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, 2004

                                       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 000-28553

                        STEREO VISION ENTERTAINMENT, INC.
                 (Name of small business issuer in its charter)

           Nevada                                                 95-4786792
State or other jurisdiction of                                (I.R.S. Employer
 incorporation or organization                               Identification No.)

                15452 Cabrieto Rd., Suite 204, Van Nuys, CA 91406
 -------------------------------------------------------------------------------
               (Address of principal executive offices) (Zip code)



                                (Former address)


Issuer's telephone number                      (818) 909-7911
                                              ---------------

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

                          Common Stock, par value $.001
                                (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  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.      $ -0-
                                                                       -----

         As  of  September  9,  2004,   there  were  9,846,571   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 $4,601,369,  computed at the average bid and
asked price as of September 9, 2004.


                             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
















                                                     TABLE OF CONTENTS
<TABLE>
<CAPTION>
Item Number and
Caption                                                                                                         Page

PART I

<S>               <C>                                                                                           <C>
Item 1.           Description of Business.........................................................................4

Item 2.           Description of Property........................................................................10

Item 3.           Legal Proceedings..............................................................................10

Item 4.           Submission of Matters to a Vote of Security Holders............................................10


PART II

Item 5.           Market for Common Equity and Related Stockholder Matters.......................................10

Item 6.           Management's Discussion and Analysis or Plan of Operations.....................................15

Item 7.           Financial Statements...........................................................................17

Item 8.           Changes in and Disagreements With Accountants on Accounting and
                  Financial Disclosure...........................................................................17

PART III

Item 9.           Directors, Executive Officers, Promoters and Control Persons;
                  Compliance with Section 16(a) of the Exchange Act..............................................18

Item 10.          Executive Compensation.........................................................................21

Item 11.          Security Ownership of Certain Beneficial Owners and Management.................................21

Item 12.          Certain Relationships and Related Transactions.................................................22

Item 13.          Exhibits and Reports on Form 8-K...............................................................23
</TABLE>





                                     PART I

ITEM 1.   DESCRIPTION OF
BUSINESS

GENERAL

         The  Company  intends to position  itself to evolve  into a  vertically
integrated,  diversified global media entertainment company. The Company intends
to acquire a number of diversified  entertainment  companies that will allow for
the pursuit of opportunities currently available in the global marketplace.

         The Company  anticipates  generating  revenues  from  several  sources,
including,  production of new and existing  feature films,  as well as expanding
into other areas of the entertainment industry.

         The Company's  common stock is traded on the NASDAQ OTC Bulletin  Board
market under the symbol: SVSN.

HISTORY

         Stereo Vision Entertainment,  Inc. ("SVEI") was originally incorporated
in the State of Arizona as Arizona Tax Pros & Insurance  Wholesalers,  Inc.,  on
December14,  1993. Arizona Tax Pros & Insurance  Wholesalers,  Inc., changed its
name to Kestrel  Equity  Corporation  ("Kestrel") on September 30, 1997. On July
20, 1999,  Kestrel  entered into an  Acquisition  Agreement  and Plan of Reverse
Merger  with  Stereo  Vision  Entertainment,   Inc.,  a  privately  held  Nevada
corporation  ("Stereo")  (the "Merger").  Pursuant to the Merger,  which was not
actually  consummated  until December 30, 1999,  Stereo was merged with and into
"Kestrel".  Each share of Stereo common stock  outstanding was exchanged for 120
shares of Kestrel's common stock, $.001 par value (the "Common Stock").

         On January 31, 2000,  "Kestrel" changed its state of incorporation from
Arizona to Nevada,  and also  changed its name to Stereo  Vision  Entertainment,
Inc.

         Since the time of its inception until the effective date of the Merger,
Kestrel  Equity  Corporation  was a  development  stage  company  with no active
business  operations and no revenues.  As such, Kestrel was considered a "shell"
corporation  with a principal  purpose of locating and  consummating a merger or
acquisition  with a private  entity.  Beginning  in August  1999,  the  business
activities  of Kestrel,  prior to the  Merger,  encompassed  administrative  and
organizational matters and identifying additional acquisition  opportunities for
operating  companies and intellectual  property assets in the global multi-media
industries.  Upon the  consummation of the Merger,  Kestrel  acquired all of the
assets of Stereo with the intent of continuing  Stereo's  business and expanding
into new areas of the  entertainment  industry.  Stereo was  incorporated in the
State   of    Nevada   on   May   5,   1999   for    purposes    of    acquiring
multi-media/entertainment industry assets and pursuing merger opportunities with
an existing  publicly  traded company.  Mr. Kallett,  an officer and director of
Kestrel Equity Corporation,  and Mr. Honour, a principal shareholder of Kestrel,
both owned common stock in Stereo representing an aggregate of 51% of the issued
and  outstanding  capital stock of Stereo.  The operations and management of the
merged  companies  (SVEI) were then  integrated  following  the  replacement  of
Stereo's  sole officer and  director  with the then sole officer and director of
Kestrel.

         On  December  17,  1999  "Kestrel"  filed its Form  10-SB with the U.S.
Securities  and  Exchange  Commission.  Upon the  consummation  of the merger on
December  30,  1999,  shortly  thereafter  in January of 2000,  SVEI elected new
officers and directors.  Since January 2000, the Company's  activities have been
developing entertainment projects, both musical and theatrical,  and identifying
and securing  candidates with entertainment  industry experience to serve on the
SVEI  Board  of  Directors  and  identifying  additional  opportunities  for the
acquisition of operating  entertainment  oriented companies as well as acquiring
intellectual  property  assets.  Although  acquisition  opportunities  have been
identified, no transactions have been consummated and there is no guarantee that
any transactions will be consummated in the near future.

         The executive offices of the Company are located at 15452 Cabrieto Rd.,
Suite 204, Van Nuys, CA 91406. Its telephone number is (818) 909-7911.

OPERATING LOSSES

         The Company has incurred  net losses of  approximately  $2,945,000  and
$2,459,000  for the fiscal  years ended June 30, 2004 and 2003.  Such  operating
losses reflect  developmental  and other start-up  activities for 2004 and 2003.
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

         SVEI anticipates  generating  operating revenues during its next fiscal
year  as  it  becomes   operational  and  acquires  operating  companies  and/or
intellectual  property assets.  "SVEI"  management  acknowledges that during its
next fiscal year there is no assurance that "SVEI" will transition itself from a
development stage company to an operational one and SVEI's continued  operations
may be dependent upon additional  shareholder  loans and/or proceeds from "SVEI"
debt/equity  offerings.  There  currently  are no agreements in place for future
shareholder  loans and management has no assurances as to any market  acceptance
of any future SVEI debt/equity offerings.

BUSINESS - OVERVIEW

         Currently,  management  believes that SVEI's principal  expertise is in
the content production segment of the multi-media  entertainment  industry. SVEI
also intends to acquire  additional  intellectual  property assets. In utilizing
the SVEI's existing  physical and managerial  assets,  SVEI's initial  operating
activities are anticipated to encompass the production,  acquisition,  marketing
and distribution of music content and the production,  distribution,  exhibition
of independent  feature length  theatrical  films and related  technology.  SVEI
intends to use  traditional  distribution  channels  for its content  and,  when
available and if practical,  alternative and complimentary distribution channels
such as the Internet.

STEREOVISION ENTERTAINMENT PRODUCTIONS

         The film  content  production  business is very capital  intensive  and
StereoVision will need to raise and secure  significant equity or debt financing
to implement its specific  production  objectives.  If the Company receives such
financing,   it  anticipates   producing  and/or   co-producing   cutting  edge,
commercially  successful  independent  feature  length film  productions  in all
genres.  Financing for these  productions,  when possible,  will be accomplished
through  partnerships or joint ventures in order to minimize  company risk. When
feasible,  StereoVision  anticipates  each  production  will be  structured as a
stand-alone  limited  liability  company,  thus  diminishing the equity dilution
impact on the Company.  StereoVision intends to act as the executive producer of
each film project.  There is no assurance that StereoVision can secure financing
to  produce  films or even if films are  produced  that  they can be  profitably
distributed.

MUSIC DIVISION

            The  Company  intends to engage in the  production  of music  albums
under the StereoVision  label.  Herky Williams,  a Director of the Company,  has
been an active record producer for over ten years. Mr. Williams will direct this
effort for the Company from his home base in Nashville, TN.

BUSINESS EXPANSION; CAPITAL GROWTH

         StereoVision  intends to position  itself to evolve  into a  vertically
integrated,  diversified global multimedia  entertainment  company as well as to
pursue the acquisition of diversified  entertainment  companies and intellectual
property assets that will allow it to pursue  opportunities  currently available
in the global marketplace. The Company believes that synergy among its divisions
will allow it to  effectively  compete for its  incremental  share of the global
consumer's  discretionary  expenditures.  StereoVision  intends to  finance  its
business expansion and acquisitions  through the sale of equity securities.  The
Company  can give no  assurance  that any  offering  of its  securities  will be
successful.  If the Company is unable to successfully  raise equity financing or
alternative   financing   its  ability  to  fund  its  business  plan  would  be
significantly limited.

         The ability of StereoVision to implement its business  strategy depends
upon its  ability to  successfully  create,  produce,  and market  entertainment
content and ancillary products for traditional real-world  distribution channels
including, but not limited to, retailers,  radio, television,  theatres and home
markets and newly emerging distribution channels such as the Internet.

         StereoVision intends to produce and develop films and DVD/videos in all
genres for its library,  as well as acquire  additional  film and music  assets.
While the Company may enter into  participation,  licensing  or other  financial
arrangements  with third parties in order to minimize its financial  involvement
in production, it will be subject to substantial financial risks relating to the
content.  StereoVision expects that it will typically be required to pay for the
production  of content  during the  production  period prior to release and will
most likely be able to recoup these  costs,  utilizing a strategy of high volume
and moderate profits,  from revenues from exhibition licenses within to 18 to 24
months  following  release.  The company will,  however,  always seek to arrange
presales to both  foreign  and  domestic  buyers  such as studios,  distribution
companies, cable networks, equity partners etc.

         StereoVision  anticipates  generating  revenues  from several  sources,
including  production and distribution of new and existing  independent  feature
films,  TV movies and direct to DVD/video  films and record albums.  The company
will also  license the rights to its  products  for  ancillary  markets  such as
airlines,  hotels, the armed forces,  ships at sea,  syndication,  pay per view,
sound  track  recordings,  merchandising  and  licensing  of video  games.  When
appropriate,  the Company  will  attempt to acquire  other  assets and  existing
operating global multi-media  entertainment  companies with seasoned  management
teams.

MANAGEMENT OF GROWTH

         In order to maximize  the  potential  growth of the  Company's  various
opportunities,   StereoVision   believes   that  it  must  expand   rapidly  and
significantly upon its entrance into the marketplace. This impetus for expansion
will place a significant  strain on the Company's  management,  operational  and
financial  resources.  In order to manage growth, the Company must implement and
continually  improve its operational and financial  systems,  expand operations,
attract and retain superior management and train, manage and expand its employee
base.  StereoVision  cannot guarantee that it will effectively  manage the rapid
expansion of its  operations,  that its  systems,  procedures  or controls  will
adequately  support its  operations  or that its  management  will  successfully
implement  its  business  plan.  If the Company  cannot  effectively  manage its
growth, its business, financial condition and results of operations could suffer
a material adverse effect.

         StereoVision  expects that it will  require  additional  equity  and/or
credit  financing  prior  to  becoming  cash  self-sufficient.  There  can be no
assurances  that the Company will  successfully  negotiate or obtain  additional
financing, or that it will obtain financing on terms favourable or acceptable to
it.  StereoVision  does not have any commitments for additional  financing.  The
Company's ability to obtain additional capital depends on market conditions, the
global  economy and other factors  outside its control.  If the Company does not
obtain  adequate  financing  or such  financing is not  available on  acceptable
terms,  its ability to finance  its  expansion,  develop or enhance  products or
services or respond to competitive  pressures  would be  significantly  limited.
StereoVision's  failure  to secure  necessary  financing  could  have a material
adverse effect on its business,  prospects,  financial  condition and results of
operations.

