U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

         [X]      Annual Report under Section 13 or 15(d) of the Securities
                  Exchange Act of 1934

                   For the fiscal year ended October 31, 2001

                                       or

         [ ]      Transitional Report Under Section 13 or 15(d) of the
                  Securities Exchange Act of 1934

                        Commission file number 000-29921

                                  MAGICINC.COM
                                  ------------
                 (Name of small business issuer in its charter)

             DELAWARE                                       65-0494581
             --------                                       ----------
   (State or other Jurisdiction of                      (I.R.S. Employer
    Incorporation or Organization)                     Identification No.)

            530 North Federal Highway, Fort Lauderdale, Florida 33301
            ---------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                    Issuer's telephone number (954) 764-0579


        Securities registered pursuant to Section 12(b) of the Act: NONE

        Securities registered under to Section 12(g) of the Exchange Act:

                                  Common Stock
                                  ------------
                                (Title of Class)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period 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 is not 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. [ ]

Magicinc.com did not have any revenue for the fiscal year ended October 31,
2001.

The aggregate market value of the voting stock held by non-affiliates (3,091,226
post-reverse split shares) computed by reference to the average bid price of
such stock ($0.02), as of January 31, 2002, was $61,825.

As of January 31, 2002 there were 4,386,519 shares of the Common Stock of
Magicinc.com outstanding.

<PAGE>

                                     PART I


ITEM 1.  DESCRIPTION OF BUSINESS

A.       Corporate History

         Magicinc.com ("We or the "Company") is a Delaware corporation
originally incorporated in 1961 as Magic Fingers, Inc. to design, manufacture
and distribute a patented vibrating massage device for installation in hotel and
motel beds. In 1979, we began attempts to diversify our operations and we sought
opportunities in other industries. Currently, we are a development stage company
with plans to engage in providing advertising on our Cybars.com network and the
distribution, promotion and production of varied forms of entertainment via the
Internet.

         In April 1994, we acquired, in a reverse merger, a 100% interest in
Flash Entertainment, Inc. ("Flash"), a Florida film production and distribution
corporation for 20,000,000 shares of our Common Stock (prior to the two reverse
splits of our Common Stock.) As part of this acquisition we also acquired a
Florida film distribution company, No Bull Distribution, Inc., which was a
wholly-owned subsidiary of Flash and the rights to three feature-length films,
"No More Dirty Deals," "Shakma," and "Shoot." Pursuant to the merger and
reorganization, Flash acquired approximately 79% of our outstanding stock and
assumed management of our company. Our current management obtained controlling
ownership, pursuant to this reorganization.

         In May 1995, certain company insiders attempted an unsuccessful hostile
takeover. Gordon Scott Venters, our president, and chief executive officer,
initiated legal action to prevent the takeover, and a trustee was subsequently
assigned. The trustee appointed a new board of directors and was eventually
released from his position on August 2, 1995. As a result, our company became
dormant and conducted minimal business operations until December 9, 1996, when
we reorganized and a new board of directors was elected. The reorganization was
carried out to bring change in our focus. We had substantial debt and no
significant operations. As a result of the reorganization, we began developing
and implementing a plan of operations designed to restructure and eliminate our
substantial debt. The last of our "old debt" was settled on December 5, 1999,
leaving us free to pursue our present plan of operations.

         At various times in our company's history, our charter under Delaware
law has become inoperative for failure to pay taxes. However, the delinquencies
were cured by filing a Certificate for Renewal and Revival in accordance with
Section 312 of the General Corporate Law of Delaware.

         In an effort to revitalize our company, new management undertook an
aggressive program to restructure and eliminate our debt. The debt primarily
consisted of promissory notes payable to Dr. H. K. Terry (the "Terry Notes") in
the amount of $220,000; a judgment entered against us in favor of Ing. Adolph
Malinek Gesellschaft M.B.H., an Austrian corporation, in the 15th Circuit Court,
Palm Beach, Florida, Case No. CL94-6263AJ in the amount of $247,205 (the
"Malinek Judgment"); and a secured convertible promissory note payable to HDT
Properties, Inc. in the sum of $100,000 (the "HDT Note").

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<PAGE>

         We satisfied the Malinek Judgment by payment of $50,000 cash and the
issuance of 100,000 pre-reverse split shares of our Common Stock. The HDT Note
was satisfied by payment of $50,000 cash. The Terry Notes were first extended
and then paid by issuing to Dr. Terry a total of 84,125 pre-reverse split shares
of our Common Stock.

         We entered into an agreement with Castle Hill Productions in March
1998, to grant and assign the rights in the motion picture "Shakma." We received
$7,220 pursuant to this agreement. This agreement was superseded by an agreement
dated February 12, 1999, in which we granted Castle Hill Productions the
exclusive worldwide rights to, three feature films owned by us, "Shakma,"
"Shoot," and "No More Dirty Deals." Castle Hill Productions paid us an
additional $46,240 for the distribution rights to these films in perpetuity.

B.       Corporate Organization

         During the fiscal year ended October 31, 2001, our corporation
structure consisted of the following four corporate divisions:

         CyBars.com - a nightclub portal, using CyBarCam Internet cameras and
monitors, which broadcasts, live on the Internet, nightclubs, bands and bars on
its own network, Magicinternetwork.com.

         Magicinternetwork.com - an independent network of exclusive
entertainment content owned or licensed to Magicinc.com for distribution to the
world market on the Internet.

         Magic Studios - an independent studio established to produce
independent films, music videos, commercials and other core content for
Magicinternetwork and for licensing to other broadcast mediums.

         Magic Music Label - an independent music label utilizing the CyBars.com
portal and the Magicinternetwork to distribute independent artists' music over
the Internet.

         Our primary activity during the fiscal year ended October 31, 2001 was
within the Cybars.com division. On January 2, 2002, we formed a wholly owned
subsidiary, Cybars Inc. This corporation was incorporated in Florida and will
assume the operations of our Cybars.com division.

         We expect to pursue opportunities involving our Magic Studios and Magic
Music during fiscal year 2002.

C.       Business of the Company

General

         We are development stage company engaged in the distribution, promotion
and production of varied forms of entertainment and advertising content.

         We own two registered domain names on the Internet:

         (i)      magicinternetwork.com, which we propose to use as our own
                  Internet Service Provider (ISP) for our CyBars network and

         (ii)     CyBars.com within which we intend to create an Internet link
                  of entertainment venues to magicinternetwork.com for Internet
                  broadcast of content owned by us.

         We intended to create an independent Internet entertainment network,
magicinternetwork.com (a registered domain name). Contained within this network
was to be a diverse array of select entertainment nightclub links using club
monitors. Cybars.com (a registered domain name) is a live Internet nightclub
syndication utilizing CyBarCam Internet cameras and club monitors. Our plan of
operations provided for our websites to contain graphically rich interactive
"CyBar-Streets" and "CyBarClubs" in a virtual entertainment network linking
major cities throughout the country. These "CyBar-Streets" were to contain

                                       4
<PAGE>

numerous entertainment venues in the form of Internet "CyBarClubs." At these
sites patrons were able to literally go "nightclubbing" from home computer
terminals linked to monitors and live camera feeds to local clubs.

         We had intended to sell memberships in our CyBarClub network with
various membership levels. The membership was to provide access to our website
and the club network for a monthly fee. For a higher monthly fee we were to
provide additional services.

         After a trial period with little success in attracting dues-paying
members, we discontinued soliciting for memberships and are now issuing free
memberships and plan to obtain our revenue from fees from nightclubs to be part
of our network.

         Although we have not abandoned the concept of members being able to
interact via the Internet with nightclub patrons, we are now concentrating on
offering owners of bars and nightclubs and eventually other establishments with
similar demographic characteristics, such as gyms and health clubs, the
opportunity to advertise on our network.

Description of Products and Services

         We are an entertainment and advertising holding company. We currently
have no substantial operations or operating history. We are attempting to create
an independent Internet entertainment and advertising network known as the
Cybars network and also the Magicinternetwork.com. Within these networks, we
plan to provide advertising commercials as well as varied entertainment.

         The CybarCam Internet cameras that we had installed at nightclubs are
being relocated and will be used for special events for short-term periods at
particular locations.

         Our plan of operation consists of using trained commissioned sales
people to solicit for advertisers for the Cybars network. We provide
advertisers, as part of an advertising package, a professionally produced
commercial which will air a specific number of times per day at locations that
agree to run the commercials on televisions at their place of business. The
locations are primarily bars which cater to a particular age and income group
which is attractive to specific advertisers.

         During the first quarter of fiscal 2002, we began to implement our new
business model. We have had modest success and have started to receive revenue
from advertisers. Our sales personnel have entered into contracts with 13
sponsors and our network is now viewed at 28 locations in the Fort Lauderdale,
Florida area.

         Generally, we offer an advertising package to sponsors for $250 per
month. Bars and other businesses which permit our ads to be viewed at their
locations are compensated with free advertising spots. We plan to aggressively
solicit for advertisers in Fort Lauderdale and for additional bars and similar
venues where our ads can be seen. We also plan to promote our advertisers on our
website and assist them in providing special offers to viewers and to guests of
our website.

         On a longer-term basis, we expect to hire sales personnel to sell ads
in other cities in Broward County, Florida such as Pompano Beach and Deerfield
Beach. If this endeavor proves to be successful, we intend to expand the scope
of our business to adjoining counties and throughout Florida.

