U.S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB


(Mark One)
 [X]      ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

                      For Fiscal Year Ended: June 30, 2000

                                       or

 [  ]     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

          For the transition period from ________________ To ___________________


                     Commission file number 0-21376


                            Phoenix Media Group, Ltd.
                 (Name of small business issuer in its charter)

            Nevada                                       33-0714007
     --------------------                             ---------------
 State or other jurisdiction of                       (I.R.S. Employer
 incorporation or organization                      Identification No.)

             290 East Verdugo, Suite 207, Burbank, California 91502
  ----------------------------------------------------------------------------
          (Address of principal executive offices)         (Zip code)


Issuer's telephone number                      (818)-563-3900
                                               ---------------

Securities registered under Section 12(b) of the Act: NONE
Securities registered under Section 12(g) of the Act:

                         Common Stock, $0.001 Par Value
                         ------------------------------
                                (Title of class)

                 Convertible Preferred Series A, $0.01 Par Value
                 -----------------------------------------------
                                (Title of class)

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<PAGE>

     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  pursuant 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. [ ]

     State  issuer's  revenues  for its  most  recent  fiscal  year.   $334,574


     As of September 19, 2000,  there were 6,720,649  shares of the Registrant's
common stock,  par value $0.001,  issued and  outstanding.  The aggregate market
value of the Registrant's  voting stock held by non-affiliates of the Registrant
was approximately  $2,957,000  computed at the average bid and asked price as of
September 19, 2000.


                       DOCUMENTS INCORPORATED BY REFERENCE

     If the following documents are incorporated by reference,  briefly describe
them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into
which the document is incorporated:  (1) any annual report to security  holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act"): NONE

     Transitional Small Business Disclosure Format (check one): Yes ; NO X


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                                TABLE OF CONTENTS


Item Number and Caption                                                    Page

PART I

Item 1.  Description of Business..............................................4

Item 2.  Description of Property..............................................7

Item 3.  Legal Proceedings....................................................7

Item 4.  Submission of Matters to a Vote of Security Holders..................7


PART II

Item 5.  Market for Common Equity and Related Stockholder Matters.............8

Item 6.  Management's Discussion and Analysis or Plan of Operations...........9

Item 7.  Financial Statements.................................................14

Item 8.  Changes in and Disagreements With Accountants on Accounting and
         Financial Disclosure.................................................14

PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act....................15

Item 10. Executive Compensation...............................................17

Item 11. Security Ownership of Certain Beneficial Owners and Management.......17

Item 12. Certain Relationships and Related Transactions.......................18

Item 13. Exhibits and Reports on Form 8-K.....................................19


                                        3

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                                     PART I


                         ITEM 1 DESCRIPTION OF BUSINESS


General

     The  Company  was  formed for the  purpose of  creating a vehicle to obtain
capital  to  seek  out,  investigate  and  acquire  interests  in  products  and
businesses  which may have potential for profit.  The Company's  objective is to
become a major player in the communications  industry with an emphasis on radio,
television and Internet services.

Principal  Products  or  services  - The  production  of  radio  and  television
infomercials and commercials. The development,  publication, manufacture, design
and  sale of  books  and  toys in the  image  of or  otherwise  relating  to the
character Manfred Moose(TM).

Distribution  methods  of the  products  or  services  -  Radio  and  television
infomercials  and  commercials  are  solicited  directly  from a wide variety of
commercial  prospects and distributed via electronic  media to various radio and
television stations.

Status of any publicly  announced  new product or service - In Fiscal Year 1999,
the Company  announced the development of the Manfred  Moose(TM)  Millenium Doll
and the book  "Manfred  Moose(TM)  Flies to Hong Kong." Both  products have been
completed and are being sold in the manner described above.

Competitive  business  conditions  and  issuer's  competitive  position  in  the
industry and methods of competition - Regarding radio and television commercials
and  infomercials,  the  Company  is faced  with  significant  competition.  The
Company's relative position in the industry is small.

     Regarding  Manfred  Moose(TM),  the  competition is  substantial  including
several major corporations. Our relative position in the industry is very small.

Sources and availability of raw materials and the names of principal suppliers -
Not Applicable.

Dependence on one or a few major customers - Not Applicable.

     The  Company's  common  stock is  traded  on the  National  Association  of
Security  Dealers,  Inc.  (the  "NASD's")  OTC  Bulletin  Board Under the symbol
"PXMG."


                                        4

<PAGE>

History

     The Company was  organized  under the laws of the State of Utah on December
5, 1985 as Bullseye  Corp.  On June 22, 1992 the name of the Company was changed
to Natural  Solutions,  Ltd. and the corporate domicile was changed to the State
of Nevada.  On March 25,  1994,  the Company  name was changed to Phoenix  Media
Group,  Ltd. The Company was in the development stage through June 30, 1994. The
June 30, 1995 year is the first year during which it is  considered an operating
company.  Its authorized capital stock is 50,000,000 shares of common stock, par
value $0.001 per share.

     The executive offices of the Company are located at 290 East Verdugo, Suite
207, Burbank, California 91502. Its telephone number is (818)-563-3900.

OPERATING LOSSES

     The Company  has  incurred  net losses of  approximately  $226,000  for the
fiscal year ended June 30, 2000. Such operating losses reflect developmental and
other  start-up  activities  relating to the character  Manfred  Moose(TM).  The
Company  expects  to incur  losses in the near  future  until  profitability  is
achieved. The Company's operations are subject to numerous risks associated with
establishing  any  new  business,  including  unforeseen  expenses,  delays  and
complications.  There can be no  assurance  that the  Company  will  achieve  or
sustain profitable operations or that it will be able to remain in business.

FUTURE CAPITAL NEEDS AND UNCERTAINTY OF ADDITIONAL FUNDING

     Revenues are not yet sufficient to support the Company's operating expenses
and are not expected to reach such levels  until the first or second  quarter of
2001.  Since the Company's  formation,  it has funded its operations and capital
expenditures primarily through private placements of debt and equity securities.
See "Recent Sales of Unregistered  Securities." The Company expects that it will
be  required  to  seek  additional  financing  in the  future.  There  can be no
assurance  that such  financing  will be  available at all or available on terms
acceptable to the Company.

GOVERNMENT REGULATION

     The  Company is subject to all  pertinent  Federal,  State,  and Local laws
governing its business.  The Company is subject to licensing and regulation by a
number of authorities in its State or  municipality.  These may include  health,
safety,  and fire  regulations.  The  Company's  operations  are also subject to
Federal and State minimum wage laws governing such matters as working conditions
and overtime.


