UNITED STATESSECURITIES AND EXCHANGE
COMMISSIONWashington, D.C. 20549



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FORM 10-QSB



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(Mark One)



[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarter ended March 31, 2001

OR

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

FOR THE TRANSITION PERIOD FROM ___________ TO _____________

Commission file number 333-18967

AMERICAN CHAMPION ENTERTAINMENT, INC.

|**Delaware**                                                         | **94-3261987**                         
|-------------------------------------------------------------------- | ---------------------------------------
|(State or Other Jurisdiction of Incorporation or
      Organization) | (I.R.S. Employer Identification Number)

22320 Foothill Boulevard, Suite 260Hayward, California
   94541

(510) 728-0200

Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 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 [   ]



Applicable only to issuers involved in bankruptcy proceedings during the past
five years:

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [ ] No [ ]



Applicable only to corporate issuers:

Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.

Number of shares of common stock, par value $0.0001, outstanding as of April
15, 2001 is 26,527,871.



Transitional Small Business Disclosure Format (check one):    Yes
[     ]    No     [X]






AMERICAN CHAMPION ENTERTAINMENT, INC.FORM 10-QSB

FOR MARCH 31, 2001

TABLE OF CONTENTS



|           |                                                                                                       | 
|---------- | ----------------------------------------------------------------------------------------------------- | 
|Part I.    | Financial Information                                                                                 | 
|Item 1.    | Financial Statements                                                                                  | 
|           | Consolidated Balance Sheet as of March 31, 2001 and December 31,
      2000                           | 
|           | Consolidated Statements of Operations for the three month periods ended
      March 31, 2001 and 2000 | 
|           | Consolidated Statements of Cash Flows for the three month periods ended
      March 31, 2001 and 2000 | 
|           | Notes to Consolidated Financial Statements                                                            | 
|Item 2.    | Management's Discussion and Analysis of Financial Condition and Results
      of Operations           | 
|           |                                                                                                       | 
|Part II.   | Other Information                                                                                     | 
|Item 1.    | Legal Proceedings                                                                                     | 
|Item 4.    | Submission of Matters to a Vote of Security Holders                                                   | 
|Item 6.    | Reports on Form 8-K                                                                                   | 
|           |                                                                                                       | 
|Signatures |                                                                                                       | 





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PART I



Item 1. Financial Information - (unaudited)



AMERICAN CHAMPION ENTERTAINMENT, INC. CONSOLIDATED BALANCE
SHEETS

`March 31, 2001  December 31, 2000
                                             --------------- -------------------
                                               (unaudited)       (audited)
ASSETS
  Cash....................................... $     7,645   $      5,309
  Accounts receivable........................     269,367        187,726
  Loans receivable, related parties..........      91,179         91,179
  Prepaid expenses...........................       5,205         15,667
  Property and equipment, net................     208,228        226,547
  Investments................................     517,647        487,647
  Film costs, net............................   3,794,518      3,950,000
  Note receivable............................      81,244         81,244
  Inventory..................................      15,382            -
                                               ------------  ------------
    Total Assets............................. $ 4,990,415   $  5,045,319
                                               ============  ============

LIABILITIES
  Accounts payable and accrued expenses...... $   457,857   $    630,790
  Notes payable, related parties.............      54,000         36,000
  Other......................................         -            3,746
  Securities to be issued....................     150,000      2,228,391
  Notes payable..............................     132,580      1,606,043
                                               ------------  ------------
    Total Liabilities........................     794,437      4,504,970
                                               ------------  ------------

STOCKHOLDERS' EQUITY
  Preferred stock, $.0001 per share,
     6,000,000 shares authorized,
     none issued or outstanding..............                        -
  Common stock, $.0001 par value;
     40,000,000 shares authorized............        2,653           941
  Additional paid-in capital.................   28,389,627    24,464,507
  Accumulated deficit........................  (24,196,302)  (23,925,099)
                                               ------------  ------------
    Total Stockholders' Equity...............    4,195,978       540,349
                                               ------------  ------------
                                              $  4,990,415  $  5,045,319
                                               ============  ============`

See accompanying notes.



