIRECTORS AND EXECUTIVE OFFICERS

         Gilles Assouline was, along with his brother, Michel Assouline, a
founder of Unimedia in July 1995. Prior thereto, for more than five years,
Gilles Assouline was the founder and managing director of several consulting,
software and media companies. See "Certain Relationships and Related
Transactions."

         Michel Assouline was a founder of Unimedia in July 1995. Prior to July
1995, for more than five years, he was employed by Thomson-CSF in various
executive capacities, including having responsibility for business development
at the corporate level. See Item 10 "Certain Relationships and Related
Transactions."

         Claude Berda is the controlling shareholder of AB Groupe. He has held
the position of Chairman and Chief Executive Officer of the company since its
inception in 1977.

         Denis Bortot is Director, Executive Vice President and Chief Operating
Officer of AB Groupe. He joined AB Groupe in 1985.

         Jean-Michel Fava is Executive Vice President of AB Groupe responsible
for Marketing and Press Relations for the thematic channels business. He joined
AB Groupe in 1990.

         David Ho is the founder of Caltex South China Investments Limited and
holds the position of Executive Vice Chairman of this petroleum firm, where he
has been employed for more than the last five years. Mr. Ho, through a private
venture capital fund, also has interests in other Asia Pacific companies with
extensive interests in manufacturing, leisure, construction, meat processing and
real estate. Mr. Ho is

                                       27
<PAGE>

also a director of Regency Worldwide Holdings Limited. See "Certain
Relationships and Related Transactions."

         Patrick Ho is the President of Caltex South China Investments Limited,
where he has been employed for more than the last five years. Mr. Ho is also a
director of Regency Worldwide Holdings Limited. Patrick Ho is the brother of
David Ho. See "Certain Relationships and Related Transactions".

         Jean-Francois Klein has been employed by AB Groupe for more than the
last five years and is currently Executive Vice President and Chief Financial
Officer of AB Groupe. See "Certain Relationships and Related Transactions."

         Roger Orf is Managing Director and founding partner of Pelham Partners
Ltd, a Real Estate company located in London, England and controlling over $5.5
billion of property and corporate investments throughout Europe. Roger Orf is
the former head of the European Real Estate Department of Goldman Sachs & Co.

         Richard Maroko is Executive Vice President of AB Groupe with
responsibility for Programming and Rights Acquisitions. Mr Maroko joined AB
Groupe in 1996. He previously worked at Multithematiques where he was
responsible for programming acquisitions.

         Orla Noonan is Executive Vice President and Secretary of AB Groupe. She
joined AB Groupe in 1996 with responsibility for business development and
investor relations. She was appointed to her current position in 1999. Orla
Noonan previously worked at Salomon Brothers International.

COMMITTEES OF THE BOARD

         Our Board of Directors has established Committees to assist it in the
discharge of its responsibilities. These Committees, their principal
responsibilities, and the current members of each are described below.

         AUDIT COMMITTEE. The Audit Committee, which consists of David Ho,
Patrick Ho and Jean-Francois Klein, recommends the firm to be appointed as
independent accountants to audit our financial statements and to perform
services related to the audit, reviews the scope and results of the audit with
the independent accountants, reviews with management and the independent
accountants our year-end operating results and considers the adequacy of our
internal accounting procedures.

         COMPENSATION COMMITTEE. The Compensation Committee, which consists of
David Ho, Patrick Ho and Jean-Francois Klein, reviews and recommends the
compensation arrangements for all directors and officers and approves such
arrangements for other senior level employees.

                                       28
<PAGE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         To our knowledge, no compensation committee interlocks currently exist
between our management and its directors.

BOARD COMPENSATION

         On March 10, 1998, the Board of Directors granted options to purchase
an aggregate of 400,000 shares of Common Stock at an exercise price of $3.50 per
share (the fair market value of Common Stock on the date of grant). Messrs.
Gilles Assouline, our Chairman and Chief Executive Officer, Michel Assouline,
our then Chief Operating Officer, Stephen Coleman, our then Chief Financial
Officer and Barry Llewellyn, our then Vice President and a Director, were each
granted options to purchase 100,000 shares.

         Of each 100,000 share option grant, options to purchase 20,000 shares
vested immediately, with the remaining options vesting in equal portions over
the next three years (in that regard, 80,000 and 26,668 of the options which
were issued to Mr. Llewellyn and Mr. Coleman respectively have lapsed due to
their resignations in September 1998 and January 2000).

         Additionally, on the same date, each of our non-employee directors was
granted an option to purchase 10,000 shares of Common Stock at an exercise price
of $3.50 per share. An aggregate of options to purchase 50,000 shares were
granted to our non-employee directors. These options vested immediately.

         In January 2000, three of our directors, Gilles Assouline, Michel
Assouline and David Ho, were each granted 250,000 warrants to purchase Common
Stock and another director, Jean-Francois Klein, was granted 650,000 warrants to
purchase Common Stock. The warrants to Purchase Common Stock are exercisable for
a three-year period at an exercise price of $1.00 per share. The warrants were
granted for their services to the Company. No other directors received
compensation for their service as a director. The directors are also reimbursed
for travel expenses incurred in attending meetings of the Board of Directors and
its committees.

         In March 2000, the Board of Directors granted the right to purchase up
to 6.5 million shares on or before December 31, 2000 to certain of its directors
at prices ranging from $1 to $2.50 per share. Gilles Assouline designated a
portion of these warrants to FA Television Holdings LLC. See Item 10. "Certain
Relationships and Related Transactions." The balance of these warrants expired
unexercised at the end of 2000.

CONSULTANTS

         Stephen Coleman our former Chief Financial Officer resigned on January
31, 2000 and acted as consultant for the period from February until May 2000. He
received $47,257 in compensation for his services for this period.

         Anne-Marie Assouline acts as consultant on behalf of Menkar SA
("Menkar"). Since September 1, 1999, the Company has signed a consulting
contract with Menkar whereby in compensation with services rendered by
Anne-Marie Assouline, the Company pays to Menkar a monthly fee of $6,745.
Anne-Marie Assouline is a former director of Unimedia.

                                       29
<PAGE>

BOARD MEETINGS

         The Board of Directors of the Company held a total of 8 meetings during
the fiscal year ended December 31,2000. Each of the directors attended at least
75% of the aggregate number of meetings of the Board of Directors.

FAMILY RELATIONSHIPS

         Gilles Assouline, the Company's Chairman of the Board, President and
Chief Executive Officer, and Michel Assouline, both members of Board, are
brothers. Anne-Marie Assouline acting as a consultant is Gilles Assouline's
wife.

         David Ho and Patrick Ho both directors of the Company are brothers.

COMPLIANCE WITH SECTION 16(a)

         The Company's officers, directors and more than 10% holders are
required to make filings with the SEC on Forms 3, 4 and, if required, 5 under
Section 16(a) of the Securities Exchange Act of 1934, to report their beneficial
ownership of the Company's securities at the time they became officers,
directors and more than 10% stockholders of the Company, and each month
thereafter that such ownership changes. All of the Company's current officers,
and all of the Company's current directors have made all of their required
filings for 1999 and for periods prior thereto. Based upon the information
available to the Company, all of the holders who are believed to own
beneficially more than 10% of the Company's outstanding shares have made their
required filings for 1999 and for periods prior there to. All of the filings
required of all of the Company's current officers, directors and more than 10%
stockholders relating to periods subsequent to December 31, 1999 will be filed
in the near future.

ITEM 8.  EXECUTIVE COMPENSATION.

SUMMARY COMPENSATION TABLE

         The following table sets forth information about the compensation paid
or accrued during 2000 to the Company's Chief Executive Officer and to each of
the other most highly compensated executive officers of the Company whose
aggregate direct compensation exceeded $100,000.


                                       30
<PAGE>

<TABLE>
<CAPTION>
                            SUMMARY COMPENSATION TABLE
                                 ANNUAL COMPENSATION                                LONG TERM
                                                                                   COMPENSATION
                                                                    Other Annual                        All Other
Name                          Year       Salary        Bonus        Compensation         Options      Compensation
                                          ($)           ($)             ($)                (#)             ($)
<S>                           <C>       <C>             <C>             <C>             <C>             <C>
Gilles Assouline              2000      250,000         --              --                    --              --
                              1999      250,000         --              --                    --              --
                              1998      250,000         --              --               100,000              --

Michel Assouline              2000      200,000         --              --                    --         250,000 (1)
                              1999      200,000         --              --                    --              --
                              1998      200,000         --              --               100,000              --

<FN>
(1)      Mr. Michel Assouline had an arrangement with the Company to serve as
         its Chief Operating Officer, General Manager of Onyx and Director of
         CM(UK) under which he was entitled to an annual base salary of
         $200,000. In January 2001, Michel Assouline retired as an employee and
         received a severance payment of $250,000.
</FN>
</TABLE>

OPTION GRANTS DURING LAST FISCAL YEAR

         No options to purchase shares of the Company's Common Stock were
granted to those persons named in the Summary Compensation Table during 2000 in
these notes as employees of the Company. For information regarding certain
rights which were granted to purchase share which were not exercised see Item 5
"Management Discussion - Financial Condition, Liquidity and Capital Resources".

AGGREGATED OPTIONS EXERCISED, LAST FISCAL YEAR END OPTION VALUES

         The following table sets forth information concerning the exercise of
stock options to purchase shares of Common Stock during the 2000 fiscal year and
the value of unexercised stock options to purchase shares of Common Stock at the
end of the 2000 fiscal year for the persons named in the Summary Compensation
Table.

<TABLE>
<CAPTION>
                                                                        Number of            Value of Unexercised
                                                                   Unexercised Options     In-the-Money Options at
         Name                                                       At Fiscal Year End      Fiscal Year End ($) *
------------------------                                         ------------------------- -------------------------
                           Number of Shares
                             Acquired on
                               Exercise       Value Realised ($) Exercisable/Unexercisable Exercisable/Unexercisable
                          ------------------- -----------------  ------------------------- -------------------------
<S>                               <C>                 <C>             <C>                            <C>
Gilles Assouline......            --                  --              62,666/57,314                  0/0
Michel Assouline......            --                  --              60,666/56,834                  0/0

<FN>
*        Computed based upon the difference between the closing price of CMG
         Common Stock at December 31, 2000 and the exercise price. No value has
         been assigned to options, which are not in-the-money.
</FN>
</TABLE>

EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS

         The Company entered into employment agreements with Gilles Assouline
and Michel Assouline, effective August 1, 1997 and automatically renewed in
September 2000, providing for them to receive the following compensation for
their services on the Company's behalf: (i) annual base compensation of


                                       31
<PAGE>

$250,000 and $200,000, respectively; (ii) 6 weeks paid holiday, (iii) such bonus
compensation as determined by the Board in its discretion; (iv) a grant of
20,000 and 17,500 shares, respectively, of Common Stock; (v) options to purchase
an additional 20,000 and 17,500 shares of Common Stock at the fair market value
of the Common Stock on the date of grant ($5.70); and (vi) such benefits as are
provided generally to the executive management of the Company. The agreements
also provide that Gilles Assouline and Michel Assouline shall be paid a minimum
of US $250,000 and US $200,000 respectively if they are breached or terminated
prior to one-year notice period. In December 2000, Michel Assouline was
requested to resign and received in January 2001 a $250,000 severance payment.
Mr. Assouline also received a release from the Company upon his resignation.

         Mr. Coleman had an arrangement with the Company to serve as its Chief
Financial Officer, under which he was entitled to an annual base salary of
$200,000 after December 31, 1997 until January 2000. Mr. Coleman resigned on
January 31, 2000 and has received $70,000 in compensation under his service
agreement for consulting work performed for the Company.

STOCK OPTIONS

         On December 18, 1998, the Board approved the grant of a two-year
warrant to purchase an aggregate of 1.6 million shares at an exercise price of
$1.00 per share to Diamond Productions, an entity controlled by Gilles Assouline
and Michel Assouline. This warrant was approved at the Stockholder's Meeting
held on October 22, 1999. The warrant has now been extended until December 18,
2001.