GOVERNMENT REGULATION

         The  Classification  and Rating  Administration  of the Motion  Picture
Association  of America,  an industry  trade  association,  assigns  ratings for
age-group suitability for motion pictures. SVEI plans to submit its pictures for
such ratings.  Management's  current policy is to produce  motion  pictures that
qualify for a rating no more restrictive than "R."

         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.

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.


INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS

         The Company  relies on a  combination  of trade  secret,  copyright and
trademark  law,  nondisclosure  agreements  and technical  security  measures to
protect its  products.  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.

         Distribution  rights to motion  pictures are granted  legal  protection
under the copyright laws of the United States and most foreign countries.  These
copyright laws provide substantial civil and criminal sanctions for unauthorized
duplication and exhibition of motion pictures.  Motion pictures,  musical works,
sound recordings,  artwork,  still photography and motion picture properties are
each separate works subject to copyright  under most copyright  laws,  including
the United States Copyright Act of 1976, as amended.

COMPETITION

         SVEI competes with a large array of diverse global media conglomerates,
upstart  "entertainment,  information and commerce" companies, as well as with a
number  of  smaller,   independent  production  companies.  SVEI's  current  and
potential competitors include:

         o        Fox, Disney, Warner Bros., Universal, Lions Gate Entertainment
                  and others
         o        Globcast, Vyvx and COMSAT World Systems
         o        Universal music, EMI, BMG and others

         A portion of these  companies  compete for motion picture  projects and
talent and are producing  motion  pictures that compete for  exhibition  time at
theaters,  on  television,  and on home  video  with  pictures  produced  by the
Company.   Other  companies  compete  in  areas  of  satellite   production  and
transmission  services and music  production,  distribution and promotion.  SVEI
also  intends  to use its core  competencies  in areas of music  production  and
production services to diversify and compete in the global marketplace.

         Most of SVEI's  competitors have operating  histories,  larger customer
bases and  significantly  greater  financial,  marketing  and  other  resources.
Certain of SVEI's  competitors  have the financial  resources to devote  greater
resources to marketing and promotional  campaigns and devote  substantially more
resources to technology development. Increased competition may result in reduced
operating margins.

EMPLOYEES

         As of September 25, 2004, SVEI employed four employees.  SVEI considers
its employee relations to be satisfactory at present.


ITEM 2.   DESCRIPTION OF PROPERTY


         SVEI's principal  executive  offices are located at 15452 Cabrieto Rd.,
Suite 204, Van Nuys, CA 91406 and consist of  approximately  2500 square feet of
unfurnished   executive   suite  offices  and  reception  and  conference   room
arrangements.  The lease expires in June 2005. The monthly rent for the property
is $2,500.

ITEM 3.   LEGAL PROCEEDINGS


         In  September of 2001 the Company  entered into a promissory  note with
Duncan  MacPherson  to be payable  within the year. A dispute arose and the note
was not timely paid,  which led to a court action  styled R. DUNCAN  MACPHEARSON
VS. STEREOVISION ENTERTAINMENT, ET, AL. ,
Case No. LC 0611749 in Los Angeles,  California.  Subsequently,  the parties, on
January 26, 2004, entered into a Settlement  Agreement,  including provisions if
scheduled  payments do not occur as agreed.  25,000 shares of  restricted  stock
were  delivered  and $40,000 of payments  were made,  with the final $10,000 not
paid according to the  stipulated  agreement.  This resulted in the  plaintiff's
entry of a judgment,  according to notice  received by the company,  of slightly
over $37,500, which has been appealed by the Company as incorrect and EXCESSIVE.

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

         In accordance  with Nevada  corporate law, no matters were subject to a
vote of security holders during the year ended June 30, 2004.

                                     PART II

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

         The  Company's  Common  Stock is traded on the NASDAQ OVER OTC Bulletin
Board market under the symbol "SVSN." The following  table presents the high and
low bid quotations for the Common Stock as reported by the NASD for each quarter
during the last two years. Such prices reflect  inter-dealer  quotations without
adjustments  for retail markup,  markdown or commission,  and do not necessarily
represent actual transactions.

         Prior to December 2, 1999,  there was no trading  market for  Company's
Common Stock. As of December 2, 1999, SVEI's Common Stock has been traded on the
OTC Bulletin Board under the trading symbol "SVED." On June 2, 2003, the Company
changed  its  trading  symbol to  SVSN.OB.  The price for the  common  stock has
approximately ranged in price as follows:



                                                      HIGH                 LOW

Quarter ended September 30, 2002                      $0.09               $0.01
Quarter ended December 31, 2002                       $0.05               $0.02
Quarter ended March 31, 2003                          $0.03               $0.02
Quarter ended June 30, 2003                           $1.13               $0.01

Quarter ended September 30, 2003                      $1.20               $0.40
Quarter ended December 31, 2003                       $0.61               $0.21
Quarter ended March 31, 2004                          $3.25               $0.25
Quarter ended June 30, 2004                           $2.15               $0.35

         The number of shareholders  of record of the Company's  Common Stock as
of September 9, 2004 was approximately 172.

DIVIDENDS

         SVEI has never paid a cash  dividend on its Common  Stock nor does SVEI
anticipate  paying cash dividends on its Common Stock in the near future.  It is
the present  policy of SVEI not to pay cash dividends on the Common Stock but to
retain  earnings,  if any,  to fund  growth and  expansion.  Any payment of cash
dividends  on the  Common  Stock in the future  will be  dependent  upon  SVEI's
financial  condition,  results  of  operations,  current  and  anticipated  cash
requirements,  plans  for  expansion,  as well as  other  factors  the  Board of
Directors deems relevant.

TRANSFER AGENT

         The Company has appointed  Holladay Stock Transfer,  Inc., with offices
at 2939 North 67th Place, Scottsdale, Arizona, 85215, phone number 480-481-3940,
as  transfer  agent for our  shares  of  common  stock.  The  transfer  agent is
responsible for all record-keeping  and  administrative  functions in connection
with the common shares and stock warrants.

RECENT SALES OF UNREGISTERED SECURITIES

         The Company was initially  incorporated to allow for the issuance of up
to 25,000  shares of no par value common  stock.  As a result of the merger with
Kestrel Equity Corporation the authorized number of shares is 100,000,000 with a
par value of $.001.

         At inception, the Company issued 61,200 (1,530,000 pre-split) shares of
common stock to its officers and directors  for services  performed and payments
made on the Company's  behalf during its formation.  This transaction was valued
at approximately $0.003 per share or an aggregate approximate $5,000.

         On December 3, 1999 the Company  entered into an acquisition  agreement
and plan of reverse merger with Kestrel Equity  Corporation and at the same time
entered into an asset acquisition agreement for the acquisition of 3-D projects,
equipment,  licensing and distribution  rights.  By virtue of the merger and the
asset  acquisition,  the Company  issued  106,800  shares of common stock of the
surviving  corporation and acquired assets valued at $4,013,100 or approximately
$1.50 per share.

         On  December  31,  1999 the  Company  issued  14,000  shares to various
employees and consultants for services rendered valued at $2.00 per share.

         On February 14, 2000 the Company issued 4,000 shares of common stock as
payment for services rendered by Mr. Herky Williams.  The services rendered were
for the development of the Company's music division.

         From April to June 2000,  the Company  issued 8,000  restricted  common
shares to various consultants for services and 3,620 restricted common shares to
individuals for cash all at $1.00 per share.

         On April 25, 2000 the Board of  Directors  approved a stock option plan
whereby107,000  common shares have been set aside for employees and  consultants
to be distributed at the discretion of the Board of Directors. The option shares
will be exercisable  on a cashless  basis at a 15% discount to market value.  No
formal plan has been adopted as of the date of this report.

         On August 10, 2000,  the Company  purchased a motion  picture  entitled
"ROUTE 66" including all rights and materials, the rights as the creator and the
writer  of the  original  screenplay,  all  copyright  rights,  trade  names and
trademarks  and  all  other  forms  of  exploitation  of the  Property,  and all
ancillary,  merchandise, music and book-publishing rights in exchange for 10,600
restricted  common  shares,  $96,492.73  (payable  $25,000  August 14,  2000 and
$11,915.46 per month from December 14, 2000 to May 14, 2001 and $25,000 plus a 1
1/2% royalty on anY merchandise and 2% royalty on sequels).

         On  September  27, 2000 the Company  entered  into a contract  with Ron
Whiten  to  make  strategic  introductions  on  behalf  of  the  Company  to the
investments community in exchange for 4,000 common shares. On September 29, 2000
the shares were issued at a value of $95,000,  which was the quoted market price
on the date of issue.  The contract is for a period of time covering 3 quarterly
financial statements. To the best knowledge and belief of the Company Mr. Whiten
has performed no services pursuant to this agreement. On May 25, 2001, the 4,000
shares of stock  issued to Mr.  Whiten  were  canceled  for  non-performance  of
services.

         On October  27,  2000 the  Company  issued  500 shares of common  stock
valued at $1.00 per share to National  Financial  Group for services  previously
rendered.

         Pursuant to an agreement made with an affiliate company of Mr. Williams
(the   Secretary-Treasurer   and  Director  of  the  Company)   called  Wilfield
Entertainment,  the company  issued  16,000  shares of common  stock at a market
price of $0.55 per share on April 18,  2001 for its  participation  in the joint
venture. The joint venture with Wilfield is for the production of thirteen music
albums. The Company will supply the necessary funding for the production of said
albums and after capital repayment has occurred, the Company will receive 51% of
the profits  from the  projects.  The  estimated  production  costs per album is
projected to be $80,000.

         On May 25, 2001,  14,000 shares that were issued to various  people for
services were  cancelled.  These shares were  cancelled for  non-performance  of
services.

         During the year ending  June 30,  2001,  68,840  shares were issued for
conversion of notes payable totaling $664,651.  The value of these shares ranged
from $0.26 to $0.51 per share.

         During the year ended June 30, 2001,  the Company  issued 61,304 shares
to various  consultants for services at the market value on the date of issuance
and 600 restricted common shares to individuals for cash at $1.00 per share.

         During the quarter ended  September 30,  2001,4,000  shares were issued
for conversion of notes payable totaling $25,600.  The value of these shares was
$0.26 per share.

         During the quarter ended September 30, 2001, the Company issued 123,200
shares to various  consultants  for  services at the market value on the date of
issuance and 3,600 restricted common shares to individuals for cash at $0.50 per
share.

         During the quarter ended  December 31, 2001,  the Company issued 25,912
shares of stock for conversion of notes payable totaling  $135,596,  for accrued
interest  on the notes  payable  of  $12,275,  and for  consulting  services  of
$20,778. The value of the shares was between $0.14 and $0.35 per share.

         During  the  quarter  ended  December  31,  2001,  the  Company  issued
2,370,631 shares to various  consultants for services at the market value on the
date of issuance.  Also,  1,600 shares issued on July 30, 2001 for services were
cancelled on October 2, 2001 for non-performance of services.

         On January 15, 2002, 12,000 shares of common stock were issued for cash
at $0.33 per share.  Also during the quarter,  106,480 were issued in connection
with previous debt cancellation.

         During the  quarter  ended June 30,  2002,  the Company  issued  12,000
shares of common  stock for cash.  Shares  were issued  for$0.025  to $0.075 per
share.  Also during the quarter,  10,000 shares were issued for  consulting  and
rent expense. The value of the shares was between $0.03 and $0.08 per share.

         On April 29, 2002,  8,000 common shares were issued for the purchase of
"In the Garden of Evil" album. The value of the shares was $0.06.

         On May 30, 2002,  4,000 common shares were issued to various people for
services  connected  with the  project  "Mad Dogs and  Oakies."  The shares were
issued for $0.03 per share.

         On July 1, 2002, 34,000 common shares were issued for cash. Shares were
issued for $0.01 to $0.025 per share.  Also on July 8, 2002,  93,344 were issued
in connection with a previous debt cancellation.

         On December 23, 2002, 132,000 common shares were cancelled from various
shareholders for non-performance of services.

         During the quarter  ended March 31, 2003,  661,400  common  shares were
issued to various people for services. The value of the shares was between $0.01
and $0.03 per share.

         On March 26, 2003,  160,000 common shares were issued for conversion of
notes payable of $289,892.

