UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549

                           FORM 10-KSB

(Mark One)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934.  For the fiscal year ended
     December 31, 1996

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934. [No Fee Required] For the
     transition period from ___________ to ______________

                 Commission file number 0-26828

              FOOD COURT ENTERTAINMENT NETWORK INC.
         (Name of small business issuer in its charter)

          Delaware                        51-0338736            
(State or other jurisdiction of         (I.R.S. Employer
incorporation or organization)          Identification No.) 

                220 East 42nd Street, 16th Floor,
                    New York, New York 10017
                         (212) 983-4500
           (Address, Zip Code and telephone of Issuer)

            Securities registered under Section 12(b)
                   of the Exchange Act:  None
            Securities registered under Section 12(g)
                      of the Exchange Act:
                        (Title of Class)

                              Units
              Series A Common Stock, $.01 par value
                   Redeemable Class A Warrants
                   Redeemable Class B Warrants
                        (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 disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no
disclosure will be contained, to the best of registrant's
knowledge, in a definitive proxy or information statement
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  [ ]

          Issuer's revenues for its most recent fiscal year: 
$122,260

          As of March 31, 1997, there were outstanding 6,963,655
shares of Series A Common Stock and 1,064,765 Shares of Series B
Common Stock.  The aggregate market value of Series A Common
Stock held by non-affiliates was approximately $11,223,727.(1)



























________________

          (1)  The aggregate dollar amount of the voting stock
set forth equals the number of shares of the Company's Series A
Common Stock outstanding, reduced by the amount of Series A
Common Stock held by officers, directors, and shareholders owning
in excess of 10% of the Company's Series A Common Stock,
multiplied by the last reported sale price for the Company's
Series A Common Stock on March 31, 1997.  The information
provided shall in no way be construed as an admission that any
officer, director or 10% shareholder in the Company may or may
not be deemed an affiliate of the Company or that he/it is the
beneficial owner of the shares reported as being held by him/it,
and any Such inference is hereby disclaimed.  The information
provided herein is included solely for recordkeeping purposes of
the Securities and Exchange Commission.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE


          Portions of the Registrant's 1997 Definitive Proxy
Statement, which will be filed not later than 120 days after the
end of the fiscal year covered by this Report, are incorporated
by reference in Part III hereof.

          Certain exhibits from the Company's Registration
Statement on Form S-3 (File No. 333-21077) are incorporated by
reference as Exhibits in Part IV of this Report.

Transitional Small Business Disclosure Format

          Yes ___     No   X   
<PAGE>
PART I

ITEM 1 - DESCRIPTION OF BUSINESS

THE COMPANY

          SEE THE "INVESTMENT CONSIDERATIONS" SECTION WHICH
FOLLOWS THIS SECTION FOR A DISCUSSION OF CERTAIN FACTORS WHICH
SHOULD BE CONSIDERED IN CONNECTION WITH THE COMPANY'S BUSINESS.

Organization

          Food Court Entertainment Network, Inc. ("The Company")
was organized in February, 1992 to establish a national
television network to broadcast high quality television
programming called Cafe USA to large, enclosed shopping mall food
courts ("Food Courts") throughout the country.  The Company's
concept of providing advertising through broadcast directly into
mall Food Courts was predicated on its belief that shopping and
product decisions by consumers are often made at the
point-of-purchase.  The Company believes it offers national and
regional advertisers a new vehicle to communicate their
advertising messages to consumers at or near where shopping
decisions may be made.

          The Company was initially incorporated in the State of
Delaware on February 12, 1992 under the name Advanced Media, Inc. 
In April, 1992, the Company changed its name to AppleBell
Communications, Inc. and then in October, 1993 to Food Court
Entertainment Network, Inc.  The Company's executive offices are
located at 220 East 42nd Street, 16th Floor, New York, New York
10017 and its telephone number is (212) 983-4500.

          On October 16, 1995, the Company closed on its initial
public offering (the "Public Offering") of 2,800,000 units
consisting of one share of Series A Common Stock, one Class A
Warrant and one Class B Warrant (the "IPO Units") to D.H. Blair
Investment Banking Corp. (the "Underwriter").  On November 9,
1995, the Company closed the offering of an additional 420,000
IPO Units to the Underwriter pursuant to the Underwriter's
overallotment option.  On November 14, 1996, the Company closed a
private offering to accredited investors ("Private Offering") of
90 Units ("Private Units") for $100,000 per Private Unit, each
Private Unit consisting of 31,746 IPO Units.  See "Managements
Discussion and Analysis and Results of Operations."

Marketing Strategy

          There are approximately 750 large malls in the U.S.
which contain Food Courts.  These Food Courts contain an average
of 450 seats and each features a variety of regular and fast food
restaurants.  The Company believes that mall operators will
expand existing Food Courts and renovate older malls to include
Food Courts.  Many such plans to do so are already in progress.

          The Company is marketing the Cafe USA program and
network as an innovative advertising and promotion medium to
major national and regional advertisers.  These potential
advertisers include:  retailers located in malls or businesses
which sell a substantial amount of their products or services in
malls (such as apparel and shoe, cosmetic and motion picture
companies); businesses for which the target Cafe USA audience is
attractive and which rely upon malls for a portion of the sales
of their products or services (such as credit card, soft drink,
film, and greeting card companies) and businesses for which the
target Cafe USA audience is attractive even though the business
presently does not have a significant distribution of its
products or services in malls (such as telephone companies and
broadcast media).

          On January 23, 1997, the Company entered into a sales
representation agreement with ABC New Media Sales ("ABC")
pursuant to which ABC has agreed to act as the Company's
exclusive advertising sales representative for Cafe USA and use
its best efforts to sell Cafe USA advertising nationwide.  Under
the agreement, ABC is authorized to enter into agreements with
respect to the sale of commercial advertising space on Cafe USA
in such amounts as made available by the Company.  Under the
terms of the agreement, ABC will receive a commission equal to
15% on the first $15.0 million of net advertising revenue, 10% on
the net advertising revenue between $15.0 million and
$30.0 million, and 7.5% on net advertising revenue over
$30.0 million.  The agreement is for a period of six years,
subject to the right of the parties to terminate after two years.

Development Activities to Date and Plan of Operation

          The Company is currently in the development stage.  To
date, the Company's activities have consisted primarily of
designing, developing and producing Cafe USA programming, 
producing and developing and refining an end-to-end distribution
system for delivery and management of Cafe USA programming into
Food Courts, attracting and engaging management employees,
consultants and advisers for marketing, operations and
implementation of the Cafe USA network, producing three market
research projects to evaluate the acceptance of Cafe USA in the
marketplace, establishing contacts with potential advertisers and
mall operators, and installing and operating Cafe USA as of
December 31, 1996 in 11 Food Courts (now installed in 18 Food
Courts as of March 26, 1997).  Through December 31, 1996, the
Company had expended approximately $8,984,000 in its development
activities.

          In the fall of 1995, the Company began a ten-week
evaluatory period ("Evaluatory Period") of Cafe USA during which
the Company broadcast the Cafe USA program in a total of four
major enclosed malls located in the Chicago, Philadelphia, New
York, and Greenville, South Carolina markets.  The Company
engaged A. C. Nielsen to conduct a survey of 4,800 mall and Food
Court visitors to the four malls during the ten-week Evaluatory
Period (the "1995 Nielsen Survey").  The purpose of the
Evaluatory Period was to gather data necessary to evaluate the
acceptance of Cafe USA by mall operators and Food Court visitors,
and, assuming marketplace acceptance, to determine the pricing
structure for advertising, since the Company's future viability
and profitability are dependent upon the generation of
advertising revenue.  To date, the Company has generated very
limited revenues from advertising sales.