          We currently hold an option to purchase all of the outstanding shares
of Quantum Entertainment, Inc., a Florida corporation ("Quantum"), in exchange
for certain rights and payment of $50,000 and 5,000 (post-reverse) shares
of our Common Stock. Quantum owns 100% of the exclusive worldwide distribution
rights to the feature film project "Liberty City." Also, Quantum owns 70% of the
gross proceeds after print, advertising and distribution costs up to the first
$5 million. Thereafter, Quantum will receive 60% of the gross proceeds up to
$7.5 million and then 50% in perpetuity. Gordon Scott Venters is the President
and CEO as well as a major shareholder of Quantum. For more information, see
Related Party Transactions.

                                       5
<PAGE>

Distribution Methods

         We have installed CyBarCams in various clubs in the Fort Lauderdale
area. The acceptance of these camera installations has not met our expectations
and we plan to provide them on a limited basis to a minimum number of select
clubs as part of our new focus on developing revenue from advertisers rather
than individual subscribers.

         We lease, with an agreement to purchase, a building, which houses our
corporate offices and an adjacent building where we plan to locate a
company-owned CyBar. Our plans for this location are tentative and may include
serving as a prototype CyBar location and as a live Internet corporate broadcast
facility for our planned CyBar Network.

         Our magicinternetwork.com division intends to record, store and own all
of the content transmitted via the CyBar network for future broadcasts and
licensing, as well as providing for our own network content and programming.

Other Opportunities

         In addition to pursuing our new adverting business model, we are
seeking to acquire companies or enter into joint ventures with companies that
are involved in the Internet, entertainment and advertising businesses. We may
also consider the acquisition of companies that are in completely unrelated
industries if our board of directors considers the opportunity worthwhile. In
light of our limited cash position and the price of our Common Stock, there is
no assurance that we will be able to complete the acquisition of any company.

         On January 2, 2002, we incorporated, as a wholly owned subsidiary,
Cybars Inc., to assume the operations of our Cybars division. We believe that
this corporate realignment should accommodate any proposed acquisitions which we
may pursue.

Competition

         The Internet, advertising and entertainment industries are intensely
competitive and there are many well-established competitors that have
substantially greater financial and other resources than we do. The great
majority of these companies are better established in the entertainment and
advertising marketplace than we are. Changes in consumer tastes, national,
regional or local economic conditions and demographic trends often affect these
businesses. There can be no assurances that we will be able to obtain the
desired results from our business strategy or to be profitable.

         The market for online entertainment and entertainment products is
relatively new, rapidly evolving and intensely competitive, and we expect
competition to intensify even more in the future. Barriers to entry are low, and
current and new competitors can launch new sites at low-cost, using commercially
available software.

         Competition for advertisers is intense. We will be competing with
similar networks but also with radio, television and cable companies.
Advertising rates on the Internet have fallen dramatically. However, we believe
that our new strategy of offering advertising in bars and nightclubs through our
Cybars.com network will provide advertisers with access to a select clientele at
attractive rates.

                                       6
<PAGE>

D.       Regulatory Overview

         We are subject to the same federal, state and local laws as other
companies conducting business on the Internet or providing advertising. Today
there are relatively few laws specifically directed toward online services.
However, due to the increasing popularity and use of the Internet and online
services, it is possible that laws and regulations will be adopted with respect
to the Internet or online services. These laws and regulations could cover
issues such as online contracts, user privacy, freedom of expression, pricing,
fraud, content and quality of products and services, taxation, advertising,
intellectual property rights and information security. Applicability to the
Internet of existing laws governing issues such as property ownership,
copyrights and other intellectual property issues, taxation, libel, obscenity
and personal privacy is uncertain.

         Changes to existing laws or the passage of new laws that address
Internet issues may directly affect the way we do business or may create
uncertainty in the marketplace. This could reduce demand for our services or
increase the cost of doing business as a result of litigation costs or increased
service delivery costs, or could otherwise harm our business. In addition,
because our services are accessible worldwide, and we expect to facilitate sales
of goods to users worldwide, foreign jurisdictions may claim that we are
required to comply with their laws. In some jurisdictions, we may be required to
collect value-added or other taxes on our fees. Our failure to comply with
foreign laws could subject us to penalties ranging from fines to bans on our
ability to offer our services.

E.       Reports to Security Holders

         We are not required to deliver an annual report to security holders and
we do not plan to deliver a copy of the annual report to the security holders.
Since the effective date of our Form 10-SB registration statement, we have filed
the required information with the Securities and Exchange Commission ("SEC"). We
plan to continue to file the 10-KSB, 10-QSB, and all other forms, that may be or
become applicable to us, with the SEC.

         The public may read and copy any materials that are filed by our
company with the SEC at the SEC's Public Reference Room at 450 Fifth Street, NW,
Washington, D.C. 20549. The public may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330. The statements
and forms filed by us with the SEC have also been filed electronically and are
available for viewing or copying on the SEC maintained Internet site that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC. The Internet address
for this site can be found at http://www.sec.gov. Additional information can be
found concerning us at our website on the Internet at http://www.magicinc.com.

F.       Employees

         We currently have three full-time employees and also employ four
independent commission sales representatives. We typically enter into
independent contractor agreements or work-for-hire agreements with individuals
to provide professional services on an as needed basis.

ITEM 2.  PROPERTY

         We lease an 8,500 square foot building at 530 North Federal Highway,
Fort Lauderdale, Florida. This building now houses our administrative offices
and computer operations. There are plans in place to build a recording studio
and video facility at this location.

         The lease is for a term of two-years, which began June 1, 2000 and is
scheduled to end May 31, 2002. The rent for the property was originally
scheduled as follows:

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<PAGE>

         June 1, 2000 through July 31, 2000          Rent waived by Lessor
         August 1, 2000 through November 30, 2000       $4,000/month
         December 1, 2000 through May 31, 2001          $4,500/month
         June 1, 2001 through November 30, 2001         $5,000/month
         December 1, 2001 through May 31, 2002          $5,300/month

         Since the renovation of the entire building was not completed and a
certificate of occupancy was issued on only part of the building, the lessor
waived rent payments until May 1, 2001. From that date until the present, we
have paid $3,000 per month pursuant to an agreement with the lessor. We have
received assurances that because of the delay in the completion of the
renovations to the building, the lease will be extended and its terms will be
modified.

         We have also entered into an agreement to purchase the building no
later than May 31, 2002 for $480,000 subject to standard conditions, including
obtaining necessary licenses and permits. We have received verbal assurance that
an extension of time will be granted to purchase the building. The lessor/seller
has, pursuant to an agreement with us, paid for certain repairs to the building.
We believe these facilities are adequate for us to operate our business as
presently constituted.

         During the construction period, we made available to Black Music
Television, Inc. a small part of our facility on a rent-free basis. Robert
Ingria, a former officer and director of our company was an officer, director
and major shareholder of Black Music Television, Inc. As of January 31, 2002,
Black Music Television, Inc. vacated our premises.

ITEM 3.  LEGAL PROCEEDINGS

         We are not currently a party to any legal proceedings. However, we have
been billed approximately $20,000 for services that, we believe, were previously
paid for with shares of our Common Stock in lieu of cash. If the claimant
pursues a legal remedy, we will defend our position. We also have been advised
that the holders of the remaining $28,000 of our convertible debentures, which
came due on October 20, 2001, may commence litigation if payment is not made.

         We are not aware of any other material legal, governmental or
administrative proceedings contemplated either against us or on our behalf.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters were submitted to a vote of our security holders during the
fourth quarter of our fiscal year other than the approval of the Amendment of
our Certificate of Incorporation to provide for a one-for-ten reverse split of
our Common Stock. The vote was taken by consent, without solicitation of proxies
and approved by a majority vote (34,163,784 pre-reverse split shares) of the
total shares of Common and Preferred Stock outstanding. Each share of our Common
Stock was entitled to one vote and each share of Series A Preferred Stock was
entitled to four votes as provided by our Certificate of Incorporation and
Certificate of Designations, Preferences and Rights of our Series A Preferred
Stock.

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<PAGE>

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Price Range of Common Stock

         The primary market for our Common Stock is the OTC Bulletin Board,
where it trades under the symbol "MGCN."

         Our Common Stock was traded on the OTC Bulletin Board until December
19, 1999 under the symbol "MAGC" and then under the symbol "MAGCE" until January
19, 2000 when it was delisted. From January 20, 2000, our stock was quoted in
the "Pink Sheets", which is a trademark of Pink Sheets LLC, under the symbol
"MAGC." On September 5, 2000 our registration statement, Form 10-SB, was deemed
"effective" by the SEC. Shortly thereafter, our stock recommenced trading on the
OTC Bulletin Board.

         On October 12, 2001, a 1-for-10 reverse split of our Common Stock
became effective and our stock symbol was changed to "MGCN."

         The following table sets forth the high and low closing bid prices for
the shares of our Common Stock for the periods indicated as provided by the OTC
Bulletin Board. The quotations shown reflect inter-dealer prices, without retail
mark-up, markdown, or commission and may not represent actual transactions.


Quarter Ending                               High              Low
--------------                               ----              ---

January 31, 2000                             $0.50            $0.06
April 30, 2000                                0.20             0.05
July 31, 2000                                 0.12             0.04
October 31, 2000                              0.19             0.04


Quarter Ending                               High              Low
--------------                               ----              ---
January 31, 2001                             $0.30            $0.06
April 30, 2001                                0.18             0.04
July 31, 2001                                 0.14             0.011
October 31, 2001
(August 1, 2001 to October 11, 2001           0.049            0.003
(October 12 - October 31, 2001)               0.05             0.03

         The stock price quotations prior to October 11, 2001 have not been
adjusted for the 1-for-10 reverse split which became effective on October 12,
2001. The quotations for the period beginning October 12, 2001 reflect the
1-for-10 reverse split.