                                       32
<PAGE>

ITEM 9.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         As of the date of this Form 10-KSB, 33,203,251 shares of Common Stock
were outstanding, including 166,791 shares (of which 60,000 shares are pledged
as security by Unimedia to support its guaranty of debt of Pixel, Ltd. due to a
financial institution) owned by our 98.33% owned subsidiary, Unimedia. The
following table sets forth, as of such date, the share ownership of Common Stock
by (i) each person who owns beneficially more than 5% of our outstanding Common
Stock; (ii) each of our directors and executive officers; and (iii) all of our
directors and executive officers as a group:

<TABLE>
<CAPTION>
                                                                    SHARES                   PERCENT OF
                                                                 BENEFICIALLY            OUTSTANDING COMMON
                 NAME OF BENEFICIAL OWNER                            OWNED                     STOCK
-----------------------------------------------------------   ---------------------     ---------------------
<S>                                                                <C>                          <C>
Gilles Assouline (1)                                                2,882,000                    7.02%
Michel Assouline (2)                                                  367,500                    0.89%
David Ho (3)                                                       10,649,983                   25.93%
Jean-Francois Klien (4) (5)                                           838,570                    2.04%
Patrick Ho                                                                  0                    *
Group AB (6)                                                       21,265,792                   51.78%
Claude Berda (4) (6)                                               21,444,362                   52.21%
Denis Bortot                                                                0                    *
Jean-Michel Fava                                                            0                    *
Richard Maroko                                                              0                    *
Orla Noonan                                                                 0                    *
Directors and Executive Officers as a group (5 persons)(7)         36,003,845                   87.66%
</TABLE>

*        Less than 1%.

(1)      Includes shares owned of record by three entities, Diamond Productions,
         Multimedia Investments ("MMI") and FA Television Holding LLC. Gilles
         Assouline, our President and Chief Executive Officer, controls the
         power to vote and dispose of the shares of Common Stock owned by these
         entities, and may therefore be deemed to be the beneficial owner of
         these shares for U.S. securities law purposes. Also includes vested
         options and warrants to purchase 1,974,000 shares of Common Stock.

(2)      Vested options and warrants to purchase 371,000 shares.

(3)      Substantially all of these shares are owned of record by two entities
         controlled by Mr. Ho, Unbeatable and Superstar. Also includes vested
         options and warrants to purchase 260,000 shares.

(4)      Includes 178,570 shares owned of record by two entities, BIMAP and
         Media Venture. Mr. Klein co-controls (with Mr. Berda) the power to vote
         and dispose of the shares of Common Stock owned by these entities, and
         may therefore be deemed to be a beneficial owner of these shares for
         U.S. securities law purposes. However, the ultimate benefit from the
         shares owned of record by these entities and MMI (an entity partially
         held by BIMAP owned by Claude Berda and of which Gilles Assouline is
         the Chairman) is held by Claude Berda who is also an officer, director
         and principal shareholder of AB Groupe. See "Certain Relationships and
         Related Transactions" and footnote (6) below. Also includes vested
         options and warrants to purchase 660,000 shares.

(5)      While Mr. Klein serves as an executive officer of AB Groupe, he
         disclaims beneficial ownership over the shares and warrants owned by AB
         Groupe. See footnote (6) below.

(6)      17,798,453 shares are owned by AB Groupe. Bimap and Media Venture own
         collectively 178,570 shares. Also includes AB Groupe's warrants to
         purchase (i) 180,000 shares of Common Stock at an exercise price of
         $40.00 per share, (ii) 3,287,339 shares of Common Stock at an exercise
         price of $1.00 per share. Mr. Berda is deemed to be the beneficial
         owner of the shares and warrants owned by AB Groupe by virtue of his
         being a principal stockholder, officer and director of that entity,
         although he only benefits from his proportionate share of such
         securities. He is also deemed to be the beneficial owner of the shares
         owned by Bimap and Media Venture.

(7)      Includes vested warrants and options to purchase an aggregate of
         6,724,839 shares.


                                       33
<PAGE>

ITEM 10. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.


         In October 1998, we entered into a two-year services agreement (the
"Services Agreement") with AB Groupe under which AB Groupe has provided
technical services to Onyx, including, among other services: (1) the use of
transponder capacity on a EUTELSAT satellite, (2) uplink facilities, (3) all
transmission services to the cable head ends of each of the German cable
television networks over which our programming is broadcast, and (4) the use of
a master control room and other transmission facilities required to operate
Onyx. Additionally, we received $60,000 per month in cash from AB Groupe which
we used to pay the transmitting costs of our broadcast signal over telephone
lines to decoders at the cable ends. In return for these services and these cash
payments, we issued 260,000 shares of Common Stock per month (having an agreed
value of $260,000 to AB Groupe) until September 30, 2000.


         In May 1999, AB Groupe and Superstar loaned us an aggregate of
$300,000, the proceeds of which were used to fund the settlement of the Fontal
loan. The loan is due in two years and bears interest at the rate of 10% per
annum. In connection with the loan, we granted the lenders a warrant exercisable
for two years to purchase 300,000 shares of Common Stock at an exercise price of
$1.00 per share.


         In July 1999, we received a letter from Gilles Assouline, our Chairman,
President and CEO, Anne-Marie Assouline (the wife of our chairman), and an
entity controlled by Mr. and Mrs. Assouline, Diamond Productions, alleging
claims under the Agreement and Plan of Reorganization, dated March 4, 1997, as
amended, between Capital Media, Unimedia, S.A. and certain of the stockholders
of Unimedia. Additionally, on July 30, 1999, two of our directors notified
Diamond, Gilles Assouline and Michel Assouline (our Vice President and COO) that
we were asserting a protective claim against each of them under the Unimedia
agreement until the claims raised in the letter could be considered.


         After consideration of these matters, our Board and the claimants
concluded that these disputes held the potential of leading the parties into
substantial and damaging litigation. As a result, the Board and the claimants
determined that the best interests of the Company would be served by resolving
these issues at this stage. On September 22, 1999, we entered into a settlement
agreement with Diamond, Gilles Assouline, Michel Assouline and Anne-Marie
Assouline under which the asserted claims were withdrawn and we and the
Assoulines exchanged mutual releases. As part of the settlement, we also
provided the Assoulines with a full indemnity for all claims which may arise in
the future from third parties relating to the Unimedia share exchanges and
subscriptions and with a general release through the date of the settlement
agreement.


         In August 1999, AB Groupe made a loan to us in the aggregate amount of
$327,339, the proceeds of which were used to fund the settlement of the
outstanding amounts due to KPN Telecom. See Item 5 "Management's Discussion and
Analysis-Financial Condition, Liquidity and Capital Resources." The loan is due
in August 2001 and bears interest at the rate of 10% per annum. In connection
with the loan, we granted AB Groupe a warrant exercisable until August 2001 to
purchase 327,339 shares of Common Stock at an exercise price of $1.00 per share.


         In September 1999, AB Groupe provided a guarantee to a bank for DM 1.6
million (approximately $820,000) against a DM 3 million (approximately $1.54
million) bank facility granted to Onyx. In connection with the guarantee, we
granted AB Groupe a two year warrant to purchase approximately 810,000 shares of
Common Stock at an exercise price of $1.00 per share. In the event that the bank
guarantee is called upon, then we are obligated to issue to AB Groupe such
number of shares of Common Stock at an exercise price of $1.00 per share as are
equal to the amount called upon to repay by AB Groupe.


         On October 27, 1999, $22.6 million, which represented substantially all
of the convertible debt due to AB Groupe and Superstar, was converted into
Common Stock. Following conversion, AB Groupe and David Ho (who controls
Superstar) owned 50.4% and 34.0%, respectively, of our outstanding Common Stock.
In December 1999, AB Groupe received an additional 841,584 shares of Common
Stock in consideration for (i) $520,000 of cash and services provided in
November and December 1999 under the August 1998 agreement described above, (ii)
$200,000 paid in respect of the Instar Loan and (iii) $121,584 of cash received.
In March 2000, AB Groupe received a further 700,000 shares of Common Stock in
consideration for $600,000 received for services provided in the first quarter
of year 2000 under the August 1998 agreement described above and $100,000 being
the final Instar Loan payments made by AB Groupe on our behalf under the March
1999 agreement described above.


         In December 1999, AB Groupe made a loan to the Company of $500,000 for
general working capital purposes. The loan is due in December 2001 and bears
interest at the rate of ten percent (10%) per

                                       34
<PAGE>

year. In connection with the loan, the Company granted AB Groupe a warrant
exercisable until December 2001 to purchase 500,000 shares of Common Stock at an
exercise price of $1.00 per share.

         In January 2000, AB Groupe and Superstar made loans to the Company in
the aggregate of $1,000,000. The proceeds were in part used to increase the
capital investments in Onyx by $465,000 and TopCard (through Unimedia) by
$225,000. The loan is due in January 2002 and accrues interest at the rate of
ten percent (10%) per year. In connection with the loan, the Company granted AB
Groupe and Superstar a warrant exercisable until January 2002 to purchase
1,000,000 shares of the Common Stock at an exercise price of $1.00 per share.

         In March 2000, AB Groupe loaned the Company an additional $1,000,000
for working capital. The loan is due in March 2002 with interest of ten percent
(10%) per annum. In connection with the loan, the Company granted AB Groupe a
warrant exercisable until March 2002 to purchase 1,000,000 shares of common
stock at an exercise price of $1.00 per share.

         In March 2000, the Company granted the right to purchase up to 6.5
million shares on or before December 31, 2000 to certain shareholders including
the management as detailed below:

<TABLE>
<CAPTION>
   Purchase Price       Gilles Assouline     Michel Assouline   Jean-Francois Klein   David Ho          Total
<S>                        <C>                  <C>                  <C>             <C>              <C>
$1 per share                 750,000            1,100,000              750,000         750,000        3,350,000
$1.50 per share              250,000              300,000              250,000         250,000        1,050,000
$2 per share                 250,000              300,000              250,000         250,000        1,050,000
$2.50 per share              250,000              300,000              250,000         250,000        1,050,000
                           ---------            ---------            ---------       ---------        ---------
Total                      1,500,000            2,000,000            1,500,000       1,500,000        6,500,000
                           =========            =========            =========       =========        =========
</TABLE>

         The terms and conditions of this proposed share issuance were
recommended by the audit committee of the Company's board on March 17, 2000. In
concluding this price to be the fair value for the shares, the audit committee
took into consideration the level of funding of the Company required until the
end of 2000 and the poor level of trading activity of the Company's shares on
the market (making, in their view, the market price of the Common Stock
unreliable as a factor in determining value). The difference between the fair
value of these options determined using the Black-Scholes Method and the
exercise price has been charged to income.

         On April 21,2000, the Board authorized the issuance of up to 500,000
shares to each of AB Groupe and Superstar at $1.50 each prior to the end of July
2000. Out of these, 780,000 shares were effectively issued and paid. AB Groupe
and Superstar purchased 480,000 new shares and 300,000 shares respectively, out
of which an aggregate number of 280,000 shares were effectively subscribed prior
to June 30, 2000 and 500,000 shares were effectively subscribed in July 2000.

         In May 2000, the Board proposed to issue 1,000,000 Company shares to
Roger Orf at a purchase price of $2.50 per share prior to July 31, 2000. Roger
Orf did not purchase these shares.

         In August 2000 and in September 2000, AB Groupe sent $278,123 (DM
600,000) and $133,509 (DM 300,000) respectively on behalf of the Company for
same to participate to a capital increase in Onyx.

         On September 25, 2000 the Board of the Company authorized a euro 38.9
million capital injection into Onyx to be funded through (i) a short term loan
from AB Groupe in the amount of 36,200,000 Euros and (ii) the exercise by AB
Groupe of 2.6 million warrants at $1 each resulting in the issue of 2.6 million
new shares of the Company's Common Stock pursuant to an agreement entered
between the Company and AB Groupe on October 20, 2000. 36.5 million Euros were
wired by the Company into the Onyx capital


                                       35
<PAGE>

reserve and 2.4 million Euros of new Onyx shares were subscribed by the Company
for a total funding consideration of 38.9 million Euros in the aggregate. After
this capital increase, the Company directly owns 66.7% of Onyx while its wholly
owned subsidiary CM (UK), owns 33.33% of Onyx.

         On September 25, 2000, Superstar also exercised 650,000 warrants and
650,000 shares of Common Stock were issued by the Company to Superstar.

         In October 2000, FA Television Holdings LLC, a joint venture Company
among Allied Capital, Gilles Assouline and Michel Assouline, subscribed for the
purchase 480,000 shares of the Company at $1.50 each and 120,000 shares at $1.00
for an aggregate purchase price of $840,000 with all such shares being issued
from the 6.5 million shares reserved for certain shareholders including the
management in March 2000. In October 2000, 600,000 new shares of the Company
were issued to FA Television Holdings LLC. By a Board decision of September 25,
2000, the Company agreed to register these shares.