          Based upon the results of the 1995 Nielsen Survey, the
Company believes sufficient support for the Cafe USA concept
exists in the marketplace to justify the expansion of Cafe USA in
Food Courts throughout the United States (the "Mall Expansion"). 
The conclusions drawn by the Company's management from the
Evaluatory Period, the 1995 Nielsen Survey and marketing and
sales activities during 1996 resulted in the Company's modifying
its business strategy.  The Company determined that in order to
successfully sell Cafe USA to a substantial number of
advertisers, and thereby generate significant revenues, the
distribution network for Cafe USA must first be expanded. 
Accordingly, the Company requires substantial funds in addition
to revenues from operations and financing available from external
sources in order to implement its business plan and reach
profitable operations.  The Company intends to seek strategic
alliances, either through a joint venture, merger or acquisition
transaction, with other entities that have significant financial
or other resources, in order to provide the Company with the
necessary funding required to successfully complete the Mall
Expansion and to build its internal marketing and advertising
sales force.  There can be no assurance that the Company will be
able to enter into any such arrangements.  If the Company is
unsuccessful in securing any arrangements with third parties to
provide the necessary funding, the Company may be unable to
complete the Mall Expansion.  The Company currently has no paid
advertisers.  The Company has an arrangement with Pan American
World Airways, Inc. ("Pan Am") pursuant to which Pan Am
advertising is broadcast on the Cafe USA network in exchange for
airline travel.

          In November, 1996 the Company received approximately
$7.8 million from the Private Offering.  The Company's strategy
is to utilize the proceeds of the Private Offering to expand the
Cafe USA network into up to 31 mall Food Courts.

          Based upon its current plan to proceed with the Mall
Expansion, the Company is attempting to obtain commitments from
advertisers and is negotiating with mall operators for
installation and operation of Cafe USA in additional malls.  As
of the date of this report, the Company has fully installed and
is operating Cafe USA in 18 Food Courts and has begun
installation in two Food Courts.

          The Company has limited capital remaining after
expanding into 18 malls (estimated to be approximately
$3.8 million as of March 31, 1997).  Further, it is not
anticipated that even with expansion in up to 31 Food Courts that
advertising revenue alone will be sufficient to maintain the
Company as a going concern.  If the Company is not able to enter
into strategic alliances, the Company will be unable to carry out
its Plan of Operation and may cease to exist.

          There can be no assurances that advertisers will be
willing to commit significant expenditures for advertising on
Cafe USA in which event, without a strategic alliance, the
Company will lack sufficient revenues to sustain operations. 
Furthermore, if advertisers are not willing to commit material
expenditures towards advertising on Cafe USA or advertisers
feedback otherwise indicates that the Cafe USA program in its
current format is not being accepted by the marketplace, the
Company will review the data to determine the reasons therefor,
determine the modifications or changes necessary to gain
marketplace acceptance, if possible, and implement such
modifications or changes.  If the Company determines that it is
unable to modify or revise the Cafe USA program or delivery
thereof in a manner that will achieve marketplace acceptance, the
Company may be forced to cease operations.  Furthermore, it is
possible that required modifications or revisions to Cafe USA
would exhaust all of the Company's available capital.

          The Mall Expansion is dependent upon the Company
obtaining financing for the lease or purchase and installation of
the monitors and sound systems necessary for the broadcasting of
Cafe USA in Food Courts.  Without additional financing, the
Company will not be able to pursue its expansion plan.  The
Company is negotiating with potential suppliers of the equipment,
and suppliers of programming and others to provide such
financing.  There is no assurance that such financing will be
available.  If the Company is not able to obtain additional
financing, the Company will be unable to pursue its Expansion
Plan and may be forced to cease business.  See "Investment
Considerations - Capital Intensive Nature of Business.

          While the development of a national television network
remains the core business of the Company, management has
determined that it is in the Company's best interest to restate
the Company's mission.  The Company plans to promote, introduce
and operate electronic entertainment, information and transaction
networks in high-traffic consumer areas such as shopping centers,
multi-purpose malls, resorts, travel facilities and entertainment
and retail destinations, utilizing both new and traditional media
and contemporary communications technologies.

Programming

          Management believes that high quality programming
integrated with national, regional and local advertising is
critical to the success of Cafe USA.  The Company originally
subcontracted programming to Turner Private Networks, Inc.
("Turner"), a subsidiary of Turner Broadcasting System, Inc.  In
December, 1996 the Company determined that it was in its best
interest to terminate the programming agreement with Turner. 
Management of the Company believed that it could produce more
suitable programming utilizing the Company's own resources and
the expertise of its own employees who have had substantial
experience as television producers for major cable networks. 
Further, management of the Company believed that it would not
only maintain quality broadcast and content standards for Cafe
USA programming, but also could produce programming for a lower
cost than the Company would have had to incur if it continued the
Turner contract.  During the three months since the termination
of the Turner contract, the Company has reduced its per program
cost from $50,000 as required by the Turner contract to
approximately $37,500 per program while maintaining a quality
broadcast product.

          The Cafe USA program structure currently calls for a
30-minute "cycle" with 22 minutes of national/regional/local
programming and eight minutes of advertising.  Programming may
vary to address the interest of the changing audience
demographics throughout the day based upon audience research.

Proposed Local Installation, Operation and Maintenance

          For each mall, the Company has installed an average of
15 to 20 monitors distributed throughout the Food Court, an audio
system designed for the Food Court and a control room with
equipment needed for the local operation of Cafe USA.  The per
mall cost of setup including equipment and installation was
approximately $150,000 during 1996.  In the later part of 1996,
the Company reevaluated its approach to installing audio and
video equipment in the Food Courts.  Rather than having a goal of
100% coverage of the Food Court, the Company believes 70% to 80%
coverage is more appropriate, thereby having a portion of the
Food Court without monitors or audio.  In addition, the Company
has redesigned the placement of the speakers and has revised its
specifications for certain equipment used to broadcast Cafe USA. 
The current cost for the setup in each mall is presently
approximately $80,000 per mall.  There are no assurances,
however, that future setup costs will not exceed $80,000 per
mall.  The equipment is maintained by local personnel
subcontracted by the Company.  In the future the Company intends
to manage the equipment from a central facility, coupled with a
third party maintenance contract for services on an as-needed
basis.

          At the present time, the Company distributes its
programs via laser disc to each operative Food Court.  The
Company has issued a purchase order to Digital Equipment
Corporation ("DEC") whereby DEC has undertaken to develop
software applications and provide hardware necessary to deliver
Cafe USA digitally through telecommunications network into malls
nationwide.  Through the end of 1996 the Company has paid DEC the
sum of $150,000.  The cost of the digital network is estimated to
be about $1,000,000.  Further, DEC and the Company have agreed to
enter into a definitive agreement setting forth the exact
obligations and responsibilities of both DEC and the Company. 
There can be no assurance that a definitive agreement with DEC
will be signed.  In the event that the Company does not proceed
with the DEC contract, there are other options and methods of
broadcast or other digital systems which have been designed by
other companies that will be available to the Company.

Advertising

          The Company expects that substantially all of its
revenues, will be derived from payments by advertisers for
commercials played on the Cafe USA network.  The Company believes
that Cafe USA will provide advertisers with a capacity to reach a
sizeable audience with desirable demographics while in the
shopping environment.  Advertisers may be offered competitive
exclusivity (either by type of product or service or within a
given time period).