Price Range of Preferred Stock.

         All of our Series A Preferred Stock is owned by our president, Gordon
Scott Venters. There is no public market for our Preferred Stock.

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<PAGE>

Shareholders

         As of January 31, 2002, we had 4,386,519 shares of Common Stock
outstanding and 5,576,923 shares of Series A Preferred Stock outstanding. The
Series A Preferred Stock is convertible into 557,693 shares of Common Stock.

         As of January 31, 2002, we had approximately 475 shareholders of our
Common Stock and as of that date we had one shareholder of our Series A
Preferred Stock.

         The holders of our Common Stock are entitled to one vote for each share
held of record on all matters submitted to a vote of shareholders. Holders of
our Common Stock have no preemptive rights and no right to convert their Common
Stock into any other securities. There are no redemption or sinking fund
provisions applicable to the Common Stock.

         The holders of the Series A Preferred Stock have rights identical to
the holders of the Common Stock except that each share of the Preferred Stock
has the voting rights equivalent to four times the votes of each share of Common
Stock into which it may be converted.

Dividends

         We have never declared or paid any cash dividends on our Common Stock
and do not anticipate paying any cash dividends in the foreseeable future. We
currently intend to retain future earnings, if any, to finance operations and
the expansion of our business. Any future determination to pay cash dividends
will be at the discretion of the board of directors and will be based upon our
financial condition, operating results, capital requirements, plans for
expansion, restrictions imposed by any financing arrangements and any other
factors that the board of directors deems relevant.

Changes in Securities and Use of Proceeds

Common Stock

         In the fiscal year ending October 31, 2000, we issued 4,747,500
(pre-reverse split) shares for cash; 75,000 as part of a debt settlement
agreement; 1,635,600 for services and other value and 3,230,381 for conversion
of our convertible debentures for a total of 9,688,481 shares. The details of
these stock issuances were reported in our Form 10-SB filing and Form 10-KSB for
the fiscal year ended October 31, 2000.

         As of October 31, 2000, the total of our outstanding shares of Common
Stock was 13,632,505.

         In the fiscal year ending October 31, 2001, we issued a total of
29,232,680 (pre-reverse split) shares of Common Stock or 2,923,268 (post-reverse
split) shares. Of these shares, on a pre-reverse split basis, 13,080,881 were
issued for cash; 2,000,000 for services and the balance of 14,151,799 was used
in connection with the conversion of our convertible debentures. The details of
our stock issuances from November 1, 2000 through July 31, 2001 were reported in
our Forms 10-QSB for the quarters ended January 31, 2001, April 30, 2001 and
July 31, 2001.

         During the period from August 1, 2001 through October 31, 2001, the
fourth quarter of our fiscal year, we issued a total of 19,130,340 (pre-reverse
split) shares or 1,913,034 (post-reverse split) shares. Of these shares,
10,200,000 (pre-reverse split) shares were issued for cash; 75,000 (pre-reverse
split) shares or 7,500 (post-reverse split) shares were issued for services and
8,855,340 (pre-reverse split) shares or 885,534 (post-reverse split) shares
were issued in conversion of our debentures including interest. The details of
the stock issuances during our fourth fiscal quarter are listed below.

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<PAGE>

         In September 2001, 25,000 (pre-reverse split) shares were issued to Dr.
George Williams and 50,000 (pre-reverse split) shares were issued to John
Kearney, a former director of our company, for business consulting services. The
stock was valued at $500 and $1,000 respectively or $0.02 per share, which
approximated market value. The issuances were made in reliance on Section 4(2)
of the Securities Act of 1933 and were made without general solicitation or
advertising. The recipients are sophisticated investors with access to all
relevant information necessary to evaluate the investment and they both
represented to us that the securities were being acquired for investment
purposes.

         In September 2001, we also issued 200,000 (pre-reverse split) shares of
our Common Stock to Dr. Harold Terry at $0.10 per share. The issuance was made
in reliance on Section 4(2) of the Securities Act of 1933 and was made without
general solicitation or advertising. The recipient is an "accredited"
sophisticated investor with access to all relevant information necessary to
evaluate the investment, and who represented to us that the securities were
being acquired for investment purposes. We used the $20,000 proceeds of the sale
for general working capital requirements.

         On October 1, 2001, we also issued 10,000,000 (pre-reverse split)
shares of our Common Stock to Dr. Harold Terry at $0.02 per share. The issuance
was made in reliance on Section 4(2) of the Securities Act of 1933 and was made
without general solicitation or advertising. The recipient is an "accredited"
sophisticated investor with access to all relevant information necessary to
evaluate the investment, and who represented to us that the securities were
being acquired for investment purposes. We used the $200,000 proceeds of the
sale for general working capital requirements.

         As of October 31, 2002 we had 4,286,519 (post-reverse split) shares of
Common Stock outstanding.

         In the first quarter of fiscal year 2002, we issued a total of 100,000
(post-reverse split) shares of our Common Stock for cash.

         As of January 31, 2002 we had 4,386,519 (post-reverse split) shares of
Common Stock outstanding.

Series A Preferred Stock

         On March 23, 2001, we issued 3,076,923 shares of Series A Preferred
Stock to our president and chief executive officer, Gordon Scott Venters, in
exchange for the elimination of $200,000 of debt owed to him for accrued
salaries. The shares were valued at $0.065 per share which was the average price
of the Common Stock at the time of issuance. Each share of this series of
preferred stock was initially convertible into one share of Common Stock. The
issuance was made in reliance on Section 4(2) of the Securities Act of 1933 and
was made without general solicitation or advertising. The recipient is an
"accredited" investor, by virtue of his position with our company, with access
to all relevant information necessary to evaluate the investment, and who
represented to us that the securities were being acquired for investment
purposes.

         On October 1, 2001, we issued an additional 2,500,000 shares of Series
A Preferred Stock to our president and chief executive officer, Gordon Scott
Venters, in exchange for the elimination of $50,000 of debt owed to him for
accrued salaries. The shares were valued at $0.02 per share which was in excess
of the average price of the Common Stock on September 28, 2001. Each share of
this series of preferred stock was also initially convertible into one share of
Common Stock. The issuance again was made in reliance on Section 4(2) of the
Securities Act of 1933 and was made without general solicitation or advertising.

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<PAGE>

The recipient is an "accredited" investor, by virtue of his position with our
company, with access to all relevant information necessary to evaluate the
investment, and who represented to us that the securities were being acquired
for investment purposes.

         The Series A Preferred Stock is identical to the Common Stock except
that each share of Series A Preferred Stock has voting rights equivalent to four
times the number of shares of Common Stock into which it could be converted.

         On October 12, 2001, a 1 for 10 reverse split of our Common Stock
became effective resulting in each share of Common Stock being exchanged for
one-tenth of a new share of our Common Stock. The number of shares of the Series
A Preferred remained the same as before the reverse split, however, the
conversion feature was changed from one share of pre-reverse split Common Stock
for each share of Series A Preferred Stock to one-tenth share of post-reverse
split Common Stock for each share of Series A Preferred Stock. Consequently,
each share of Series A Preferred Stock has voting rights equivalent to
four-tenths of a share of Common Stock.

Convertible Debentures

         In January 2001 and, then again, in May 2001, we received $130,500
(net of expenses of $19,500) for a total of $261,000 (net of expenses of
$39,000) from our offering of 5% Class A Senior Subordinated Convertible
Redeemable Debentures. These debentures entitle the holder to convert into our
Common Stock at 70% of the average closing bid price of the three trading days
prior to the election to convert. Accrued interest may also be paid in the same
fashion. At any time after 90 days, we have the option to redeem the debentures,
in whole or in increments of $10,000, for 125% of the face amount. At the
request of the debenture holders, we issued, in escrow, 3,250,000 (pre-reverse
split) shares of Common Stock to guarantee the stock issuance if the debenture
holders elect conversion. All of the escrow shares have been used to satisfy
conversion requests by the debenture holders.

         During the period from August 1, 2001 through October 31, 2001, the
fourth quarter of our fiscal year, we issued 8,855,340 (pre-reverse split)
shares or 885,534 (post-reverse split) shares in conversion of our debentures
including interest.

         As of October 31, 2001, the remaining balance of the convertible
debenture issue was $28,000. The debentures came due on October 20, 2001 and as
of January 31, 2002, $28,000 remains unpaid. Due to provisions of the conversion
formula, the potential dilutive effect, if debentures are converted, cannot be
determined at this date.

                                       12
<PAGE>

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF INFORMATION

Results of operations for the Fiscal Years Ending October 31, 2001 and
October 31, 2000

         The following discussion and analysis provides information that our
management believes is relevant to an assessment and understanding of our
results of operations and financial condition. The discussion should be read in
conjunction with the financial statements and footnotes that appear elsewhere in
this report.

Sales and Other Revenues

         In the fiscal years ending October 31, 2001 and October 31, 2000, there
were no sales or other revenues.

Cost of Sales

         Since there were no sales or revenues in fiscal years 2001 and 2000,
there was no cost of sales for those periods.