         During the quarter ended June 30, 2003, 2,257,600 shares were issued to
various  people  for  services.  The value of the  shares was $0.25 to $1.13 per
share.

         On June 2, 2003,  88,000  common  shares were issued for  conversion of
debt totaling $20,000.

         On June 3, 2003,  12,000 shares were cancelled for  non-performance  of
services.

         On June 25,  2003,  40,000  shares were issued for  conversion  of debt
totaling $15,491.

         During the quarter  ended  September  30, 2003,  1,198,000  shares were
issued to  various  people  for  services.  The value of the shares was $0.45 to
$0.57 per share.

         On July 8,  2003,  30,000  shares  of  common  stock  were  issued  for
conversion of debt totaling $8,465.

         During the quarter ended December 31, 2003,  623,072 shares were issued
for cash from $0.13 to $0.25 per share. Also during the quarter,  720,000 shares
were issued to various  people for services.  The value of the shares was $0.25.
In addition,  the Company issued  100,000  shares to pay an accounts  payable of
$20,000.

         During the quarter  ended March 31, 2004,  the Company  issued  425,000
shares for cash from $0.25 to $0.50 per share. Also during the quarter,  435,000
shares were issued to various people for services and 100,000 shares were issued
to pay rent.  The value of these  shares was $0.25 to $2.00.  In  addition,  the
Company canceled 176,000 shares for nonperformance of services.

         On January 20, 2004,  the Company  converted debt of $35,000 to 200,000
shares of common stock.

         On April 7, 2004,  the Company  issued 60,000 shares of common stock to
various  people for  consulting  services.  Also,  on April 7, 2004 the  Company
issued  375,000 shares of common stock to various people for cash of at $0.25 to
$0.75 per share. In addition, approximately $14,200 in loans were converted into
30,000 shares of common stock.

         On April 14, 2004,  the Company  issued  100,000 shares of common stock
for cash at $0.25 per share.

         On May 6, 2004,  the Company  issued  10,000 shares of common stock for
cash at $0.50 per share.

         On May 25,  2004,  the Company  issued  50,000  shares of common  stock
valued at $0.81 per share for consulting services.

         On June 8, 2004,  the Company  issued 100,000 shares of common stock in
connection with extension of acquiring ownership in Baywatch 3D Production, LLC.
The shares were valued at $0.75 per share

         On June 16, 2004, the Company issued 240,000 shares of common stock for
consulting  expenses paid by a shareholder to a third party. The amount paid for
the consulting services was $80,000.

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


PLAN OF OPERATIONS - The following discussion should be read in conjunction with
the Company's audited financial statements.

         The  Company  was  organized  for the  purpose of  creating a corporate
vehicle to seek,  investigate and, if such  investigation  warrants,  acquire an
interest in one or more  business  opportunities  presented  to it by persons or
firms who or which  desire  to seek  perceived  advantages  of a  publicly  held
corporation.

         The  Company  may  incur   significant   post-merger   or   acquisition
registration costs in the event management wishes to register a portion of their
shares for subsequent  sale. The Company will also incur  significant  legal and
accounting  costs in  connection  with the  acquisition  including  the costs of
preparing post- effective amendments,  Forms 8-K, agreements and related reports
and documents.

         The Company will not have sufficient  funds (unless it is able to raise
funds  in  a  private  placement)  to  undertake  any  significant  development,
marketing and manufacturing of the products acquired. Accordingly,  following an
acquisition,  the Company  will, in all  likelihood,  be required to either seek
debt or equity  financing or obtain funding from third parties,  in exchange for
which the  Company  may be  required  to give up a  substantial  portion  of its
interest in the acquired product. There is no assurance that the Company will be
able  either to  obtain  additional  financing  or  interest  third  parties  in
providing  funding for the further  development,  marketing and manufacturing of
any products acquired.

         The current plan of SVEI incorporates  operational  resources that will
reach the mass  market by  aligning  itself  with  already-established,  branded
products  and titles  for the  production,  promotion  and  distribution  of 3-D
products.  The Company's management intends to aggressively  evaluate and pursue
production  opportunities  in order to increase  SVEI's  content  library.  As a
development stage company, SVEI has minimal historical  operations,  no revenues
and  negative  cash  flows.  In order to satisfy  cash  requirements  for SVEI's
production and revenue goals,  management  must obtain working  capital  through
either debt or equity financing.

         The  entertainment  industry is an  intensely  competitive  one,  where
price, service, location, and quality are critical factors. The Company has many
established  competitors,  ranging from similar local single unit  operations to
large  multi-national  operations.  Some of these competitors have substantially
greater financial  resources and may be established or indeed become established
in areas where the Company operates.  The entertainment industry may be affected
by changes in customer tastes, economic, and demographic trends. Factors such as
inflation,  increased  supplies costs and the availability of suitable employees
may adversely  affect the  entertainment  industry in general and the Company in
particular.  In view of the Company's limited financial resources and management
availability,  the  Company  will  continue to be at a  significant  competitive
disadvantage vis-a-vis the Company's competitors.

RESULTS  OF  OPERATIONS  - THERE were no  revenues  from sales for the two years
ended June 30, 2003 and 2004.  SVEI has  sustained  a net loss of  approximately
$2.9 million for the year ended June 30, 2004, which was largely attributable to
consulting  expense from stock  issuances to  consultants.  From May 5, 1999 the
Company was a development stage company and had not begun principal  operations.
Accordingly, comparisons with prior periods are not meaningful.

LIQUIDITY AND CAPITAL RESOURCES

         The  Company  is in the  process  of  developing  a  detailed  plan  of
operations  to exploit  its asset  base.  On a  preliminary  basis,  the Company
estimates that it will require from  $5,000,000 to $10,000,000  over a period of
18 months to fund this plan of  operations.  This plan of operations is expected
to include both  exploitation of existing  movies and equipment,  and efforts to
arrange  development  of additional  movies.  The Company may attempt to arrange
joint ventures with studios to facilitate the development of new movies.

         The aforementioned  estimates of capital required are still preliminary
in nature and are subject to substantial and continuing revisions.  Although the
Company has not yet commenced any formal capital  raising  efforts,  the Company
expects  that any capital that it raises will be in the form of one or more debt
or equity financings.  However, there can be no assurances that the Company will
be  successful  in raising any  required  capital on a timely basis and/or under
acceptable  terms and conditions.  To the extent that the Company does not raise
sufficient  capital to implement its plan of  operations  on a timely basis,  it
will have to curtail,  revise and/or delay its business  plans.  The Company has
financed  its  operations  to date from the sale of stock and loans from related
parties. During the year ended June 30, 2004, the Company received approximately
$448,000  from the sale of common stock and $112,000  from related  party loans.
However,  there can be no assurances that  additional  loans will be forthcoming
from officers, directors, and shareholders.

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.

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.

ITEM 8A. CONTROLS AND PROCEDURES

We have established  disclosure  controls and procedures to ensure that material
information  relating to the Company is made known to the  officers  who certify
the Company's  financial  reports and to other members of senior  management and
the Board of Directors.

Based on their  evaluation,  as of the end of the period  covered by this Annual
Report on Form 10-KSB, the principal  executive officer and principal  financial
officer of Stereo Vision Entertainment, Inc. have concluded that Stereo Vision's
disclosure  controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the  Securities  Exchange Act of 1934) are  effective in ensuring that the
information  required to be disclosed by the Company in reports that it files or
submits  under  the  Securities  Exchange  Act  of1934 is  recorded,  processed,
summarized and reported within the time periods specified in the SEC's rules and
forms.

There were no  significant  changes in Stereo  Vision's  internal  control  over
financial  reporting  during  the  Company's  fourth  fiscal  quarter  that  has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.

                                    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 composition of the Board of Directors as well as the Officers of the company
has undergone  significant change since the end of the company's fiscal year. On
July 5,2004 Douglas  Schwartz was named  Chairman of the Board of Directors.  On
August 30, 2004 Lance H. Robbins was  appointed CEO and President and joined the
Board of Directors. On that same day, Theodore P. Botts joined the Board and was
appointed Chief Financial Officer on September 7.

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:

Name of Director          Age      Current Position         Position Held Since

Doug Schwartz             59       Chairman/Director        July, 2004
Tom Noonan                72       Vice Chairman            August, 2000
Lance Robbins             48       CEO/President            August, 2004
                                   Director
John Honour               52       COO, Director            June, 2001
Theodore Botts            59       CFO, Director            September, 2004
Herky Williams            49       Secretary/Treasurer      May, 2000
                                   Director
John C. Bodziak, Jr.      30       Director                 August, 2000


DOUG SCHWARTZ, Chairman of the Board
Mr.  Schwartz was elected  Chairman of the Board on July 6, 2004. He has been an
established   writer,   creator  and  director  for  25  years.   His  extensive
entertainment background includes being co-creator and executive producer of the
world's most watched television series in history.
`Baywatch",  which was distributed to 145 countries in 23 languages,  was viewed
by a world wide audience of over one billion people.  In addition,  Mr. Schwartz
has co-created and executive produced eight television series, which added up to
hundreds of one hour  episodes,  and over twenty  highly rated and award winning
television movies

TOM NOONAN, Vice-Chairman of the Board
Mr.  Noonan has  served on the Board of  Directors  since  August,  2000.  He is
currently head of Columbia/Epic  Records Alumni  Association.  From 1995-2000 he
was  President  of  Noonan  Consulting,  a record  industry  consulting  firm to
artists, labels, video companies, music publishers, trade publications, artists'
managers, newly formed companies and foreign affiliates. Mr. Noonan was formerly
a senior executive at Billboard Magazine where he founded the Hot 100 Charts. He
has provided  valuation  advice to the IRS on albums and music  associations and
served as a US Government  Expert  Witness  before  investigative  congressional
committees.  He has  provided  marketing  services for major  artists  including
Barbara  Streisand,  Bob Seger,  Janis Joplin,  Marvin Gaye and Diana Ross & The
Supremes.

LANCE H. ROBBINS, President and CEO, Director
Lance Robbins was elected to the Board of Directors and appointed  President and
CEO of the company in August, 2004. He has been an entertainment  industry force
since  graduating  law school and  joining a  prestigious  Los Angeles law firm.
While remaining a licensed  attorney,  in 1983 he began his first  entertainment
company,  Barnett-Robbins  Enterprises,  which  became  a leader  in  nationally
syndicated radio programs. After four years, Barnett-Robbins was acquired by MCA
Music Inc.  For the next three  years  Robbins  was  vice-president  of Premiere
Entertainment  Group,  where  he  oversaw  the  development,   acquisition,  and
production of feature films and  low-to-medium  budget,  and highly  profitable,
direct-to-video titles. In 1990 he joined Saban Entertainment as President. Over
the next eight years he was the driving force behind  Saban's  building a motion
picture and  television  library of more than three  hundred  and fifty  titles,
which included the most  successful  kids franchise in television and marketing,
MIGHTY MORPHIN POWER RANGERS,  as well as NINJA TURTLES,  and THE ADDAMS FAMILY.
The Saban International and Saban Entertainment  assets and libraries were later
sold to ABC/Disney for over five billion dollars. In 1998 he became President of
Fox Family Television Studios  Worldwide.  During his tenure there, his numerous
credits  included the critically  acclaimed LES MISERABLES,  CASPER MEETS WENDY,
EARTHQUAKE  IN NEW York,  THE SPIRAL  STAIRCASE,  AU PAIR,  HONOR THY FATHER AND
MOTHER: THE TRUE STORY OF THE MENENDEZ MURDERS, THE MICHAEL JORDAN STORY and the
award-winning  ELIAN GONZALEZ STORY. In 2002, Robbins left Fox Family Television
Studios and formed Robbins  Entertainment Group. For the past two years, Robbins
has  continued  to  develop  projects  with  almost  all the  network  and cable
companies,  including CBS, Pax, TNT, Lifetime, Hallmark, and Showtime. As CEO of
Stereo Vision  Entertainment  Inc.  Robbins intends to utilize all his creative,
business and strategic  alliances in the Hollywood  community and abroad to help
build  Stereo  Vision into a leading  multimedia  entertainment  production  and
distribution company.