          Cafe USA is offering advertisers eight minutes of
commercials per 30 minutes replayed every half hour during the
11 to 12 hours per day the mall is open.

          The Company has reevaluated its pricing structure. 
Initially, the Company expected to utilize an advertising pricing
structure based upon the number of malls which broadcast Cafe USA
programming and advertising.  However, experience and advertiser
feedback have dictated a modification of the pricing structure. 
Rather than a price per Food Court, the Company is pricing its
advertising based upon statistical data of the number of persons
who visit the particular Food Courts in which Cafe USA is
installed and operating each month.  The Company believes that
advertising revenues will be earned from a combination of
long-term exclusive contracts and short-term contracts for
specific periods.  There can be no assurance that advertising
revenues will ever be sufficient to cover operating costs and
provide profitability to the Company.  The Company currently has
no paid advertisers.

Competition

          The Company competes in the broad arena of traditional
broadcast programming and promotional delivery vehicles and as
such is in competition with all established media/promotional
products and services.  In addition, the Company competes in the
arena of alternative or place based media.  In both arenas the
Company competes with companies having greater financial and
other resources than the Company.

          To the knowledge of Company management, no company to
date has distributed, on a national level, entertainment
programming as a new medium for advertisers specifically targeted
to the Food Court audience.  There have been previous
unsuccessful place based advertising attempts in major malls,
including in Food Courts (on a regional basis), and there are
several limited current endeavors in this area.  In the future,
and especially if the Cafe USA program is successful, other
entities may develop products and related systems that are
similar to the Company's, and such entities may provide
substantial competition to the Company.  Furthermore, the
Company's trade secrets and intellectual property provide no
significant barrier to competition.

Intellectual Property

          The Company has received service mark registration of 
Cafe USA and of its Cafe USA logo and has applied for service
mark registration of its "Television in the Red Zone" logo from
the United States Patent and Trademark Office.  The Company has
no other protection with respect to its trade secrets and
intellectual property, although the Company may in the future
seek copyright or other intellectual property protection for
programming designed by Company.

Employees

          The Company currently has 20 full time employees,
including 3 executive officers.  The Company has entered into
employment contracts for a term of three years effective
October 1, 1996 with both the Chairman and the Chief Executive
Officer, and a one-year renewal of an existing employment
contract effective October 9, 1995 which renewed automatically
October 1, 1996 with its Chief Financial Officer.  See
"Management - Employment Agreements."

                    INVESTMENT CONSIDERATIONS

          In addition to the other information in this Report,
the following information should be considered carefully by
investors in evaluating the Company and its business.

          Unproven Commercial Viability; Need for Market
Acceptance.  There can be no assurance that the Company's
television programming and advertising in shopping mall Food
Courts will be accepted in the marketplace or that the Company's
operations will be commercially viable.  The commercial viability
of the Cafe USA concept will be determined in large part by the
acceptance of Cafe USA by advertisers and mall operators.  The
Company is currently broadcasting Cafe USA in only 18 mall Food
Courts.  Without further acceptance by the marketplace, the
Company may be forced to cease operations.  The Company has no
paid advertisers.  While the Company has conducted testing of its
Cafe USA concept, there is no assurance that the test results of
the acceptance of Cafe USA in four malls are indicative of
widespread acceptance in the marketplace or that, if accepted, it
will ever result in the Company achieving profitable operations. 
See "Development Activities and Plan of Operation."

          Capital Intensive Nature of Business; Need for, and No
Assurance of, Strategic Alliances and Additional Financing to
Develop Cafe USA.  The Company has received only minimal revenues
from operations and has relied on the proceeds of equity
financings to fund its operations.  The net proceeds received by
the Company from the Private Offering will enable the Company to
continue operations through approximately June 30, 1997. 
Management of the Company is pursuing strategic alliances through
a combination of one or more joint venture, merger or acquisition
transactions because advertising revenues generated by Cafe USA
and financing that may be available from external sources will
not provide the Company with sufficient capital required to
complete the Company's business plan for expansion of Cafe USA. 
However, there can be no assurances that the Company will be able
to complete one or more of such strategic alliances.  Since the
Company anticipates receiving only limited revenues from
advertisers during the early stages of the Mall Expansion, the
Company will remain dependent upon external sources of financing
until such time as the Company is able to complete one or more
strategic alliances.  If the Company is unable to either complete
one or more strategic alliances or obtain additional financing on
acceptable terms, the Company will be unable to complete the
expansion of Cafe USA and will be forced to cease business.

          Development Stage Company; Significant Losses.  The
Company is a development stage company which has engaged
primarily in the development of the Cafe USA network.  The
Company has realized only minimal revenues to date, has incurred
substantial losses since its inception and expects to continue
incurring losses in the foreseeable future.  Accordingly, the
Company, as of December 31, 1996, had a deficit accumulated in
the development stage of approximately $15,691,000.  The Company
has continued to incur substantial losses since such date. 
Furthermore, for the foreseeable future, the Company expects
losses to continue and will be entirely dependent on public or
private financing.

          Requirement for Capital Equipment; Potential Negative
Effect on Statement of Operations.  The Company's business is
capital intensive, requiring substantial outlays for the purchase
and installation of broadcasting equipment.  The cost of
"outfitting" each mall with equipment necessary to transmit and
receive Cafe USA is currently costing approximately $80,000,
consisting of approximately $40,000 in equipment costs and
$40,000 in installation costs.  There are no assurances, however,
that future costs will not exceed actual costs to date.  Although
the Company has been seeking financing for all or a portion of
these costs in view of the Company's limited cash resources, the
Company has been unsuccessful in securing such financing to date
and there is no assurance that this financing can be obtained on
favorable terms, if at all.  Irrespective of whether financing is
obtained, the Company's future operations will be charged for the
depreciation of the equipment, including the installation costs,
and, if the Company has to remove the equipment for relocation
before the expiration of the expected life of the equipment, a
loss would have to be recognized equal to the undepreciated
installation costs because they would provide no future benefit.

          Possible Need for Additional Statistical Data.  To
provide the necessary data for the sale of advertising, the
Company will need on-going market research to develop reliable
statistical data.  The Company retained A.C. Nielsen to conduct
the 1995 Nielsen Survey.  The Company had previously conducted a
much smaller A.C. Nielsen survey during a week demonstration of
its programming and advertising in May, 1994 in Haywood Mall in
Greenville, South Carolina and a more preliminary Audits and
Surveys research study in October, 1992.  The 1995 Nielsen Survey
was still limited in scope (only four malls) and may not provide
sufficient data required for the sale of advertising. 
Accordingly, the Company will require substantial additional data
in order to validate rates to advertisers.  Pricing for
advertising is based substantially on the number of visitors
exposed to Cafe USA programming and advertising and the impact of
the advertising upon those exposed.  There is no assurance that
all of the necessary data will be obtained, or if obtained, will
be favorable or be accepted by advertisers.

          New Enterprise.  The Company was formed in February,
1992 and its success depends upon several factors, including the
quality of its programming and managing the technical aspects of
its operations.  Investors should be aware of the difficulties
normally encountered by a new enterprise and the high rate of
failure of such enterprises.  There is no history upon which to
base any assumption as to the likelihood that the Company will
prove successful, and as such, there can be no assurances that
the Company will be a viable and profitable business.  The
likelihood of success must be considered in light of the
problems, expenses, difficulties, complications and delays
encountered in connection with the development of a business in
the area in which the Company intends to operate and in
connection with the formation and commencement of operations of a
new business in general.  The Company is unable to predict how
long it will be before it begins to generate additional revenues
or how long its losses will continue.  There is a substantial
risk that the Company will have inadequate working capital to pay
all of its expenses during this start-up period.