Expenses

         Selling, general and administrative expenses for the fiscal year 2001
increased $280,204 or 73.5% to $661,498 from $381,294 in fiscal year 2000.
During this same period, interest expense increased $90,882 or 108.7% to
$174,474 for fiscal year 2001 from $83,592 in fiscal year 2000. The increase in
selling, general and administrative expenses was primarily the result of
continuing expenses associated with the relocation to new facilities and the
general expenses associated with the start-up of our Internet-related
entertainment business and subsequent redirection of focus to an
advertising-based business model from our original subscriber-based revenue
approach. Included in the selling, general and administrative expenses, for the
fiscal year 2001 is the salary of our president and chief executive officer, Mr.
Gordon Scott Venters, in the amount of 133,000 of which $24,569 remains unpaid.
Mr. Venters, during the year, exchanged $250,000 of unpaid salary owed to him
for shares of our Series A Convertible Preferred Stock. Also included in the
expenses for the year are professional consulting services paid for with the
issuance of our Common Stock, valued at $185,881.

         The increase in interest expense resulted from the payment of interest
on $300,000 of convertible debentures. The interest on the debentures was a
combination of the payment of the coupon rate on the debentures, in stock, and
the amortization of the original issue discount on the debentures.

         Depreciation expense, for fiscal year 2001, increased 131.5%, to $5,294
from $2,287 in fiscal year 2000.

Losses

         Our net loss before taxes for fiscal year 2001 increased 79.8% to
$835,972 from $464,886 in fiscal year 2000. This increase in the loss before
taxes of $371,086 was the result of the increase of selling, general and
administrative expenses of $280,204 and the increase in interest expense in the
amount of $90,882.

                                       13
<PAGE>

         We believe that our new business model, which is dependent upon
revenues from advertisers, should result in a substantial reduction in losses
and may even provide us with a small profit for the year ending October 31,
2002. There can be no assurance that we will achieve or maintain profitability
or that revenues will be generated or that growth can be sustained in the
future.

Income Tax Expense (Benefit)

         We have substantial net operating loss carry-forwards, which may be
used to offset operating profits in the future. In the periods covered by this
report there was no income tax expense or benefit reported on our financial
statements.

Loss per Share

         The loss per share of Common Stock was $0.37 in fiscal 2001 and $0.87
in fiscal 2001. The Basic Net Loss per Share is computed by dividing the Net
Loss, by the Weighted Average Common Shares Outstanding. In fiscal 2001, the
weighted average of outstanding Common Shares which includes the weighted
average number of Common Shares into which the Preferred Stock is convertible
was 2,288,381, after adjusting retroactively for the 1-for-10 reverse stock
split. In fiscal year 2000, the weighted average shares of Common Stock was
533,817, as retroactively-adjusted for the reverse stock split.

Impact of Inflation

         It is management's opinion that inflation has had only a negligible
effect on our operations in the past several years.

Liquidity and Capital Resources

         We did not generate cash from operations in the period November 1, 1999
through October 31, 2001. In fact, our operating activities consumed cash in the
amount of $473,000 in the fiscal year ended October 31, 2001 and $250,000 in
the fiscal year ended October 31, 2000.

         We have been able to continue in business primarily from the receipt of
cash from financing activities. During fiscal year 2001, our financing
activities provided total funds of $515,000. Similarly, our financing activities
provided total funds of $270,000 for fiscal year 2000.

         We have funded our cash needs during the last two fiscal years through
the issuance of our Common Stock and convertible debentures, for cash. We also
used our Common Stock, in lieu of cash, to obtain professional and employment
services. We intend to cover our cash needs over the next 12 months through the
sale of additional shares of our Common Stock and/or convertible securities
pursuant to a registration statement or an appropriate exemption from
registration. In order to support existing and proposed operations, bank,
private and/or equity financing will be necessary. However, there is no
guarantee that we will be able to raise additional funds from borrowing or the
sale of our securities.

Capital Expenditures

         Up through the end of our fiscal year, October 31, 2000, our capital
expenditures on property and equipment had not been significant. We
substantially increased our capital expenditures, including leasing, during
fiscal year 2001, as we proceeded with the development and the launching of the
magicinternetwork and CyBar.com concepts. Our landlord has paid $26,935 for
repairs and renovations to our new facilities.

                                       14
<PAGE>

Quasi-reorganization

         As of October 1999, we reached settlement agreements with all of our
significant creditors. Also, by that date we changed our business focus to
become an Internet entertainment company. Our board of directors, therefore,
elected to state our October 31, 1999 balance sheet as a "quasi-reorganization."
In a quasi-reorganization, the deficit in retained earnings is eliminated by
charging paid-in-capital. In effect, this gave our balance sheet a
"fresh-start." Beginning November 1, 1999 and continuing forward, we are
crediting net income and charging net losses to retained earnings.

Ability to Continue as a Going Concern

         Our financial statements, which are a part of this Form 10-KSB, have
been prepared assuming that we will continue as a going concern. In the past two
years, while we have been developing a new business plan, we have had no
revenue. The lack of sales and recurring losses from operations raises
substantial doubt about our ability to continue as a going concern. Our
management estimates it will need approximately $300,000 to fund our operations
for the next 12 months. Our management's plan regarding these matters is to seek
further equity funding to allow us to meet our cash needs and to build
Cybars.com. In order to support ongoing operations for the next 12 month period,
additional financing must be obtained.

ITEM 7.  FINANCIAL STATEMENTS

         Our financial statements for the fiscal years ended October 31, 2001
and October 31, 2000 follow as pages F-1 through F-15.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
         AND FINANCIAL DISCLOSURE

         We have not changed our accountant nor have we had disagreements with
him on accounting or financial disclosure.

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

         The following is a list of our directors, executive officers, control
persons, and significant employees, their respective ages and the positions they
hold with us.

    Name                  Age           Positions
    ----                  ---           ---------
Gordon Scott Venters      40     Director, chief executive officer and president
Todd Nugent               44     Director


         Pursuant to Article II of our bylaws, all directors are elected to a
term of one year, and hold such office until the next meeting of the
shareholders or until their successors are elected and qualified. The executive
officers serve at the pleasure of the board. The principal occupation and
business experience for each executive officer and director for at least the
past five years follows:

         Gordon Scott Venters, our president and chief executive officer has
specialized in the entertainment industry, including the financing, management
and production of films, videos and recordings, for over 17 years. Mr. Venters
has served as our director from March 15, 1994 to May 19, 1995 and from

                                       15
<PAGE>

December 9, 1996 to the present. From May 19, 1996 until December 9, 1996, he
served as president and a director of Quantum Entertainment Company in Los
Angeles, California. From 1990 to 1993, Mr. Venters served as the president and
chief executive officer of Flash Entertainment, Inc., an independent feature
film company and predecessor of our company, during which time he was the
executive producer of the feature film "No More Dirty Deals" and five music
videos. From 1989 to 1990, Mr. Venters was the executive producer of two
full-length feature films, "Shakma" and "Shoot." Mr. Venters has also been a
financial advisor and a registered stockbroker with F.D. Roberts Securities from
1987-1989 and with Prudential- Bache Securities, Inc.

         Todd Waddell Nugent, a director since 1996, served as our chief
executive officer from July 17, 1996 to December 9, 1996 and as the president of
our company's Entertainment Film Partners division from December 9, 1996 to
February 17, 1997, when this division was eliminated. From June 1995 to March
1996, Mr. Nugent served as chief executive officer of Stradigi, Inc., a
telecommunications group. Mr. Nugent was a co-founder of Multi-Channel Video
Programming, Inc., a DBS system, where he served as its chief executive officer
from February 1994 to March 1995. From 1986 to February 1993, Mr. Nugent was a
broker with Royal Alliance and Associates, Inc., a registered securities
broker/dealer.

         On January 31, 2002, we accepted the resignation of our director, Mr.
Robert Ingria. We are in the process of considering a replacement for Mr.
Ingria.

Compliance with Section 16(a) of the Exchange Act

         Gordon Scott Venters and Todd Nugent have not filed all required Forms
3 and 4 in a timely manner.

ITEM 10: EXECUTIVE COMPENSATION

Compensation of Executives

         The following table provides summary information for the fiscal years
2001 and 2000 concerning cash and non-cash compensation paid or accrued by us to
or on behalf of Gordon Scott Venters, our president and chief executive officer.
<TABLE>
<CAPTION>

                                   Summary Compensation Table

                                   Annual Compensation                   Awards         Payouts
                          ------------------------------------------  --------------  --------------
                                                                                       Securities
 Name                                                  Other                             Under-
 and                                                   Annual         Restricted          lying        All Other
 Principal                                             Compen-          Stock           Options/LTIP    Compen-
 Position        Year        Salary        Bonus        sation          Awards          SARs Payouts     sation
-------------- --------- --------------  ----------  ---------------  --------------  -------------- -------------
<S>             <C>         <C>                <C>        <C>             <C>                 <C>           <C>
G.S. Venters    2000        133,000            0          0               0                   0             0
CEO             2001        133,000            0          0               0                   0             0
</TABLE>

         No officer or employee other than Mr. Gordon Scott Venters received a
total of salary, bonus and other compensation which, when combined, exceeded
$100,000 during the fiscal years ended October 31, 2000 and October 30, 2001.

                                       16
<PAGE>

Employment Agreements

         Gordon Scott Venters - Effective October 1, 1997, we entered into a
three-year employment agreement with Gordon Scott Venters, our president and
chief executive officer, whereby Mr. Venters receives a salary of $75,000 for
the first year. The agreement provided for increases in year-two to $100,000 and
year-three to $133,000. The agreement has not yet been extended. With the
approval of our board of directors, accruals of salary expense for Mr. Venters
have continued after the end of the term of the agreement at the same monthly
rate as in the final year of the agreement. The earned, but unpaid, portion of
Mr. Venters' compensation is carried as a current payable and reflects any
payments made through October 31, 2000 and October 31, 2001. The amounts owing
on those dates were $278,444 and $24,569 respectively.