JACK HONOUR, Chief Operating Officer, Director
Mr. Honour has been the driving force behind the Company's  vision and strategy.
He founded the Company  three years ago in order to capitalize on what he saw as
the  emerging  transition  from  traditional  entertainment  to state of the art
multimedia entertainment. He served as President and CEO before recruiting Lance
Robbins to that position and is a member of the Board of Directors.  His diverse
career has included  starting a number of businesses  in Restaurant  Management,
Real Estate and an Import/Export Trading Company. Since he founded Stereo Vision
Entertainment  he has  gathered  together  the  management  team  and  Board  of
Directors necessary to develop the various facets of the business.  In addition,
Mr. Honour has succeeded in identifying  attractive projects for the Company and
forging close relationships with key strategic partners.

THEODORE P. BOTTS, Chief Financial Officer, Director
Mr. Botts was elected to the  StereoVision  Board of Directors  and appointed as
the Chief Financial  officer in August,  2004.  Prior to his  appointments,  Mr.
Botts had served as Senior Financial Advisor to the Company's officers and Board
of Directors.
With a career on Wall Street that spans more than 30 years,  including  fourteen
years at Goldman Sachs, and then until the year 2000, twelve years as a Managing
Director for UBS in London and New York, Mr.Botts brings to StereoVision a broad
range of corporate finance experience and contacts in the investment  community.
Since 2000, he has been managing his private financial advisory firm, Kensington
Gate  Capital.  He has been  consulting to  StereoVision  since the beginning of
2004.  In addition to his  position at  StereoVision,  Mr.  Botts  serves as the
chairman of the audit  committee  and a Board Member of INTAC  International,  a
NASDAQ listed China Ventures Company.  He also serves as the head of development
for REACH Prep, a non-profit children's educational organization.

HERKY WILLIAMS, Secretary and Treasurer, Director
Mr.  Williams  has  served as  Secretary/Treasurer  and a member of the board of
directors  since  May,  2000.  Mr.  Williams  has an  extensive  background  and
experience in various facets of the music industry. He served as Senior Director
of A&R for Capitol Records in 1995/6 where his duties  included  signing artists
as well as artist  development.  Such  artists  included  Willie  Nelson,  Garth
Brooks, Charlie Daniels and Tanya Tucker.

JOHN C. BODZIAK, Director
Mr. Bodziak served as  CEO/President  of StereoVision  from August 4 to November
15,  2000.  During his career,  Mr.  Bodziak has owned and  operated a number of
businesses  in the  restaurant,  liquor and concert  entertainment  areas.  From
1995-1997  he was the  general  manager  for Key Largo  International  where his
duties included managing a restaurant and a nightclub.  From 1997-2000 he served
as  CEO/President  of Janus  Landing  Courtyard  that was voted by Rolling Stone
magazine to be one of the top ten concert venues in the US.

CONFLICTS OF INTEREST

         Certain conflicts of interest existed at June 30, 2004 and may continue
to exist  between the Company and some of its officers and  directors due to the
fact that each may have  other  business  interests  to which  they  devote  his
primary  attention.  Each of these  officers and directors 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

         Our Board of Directors  conducts its business  through  meetings of the
Board.  During the fiscal year ended June 30, 2004, the Board  consisted of four
individuals and adopted 3 resolutions.

         The Board does not currently have any committees, but is in the process
of establishing an audit committee and an option committee.

CODE OF ETHICS

         We do not currently  have a Code of Ethics  applicable to our principal
executive,  financial  and  accounting  officers.  We do not  have a  "financial
expert" on the board.

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.

ITEM 10.   EXECUTIVE COMPENSATION


         None of the  executive  officer's  annual  salary  and  bonus  exceeded
$125,000 during any of the Company's last two fiscal 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
9,846,571  shares of issued and  outstanding  Common  Stock of the Company as of
September 9, 2004 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.
<TABLE>
<CAPTION>

          Name and Address of                  Nature of
     Beneficial Owners / Directors             Ownership            Shares Owned           Percent
----------------------------------------  ---------------------  -------------------   ----------------
<S>                                       <C>                    <C>                   <C>
All Executive Officers
and Directors as a Group *
(7 persons)                               Common                          4,094,236             41.58%

Theodore Botts*                           Common                            850,702              8.84%

H.F.I.C Investments
420 S. Hibiscus Dr.
Miami, FL 33139                           Common                            500,000              5.08%

John Honour *                             Common                          2,424,934             24.62%

Herky Williams
120 Garden Gate Dr.
Franklin, TN 37069                        Common                            556,000              5.65%
</TABLE>


*The address of all five officers and directors is in care of the Company.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         As of June 30, 2004 and 2003, the company owes $285,370 and $230,708 to
various  shareholders  and  officers/directors.  The  loans are  unsecured  with
interest at rates of 4.00% to 12% and have no fixed terms of repayment.


         On  April  30,  2004,  the  company  signed  a  Development  Production
Agreement with Baywatch 3 Double D LLC which is 50 % owned by Douglas  Schwartz,
Chairman.  Under the terms of the  agreement,  the company will receive  certain
rights  in a film  to be  produced  in  return  for  providing  the  development
production  advance.  Originally  the company had 30 days in which to secure the
advance.  The  company  has since  received  an  extension  for which it granted
Baywatch LLC 100,000  unregistered  shares and is free to continue to pursue the
funding  on a  non-exclusive  basis of the  production  advance  for the  movie,
"Baywatch 3 Double D".

         On September 21, 2004 the company announced that Lance Robbins, CEO had
assigned  his 50%  ownership of five low budget  feature  length films to Stereo
Vision  Entertainment.  Robbins will serve as co-executive producer of the films
that will be financed by Movies, Inc. under the umbrella title, "Miami Models".

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

Exhibits

The following exhibits are included as part of this report:

Exhibit
Number   Title of Document


2.1 *    Acquisition Agreement and Plan of Reverse Merger by and between Stereo
         Vision Entertainment, Inc and Kestrel Equity Corporation dated December
         3, 1999. (incorporated by reference to Form 10-SB filed with the SEC on
         December 17, 1999)

2.2 *    Agreement and Plan of Merger by and between Kestrel Equity Corporation


1
1
         and SVE Merger, Inc. dated January 10, 2000.

3.1      * Articles of  Incorporation of Kestrel Equity  Corporation  filed with
         the State of Arizona on December 14, 1993.  (incorporated  by reference
         to Form 10-SB filed with the SEC on December 17, 1999)

3.2      * Articles of Amendment of Articles of  Incorporation of Kestrel Equity
         Corporation  filed  with  the  State  of  Arizona  on  June  18,  1997.
         (incorporated by reference to Form 10-SB filed with the SEC on December
         17, 1999)

3.3      * Articles of Amendment of Articles of  Incorporation of Kestrel Equity
         Corporation  filed  with the State of Arizona on  September  30,  1997.
         (incorporated by reference to Form 10-SB filed with the SEC on December
         17, 1999)

3.4       * Bylaws of the Kestrel Equity Corporation. (incorporated by reference
          to Form 10-SB filed with the SEC on December 17, 1999)

3.5 *    Articles of Incorporation of SVE Merger, Inc. filed with the State of
         Nevada on December 23, 1999.

3.6 *    Bylaws of SVE Merger, Inc.

4.1 *    Specimen Stock Certificate of Kestrel Equity Corporation. (incorporated
         by reference to Form 10-SB filed with the SEC on December 17, 1999)

4.2 *    Specimen Stock Certificate of SVE Merger, Inc.

10.1*    Stock Purchase Agreement by and between Kestrel Equity Corporation and
         John Honour, dated September 25, 1999.

31.1     Certification  of  Principal  Executive  Officer  Pursuant  to 18 U.S.C
         Section 1350 as Adopted  Pursuant to Section 302 of the  Sarbanes-Oxley
         Act of 2002.

31.2     Certification  of  Principal  Financial  Officer  Pursuant  to 18 U.S.C
         Section 1350 as Adopted  Pursuant to Section 302 of the  Sarbanes-Oxley
         Act of 2002.

32.1     Certification  of  Principal  Executive  Officer  Pursuant  to 18 U.S.C
         Section 1350 as Adopted  Pursuant to Section 906 of the  Sarbanes-Oxley
         Act of 2002.

32.2     Certification  of  Principal  Financial  Officer  Pursuant  to 18 U.S.C
         Section 1350 as Adopted  Pursuant to Section 906 of the  Sarbanes-Oxley
         Act of 2002.


(*)      Incorporated by reference to the Registrant's registration statement on
         Form 10-SB filed on August 9, 2000.

(a)      Reports on Form 8-K filed.

         There were no Form 8-K's filed during the quarter ended June 30, 2004.


<PAGE>

















                        STEREO VISION ENTERTAINMENT, INC.
                          (A Development Stage Company)

                                       -:-

                          INDEPENDENT AUDITOR'S REPORT


                             JUNE 30, 2004 AND 2003


















<PAGE>



                                    CONTENTS



                                                                          Page

Independent Auditor's Report.............................................F - 1

Balance Sheets
   June 30, 2004 and 2003................................................F - 2

Statements of Operations for the
   Years Ended June 30, 2004 and 2003 and the Cumulative
   Period May 5, 1999 (inception) to June 30, 2004.......................F - 4

Statement of Stockholders' Equity for the
   Period May 5, 1999 (Inception) to June 30, 2004 ......................F - 5

Statements of Cash Flows for the
   Years Ended June 30, 2004 and 2003 and the Cumulative
   Period May 5, 1999 (Inception to June 30, 2004.......................F - 15

Notes to Financial Statements...........................................F - 17
























<PAGE>






                          INDEPENDENT AUDITOR'S REPORT

Stereo Vision Entertainment, Inc.
(A Development Stage Company)

         We have  audited  the  accompanying  balance  sheets of  Stereo  Vision
Entertainment,  Inc. (a development  stage company) as of June 30, 2004 and 2003
and the related statements of operations, and cash flows for the two years ended
June 30, 2004 and 2003 and the cumulative period May 5, 1999 (inception) to June
30, 2004 and the  statement  of  stockholders  equity for the period May 5, 1999
(inception) to June 30, 2004. 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 audit.

         We conducted our audits in accordance  with the standards of the Public
Company Accounting Oversight Board (United States). 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 Stereo  Vision
Entertainment,  Inc. (a development  stage company) as of June 30, 2004 and 2003
and the  results of its  operations  and its cash flows for the two years  ended
June 30, 2004 and 2003 and the cumulative period May 5, 1999 (inception) to June
30, 2004, in conformity with  accounting  principles  generally  accepted in the
United States of America.

         The accompanying  financial statements have been prepared assuming that
the Company  will  continue as a going  concern.  As  discussed in Note 1 to the
financial statements,  the Company has suffered recurring losses from operations
and has a net capital  deficiency that raise substantial doubt about its ability
to continue as a going  concern.  Management's  plans in regard to these matters
are also  described  in Note 1. The  financial  statements  do not  include  any
adjustments that might result from the outcome of this uncertainty.