                                        5

<PAGE>

RISK OF LOW-PRICED STOCKS

     Rules 15g-1 through 15g-9 promulgated under the Securities  Exchange Act of
1934 (the "Exchange  Act") impose sales practice and disclosure  requirements on
certain  brokers  and dealers who engage in certain  transactions  involving  "a
penny stock."

     Currently,  the  Company's  Common  Stock is  considered  a penny stock for
purposes of the  Exchange  Act. The  additional  sales  practice and  disclosure
requirements imposed on certain brokers and dealers could impede the sale of the
Company's  Common  Stock  in the  secondary  market.  In  addition,  the  market
liquidity for the Company's securities may be severely adversely affected,  with
concomitant adverse effects on the price of the Company's securities.

     Under the penny stock  regulations,  a broker or dealer selling penny stock
to  anyone  other  than  an  established   customer  or  "accredited   investor"
(generally,  an  individual  with net worth in excess  of  $1,000,000  or annual
incomes  exceeding  $200,000,  or $300,000 together with his or her spouse) must
make a special suitability  determination for the purchaser and must receive the
purchaser's  written consent to the transaction prior to sale, unless the broker
or dealer or the transaction is otherwise exempt.  In addition,  the penny stock
regulations  require the broker or dealer to deliver,  prior to any  transaction
involving a penny stock,  a disclosure  schedule  prepared by the Securities and
Exchange  Commission (the "SEC") relating to the penny stock market,  unless the
broker or dealer or the transaction is otherwise  exempt.  A broker or dealer is
also  required to disclose  commissions  payable to the broker or dealer and the
registered   representative  and  current  quotations  for  the  Securities.  In
addition,  a broker or dealer is required to send monthly statements  disclosing
recent  price  information  with respect to the penny stock held in a customer's
account and information with respect to the limited market in penny stocks.

LACK OF TRADEMARK AND PATENT PROTECTION

     The  Company  relies  on a  combination  of  trade  secret,  copyright  and
trademark  law,  nondisclosure  agreements  and technical  security  measures to
protect  its  products.  The  Company  holds a  trademark  on the  name  Manfred
Moose(TM) and copyrights on several Manfred  Moose(TM)  images.  Notwithstanding
these  safeguards,  it is possible for  competitors of the company to obtain its
trade secrets and to imitate its products. Furthermore, others may independently
develop  products  similar  or  superior  to those  developed  or planned by the
Company.

COMPETITION

     The  Company  faces  competition  from  a  wide  variety  of  entertainment
distributors,  many of which have substantially greater financial, marketing and
technological resources than the Company.

     Regarding radio and television commercials and infomercials, the Company is
faced with  significant  competition.  The  Company's  relative  position in the
industry is small.

                                        6

<PAGE>

     Regarding  Manfred  Moose(TM),  the  competition is  substantial  including
several major corporations. Our relative position in the industry is very small.

EMPLOYEES

     As of September 19, 2000,  the Company has 4 employees,  of which,  two are
full time.


                         ITEM 2 DESCRIPTION OF PROPERTY


     The Company  maintains an office  condominium  at 290 east Verdugo  Avenue,
Suite 207,  Burbank  California.  The property was  purchased for $75,000 and is
being amortized over 39 years.  The property is subject to a first mortgage with
monthly payment of $393.36 over 30 years at 8.75%.

     In the  opinion of  management,  all  properties  owned by the  Company are
adequately insured.


                            ITEM 3 LEGAL PROCEEDINGS


     The Company is not engaged in any legal proceedings other than the ordinary
routine litigation incidental to its business operations, which the Company does
not  believe,  in the  aggregate,  will have a  material  adverse  effect on the
Company, or its operations.



                        ITEM 4 SUBMISSION OF MATTERS TO A
                            VOTE OF SECURITY HOLDERS


     No matters were subject to a vote of security  holders during the year June
30, 2000.



                                        7

<PAGE>

                                     PART II


                       ITEM 5 MARKET FOR COMMON EQUITY AND
                           RELATED STOCKHOLDER MATTERS



MARKET INFORMATION

     The stock is traded  over-the-counter  with the trading symbol "PXMG".  The
following high and low bid information was provided by PC Financial Network. The
quotations  provided  reflect  inter-dealer  prices,   without  retail  mark-up,
mark-down or commission and may not represent actual transactions.


        1998                                        HIGH BID            LOW BID

First Quarter (09/30/98)                            $0.180               $0.125
Second Quarter (12/31/98)                           $0.150               $0.080
Third Quarter (03/31/99)                            $0.120               $0.080
Fourth Quarter (06/30/99)                           $0.125               $0.063

        1999
First Quarter (09/30/99)                            $0.480               $0.060
Second Quarter (12/31/99)                           $0.220               $0.130
Third Quarter (03/31/00)                            $0.800               $0.130
Fourth Quarter (06/30/00)                           $0.950               $0.150


DIVIDENDS

     The Company has not paid any cash dividends to date and does not anticipate
paying  dividends  in the  foreseeable  future.  It is the present  intention of
management to utilize all available  funds for the  development of the Company's
business.

     The number of  shareholders  of record of the Company's  Common Stock as of
September 19, 2000 was approximately 800.


RECENT SALES OF UNREGISTERED SECURITIES

     The  Company  over the past three  years has sold  10,000  shares of common
stock.

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     On October 30, 1997 the Company issued 10,000 shares in exchange for $5,000
in  consulting  services  under  Section  4(2) of the  Securities  and  Exchange
Commission Act of 1933 to Mr. William Concha (non-affiliate investor)

     On August 16,  1999 the  Company  issued  160,000  shares in  exchange  for
$32,000 in consulting services under Section 4(2) of the Securities and Exchange
Act of 1933 to Messrs. Irwin, Smith, Martin and Hanna (affiliate investors)

     On January 30,  2000 the  Company  issued  20,000  shares in  exchange  for
$50,000 in consulting services under Section 4(2) of the Securities and Exchange
Act of 1933 to Messrs. Levy, Neur and Kingstone (non-affiliate investors)

     On May 1, 2000 the Company  issued  25,000 shares in exchange for $6,250 in
consulting  services  under Section 4(2) of the  Securities  and Exchange Act of
1933 to Messrs. Mister and Grossman (non-affiliate investors)

Shares to Be Issued:

Name    # of Shares  Exemption                Type of Purchaser     Value/Share
Bristol  128,000     4(2) (not involving a    Affiliate            $1.00
                           public offering)

All investors,  including the non-affiliate investors,  were given access to the
books and records of the Company,  including financial statements, and given the
opportunity to ask  management any and all questions  concerning the Company and
its prospects for the future.  The  non-affiliate  issuances of securities  were
issued  as  compensation  for  services  provided  to the  Company  as were  the
affiliate  issuances.  The investors were asked about prior investment  history,
business   experience  and   educational   background.   After   reviewing  that
information, these investors were determined to be capable of making an informed
investment  decision  based upon this  information.  All were informed as to the
restricted  nature of the stock being received and all represented and warranted
that they were purchasing the stock for their own account.