          Dependence Upon Others.  The success of the Company's
operations will depend upon numerous factors, many of which are
beyond the Company's control, including (i) the ability of the
Company to enter into strategic alliances through a combination
of one or more joint venture, merger or acquisition transactions,
(ii) the ability of the Company to obtain contracts with
advertisers that will produce revenues; (iii) the availability of
operating resources to produce or purchase programming; and
(iv) the availability of operating resources to install, maintain
and service the video and audio system satisfactorily, to obtain
and service satisfactory network communication and to obtain the
services of and pay a sufficient number of representatives on a
local basis necessary to operate and service all facets of the
Cafe USA business.  These and other factors will require the use
of outside suppliers as well as the talents and efforts of the
Company.  There can be no assurance of success with any or all of
these factors on which the Company's operations will depend.

          Lack of Programming and Production Experience.  Because
of the absence of any operating history in connection with
broadcasting programming and advertising to mall Food Courts on
the part of the Company or advertising entities, there can be no
assurance that the Cafe USA programming and advertising will be
viewed favorably by consumers or that advertisers will be
attracted to either the concept of this medium or the specific
programming developed by the Company.  Further, the Company has
broadcast during only approximately 18 months in a limited number
of Food Courts and there can be no assurances that the technology
associated with the broadcasting will prove to be manageable.

          ABC Contract, Reliance on ABC New Media Sales ("ABC")
for Advertising Sales Revenue.  The Company has entered into a
six year Sales Representative Agreement with and has engaged ABC
as the Company's exclusive advertising sales representative to
sell the Company's available advertising inventory.  Although the
Company maintains an internal three person sales staff, the
Company is substantially dependent upon the ability of ABC to
sell its advertising at reasonable rates.  There is no assurance
that ABC will be able to sell sufficient amounts of advertising
at reasonable rates.  Since advertising is the Company's main
source of earned revenue, the failure to sell sufficient
advertising could cause the Company to significantly curtail
operations or possibly to cease operations.

          Risks Relating to Agreement with DEC.  Although DEC has
agreed to develop software applications and provide hardware
necessary to deliver Cafe USA digitally through a
telecommunications network into malls nationwide, the execution
of a definitive agreement, which is currently being negotiated,
is subject to certain conditions.  There can be no assurance that
the Company will enter into a definitive agreement with DEC.  To
date, the Company has made payments to DEC aggregating $150,000. 
If a definitive agreement is not entered into, there can be no
assurance that the Company will have rights to the software
applications and the hardware developed by DEC.  Accordingly, the
payments made to DEC by the Company, which are not returnable,
may result in the Company not obtaining from DEC a digital
delivery system for Cafe USA or the ownership of the software
applications and related hardware.

          Dependence Upon Mall Operators.  The ability of the
Company to establish the Cafe USA network is dependent upon the
Company entering into agreements with mall operators for the
installation of Cafe USA in mall Food Courts.  While agreements
have been entered into with several mall developers, there is no
assurance that a sufficient number of mall operators will accept
Cafe USA in Food Courts or continue to accept it once it is
installed.

          Reliance on Senior Management and Key Employees.  The
Company is substantially dependent on the efforts of its senior
management.  The Company has entered into employment agreements
with its Chairman, Robert H. Lenz, and its President, James N.
Perkins, with terms ending September 30, 1999.  The Company has
an employment agreement which terminates on 30 days' prior notice
by either party in October, 1997 with Darren M. Sardoff, the
Company's Senior Vice President, Business Affairs and Chief
Financial Officer.  The loss of services of any of the foregoing
individuals could have a material adverse effect on the Company's
prospects.  The Company maintains key-person life insurance
coverage in the face amount of $2,000,000 for each of
Messrs. Lenz and Perkins naming the Company as beneficiary. 
Management of the Company believes that the future success of
Cafe USA will depend on the Company's ability to attract
additional key personnel in sales, marketing, technical support,
finance, programming and mall relations.  However, there can be
no assurances that the Company will be successful in attracting
or retaining additional personnel necessary to conduct its
business.

          Competition.  While the Company is operating in a new
industry, it is aware of other companies which have
unsuccessfully attempted to utilize the shopping mall for point
of sale broadcast or video advertising.  Entities which enter the
shopping mall Food Court business in the future may have
substantially greater marketing, financial and human resources
than the Company and may provide significant long term
competition.  Since Cafe USA is a broadcasting medium, the
Company will also be competing for advertising revenue with other
established media.  Furthermore, the Company does not possess any
patented or copyrighted trade secrets or intellectual property to
provide barriers to competition.

          Charge to Income in the Event of Release of Escrow
Shares.  If the Company attains certain earnings thresholds or
the Company is sold at certain prices, the Company will be
required to recognize additional compensation expense in
connection with the release from escrow to certain stockholders
of the Company of 636,115 shares of Series B Common Stock (the
"Escrow Shares").  Accordingly, the Company will, in the event of
the release of the Escrow Shares, recognize during the period in
which the earnings thresholds are met or such per share sales
prices obtained, what could be a substantial charge that would
have the effect of substantially increasing the Company's loss or
reducing or eliminating earnings, if any, at such time.  Such
charge will not be deductible for income tax purposes.  Although
the amount of compensation expense recognized by the Company will
not affect the Company's total stockholders' equity or cash flow,
it may have a depressive effect on the market price of the
Company's securities.

          Influence by Management and Other Stockholders;
Possible Depressive Effect on the Company's Securities.  One of
the Company's current directors (who is also an officer) and four
other stockholders own collectively 100% of the issued and
outstanding Series B Common Stock.  All current officers and
directors, together with such four other stockholders of Series B
Common Stock, beneficially own in the aggregate approximately
21.61% of the total outstanding capital stock of the Company and
have approximately 47.22% of the total voting power thereof.  As
a result, such individuals will be able to influence the election
of all of the Company's directors and otherwise influence the
Company's operations.  Furthermore, the disproportionate vote
afforded the Series B Common Stock could also serve to impede or
prevent a change of control of the Company.  As a result,
potential acquirors may be discouraged from seeking to acquire
control of the Company through the purchase of Series A Common
Stock, which could have a depressive effect on the price of the
Company's securities.

          Potential Adverse Effect of Redemption of Warrants. 
The outstanding Class A and Class B Warrants may be redeemed by
the Company at a redemption price of $.05 per Warrant upon
30 days' notice if, the average closing bid price of the Series A
Common Stock exceeds $9.00 per share with respect to the Class A
Warrants and $12.00 per share with respect to the Class B
Warrants for 30 consecutive business days ending within 5 days of
the notice of redemption.  Redemption of the Warrants could force
the holders to exercise the Warrants and pay the exercise price
at a time when it may be disadvantageous for the holders to sell
the Warrants at the then current market price when they might
otherwise wish to hold the Warrants; or to accept the redemption
price, which, at the time the Warrants are called for redemption,
is likely to be substantially less than the market value of the
warrants.