         Mr. Venters is also entitled to receive two-weeks paid vacation for the
first-year and four-weeks paid vacation for the following two years. In the
event of Mr. Venters' disability for a period of more than two weeks, Mr.
Venters will receive 50% of his compensation for a period of up to three months.

         Robert Michael Ingria - Effective December 15, 1999, we entered into a
one year employment agreement with Robert Michael Ingria. In December 1999, Mr.
Ingria received 75,000 (pre-reverse split) shares of our Common Stock pursuant
to the employment agreement. In addition, as a director, Mr. Ingria received
25,000 additional (pre-reverse split) shares annually for his services. On
August 24, 2000, Mr. Ingria received an additional 325,000 (pre-reverse split)
shares valued at $16,250 or $0.05 per share. Mr. Ingria resigned effective
January 31, 2002.

Compensation of Directors

         All members of our board of directors will receive, on an annual basis,
shares of our Common Stock, as payment for services. The number of shares will
be determined at a future date.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth certain information concerning the
ownership of our (post-reverse split) Common Stock and Series A Preferred Stock
as of January 31, 2002, with respect to: (i) each person known to us to be the
beneficial owner of more than 5 percent of each class of stock; (ii) all of our
directors and executive officers; and (iii) all of our directors and executive
officers as a group. The notes accompanying the information in the table are
necessary for a complete understanding of the information provided below. As of
January 31, 2002, there were 4,386,519 shares of Common Stock outstanding and
5,576,923 shares of Series A Preferred Stock outstanding. Each share of Series A
Preferred Stock is convertible into one-tenth (0.1) of a share of post-reverse
split Common Stock. Each share of Series A Preferred Stock has the equivalent
voting rights of four-tenths (0.4) of a share of Common Stock.

                                       17
<PAGE>

Class of Stock
Common Stock

                                                 Number of
                            Relationship         Shares                 Percent
Name and Address of            to the            Beneficially Owned     of
Beneficial Owner              Company            (post-reverse split)   Class
----------------              -------            ---------              -----
Gordon Scott Venters           Director           60,770                 1.4%
530 North Federal Highway      Officer
Fort Lauderdale, FL 33301

Todd Nugent                    Director            9,050                 0.2%
1291 Claret St.
Fort Myers, FL 33919

Dr. Harold K. Terry                            1,225,473                27.9%
600 NE 55th Terrace
Miami, FL 33137

Bering Capital                                   485,335                11.1%
8 Greenway Plaza, Suite 818
Houston, TX 77046

Directors and officers as a
group (2 individuals)                             69,820                 1.6%


This table does not include the potential shares that may be issued if the
outstanding $28,000 Series A debentures are converted into Common Stock. Three
investors own the debentures. Due to the nature of the conversion formula, the
number of shares that may be issued cannot be determined.

Class of Stock
Series A Preferred Stock


                               Relationship      Number of Shares       Percent
Name and Address of               to the          Beneficially            of
Beneficial Owner                 Company            Owned                Class
----------------                 -------            ---------           -----

Gordon Scott Venters              Director          5,576,923           100.0%
530 North Federal Highway         Officer
Fort Lauderdale, FL 33301

Todd Nugent                       Director                  0             --
1291 Claret St.
Fort Myers, FL 33919

Directors and officers as a
group (2 individuals)                               5,576,923           100.0%

                                       18
<PAGE>

Changes in Control

         There are currently no arrangements in place that will result in a
change in control of our company.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Mr. Gordon Scott Venters is employed as the Company's President and
Chief Executive Officer, pursuant to an original three-year employment agreement
which began October 1, 1997. The agreement provided for a base salary of
$75,000, $100,000 and $133,000 for years one, two and three, respectively. Since
the end of the term of the employment agreement, Mr. Venters has, with the
approval of the Board of Directors, continued in his positions with the Company
and his salary has continued to accrue at the same level as in the last year of
the agreement. The accrued, but unpaid, portion of Mr. Venters' cash
compensation is carried as a current payable and reflects any payments made
through October 31, 2001 and October 31, 2000. In March and October 2001, Mr.
Scott Venters received, in exchange for a total of $250,000 of salary owed to
him, a total of 5,576,923 shares of Series A Preferred Stock. The Series A
Preferred Stock is convertible into 557,693 (post-reverse split) shares and has
the equivalent voting rights of 2,230,772 shares of (post-reverse split) Common
Stock. As of October 31, 2001 and October 31, 2000, the amount owed Mr. Gordon
Scott Venters for accrued salary was $24,569 and $278,444, at those dates,
respectively.

         In addition to cash compensation, the Company granted Mr. Venters
options to purchase 750,000 (pre-reverse split) shares of the Company's common
stock at $0.0001 per share. As of October 31, 1999, Mr. Venters had exercised
all of these options.

         Mr. Venters also has an option to acquire an additional 500,000
(pre-reverse split) shares at $0.0001 per share upon the successful procurement
of financing for the motion picture "Liberty City".

         On May 28, 1999 and amended on June 15, 1999, we were granted an option
to purchase all of the outstanding shares of Quantum, a Florida corporation, in
exchange for certain rights and payment of $50,000 and 5,000 (post-reverse)
split shares of our Common Stock. Quantum owns 100% of the exclusive worldwide
distribution rights to the feature film project "Liberty City." It also owns 70%
of the gross proceeds after print, advertising and distribution costs up to the
first $5 million. Thereafter, Quantum Entertainment, Inc. will receive 60% of
the gross proceeds up to $7.5 million and then 50% in perpetuity. Gordon Scott
Venters is the president and chief executive officer as well as a major
shareholder of Quantum Entertainment, Inc.

         During both fiscal years 2000 and 2001, Mr. John Venters, the father of
the Company's president, owed the Company, on a non-interest bearing basis, up
to $50,000 for short-term periods. As of October 31, 2001, the balance owed was
$50,000 which was repaid in January 2002.

         Mr. Robert Ingria, a former director of our company was also president,
director and shareholder of Black Music Television, Inc. During the construction
period, we made available to Black Music Television, Inc. a small part of our
facility on a rent-free basis. As of January 31, 2002, Black Music Television,
Inc. vacated our premises.

                                       19
<PAGE>

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits

                  23.1     Consent of Michael F. Cronin, Certified Public
                           Accountant

         (b)      Reports on Form 8-K.

         During the quarter ended October 31, 2001, we filed a Form 8-K on
October 9, 2001.


                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                     MAGICINC.COM


February 13, 2001                    By: /s/ Gordon Scott Venters
                                         ------------------------
                                         Gordon Scott Venters
                                         President and Chief Executive Officer
                                         and Director

February 13, 2001                        /s/ Todd Nugent
                                         ------------------------
                                         Todd Nugent, Director

                                       20
<PAGE>

                                  MAGICINC.COM

                          INDEX TO FINANCIAL STATEMENTS


      Independent Auditor's Report..........................................F-2

      Financial Statements:

         Balance Sheet as of October 31, 2001 and October 31, 2000..........F-3

         Statement of Operations for the Years Ended October 31, 2001
           and October 31, 2000 ............................................F-4

         Statement of Cash Flows for the Years Ended October 31, 2001
           and October 31, 2000.............................................F-5

         Statement of Changes in Stockholders' Equity for the Years
           Ended October 31, 2001 and October 31, 2000......................F-6

         Notes to Financial Statements......................................F-7


                                       F-1
<PAGE>

                                Michael F. Cronin
                           Certified Public Accountant
                             1574 Eagle Nest Circle
                          Winter Springs, Florida 32708



Board of Directors and Shareholders
Magicinc.com
Fort Lauderdale, Florida

         I have audited the  accompanying  balance sheet of  Magicinc.com  as of
October 31, 2001 and October 31, 2000 and the related  statements of operations,
cash flows and  stockholders'  equity for the years then  ended.  The  financial
statements are the  responsibility  of the directors.  My  responsibility  is to
express an opinion on these financial statements based on my audit.

         I conducted my audit in accordance  with  generally  accepted  auditing
standards  except as described in the last paragraph.  Those  standards  require
that I plan and perform the audit to obtain  reasonable  assurance about whether
the financial  statements are free of material  misstatement.  An audit includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall financial statement presentation. I believe that my audit
provides a reasonable basis for my opinion.

         In my opinion,  the  financial  statements  referred  to above  present
fairly, in all material  respects,  the financial position of Magicinc.com as of
October 31, 2001 and  October  31, 2000 and the results of its  operations,  its
cash  flows and  changes  in  stockholders'  equity  for the years then ended in
conformity with generally accepted accounting principles.

         The accompanying  financial  statements have been prepared assuming the
Company will  continue as a going  concern.  The Company has incurred  operating
losses of  approximately  $6,600,000  through  October 31, 2001.  As a result of
these continued losses, the Company has been unable to generate  sufficient cash
flow from its operating activities to support current operations.  The Company's
ability to generate  sufficient future cash flows from its operating  activities
in order to sustain  future  operations  cannot be determined at this time.  Its
plan  is  included  in  Note 9 of the  financial  statements.  The  Company  has
primarily  funded  its  operations  through  the sale of its  common  stock  and
proceeds of debt borrowings.  There can be no assurance that the Company will be
able to do so in the future,  and, if so, provide it with sufficient capital and
on terms favorable to the Company.  These  uncertainties raise substantial doubt
about the  Company's  ability to  continue  as a going  concern.  The  financial
statements do not include any  adjustments  that might arise from the outcome of
these uncertainties.