The price of the issuance was the price  negotiated  between the Company and the
investor.


                                        9

<PAGE>

                       ITEM 6 MANAGEMENT'S DISCUSSION AND
                         ANALYSIS OR PLAN OF OPERATIONS


FORWARD-LOOKING STATEMENTS MAY NOT PROVE ACCURATE

When used in this Form 10-KSB,  the words  anticipated,  estimate,  expect,  and
similar expressions are intended to identify  forward-looking  statements.  Such
statements are subject to certain risks, uncertainties and assumptions including
the  possibility  that the Company's will fail to generate  projected  revenues.
Should  one or more of  these  risks or  uncertainties  materialize,  or  should
underlying assumptions prove incorrect,  actual results may vary materially from
those anticipated, estimated or projected.

General

     The following discusses the financial position and results of operations of
the Company.

     Significantly all of the Company's revenues came from its resale of
air time to its customers.  That was the Company's  principle  service  provided
during fiscal 2000.  During fiscal 2000,  the Company began  purchasing air time
from a total of four  stations,  which is double the number of  stations  it was
purchasing from during fiscal 1999. Revenues from sales of items associated with
Manfred  Moose(TM) were negligible.  At the present time,  approximately  twelve
percent of  customers  with six month  contracts  renew  their  contracts  while
approximately twenty percent of customers with three month contracts renew their
contracts.  Although the Company  provides  service to its customers with repeat
business,  there is no assurance  that such  customers will maintain or increase
the level of volume of business of the Company.

     The  Company  produces a weekly  radio talk show which it  produces  in its
Burbank  offices.  The Company  purchases air time from four radio  stations and
resells the air time to customers  seeking to advertise their goods and services
during the program.  The Company has been  producing its radio show for over two
years.  The companies  which sponsor the talk show through their purchase of air
time can play their own  previously  produced  commercials  or have the  Company
provide the commercial for broadcast during the show.




                                       10

<PAGE>

Results of Operations - The following table set forth,  for the years ended June
30, 2000 and 1999,  certain  items from the  Company's  Condensed  Statements of
Operations expressed as a percentage of net sales.


                                                          2000            1999
                                                        ------          ------

Sales, Net .....................................        100.0%          100.0%
Cost of Sales ..................................         56.6%           29.0%
                                                        ------          ------

Gross Margin ...................................         43.4%           71.0%

Operating Expenses .............................        100.4%           58.8%
                                                        ------          ------

Operating Income (Loss) ........................        (57.0)%          12.2%

Other Income (Expense), Net ....................        (10.5)%          (1.5)%
                                                        ------          ------

Income (Loss) Before Income Taxes ..............        (67.5)%          10.7%

Income Taxes ...................................          0.3%            0.3%
                                                        ------          ------

Net Income (Loss) ..............................        (67.8)%          10.4%
                                                        ======          ======


Net Sales

     Net  sales  for  Fiscal  2000   compared  to  Fiscal  1999   increased   by
approximately  $57,000 or 21%.  This  increase was due to expansion of sales and
marketing efforts and the addition of new products and services.

Cost of Sales

     Cost of sales for Fiscal  2000  increased  approximately  $109,000  or 135%
compared to Fiscal 1999. As a percentage of sales, cost of sales increased 27.6%
from 29.0% to 56.6%.  This  increase was due to the purchase of  additional  air
time at increased costs.

Operating Expenses

     Operating  expenses  during Fiscal 2000  increased  approximately  $173,000
or100.6%  compared to Fiscal 1999 from $162,821 to $336,064.  As a percentage of
sales, operating expenses increased 60.5% from 58.8% to 100.4%. This increase in
operating  expenses is  attributable  to the  Company's  efforts  with regard to
developing  Manfred  Moose(TM)  and  related  products to market and sell in the
future and includes  compensation  to officers  and  directors as well as actual
production

                                       11

<PAGE>

costs. It is anticipated that this trend will continue as the Company  continues
to develop and seek new  opportunities  to license and market Manfred  Moose(TM)
merchandise.  The Company  cannot  predict how and when, if ever, it will recoup
these  operating  expenses  until  the  Company  can gauge  whether  or not this
character  will  be  successful  with  consumers  and as a  marketing  tool  for
businesses wishing to license the character for their use.


Liquidity and Capital Resources

     The Company  requires working capital to fund its current  operations.  The
Company has  budgeted  its  anticipated  revenue and cash  flows,  after  paying
expenses,  from its  sale of  radio  air  time to  provide  for its  anticipated
expenditures  to fund  development of the Manfred  Moose(TM)  project until such
time as the Company begins to receive revenue from Manfred  Moose(TM)  projects.
If the Company's revenues decline below present or projected levels, the Company
may have to scale back its  operations  and its proposed  development of Manfred
Moose(TM)  to  accommodate  the  resulting  shortfall  in  revenues  to fund its
projects. Generally the Company has adequate funds for its activities. There are
no formal commitments from banks or other lending sources for lines of credit or
similar short-term borrowing. It is anticipated that the current operations will
expand  and the funds  generated  will  exceed  the  Company's  working  capital
requirements for the next year.

     The  Company  has long term  goals to  further  develop  Manfred  Moose(TM)
merchandise  and products over the next twelve month period and expects that the
projects it currently has in  development  will require  approximately  $150,000
over the next twelve months.  The Company  believes that its operations  will be
able to  provide  the funds for these  development  costs  over the next  twelve
months. The Company anticipates that ultimately, these development costs will be
recouped through the eventual sales of the various products being developed.  If
revenues are not  sufficient  to fund its  operations,  the Company will need to
seek  alternative  sources of financing  either through loans or through raising
capital. There are no formal commitments from banks or other lending sources for
lines of credit or similar short-term borrowing. There can be no assurances that
the  Company  will be able to  obtain  alternative  financing  through  loans or
capital and the  Company has no  commitments  for either type of  financing.  If
alternative financing is not available, then the Company will be forced to scale
back its  proposed  operations  and  perhaps  be forced to abandon  its  Manfred
Moose(TM)  projects or delay it  significantly.  The  Company's  lack of current
assets would be a factor to be considered  by potential  lenders or investors in
deciding whether or not to loan money to or invest in the Company.