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AMERICAN CHAMPION ENTERTAINMENT, INC. CONSOLIDATED STATEMENT
OF OPERATIONS

`Three Months Ended
                                                          ---------------------------------
                                                           March 31, 2001   March 31, 2000
                                                          ---------------  ----------------
                                                            (unaudited)      (unaudited)
REVENUE
  Film income and sponsorship fees........................ $        -     $       1,978
  Licensing income........................................     150,000              -
  Tuition and related fees (discontinued operation).......          -            42,186
  Interest income.........................................          -             6,578
  Other...................................................       1,182              105
                                                            ------------    ------------
    Total revenue.........................................     151,182           50,847
                                                            ------------    ------------
COSTS AND EXPENSES
  Cost of sales-Film income...............................         325              775
  Film cost amortization and reverse......................     150,000              -
  Selling.................................................      13,095          340,357
  Salaries and payroll taxes..............................     112,873          300,474
  Rent....................................................      29,105           28,907
  General and administrative..............................     115,777        2,605,483
                                                            ------------    ------------
    Total costs and expenses..............................     421,175       (3,275,996)                                                 ------------  ------------
                                                            ------------    ------------
OTHER EXPENSES
  Interest expense........................................      (1,211)         (21,614)
  Interest - Beneficial conversation feature of debentures         -           (264,964)
  Interest - Debenture conversion expense.................         -            (18,134)
                                                            ------------    ------------
    Total other expenses..................................      (1,211)        (304,712)
                                                            ------------    ------------

LOSS FROM OPERATIONS BEFORE
  PROVISION FOR INCOME TAXES..............................    (271,204)      (3,529,861)

PROVISION FOR INCOME TAXES................................         -                -
                                                            ------------    ------------
NET LOSS..................................................    (271,204)      (3,529,861)
                                                            ============    ============

ACCUMULATED DEFICIT....................................... (24,196,302)     (13,436,301)

WEIGHTED AVERAGE NUMBER OF SHARES.........................  25,578,706        5,933,431

NET LOSS PER SHARE........................................      ($0.01)          ($0.59)


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



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`AMERICAN CHAMPION ENTERTAINMENT, INC.CONSOLIDATED STATEMENT OF CASH FLOWS

                                                                Three Months Ended
                                                        ---------------------------------
                                                         March 31, 2001    March 31, 2000
                                                        ---------------   ---------------
                                                          (unaudited)       (unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss............................................ $    (271,204)    $   (3,529,861)
  Adjustments to reconcile net loss to net cash
    used for operating activities
      Securities issued for services..................           -            2,365,747
      Non-cash charge for beneficial conversion
        feature of debentures.........................           -              264,964
      Conversion of debenture interest
        to common stock...............................           -               11,185
      Depreciation and amortization...................        21,444             30,057
      Amortization of original issue discount
        on long-term debt.............................           -               18,134
      Amortization of loan fees & consulting fees.....           -               93,299
      Amortization of film costs......................       150,000                -
  (Increase) decrease in
      Accounts receivable.............................       (81,641)            (8,733)
       Prepaid expenses and other.....................        10,462            (20,937)
      Inventory.......................................       (15,382)               -
  Increase (decrease) in
    Accounts payable and accrued expenses.............       (99,199)          (452,328)
                                                         ------------        ------------
      Net cash used for operating activities..........      (285,520)        (1,228,473)
                                                         ------------        ------------
CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of property and equipment..................        (3,125)            (3,606)
  Payments for film costs.............................         5,482            (11,033)
  Increase in other investments.......................       (30,000)               -
                                                         ------------       ------------
         Net cash used for investing activities.......       (27,643)           (14,639)
                                                         ------------       ------------
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from exercise of common stock options......       300,000            335,690
  Proceeds from exercise of warrants..................           -              459,750
  Proceeds on loans from related parties..............        18,000                -
  Payments on loans from related parties..............           -              (85,611)
  Proceeds on notes payable...........................           -            1,250,000
  Payments on notes payable...........................        (2,501)          (275,405)
  Principal payments on capital leases................           -                 (856)
                                                         ------------       ------------
      Net cash provided by financing activities.......       315,499          1,683,568
                                                         ------------       ------------
NET INCREASE IN CASH..................................         2,336            440,456

CASH, beginning of year...............................         5,309             32,514
                                                         ------------       ------------
CASH, end of year..................................... $       7,645      $     472,970
                                                         ============       ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
  Cash paid during the period for
    Interest.......................................... $       1,211      $         -
                                                         ============       ============

    Foreign and state income taxes.................... $         -        $         -
                                                         ============       ============
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
  AND FINANCING ACTIVITIES