January 31, 2002

/s/ Michael F. Cronin
------------------------------
Michael F. Cronin
Certified Public Accountant

                                       F-2
<PAGE>
<TABLE>
<CAPTION>
                                          MAGICINC.COM

                                          Balance Sheet
                              October 31, 2001 and October 31, 2000

ASSETS
                                                               October 31,        October 31,
                                                                  20O1              2000
                                                               ----------         ----------
<S>                                                            <C>                <C>
Current Assets:
  Cash and Cash Equivalents                                    $   58,858         $   17,129
  Loans Receivable - Related Parties                               50,000
  Deposit Receivable                                                    0             10,000
                                                               ----------         ----------
      Total Current Assets                                        108,858             27,129

Property and Equipment-Net                                         15,926             10,926
                                                               ----------         ----------

      Total Assets                                                124,784             38,055
                                                               ==========         ==========

LIABILITIES & STOCKHOLDERS' EQUITY

Current Liabilities:
  Accounts Payable-Trade and Accrued Expenses Payable              20,873             12,794
  Accrued Officer's Salary under Employment Agreement              24,569            278,444
  Convertible Debentures Payable                                   28,000                  0
                                                               ----------         ----------

       Total Liabilities                                           73,442            291,238
                                                               ----------         ----------


Stockholders' Equity:
  Preferred Stock, Series A Convertible ($0.0001 par value)
    5,576,923 Shares Authorized
    5,576,923 Shares Issued in 2001                               250,000                  0
    -0- Shares Issued in 2000

  Common Stock
    44,423,077 Shares Authorized ($0.0001 par value)            1,102,200            231,703
    4,286,519 Shares Issued in 2001
    1,361,251 (Post-reverse) Shares Issued in 2000

  Subscription Receivable                                               0            (20,000)

  Deficit Accumulated During Development Stage
    Since Quasi-reorganization October 31, 1999                (1,300,858)          (464,886)
                                                               ----------         ----------

          Total Stockholders' Equity (Deficit)                     51,342           (253,183)
                                                               ----------         ----------

          Total Liabilities & Stockholders' Equity             $  124,784         $   38,055
                                                               ==========         ==========
</TABLE>
See Summary of Accounting Policies and Notes to Financial Statements

                                      F-3
<PAGE>
<TABLE>
<CAPTION>
                                          MAGICINC.COM

                                     Statement of Operations
                  For the Years Ended October 31, 2001 and October 31, 2000


                                                                  Year Ended          Year Ended
                                                               October 31, 2001    October 31, 2000
                                                             ------------------   ------------------
<S>                                                          <C>                  <C>
Net Sales                                                    $               0    $               0

Costs Applicable to Sales and Revenue                                        0                    0
                                                             ------------------   ------------------

Gross Profit                                                                 0                    0

Selling, General and Administrative Expenses                           661,498              381,294

Interest Expense                                                       174,474               83,592
                                                             ------------------   ------------------
Net Loss before Income Taxes                                          (835,972)            (464,886)

Income Tax Expense                                                           0                    0
                                                             ------------------   ------------------

Net Loss                                                     $        (835,972)   $        (464,886)
                                                             ==================   ==================

Basic Net Loss per Share                                     $           (0.37)   $           (0.87)
                                                             ==================   ==================

Weighted Average Common Share Equivalents
Outstanding as Adjusted for 1-for-10 Reverse Split                   2,288,381              533,817
                                                             ==================   ==================
</TABLE>

See Summary of Accounting Policies and Notes to Financial Statements

                                      F-4
<PAGE>
<TABLE>
<CAPTION>
                                  MAGICINC.COM

                             Statement of Cash Flows
           For the Years Ended October 31, 2001 and October 31, 2000

                                                                 Year Ended          Year Ended
                                                              October 31, 2001     October 31, 2000
                                                             ------------------   ------------------
<S>                                                          <C>                  <C>
Operating Activities:
Net Loss                                                     $        (835,972)   $        (464,886)
Adjustment to Reconcile Net Loss to Cash
Non-Cash Expenses Included in Net Loss
  Depreciation                                                           5,294                2,287
  Amortization                                                         131,492               50,000
  Stock Issued for Services and Other                                  185,881               81,780

Provided by Operating Activities:
  Increase in Accounts Payable and
    Accrued Expenses                                                    40,284               80,757
                                                             ------------------   ------------------
Cash Consumed by Operating Activities                                 (473,021)            (250,062)

Financing Activities:
  Proceeds from the Issuance of Common Stock                           284,044              119,536
  Proceeds from Subscription Receivable                                 20,000
  Proceeds from the Issuance of Convertible Debentures                 300,000              143,500
  Cost of Issuing Convertible Debentures                               (39,000)
  Advances to (from) Related Parties                                   (50,000)               6,500
                                                             ------------------   ------------------
Cash Generated by Financing Activities                                 515,044              269,536

Investing Activities:
  Acquisition of Fixed Assets                                          (10,294)             (12,862)
  Receipt (Advance) of Deposit Receivable                               10,000              (10,000)
                                                             ------------------   ------------------
Cash Provided by Investing Activities                                     (294)             (22,862)

Change in Cash                                                          41,729               (3,388)
Cash and Cash Equivalents-Beginning                                     17,129               20,515
                                                             ------------------   ------------------
Cash and Cash Equivalents-End                                $          58,858    $          17,127
                                                             ==================   ==================
</TABLE>
See Summary of Accounting Policies and Notes to Financial Statements

                                      F-5
<PAGE>
<TABLE>
<CAPTION>
                                                          MAGICINC.COM
                                          Statement of Changes in Stockholders' Equity
                                  For the Years Ended October 31, 2001 and October 31, 2000

                                                                                                                           Total
                                                                Common Stock          Preferred Stock    Accumulated   Stockholders'
                                                           Shares        Amount      Shares    Amount      Deficit        Equity
                                                           ------        ------      ------    ------      -------        ------
<S>                                                       <C>         <C>           <C>        <C>       <C>             <C>
Balance October 31, 1999                                  3,944,024   $  (317,577)             $      0  $         0     $(317,577)
                                                         ----------   -----------   ---------  --------  -----------     ---------

Shares Issued in Exchange for Cash                        4,747,500       262,250
Shares Issued as Part of Debt Settlement Agreement           75,000         5,250
Shares Issued in Payment for Services and Other           1,635,600        81,780
Shares Issued upon Conversion of Debt                     3,230,381       150,000
Original Issue Discount on Convertible Debt                       0        50,000
Subscription Receivable                                           0       (20,000)
Net Loss for Year Ended October 31, 2000                                                                    (464,886)
                                                         ----------                 ---------
Balance October 31, 2000                                 13,632,505       211,703                           (464,886)     (253,183)

Shares Issued in Exchange for Cash                       13,080,881       284,044
Shares Issued in Payment for Services and Other           2,000,000       185,881
Shares Issued upon Conversion of Debt                    14,151,799       272,000
Original Issue Discount on Convertible Debt                       0       128,571
Shares Issued in Exchange for Accrued Officer's Salaries                            5,576,923   250,000
Payment of Subscription Receivable                                0        20,000
Net Loss for Year Ended October 31, 2001                                                                    (835,972)
                                                         ----------   -----------   ---------  --------  -----------     ---------
Total Shares before Reverse Split                        42,865,185                 5,576,923
Reduction of Common Shares as Result of
1-for-10 Reverse Stock Split October 12, 2001           (38,578,666)                        0
                                                         ----------   -----------   ---------  --------  -----------     ---------

Balance October 31, 2001                                  4,286,519   $ 1,102,199   5,576,923  $250,000  $(1,300,858)    $  51,341
                                                          =========   ===========   =========  ========  ===========     =========
</TABLE>

See Summary of Accounting Policies and Notes to Financial Statements

                                      F-6
<PAGE>

                                  MAGICINC.COM

                   Summary of Significant Accounting Policies
            Fiscal Years Ended October 31, 2001 and October 31, 2000

Change in Accounting Year

         Beginning January 1, 1999, the Company changed its accounting reporting
         period from a calendar year ending  December 31 to a fiscal year ending
         October 31. The financial statements,  accordingly, present the results
         of operations,  changes in stockholders'  equity and cash flows for the
         years ended October 31, 2001 and October 31, 2000.

Quasi-Reorganization

         As  of  October  31,  1999,   the  Company   concluded  its  period  of
         reorganization  by  reaching  a  settlement   agreement  with  all  its
         significant  creditors.  The  Company,  as  approved  by its  Board  of
         Directors,  elected to state its October 31, 1999,  balance  sheet as a
         "quasi-reorganization",  pursuant to ARB 43.  These  rules  require the
         revaluation  of all  assets and  liabilities  to their  current  values
         through a current charge to earnings and the elimination of any deficit
         in  retained  earnings  by  charging  paid-in-capital.  The Company has
         reported  net  income  (and  net  losses)  to  retained   earnings  and
         (accumulated deficit) from November 1, 1999 forward.

Use of Estimates

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

Cash and Cash Equivalents

         For financial statement  presentation  purposes,  the Company considers
         those short-term, highly liquid investments with original maturities of
         three months or less to be cash or cash equivalents.

Property and Equipment

         Property and equipment are recorded at cost.  Depreciation  is computed
         using the  straight-line  method over the estimated useful lives of the
         assets,  generally 5 years.  Expenditures  for renewals and betterments
         are capitalized.  Expenditures for minor items, repairs and maintenance
         are  charged  to  operations  as  incurred.  Gain or loss  upon sale or
         retirement due to obsolescence is reflected in the operating results in
         the period the event takes place.