     During  the  year  ended  June  30,  2000,  the  Company  sold  $57,750  in
investments  held for sale.  This  consisted of  securities  transferred  to the
Company  in  satisfaction  of  an  account  receivable  of  the  Company.  These
securities were sold in the fall of 1999,  with the Company  incurring a loss of
$32,859  on the  transaction.  The  Company  does not  anticipate  this  type of
activity recurring in the future.  Also during the year ended June 30, 2000, the
company  issued  205,000  shares of the  Company's  Common Stock in exchange for
services.  The loss on sale of  investments  and expense due to the  issuance of
stock for services make up approximately $121,000 of the Company loss

                                       12

<PAGE>

before taxes of approximately $226,000 for the year ended June 30, 2000 compared
to a net profit before taxes of  approximately  $29,000 for the year ending June
30, 1999.

     For the year ended June 30,  2000,  the  Company's  asset value of vehicles
rose to $34,173  compared  to $15,200  for the year  ended June 30,  1999.  This
increase  is  attributable  to the  purchase  of a Ford  Taurus  for  use by the
Company's CEO.

     The  Company  requires  working  capital  principally  to fund its  current
operations.  Generally the Company has adequate funds for its activities.  There
are no formal  commitments  from  banks or other  lending  sources  for lines of
credit or similar  short-term  borrowing.  It is  anticipated  that the  current
operations will expand and the funds generated will exceed the Company's working
capital requirements for the next year.

     The  Company  generates  and uses  cash  flows  through  three  activities:
operating, investing, and financing. During 2000, operating activities used cash
of approximately  $163,000 as compared to net cash used of approximately  $4,000
for 1999. Much of this increase in attributable to the Company's development and
marketing of Manfred Moose(TM).

     Cash flows used in investing activities is primarily due to the acquisition
of approximately $52,000 of computer equipment,  office furniture and automotive
equipment for 2000.  During 1999  investing  activities  provided  approximately
$1,200,  from  shareholder  loans and notes  receivable  and used  approximately
$4,500 for the purchase of property and equipment.

     Financing  activities  used less than $9,000 in principle  payments on debt
for 2000 and $1,000 for 1999. During 2000 financing activities provided $216,000
in proceeds from capital stock issued.

     Management  believes  that the Company's  current cash and funds  available
will be  sufficient  to meet capital  requirements  and short term and long term
working capital needs in the fiscal year ending June 31, 2001 and beyond, unless
a significant acquisition or expansion is undertaken.  The Company is constantly
searching for potential  acquisitions and/or expansion  opportunities.  However,
there  are no  arrangements  or  ongoing  negotiations  for any  acquisition  or
expansion.

Inflation and Regulation

     The  Company's  operations  have not  been,  and in the  near  term are not
expected to be, materially affected by inflation or changing prices. The Company
encounters competition from a variety of Companies in its markets. Many of these
companies have long standing  customer  relationships  and are  well-staffed and
well financed.  The Company  believes that  competition in the its industries is
based on customer  satisfaction and production of quality products and services,
although the ability,  reputation and support of management is also significant.
The Company  does not believe that any  recently  enacted or  presently  pending
proposed  legislation  will have a  material  adverse  effect on its  results of
operations.


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<PAGE>

Factors That May Affect Future Results

     Management's  Discussion and Analysis and other parts of this  registration
statement contain information based on management's  beliefs and forward-looking
statements that involve a number of risks, uncertainties, and assumptions. There
can be no  assurance  that actual  results  will not differ  materially  for the
forward-looking  statements  as a result of various  factors,  including but not
limited to the following:

     The  markets  for many of the  Company's  offerings  are  characterized  by
rapidly  changing  technology,  evolving  industry  standards,  and frequent new
product  introductions.  The  Company's  operating  results  will  depend  to  a
significant  extent on its ability to design,  develop,  or otherwise obtain and
introduce new products, services, systems, and solutions and to reduce the costs
of these offerings. The success of these and other new offerings is dependent on
many factors,  including proper  identification of customer needs,  cost, timely
completion  and  introduction,  differentiation  from offerings of the Company's
competitors,  and market acceptance.  The ability to successfully  introduce new
products and services could have an impact on future results of operations.

Government Regulations - The Company is subject to all pertinent Federal, State,
and Local laws  governing its business.  The Company is subject to licensing and
regulation by a number of  authorities in its State or  municipality.  These may
include health, safety, and fire regulations.  The Company's operations are also
subject to Federal and State minimum wage laws governing such matters as working
conditions and overtime.



                           ITEM 7 FINANCIAL STATEMENTS


     The financial statements of the Company and supplementary data are
included beginning  immediately following the signature page to this report. See
Item 13 for a list of the financial statements and financial statement schedules
included.



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


     There are not and have not been any disagreements between the Company
and its  accountants  on any  matter  of  accounting  principles,  practices  or
financial statements disclosure.


                                       14

<PAGE>

                                    PART III


               ITEM 9 DIRECTORS EXECUTIVE OFFICERS, PROMOTERS AND
                CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF
                                THE EXCHANGE ACT


Executive Officers and Directors

The members of the Board of Directors of the Company serve until the next annual
meeting of  stockholders,  or until  their  successors  have been  elected.  The
officers  serve at the pleasure of the Board of Directors.  The following  table
sets forth the name, age, and position of each executive officer and director of
the Company:

           Directors and Executive Officers.


         (1)                       (2)                            (3)
     NAME and AGE               POSITION                     TERM OF OFFICE

Ronald R. Irwin   54       C.E.O. and Chairman              Until next meeting

Richard Spangler  65       President & Director             Until next meeting

David Petrik      52       Director                         Until next meeting

Wayne Smith       45       Secretary/Treasurer              Until next meeting


     Ronald R. Irwin - During the past 5 years,  Mr. Irwin has been engaged full
time as Chairman and C.E.O. for the Company.

     Richard  Spangler - During the past 5 years,  Mr.  Spangler has served full
time as President and Director for the Company.

     David Petrik - During the past 5 years,  Mr.  Petrik has served as Director
and Chief Engineer for the Company.  Prior to his employement  with the Company,
he worked as a Radio Engineer for KROQ Radio in Los Angeles, CA, and the Premier
Radio Network in Los Angeles, Ca.

     Wayne Smith - During the past 5 years has served as Secretary/Treasurer for
the Company. During this same period of time, he has also worked for Trans World
Airlines, Inc. in a non-executive position.

                                       15

<PAGE>

Conflicts of Interest

Certain conflicts of interest existed at June 30, 2000 and may continue to exist
between the Company and its officers and directors due to the fact that each has
other  business  interests  to which he  devotes  attention.  Each  officer  and
director may continue to do so  notwithstanding  the fact that  management  time
should be devoted to the business of the Company.