         In December 2000, AB Groupe notified the Company that it had decided
not to exercise the 2.6 million warrants at $1 as scheduled in the agreement
dated October 20, 2000. The Company disputes this and believes that an agreement
had been reached with AB Groupe to exercise of the 2.6 million warrants at the
time the funds were received. However, until the dispute is settled, the $2.6
million received from AB Groupe is being treated as a loan in the Company's
accounts.

         On December 26, 2000, in response to a request from AB Groupe, the
Company's majority shareholder, the Board increased its size appointed the
following directors:

         -        Claude Berda, Chairman of AB Groupe,
         -        Denis Bortot, CEO of AB Groupe,
         -        Orla Noonan, Executive Vice President and Secretary of AB
                  Groupe,
         -        Richard Maroko, Executive Vice President of AB Groupe, and
         -        Jean-Michel Fava, Executive Vice President of AB Groupe.

         The appointment of these five new directors, together with
Jean-Francois Klein, CFO of AB Groupe and already a director of CMG, meant that
persons associated with AB Groupe held a majority of seats on our Board.

         On January 2, 2001, in connection with a decision to allow AB Groupe to
assume operational control of Onyx and Onyx +, Michel Assouline resigned as the
managing Director of Onyx and Onyx +. Jean-Francois Klein was then appointed
Managing Director of both Onyx and Onyx+. In January 2001, Orla Noonan and
Jean-Francois Klein from AB Groupe were appointed by the Board
Secretary-Director and Director of Capital Media (UK) Ltd, respectively.

         The accounts payables shown in our consolidated statements include (i)
a $600,000 invoice from AB Groupe to Onyx corresponding to broadcasting services
rendered after the termination of our service agreement with AB Groupe in
October, November and December 2000, and (ii) an invoice of approximately
$140,000 from AB Groupe to Onyx+ corresponding to certain management services.
These invoices have been disputed by certain of the Company's disinterested
directors. Therefore, although an agreement has been reached with AB Groupe
concerning these services for 2001, an agreement has yet to be reached regarding
these invoices. However, until such time as the dispute is resolved, these
amounts have been recorded as payables by the Company.

         The acquisition by Onyx + of programing rights purchased and invoiced
by AB Groupe during the course of 2000 was suspended in February 2001 following
the slower than expected development of the digital television market in
Germany. See Item 1. "Description of Business-Digital Cable Television."

                                       36
<PAGE>

         On February 26, 2001 the Board agreed that AB Groupe shall continue to
provide Onyx with broadcasting services, including the play out, the uplink and
the transponder facilities in exchange for a monthly payment of approximately
$80,000 throughout 2001. The Board also agreed that AB Groupe provide Onyx with
certain management services for approximately $15,000 per month. The Company
believes that the fees which will be paid to AB Groupe will be at least as
favorable as those that would be obtained by the Company from unaffiliated third
parties. At the Board meeting held to consider these matters, the Board
appointed Gilles Assouline, Michel Assouline and David Ho as a special committee
of independent directors to negotiate the terms and conditions of the service
and management agreements to be entered into between the Company and AB Groupe.

         On February 24, 2001, the Company accepted a funding proposal from AB
Groupe to loan the Company US $800,000, which funds were required to support the
Company's operations. The loan bears interest at 10% per annum and was due on
April 30, 2001. Since the loan was not repaid by that date, the loan is, at AB
Groupe's option, convertible into shares of common stock at a conversion price
of $0.60 per share. The Company is currently exploring alternative funding
solutions and available capital formation options to repay this loan and to
otherwise meet the Company's working capital requirements.

         David Ho, a director and 31.3% beneficial owner of the Company, has
disputed certain recent actions taken by the Company and the propriety of
certain recent actions taken by AB Groupe with respect to the Company, including
actions relating to the management, the funding and the operations of the
Company and to the provision of services to the Company (including charges
therefor). AB Groupe strongly disagrees with David Ho's allegations. The
Company, AB Groupe and David Ho have discussed these issues in an effort to
resolve them to the satisfaction of all parties. To date, this dispute has not
been resolved but has not resulted on any litigation. However, there is no
assurance that litigation will not result in the future nor that this dispute
will not have an adverse impact on the Company.

         Certain of our directors have disputed the Company's determination that
the 6.5 million options granted in 2000 were compensatory in nature or, even if
compensatory, whether they had any value. There can be no assurance as to the
impact of this dispute on the Company.

                                       37
<PAGE>

ITEM 11. EXHIBITS LIST AND REPORTS ON FORM 8-K.

         (a) Exhibits

         2.1.     Agreement and Plan of Reorganization, dated December 29, 1995,
                  by and among Cardinal Capital Corp. and the shareholders of
                  ECL (1).

         2.2      Agreement and Plan of Reorganization ("Agreement"), entered
                  into effective as of March 4, 1997 by and among the Company,
                  Unimedia S.A., a company organized under the laws of the
                  Republic of France and certain shareholders of Unimedia, S.A.
                  (incorporated by reference from the Company's Current Report
                  on Form 8-K, dated March 14, 1997).

         2.3      Amendment No. 1 to the Agreement, dated as of June 25, 1997
                  (incorporated by reference from the Company's Current Report
                  on Form 8-K dated June 25, 1997).

         2.4      Amendment No. 2 to the Agreement, dated as of July 11, 1997
                  (incorporated by reference from the Company's Current Report
                  on Form 8-K dated July 11, 1997).

         2.5      Amendment No. 3 to the Agreement, dated as of July 25, 1997
                  (incorporated by reference from the Company's Current Report
                  on Form 8-K dated July 11, 1997).

         3.1      Amendment to Articles of Incorporation (incorporated by
                  reference from the Company's Current Report on Form 8-K, dated
                  December 29, 1995).

         4.1      Certificate of Designations, Preferences and Rights of Series
                  A Preferred Stock (incorporated by reference from the
                  Company's Quarterly Report on Form 10-QSB for the quarter
                  ended June 30, 1997).

         4.2      Form of warrant issued in connection with Registrant's winter
                  1995/96 private placement of securities (1).

         4.3      Amendment to Articles of Incorporation, dated as of March 16,
                  2000 canceling the Series A Preferred Stock (5).

         10.1     Service Agreement dated September 27, 1995, between the
                  Registrant and Charles Koppel (1).

         10.2     Service Agreement dated September 27, 1995, between the
                  Registrant and Barry Llewellyn (1).

         10.3     Shareholders Agreement dated November 15, 1995, among Telor
                  International Limited, Europa Capital Management Limited,
                  Tinerama Investment A.G. and the Registrant (1).

         10.4     Transponder Lease between PTT Telecom BV and the Registrant
                  (1).

         10.5     Contract for On-Site Satellite Uplink Service between BT
                  Telecom (Deutschland) GmbH and the Registrant (1).

         10.6     Service Agreement between Onyx Television and Wagner &
                  Taunusfilm Television GmbH (1).

         10.7     Letter Agreement dated December 6, 1995 between Onyx
                  Television and Studio Dortmund (1).

         10.8     Facility letter dated October 31, 1996 made between Instar
                  Holdings, Inc. and Capital Media (UK) Limited (2).

         10.9     Debenture dated October 31, 1996 made between Instar Holdings,
                  Inc. and Capital Media (UK) Limited (2).


                                       38
<PAGE>

         10.10    Security Assignment dated October 31, 1996 made between
                  Capital Media (UK) Limited and Instar Holdings, Inc. (2).

         10.11    Charge Over Shares and Securities dated October 31, 1996 made
                  between Capital Media Group Limited and Instar Holdings, (2).

         10.12    Guarantee dated October 31, 1996 made between Instar Holdings,
                  Inc. and the Guarantors (2).

         10.13    Deed of Counter-Indemnity dated October 31, 1996 made between
                  Capital Media (UK) Limited and Universal Independent Holdings
                  Limited (2).

         10.14    Side letter to the Deed of Counter-Indemnity dated October 31,
                  1996 from Universal Independent Holdings Limited to Capital
                  Media (UK) Limited (2).

         10.15    Debenture dated October 31, 1996 made between Universal
                  Independent Holdings Limited and Capital Media (UK) Limited
                  (2).

         10.16    Security Assignment dated October 31, 1996 made between
                  Capital Media (UK) Limited and Universal Independent Holdings
                  Limited (2).

         10.17    Charge Over Shares and Securities dated October 31, 1996 made
                  between Capital Media Group Limited and Universal Independent
                  Holdings Limited (2).

         10.18    Guarantee dated October 31, 1996 made between Universal
                  Independent Holding Limited and the Guarantors (2).

         10.19    Deed of priorities dated October 31, 1996 made between Instar
                  Holdings, Inc. and Universal Independent Holdings Limited and
                  Capital Media (UK) Limited (2).

         10.20    Deed of priorities dated October 31, 1996 made between Instar
                  Holdings, Inc. and Universal Independent Holdings Limited and
                  Capital Media Group Limited (2).

         10.21    Form of Indemnification Agreement dated July 31, 1997, by and
                  between the Company and Gilles Assouline and Michel Assouline
                  (3).

         10.22    Letter Agreement, dated July 1998, between CM (UK), the
                  Company, Onyx, Superstar and Instar (3).

         10.23    Services Agreement between Onyx Television and Groupe AB (3).

         10.24    Superstar Note in the face amount of $5.0 million (3).

         10.25    Groupe AB Note in the face amount of $6.64 million (3).

         10.26    Groupe AB Note in the face amount of $6.0 million (4).

         21.1     Subsidiaries (4).


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

(1)      Incorporated by reference to the Company's Annual Report on Form 10-KSB
         for the year ended December 31, 1995.


                                       39
<PAGE>


(2)      Incorporated by reference to the Company's Annual Report on Form 10-KSB
         for the year ended December 31, 1996.

(3)      Incorporated by reference to the Company's Annual Report on Form 10-KSB
         for the year ended December 31, 1997.

(4)      Incorporated by reference to the Company's Annual Report on Form 10-KSB
         for the year ended December 31, 1998.

(5)      Incorporated by reference to the Company's Annual Report on Form 10-KSB
         for the year ended December 31, 1999.

         (b) Reports on Form 8-K

             None

                                       40
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant certifies that it caused this Annual Report to be
signed on its behalf by the undersigned, thereunto duly authorized, on May 29,
2001.

                                    CAPITAL MEDIA GROUP LIMITED

                                    By: /s/ GILLES ASSOULINE
                                       -----------------------------------------
                                        Gilles Assouline, President and Chief
                                        Executive Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this Annual Report has been signed by the following persons in the capacities
and on the dates indicated:

<TABLE>
<CAPTION>
               Signature                                         Title                       Date
<S>                                              <C>                                     <C>
                                                 Chairman, President and Chief           May 29, 2001
                                                 Executive Officer (Principal
/s/ GILLES ASSOULINE                             Executive Officer)
-----------------------------------------
Gilles Assouline

                                                 Director                                May __, 2001
-----------------------------------------
Michel Assouline

                                                 Director                                May __, 2001
-----------------------------------------
David Ho

                                                 Director                                May __, 2001
-----------------------------------------
Patrick Ho

                                                 Director                                May __, 2001
-----------------------------------------
Roger ORF

/s/ JEAN-FRANCOIS KLEIN                          Director and Chief Financial Officer    May 29, 2001
-----------------------------------------
Jean-Francois Klein

/s/CLAUDE BERDA                                  Director                                May 29, 2001
-----------------------------------------
Claude Berda

/s/DENIS BORTOT                                  Director                                May 29, 2001
-----------------------------------------
Denis Bortot

                                                 Director                                May __, 2001
-----------------------------------------
Jean-Michel Fava

/s/RICHARD MAROKO                                Director                                May 29, 2001
-----------------------------------------
Richard Maroko

/s/ORLA NOONAN                                   Director                                May 29, 2001
-----------------------------------------
Orla Noonan
</TABLE>

                                       41
<PAGE>

                           CAPITAL MEDIA GROUP LIMITED

                          INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>

                                                                                            Page
<S>                                                                                          <C>

Independent Accountant's Report of PricewaterhouseCoopers to the Board of
Directors and Stockholders of Capital Media Group Limited............................        F-2
Consolidated Balance Sheet at December 31, 2000 and 1999.............................        F-3
Consolidated Statement of Operations for the years ended December 31, 2000
and 1999.............................................................................        F-4
Consolidated Statement of Changes in Stockholders' Equity for the years
ended December 31, 2000 and 1999.....................................................        F-5
Consolidated Statement of Cash Flows for the years ended December 31, 2000
and 1999.............................................................................        F-6
Notes to the Consolidated Financial Statements.......................................        F-7
</TABLE>

                                      F-1
<PAGE>

                          CAPITAL MEDIA GROUP LIMITED

            INDEPENDENT ACCOUNTANT'S REPORT TO THE BOARD OF DIRECTORS
                 AND STOCKHOLDERS OF CAPITAL MEDIA GROUP LIMITED

To the Board of Directors and
the Stockholders of Capital Media Group Limited

         In our opinion, the consolidated balance sheets and the related
consolidated statements of operations, of changes in stockholders' equity and of
cash flows presented on pages F-3 through F-28, present fairly, in all material
respects, the financial position of Capital Media Group Limited and its
subsidiaries (the "Company") at December 31, 2000 and 1999 and the result of
their operations and their cash flows for each of the two years in the period
ended December 31, 2000, in conformity with generally accepted accounting
principles in the United States of America. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit in accordance with generally accepted auditing
standards in the United States of America, which require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for the opinion expressed above.