          Possible Depressive Effect of Future Sales of Common
Stock and Exercise of Registration Rights.  The Company has
outstanding 6,963,655 shares of Series A Common Stock, 1,064,765
shares of Series B Common Stock, 8,796,797 Class A Warrants and
7,097,447 Class B Warrants.  The 3,220,000 shares of Series A
Common Stock, Class A Warrants and Class B Warrants sold in the
Public Offering are freely tradeable without restriction under
the Securities Act of 1933, as amended (the "Act"), unless
acquired by "affiliates" of the Company as that term is defined
in the Act.  The 2,857,189 shares of Series A Common Stock,
3,341,742 Class A Warrants and 3,336,863 Class B warrants sold in
the Private Offering have been registered under the Act effective
February 27, 1997 and are also freely tradeable.  None of the
1,064,765 shares of Series B Common Stock, 573,125 shares of
Series A Common Stock issued prior to the Public Offering and the
250,000 shares issued to Turner in connection with the
programming agreement have been registered under the Act, and all
are "restricted securities" under Rule 144 of the Act.  However,
a substantial portion of the Series B Stock and 573,125 shares of
Series A Common Stock issued prior to the Public Offering have
been held a sufficient period of time that it is now freely
tradeable.  The holders of the 573,125 shares of Series A Common
Stock issued prior to the Public Offering also have certain
"demand" and "piggyback" registration rights.  Messrs. Lenz and
Perkins have agreed not to sell any shares of the Company's
Common Stock which they own for a period of 13 months following
February 27, 1997, the effective date of a Registration Statement
filed under the Act with respect to certain restricted securities
without the written consent of D.H. Blair Investment Banking
Corp., the placement agent (the "Placement Agent") for the
Private Offering.  There are 636,115 shares of Series B Common
Stock in escrow which is owned by current and prior management. 
The Company also has outstanding stock options and warrants (or
commitments to issue options, stock options and warrants) to
purchase 3,043,459 shares of Series A Common Stock at prices
ranging from $2.00 to $6.85 per share.

          An additional 21,313,095 shares of Series A Common
stock issuable upon exercise of the Company's Class A and Class B
Warrants issued or issuable in connection with the Company's
Public Offering and Private Offering may be resold without
restriction provided there is a current prospectus under the Act
relating thereto and applicable state securities laws are
complied with.  Furthermore, 1,120,000 shares of Series A Common
Stock underlying the unit purchase options issued to the
Placement Agent in connection with the Public Offering are
subject to restrictions on transferability until October 11, 1998
and thereafter, are freely transferable without restriction
provided there is a current prospectus under the Act relating
thereto and applicable state securities laws are complied with. 
The existence of the Unit Purchase Options issued in the Public
Offering, outstanding options and warrants, Class A Warrants,
Class B Warrants, and other options that may be issued by the
Company may hinder future financing by the Company, and exercise
of these securities may further dilute the interest of the
persons holding Series A Common Stock.  Further, the holders of
such options and warrants may exercise them at a time when the
Company would otherwise be able to obtain additional equity
capital on terms more favorable to the Company.  No prediction
can be made as to the effect, if any, that sale of these
securities or the availability of such securities for sale
without restriction will have on the market prices of the
Company's securities prevailing from time to time.  Nevertheless,
the possibility that substantial amounts of securities may be
sold in the public market may adversely affect prevailing market
prices for the Company's securities and could impair the
Company's ability to raise capital through the sale of its
securities.

          Effect of Outstanding Options and Warrants.  The
Company currently has outstanding a substantial number of Class A
Warrants, Class B Warrants and other options to purchase shares
of Series A Common Stock.  For the terms of outstanding options
and warrants, the holders thereof are given an opportunity to
profit from a rise in the market price of the Series A Common
Stock with a resulting dilution in the interest of the other
stockholders.  Further, the terms on which the Company may obtain
additional financing during that period may be adversely affected
by the existence of such options and warrants.  The holders of
such options and warrants may exercise them at a time when the
Company might be able to obtain additional capital through a new
offering of securities on terms more favorable than those
provided by such securities.

          Authorization of Preferred Stock.  The Company's
Certificate of Incorporation authorizes the issuance of up to
5,000,000 shares of preferred stock, par value $.01 per share,
with such designation, rights and preferences as may be
determined from time to time by the Board of Directors. 
Accordingly, the Board of Directors is empowered, without
stockholder approval, to issue preferred stock with dividend,
liquidation, conversion, voting or other rights which could
adversely affect the voting power or other rights of the holders
of the Company's Series A and Series B Common Stock.  In the
event of issuance, preferred stock could be utilized, under
certain circumstances, as a method of discouraging, delaying or
preventing a change in control of the Company.  There can be no
assurance that the Company will not issue shares of preferred
stock in the future.

          No Dividends Anticipated.  The Company has never paid
any cash dividends on its Series A and Series B Common Stock and
does not anticipate the payment of cash dividends in the
foreseeable future.

          Possible Restrictions on Market-Making Activities in
the Company's Securities.  D. H. Blair & Co., Inc. ("Blair &
Co.") is currently, and the Company believes that it intends in
the future to continue to be, a market maker in the Company's
securities.  Regulation M, which was recently adopted to replace
Rule 10b-6 and certain other rules promulgated under the Exchange
Act may prohibit Blair & Co. from engaging in any market-making
activities with regard to the Company's securities for the period
from five business days (or such other applicable period as
Regulation M may provide) prior to any solicitation by
D. H. Blair Investment Banking Corp. ("Blair") of the exercise of
the Company's outstanding warrants until the later of the
termination of such solicitation activity or the termination (by
waiver or otherwise) of any right that Blair may have to receive
a fee for the exercise of such warrants following such
solicitation.  As a result, Blair & Co. may be unable to provide
a market for the Company's securities during certain periods
while the warrants are exercisable.  In addition, under
applicable rules and regulations under the Exchange Act, any
person engaged in the distribution of warrants offered by selling
securityholders may not simultaneously engage in market-making
activities with respect to any securities of the Company for the
applicable "cooling off" period (currently at least two and
possibly nine business days) prior to the commencement of such
distribution.  Accordingly, in the event Blair & Co. is engaged
in a distribution of the selling securityholder warrants, Blair &
Co. will not be able to make a market in the Company's securities
during the applicable restrictive period.  Any temporary
cessation of such market-making activities could have an adverse
effect on the market price of the Company securities.

          Investigation of Blair and Blair & Co. by the
Securities and Exchange Commission.  The Company has been advised
that the Securities and Exchange Commission (the "Commission") is
conducting an investigation concerning various business
activities of Blair and Blair & Co.  The investigation appears to
be broad in scope, involving numerous aspects of Blair and
Blair & Co.'s compliance with the federal securities laws and
compliance with the federal securities laws by issuers whose
securities were underwritten by Blair or Blair & Co., or in which
Blair or Blair & Co. made over-the-counter markets, and persons
associated with Blair or Blair & Co., such issuers and other
persons.  The Company has been advised by Blair that the
investigation has been ongoing since at least 1989 and that it is
cooperating with the investigation.  Neither the Company, Blair
nor Blair & Co. can predict whether this investigation will ever
result in any type of formal enforcement action against Blair or
Blair & Co.  An unfavorable resolution of this investigation
could have the effect of limiting Blair & Co.'s ability to make a
market in the Company's securities, which could affect the
liquidity or price of such securities.  Any temporary cessation
of such market making activities could have a material adverse
effect on the market prices of the Company's securities.

ITEM 2 - PROPERTY

          The Company currently utilizes approximately
7,500 square feet of space for its executive and administrative
staff at the 220 East 42nd Street, 16th Floor, New York, New York
10017 pursuant to a lease which expires December 31, 2000 and
which provides for a monthly rental of approximately $10,500. 
The Company believes that such space will be sufficient for its
needs for the foreseeable future and that alternative space is
available at rental rates which would not materially adversely
affect the Company.

ITEM 3 - LEGAL PROCEEDINGS

          Not applicable.