Certain  conflicts of interest may exist between the Company and its management,
and  conflicts  may  develop in the  future.  The  Company  has not  established
policies or procedures for the  resolution of current or potential  conflicts of
interests  between  the  Company,  its  officers  and  directors  or  affiliated
entities.  There can be no assurance that  management will resolve all conflicts
of interest in favor of the Company,  and failure by  management  to conduct the
Company's business in the Company's best interest may result in liability to the
management.  The  officers  and  directors  are  accountable  to the  Company as
fiduciaries,  which  means that they are  required  to  exercise  good faith and
integrity in handling the Company's  affairs.  Shareholders who believe that the
Company has been  harmed by failure of an officer or  director to  appropriately
resolve any  conflict  of  interest  may,  subject to  applicable  rule of civil
procedure,  be able to bring a class action or derivative  suit to enforce their
rights and the Company's rights.

Board Meetings and Committees

     The  Directors  will not  receive  remuneration  from the  Company  until a
subsequent offering has been successfully completed, or cash flow from operating
permits, all in the discretion of the Board of Directors.  Directors may be paid
their expenses, if any, of attendance at such meeting of the Board of Directors,
and may be paid a fixed  sum for  attendance  at each  meeting  of the  Board of
Directors or a stated  salary as Director.  No such payment  shall  preclude any
Director  from  serving the  Corporation  in any other  capacity  and  receiving
compensation therefor. No compensation has been paid to the Directors. The Board
of Directors may designate from among its members an executive committee and one
or more other committees. No such committees have been appointed.

Compliance with Section 16(a) of the Exchange Act

     Based  solely  upon a review of forms 3, 4, and 5 and  amendments  thereto,
furnished to the Company during or respecting its last fiscal year, no director,
officer,  beneficial owner of more than 10% of any class of equity securities of
the  Company  or any other  person  known to be  subject  to  Section  16 of the
Exchange  Act of 1934,  as  amended,  failed to file on a timely  basis  reports
required by Section 16(a) of the Exchange Act for the last fiscal year.


                                       16

<PAGE>


                         ITEM 10 EXECUTIVE COMPENSATION


     None of the executive  officer's salary and bonus exceeded  $100,000 during
any of the Company's last two fiscal years.

     Ronald R. Irwin, C.E.O. and Chairman received compensation of approximately
$60,000 per year during the past two years.



                 ITEM 11 SECURITY OWNERSHIP OF BENEFICIAL OWNERS
                                 AND MANAGEMENT


Principal Shareholders

     The table below sets forth  information  as to each person owning of record
or who  was  known  by the  Company  to own  beneficially  more  than  5% of the
6,925,649  shares of issued and  outstanding  Common  Stock of the Company as of
June 30, 2000 and information as to the ownership of the Company's Stock by each
of its  directors  and  executive  officers and by the  directors  and executive
officers  as a group.  Except  as  otherwise  indicated,  all  shares  are owned
directly,  and the persons  named in the table have sole  voting and  investment
power with respect to shares shown as beneficially owned by them.


     (1)                     (2)                           (3)        (4)
                           Name and                    Amount and
                          Address of                   Nature of
   Title of               Beneficial                   Beneficial    Percent of
    Class                   Owner                        Owner         Class
--------------------------------------------------------------------------------

Common Stock            Bristol Investments Limited      900,000       13.39%
                        1601 Kinwick Centre
                        32 Hollywood Road
                        Central Hong Kong
                        Zhong Hong Li

Directors & Executives
                        Ronald R. Irwin, CEO & Director  3,500,000     52.08%
                        290 E. Verdugo Ave.
                        Burbank, CA 91502

                                       17

<PAGE>

  (1)              (2)                             (3)                    (4)
Title of        Name and                         Amount and
Class          Address of                         Nature of
               Beneficial                         Beneficial         Percent of
                 Owner                             Owner                Class
________________________________________________________________________________


            Richard Spangler, President &              100,000           1.49%
            Director
            290 E. Verdugo Ave.
            Burbank, CA 91502

            David Petrik, Director                     25,000            0.37%
            290 E. Verdugo Ave.
            Burbank, CA 91502

            Wayne K. Smith, Sec/Treas.                 68,000            1.01%
            290 E. Verdugo Ave.
            Burbank, CA 91502

Directors and executive                                3,693,000        54.95%
officers as a Group



             ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



      During 1997 The Company loaned an officer/director $20,100, interest
at 1%,  repayable at $201 per month for ten months with a balloon payment due in
2007. In addition an  officer/director  advanced  $2,500 at 0% interest,  to the
Company.




                                       18

<PAGE>


                   ITEM 13. EXHIBITS, AND REPORTS ON FORM 8-K


          (a) The following documents are filed as part of this report.

1.  Financial Statements                                            PAGE

Independent Auditor's Report                                         F-1
Balance Sheets,  June 30, 2000 and 1999                              F-2
Statements of Operations,
  For the Years Ended June 30, 2000 and 1999                         F-4
Statements of Changes in Stockholders' Equity,
  For the Years Ended June 30, 2000 and 1999                         F-5
Statements of Cash Flows,
  For the Years Ended June 30, 2000 and 1999                         F-6
Notes to Consolidated Financial Statements                           F-7

2.  Financial Statement Schedules

     The following  financial statement schedules required by Regulation S-X are
included herein.

     All Schedules are omitted  because they are not  applicable or the required
information is shown in the financial statements or notes thereto.

3.  Exhibits

     The following exhibits are included as part of this report:

Exhibit
Number               Exhibit

3.1                  Articles of Articles of Incorporation and By-Laws.     (1)

27.1                 Financial Data Schedule


(1)  Incorporated by reference



                                       19

<PAGE>

                                   SIGNATURES


     Pursuant  to the  requirements  of  section  13 or 15(d) of the  Securities
Exchange Act of 1934, as amended,  the Registrant has duly caused this report to
be signed on it behalf by the undersigned, thereunto duly authorized.

                                                      PHOENIX MEDIA GROUP, LTD.

Dated: September 27, 2000                           By  /S/     Ronald R. Irwin
                                                    ---------------------------
                                                    Ronald R. Irwin,
                                                    C.E.O. and Chairman

     Pursuant to the  requirements  of the  Securities  Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the  Registrant  and in the  capacities  indicated  on this 27h day of September
2000.