         The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 2 of the
financial statements, the Company has suffered recurring losses from operations
and has a net capital deficiency that raise substantial doubt about its ability
to continue as a going concern. Management's plans concerning these matters are
also described in Note 14. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

         As discussed in Note 16 to the financial statements, the accompanying
consolidated financial statements for the year ended December 31, 1999 have been
restated.

PricewaterhouseCoopers

Paris, May 23, 2001.

                                      F-2
<PAGE>

                          CAPITAL MEDIA GROUP LIMITED

                           CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
                                                                               Note
                                                                                         December 31,         December 31,
                                                                                                 2000                 1999
                                                                                                               As restated
                                                                                                              (See note 16)
<S>                                                                             <C>       <C>                  <C>
ASSETS                                                                                              $                    $
Cash and cash equivalents                                                                     929,913              181,352
Accounts receivable trade, net of allowances for doubtful accounts of $19,498
 (December 31, 1999 - $28,234)                                                  3           1,212,781            1,345,979
Inventories, net                                                                              202,875              114,744
Prepaid expenses                                                                              176,460               33,784
                                                                                          -----------          -----------
TOTAL CURRENT ASSETS                                                                        2,522,029            1,675,859
Investments                                                                                         -                6,985
Equity in affiliated companies                                                                 68,076              112,725
Intangible assets, net of accumulated amortization of $4,276,276
(December 31, 1999 - $3,171,811)                                                4           1,693,282            2,204,271
Property, plant and equipment, net                                              5           1,213,650            1,085,253
                                                                                          -----------          -----------
TOTAL ASSETS                                                                                5,497,037            5,085,093
                                                                                          ===========          ===========

LIABILITIES AND STOCKHOLDERS' DEFICIT
Accounts payable                                                                7           3,021,802            2,223,375
Accrued expenses                                                                            1,464,360            1,620,310
Related parties loans repayable within one year                                 6           5,733,819            1,259,583
Bank debt due within one year                                                               1,369,454            1,607,007
                                                                                          -----------          -----------
TOTAL LIABILITIES                                                                          11,589,435            6,710,275

Minority Interest in Subsidiaries                                                             382,057              402,477
                                                                                          -----------          -----------
                                                                                           11,971,492            7,112,752
                                                                                          -----------          -----------
Commitments and Contingencies

STOCKHOLDERS' DEFICIT
Common stock - 50,000,000 shares authorized:
$0.001 par value 33,203,251 (December 31, 1999 - 28,583,251) issued and
  outstanding                                                                  13              33,203               28,583
Additional paid in capital                                                                 66,449,689           59,025,103
166,791 shares held by a subsidiary (December 31, 1999 - 166,791) at cost                    (950,712)            (950,712)
                                                                                          -----------          -----------
                                                                                           65,532,180           58,102,974
Cumulative translation adjustment                                                           7,205,017            5,986,265
Accumulated deficit                                                                       (79,211,652)         (66,116,898)
                                                                                          -----------          -----------
TOTAL STOCKHOLDERS' DEFICIT                                                                (6,474,455)          (2,027,659)
                                                                                          -----------          -----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                                 5,497,037            5,085,093
                                                                                          ===========          ===========
</TABLE>

See notes to the consolidated financial statements.

                                      F-3
<PAGE>

                          CAPITAL MEDIA GROUP LIMITED

                      CONSOLIDATED STATEMENT OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                                Year                     Year
                                                                               ended                    ended
                                                                            December                 December
                                                     Note                   31, 2000                 31, 1999
                                                                                                  As restated
                                                                                                 (See note 16)
<S>                                                    <C>              <C>                      <C>
                                                                                   $                        $
Operating revenue                                                          2,787,500                2,728,971

Operating costs
Staff costs                                                                4,770,348                2,469,286
Depreciation and amortisation                                              1,508,445                1,089,381
Other operating expenses                                                   9,223,742                7,232,815
                                                                        ------------             ------------
                                                                         (15,502,535)             (10,791,482)

Operating loss                                                           (12,715,035)              (8,062,511)

Other (expense)                                                              (97,430)               1,808,895
Financial (expense) income, net                        10                   (701,323)             (11,674,860)

Equity in net loss of affiliates                                             (44,650)                  (8,075)
                                                                        ------------             ------------
Loss from operations before taxation                                     (13,558,438)             (17,936,551)
Income tax benefit                                                             9,689                   57,727
                                                                        ------------             ------------
Net loss before minority interest                                        (13,548,749)             (17,878,824)
Minority interest                                                            453,995                        -
                                                                        ------------             ------------
 Net loss                                                                (13,094,754)             (17,878,824)
                                                                        ============             ============
Net loss per share
- basic                                                                        (0.43)                   (2.32)
                                                                        ============             ============
- diluted                                                                      (0.43)                   (2.32)
                                                                        ============             ============
Weighted average number of shares -  basic                                30,670,751                7,707,446
                                                                        ============             ============
Weighted average number of shares  - diluted                              30,670,751                7,707,446
                                                                        ============             ============
</TABLE>

See notes to the consolidated financial statements.

                                      F-4
<PAGE>

                          CAPITAL MEDIA GROUP LIMITED

            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                     YEARS ENDED DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                                   Cumulative
                                                   Shares held    Additional   other comprehensive
                                                       by a        paid-in      income (deficit)     Accumulated         Total
                         Common stock              subsidiary      capital                             deficit
                               Shares         $             $              $                $                   $             $
<S>                        <C>           <C>         <C>          <C>               <C>               <C>           <C>
Balance at
January 1, 2000            28,583,251    28,583      (950,712)    59,025,103        5,986,265         (66,116,898)   (2,027,659)

Shares issued               4,620,000     4,620             -      5,449,045                -                   -     5,453,665

Warrants/options issued             -         -             -      1,975,541                -                   -     1,975,541

Translation adjustment                                                              1,218,752                         1,218,752
Net loss                            -         -             -              -                -         (13,094,754)  (13,094,754)

Comprehensive loss                  -         -             -              -                -                   -   (11,876,002)
                           ----------    ------      --------     ----------        ---------         -----------   -----------
Balance at
December 31, 2000          33,203,251    33,203      (950,712)    66,449,689        7,205,017         (79,211,652)   (6,474,455)
                           ==========    ======      ========     ==========        =========         ===========   ===========

<CAPTION>
                                                                                   Cumulative
                                                   Shares held    Additional   other comprehensive
                                                       by a        paid-in      income (deficit)     Accumulated         Total
                         Common stock              subsidiary      capital                             deficit
                               Shares         $             $              $                $                   $             $
<S>                        <C>           <C>         <C>          <C>               <C>               <C>           <C>
Balance at
January 1, 1999             4,009,413     4,009      (950,712)    31,191,990          756,406         (48,238,074)  (17,236,381)

Shares issued              24,573,838    24,574                   24,669,265                                         24,693,839

Commission paid                     -         -             -        (90,000)               -                   -       (90,000)

Convertible debt                    -         -             -      2,694,535                -                   -     2,694,535
Warrants and
  options issued                    -         -             -        559,313                -                   -       559,313

Translation adjustment                                                              5,229,859                         5,229,859
Net loss                                                                                              (17,878,824)  (17,878,824)

Comprehensive loss                  -         -             -              -                -                   -   (12,648,965)
                           ----------    ------      --------     ----------        ---------         -----------   -----------
Balance at
December 31, 1999          28,583,251    28,583      (950,712)    59,025,103        5,986,265         (66,116,898)   (2,027,659)
As restated                ==========    ======      ========     ==========        =========         ===========   ===========
(See note 16)
</TABLE>



See notes to the consolidated financial statements.

                                      F-5
<PAGE>

                          CAPITAL MEDIA GROUP LIMITED

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 2000 AND 1999
<TABLE>
<CAPTION>
                                                                          Year ended        Year ended
                                                                        December 31,      December 31,
                                                                                2000              1999
                                                                                          As restated
                                                                                         (See note 16)
                                                                                   $                 $
<S>                                                                      <C>               <C>
Cash flows from operating activities

Net loss                                                                 (13,094,754)      (17,878,824)
Adjustment to reconcile net loss to net cash used in operating
  activities:
    Depreciation and amortization                                          1,511,138         1,089,381
    Other income arising from disposal of subsidiary investments                  --         1,212,145
    Equity in net losses of affiliates and minority interests                 24,229             2,543
    Other non-cash items                                                          --         5,616,415
Changes in assets and liabilities:
    (Increase)/Decrease in other assets and inventories                     (230,671)          (14,587)
    (Increase)/Decrease in accounts receivable                               133,198           769,604
    (Decrease)/Increase in accrued expenses and other liabilities            792,638        (7,617,030)
                                                                         -----------       -----------
Net cash used in operations                                              (10,864,222)      (21,935,192)
                                                                         -----------       -----------
Cash flows from investing activities
Acquisition of plant and equipment                                          (510,769)         (642,866)
Acquisition of intangible assets                                            (617,913)               --
Disposal of financial assets                                                   6,985                --
                                                                         -----------       -----------
Net cash in investing activities                                          (1,121,697)         (642,866)
                                                                         -----------       -----------
Cash flows from financing activities
Increase in short term debt                                                4,600,071        10,746,339
Repayment of loans                                                          (250,000)       (3,100,000)
Issuance of warrants/options and convertible loans                         1,975,541         2,668,046
Issuance of shares                                                         5,453,665                --
Commission paid                                                                   --           (90,000)
                                                                         -----------       -----------
Net cash provided by financing activities                                 11,779,277        10,224,385
                                                                         -----------       -----------
Effect of exchange rate changes on cash                                    1,218,752         5,229,859
                                                                         -----------       -----------
Net (decrease)/increase in cash and cash equivalents                       1,012,110        (2,008,975)
Cash and cash equivalents at beginning of period                          (1,425,655)          583,320
                                                                         -----------       -----------
Net (debt)/income at end of period                                          (413,545)       (1,425,655)
                                                                         ===========       ===========
Supplemental data:

Interest received                                                             54,919                --
Conversion in capital of interest payable                                         --         5,114,839
Conversion of loans into capital                                                  --        19,579,000
Income tax paid                                                                9,689             1,581
</TABLE>

See notes to the consolidated financial statements.

                                      F-6
<PAGE>

                           CAPITAL MEDIA GROUP LIMITED

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                          Year ended December 31, 2000

1.       SIGNIFICANT ACCOUNTING POLICIES

         The consolidated financial statements are prepared in conformity with
         generally accepted accounting principles in the United States of
         America.

         Principles of consolidation

         The consolidated financial statements include the accounts of Capital
         Media Group Limited ("the Company") and its wholly owned subsidiaries,
         Capital Media (UK) Limited (""CM(UK)"), and Onyx Television GmbH
         ("Onyx") and Onyx's 50% affiliate Onyx Plus GmbH ("Onyx+"), together
         with the Company's 98.33% owned subsidiary Unimedia SA ("Unimedia") and
         Unimedia's wholly owned subsidiary, Pixel Limited ("Pixel"), and its
         98.66% owned subsidiary TopCard SA ("TopCard"). All inter-company
         accounts and transactions have been eliminated in consolidation.
         Pixel's 47.5% interest in Henry Communications Limited ("Henry"), have
         been accounted for using the equity method, after the elimination of
         all significant intercompany balances and transactions.