    Long-term debt converted to equity................ $   2,000,000      $     725,000
                                                         ============       ============
    Beneficial conversion feature of debentures....... $         -        $     264,964
                                                         ============       ============
    Common stock and warrants issued with debt........ $         -        $     283,476
                                                         ============       ============
    Common stock warrants issued related to services.. $         -        $   2,007,482
                                                         ============       ============
    Common stock and warrants issued to consultant.... $         -        $     358,265
                                                         ============       ============
    Common stock and warrants issued related
      to redemption of debentures..................... $   2,078,391      $         -
                                                         ============       ===========

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




NOTES TO FINANCIAL STATEMENTS

March 31, 2001

Note 1 - Nature of Operations and Summary of Significant Accounting Policies

Basis of Presentation and Consolidation - The consolidated financial statements include
the accounts of American Champion Entertainment, Inc. (the "Company") and its wholly
owned subsidiary, America's Best Karate ("ABK"), which owns 100% of American Champion
Media, Inc. ("AC Media"), and American Champion Marketing ("AC Marketing"), which is a
wholly owned subsidiary of AC Media. There was no activity in AC Marketing during 2000.
All significant intercompany accounts and transactions have been eliminated in consolidation.

Nature of Operations - AC Media focuses on operating and
managing all media-related programs for the Company. These programs consist
of production of educational television programs for children, which
emphasize martial arts values and fun. ABK was involved in the operations of
the Company's karate studios, which have been discontinued.

Acquisition - In September 2000, the Company entered into an agreement
to acquire an 80% interest of Beijing Wisdom Net Technology, Co., Ltd.
("BA Networks"), located in Beijing, People's Republic of China. BA Network is
in the business of computer and communication network deployment, apartment
and office building security automation deployment and related consulting
services. The total purchase price paid to BA Networks, including 800,000
shares of the Company's common stock was $450,000. As of March 31, 2001,
BA Networks had not commenced the necessary procedures to change the legal
status of BA Networks to a foreign invested enterprise or applied for the
necessary PRC governmental approvals for the transfer of ownership.
On October 28, 2000, BA Networks signed a letter of intent with the Company
to set up a Co-operative Joint Venture ("CJV") in China into which all BA
Network's assets will be transferred. The CJV will be owned 80% by the
Company and 20% by BA Networks. The establishment the CJV was approved by
the Beijing Municipal Government on December 1, 2000 and the business license
was granted on December 20, 2000. Since the Company does not have control of
BA Networks until the transfer of assets occurs, the investment in BA Networks
is being accounted for as a deposit under the cost method of accounting as of
March 31, 2001 at the original purchase price of $450,000. Upon completion of
the transfer of assets the acquisition will be accounted for under the purchase
method of accounting. The operations of BA Networks are conducted exclusively in
the People's Republic of China ("PRC"). It is at least reasonably possible that
the activities of BA Networks, which are conducted in the People's Republic of
China, may be disrupted in the near term from factors outside the control of the
Company such as from negative effects of economic and political forces.

Revenue Recognition - Revenue from films is recognized on delivery of each
master. Film costs are amortized using the individual-film-forecast-computation
method, which amortizes costs in the ratio that current gross revenues bear to
anticipated total gross revenues from all sources. The management of AC
Media periodically reviews its estimates of future revenues for each master and
if necessary a revision is made to amortization rates and a write down to net
realizable value may occur. During the year ended December 31, 2000, management
determined that based on the current licensing agreements in place with respect
to films released, a reserve of $3,697,224 should be established.

Concentrations of Risk - Financial instruments which potentially subject
the Company to concentrations of credit risk are cash and accounts receivable
arising from its normal business activities. The Company places its cash with
financial institutions deemed by management to be of high credit quality.
The amount on deposit in any one institution that exceeds federally insured
limits is subject to credit risk.

Cash and Cash Equivalents - The Company considers certain highly liquid
instruments purchased with original maturities of three months or less to
be cash equivalents.

Property and Equipment - Property and equipment is stated at cost.
Depreciation for furniture and fixtures and certain equipment is computed
using the straight-line method over an estimated useful life of five
years. Leasehold improvements are amortized using the straight-line
method over the term of the respective leases.

Film Costs - Film costs consist of the capitalized costs related to
the production of original film masters for videos and television
programs. The net film costs are presented on the balance sheet at
the net realizable value for each master. During 2000 the Company
established a reserve against the capitalized film costs to reduce
the carrying amount to the estimated net realizable value.