Signatures                                           Title

/S/     Ronald R. Irwin
Ronald R. Irwin                             C.E.O. and Chairman
                                            (Principal Executive Officer)

/S/     Wayne Smith
Wayne Smith                                 Secretary/Treasurer
                                            (Principal Financial and Accounting
                                            Officer)

/S/     Richard Spangler
Richard Spangler                            President and Director



/S/      David Petrik
David Petrik                                Director



                                       20
<PAGE>




               Report of Independent Certified Public Accountants

Board of Directors
Phoenix Media Group, Ltd.
Burbank, California


     We have audited the  accompanying  balance  sheets of Phoenix  Media Group,
Ltd. as of June 30, 2000 and 1999,  and the related  statements  of  operations,
retained earnings,  and cash flows for the two years then ended. These financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

     In our opinion,  the financial statements referred to above present fairly,
in all material respects, the financial position of Phoenix Media Group, Ltd. as
of June 30, 2000 and 1999,  and the results of its operations and its cash flows
for the two years then ended in conformity  with generally  accepted  accounting
principles.

                                               Respectfully submitted,



                                               /s/ ROBISON, HILL & CO.
                                               Certified Public Accountants



Salt Lake City, Utah
July 31, 2000

                                      F - 1

<PAGE>

                            PHOENIX MEDIA GROUP, LTD.
                                 BALANCE SHEETS




                                                              June 30,
                                                        -----------------------
                                                           2000          1999
                                                        ---------     ---------
ASSETS
Cash ...............................................    $  19,815     $   2,312
Inventory ..........................................       34,130          --
Investments held for sale ..........................         --          57,750
                                                        ---------     ---------

        Total Current Assets .......................       53,945        60,062
                                                        ---------     ---------

Property and Equipment
Office Equipment ...................................       24,315        12,965
Radio Equipment ....................................       26,312        16,405
Office Condominium .................................       75,000        75,000
Vehicles ...........................................       41,586        15,200
                                                        ---------     ---------
                                                          167,213       119,570
Less Accumulated Depreciation ......................      (46,679)      (33,560)
                                                        ---------     ---------

        Net Property and Equipment .................      120,534        86,010
                                                        ---------     ---------

Other Assets
Stockholder Loans ..................................       18,598        18,432
Intangibles (Net of Accumulated Amortization of
   $65,000 and $52,540) ............................         --          12,460
Goodwill (Net of Accumulated Amortization of
   $20,000 and $16,167) ............................         --           3,833
                                                        ---------     ---------

        Total Non Current Assets ...................       18,598        34,725
                                                        ---------     ---------

        Total Assets ...............................    $ 193,077     $ 180,797
                                                        =========     =========


                                      F - 2

<PAGE>

                            PHOENIX MEDIA GROUP, LTD.
                                 BALANCE SHEETS
                                   (Continued)


                                                                 June 30,
                                                          ---------------------
                                                            2000        1999
                                                          ---------   ---------
LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
Accounts payable .......................................  $  18,769   $   2,135
Accrued expenses .......................................      7,823      19,128
Stockholder loans ......................................      8,000       8,000
Current portion of long-term debt ......................      6,520         477
                                                          ---------   ---------

        Total Current Liabilities ......................     41,112      29,740
                                                          ---------   ---------

Long-term Debt .........................................     59,647      48,230
                                                          ---------   ---------

Stockholders' equity
Series A convertible preferred stock (par value $.01),
 5,000,000 shares authorized, no shares issued or
 Outstanding June 30, 2000 and 1999 ....................       --          --

 Common Stock (par  value  $.001), 50,000,000 shares
  Authorized,  6,925,649 shares issued and outstanding
  June 30, 2000, and 6,720,649 on June 30, 1999 ........      6,926       6,721
  Common Stock to be Issued 128,000 shares .............        128        --
Paid in capital in excess of par value .................    501,776     285,849

Retained deficit .......................................   (416,512)   (189,743)
                                                          ---------   ---------

        Total Stockholders' Equity .....................     92,318     102,827
                                                          ---------   ---------

        Total Liabilities and Stockholders' Equity .....  $ 193,077   $ 180,797
                                                          =========   =========



   The accompanying notes are an integral part of these financial statements.

                                      F - 3

<PAGE>

                            PHOENIX MEDIA GROUP, LTD.
                            STATEMENTS OF OPERATIONS



                                                  For the Year Ended
                                                       June 30,
                                              --------------------------
                                                 2000          1999
                                              -----------    -----------
Revenue
Sales .....................................   $   334,574    $   277,112
Cost of sales .............................       189,289         80,439
                                              -----------    -----------

        Gross Margin ......................       145,285        196,673

Operating Expenses
General and Administrative ................      (336,064)      (162,821)

Other Income (Expense)
Interest expense ..........................        (5,007)        (4,283)
Interest income ...........................             5            109
Gain (loss) on sale of assets .............       (30,079)           (45)
                                              -----------    -----------

Income (loss) before income taxes .........      (225,860)        29,633

Income taxes ..............................           909            800
                                              -----------    -----------

Net Income (Loss) .........................   $  (226,769)   $    28,833
                                              ===========    ===========

Earnings (Loss) Per Share .................   $     (0.03)   $      --
                                              ===========    ===========

Weighted Average Shares Outstanding .......     6,872,443      6,720,649
                                              ===========    ===========



   The accompanying notes are an integral part of these financial statements.

                                      F - 4

<PAGE>

                            PHOENIX MEDIA GROUP, LTD.
                  STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>


                                                          Common Stock                           Capital in
                                      Preferred Stock     to be Issued       Common Stock        Excess of  Retained
                                      ----------------  ----------------  ---------------------
                                      Shares   Amount   Shares    Amount    Shares      Amount   Par Value   Deficit
                                      ------  --------  -------  -------  -----------  --------  ---------  ---------

<S>                                   <C>     <C>       <C>      <C>      <C>          <C>       <C>        <C>
Balance July 1, 1998 ...............    --    $   --       --    $  --      6,720,649  $  6,721  $ 285,849  $(218,576)

Net Income .........................    --        --       --       --           --        --         --       28,833
                                      ------  --------  -------  -------  -----------  --------  ---------  ---------

Balance June 30, 1999 ..............    --        --                        6,720,649     6,721    285,849   (189,743)

Issuance of shares for services ....    --        --                          205,000       205     88,055       --

Stock sold Cash ....................    --        --    128,000      128         --        --      127,872       --

Net Loss ...........................    --        --       --       --           --        --         --     (226,769)
                                      ------  --------  -------  -------  -----------  --------  ---------  ---------

Balance June 30, 2000 ..............    --    $   --    128,000 $    128    6,925,649  $  6,926  $ 501,776  $(416,512)
                                      ======  ========  =======  =======  ===========  ========  =========  =========


</TABLE>



   The accompanying notes are an integral part of these financial statements.