         Inventories

         Inventories are stated at the lower of first-in, first-out cost or
         market value. Inventories include both raw materials and finished
         goods.

         Intangible assets

         Intangible assets represent purchased broadcast licenses, computer
         software and goodwill arising on acquisition of subsidiary
         undertakings. The amounts in the balance sheet are stated net of the
         related accumulated amortization. Computer software is amortized in the
         year of acquisition. Broadcast licenses and goodwill are amortized on a
         straight-line basis over periods not exceeding six years. The Company
         evaluates the possible impairment of long-lived assets, including
         intangible assets, whenever events or circumstances indicate that the
         carrying value of the assets may not be recoverable, by comparing the
         undiscounted future cash flows from such assets with the carrying value
         of the assets. An impairment loss would be computed based upon the
         amount by which the carrying amount of the assets exceeds its fair
         value at any evaluation date.

         Property, plant and equipment

         Property, plant and equipment are all stated at cost. Depreciation is
         recorded on a straight-line basis over the estimated useful lives of
         the assets as shown below:

         Fixtures, fittings and equipment                 5 to 20 years

         Foreign currency

         Assets and liabilities of the Company's foreign subsidiaries are
         translated at year-end exchange rates. Income statement items are
         translated at the average rate for the period.

                                      F-7
<PAGE>

                          CAPITAL MEDIA GROUP LIMITED

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                          Year ended December 31, 2000

         The effects of these translation adjustments are reported in a separate
         component of stockholders' equity. Exchange gains and losses arising
         from transactions denominated in a currency other than the functional
         currency of the entity involved are included in net income.

         Income taxes

         Full provision is made for all deferred tax liabilities. Deferred
         income tax assets are recognized for deductible temporary differences
         and net operating losses, reduced by a valuation allowance if it is
         more likely than not that some portion of the benefit will not be
         realized.

         Lease

         Operating leases are charged to expense, on a straight-line basis, over
         the term of the lease.

         Revenue recognition

         Sales of products are recognized when property title changes.
         Advertising revenue is recognized when advertisements are broadcast and
         thereby invoiced to the customer. Inter-company charges are eliminated
         on consolidation and not included in revenues.

         Research and development costs

         Research and development costs are charged to expense as incurred.

         Stock based compensation and other warrants and options

         In fiscal 2000, the Company adopted the method of accounting for
         stock-based compensation arrangements with employees and directors as
         prescribed in SFAS No. 123. This standard applies to all transactions
         in which an entity acquires goods or services by issuing equity
         instruments. In that method, the fair value based method, the cost of
         services or compensation is measured at the transaction or grant data
         based on the value of the equity, and the fair value is determined
         using an option-pricing model.

         Earnings per share and reverse split

         Basic income per share is calculated on the basis of weighted average
         outstanding shares. Diluted income per share is computed on the basis
         of weighted average outstanding common shares, plus potential common
         shares assuming exercised stock options and conversion of outstanding
         convertible securities where issued. The computation of earnings per
         share does not assume exercise of the warrants or options if they would
         have an anti-dilutive effect on earnings per share.

         On October 27, 1999, the Company effected a reverse split of its
         outstanding common stock on a one share for ten share basis, and its
         authorized shares remaining at 50 million shares (see "Stockholders'
         Meeting" below). Unless otherwise stated, all per share data contained
         herein has been adjusted to reflect the completion of the reverse
         split.

                                      F-8
<PAGE>

                          CAPITAL MEDIA GROUP LIMITED

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                          Year ended December 31, 2000

         Use of estimates

         The preparation of financial statements in conformity with generally
         accepted accounting principles requires management to make estimates
         and assumptions that affect the reported amounts of assets and
         liabilities and disclosure of contingent assets and liabilities at the
         date of the financial statements and the reported amounts of revenues
         and expenses during the reporting period. Actual results could differ
         from those estimates.

         New accounting standard

         In 1998, the Financial Standards Accounting Board issued SFAS No. 133,
         "Accounting for Derivative Instruments and Hedging Activities". This
         statement, which establishes accounting and reporting standards for
         derivative instruments and for hedging activities, will be adopted in
         fiscal 2001. It is not expected that its implementation will have any
         significant impact on the financial statements.

         Last Stockholders' Meeting

         The last Stockholders' Meeting took place on October 22, 1999. During
         this meeting, the stockholders approved the following resolutions:

         (i)      a reverse split of the Company's outstanding stock on a one
                  share for ten shares basis, with the Company's authorized
                  shares remaining at 50 million shares;

         (ii)     the terms of the financial arrangements between the Company
                  and AB Groupe, S.A. ("AB Groupe"), and between the Company and
                  Superstar Ventures Limited ("Superstar"); and

         (iii)    the grant of an option to an entity controlled by the
                  Company's Chairman and Chief Executive and Chief Operating
                  Officer to purchase 1.6 million shares of the Company's common
                  stock at an exercise price of $1.00 per share.

         Following the reverse split, which was effected on October 27, 1999, in
         accordance with its financial arrangements among the Company, AB Groupe
         and Superstar, the Company issued 22,598,255 shares to AB Groupe and
         Superstar, in conversion of $22,598,255 of outstanding convertible
         debt, including $4,649,839 of accrued interest and penalty as detailed
         in the following table:

         PAYEE                                 $                   Shares issued
                                                                   in conversion
         AB Groupe:
         ----------
         Outstanding convertible debt       10,688,416              11,298,416
         Interest accrued                    2,358,452               2,358,452
                                                                    ----------
                                                                    13,656,868

                                      F-9
<PAGE>

                          CAPITAL MEDIA GROUP LIMITED

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                          Year ended December 31, 2000

         Superstar
         ---------
         Outstanding convertible debt        6,650,000               6,650,000
         Interest accrued                    1,298,000               1,298,000
         Penalty                               993,397                 993,387
                                                                    ----------
                                                                     8,941,397

2.       GOING CONCERN

         The accompanying financial statements have been prepared on the going
         concern basis, which contemplates the realization of assets and the
         satisfaction of liabilities in the normal course of business. As shown
         in the financial statements, during the year ended December 31, 2000
         and the year ended December 31, 1999, the Company incurred net losses
         of $13,094,754 and $17,878,824 respectively.

         At December 31, 2000, the Company had net current liabilities of
         $9,067,406 and its total liabilities exceeded its total assets by
         $6,474,455. These factors among others raise substantial doubt about
         its ability to continue as a going concern for a reasonable period of
         time. The company anticipates that any required funding will be made
         available by its shareholders including AB Groupe and/or Superstar, or
         from other sources, although there can be no assurance that the
         necessary funding will become available.

         The financial statements do not include any adjustments relating to the
         recoverability and classification of the recorded asset amounts or the
         amounts and classification of liabilities that might be necessary
         should the Company be unable to continue as a going concern. As
         described in Note 14, the Company's continuation as a going concern is
         dependent upon its ability to obtain additional financing as may be
         required, and ultimately to attain successful operations.

                                      F-10
<PAGE>

                          CAPITAL MEDIA GROUP LIMITED

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                          Year ended December 31, 2000

3.       ACCOUNTS RECEIVABLE

<TABLE>
<CAPTION>
                                                         December 31,     December 31,
                                                                 2000             1999
                                                                    $                $
<S>                                                        <C>              <C>
         Accounts receivable comprise:

         Trade receivables                                    537,377          500,954
         Taxation receivable                                    1,489           37,654
         Other debtors receivable                             673,915          807,371
                                                           ----------       ----------
                                                            1,212,781        1,345,979
                                                           ==========       ==========
</TABLE>

4.       INTANGIBLE ASSETS

<TABLE>
<CAPTION>
                                                         December 31,     December 31,
                                                                 2000             1999
                                                                    $                $
<S>                                                        <C>              <C>
         Purchased broadcast licenses                         223,642          241,755
         Computer software                                  1,164,098          569,131
         Other intangible assets                               14,313                -
         Goodwill                                           4,567,505        4,565,196
                                                           ----------       ----------
                                                            5,969,558        5,376,082
         Less accumulated amortization                      4,276,276       (3,171,811)
                                                           ----------       ----------
                                                            1,693,282        2,204,271
                                                           ==========       ==========
</TABLE>

         Goodwill net of amortization is as follows:

<TABLE>
<CAPTION>
                                                         December 31,     December 31,
                                                                 2000             1999
                                                                    $                $
<S>                                                        <C>              <C>
         Unimedia                                           1,213,446        1,674,695
         TopCard                                              336,614          452,232
         Pixel                                                 28,945           53,965
                                                           ----------       ----------
                                                            1,579,005        2,180,892
                                                           ==========       ==========
</TABLE>

                                      F-11
<PAGE>

                          CAPITAL MEDIA GROUP LIMITED

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                          Year ended December 31, 2000

5.       PROPERTY, PLANT AND EQUIPEMENT, NET

<TABLE>
<CAPTION>
                                                         December 31,     December 31,
                                                                 2000             1999
                                                                    $                $
<S>                                                        <C>              <C>
         Property, plant and equipment consist of:

         Fixtures, fittings and equipment                   4,134,867        3,505,303
         Less accumulated depreciation                     (2,921,217)      (2,420,050)
                                                           ----------       ----------
                                                            1,213,650        1,085,253
                                                           ==========       ==========
</TABLE>

6.       LOANS REPAYABLE WITHIN ONE YEAR

<TABLE>
<CAPTION>
                                                         December 31,     December 31,
                                                                 2000             1999
                                                                    $                $
<S>                                                         <C>              <C>
         Instar Holdings Ltd                                        -          100,000
         AB Groupe S.A.                                     5,488,970          977,339
         Superstar Investments Ltd.                                 -          150,000
         Interest accrued                                     244,849           32,244
                                                           ----------       ----------
         Related party loans                                5,733,819        1,259,583
                                                           ==========       ==========
</TABLE>

The terms of AB Groupe loans are detailed in Note 14 and were received on the
following dates:

                                                               $
         August 1999                                     327,338 (1)
         May 1999                                        150,000 (1)
         December 1999                                   500,000 (1)
         January 2000                                    500,000 (1)
         March 2000                                    1,000,000 (1)
         August 2000                                     278,123
         September 2000                                  133,509
         October 2000                                  2,600,000 *
                                                       ----------
                                                       5,488,970

* In December 2000, AB Groupe notified the Company that it had decided not to
  exercise the 2.6 million warrants at $1 as scheduled in the agreement dated
  October 20, 2000. The Company disputes this and believes that an agreement had
  been reached with AB Groupe to exercise of the 2.6 million warrants at the
  time the funds were received. However, until the dispute is settled, the $2.6
  million received from AB Groupe is being treated as a loan in the accounts.

(1) Loan due in two years, bearing interest at 10% per annum, with two year
  warrants to purchase shares of the common stock at an exercise price of $1.00
  per share (see Notes 13 and 14).

                                      F-12
<PAGE>

                          CAPITAL MEDIA GROUP LIMITED

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                          Year ended December 31, 2000

7.       ACCOUNTS PAYABLES

         Accounts payables include a $600,000 invoice sent by AB Groupe in
         January 2001 corresponding to three months (October to December 2000)
         of broadcasting services rendered by AB Groupe pursuant to the
         termination of the two-year service agreement commenced in October
         1998. This invoice has been disputed by several of the Company's
         disinterested directors and is still being discussed.

         Accounts payables also include an invoice of approximately $140,000
         sent by AB Groupe in January 2001 corresponding to services rendered by
         AB Groupe to Onyx+. This invoice has been disputed by several of the
         Company's disinterested directors and is still being discussed.

8.       COMMITMENTS AND CONTINGENCIES

         In October 1999, the Company entered into a monthly agreement to lease
         offices, as well as the use of studio, postproduction and editing
         facilities in Cologne, Germany. Under the terms of the agreement, the
         Company was committed to paying DM 180,000 ($92,000 at December 31,
         2000 exchange rates) per annum.

         The Company has also entered into leases for office space in France,
         expiring between December 2001 and March 2002 at an annualized cost of
         $90,500 (at December 31, 2000 exchange rates).

         The total rental expenses in 2000 are $257,500.