Other Assets - Other assets for 1999 consists of a deposit for the
acquisition of Great Wall. The acquisition did not go through and
the deposit was reclassified to note receivable. At December 31, 2000,
the total amount of $203,110 was written down to $81,244.

Fair Values of Financial Instruments - The carrying value of cash,
receivables, accounts payable and short-term borrowings approximate
fair value due to the short maturity of these instruments. The carrying
values of long-term obligations approximate fair value since the
interest rates either fluctuate with the lending banks' prime rates or
approximate market rate. None of the financial instruments are held for
trading purposes.

Basic Loss Per Share - Basic loss per share is based on the weighted
average outstanding shares issued. Because the Company has a net loss,
the common stock equivalents would have an anti-dilutive effect on
earnings per share. Accordingly, basic earnings per share and diluted
earnings per share are the same.

Income Taxes - Income taxes are accounted for using an asset and
liability approach, which requires the recognition of deferred tax assets
and liabilities for the expected future tax consequences of temporary
differences between financial statement and tax basis of assets and
liabilities at the applicable enacted tax rates. Generally accepted
accounting principles require a valuation allowance against deferred
tax assets if, based on the weight of available evidence, it is more
likely than not that some or all of the deferred tax assets will not
be realized. The Company and its Subsidiaries file a consolidated tax return.

Securities to be Issued - The balance sheet account also includes
shares of common stock to be issued in connection with the acquisition
of BA Networks.

Beneficial Conversion Feature of Debentures - The beneficial conversion
feature of debentures relates to the accounting under Emerging Issues
Task Force Consensus 98-5. Under this standard the Company is required
to record a charge as interest expense when the conversion terms of
convertible debentures provide for a discount from the fair market value
of the stock when computing shares to be received by the debenture holders
when the debentures are converted to common stock.

Reclassifications - Certain reclassifications have been made to the 1999
amounts to conform to the current presentation.

Presentation - Management believes utilizing a classified balance sheet
presentation is not appropriate, as the operating cycle of the media-related
segment of the Company is expected to exceed 12 months. Accordingly, an
unclassified presentation is utilized for the accompanying balance sheet,
which is an acceptable method under SFAS No. 53, "Financial Reporting by
Producers and Distributors of Motion Picture Films."

Use of Estimates, Risks and Uncertainties - The preparation of financial
statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect amounts
reported in the financial statements and accompanying notes. Actual results
could differ from those estimates. Significant estimates used in these
financial statements include the recovery of film costs, which has a direct
relationship to the net realizable value of the related asset. It is at least
reasonably possible that management's estimate of revenue from films could
change in the near term, which could have a material adverse effect on the
Company's financial condition and results of operations.


Note 2 - Basis of Reporting

The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB. Accordingly,
they do not include all of the information and disclosures required
by generally accepted accounting principles for completed financial
statements. In the opinion of management, such statements include all
adjustments (consisting only of normal recurring items) which are
considered necessary for a fair presentation of the financial position
of the Company on March 31, 2001 and the results of its operations and
its cash flows for the three months periods ended March 31, 2001 and 2000.
The accompanying unaudited financial statements should be read in
conjunction with the financial statements and notes for the year ended
December 31, 2000 included in the Company's Form 10-KSB/A as filled with
the SEC on April 26, 2001.


Note 3 - Uses of Estimates, Risks and Uncertainties

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. Significant estimates used
in these financial statements include the recovery of film costs which has
a direct relationship to the net realizable value of the related asset. It is
at least reasonably possible that management's estimate of revenue from films
could change in the near term which could have a material adverse effect on
the Company's financial condition and results of operations.


Note 4 - Film Costs

Film costs consist of the capitalized costs related to the production of videos
and programs for television as follows:
                                                 March 31, 2001       2000
                                                ----------------  ------------
Television program
  The Adventures With Kanga Roddy, net of
    reserve of $3,537,259 at March 31, 2001 and
    December 31, 2000........................... $  4,660,075  $  4,665,557
Videos
  Montana Exercise Video, net of reserve of
    $148,253 at March 31, 2001 and
    December 31, 2000...........................           -            -
  Strong Mind Fit Body, net of reserve of
    $18,042 at March 31, 2001 and
    December 31, 2000...........................           -            -
                                                  ------------  ------------
                                                    4,660,075     4,665,557

Less accumulated amortization                         865,557       715,557
                                                  ------------  ------------
                                                 $  3,794,518  $  3,950,000
                                                  ============  ============
  
A reserve was established to reduce the capitalized film costs of The
Adventures With Kanga Roddy to its net realizable value at
December 31, 2000. Other investments in both Montana Exercise Video
and the videos of the Strong Mind Fit Body were fully reserved
as management believes these videos would not generate future revenues
for the Company.