                                      F - 5

<PAGE>

                            PHOENIX MEDIA GROUP, LTD.
                             STATEMENTS OF CASH FLOW


                                                          For the Year Ended
                                                               June 30,
                                                        --------------------
Cash Flows From Operating Activities: ................     2000       1999
                                                        ---------   --------
Net income (loss) ....................................  $(226,769)  $ 28,833
Adjustments to reconcile
 Net income (loss) to net cash provided by (used in)
 Operating activities:
  Amortization and depreciation ......................     37,248     29,719
  (Gain) Loss on sale of assets ......................     (2,780)        45
 Change in operating assets and liabilities:
  Inventory ..........................................    (34,130)      --
  Investments held for sale ..........................     57,750    (57,750)
  Accounts payable ...................................     16,644     (2,759)
  Checks written in excess of cash in bank ...........       --         --
  Accrued expenses ...................................    (11,305)    (1,600)
                                                        ---------   --------

  Net cash used by operating activities ..............   (163,342)    (3,512)
                                                        ---------   --------

Cash Flows From Investing Activities:
Stockholders loans ....................................      (166)     1,259
Purchase of property and equipment ....................   (52,699)    (4,561)
                                                        ---------   --------

Net cash used in investing activities .................   (52,865)    (3,302)
                                                        ---------   --------

Cash Flows From Financing Activities:
Proceeds from issuance of debt ........................    26,173       --
Principle payments on debt ............................    (8,713)      (437)
Proceeds from capital stock issued ....................   216,250       --
                                                        ---------   --------

Net cash provided by (used in) financing activities ...   233,710       (437)
                                                        ---------   --------

Net increase (decrease) in cash and cash equivalents ...   17,503     (7,251)
Cash and cash equivalents at beginning of period .......    2,312      9,563
                                                        ---------   --------

Cash and cash equivalents at end of period .............   19,815   $  2,312
                                                        =========   ========

Supplemental Disclosure of Cash Flow Information:
 Interest ..............................................$   5,007   $  4,283
 Income taxes ..........................................$     909   $   --

Supplemental Schedule of Non-Cash Investing and Financing Activities: None


   The accompanying notes are an integral part of these financial statements.


                                      F - 6

<PAGE>

                            PHOENIX MEDIA GROUP, LTD.
                          NOTES TO FINANCIAL STATEMENTS
                             JUNE 30, 2000 AND 1999


NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES

     This  summary of  accounting  policies  of Phoenix  Media  Group,  Ltd.  is
presented to assist in understanding  the Company's  financial  statements.  The
accounting policies conform to generally accepted accounting principles and have
been consistently applied in the preparation of the financial statements.

Organization and Basis of Presentation

     The Company was  organized  under the laws of the State of Utah on December
5, 1985 as Bullseye  Corp.  On June 22, 1992 the name of the Company was changed
to Natural  Solutions,  Ltd. and the corporate domicile was changed to the State
of Nevada.  On March 25,  1994,  the Company  name was changed to Phoenix  Media
Group,  Ltd. The Company is in the development  stage through June 30, 1994. The
June 30, 1995 year is the first year during which it is  considered an operating
company.

Nature of Business

     The  Company  was  formed for the  purpose of  creating a vehicle to obtain
capital  to  seek  out,  investigate  and  acquire  interests  in  products  and
businesses  which may have potential for profit.  The Company's  objective is to
become a major player in the communications  industry with an emphasis on radio,
television and Internet services.

Cash Equivalents

     For the purpose of reporting cash flows,  the Company  considers all highly
liquid debt  instruments  purchased  with maturity of three months or less to be
cash  equivalents  to the  extent  the funds are not being  held for  investment
purposes.

Income Taxes

     The Company accounts for income taxes under the provisions of SFAS No. 109,
"Accounting  for Income  Taxes." SFAS No.109  requires  recognition  of deferred
income  tax  assets  and   liabilities   for  the  expected  future  income  tax
consequences,  based on enacted tax laws, of temporary  differences  between the
financial reporting and tax bases of assets and liabilities.

Earnings (Loss) Per Share

     In 1997,  the  Financial  Accounting  Standards  Board issued SFAS No. 128,
"Earnings per Share" (EPS). SFAS No. 128 replaced the calculation of primary and
fully diluted earnings per share with basic and diluted earnings per share.


                                      F - 7

<PAGE>

                            PHOENIX MEDIA GROUP, LTD.
                          NOTES TO FINANCIAL STATEMENTS
                             JUNE 30, 2000 AND 1999
                                   (CONTINUED)


NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES
(Continued)

     Diluted net income per common  share was  calculated  based on an increased
number of shares  that  would be  outstanding  assuming  that the  warrants  are
converted to common shares.  The effect of outstanding  common stock equivalents
are anti-dilutive for 1999 and 1998 and are thus not considered.

     The  reconciliations  of the  numerators  and  denominators  of  the  basic
earnings per share computations are as follows:


                                 For the Year Ended June 30, 1999
                             --------------------------------------
                                                         Per Share
                                 Income       Shares      Amount
                             --------------  ---------  -----------

Basic EPS
Net Income to common
shareholders ..............  $       28,833  6,720,649  $      --
                             ==============  =========  ===========


                                  For the Year Ended June 30, 2000
                             ----------------------------------------
                                                            Per Share
                                Income         Shares        Amount
                             --------------  ----------   -----------

Basic EPS
Net Loss to common
shareholders                 $    (226,769)    6,872,443  $     (0.03)
                             =============   ===========  ===========


Amortization

     Intangibles  and goodwill are amortized using the straight line method over
five years.  Amortization  expense related to intangibles  and goodwill  totaled
$16,293 for the year ended June 30, 2000 and $17,000 for the year ended June 30,
1999.

     Goodwill was created by the excess of the purchase price over cost of
acquisitions made in fiscal year 1995, and is amortized on a straight-line basis
over 5 years.  Management  regularly  assesses the carrying amount of intangible
assets and where, in their opinion,  the value is less than the carrying amount,
the loss is recognized immediately.

                                      F - 8

<PAGE>

                            PHOENIX MEDIA GROUP, LTD.
                          NOTES TO FINANCIAL STATEMENTS
                             JUNE 30, 2000 AND 1999
                                   (CONTINUED)

NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES (Continued)


     The Company has implemented the provisions of SFAS No. 121, "Accounting for
the impairment of Long-Lived Assets and for Long-Lived Assets Disposed of." SFAS
No. 121 requires that long-lived assets and certain identifiable  intangibles to
be held and used by the Company be reviewed for  impairment  whenever  events or
changes in  circumstances  indicate that the carrying amount of an asset may not
be recoverable. If the sum of the expected future cash flows from the use of the
assets and its eventual disposition  (undiscounted and without interest charges)
is less than the carrying amount of the asset, an impairment loss is recognized.