                                                Respectfully Submitted,

                                                /S/ Robison, Hill & Co.
                                                Certified Public Accountants

Salt Lake City, Utah
October 11, 2004

                                      F - 1

<PAGE>



                        STEREO VISION ENTERTAINMENT, INC.
                          (A Development Stage Company)
                                 BALANCE SHEETS

<TABLE>
<CAPTION>

ASSETS:                                                                                     June 30,
                                                                                    2004                2003
                                                                             ------------------  ------------------
Current Assets:
<S>                                                                          <C>                 <C>
   Cash                                                                      $                -  $           10,757
   Prepaid Expenses                                                                       9,234                   -
                                                                             ------------------  ------------------
       Total Current Assets                                                               9,234              10,757
                                                                             ------------------  ------------------

Fixed Assets:
   Office Equipment                                                                      13,745              13,745
   Less Accumulated Depreciation                                                        (13,745)            (10,996)
                                                                             ------------------  ------------------
       Net Fixed Assets                                                                       -               2,749
                                                                             ------------------  ------------------

Intangible and Other Non- Current Assets:
   Investment in Wilfield Entertainment                                                       -             220,000
   Films, Manuscripts, Recordings and Similar Property                                        -             337,008
                                                                             ------------------  ------------------
       Net Intangible and Other Non-Current Assets                                            -             557,008
                                                                             ------------------  ------------------

Total Assets                                                                 $            9,234  $          570,514
                                                                             ==================  ==================
</TABLE>





















                                      F - 2

<PAGE>



                        STEREO VISION ENTERTAINMENT, INC.
                          (A Development Stage Company)
                                 BALANCE SHEETS
                                   (Continued)

<TABLE>
<CAPTION>

                                                                                            June 30,
                                                                                    2004                2003
                                                                             ------------------  ------------------
LIABILITIES AND STOCKHOLDERS' EQUITY:

Liabilities:
<S>                                                                          <C>                 <C>
   Accounts Payable                                                          $          246,628  $          268,277
   Accrued Expenses                                                                      78,373              42,042
   Bank Overdraft                                                                           401                   -
   Payable to SAG for Route 66                                                           71,493              71,493
   Lawsuit Payable                                                                       37,411                   -
   Loans from Shareholders                                                              285,370             230,708
                                                                             ------------------  ------------------
      Total Current Liabilities                                                         719,676             612,520
                                                                             ------------------  ------------------


Stockholders' Equity:
   Shareholder Receivable                                                                     -                   -
  Common Stock, $.001 Par value
    Authorized 100,000,000 shares,
    Issued 8,348,222 shares at June 30, 2004
      and 3,828,150 shares at June 30, 2003                                               8,348               3,828
  Additional Paid in Capital                                                         14,249,680          11,489,811
  Stock Options Outstanding                                                                   -             487,500
  Deficit Accumulated During the Development Stage                                  (14,968,470)        (12,023,145)
                                                                             ------------------  ------------------
     Total Stockholders' Equity                                                        (710,442)            (42,006)
                                                                             ------------------  ------------------

     Total Liabilities and Stockholders' Equity                              $            9,234  $          570,514
                                                                             ==================  ==================
</TABLE>











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

                                      F - 3

<PAGE>



                        STEREO VISION ENTERTAINMENT, INC.
                          (A Development Stage Company)
                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                                                    Cumulative
                                                                                                   Since May 5,
                                                                                                       1999
                                                                 For the Year Ended                Inception of
                                                                      June 30,                      Development
                                                       --------------------------------------
                                                              2004                2003                 Stage
                                                       ------------------  ------------------   -------------------

<S>                                                    <C>                 <C>                  <C>
Revenues                                               $                -  $                -   $                 -
                                                       ------------------  ------------------   -------------------

Expenses
Research & Development                                                  -                   -               293,000
General & Administrative                                          186,524             648,250             9,062,048
Consulting                                                      1,781,703           1,648,106             4,419,498
Advertising & Promotion                                            31,750             122,040               301,823
                                                       ------------------  ------------------   -------------------

Operating Loss                                                 (1,999,977)         (2,418,396)           (14,076,369)

Other income (expense):
   Interest                                                       (14,737)            (76,733)             (394,061)
   Investment Fee                                                 (75,000)                                  (75,000)
   Loss on Sale of Assets                                               -                   -               (15,883)
   Loss on Investment                                            (558,191)            (12,000)             (570,191)
   Lawsuit Settlement                                            (104,911)                  -              (104,911)
   Write off of Note Receivable                                  (191,701)                  -              (191,701)
   Gain on Forgiveness of Debt                                          -              48,516                48,516
   Gain (Loss) on Trading
          Investments                                                   -                   -               412,772
                                                       ------------------  ------------------   -------------------
Total Other Income (expense)                                     (944,540)            (40,217)             (890,459)
                                                       ------------------  ------------------   -------------------

       Net Loss Before Taxes                                   (2,944,517)         (2,458,613)          (14,966,828)

Income Tax Expense                                                   (808)               (834)               (1,642)
                                                       ------------------  ------------------   -------------------

       Net Loss                                        $       (2,945,325) $       (2,459,447)  $       (14,968,470)
                                                       ==================  ==================   ===================

Basic & Diluted loss Per Share                         $           (0.48)  $           (2.00)
                                                       ==================  ==================

Weighted Average                                                6,154,874           1,232,591
                                                       ==================  ==================
</TABLE>

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

                                      F - 4

<PAGE>


                        STEREO VISION ENTERTAINMENT, INC.
                          (A Development Stage Company)
                        STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                                                                    Deficit
                                                                                                  Accumulated
                                                                                Additional          During
                                                        Common Stock             Paid in          Development
                                                ----------------------------
                                                    Shares         Value         Capital             Stage
                                                --------------  ------------ ----------------  -----------------
May 5, 1999 Stock Issued for Services
<S>                                                  <C>        <C>          <C>               <C>
  and Payment of Accounts Payable                    1,530,000  $      1,530 $          3,470  $                -

Net Loss                                                     -             -                -           (144,977)
                                                --------------  ------------ ----------------  -----------------

Balance at June 30, 1999                             1,530,000         1,530            3,470           (144,977)

Retroactive Adjustment for 25:1
  Stock Split May 30, 2003                          (1,468,800)       (1,469)           1,469                  -
                                                --------------  ------------ ----------------  -----------------

Restated Balance June 30, 1999                          61,200            61            4,939           (144,977)

December 2, 1999 Stock Issued in
   Exchange for Assets                                  58,800            59        4,011,841                  -

December 3, 1999 Stock Issued in
   Connection to Merger with Kestrel
   Equity Corporation                                   48,000            48         (112,114)                 -

December 31, 1999 Stock Issued
   for Services                                         14,000            14          699,986                  -

February 14, 2000 Stock Issued
   for Services                                          4,000             4           99,996                  -

April 17, 2000 Stock Issued for
   Services                                              4,000             4           99,996                  -

May 4, 2000 Stock Issued for Cash                        2,200             2           54,998                  -

June 2, 2000 Stock Issued for Services                   4,000             4           99,996                  -

June 30, 2000 Stock Issued for Cash                      1,420             2           35,499                  -

Net Loss                                                     -             -                -         (2,680,213)
                                                --------------  ------------ ----------------  -----------------
</TABLE>

                                      F - 5

<PAGE>

                        STEREO VISION ENTERTAINMENT, INC.
                          (A Development Stage Company)
                        STATEMENT OF STOCKHOLDERS' EQUITY
                                   (Continued)

<TABLE>
<CAPTION>

                                                                                                    Deficit
                                                                                                  Accumulated
                                                                                Additional          During
                                                        Common Stock             Paid in          Development
                                                ----------------------------
                                                    Shares         Value         Capital             Stage
                                                --------------  ------------ ----------------  -----------------

<S>             <C> <C>                                <C>      <C>          <C>               <C>
Balance at June 30, 2000                               197,620  $        198 $      4,995,137  $      (2,825,190)

September 13, 2000 Stock Issued for
   Services                                              5,000             5          141,245                  -

September 29, 2000 Stock Issued for
  Advertising                                            4,000             4           94,996                  -

October 27, 2000 Stock Issued for
  Advertising                                              500             -           12,499                  -

November 15, 2000 Stock Issued for
  Conversion of Note Payable                            32,000            32          407,106                  -

November 22, 2000 Stock Issued for
  Conversion of Note Payable                             2,000             2           24,998                  -

November 22, 2000 Stock Issued for
  Consulting                                             4,080             4          101,996                  -

December 4, 2000 Stock Issued for
   Services                                                400             -           10,200                  -

December 14, 2000 Stock Issued for
   Services                                              4,000             4          105,996                  -

January 23, 2001 Stock Issued for
   Cash                                                    600             1           14,999                  -


January 30, 2001 Stock Issued for
   Services                                              4,724             4           64,946                  -

March 10, 2001 Stock Issued for
   Services                                              8,000             8          153,992                  -
</TABLE>

                                      F - 6

<PAGE>

                        STEREO VISION ENTERTAINMENT, INC.
                          (A Development Stage Company)
                        STATEMENT OF STOCKHOLDERS' EQUITY
                                   (Continued)

<TABLE>
<CAPTION>

                                                                                                    Deficit
                                                                                                  Accumulated
                                                                                Additional          During
                                                        Common Stock             Paid in          Development
                                                ----------------------------
                                                    Shares         Value         Capital             Stage
                                                --------------  ------------ ----------------  -----------------

April 9, 2001 Stock Issued for
<S>                                                      <C>    <C>          <C>               <C>
   Advertising                                           3,600  $          4 $         49,496  $               -

April 18, 2001 Stock Issued for
  Acquisition of Wilfield Entertainment                 16,000            16          219,984                  -

May 25, 2001 Shares Cancelled for
   Non-Performance of Advertising and
   Services                                            (14,000)          (14)        (328,486)                 -

June 1, 2001 Shares Issued for
   Conversion of Notes Payable                             840             1            7,512                  -

June 15, 2001 Shares Issued for
   Services                                              1,000             1           14,999                  -

June 28, 2001 Shares Issued for
   Advertising                                           4,000             4           59,996                  -

June 28, 2001 Shares Issued for
   Services                                              6,000             6           89,994                  -

June 29, 2001 Shares Issued for
   Conversion of Notes Payable                          34,000            34          224,966                  -

Net Loss                                                     -             -                -         (4,572,325)
                                                --------------  ------------ ----------------  -----------------

Balance at June 30, 2001                               314,364           314        6,466,571         (7,397,515)

July 3, 2001 Shares Issued for Expenses                  1,000             1            9,999                  -

July 3, 2001 Shares Issued for Services                  5,000             5           74,995                  -

July 25, 2001 Shares Issued for Cash                     1,600             1           19,999                  -
</TABLE>

                                      F - 7

<PAGE>

                        STEREO VISION ENTERTAINMENT, INC.
                          (A Development Stage Company)
                        STATEMENT OF STOCKHOLDERS' EQUITY
                                   (Continued)

<TABLE>
<CAPTION>

                                                                                                    Deficit
                                                                                                  Accumulated
                                                                                Additional          During
                                                        Common Stock             Paid in          Development
                                                ----------------------------
                                                    Shares         Value         Capital             Stage
                                                --------------  ------------ ----------------  -----------------
July 30, 2001 Shares Issued for
<S>                                                      <C>    <C>          <C>               <C>
    Consulting                                           4,400  $          4 $         45,096  $               -

August 29, 2001 Shares Issued for
    Interest on Notes Payable                           13,400            13          100,487                  -

September 10, 2001 Shares Issued for
    Services                                               800             1            5,999                  -

September 10, 2001 Shares Issued for
   Conversion of Note Payable                            4,000             4           25,596                  -

September 25, 2001 Shares Canceled
   For Non-Performance of Contract                      (4,000)           (4)          70,536                  -

September 27, 2001 Shares Issued for
    Services                                           101,000           101        1,136,149                  -


September 27, 2001 Shares Issued for
   Cash and Commission                                   2,000             2           24,998                  -

October 2, 2001 Shares Issued for
   Services                                             18,000            18          242,982                  -

October 31, 2001 Shares Issued for
   Conversion of Note Payable                           10,182            10           89,085                  -

November 1, 2001 Shares Issued for
   Services                                              2,825             3           14,123                  -

November 7, 2001 Shares Issued for
   Conversion of Note Payable                            8,910             9           55,676                  -
</TABLE>


                                      F - 8

<PAGE>

                        STEREO VISION ENTERTAINMENT, INC.
                          (A Development Stage Company)
                        STATEMENT OF STOCKHOLDERS' EQUITY
                                   (Continued)

<TABLE>
<CAPTION>

                                                                                                    Deficit
                                                                                                  Accumulated
                                                                                Additional          During
                                                        Common Stock             Paid in          Development
                                                ----------------------------
                                                    Shares         Value         Capital             Stage
                                                --------------  ------------ ----------------  -----------------
December 19, 2001 Shares Issued for
<S>                                                     <C>     <C>          <C>               <C>
   Services                                             44,000  $         44 $        153,956  $                -

December 19, 2001 Shares Issued for
   Conversion of Note Payable                            6,820             7           23,863                  -

December 20, 2001 Shares Issued for
   Services                                             30,000            30          157,470                  -

January 1, 2002 Shares Issued for Cash                  12,000            12           99,988                  -

January 24, 2002 Shares Issued for
  Previous Conversion of Note Payable                   55,660            56              (57)                 -

February 25, 2002 Shares Issued for
  Previous Conversion of Note Payable                   63,525            64              (64)                 -

April 10, 2002 Shares Issued for
  Conversion of Note Payable                             9,920            10           32,617                  -