Note 5 - Debenture Conversion
On December 27, 2000, the Company entered into an agreement with Holley
Holding (U.S.A.) Ltd. (Holley), in which Holley agreed to acquire all outstanding
debentures of the Company from the debenture holders. They also agreed that they
would convert the debentures to common stock upon acquisition from the debenture
holders. The debentures were purchased from the debenture holders and the debentures
were converted to common stock on January 4, 2001. As part of the agreement, the
conversion terms of the debentures were changed and the debentures were then converted
to 13,717,045 shares of common stock. In connection with the agreement, the Company
is obligated to issue 2,404,960 shares of stock to the prior debentures holders and
certain other individuals. The Company has also agreed to issue 2,325,000 warrants
to purchase common stock of the Company at a price of $0.16 per share. The Company
also issued warrants and options to various parties related to the conversion. The
value of the additional shares issued as a result of the change in conversion terms
and securities issued in connection with the transaction was $2,078,391. This
amount has been accrued and charged to expense as of December 31, 2000, the period
in which the parties agreed to all terms of the transaction.


Item 2. Management's Discussion And Analysis Of Financial Condition And Results Of Operations
 
Forward Looking Information
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
from liability for forward-looking statements. Certain information included in
this Form 10-QSB and other materials filed or to be filed by the Company with
the Securities and Exchange Commission (as well as information included in oral
statements or other written statements made or to be made by or on behalf of the
Company) are forward-looking, such as statements relating to operational and
financing plans, capital uses and resources, competition, and demands for the
Company's products and services. Such forward-looking statements involve
important risks and uncertainties, many of which will be beyond the control of
the Company. These risks and uncertainties could significantly affect
anticipated results in the future, both short-term and long-term, and
accordingly, such results may differ from those expressed in forward-looking
statements made by or on behalf of the Company. These risks and uncertainties
include, but are not limited to, changes in external competitive market factors
or in the Company's internal budgeting process which might impact trends in the
Company's results of operations, unanticipated working capital or other cash
requirements, changes in the Company's business strategy or an inability to
execute its strategy due to unanticipated change in the industries in which it
operates; and various competitive factors that may prevent the Company from
competing successfully in the marketplace.
The following section discusses the significant operating changes, business
trends, financial condition, earnings and liquidity that have occurred in the
three-month period ended March 31, 2001. This discussion should be read in
conjunction with the Company's consolidated financial statements and notes appearing elsewhere in this report.
 