         Under the terms of a two year service agreement which commenced October
         1, 1998 and ended September 30, 2000, AB Groupe provided broadcasting
         facilities to Onyx, comprising the uplink, the master control and pay
         out, and the satellite transponder broadcasting as well as the payment
         of a $60,000 monthly service fee to Deutsche Telekom for cable
         transmission. The monthly cost of those contracts was $260,000.

         Subject to the approval of the Controlling Committee of the Board, the
         Company intends to enter into a new service agreement with AB Groupe
         providing such broadcasting services for a monthly cost of $80,000.
         Deutsche Telekom monthly service fee has increased to $100,000 in 2001.

         The commitments described above are expected to result in the following
         payments and charges:

         Years ending December 31,
         2001                                                      $2,500,000
         2002                                                         250,000
         2003                                                         250,000
         2004                                                               -
         2005 and thereafter                                                -
                                                               ---------------
                                                                   $3,000,000
                                                               ===============

                                      F-13
<PAGE>

                          CAPITAL MEDIA GROUP LIMITED

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                          Year ended December 31, 2000

         The Company is committed to pay to its directors and officers under
         employment agreements an aggregate of $505,000 during the year ended
         December 31, 2001, of which: $250,000 represents the indemnity paid by
         the Company to Michel Assouline in January 2001 pursuant to the early
         termination of his employment contract by the Company as decided by the
         Board of December 26, 2000.

         RETIREMENT INDEMNITIES AND PENSION PLANS

         Retired employees benefit from State or Government sponsored pension
         schemes. Contributions by employers to these sponsored schemes are
         expensed as incurred. There are no specific supplemental pension plans
         operated by the Company or any subsidiary. There is no liability
         arising from retirement indemnity.

9.       RESEARCH AND DEVELOPMENT COSTS

         TopCard is involved in the development of specific applications based
         upon smart card technology including remote security Internet access
         and infrared contactless smart card technology.

                                                   Year ended      Year ended
                                                 December 31,    December 31,
                                                         2000            1999
                                               --------------  --------------
         Research and development costs              $218,639        $287,804
                                               ==============  ==============

10.      FINANCIAL EXPENSE

         Financial expense is comprised of the followings:

                                                   Year ended      Year ended
                                                 December 31,    December 31,
                                                         2000            1999
                                                                 As Restated
                                                                (See note 16)
                                                            $               $
         Effect of warrants/options and
           convertible loans issued                  (100,244)     (2,694,535)
         Interest income                              329,424               -
         Interest expense net                        (487,110)     (4,266,534)
         Foreign currency exchange loss              (443,393)     (4,713,791)
                                               --------------  --------------
                                                     (701,323)    (11,674,860)
                                               ==============  ==============

         The foreign currency exchange loss in 2000 and in 1999 arose primarily
         from the exchange differences arising in the inter-company loan between
         CM(UK) and Onyx recorded in pounds sterling and German Marks,
         respectively. Decision was taken in September that would allow the
         Company to recapitalise Onyx and permit the reimbursement of amounts
         borrowed from CM (UK) by Onyx. The reimbursement rates were
         contractually fixed as those at January 1, 2000. These inter-company
         loans have been effectively reimbursed in October 2000.

         The effect of warrants issuances is determined using the Black-Scholes
         method as described in Note 13.

                                      F-14
<PAGE>

                          CAPITAL MEDIA GROUP LIMITED

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                          Year ended December 31, 2000

11.      INCOME TAXES

         Net operating loss carry forwards, which give rise to deferred tax
         assets at December 31, 2000 and December 31, 1999, are as follows:

<TABLE>
<CAPTION>
                                                                  December 31,        December 31,
                                                                          2000                1999
                                                                             $                   $
<S>                                                                <C>                 <C>
                Deferred tax asset on unrealized tax losses         26,909,000          23,251,000
                Timing differences                                     610,000             409,000
                                                                   -----------         -----------
                Valuation allowances                               (27,519,000)        (23,660,000)
                                                                   -----------         -----------
                Total deferred tax assets                                    -                   -
                                                                   ===========         ===========
</TABLE>

         The Company has significant deferred tax assets (approximately
         $27,519,000) corresponding to tax losses arising primarily from the
         operating losses incurred by Onyx, in Germany. These tax losses are
         available to be carried forward indefinitely to be set off against
         future profits in Germany. However, at the end of 2000, management
         forecast that the Company will not be profitable in 2001 and sometime
         thereafter and therefore no credit for income tax was recorded. The
         Company will continue to review its tax valuation allowance in future
         periods.

         CM (UK) is currently strongly disputing a tax reassessment of an amount
         of (pound)330,000 (approximately $600,000) from the UK Tax Authorities
         who are claiming taxes on deemed interests relating to advances to
         Onyx. The Company is seeking to settle on the fact that no payment is
         due because of the important tax deficit of CM(UK) since 1995. No
         provision has been recorded in the accounts because the potential
         liability is neither probable nor estimate.

12.      LITIGATION

         In June 1997, a former managing director of Onyx whose employment was
         terminated brought suit in Germany for alleged wrongful early
         termination of his employment. Onyx maintained that the action taken
         was lawful while in July 1998 the court ruled in favor of Onyx. The
         plaintiff appealed against the ruling and claimed DM168,000 (US$86,000)
         in respect of his 1997 salary. The court is currently considering new
         evidence put forward by Onyx which believes that it has valid defenses
         to this claim. However, there can be no assurance as to the outcome of
         the matter.

         In March 2000, Onyx paid $120,000 in full settlement of a dispute with
         TV Strategies, a Dallas, Texas based television services Company, which
         alleged that they had provided services to Onyx.

                                      F-15
<PAGE>

                          CAPITAL MEDIA GROUP LIMITED

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                          Year ended December 31, 2000

         Unimedia has two minority shareholders (Oradea and Roland Pardo) who
         have unsuccessfully brought numerous legal actions against Unimedia
         and/or its management, pursuant to one of which these minority
         shareholders were ordered by a French court to pay damages in the
         amount of 55,000 French Francs (approximately $7,500) to Unimedia for
         having maintained abusive liens on all Unimedia's assets after Unimedia
         settled their shareholder loans in July 1999.

         Oradea and R. Pardo have also brought a legal action through the Court
         of England against Gilles Assouline with respect to their investments
         in both Unimedia and ActivCard. The Court has favorably considered an
         application to dismiss the claim filed by Gilles Assouline, who
         believes that he has strong and valid defenses. However there can be no
         assurance as to the outcome of this claim. The Company is indemnifying
         Mr. Assouline with respect to this matter.

         In August 2000, Gralec Establishment, a shareholder of the Company,
         brought a legal action against Unimedia before a French court with
         respect to alleged still existing rights of Gralec to purchase 50,000
         ActivCard shares from Unimedia at $13.00 each pursuant to an option
         granted in October 1996 and which expired in February 1997. In October
         2000, the Court dismissed Gralec's claim and ordered Gralec to pay
         damages and legal fees in the amount of 60,000 French Francs
         (approximately $8,000) to Unimedia.

         In June 2000, Onyx+, which was planning to broadcast its digital
         channels directly from Germany, entered into a service agreement with
         Mediagate. As a result of the numerous delays taken by the cable
         operators with respect to the development of digital cable services in
         Germany combined with the failure of certain conditions precedent to
         the use by Onyx+ of the services provided by Mediagate, this agreement
         never became applicable. Mediagate has taken the position that Onyx+
         was obligated under the contract and has been invoicing Onyx+ at a
         monthly rate of DM430,000 (approximately $195,000) starting January
         2001.

         Onyx+ has and will continue to vigorously dispute these invoices.
         Accordingly, there can be no assurance as to the outcome of Onyx's
         dispute with Mediagate.

13.      CAPITAL STRUCTURE

         At the last Stockholders' Meeting on October 22, 1999, the stockholders
         approved a reverse split of the Company's authorized capital on a one
         new share for ten old shares basis, with the Company's authorized
         shares remaining at 50 million shares. Unless otherwise noted, all
         share and per share references herein reflect completion of the reverse
         split on October 27, 1999.

                                      F-16
<PAGE>

                          CAPITAL MEDIA GROUP LIMITED

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                          Year ended December 31, 2000

13.1     COMMON STOCK PURCHASE WARRANTS

         The Company had the following issued and vested warrants to purchase
         common stock outstanding at December 31, 2000 and December 31, 1999:

<TABLE>
<CAPTION>
Description                                December 31,          Exercised           Granted            December 31,
                                                   2000                                                         1999
<S>                                           <C>                  <C>              <C>                    <C>
Warrants for common stock
Exercisable at $40.00  (2)                      633,914                 --                 --                633,914
Warrants for common stock
Exercisable at $31.25  (3)                       51,119                 --                 --                 51,119
Warrants for common stock
Exercisable at $25.00  (4)                      129,767                 --                 --                129,767
Warrants for common stock
Exercisable at $1.00   (1)                    6,537,339            650,000 (6)      3,650,000 (5)          3,537,339 (1)
                                              ---------            -------          ---------              ---------
                                              7,352,139            650,000          3,650,000              4,352,139
<FN>
         (1) includes 1,787,339 warrants issued and vested to AB Groupe,
             1,600,000 issued and vested to Diamond Productions and 150,000
             warrants issued and vested to Superstar.

         (2) includes 180,000 warrants issued and vested to AB Groupe and
             113,914 warrants issued and vested to former Unimedia shareholders.

         (3) includes 7,787 warrants issued and vested to former Unimedia
             shareholders.

         (4) includes 19,767 warrants issued and vested to former Unimedia
             shareholders.

         (5) includes 1,500,000 warrants issued and vested to AB Groupe, 500,000
             to Superstar and 1,650,000 to Company's officers and staff members.

         (6) 650,000 warrants were exercised by Superstar.
</FN>
</TABLE>

         All outstanding registered warrants expire on January 19, 2003.

         The Company offered to the warrant holders whose shares have an
         exercise price of $25.00 per share, $31.25 per share and $40.00 per
         share the right, for a period of nine months expiring on October 19,
         2000, to exercise their warrants and receive two shares of Common Stock
         at an exercise price of $3.00 per share (as further described in the
         Company's Form SB-2 filed on January 18, 2000), with the exception of
         one of its warrant holders, Auric Investments Limited ("Auric"). Auric
         was given the right to subscribe to purchase 156,416 shares of Common
         Stock on the basis of two shares for each of the 78,208 warrants which
         they hold, but at an exercise price of $2.00 per share. No warrants
         were exercised during this period and the exercise price of these
         warrants remains at $25.00, $31.25 and $40.00 per share, respectively.

                                      F-17
<PAGE>

                          CAPITAL MEDIA GROUP LIMITED

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                          Year ended December 31, 2000

         Since the holders of the outstanding warrants did not exercise this
         right, the warrants remain outstanding on their original terms until
         their expiration date.

         In January 2000, the Company granted two year warrants to purchase
         1,650,000 shares at an exercise price of $1.00 per share. These
         warrants were granted to staff members for 250,000; to Jean Francois
         Klein for 650,000; to David Ho for 250,000; to Gilles Assouline for
         250,000 and to Michel Assouline for 250,000. These warrants were
         converted in March into warrants to purchase Company common stock at a
         purchase price of $1.00 per share exercisable from March 17, 2000 for a
         three year period following the effective registration of all warrants.

         In December 1999, AB Groupe made a loan to the Company of $500,000 for
         general working capital purposes. The loan is due in December 2001 and
         bears interest at the rate of ten percent (10%) per year. In connection
         with the loan, the Company granted AB Groupe a warrant exercisable
         until December 2001 to purchase 500,000 shares of Common Stock at an
         exercise price of $1.00 per share.

         In January 2000, AB Groupe and Superstar made loans to the Company of
         $500,000 each, or in the aggregate of $1,000,000. The proceeds were in
         part used to increase the capital investments in Onyx and TopCard
         (through Unimedia). The loan is due in January 2002 and accrues
         interest at the rate of ten percent (10%) per year. In connection with
         the loan, the Company granted AB Groupe and Superstar a warrant
         exercisable until January 2002 to purchase 1,000,000 shares of the
         Common Stock at an exercise price of $1.00 per share.

         In March 2000, AB Groupe loaned the Company an additional $1,000,000
         for working capital. The loan is due in March 2002 with interest of ten
         percent (10%) per annum. In connection with the loan, we granted AB
         Groupe a warrant exercisable in March 2002 to purchase 1,000,000 shares
         of Common Stock at an exercise price of $1.00 per share.