April 15, 2002 Shares Issued for Rent                    2,000             2            3,998                  -

April 15, 2002 Shares Issued for Cash                    4,000             4            2,996                  -

April 29, 2002 Shares Issued for
   Project Agreement                                     8,000             8           11,992                  -

April 29, 2002 Shares Issued for
   Consulting                                            4,000             4            5,996                  -

May 8, 2002 Shares Issued for Cash                       4,000             4            2,496                  -

May 24, 2002 Shares Issued for
   Consulting                                            4,000             4            3,496                  -
</TABLE>

                                      F - 9

<PAGE>

                        STEREO VISION ENTERTAINMENT, INC.
                          (A Development Stage Company)
                        STATEMENT OF STOCKHOLDERS' EQUITY
                                   (Continued)

<TABLE>
<CAPTION>

                                                                                                    Deficit
                                                                                                  Accumulated
                                                                                Additional          During
                                                        Common Stock             Paid in          Development
                                                ----------------------------
                                                    Shares         Value         Capital             Stage
                                                --------------  ------------ ----------------  -----------------
May 30, 2002 Shares Issued for
<S>                                                      <C>    <C>          <C>               <C>
  Project Agreement                                      4,000  $          4 $          2,996  $               -

June 24, 2002 Shares Issued for Cash                     4,000             4            7,496                  -

Net Loss                                                     -             -                 -        (2,166,183)
                                                --------------  ------------ ----------------  -----------------

Balance at June 30, 2002                               739,406           739        8,891,530         (9,563,698)

July 1, 2002 Shares Issued for Cash                     34,000            34            9,466                  -

July 8, 2002 Shares Issued for
  Interest on Debt Retirement                           93,344            93           81,574                  -

December 23, 2002, Shares
  Cancelled for non-performance of
  Services                                            (132,000)         (132)             132                  -

January 1, 2003, Shares Issued for
  Services                                             494,000           494          370,006                  -

March 18, 2003, Shares Issued for
  Services                                              52,600            53           26,247                  -

March 26, 2003, Shares Issued for
  Conversion of Debt                                   160,000           160          274,772                  -

March 26, 2003, Shares Issued for
  Services                                              13,200            13            6,587                  -

May 9, 2003, Shares Issued for
  Services                                             101,600           102           25,298                  -
</TABLE>


                                     F - 10

<PAGE>

                        STEREO VISION ENTERTAINMENT, INC.
                          (A Development Stage Company)
                        STATEMENT OF STOCKHOLDERS' EQUITY
                                   (Continued)

<TABLE>
<CAPTION>

                                                                                                    Deficit
                                                                                                  Accumulated
                                                                                Additional          During
                                                        Common Stock              Paid in         Development
                                                ----------------------------
                                                    Shares         Value          Capital            Stage
                                                --------------  ------------ ----------------- -----------------
May 29, 2003, Shares Issued for
<S>                                                    <C>      <C>          <C>               <C>
  Services                                             108,000  $        108 $         121,932 $               -

June 2, 2003, Shares Issued for
  Services                                              38,000            38            42,902                 -

June 2, 2003, Shares Issued for
  Conversion of Debt                                    88,000            88            19,912                 -

June 3, 2003, Shares Cancelled for
  Non-Performance of Service                           (12,000)          (12)               12                 -

June 12, 2003, Shares Issued for
  Services                                           2,000,000         2,000         1,598,000                 -

June 20, 2003, Shares Issued for
  Services                                              10,000            10             5,990                 -

June 25, 2003, Shares Issued for
  Conversion of Debt                                    40,000            40            15,451                 -

Net Loss                                                     -             -                 -        (2,459,447)
                                                --------------  ------------ ----------------- -----------------

Balance at June 30, 2003                             3,828,150         3,828        11,489,811       (12,023,145)

July 1, 2003, Shares Issued for
   Services                                            100,000           100            47,900                 -

July 8, 2003, Loan Converted to Shares                  30,000            30             8,875                 -

July 9, 2003, Shares Issued for
   Services                                             70,000            70            23,930                 -
</TABLE>

                                     F - 11

<PAGE>

                        STEREO VISION ENTERTAINMENT, INC.
                          (A Development Stage Company)
                        STATEMENT OF STOCKHOLDERS' EQUITY
                                   (Continued)

<TABLE>
<CAPTION>

                                                                                                    Deficit
                                                                                                  Accumulated
                                                                                Additional          During
                                                        Common Stock              Paid in         Development
                                                ----------------------------
                                                    Shares         Value          Capital            Stage
                                                --------------  ------------ ----------------- -----------------

September 11, 2003, Shares Issued
<S>                                                    <C>      <C>          <C>               <C>
  for Services                                         218,000  $        218 $         101,382 $               -

September 17, 2003, Shares Issued
  for Services                                         100,000           100            51,900                 -

September 29, 2003, Shares Issued


  for Services                                         710,000           710           403,990                 -

October 1, 2003, Shares Issued for
  Cash                                                 200,000           200            55,300                 -

October 1, 2003, Shares Issued for
  Services                                              20,000            20             4,980                 -

November 17, 2003, Shares
  Canceled for Non-Performance                        (100,000)         (100)          (47,800)                -

December 2, 2003, Shares Issued for
  Services                                           1,223,072         1,223           210,277                 -

January 12, 2004, Shares Issued for
  Services                                              90,000            90            53,910                 -

January 20, 2004, Shares Issued for
  Cash                                                 200,000           200            34,846                 -

February 2, 2004, Shares Issued for
  Cash                                                 400,000           400            99,600                 -

February 9, 2004, Shares Canceled
  for Non-Performance                                  (20,000)          (20)           (4,980)                -
</TABLE>


                                     F - 12

<PAGE>

                        STEREO VISION ENTERTAINMENT, INC.
                          (A Development Stage Company)
                        STATEMENT OF STOCKHOLDERS' EQUITY
                                   (Continued)

<TABLE>
<CAPTION>

                                                                                                    Deficit
                                                                                                  Accumulated
                                                                                Additional          During
                                                        Common Stock              Paid in         Development
                                                ----------------------------
                                                    Shares         Value          Capital            Stage
                                                --------------  ------------ ----------------- -----------------
March 9, 2004, Shares Issued for
<S>                                                     <C>     <C>          <C>               <C>
  Cash                                                  25,000  $         25 $          12,475 $               -

March 9, 2004, Shares Issued for
  Rent and Accounts Payable                            100,000           100            24,900                 -

March 9, 2004, Shares Canceled for
  Non-Performance                                     (156,000)         (156)          (75,276)                -

March 11, 2004, Shares Issued for
  Services                                             345,000           345           689,655                 -

April 7, 2004, Shares Issued for
  Services                                              60,000            60           122,740                 -

April 7, 2004, Shares Issued for
  Cash                                                 375,000           375           214,495                 -

April 7, 2004, Loan Converted to
  Shares                                                30,000            30            14,169                 -

April 14, 2004, Shares Issued for
  Cash                                                 100,000           100            25,000                 -

May 6, 2004, Shares Issued for
  Cash                                                  10,000            10             4,990                 -

May 25, 2004, Shares Issued for
  Services                                              50,000            50            40,450                 -

June 8, 2004, Shares Issued for
  Investment Expense                                   100,000           100            74,900                 -
</TABLE>


                                     F - 13

<PAGE>

                        STEREO VISION ENTERTAINMENT, INC.
                          (A Development Stage Company)
                        STATEMENT OF STOCKHOLDERS' EQUITY
                                   (Continued)

<TABLE>
<CAPTION>

                                                                                                      Deficit
                                                                                                    Accumulated
                                                                                   Additional          During
                                                         Common Stock               Paid in         Development
                                                ------------------------------
                                                    Shares          Value           Capital            Stage
                                                --------------  --------------  ---------------- ------------------

June 16, 2004, Shares Issued for
<S>                                                    <C>      <C>             <C>              <C>
  Services                                             240,000  $          240  $         79,761 $                -

Cancellation of Stock Options for
Non-Performance                                              -               -           487,500                  -


Net Loss                                                     -               -                 -         (2,945,325)
                                                --------------  --------------  ---------------- ------------------

Balance at June 30, 2004                             8,348,222  $        8,348  $     14,249,680 $      (14,968,470)
                                                ==============  ==============  ================ ==================
</TABLE>





















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

                                     F - 14

<PAGE>



                        STEREO VISION ENTERTAINMENT, INC.
                          (A Development Stage Company)
                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                                     Cumulative
                                                                                                    Since May 5,
                                                                                                        1999
                                                                    For the Year Ended              Inception of
                                                                         June 30,                   Development
                                                           ------------------------------------
                                                                 2004               2003               Stage
                                                           ----------------  ------------------  ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                        <C>               <C>                 <C>
Net Loss                                                   $     (2,945,325) $       (2,459,447) $      (14,968,470)
Adjustments to reconcile net loss to net
cash used in operating activities:
   Depreciation and Amortization                                      2,749               2,749           3,536,428
   Issuance of Common Stock for Expenses                          1,785,769           2,281,447           7,667,696
   Stock Issued for Payment of Accounts Payable                      20,000                   -              20,000
   Compensation Expense from Stock Options                                -                   -             487,500
   Realized gain on trading investments                                   -                   -            (412,773)
   Loss on sale of assets                                                 -                   -              15,883
   Loss on Investment Written Off                                   557,008              12,000             569,008
   Gain on Forgiveness of Debt                                            -             (48,516)            (48,516)
   Cash acquired in merger                                                -                   -                 332

Change in operating assets and liabilities:
   Investment in films, manuscripts, recordings
      and similar property                                                -             (18,547)           (272,008)
    Prepaid Expense                                                  (9,234)                                 (9,234)
   Accounts Payable                                                 (21,649)             66,870             229,198
   Accrued Expenses                                                  36,331             (27,009)             78,373
   Bank Overdraft                                                       401                   -                 401
   Lawsuit Payable                                                   37,411                   -              37,411
   Payable to SAG for Route 66                                            -                   -              71,493
                                                           ----------------  ------------------  ------------------

  Net Cash Used in operating activities                            (536,539)           (190,453)         (2,997,278)
                                                           ----------------  ------------------  ------------------

CASH FLOWS FROM INVESTING ACTIVITIES:

   Purchase of equipment                                                  -                   -             (13,745)
   Proceeds from sale of assets                                           -                   -              51,117
   Proceeds from sale of investments                                      -                   -             565,773
                                                           ----------------  ------------------  ------------------

Net cash provided (used) in investing activities                          -                   -             603,145
                                                           ----------------  ------------------  ------------------
</TABLE>


                                     F - 15

<PAGE>

                        STEREO VISION ENTERTAINMENT, INC.
                          (A Development Stage Company)
                            STATEMENTS OF CASH FLOWS
                                   (Continued)

<TABLE>
<CAPTION>

                                                                                                     Cumulative
                                                                                                    Since May 5,
                                                                                                        1999
                                                                    For the Year Ended              Inception of
                                                                      June 30, 2004                 Development
                                                           ------------------------------------
                                                                 2004               2003               Stage
                                                           ----------------  ------------------  ------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
<S>                                                        <C>               <C>                 <C>
Proceeds from loans from shareholders                      $        112,511  $          198,067  $        2,020,113
Payments of principal on loans from shareholders                    (34,745)             (7,364)           (408,996)
Proceeds from issuance of common stock                              448,016               9,500             719,016
Proceeds from issuance of short-term notes                                -                   -              64,000
                                                           ----------------  ------------------  ------------------

Net Cash Provided by Financing Activities                           525,782             200,203           2,394,133
                                                           ----------------  ------------------  ------------------

Net (Decrease) Increase in Cash                                     (10,757)              9,750                   -
Cash at Beginning of Period                                          10,757               1,007                   -
                                                           ----------------  ------------------  ------------------

Cash at End of Period                                      $              -  $           10,757  $                -
                                                           ================  ==================  ==================

SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash paid during the year for:
  Interest                                                 $                 $               26  $           43,799
                                                           ----------------  ------------------  ------------------
  Income taxes                                             $              -  $                -  $               -
                                                           ----------------  ------------------  ------------------

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:

Common Stock Issued for Investment in
   Wilfield Entertainment                                  $              -  $                -  $          220,000
Common Stock Issued for Investment in
   Mad Dogs & Oakies Project                                              -                   -               3,000
Common Stock Issued for Investment in
  In the Garden of Evil Project                                           -                   -              12,000
Notes Payable Converted to Stock                                     23,105             392,090           1,214,936
</TABLE>


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

                                     F - 16

<PAGE>



                        STEREO VISION ENTERTAINMENT, INC.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         This summary of accounting  policies for Stereo  Vision  Entertainment,
Inc. 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.