Depreciation

     Office furniture, equipment and leasehold improvements, are stated at cost.
Depreciation and amortization are computed using the  straight-line  method over
the estimated economic useful lives of the related assets as follows:

     Office furniture                                   5-10 years
     Equipment                                          5-7  years
     Office Condominium                                 39   years

     Maintenance  and  repairs  are  charged  to  operations;   betterments  are
capitalized.  The  cost  of  property  sold  or  otherwise  disposed  of and the
accumulated  depreciation  thereon are eliminated  from the property and related
accumulated depreciation accounts, and any resulting gain or loss is credited or
charged to income.

Pervasiveness of Estimates

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

Reclassifications

     Certain  reclassifications  have been made in the 1999 financial statements
to conform with the 2000 presentation.


                                      F - 9

<PAGE>

                            PHOENIX MEDIA GROUP, LTD.
                          NOTES TO FINANCIAL STATEMENTS
                             JUNE 30, 2000 AND 1999
                                   (CONTINUED)


NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES (Continued)
--------------------------------------------------------------------

Concentration of Credit Risk

     The Company has no significant  off-balance-sheet  concentrations of credit
risk such as foreign  exchange  contracts,  options  contracts or other  foreign
hedging  arrangements.  The Company  maintains the majority of its cash balances
with one financial institution, in the form of demand deposits.

NOTE 2 - CAPITAL TRANSACTIONS

Preferred Stock

     The  Board  of  Directors  of  the  Company  has  the  authority  to fix by
resolution for each particular series of preferred stock the number of shares to
be issued;  the rate and terms on which cumulative or  non-cumulative  dividends
shall be paid; conversion features of the preferred stock; redemption rights and
prices, if any; terms of the sinking fund, if any to be provided for the shares;
voting  powers  of  preferred  shareholders;   and  any  other  special  rights,
qualifications, limitations, or restrictions.

NOTE 3 - STOCK OPTIONS

     Effective April 9, 1993 the Board of Directors approved a five year "Option
to  Purchase" to be exercised on or after May 1, 1993 and to expire at midnight,
mountain time, on June 30, 1998.  Under the  provisions of the plan,  options to
purchase up to 230,000  shares at prices  ranging  from $1.00 to $5.00 per share
were granted to eight directors and members of the Advisory Board.  The purchase
price  for the  common  stock  under  these  options  may be paid  in  cash,  by
delivering  shares of common stock already owned by the optionee  (valued at its
fair market value at the time of exercise), by delivering options (valued at the
amount  by  which  the fair  market  value  of the  common  stock at the time of
exercise exceeds the exercise price), or other  consideration  acceptable to the
Company. At June 30, 1998 all 230,000 options expired unexercised.

NOTE 4 - INCOME TAXES

     Deferred  taxes result from  temporary  differences  in the  recognition of
income and expenses for income tax reporting and financial  statement  reporting
purposes. Deferred benefits of $140,000 and $64,000 for the years ended June 30,
2000 and 1999 respectively, are the result of net operating losses.

                                     F - 10

<PAGE>

                            PHOENIX MEDIA GROUP, LTD.
                          NOTES TO FINANCIAL STATEMENTS
                             JUNE 30, 2000 AND 1999
                                   (CONTINUED)


NOTE 4 - INCOME TAXES (Continued)

     The Company has  recorded net  deferred  income  taxes in the  accompanying
balance sheets as follows:


                                                       As at June 30,
                                                    --------------------
                                                      2000        1999
                                                    ---------   --------
Future deductible temporary differences related to
   Reserves, accruals, and net operating losses ..  $ 140,000   $ 64,000
Valuation allowance ..............................   (140,000)   (64,000)
                                                    ---------   --------
Net Deferred Income Tax ..........................  $    --     $   --
                                                    =========   ========


     As of June 30, 2000,  the Company had a net  operating  loss ("NOL")  carry
forward for income tax reporting purposes of approximately $415,000 available to
offset future taxable  income.  This net operating loss carry forward expires at
various dates  between June 30, 2001 and 2011. A loss  generated in a particular
year will  expire for  federal tax  purposes  if not  utilized  within 15 years.
Additionally,  the Internal Revenue Code contains  provisions which could reduce
or limit the  availability  and  utilization of these NOLs if certain  ownership
changes have taken place or will take place.  In accordance with SFAS No. 109, a
valuation allowance is provided when it is more likely than not that all or some
portion of the deferred tax asset will not be realized.  Due to the  uncertainty
with respect to the ultimate  realization of the NOLs, the Company established a
valuation  allowance for the entire net deferred income tax asset of $140,000 as
of June 30, 2000. Also consistent with SFAS No. 109, an allocation of the income
(provision) benefit has been made to the loss from continuing operations.

     The difference between the effective income tax rate and the federal
statutory  income tax rate on the loss from continuing  operations are presented
below:


                                                               As at June 30,
                                                            -------------------
                                                              2000       1999
                                                            --------   --------

Expense (Benefit) at the federal statutory rate of 34% ...  $(77,000)  $  9,800
Nondeductible expenses ...................................      --          340
                                                            --------   --------
Utilization of net operating loss carryforward ...........  $ 77,000   $(10,140)
                                                            --------   --------
                                                            $   --     $   --
                                                            ========   ========

                                     F - 11

<PAGE>
                            PHOENIX MEDIA GROUP, LTD.
                          NOTES TO FINANCIAL STATEMENTS
                             JUNE 30, 2000 AND 1999
                                   (CONTINUED)


NOTE 5 - RELATED PARTY TRANSACTIONS

     During 1997 The Company loaned an officer/director $20,100, interest
at 1%,  repayable at $201 per month for ten months with a balloon payment due in
2007. In addition an  officer/director  advanced  $2,500 at 0% interest,  to the
Company.

NOTE 6 - LONG-TERM DEBT

Long-term debt consists of the following:


                                                            As at June 30,
                                                        ----------------------
                                                          2000           1999
                                                        ---------      --------

Mortgage payable with interest at 8.75%,
 payable monthly $393.36, due March 22,
 2003, collateralized by deed of trust .............     $ 48,230      $ 48,707

Loan payable with interest at 4.9%,
payable monthly $398.81, due July 15, 2004,
collateralized by automotive equipment .............       17,937          --

Less Current Maturities ............................       (6,520)         (477)
                                                         --------      --------

Net Long-term Debt .................................     $ 59,647      $ 48,230
                                                         ========      ========


Annual principal payments on long-term debt are as follows:

                     2001                                  $   4,633
                     2002                                      4,886
                     2003                                      5,154
                     2004                                      3,333
                     2005                                        738
                     thereafter                              $45,107

                                     F - 12