         In September 2000, Superstar exercised 650,000 warrants. At the same
         time, AB Groupe agreed (on October 2000) to exercise 2.6 million
         warrants.

         In December 2000, AB Groupe notified the Company that it had decided
         not to exercise the 2.6 million warrants at $1 as scheduled in the
         agreement dated October 20, 2000. The Company disputes this and
         believes that an agreement had been reached with AB Groupe to exercise
         the 2.6 million warrants at the time the funds were received. However,
         until the dispute is settled, the $2.6 million received from AB Groupe
         is being treated as a loan in the Company's accounts.

                                      F-18
<PAGE>

                          CAPITAL MEDIA GROUP LIMITED

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                          Year ended December 31, 2000

13.2     COMMON STOCK PURCHASE OPTIONS

<TABLE>
<CAPTION>
                          Description                              Outstanding at    Granted /         Outstanding at
                                                                 December 31, 2000   Vested           December 31, 1999
<S>                                                                    <C>            <C>                  <C>
    Exercisable @ $1.00                                                      -        600,000 *                  -
    Executive officers options exercisable @ $5.70                      37,500              -               37,500
    of which vested                                                     37,500          7,500               30,000

    Officers options exercisable @ $25.00 fully vested                  30,000              -               30,000
    Executive officers options exercisable @ $3.50                     400,000              -              400,000
    of which vested                                                    239.997         79,998              159,998

    Non-employee directors options exercisable @ $3.50                  50,000              -               50,000
    fully vested
                                                                 ------------------------------------------------------
    Total exercisable                                                  517,500        687,498              517,500
                                                                 ======================================================
</TABLE>

         * 600,000 options were not exercised by Gralec.

         On August 1, 1997, the Company entered into three-year employment
         agreements with the executive officers providing for them to receive in
         addition to other compensation, options to purchase 20,000 and 17,500
         shares of common stock at an exercise price of $5.70 per share, the
         price at which transactions were effected at that time. The options
         vested 2/5 upon the effective date of the agreement and were vested 1/5
         on each of the first, second and third anniversaries, respectively, of
         the agreement. These options expire 36 months from the date of their
         effective registration. The employment agreements were automatically
         renewed in September 2000.

         The former Chief Financial Officer as part of his service agreement was
         entitled to receive options in each of the years 1996, 1997 and 1998 to
         purchase in aggregate, 30,000 common shares of the Company at $25.00
         per share, the price at which transactions were effected at that time.
         These options expire 36 months from the date of their effective
         registration.

         On March 10, 1998, the Board of Directors granted options to the
         executive officers of the Company to purchase an aggregate of 400,000
         shares of common stock at an exercise price of $3.50 per share (the
         price at which transaction were effected on the date of grant). On the
         same date, non-employee directors were granted options to purchase an
         aggregate of 50,000 shares at the same price. The options vested to
         executive officers, 100,000 in the aggregate for the year 1998, with
         the balance over 3 years, and to non-employee directors immediately.
         The options are valid for 5 years and expire on March 10, 2003.

                                      F-19
<PAGE>

                          CAPITAL MEDIA GROUP LIMITED

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                          Year ended December 31, 2000

         In 1998, Unimedia transferred 154,000 shares of Common Stock to Gralec
         Establishment for an aggregate purchase price of $500,000. The shares
         of Common Stock transferred to Gralec have now been registered,
         according to a registration rights agreement. The Company, however,
         failed to register the Common Stock by November 30, 1999 as required
         under this registration rights agreement. In order to extend the period
         during which registration of the Common Stock could be completed, the
         Board approved on December 29, 1999; (1) to sell to Gralec 220,000
         shares against transfer of the net proceeds from the sale of 50,000
         ActivCard shares previously sold by Unimedia to Gralec in 1996, and (2)
         to grant Gralec Establishment an additional option to purchase 600,000
         shares of our authorized but issued Common Stock at an exercise price
         of $1.00 per share for a period of nine months. On January 19, 2000 all
         shares and options granted to Gralec were effectively registered thus
         opening the nine month option period from there. The options have
         expired at December 31, 2000 since they were not exercised in the
         period.

13.3     ISSUANCE OF COMPANY SHARES

         In March 2000, the Company granted the right to purchase up to 6.5
         million shares to certain shareholders including the management as
         detailed below:

<TABLE>
<CAPTION>
Purchase Price         Gilles               Michel             Jean-Francois          David Ho            Total
                       Assouline            Assouline          Klein
<S>                    <C>                  <C>                <C>                   <C>                <C>
$1 per share             750,000            1,100,000            750,000               750,000          3,350,000
$1.50 per share          250,000              300,000            250,000               250,000          1,050,000
$2 per share             250,000              300,000            250,000               250,000          1,050,000
$2.50 per share          250,000              300,000            250,000               250,000          1,050,000
                       ---------            ---------          ---------             ---------          ---------
Total                  1,500,000            2,000,000          1,500,000             1,500,000          6,500,000
                       =========            =========          =========             =========          =========
</TABLE>

         The terms and conditions of this proposed share issuance were
         recommended by the audit committee of the Company's board on March 17,
         2000. In concluding this price to be the fair value for the shares, the
         audit committee took into consideration the level of funding of the
         Company required until the end of 2000 and the poor level of trading
         activity of the Company's shares on the market (making, in their view,
         the market price of the Common Stock unreliable as a factor in
         determining value).

         The Board of April 21, 2000 authorized the issuance of up to 500,000
         shares to each AB Groupe and Superstar at $1.50 each prior to July
         2000. Of these shares, 780,000 shares were effectively issued and paid.
         AB Groupe and Superstar purchased 480,000 and 300,000 new shares
         respectively, out of which an aggregate number of 280,000 shares were
         effectively subscribed for prior to June 30, 2000 and 500,000 shares
         were effectively subscribed in July 2000.

         In May 2000, the Board proposed to issue 1,000,000 Company shares to
         Roger Orf at a purchase price of $2.50 per share prior to July 31,
         2000. Roger Orf did not purchase these shares.

                                      F-20
<PAGE>
                          CAPITAL MEDIA GROUP LIMITED

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                          Year ended December 31, 2000

         In September 2000, Superstar exercised 650,000 warrants and 650,000
         shares of common stock were issued by the Company to Superstar.

         In October 2000, FA Television Holdings LLC, a joint venture Company
         among Allied Capital, Gilles Assouline and Michel Assouline, subscribed
         for the purchase of 480,000 shares of the Company at $1.50 each and
         120,000 shares at $1.00 for an aggregate purchase price of $840,000
         with all such shares being issued from the 6.5 million reserved for
         certain shareholders including the management in March 2000. In October
         2000, 600,000 new shares of the Company were issued to FA Television
         Holdings LLC. By a board decision of September 25, 2000, the Company
         agreed to register these shares.

         After all of these share issuances, at December 31, 2000 the Company
         has 33,203,251 shares of common stock outstanding and AB Groupe's and
         Superstar's stock holding represented 53.6% and 31.29%, respectively.
         Including warrants and options, the total potential number of shares
         would be 41,072,890.

13.4     The fair value of the options and warrants issued is calculated using
         Black-Scholes option-pricing model at the dated of grant takes into
         account the stock price at the grant date, the exercise price, the
         expected life of the option, the volatility of the underlying stock and
         the expected dividends on it, and the risk-free interest rate over the
         expected life of the option.

         This data is summarized in the table below:

<TABLE>
<CAPTION>
                                                         Stock compensation and       Debt issued with warrants
                                                       third parties warrants or
                                                                 options
                                                       -------------------------      -------------------------
<S>                                                            <C>                            <C>
Dividends yield                                                    0                              0
Expected volatility                                              45-50%                         45-50%
Interest rate                                                  4.59-6.58%                     5.38-6.48%
Expected life                                                   0.2-3 years                     2 years
Marketability discount                                             75%                            75%
Fair value                                                     $1,744,744                      $230,797
</TABLE>

14.      LIQUIDITY AND CAPITAL RESOURCES

         The Company has continued to use its cash reserves to fund its
         operations. The ownership, development and operation of media
         interests, including the Onyx television station requires substantial
         funding. Due to the poorer than expected advertising revenues at Onyx
         in its second and third years of operation, the funds raised by the
         Company since commencement were expended earlier than anticipated. To
         date, the Company has historically financed itself through sales of
         equity securities and debt financing.

                                      F-21
<PAGE>

                          CAPITAL MEDIA GROUP LIMITED

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                          Year ended December 31, 2000

         Following the reverse split, in accordance with its financial
         arrangements with AB Groupe and Superstar, the Company issued
         22,598,255 post reverse split shares in conversion of $22,598,255 of
         outstanding convertible debt, including $4,649,839 of accrued interest.
         The Company also issued 789,999 additional shares in conversion of
         $790,000 of certain sundry loans and also issued 344,000 additional
         shares to other parties to which it was obligated, including Instar
         Holdings Inc., which received 200,000 shares as part of the settlement
         of its litigation with the Company.

         In December 1999, AB Groupe made a loan to the Company of $500,000 for
         general working capital purposes. The loan is due in December 2001 and
         bears interest at the rate of ten percent (10%) per year. In connection
         with the loan, the Company granted AB Groupe a warrant exercisable
         until December 2001 to purchase 500,000 shares of Common Stock at an
         exercise price of $1.00 per share.

         In January 2000, AB Groupe and Superstar made loans to the Company in
         the amount of $500,000 each. The loans are due in January 2002 and
         carry interest at the rate of 10% per annum. In connection with the
         loans, the Company granted a warrant exercisable until January 2002 to
         purchase 1,000,000 shares of the common stock at an exercise price of
         $1.00 per share.

         In March 2000, AB Groupe loaned the Company an additional $1,000,000
         for working capital. The loan is due in March 2002 with interest of ten
         percent (10%) per annum. In connection with the loan, we granted AB
         Groupe a warrant exercisable in March 2002 to purchase 1,000,000 shares
         of Common Stock at an exercise price of $1.00 per share.

         The Board held on April 21, 2000 authorized the issuance of up to
         500,000 shares to each AB Groupe and Superstar at $1.50 each prior to
         the end of July 2000. Out of these, 780,000 shares were effectively
         issued and paid. AB Groupe and Superstar purchased 480,000 new shares
         and 300,000 shares respectively, out of which an aggregate number of
         280,000 shares were effectively subscribed for prior to June 30, 2000
         and 500,000 shares were effectively subscribed in July 2000.

         On September 25, 2000 the Board of the Company authorized a euro 38.9
         million capital injection into Onyx to be funded through (i) a short
         term loan from AB Groupe in the amount of euro 36,200,000 and (ii) the
         exercise by AB Groupe of 2.6 million warrants at $1 each resulting in
         the issue of 2.6 million new shares of the Company's Common Stock
         pursuant to an agreement entered between the Company and AB Groupe on
         October 20, 2000. 36.5 million Euros were wired by the Company into the
         Onyx capital reserve and 2.4 million Euros of new Onyx shares were
         subscribed by the Company for a total funding consideration of 38.9
         million Euros in the aggregate. After this capital increase, the
         Company directly owned 66.7% of Onyx while its wholly owned subsidiary
         CM (UK), owned 33.33% of Onyx.

         On September 25, 2000, Superstar also exercised 650,000 warrants and
         650,000 shares of Common Stock were issued by the Company to Superstar.

                                      F-22
<PAGE>

                          CAPITAL MEDIA GROUP LIMITED

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                          Year ended December 31, 2000

         In October 2000, FA Television Holdings LLC, a joint venture Company
         among Allied Capital, Gilles Assouline and Michel Assouline, subscribed
         for 480,000 shares of the Company at $1.50 each and 120,000 shares at
         $1.00 for an aggregate purchase price of $840,000, with all such shares
         being issued from the 6.5 million shares reserved for certain
         shareholders including the management in March 2000. In October 2000,
         600,000 new shares of the Company were issued to FA Television Holdings
         LLC. By a board decision of September 25, 2000, the Company agreed to
         register these shares.

         In December 2000, AB Groupe notified the Company that it had decided
         not to exercise the 2.6 million warrants at $1 as scheduled in the
         agreement dated October 20, 2000. The Company disputes this and
         believes that an agreement had been reached with AB Groupe to exercise
         of the 2.6 million warrants at the time the funds were received.
         However, until the dispute is settled, the $ 2.6 million received from
         AB Groupe is being treated as a loan in the Company's accounts.