Nature of Operations and Going Concern

         The accompanying  financial  statements have been prepared on the basis
of accounting principles applicable to a "going concern", which assumes that the
Company  will  continue in  operation  for at least one year and will be able to
realize  its assets  and  discharge  its  liabilities  in the  normal  course of
operations.

         Several conditions and events cast doubt about the Company's ability to
continue  as  a  "going  concern".  The  Company  has  incurred  net  losses  of
approximately  $14,968,000  for the period from May 5, 1999  (inception) to June
30, 2004, has a liquidity problem, and requires additional financing in order to
finance its business  activities  on an ongoing  basis.  The Company is actively
pursuing  alternative  financing  and has had  discussions  with  various  third
parties,  although  no firm  commitments  have been  obtained.  In the  interim,
shareholders  of the Company  have  committed  to meeting its minimal  operating
expenses.

         The  Company's  future  capital  requirements  will  depend on numerous
factors  including,  but not  limited  to,  continued  progress  developing  its
products and market penetration and profitable operations.

         These  financial  statements do not reflect  adjustments  that would be
necessary  if the Company  were unable to continue as a "going  concern".  While
management believes that the actions already taken or planned, will mitigate the
adverse conditions and events which raise doubt about the validity of the "going
concern" assumption used in preparing these financial  statements,  there can be
no assurance that these actions will be successful.

         If the  Company  were unable to  continue  as a "going  concern",  then
substantial adjustments would be necessary to the carrying values of assets, the
reported  amounts of its  liabilities,  the reported  expenses,  and the balance
sheet classifications used.






                                     F - 17

<PAGE>



                        STEREO VISION ENTERTAINMENT, INC.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

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

Organization and Basis of Presentation

         The Company was  incorporated  under the laws of the State of Nevada on
May 5, 1999. The Company as of June 30, 2004 is in the  development  stage,  and
has not commenced planned principal operations.

Nature of Business

         The  Company  intends to position  itself to evolve  into a  vertically
integrated,  diversified global media entertainment company. The Company intends
to acquire a number of diversified  entertainment  companies that will allow for
the pursuit of opportunities currently available in the global marketplace.

         The Company  anticipates  generating  revenues  from  several  sources,
including,  production of and  exhibition of new and existing  feature films and
providing  integrated  solutions to help organizations  broadcast audio,  video,
animation,  and music over the Internet as well as expanding into other areas of
the entertainment industry.

Cash and Cash Equivalents

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

Pervasiveness of Estimates

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






                                     F - 18

<PAGE>



                        STEREO VISION ENTERTAINMENT, INC.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

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

Property and Equipment

         Property and equipment are stated at cost. Depreciation is provided for
in amounts  sufficient  to relate the cost of  depreciable  assets to operations
over their estimated service lives,  principally on a straight-line basis from 3
to 5 years.

         Upon sale or other disposition of property and equipment,  the cost and
related  accumulated  depreciation or amortization are removed from the accounts
and any gain or loss is included in the determination of income or loss.

         Expenditures  for  maintenance  and  repairs  are charged to expense as
incurred.  Major overhauls and betterments are capitalized and depreciated  over
their useful lives.

         The Company  identifies  and records  impairment  losses on  long-lived
assets such as property and  equipment  when events and  circumstances  indicate
that such assets  might be  impaired.  The  Company  considers  factors  such as
significant  changes in the regulatory or business  climate and projected future
cash flows from the  respective  asset.  Impairment  losses are  measured as the
amount by which the carrying amount of intangible asset exceeds its fair value.

Stock Compensation for Non-Employees

         The  Company  accounts  for the fair  value of its  stock  compensation
grants for  non-employees  in accordance with FASB Statement 123. The fair value
of each grant is equal to the market price of the Company's stock on the date of
grant if an active  market  exists or at a value  determined  in an arms  length
negotiation between the Company and the non-employee.

Advertising Costs

         Advertising  costs are  expensed  as  incurred.  There was  $31,750 and
$122,040 advertising expense for the two years ended June 30, 2004 and 2003.

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.

                                     F - 19

<PAGE>



                        STEREO VISION ENTERTAINMENT, INC.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

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

Intangible Assets

         Intangible  assets  consist  of movie and music  licensing  rights  and
production  costs and are  valued  at cost.  As of June 30,  2004 and 2003,  the
Company had $0 and $557,008 in film costs that are in the  development  stage or
pre-production stage.

         The Company  identifies  and records  impairment  losses on  intangible
assets when events and circumstances indicate that such assets might be impaired
or  when  the  property  is  not  set  for  production  within  three  years  of
acquisition.  The Company considers  factors such as significant  changes in the
regulatory  or  business  climate  and  projected  future  cash  flows  from the
respective  asset.  Impairment  losses are  measured  as the amount by which the
carrying amount of intangible asset exceeds its fair value.

Loss per Share

         Basic loss per share has been  computed  by  dividing  the loss for the
year  applicable to the common  stockholders  by the weighted  average number of
common shares  outstanding  during the years.  The effect of outstanding  common
stock equivalents would be anti-dilutive for June 30, 2004 and 2003 and are thus
not considered.

Reclassification

         Certain   reclassifications  have  been  made  in  the  2003  financial
statements to conform with the 2004 presentation.

NOTE 2 - INCOME TAXES

         As of June 30, 2004, the Company had a net operating loss  carryforward
for income tax  reporting  purposes  of  approximately  $14,805,000  that may be
offset against  future  taxable income through 2023.  Current tax laws limit the
amount of loss  available  to be offset  against  future  taxable  income when a
substantial  change in  ownership  occurs.  Therefore,  the amount  available to
offset  future  taxable  income may be limited.  Accordingly,  the potential tax
benefits of the loss  carryforwards  are offset by a valuation  allowance of the
same amount.




                                     F - 20

<PAGE>



                        STEREO VISION ENTERTAINMENT, INC.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

NOTE 3 - DEVELOPMENT STAGE COMPANY/ GOING CONCERN

         The Company has not begun principal  operations and as is common with a
development  stage  company,  the Company has had  recurring  losses  during its
development  stage.  Continuation of the Company as a going concern is dependent
upon obtaining the additional  working capital necessary to be successful in its
planned  activity,  and the  management of the Company has developed a strategy,
which it believes will  accomplish  this  objective  through  additional  equity
funding  and long term  financing,  which will enable the Company to operate for
the coming year.

NOTE 4 - RENT EXPENSE

         The Company  has  entered  into lease  agreements  for various  office,
storage and warehouse  facilities  on a month to month basis.  For the two years
ended June 30, 2004 and 2003, rent expense was $49,723 and $0.

NOTE 5 - FORGIVENESS OF DEBT

         During the first  quarter of 2003,  the Company was relieved of $48,516
worth of debt in  connection  with the  return of the 3-D  equipment  previously
disposed of.

NOTE 6 - LOANS FROM SHAREHOLDERS AND OTHER RELATED PARTY
TRANSACTIONS

         As of June 30, 2004 and 2003, the company owes $285,370 and $230,708 to
various  shareholders  and  officers/directors.  The  loans are  unsecured  with
interest at rates of between 4.00% to 12% and have no fixed terms of repayment.

         On  April  30,  2004,  the  company  signed  a  Development  Production
Agreement with Baywatch 3 Double D LLC which is 50 % owned by Douglas  Schwartz,
Chairman  of the Board of Stereo  Vision  Entertainment.  Under the terms of the
agreement,  the company will receive  certain rights in a film to be produced in
return for providing a development  production  advance.  Originally the company
had 30 days in which to secure the  advance.  The company has since  received an
extension for which it granted Baywatch LLC 100,000  unregistered  shares and is
free  to  continue  to  pursue  the  funding  on a  non-exclusive  basis  of the
production advance for the movie, "Baywatch 3 Double D".





                                     F - 21

<PAGE>



                        STEREO VISION ENTERTAINMENT, INC.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

NOTE 7 - COMMON STOCK TRANSACTIONS (Continued)

         The Company was initially  incorporated to allow for the issuance of up
to 25,000  shares of no par value common  stock.  As a result of the merger with
Kestrel Equity Corporation the authorized number of shares is 100,000,000 with a
par value of $.001.


         At inception, the Company issued 61,200 (1,530,000 pre split) shares of
common stock to its officers and directors  for services  performed and payments
made on the Company's  behalf during its formation.  This transaction was valued
at approximately $0.003 per share or an aggregate approximate $5,000.

         On December 2, 1999,  the Company  issued 58,800  (1,470,000 pre split)
shares of common  stock in exchange  for $350,000  investment  in 3-D  projects,
$255,000 licensing and distribution  rights,  $3,306,900 3-D film production and
exhibition  equipment,  and $100,000 patent  pending.  On September 25, 2001 the
asset  acquisition  was  rescinded.  The assets  acquired  were returned and the
common stock was returned to treasury.

         In addition to the asset acquisition,  on December 3, 1999, the Company
entered into an  acquisition  agreement and plan of reverse  merger with Kestrel
Equity  Corporation  whereby the Company  acquired $332 cash,  $153,001  trading
investments,  $100,686 reduction in accounts payable, and $366,084 notes payable
in exchange for 48,000  (1,200,000 pre split) shares of common stock.  By virtue
of the merger and the asset  acquisition,  the Company issued 106,800 (2,670,000
pre split)  shares of common  stock of the  surviving  corporation  and acquired
assets valued at $4,013,100 or approximately $1.50 per share.

         On December 31, 1999,  the Company  issued  14,000  (350,000 pre split)
shares to various  employees and  consultants  for services  rendered  valued at
$2.00 per share.

         On February 14,  2000,  the Company  issued  4,000  (100,000 pre split)
shares of common  stock as payment for services  rendered by Mr. Herky  Williams
valued at $2 per share.  The services  rendered were for the  development of the
Company's music division.

         On August 10, 2000,  the Company  purchased a motion  picture  entitled
"ROUTE 66" including all rights and materials, the rights as the creator and the
writer  of the  original  screenplay,  all  copyright  rights,  trade  names and
trademarks  and  all  other  forms  of  exploitation  of the  Property,  and all
ancillary,  merchandise, music and book-publishing rights in exchange for 10,600
(265,000 per split) restricted common shares, $96,492.73 (payable $25,000 August
14, 2000 and  $11,915.46  per month from  December  14, 2000 to May 14, 2001 and
$25,000 plus a 1 1/2% royalty on any merchandise and 2% royalty on sequels).

                                     F - 22

<PAGE>



                        STEREO VISION ENTERTAINMENT, INC.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

NOTE 7 - COMMON STOCK TRANSACTIONS (Continued)

         On September  27, 2000,  the Company  entered into a contract  with Ron
Whiten  to  make  strategic  introductions  on  behalf  of  the  Company  to the
investments  community in exchange for 4,000  (100,000 pre split) common shares.
On September 29, 2000,  the shares were issued at a value of $95,000,  which was
the quoted  market  price on the date of issue.  The contract is for a period of
time covering 3 quarterly financial statements. To the best knowledge and belief
of the Company no services have been  performed by Mr.  Whiten  pursuant to this
agreement.  On May 25, 2001, the 4,000 shares of stock issued to Mr. Whiten were
canceled for non-performance of services.

         On October 27, 2000,  the Company  issued 500 (12,500 pre split) shares
of  common  stock  valued at $1.00 per  share to  National  Financial  Group for
services previously rendered.

         Pursuant to an agreement made with an affiliate company of Mr. Williams
(the  Secretary-   Treasurer  and  Director  of  the  Company)  called  Wilfield
Entertainment,  the company  issued 16,000  (400,000 pre split) shares of common
stock  at a  market  price  of  $.55  per  share  on  April  18,  2001  for  its
participation  in the joint venture.  The joint venture with Wilfield is for the
production  of thirteen  music  albums.  The Company  will supply the  necessary
funding  for the  production  of said  albums and after  capital  repayment  has
occurred,  the Company will receive 51% of the profits  from the  projects.  The
estimated production costs per album is projected to be $80,000.