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

          At a special meeting of stockholders of the Company
held on November 11, 1996, the stockholders of the Company
approved an amendment (the "Amendment") to Article FOURTH of the
Company's Certificate of Incorporation which (i) increased the
number of authorized shares of all classes of stock from
31,250,000 to 206,250,000, (ii) increased the number of
authorized shares of Common Stock, par value $.01 per share, from
26,250,000 to 201,250,000, and (iii) increased the number of
authorized shares of Series A Common Stock from 25,000,000 to
200,000,000.  The Amendment required the approval of a majority
of the outstanding stock entitled to vote.  There were 3,918,125
shares of Series A Common Stock and 1,126,115 shares of Series B
Common Stock entitled to vote on the Amendment.  Each share of
Series A Common Stock was entitled to one vote and each share of
Series B Common Stock was entitled to five votes with respect to
the Amendment.  There were 9,073,970 votes cast for the
Amendment, 105,095 votes cast against the Amendment, 46,720
abstentions, and no broker non-votes.

PART II

ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

          The Company's Units, Series A Common Stock, Class A
Warrants and Class B Warrants have been included on the Nasdaq
SmallCap Market under the symbols FCENU, FCENA, FCENW and FCENZ,
respectively, since October 11, 1995.  The Company's Series B
Common Stock is not publicly traded and is held exclusively by
current or former management of the Company.  The following table
sets forth the high asked and low bid information for the Units,
Series A Common Stock, Class A Warrants and Class B Warrants as
reported on the Nasdaq SmallCap Market for the period from
October 11, 1995 to December 31, 1995 (the "Fourth Quarter" of
1995), for each quarter in 1996, and for the period from
January 1, 1997 to March 31, 1997 (the "First Quarter" of 1997). 
Market quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not represent actual
transactions.

<TABLE>
<CAPTION>
               Security                        High       Low 
        <S>                                   <C>       <C>
        Units
          1997
            First Quarter ...............     $6 7/8    $2 1/4
          1996
            First Quarter ...............      6 3/4     5
            Second Quarter ..............      9         5 1/8
            Third Quarter ...............      9 1/2     3
            Fourth Quarter ..............      6 9/16    3
          1995
            Fourth Quarter ..............      7 3/8     5

        Series A Common Stock
          1997
            First Quarter ...............      4 3/16    1 1/8
          1996
            First Quarter ...............      4 1/2     2 1/2
            Second Quarter ..............      5 7/8     2 3/4
            Third Quarter ...............      5 3/4     2 1/2
            Fourth Quarter ..............      3 5/8     1 1/2
          1995
            Fourth Quarter ..............      5         2 1/2

        Class A Warrants
          1997
            First Quarter ...............      1 3/4       1/2
          1996
            First Quarter ...............      1 7/8     1
            Second Quarter ..............      2 3/4     1
            Third Quarter ...............      2 3/4     1
            Fourth Quarter ..............      2           7/8
          1995
            Fourth Quarter ..............      1 7/8     1 1/8

        Class B Warrants
          1997
            First Quarter ...............      1 1/2       3/8
          1996
            First Quarter ...............      1 1/2       1/2
            Second Quarter ..............      2           1/2
            Third Quarter ...............      2 1/8     1 1/8
            Fourth Quarter ..............      2           5/8
          1995
            Fourth Quarter ..............      1 1/2       1/2
</TABLE>

Holders

          On March 31, 1997 there were 177, 190 and 158 holders
of record of Series A Common Stock, Class A Warrants and Class B
Warrants, respectively and 5 holders of Series B Common Stock.

Dividends

          The Company has not paid dividends to its common
stockholders since its inception and does not anticipate paying
any dividends to its stockholders in the foreseeable future.  The
Company currently intends to retain all earnings, if any, for use
in the expansion of the Company's business.

Recent Sales of Unregistered Securities

          On November 14, 1996, the Company completed its private
offering (the "Private Offering") of 90 units (the "Private
Units"), each Private Unit consisting of 31,746 units identical
to those sold by the Company in its initial public offering (the
"IPO") in October 1995 (the "IPO Units"), each IPO Unit
consisting of one share of Series A Common Stock, one Class A
Warrant and one Class B Warrant.  The Private Units were sold to
accredited investors pursuant to Section 4(2) of the Act for net
cash proceeds of approximately $7.8 million.  As a result of the
securities sold in the Private Offering, the antidilution
provisions set forth in the Class A and Class B Warrants required
the Company to (i) issue an additional 1,275,545 Class A Warrants
and 1,020,258 Class B Warrants and (ii) adjust the exercise price
of the Class A and Class B Warrants from $6.00 to $5.13 and $8.00
to $6.85, respectively.

          Each Class A Warrant entitles the holder to purchase,
at an exercise price of $5.13, subject to adjustment, one share
of Series A Common Stock and one Class B Warrant.  Each Class B
Warrant entitles the holder to purchase, at an exercise price of
$6.85, subject to adjustment, one share of Series A Common Stock.

          D. H. Blair Investment Banking Corp. ("Blair") acted as
placement agent in the Private Offering and pursuant to the terms
of the Agency Agreement, dated November 14, 1996, between the
Company and Blair, Blair received (i) a placement fee equal to
ten percent (10%) of the $9 million of proceeds (the "Proceeds")
from the Private Placement; (ii) a non-accountable expense
allowance equal to three percent (3%) of the Proceeds; and
(iii) a unit purchase option to purchase 35% of the Private Units
sold in the Private Offering (i.e., 999,999 IPO Units).  In
addition, Blair received a right of first refusal for certain
Company financings and indemnification for liabilities arising
out of the Private Offering.  Blair is also entitled to
registration rights with respect to the securities comprising the
Private Units.  The Company has agreed, under certain
circumstances, to pay Blair a fee of 5% upon the exercise of the
warrants sold as part of the Private Units.

          On December 16, 1996, the Company entered into a
financial advisory agreement with Furman Selz LLC ("Furman
Selz"), a New York investment banking firm.  Pursuant to the
agreement Furman Selz will provide financial advisory services to
the Company for a period of approximately 18 months.  Furman Selz
received warrants to purchase 401,321 shares of Series A Common
Stock, which is equal to five percent of the outstanding shares
of Series A and Series B Common Stock, at an exercise price of
$2.00 per share.  The warrants contain certain antidilution
provisions.  The Company will be required to recognize an
aggregate charge to operations of approximately $328,000 over an
18-month period for the value of the Furman Selz Warrants.  In
the event additional warrants are issued in accordance with
antidilution provisions of the Furman Selz Warrants, the fair
value of such Warrants will be charged to operations for the
remaining term of the agreement.

ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Results of Operations

          The following discussion and analysis should be read in
conjunction with the financial statements and notes thereto
appearing elsewhere in this Report.  The Company is in its
development stage.  The Company's development activities to date
have consisted of designing, developing and producing Cafe USA
programming, producing and evaluating three market tests of Cafe
USA to evaluate its acceptance in the marketplace, developing and
refining an end-to-end distribution system for the delivery and
management of Cafe USA programming into Food Courts, attracting
and engaging management employees, consultants and advisers for
marketing operations and implementation of the Cafe USA network,
establishing contracts and entering into agreements with
advertisers and mall operators and installing and operating Cafe
USA in 11 Food Courts through December 31, 1996 (and 18 Food
Courts as of the date of this report).  The Company has received
only limited revenues.  The Company's principal expenses from its
inception through December 31, 1996 have been salaries and
payments to consultants ($5,263,000), production costs for Cafe
USA programming ($3,519,000) and advertising/marketing expenses
($1,307,000).  Additionally, the Company invested approximately
$3,095,000 in capital equipment through December 31, 1996. 
Accordingly, as of December 31, 1996, the Company had a deficit
accumulated in the development stage of approximately $15,691,000
and a net worth of approximately $8,148,000.  The Company has
continued to incur substantial losses since such date and is
utilizing the proceeds of the Private Offering to continue its
business.  For the foreseeable future, and until significant
sales, if any, of advertising occur, the Company expects losses
to continue and will be entirely dependent on public or private
financing or a strategic alliance.  See also generally
"Investment Considerations."