                                       F-7
<PAGE>

     Summary of Accounting Principles (Cont'd)

Revenue Recognition

         Sales are recognized when a product or service is delivered, shipped or
         provided to the customer and all  material  conditions  relating to the
         sale have  been  substantially  performed.  Film  production  costs are
         capitalized  as  film  cost  inventory  and  are  amortized  using  the
         individual-film-forecast-computation method over the licensing period.

Stock Based Compensation

         Stock based  compensation is accounted for by using the intrinsic value
         based method in accordance with Accounting Principles Board Opinion No.
         25,  "Accounting for Stock Issued to Employees" ("APB 25"). The Company
         has adopted  Statements  of  Financial  Accounting  Standards  No. 123,
         "Accounting  for Stock Based  Compensation",  ("SFAS 123") which allows
         companies to either continue to account for stock based compensation to
         employees  under  APB  25,  or  adopt  a fair  value  based  method  of
         accounting.  The  Company  has elected to continue to account for stock
         based  compensation to employees under APB 25 but has made the required
         SFAS 123 pro forma disclosures in accordance with SFAS 123.

Fair Value of Financial Instruments

         Statements  of Financial  Accounting  Standards  No. 107,  "Disclosures
         About Fair Value of Financial Instruments," requires disclosure of fair
         value  information  about financial  instruments.  Fair value estimates
         discussed  herein  are  based  upon  certain  market   assumptions  and
         pertinent  information  available to management as of October 31, 2001.
         The respective  carrying value of certain  on-balance  sheet  financial
         instruments approximated their fair values. These financial instruments
         include  cash  and  cash  equivalents,   marketable  securities,  trade
         receivables,  accounts payable and accrued  expenses.  Fair values were
         assumed to approximate carrying values for these financial  instruments
         since  they  are  short-term  in  nature  and  their  carrying  amounts
         approximate  fair values or they are  receivable  or payable on demand.
         The fair value of the Company's  notes payable is estimated  based upon
         the  quoted  market  prices  for the same or  similar  issues or on the
         current  rates  offered to the Company  for debt of the same  remaining
         maturities. The carrying value approximates the fair value of the notes
         payable.

 Earnings per Common Share

         The Company  has  adopted the  provisions  of  Statement  of  Financial
         Accounting  Standards No. 128  "Earnings per Share" ("SFAS 128").  SFAS
         128 replaces the previous  "primary" and "fully  diluted"  earnings per
         share with "basic" and "diluted"  earnings per share.  Unlike "primary"
         earnings  per share that  included  the  dilutive  effects of  options,
         warrants  and  convertible  securities,   "basic"  earnings  per  share
         reflects the actual  weighted  average of shares issued and outstanding
         during the period.  "Diluted" earnings per share are computed similarly
         to "fully diluted"  earnings per share. In a loss year, the calculation
         for "basic" and  "diluted"  earnings per share is  considered to be the
         same as the impact of potential common shares is anti-dilutive.

                                       F-8
<PAGE>

     Summary of Accounting Principles (Cont'd)

Income Taxes

         The Company  accounts for income taxes in accordance  with Statement of
         Financial  Accounting Standards No. 109, "Accounting for Income Taxes,"
         ("SFAS  109") which  requires  recognition  of  estimated  income taxes
         payable or  refundable  on income tax returns for the current  year and
         for  the  estimated   future  tax  effect   attributable  to  temporary
         differences and  carry-forwards.  Measurement of deferred income tax is
         based on enacted tax laws including tax rates,  with the measurement of
         deferred  income tax assets being reduced by available tax benefits not
         expected to be realized.

Impairment of Long-lived Assets

         The Company  adopted  Statement of Financial  Accounting  Standards No.
         121,  "Accounting  for the  Impairment  of  Long-lived  Assets  and for
         Long-lived  Assets to be Disposed of," ("SFAS 121").  SFAS 121 requires
         impairment   losses  to  be  recorded  on  Long-lived  assets  used  in
         operations and goodwill when  indications of impairment are present and
         the  undiscounted  cash flows estimated to be generated by those assets
         are less than the carrying amount of the asset.

Recent Accounting Pronouncements

         In  June,  2001,  the  Financial   Accounting  Standards  Board  issued
         Statement of Financial Standards No. 141, "Business Combinations" (SFAS
         141), and No. 142,  "Goodwill and Other Intangible  Assets" (SFAS 142).
         SFAS 141 is effective for business  combinations  completed  after June
         30, 2001,  and SFAS 142 is effective for fiscal years  beginning  after
         December  15,  2001  (with  early  adoption   permitted  under  certain
         circumstances).

         SFAS  141  proscribes  the  exclusive  use of the  purchase  method  of
         accounting  for all business  combinations  subsequent to the effective
         date.  SFAS 142 mandates that acquired  goodwill and intangible  assets
         deemed to have  indefinite  lives will no longer be amortized.  Rather,
         goodwill and these  intangibles  will be subject to regular  impairment
         tests in  accordance  with SFAS 142. All other  intangible  assets will
         continue to be amortized over their estimated useful lives.

                                       F-9
<PAGE>

                                  MAGICINC.COM

                          NOTES TO FINANCIAL STATEMENTS
            Fiscal Years Ended October 31, 2001 and October 31, 2000

1. The Company:

Magicinc.com (the "Company") is a Delaware  corporation formed in 1961 under the
name Magic Fingers,  Inc. It changed its name in 1999.  Through the period ended
October  31,  1999,  the  Company  devoted  substantially  all  its  efforts  to
reorganizing its financial affairs and settling its debt obligations. During the
fiscal  years ended  October 31,  2001 and  October  31,  2000,  the Company was
engaged  primarily in the planning and development of an interactive  network to
provide  entertainment  via the Internet.  Subsequent  to October 31, 2001,  the
Company  redirected its business focus to the production of commercials and sale
of advertising on its Cybars network which broadcasts to bars and nightclubs.

2. Income Taxes:

The  Corporation has  approximately  $5,000,000 in net operating loss carryovers
available  to reduce  future  income  taxes.  These  carryovers  may be utilized
through the year 2016.  The Company has adopted SFAS 109 which  provides for the
recognition of a deferred tax asset based upon the value the loss carry-forwards
will  have to  reduce  future  income  taxes and  management's  estimate  of the
probability of the realization of these tax benefits.  A summary of the deferred
tax asset presented on the accompanying balance sheet is as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
                                                            Oct. 31, 2001   Oct. 31, 2000
                                                            -------------   -------------

<S>                                                           <C>            <C>
Federal Deferred Tax Asset Relating to Net Operating Losses   $ 1,615,000    $ 2,072,679
State Deferred Tax Asset Relating to Net Operating Losses         250,000        290,291
Less: Valuation Allowance                                      (1,865,000)    (2,362,970)
                                                              -----------    -----------
Total Deferred Tax Asset                                      $         0    $         0
                                                              ===========    ===========
-------------------------------------------------------------------------------------------
</TABLE>
3. Commitments:

Facilities

The  Company  is leasing  an 8,500  square  foot  building  in Fort  Lauderdale,
Florida,  which serves as its  administrative  offices and  computer  operations
center.

                                      F-10
<PAGE>

     (Notes to Financial Statements Cont'd)

The lease is for a term of two years  beginning  June 1, 2000 and ending May 31,
2002. The rent for the property was initially scheduled as follows:

         June 1, 2000 through July 31, 2000              Rent waived by Lessor
         August 1, 2000 through November 30, 2000            $4,000/month
         December 1, 2000 through May 31, 2001               $4,500/month
         June 1, 2001 through November 30, 2001              $5,000/month
         December 1, 2001 through May 31, 2002               $5,300/month

Due to delays in obtaining a  certificate  of occupancy on the entire  building,
the lessor waived the payment of rent until May 1, 2000 and has agreed to accept
rent  payments of $3,000 per month.  The Company has been  advised  that it will
have the  opportunity  to extend the term of the lease.  The Company has entered
into  an  agreement  to  purchase  the  building  no later than May 31, 2002 for
$480,000, subject to standard conditions. The lessor/seller has paid $26,935 for
repairs to the building.

Future rental commitments are as follows:

         Year ending October 31, 2002        $ 21,000


Equipment Leases

The  Company  leases  computer  and  television  and  camera  equipment  for its
operations.  The leases are operating  leases and generally are for a term of 24
months.

Future lease commitments are as follows:

         Year ending October 31, 2002          $37,000
         Year ending October 31, 2003           31,000

Employment Agreements

Mr.  Gordon  Scott  Venters is employed  as the  Company's  President  and Chief
Executive Officer, pursuant to an original three-year employment agreement which
began  October 1, 1997.  The  agreement  provided  for a base salary of $75,000,
$100,000 and $133,000 for years one, two and three, respectively.  Since the end
of the term of the  employment  agreement,  September 30, 2000, Mr. Venters has,
with the approval of the Board of Directors, continued in his positions with the
Company and his salary has  continued to accrue at the same level as in the last
year of the  agreement.  The accrued  but unpaid  portion of Mr.  Venters'  cash
compensation  is carried as a current  payable and reflects  any  payments  made
through  October 31, 2001 and October 31, 2000. The amounts owing on those dates
were $24,569 and $278,444, respectively.

In addition to cash  compensation,  the Company  granted Mr. Venters  options to
purchase  750,000  (pre-reverse  split) shares of the Company's  common stock at
$0.0001 per share.  As of October 31, 2001,  Mr.  Venters had  exercised  all of
these options.