         On May 25, 2001,  14,000 (350,000 pre split) shares that were issued to
various  people for services  were  cancelled.  These shares were  cancelled for
non-performance of services.

         During the quarter ended September 30, 2001,  4,000 (100,000 pre split)
shares were issued for conversion of notes payable totaling  $25,600.  The value
of these shares was $.26 per share.

         During the quarter ended September 30, 2001, the Company issued 123,200
(3,080,000 pre split) shares to various  consultants  for services at the market
value on the date of issuance  and 3,600  (90,000 pre split)  restricted  common
shares to individuals for cash at $.50 per share.

         During the quarter ended December 31, 2001, the Company issued 25,912 (
647,795 pre split)  shares of stock for  conversion  of notes  payable  totaling
$135,596,  for  accrued  interest  on the  notes  payable  of  $12,275,  and for
consulting  services  of $20,778.  The value of the shares was between  $.14 and
$.35 per share.

         During the quarter ended  December 31, 2001,  the Company issued 94,825
(2,370,631 pre split) shares to various  consultants  for services at the market
value on the date of issuance. Also, 1,600 (40,000 pre split) shares were issued
on  July  30,  2001  for  services  were   cancelled  on  October  2,  2001  for
non-performance of services.

                                     F - 23

<PAGE>



                        STEREO VISION ENTERTAINMENT, INC.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

NOTE 7 - COMMON STOCK TRANSACTIONS (Continued)

         On January 15, 2002,  12,000 (300,000 pre split) shares of common stock
were  issued  for cash at $0.33 per share.  Also  during  the  quarter,  106,480
(2,662,000 pre split) were issued in connection with previous debt cancellation.

         On April 29, 2002,  8,000 (200,000 pre split) common shares were issued
for the purchase of "In the Garden of Evil" album.  The value of the shares were
$0.06.

         On May 30, 2002, 4,000 (100,000 pre split) common shares were issued to
various  people for services  connected  with the project "Mad Dogs and Oakies."
The value of the shares were $.03.

         During the  quarter  ended June 30,  2002,  the Company  issued  12,000
(300,000 pre split) shares of common stock for cash. Shares were issued for$.025
to .075 per share.  Also during the quarter,  10,000  (250,000 pre split) shares
were issued for consulting and rent expense. The value of the shares was between
$.03 and $.08 per share.

         On July 1, 2002,  34,000  (850,000 pre split) common shares were issued
for cash. Shares were issued for $.01 to $.025 per share. Also on July 8, 2002 ,
93,333  (2,333,334  pre split) were issued in  connection  with a previous  debt
cancellation.

         On December  20, 2002 and December 23,  2002,  132,000  (3,300,000  pre
split)   common   shares  were   cancelled   from   various   shareholders   for
non-performance of services.

         During the quarter ended March 31, 2003, 661,400 (16,535,000 pre split)
common  shares  were  issued to various  people for  services.  The value of the
shares was between $.01 and $.03 per share.

         On March 26, 2003,  120,000  (3,000,000  pre split)  common shares were
issued for conversion of notes payable of $289,892.

         During the quarter ended June 30, 2003, 2,257,600 shares were issued to
various people for services. The value of the shares was between $.25 to $1.13.

         On June 2, 2003,  88,000  common  shares were issued for  conversion of
debt totaling $20,000.

         On June 3, 2003,  12,000 shares were cancelled for  non-performance  of
services.

         On June 25,  2003,  40,000  shares were issued for  conversion  of debt
totaling $15,491.

                                     F - 24

<PAGE>



                        STEREO VISION ENTERTAINMENT, INC.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

NOTE 7 - COMMON STOCK TRANSACTIONS (Continued)

         During the quarter  ended  September  30, 2003,  1,198,000  shares were
issued to various people for services.  The value of the shares was between $.45
to $.57.

         On July 8,  2003,  30,000  shares  of  common  stock  were  issued  for
conversion of debt totaling $8,465.

         During the quarter ended December 31, 2003,  623,072 shares were issued
for cash from $.13 to $.25 per share.  Also during the quarter,  720,000  shares
were issued to various people for services. The value of the shares was $.25. In
addition,  the  Company  issued  100,000  shares to pay an  accounts  payable of
$20,000.

         During the quarter  ended March 31, 2004,  the Company  issued  425,000
shares for cash from $.25 to $.50 per share.  Also during the  quarter,  435,000
shares were issued to various people for services and 100,000 shares were issued
to pay rent.  The value of these  shares  was $.25 to $2.00.  In  addition,  the
Company canceled 176,000 shares for nonperformance of services.

         On January 20, 2004,  the Company  converted debt of $35,000 to 200,000
shares of common stock.

         On April 7, 2004,  the Company  issued 60,000 shares of common stock to
various  people for  consulting  services.  Also,  on April 7, 2004 the  Company
issued  375,000 shares of common stock to various people for cash of at $0.25 to
$0.75 per share. In addition, approximately $14,200 in loans were converted into
30,000 shares of common stock.

         On April 14, 2004,  the Company  issued  100,000 shares of common stock
for cash at $0.25 per share.

         On May 6, 2004,  the Company  issued  10,000 shares of common stock for
cash at $0.50 per share.

         On May 25,  2004,  the Company  issued  50,000  shares of common  stock
valued at $0.81 per share for consulting services.

         On June 8, 2004,  the Company  issued 100,000 shares of common stock in
connection with extension of acquiring ownership in Baywatch 3D Production, LLC.
The shares were valued at $0.75 per share

         On June 16, 2004, the Company issued 240,000 shares of common stock for
consulting  expenses paid by a shareholder to a third party. The amount paid for
the consulting services was $80,000.

                                     F - 25

<PAGE>



                        STEREO VISION ENTERTAINMENT, INC.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

NOTE 8 - STOCK SPLIT

         On May 30,  2003,  the  Board  of  Directors  approved  a  proposal  to
effectuate a 25 to 1 reverse  stock split of the  Company's  outstanding  common
shares with no effect on the par value or on the number of authorized shares. As
a result of this action,  the total number of outstanding shares of common stock
are reduced from 37,903,485 to 1,516,150 shares.  All references to common stock
in the financial statements have been changed to reflect the stock split.

NOTE 9 - COMMITMENTS

         On August 10, 2000,  the Company  purchased a motion  picture  entitled
"ROUTE 66" including all rights and materials, the rights as the creator and the
writer  of the  original  screenplay,  all  copyright  rights,  trade  names and
trademarks  and  all  other  forms  of  exploitation  of the  Property,  and all
ancillary, merchandise, music and book-publishing rights in exchange for 265,000
restricted  common  shares,  $96,492.73  (payable  $25,000  August 14,  2000 and
$11,915.46 per month from December 14, 2000 to May 14, 2001 and $25,000 plus a 1
1/2%  royalty on any  merchandise  and 2% royalty on sequels).  Currently,  this
project is being restructured.

         On April 25, 2000, the Board of Directors  approved a stock option plan
whereby   2,675,000  common  shares  have  been  set  aside  for  employees  and
consultants to be  distributed at the discretion of the Board of Directors.  The
option  shares  will be  exercisable  on a cashless  basis at a 15%  discount to
market value. No formal plan has been adopted as of the date of this report.

         On September 28, 2000, the Company  signed a consulting  agreement with
Solomon  Broadcasting  International for consulting  services on a non-exclusive
basis for the purposes of financing, production, acquisition and distribution of
Stereo Vision  products in various media  throughout the world.  The contract is
for 2 years at  $300,000  per year  plus an option to  purchase  250,000  common
shares at $.01 per share.  The option is exercisable  after  September 28, 2002.
During the year ended June 30,  2004,  these stock  options  were  canceled  for
non-performance.

         On March 11,  2004,  the  Company  granted  its  attorney  an option to
purchase  20,000 shares of its common stock at an exercise price of $1.00 for an
exercise price of two years.  As a result of the grant,  $20,000 was recorded as
compensation expense.







                                     F - 26

<PAGE>


                        STEREO VISION ENTERTAINMENT, INC.
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

NOTE 10- INVESTMENT IN WOW EVENTS, LLC

         On September 3, 2003, the Company entered into an agreement to form WOW
Events, LLC with David McLane Enterprises,  Inc., David McLane, Jeanie Buss, and
John Corcoran,  wherein Stereo Vision  Entertainment,  Inc. contributed services
and an agreement to provide loans to the Company to fund WOW's startup costs for
a 50 percent ownership in the LLC. In the event that Stereo Vision Entertainment
fails or  refuses  to  disburse  all or any part of the  agreed  upon loan their
percentage  interest and units shall be reduced and assigned and  transferred to
David McLane Enterprises.

         During the quarter  ending June 2004, the Company ceased its funding of
the project and was later issued a notice of  termination  and default,  wherein
its ownership was  decreased to 3.167%.  The Company had loaned WOW Events,  LLC
$190,000  which is to be  repaid  in the  event  that WOW  Events,  LLC  becomes
profitable.  As the repayment is contingent on the  profitability  of WOW, it is
uncertain if the loan will be collectible,  and thus it has been written off and
will be recorded as a gain in future years if the loan is repaid.

NOTE 11 - FILM AND MUSIC COSTS

         The  Company has  intangible  assets  which  consist of movie and music
licensing  rights and  production  costs and are valued at cost.  As of June 30,
2004 and 2003,  the  Company  had $0 and  $557,008 in film costs that are in the
development stage or pre-production stage.

         For the two years  ended June 30, 2004 and 2003,  the Company  recorded
losses of $558,191 and $12,000 for projects that have been abandoned for various
reasons or have not been set for production.

NOTE 12 - LEGAL PROCEEDINGS

         In  September of 2001 the Company  entered into a promissory  note with
Duncan  MacPherson  to be payable  within the year. A dispute arose and the note
was not timely paid,  which led to a court action  styled R. Duncan  MacPhearson
vs.  Stereovision  Entertainment,  et, al,  Case No. LC 0611749 in Los  Angeles,
California.  Subsequently,  the  parties,  on January 26,  2004,  entered into a
Settlement Agreement, including provisions if scheduled payments do not occur as
agreed. 25,000 shares of restricted stock were delivered and $40,000 of payments
were  made,  with  the  final  $10,000  not  paid  according  to the  stipulated
agreement.  This resulted in the plaintiff's  entry of a judgment,  according to
notice  received  by the  company,  of  slightly  over  $37,500,  which has been
appealed by the Company as incorrect and excessive. The $37,500 has been accrued
as liability on the June 30, 2004 financial statements.

                                     F - 27

<PAGE>




ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Robison, Hill & Co. has served as the Company's Principal Accountant since 1999.
Their pre-approved fees billed to the Company are set forth below:

                                  FISCAL YEAR ENDING         FISCAL YEAR ENDING
                                     JUNE 30, 2004             JUNE 30, 2003
                                   [GRAPHIC OMITTED]         [GRAPHIC OMITTED]
Audit Fees                    $            13,725            $        13,230
Audit Related Fees                            NIL                        NIL
Tax Fees                                       90                         80
All Other Fees                                NIL                        NIL

As of June 30,  2004,  the  Company's  Audit  Committee  did not have a  formal,
documented pre-approval policy for the fees of the principal accountant.







<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.

                        STEREO VISION ENTERTAINMENT, INC.

Dated: October 13, 2004                     By  /S/     Lance Robbins
                                            ------------------------------------
                                            Lance Robbins,
                                            C.E.O., President, Director

         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 14th day of October 2003.

Signatures & Title

/S/     Lance Robbins                                /S/     John Honour
---------------------------                         ----------------------------
Lance Robbins,                                       John Honour
C.E.O., President, Director                          COO, Director
(Principal Executive Officer)

/S/ Theodore Botts                                   /S/     Herky Williams
---------------------------                         ----------------------------
Theodore Botts                                     Herky Williams
CFO, Director                                      Secretary-Treasurer, Director
(Principal Financial and
Accounting Officer)


---------------------------                         ----------------------------
Doug Schwartz                                       John C. Bodziak
Chairman / Director                                 Director


---------------------------
Tom Noonan
Vice Chairman