          On October 16, 1995 the Company closed a Public
Offering of 2,800,000 IPO Units, each IPO Unit consisted of one
share of Series A Common Stock, one Class A Warrant and one
Class B Warrant and on November 9, 1995 the Company closed on an
additional 420,000 Units to the Underwriter pursuant to the
Underwriter's over-allotment option.  The total net proceeds to
the Company from the foregoing sales was approximately
$13,811,000.  The proceeds were applied to redemption of
preferred stock (approximately $1,294,000), repayment of notes
and bank loans (approximately $3,500,000), payment of accrued
expenses and other indebtedness (approximately $2,100,000
million) and approximately  $2,000,000 million to fund the
Evaluatory Period.

          On November 14, 1996 the Company closed on a private
placement of 90 Private Units, each Private Unit consisting of
31,746 Units identical to the IPO Units.  The total net proceeds
to the Company from the foregoing sales was approximately
$7,800,000.  A portion of the proceeds were used for mall
installations and operations and working capital including
salaries of service management and technical and administrative
staff, advertising, sales and research expenses, programming and
production expenses, professional fees and office and
administrative expenses. The Company has utilized and will
continue to utilize the remainder of the proceeds to fund its
operations and continue mall installations until such time as it
begins to receive revenues from operations, if ever.

Charge to Income in the Event of Release of Escrow Shares

          In connection with a private offering which began in
November, 1993 and terminated July, 1994 of units of Series A
Common Stock and Series A Redeemable Preferred Stock (the
"Preferred Stock Unit Offering"), 750,000 shares of Series B
Common Stock were placed in escrow of which 103,750 have been
canceled effective as Of July 5, 1994.  In the event the Company
attains any of the earnings thresholds or the Company's Series A
Common Stock meets certain minimum purchase prices required for
the release of the Escrow Shares, such release will require the
Company to recognize additional compensation expense for shares
held by current and former officers and directors.  Such charges
could substantially increase the loss or reduce or eliminate the
Company's net income, if any, for financial reporting purposes
for the period in which the Escrow Shares are released or are
probable of being released.  Although the amount of compensation
expense recognized by the Company will not affect the Company's
total stockholders' equity or its working capital, it may have a
depressive effect on the market price of the Company's
securities.  If neither the required earnings or sale price are
attained by December 31, 1998, the Escrow Shares as well as any
dividends or other distributions made with respect thereto, will
be contributed to the capital of the Company.  See Investment
Considerations - Charge to Income in the Event of Release of
Escrow Shares" and Note E[1] of Notes to Financial Statements.

Liquidity and Capital Resources

          As of December 31, 1996, the Company had a working
capital of approximately $5,502,000.  The Company has financed
its operation to date almost exclusively through three private
placements of securities, bank loans and a public offering,
including $2,292,500 through the Preferred Stock Unit Offering,
the Bridge Financing of $2,250,000 of Bridge Notes, bank loans of
approximately $1,086,000, the Public Offering of approximately
$16,800,000 and the Private Offering in November, 1996 of
$9,000,000.

          The Company has employment contracts with seven
executive officers and employees which provide for aggregate
salaries in 1997 in the amount of approximately $975,000.  See
Note F to the Financial Statements.  The Company's lease
agreement for its offices provides for monthly payments of
approximately $10,500.

          Pursuant to employment agreements with two former
executive officers, the Company is obligated to make severance
payments totaling $125,000 for the period from April 1, 1997
through September 30, 1997.

          The Company has entered into a settlement agreement
with a former director and officer of the Company dated
October 12, 1993 regarding any claims he had or may have had with
respect to continued employment with the Company and rights to
acquire additional securities of the Company for $200,000. 
Payments under such settlement agreement will be made from 25% of
"Excess Cash Flow" (as defined below) of the Company, if any. 
However, the entire remaining unpaid balance of the $200,000
shall be due and payable regardless of the Company's cash flow no
later than December 1, 1997.  Interest will accrue on such
obligation at the prime rate commencing January 1, 1996 and will
be paid quarterly thereafter.  "Excess Cash Flow" is defined in
the agreement as follows: for any fiscal quarter (i) net income
before taxes of the Company for such fiscal quarter, plus
(ii) amortization and other non-cash charges during such fiscal
quarter (to the extent deducted in computing net income), minus
(iii) capital expenditures made or accrued during such fiscal
quarter.  Dividends and redemptions shall not be treated as
expenses in determining the Company's net income.  In addition to
the above, the settlement agreement provided for the purchase by
the former director and officer from the Company of 11,250 shares
of the Company's Class B Common Stock at a price of $.01 per
share and the payment of consulting fees for services provided at
the request of the Company.

          The Company entered into an agreement with an advisor
for assistance in obtaining certain financing transactions.  The
Company has made certain payments pursuant to the agreement and
although the Company has terminated such agreement, it may be
required to pay consideration, including warrants, in the future
to such advisor for any financing obtained by the Company from
sources within the scope of the agreement.  

          In connection with the underwriting agreement for the
Private Offering, the Company entered into an agreement with the
Placement Agent that provides for a finder's fee to be paid to
the Placement Agent if it consummates a merger, acquisition,
joint venture, or other similar transaction with a party
introduced by the Underwriter during the five year period from
the consummation of the Private Offering.  The fee is based on a
percentage of the consideration paid in the transaction ranging
from 7% of the first $1,000,000 to 2-1/2% of any consideration in
excess of $9,000,000.

          The Company has agreed not to solicit warrant exercises
other than through the Placement Agent.  Upon any exercise of the
Class A or Class B Warrants the Company will pay the Placement
Agent a fee of 5% of the aggregate exercise price, if (i) the
market price of the Company's Series A Common Stock on the date
the warrant is exercised is greater than the then exercise price
of the warrants; (ii) the exercise of the warrant was solicited
by a member of the National Association of Securities Dealers,
Inc.; (iii) the warrantholder designates in writing that the
exercise of the Warrant was solicited by a member of the National
Association of Securities Dealers, Inc. and designates in writing
the broker-dealer to receive compensation for such exercise;
(iv) the Warrant is not held in a discretionary account;
(v) disclosure of compensation arrangements was made both at the
time of the Private Offering and at the time of exercise of the
warrants; and (vi) the solicitation of exercise of the warrant
was not in violation of Rule 10b-6 promulgated under the Exchange
Act.

          In connection with the Private Offering, D.H. Blair
Investment Banking Corp. was granted a five-year right of refusal
to act as underwriter for any public or private offerings by the
Company or any holder of 5% or more of the Company's Series B
Common Stock (with certain exceptions).

Plan of Operation

          The Company is currently (as of March 31, 1997)
broadcasting in 18 Food Courts, has begun the installation of
Cafe USA in two additional Food Courts.  The Company plans to
continue its Mall Expansion until it obtains a critical number of
installations in mall Food Courts.  The Company will, however,
require substantial additional capital in order to complete its
plan.  The Company intends to seek strategic alliances with
appropriate corporate partners.  Without substantial additional
capital, the Company will be unable to complete a sufficient
number of installations to rely solely on revenues for its
operations.