         After all of these share issuances, at December 31, 2000 the Company
         has 33,203,251 shares of common stock outstanding and AB Groupe's and
         Superstar/David Ho's stock holding represented 53.6% and 31.29%,
         respectively. Including warrants and options, the total potential
         number of shares would be 41,072,890.

         In February 2001, the Company accepted a funding proposal from AB
         Groupe to loan the Company $800,000, which funds were required to
         support the Company's operations. The loan bears interest at 10% per
         annum and was due on April 30, 2001. Since the loan was not repaid by
         its due date, the loan is convertible into shares at a conversion price
         of US $0.60 per share. The Company is currently exploring alternative
         funding solutions and available capital formation options to repay this
         loan and to otherwise meet the Company's working capital requirements.

15.      DISCONTINUED OPERATIONS AND DIVESTMENTS IN 1999

         TINERAMA

         During 1998, the Company approved a decision to sell its interests in
         the Romanian group of companies Tinerama. The sale was for a nominal
         sum and the transaction agreed in November 1999 closed in February
         2000. The results of the Tinerama business in 1998 were reported
         separately as a discontinued operation.

         BLINK

         In December 1999, the 50% interest in Blink held by CM(UK) was sold to
         RCL Communications Ltd., the other joint investor for a nominal sum and
         CM(UK) converted its pound sterling 130,000 (approximately $200,000) of
         existing loans to Blink into new redeemable equity equating to 17% of
         Blink at this time. If successful in the future, Blink will be
         obligated to repay the redeemable equity.

                                      F-23
<PAGE>

                          CAPITAL MEDIA GROUP LIMITED

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                          Year ended December 31, 2000

16.      RESTATEMENT

         The Company previously had not recognized a charge for the beneficial
         conversion features ("BCF") embedded in certain convertible loans
         issued in 1999 (the effective date of EITF 98-5), and measured as the
         difference between the quoted market price and the subscription price
         at the date of issuance. Such BCF, amounting to $2,668,046, has been
         recorded and amortized as additional interest expense from the date of
         issuance through October 22, 1999, which was the date the loans were
         first convertible. In addition, the Company issued debt with detachable
         warrants in 1999, but did not apply the requirements of APB 14 -
         Accounting for Convertible Debt and Debt Issued with Stock Purchase
         Warrants. The debt discount associated with those warrants amounts to
         $187,592 of which $26,489 should have been recognized in 1999. Finally,
         options and warrants issued to third parties in 1999 were not valued
         and recorded as expense. The expense associated with those options and
         warrants amounted to $559,313. Accordingly the 1999 financial
         statements have been restated to reflect an additional charge of
         $3,253,848 as follows:

<TABLE>
<CAPTION>
                                                       As reported ($)      As restated ($)
                                                       ---------------      ---------------
<S>                                                      <C>                  <C>
Year ended December 31, 1999
Operating loss                                            (7,503,198)          (8,062,511)
Financial expense net                                     (8,980,325)         (11,674,860)
Loss from continuing operations before taxation          (14,682,703)         (17,936,551)
Net loss                                                 (14,624,976)         (17,878,824)
Net loss per share basic and diluted                          $(1.90)              $(2.32)
</TABLE>

17.      CHANGE IN ACCOUNTING POLICY

         As of January 1, 2000 the Company has adopted the recognition
         provisions of SFAS No. 123 -- "Accounting for Stock-Based Compensation"
         ("SFAS 123"). Under SFAS 123, the fair value of an option on the date
         of the grant is amortized over the vesting periods of the options. The
         recognition provisions of SFAS 123 are applied prospectively upon
         adoption. As a result, the recognition provisions are applied to all
         stock awards granted in the year of adoption and are not applied to
         awards granted in previous years unless those awards are significantly
         modified. The adoption of SFAS 123 resulted in non-cash charges to
         operations of $1,744,744 in 2000. The Company applied Accounting
         Principles Board Opinion No. 25 -- "Accounting for Stock Issued to
         Employees" ("APB 25") in accounting for its stock options, prior to
         January 1, 2000.

         Since the application of FAS 123 represents a change in accounting
         policy, the impact on the quarterly consolidated statement of operation
         previously published is as follows:

<TABLE>
<CAPTION>
                                                       As published ($)      As recalculated ($)
                                                       ----------------      -------------------
<S>                                                       <C>                    <C>
Three months ended March 31, 2000
Staff cost                                                  (657,889)            (2,251,737)
Operating loss                                            (1,797,735)            (3,391,583)
Financial expense                                           (855,281)              (873,281)
Loss from continuing operations before taxation           (2,708,411)            (4,320,259)
Net loss                                                  (2,708,713)            (4,320,561)
Net loss per share basic and diluted                          $(0.09)                $(0.15)
</TABLE>

                                      F-24
<PAGE>

                          CAPITAL MEDIA GROUP LIMITED

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                          Year ended December 31, 2000

<TABLE>
<CAPTION>
                                                       As published ($)      As recalculated ($)
                                                       ----------------      -------------------
<S>                                                       <C>                    <C>
Three months ended June 30, 2000
Operating loss                                            (2,731,022)            (2,881,917)
Financial expense                                         (1,123,173)            (1,151,173)
Loss from continuing operations before taxation           (3,757,097)            (3,935,992)
Net loss                                                  (3,757,093)            (3,935,992)
Net loss per share basic and diluted                          $(0.12)                $(0.13)
<CAPTION>
                                                       As published ($)      As recalculated ($)
                                                       ----------------      -------------------
<S>                                                       <C>                    <C>
Three months ended September 30, 2000
Staff cost                                                  (657,349)              (657,349)
Operating loss                                            (2,417,852)            (2,417,852)
Financial expense                                             18,883                 (8,117)
Loss from continuing operations before taxation
  and minority interest                                   (2,427,569)            (2,454,569)
Net loss                                                  (2,340,145)            (2,367,145)
Net loss per share basic and diluted                          $(0.08)                $(0.08)
</TABLE>

                                      F-25
<PAGE>

                          CAPITAL MEDIA GROUP LIMITED

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                          Year ended December 31, 2000

18.      SEGMENT INFORMATION BY ACTIVITY AND GEOGRAPHIC AREA

         The following financial information is summarized by business segment
         and country.

         -        The television media segment contains the operations of Onyx;
                  and

         -        The technology segment contains the operations of Unimedia,
                  Pixel and TopCard.

         CMG's activities are concentrated in Germany, France and Israel.
         Revenues to December 2000 account for approximately 75%, 13% and 12%
         respectively, (to December 1999 - approximately 67%, 15% and 18%
         respectively).

                                      F-26
<PAGE>

                          CAPITAL MEDIA GROUP LIMITED

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                          Year ended December 31, 2000

<TABLE>
<CAPTION>
Year ended December 31, 2000                     Television       Technology        Corporate          TOTAL
                                                   Media
<S>                                              <C>              <C>              <C>              <C>
Revenues                                          2,089,764          697,736                -         2,787,500

Income (losses) from operations                  (8,371,958)      (1,122,762)      (3,220,315)      (12,715,035)

Other income (expense)                              115,856           23,546         (236,832)          (97,430)
Interest expenses                                    84,289          (29,052)        (313,167)         (257,930)
Other financial income (expense), net                    96          199,236         (642,725)         (443,393)
Equity in net losses of affiliates                        -          (44,650)               -           (44,650)
Income tax benefit                                        -            9,689                -             9,689
Minority interest                                   453,995                -                -           453,995
                                                -----------      -----------      -----------       -----------
Net loss                                          7,717,722         (963,993)      (4,413,039)      (13,094,754)
                                                ===========      ===========      ===========       ===========
Total assets                                      1,613,140        2,928,113          949,784         5,497,037
                                                ===========      ===========      ===========       ===========
Capital expenditure                                 390,006          120,865             (102)          510,769
                                                ===========      ===========      ===========       ===========
Depreciation of fixed assets                        833,472           67,418            3,359           904,249
                                                ===========      ===========      ===========       ===========

<CAPTION>
                                       Germany            France            Israel           Other         TOTAL
                                                                                         Corporate
<S>                                   <C>              <C>                <C>           <C>             <C>
Revenues                               2,089,764          363,736           334,000              -        2,787,500

Income (losses) from operations       (8,371,958)      (1,141,220)          (18,458)    (3,220,315)     (12,211,991)

Other income (expense)                   115,856           24,024              (478)      (236,832)         (97,430)
Interest expenses                         84,289           34,948           (64,000)      (313,167)        (257,930)
Other financial income
(expense), net                                96          225,519           (26,283)      (642,725)        (443,393)
Equity in net losses of
affiliates                                     -                            (44,650)             -          (44,650)
Income tax benefit                             -            9,689                 -              -            9,689
Minority interest                        453,995                -                 -              -          202,473
                                     -----------      -----------       -----------    -----------      -----------
Net loss                               7,717,722         (847,040)         (116,953)    (4,413,039)     (13,094,754)
                                     ===========      ===========       ===========    ===========      ===========
Total assets                           1,619,140        1,488,093         1,440,020        949,784        5,497,037
                                     ===========      ===========       ===========    ===========      ===========
Capital expenditure                      390,006          117,865             3,000          (102)          510,769
                                     ===========      ===========       ===========    ===========      ===========
Depreciation of fixed assets             833,472           40,418            27,000          3,359          904,249
                                     ===========      ===========       ===========    ===========      ===========
</TABLE>

                                      F-27
<PAGE>

                          CAPITAL MEDIA GROUP LIMITED

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                          Year ended December 31, 2000

<TABLE>
<CAPTION>
Year ended December 31, 1999                    Television        Technology       Corporate           TOTAL
As restated (See Note 16)                         Media
<S>                                              <C>               <C>             <C>              <C>
Revenues                                          1,816,016          912,955                -         2,728,971

Income (losses) from operations                  (4,772,697)        (348,131)      (2,941,683)       (8,062,511)

Other income (expenses)                              27,837          104,275        1,676,783         1,808,895
Interest revenue                                          -            4,259                -             4,259
Interest expenses                                   (85,224)        (118,920)      (6,761,184)       (6,965,328)
Other financial income (expense), net            (3,622,693)         126,841       (1,217,939)       (4,713,791)
Equity in net loss of affiliates                                      (8,075)                            (8,075)
Income tax benefit                                    3,645           54,082                -            57,727
                                                -----------      -----------      -----------       -----------
Net loss                                         (8,449,132)        (185,669)      (9,244,023)      (17,878,824)
                                                -----------      -----------      -----------       -----------
Total assets                                        670,591        2,247,572        2,166,930         5,085,093
                                                -----------      -----------      -----------       -----------
Capital expenditure                                 633,643                -            9,223           642,866
                                                -----------      -----------      -----------       -----------
Depreciation of fixed assets                        274,360          111,843           12,944           399,147
                                                -----------      -----------      -----------       -----------

<CAPTION>
                                           Germany            France           Israel      Other Corporate     TOTAL
<S>                                       <C>               <C>                <C>            <C>            <C>
Revenues                                   1,816,016          428,955          484,000                 -      2,728,971

Income (losses) from operations           (4,772,697)        (470,131)         122,000        (2,941,683)    (8,062,511)

Other income (expense)                        27,837          104,275                -         1,676,783      1,808,895
Interest revenue                                   -            4,259                -                 -          4,259
Interest expenses                            (85,224)         (20,920)         (98,000)       (6,761,184)    (6,965,328)
Other financial income (expense),
net                                       (3,622,693)         126,841                -        (1,217,939)    (4,713,791)
Equity in net loss of affiliates                   -                -           (8,075)                          (8,075)
Income tax benefit                             3,645          (50,282)           3,800                 -         57,727
                                         -----------      -----------      -----------       -----------    -----------
Net loss                                  (8,449,132)        (205,394)          19,725        (9,244,023)   (17,878,824)
                                         ===========      ===========      ===========       ===========    ===========
Total assets                                 670,591        1,578,847          668,725         2,166,930      5,085,093
                                         ===========      ===========      ===========       ===========    ===========
Capital expenditure                          633,643                -                -             9,223        642,866
                                         ===========      ===========      ===========       ===========    ===========
Depreciation of fixed assets                 274,360           64,843           47,000            12,944        399,147
                                         ===========      ===========      ===========       ===========    ===========
</TABLE>

                                      F-28