Results of Operations
In March 2000, the Company signed a Stock Exchange Agreement with the Beijing
Wisdom Network Technology Company, Ltd. ("BA Networks") for the acquisition of
80% of the common stock of BA Networks. The Company's shareholders approved of
the acquisition at the Company's Annual Meeting of Shareholders held on
September 27, 2000. The owners of BA Networks have agreed to sell an 80%
interest of BA Networks to the Company. According the commerce regulation of
China, such exchange of ownership needs to be incoprorated into a co-operative
joint venture ("CJV"). On October 28, 2000, BA Networks signed a letter of
intent with the Company to set up a CJV in China into which all of BA Networks'
assets will be transferred. The CJV will be owned 80% by the Company and 20%
by BA Networks. The establishment of the CJV was approved by the Beijing
Municipal Government on December 1, 2000 and the business license was granted on
December 20, 2000. As of March 31, 2001, the transfer of assets from BA Networks
has not yet been made. The Company and BA Networks will complete all appropriate
steps to fulfill the Chinese commerce regulations for the necessary
transfer of ownership into the CJV as soon as possible. Since the Company
does not have control of BA Networks until the transfer of assets occurs, the
investment in BA Networks is being accounted for as a deposit under the cost
method of accounting as of March 31, 2001 at the original purchase price of
$450,000. Upon completion of the transfer of assets the acquisition will be
accounted for under the purchase method of accounting. The operations of BA
Networks are conducted exclusively in the People's Republic of China ("PRC"). It
is at least reasonably possible that the activities of BA Networks, which are
conducted in the PRC, may be disrupted in the near term from factors outside the
control of the Company such as from negative effects of economic and political
forces.
 - Revenues. For the three months ended March 31, 2001, the Company's total
revenue increased to $151,182, an increase of $100,335 as compared to $50,847
for the comparable period in 2000. This increase is due to the licensing of the
Company's television property "Kanga Roddy" to World Channel, Inc.
Costs and Expenses. The Company's revenues were offset by amortization of
film costs of $150,000. Such film costs were capitalized production costs of the
Kanga Roddy series, and the amortization is calculated based upon the proportion
to the revenue generated by the series in this period compared to total expected
revenues from the series. Management intends to evaluate the recoverability of
the film costs each year going forward. Based on the ability of the Company to
conclude future licensing agreements sufficient to recover the capitalized
costs, the estimate of recoverability may change in future periods.
 - The Company's expenses for salaries and payroll taxes decreased to $112,873,
a decrease of $187,601 for the three months ended March 31, 2001 from $300,474
for the comparable period in 2000. The decrease is due to a significant effort
by management to reduce overhead personnel. Rent expense practically remained
the same at $29,105 for the three months ended March 31, 2001, as compared to
$28,907 for the comparable period in 2000.
 - Total selling, General and administrative expenses decreased to $128,872, a
decrease of $2,816,968 for the three months ended March 31, 2001 from $2,945,840
for the comparable period in 2000. This decrease is primarily due to drastic
reduction in marketing and promotional events for the television series and
corporate public relations activities.
 - Interest expense decreased to $1,211, a decrease of $20,403 for the three
months ended March 31, 2001 from $21,614 for the comparable period in 2000.
There was no non-cash charge for the beneficial conversion feature of the
convertible debentures as there was no such debt issued within the quarter,
compared to a $264,964 charge for the comparable period in 2000. The debentures
were convertible to common stock of the Company with the shares to be issued
upon conversion based on 77.5% of the fair value of the stock at the time of
conversion. Since the debt can be converted at any time, the value of the
discount as of the issuance date has been charged to interest expense with a
corresponding increase to additional paid in capital.
 - As a result of the foregoing factors, the Company's net loss decreased to
($271,204) during the three months ended March 31, 2001 from ($3,529,861) for the
comparable period in 2000. Net loss per share decreased to ($0.01) for the three
months ended March 31, 2001 from ($0.59) for the comparable period in 2000.
Weighted average number of shares outstanding increased to 25,578,706 the three
months ended March 31, 2001 from 5,933,431 for the comparable period in 2000
primarily due to purchase of the Company's debentures by Holley Holding U.S.A.
("Holley") in December 2000 and the conversion of debentures into the Company's
common stock in January 2001 and other shares that were issued along with the
Holley transaction.
Liquidity And Capital Resources
 - Cash increased for the three months ended March 31, 2001 by $2,336 of which
$27,643 was used for investing activities. Net operating cash loss was $285,520
and financing activities resulted in an inflow of $315,499.
 - As of March 31, 2001, total long-term debt was reduced to $132,580. This
reduction is primarily due to Holley's conversion of the convertible debt into
common stock of the Company.
 
PART II - OTHER INFORMATION

Item 1. Legal Proceedings
On February 9, 2001, a complaint was filed by Chuck Nelson in the Court of
Common Pleas, Mahoning County in Youngstown, Ohio, against the Company for a
percentage of the total purse amounts paid to boxers in the Company produced
boxing event in China in April 2000, and for a percentage of the television
revenue generated thereof. The Company denies all of the rights claimed by Chuck
Nelson and will vigorously defend against all of the plaintiff's claims.
With the exception of the foregoing, no lawsuits or proceedings are currently
pending against the Company.
 
Item 4. Submission of Matters to a Vote of Security Holders
There is no submission of matters to a vote of security holders during the
three months ended March 31, 2001.
 
Item 6. Reports on Form 8-K.
A report on Form 8-K was filed on January 18, 2001 regarding Holley's
purchase the company's convertible debt.
A report on Form 8-K/a was filed on February 14, 2001 regarding the
acquisition of BA Networks.
 
 
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf on May 15, 2001 by the
undersigned, thereunto duly authorized.
 
AMERICAN CHAMPION ENTERTAINMENT, INC.
(Registrant)
By: /s/ Anthony K. Chan
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Anthony K. Chan, 
Chief Executive Officer and Chief Financial Officer
 
By: /s/ Yuanhao Li
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Yuanhao Li, President`