                                      F-11
<PAGE>

     (Notes to Financial Statements Cont'd)

4. Stockholders' Equity:

Common Stock

Reverse Split

Effective  October  12,  2001,  each  share of the  Company's  common  stock was
exchanged for one-tenth of a share of the Company's new common stock pursuant to
a 1-for-10  reverse split.  The Company's  financial  statements,  including the
Statement  of  Operations  as  pertains  to Net Loss per Share and the  weighted
average of outstanding  common shares and equivalents,  have been  retroactively
revised to account for the reverse split.

Stock Issued for Cash:

The Company  issued  4,747,500  (pre-reverse  split)  shares of common stock for
$262,250 in fiscal year 2000 and 13,080,881 (pre-reverse split) shares of common
stock for $284,044 in fiscal year 2001.

Stock Issued in Exchange for Long-term Debt:

In fiscal  year 2000,  as part of its debt  restructuring,  the  Company  issued
75,000 shares of  (pre-reverse  split)  common stock.  The shares were valued at
$5,250.

Stock Issued for Services:

During fiscal year 2000, the Company issued 1,635,600 (pre-reverse split) shares
for services at a valuation of $81,780,  which  approximated  market  value.  In
fiscal year 2001 the Company issued an additional 2,000,000  (pre-reverse-split)
shares for services valued at $185,881 which approximated market value.

Stock Issued upon Conversion of Debentures:

During fiscal year 2000, the Company issued 3,230,381 (pre-reverse split) shares
of its common stock upon conversion of $150,000 of principal  amount of Series A
convertible  debentures.  In fiscal year 2001,  the Company issued an additional
14,151,799  (pre-reverse  split)  shares in  conversion of $272,000 of principal
amount of debentures.

Preferred Stock

On March 23, 2001,  the Company  issued  3,076,923  shares of Series A Preferred
Stock to its president and chief  executive  officer,  Gordon Scott Venters,  in
exchange  for  the  elimination  of  $200,000  of debt  owed to him for  accrued
salaries. The shares were valued at $0.065 per share which was the average price
of the  common  stock at the time of  issuance.  Each  share of this  series  of
preferred stock was initially convertible into one share of common stock.

                                      F-12
<PAGE>

On October 1, 2001, an additional  2,500,000  shares of Series A Preferred Stock
were issued to Gordon Scott Venters,  in exchange for the elimination of $50,000
of debt owed to him for  accrued  salaries.  The shares were valued at $0.02 per
share which was in excess of the average  price of the common stock on September
28,  2001.  Each  share of this  series of  preferred  stock was also  initially
convertible into one share of (pre-reverse split) common stock.

The Series A Preferred  Stock is  identical to the Common Stock except that each
share of Series A Preferred Stock has voting rights equivalent to four times the
number of shares of Common Stock into which it could be converted. Each share of
the Series A Preferred  Stock is  convertible  into  one-tenth of a share of the
Company's (post-reverse split) common stock.

Convertible Debentures

In January 2001 and in May 2001, the Company received  $130,500 (net of expenses
of  $19,500)  for a total of  $261,000  (net of  expenses  of  $39,000)  from an
offering of 5% Class A senior subordinated  convertible  redeemable  debentures.
These  debentures  entitle the holder to convert into common stock at 70% of the
average  closing bid price of the three  trading  days prior to the  election to
convert.  Accrued  interest  may also be paid in the same  fashion.  At any time
after 90 days, the Company has the option to redeem the debentures,  in whole or
in  increments  of $10,000,  for 125% of the face amount.  At the request of the
debenture holders, the Company issued, in escrow,  3,250,000 (pre-reverse split)
shares of common stock to guarantee the stock issuance if the debenture holders,
elect conversion.  All of the escrow shares have been used to satisfy conversion
requests by the debenture holders.

Due to provisions of the conversion  formula,  the potential dilutive effect, if
debentures are converted, cannot be determined at this date.

As of October  31,  2001,  a  principal  balance  of $28,000 of the  convertible
debentures, which had become due on October 20, 2001, was outstanding.

Stock Based Compensation:

Stock based  compensation  is accounted for by using the  intrinsic  value based
method  in  accordance  with  Accounting   Principles   Board  Opinion  No.  25,
"Accounting  for Stock Issued to Employees"  ("APB 25"). The Company has adopted
Statements  of Financial  Accounting  Standards No. 123,  "Accounting  for Stock
Based  Compensation,  ("SFAS 123") which allows  companies to either continue to
account for stock based  compensation to employees under APB 25, or adopt a fair
value based method of accounting. The Company has elected to continue to account
for stock  based  compensation  to  employees  under APB 25.  APB 25  recognizes
compensation expense for options granted to employees only when the market price
of the stock  exceeds  the grant  exercise  price at the date of the grant.  The
amount reflected as compensation  expense is measured as the difference  between
the exercise price and the market value at the date of the grant.

SFAS 123 requires pro forma  disclosures  regarding  net income and earnings per
share as if the compensation  expense had been determined in accordance with the
fair value based method  described in SFAS 123. The Company  estimates  the fair
value of each stock option at the date of grant using the  Black-Scholes  option
pricing model with the following weighted average assumptions for grants issued.

                                      F-13
<PAGE>

     (Notes to Financial Statements Cont'd)


                  Dividend Yield                              None
                  Expected Life                              2 Years
                  Expected Volatility                         68%
                  Risk-free Interest Rate                      6%

There  were no  employee  or  non-employee  options  and  warrants  granted  and
exercised  for each of the fiscal  years ended  October 31, 2000 and October 31,
2001.

5. Litigation:

The Company is not a party to any litigation except that it has been notified by
the holders of the outstanding  convertible  debentures that they may bring suit
to collect the remaining $28,000 principal  balance,  which came due October 20,
2001.  Also a supplier  of services  to the  Company  has  requested  payment of
approximately $20,000 which the Company claims has been paid for by its issuance
of common stock in lieu of cash.

6. Related Party Transactions:

Mr.  Gordon  Scott  Venters is employed  as the  Company's  President  and Chief
Executive Officer, pursuant to an original three-year employment agreement which
began  October 1, 1997.  The  agreement  provided  for a base salary of $75,000,
$100,000 and $133,000 for years one, two and three, respectively.  Since the end
of the term of the employment  agreement,  Mr. Venters has, with the approval of
the Board of  Directors,  continued  in his  positions  with the Company and his
salary  has  continued  to accrue  at the same  level as in the last year of the
agreement.  The accrued but unpaid portion of Mr. Venters' cash  compensation is
carried as a current  payable and reflects any payments made through October 31,
2001 and  October  31,  2000.  In March and  October  2001,  Mr.  Scott  Venters
received,  in exchange for a total of $250,000 of salary owed to him, a total of
5,576,923  shares of Series A Preferred  Stock.  The Series A Preferred Stock is
convertible  into 557,693  (post-reverse  split)  shares and has the  equivalent
voting rights of 2,230,772  shares of  (post-reverse  split) common stock. As of
October 31, 2001 and October 31, 2000,  the amount owed Mr. Gordon Scott Venters
for accrued salary was $24,569 and $278,444, at those dates respectively.

In addition to cash  compensation,  the Company  granted Mr. Venters  options to
purchase  750,000  (pre-reverse  split) shares of the Company's  common stock at
$0.0001 per share.  As of October 31, 1999,  Mr.  Venters had  exercised  all of
these options.

Mr.  Venters also has an option to acquire an  additional  500,000  (pre-reverse
split) shares at $0.0001 per share upon the successful  procurement of financing
for the motion picture "Liberty City".

During both fiscal  years 2000 and 2001,  Mr.  John  Venters,  the father of the
Company's  president,  owed the Company on a  non-interest  bearing  basis up to
$50,000 for  short-term  periods.  As of October 31, 2001,  the balance owed was
$50,000 which was repaid in January 2002.

                                      F-14
<PAGE>

     (Notes to Financial Statements Cont'd)

During fiscal year 2001, while the Company's facilities were being renovated,  a
small  portion  of  the  Company's  facilities  were  provided  to  Black  Music
Television,  Inc. on a rent-free  basis. Mr. Robert Ingria, a former director of
Magicinc.com  was also an  officer,  director  and  stockholder  of Black  Music
Television, Inc. Mr. Ingria resigned from the Magicinc.com board of directors on
January 31, 2002 at which time Black Music Television Inc. vacated the Company's
premises.

7. Supplemental Cash Flow Information:

Selected non-cash investing and financing activities are summarized as follows:

                                                            2001        2000
--------------------------------------------------------------------------------
Non-cash Equity Transactions:

Issuance of Common Stock to Retire Debt                          0    $   5,250
Issuance of Common Stock upon Conversion of Debentures    $272,000      150,000
Issuance of Series A Preferred Stock to Retire Accrued
  Salary Payable of Officer                                250,000            0
--------------------------------------------------------------------------------

8. Subsequent Events:

In the first quarter of fiscal year 2002,  the Company issued a total of 100,000
(post-reverse split) shares of its common stock for $20,000 cash.

9. Ability to Continue as a Going Concern and Management Plan:

The  financial  statements  have been  prepared  assuming  that the Company will
continue as a going  concern.  The  Company has not had revenue in the  ordinary
course of its business.  The lack of sales and recurring  losses from operations
raises  substantial  doubt  about the  Company's  ability to continue as a going
concern. Management's plan in regards to these matters is to seek further equity
funding to allow it to pursue its revised  business plan which involves the sale
of  advertising  on the  Company's  Cybars  digital  network  and  the  possible
acquisition  of  companies in related or  unrelated  businesses.  To support its
ongoing  operations,  additional  financing must be obtained  either through the
sale of equity or debt.

                                      F-15