          Since revenue proceeds will not be sufficient to fund a
continued expansion of the network or the cost of operations, the
Company is actively seeking strategic alliances, either through a
joint venture, merger or acquisition transaction, with other
entities that have significant financial and other resources in
order to provide the Company with the necessary funding required
to successfully complete the Mall Expansion and to build a staff
sufficient to operate a growing media company.  If the Company
determines that it is unable to enter into a strategic alliance
in a timely manner, the Company may be forced to cease
operations.

          In January, 1997, the Company entered into a six-year
exclusive advertising sales representative agreement with ABC. 
The agreement provides that ABC will be the exclusive advertising
representative for Food Court and will use the ABC sales force to
seek advertisers for the Company's programming.  The Company
believes that the addition of the ABC sales force will have a
major impact on obtaining a significant volume of advertising
sales for the Cafe USA network.  During the last quarter of 1996,
the Company ran advertisements for Sears, AT&T and the Athlete's
Foot and 20th Century Fox (for a four week period during the
fourth quarter).  The Company currently has no paid advertisers.

          The Company has issued a purchase order to Digital
Equipment Corporation ("DEC") whereby DEC has undertaken to
develop software applications and provide hardware necessary to
deliver Cafe USA digitally through telecommunications network
into malls nationwide.  Through the end of 1996 the Company has
paid DEC the sum of $150,000.  The cost of the digital network is
estimated to be about $1,000,000.  Further, DEC and the Company
have agreed to enter into a definitive agreement setting forth
the exact obligations and responsibilities of both DEC and the
Company.  There can be no assurance that a definitive agreement
with DEC will be signed.  Although the failure to proceed with
the DEC contract will initially limit the Company's options for
broadcasting its programming into Food Courts, there are other
options and methods of broadcast or other digital systems which
may be designed by other companies that will be available to the
Company.
<PAGE>
                  ITEM 7 - FINANCIAL STATEMENTS

             FOOD COURT ENTERTAINMENT NETWORK, INC.
                  (a development stage company)

                              INDEX

                                                            PAGE
                                                           NUMBER

REPORT OF INDEPENDENT AUDITORS                               28

BALANCE SHEET                                                29

STATEMENTS OF OPERATIONS                                     30

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY                31

STATEMENTS OF CASH FLOWS                                     33

NOTES TO FINANCIAL STATEMENTS                                34
<PAGE>
                 REPORT OF INDEPENDENT AUDITORS


Board of Directors and Stockholders
Food Court Entertainment Network, Inc.
Queens, New York

     We have audited the accompanying balance sheet of Food Court
Entertainment Network, Inc. (a development stage company) as at
December 31, 1996, and the related statements of operations,
changes in stockholders' equity and cash flows for the years
ended December 31, 1995 and December 31, 1996 and for the period
from February 12, 1992 (inception) through December 31, 1996. 
These financial statements are the responsibility of the
Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

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

     In our opinion, the financial statements enumerated above
present fairly, in all material respects, the financial position
of Food Court Entertainment Network, Inc. at December 31, 1996
and the results of its operations and cash flows for the years
ended December 31, 1995 and December 31, 1996 and for the period
from February 12, 1992 (inception) through December 31, 1996 in
conformity with generally accepted accounting principles.

     The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern.  As
discussed in Note A, the Company expects substantial losses to
continue until it is able to attract a significant number of
advertisers.  In order to accomplish this, the Company must
expand its network into a significant number of mall food courts,
which will require additional financing.  These factors 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 A.  The financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.

/s/ Richard A. Eisner & Company, L.L.P.
New York, New York
February 12, 1997
<PAGE>
             FOOD COURT ENTERTAINMENT NETWORK, INC.
                  (a development stage company)
                          BALANCE SHEET
                     AS AT DECEMBER 31, 1996

                             ASSETS
Current assets:     
  Cash and cash equivalents . . . . . . . . . . .   $  6,498,864
  Other current assets. . . . . . . . . . . . . .        402,626

    Total current assets. . . . . . . . . . . . .      6,901,490

Fixed assets, net (Notes B[1] and C). . . . . . .      2,415,115
Other assets. . . . . . . . . . . . . . . . . . .        130,215

    TOTAL . . . . . . . . . . . . . . . . . . . .   $  9,446,820

                           LIABILITIES
Current liabilities:
  Accounts payable. . . . . . . . . . . . . . . .   $    665,022
  Accrued payroll . . . . . . . . . . . . . . . .        255,518
  Other accrued expenses. . . . . . . . . . . . .        178,692
  Due to former employee (Note F[3]). . . . . . .        200,000

    Total liabilities . . . . . . . . . . . . . .      1,299,232

Commitments and other matters (Notes B[7] and F)

                      STOCKHOLDERS' EQUITY
                            (Note E)
Preferred stock - 5,000,000 shares authorized,
  none issued
Common stock:
  Series A common stock - $.01 par value,
    200,000,000 shares authorized and
    6,913,555 issued and outstanding. . . . . . .         69,135
  Series B common stock - $.01 par value,
    1,250,000 shares authorized,
    1,133,009 issued. . . . . . . . . . . . . . .         11,330
Additional paid-in capital. . . . . . . . . . . .     23,757,996
Deficit accumulated during the development stage.    (15,690,772)

    Total . . . . . . . . . . . . . . . . . . . .      8,147,689

Treasury stock. . . . . . . . . . . . . . . . . .           (101)

    Total stockholders' equity. . . . . . . . . .      8,147,588

    TOTAL . . . . . . . . . . . . . . . . . . . .   $  9,446,820

Attention is directed to the foregoing accountants' report and to
the accompanying notes to financial statements.
<PAGE>
             FOOD COURT ENTERTAINMENT NETWORK, INC.
                  (a development stage company)

                    STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                                  February 12,
                                                                      1992
                                                                  (Inception)
                                                                    Through
                                     Year Ended December 31,      December 31,
                                       1995           1996            1996    
<S>                                <C>            <C>            <C>
Advertising revenue (Note B[2]) .                 $   122,260    $    122,260

Operating expenses:
  Sales and marketing . . . . . .                     560,513         560,513

  Programming . . . . . . . . . .                   1,314,340       1,314,340

  Network costs . . . . . . . . .                   1,228,557       1,228,557

  General and administrative
    expenses. . . . . . . . . . .  $   620,380      2,339,523       3,334,400

  Development costs (Note B[3]) .    4,665,147      1,104,316       8,983,551

    Total operating expenses. . .    5,285,527      6,547,249      15,421,361

Operating (loss). . . . . . . . .   (5,285,527)    (6,424,989)    (15,299,101)

Other (income) expenses:

  Interest expense. . . . . . . .      616,637         16,500         657,705

  Interest and other (income) . .      (65,313)      (171,057)       (266,034)

                                       551,324       (154,557)        391,671

NET (LOSS). . . . . . . . . . . .  $(5,836,851)   $(6,270,432)   $(15,690,772)


Net (loss) per share of common
  stock . . . . . . . . . . . . .  $     (2.32)   $     (1.32)

Number of common shares and        
   common share equivalents        
   used in computation. . . . . .    2,413,975      4,738,565
</TABLE>

Attention is directed to the foregoing accountants' report and to
the accompanying notes to financial statements.
<PAGE>
             FOOD COURT ENTERTAINMENT NETWORK, INC.
                  (a development stage company)

          STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                            (Note E)
<TABLE>
<CAPTION>
                                                                                                Common Stock                        
                                                                                              Series A               Series B       
                                                                       Shares   Amount     Shares     Amount     Shares      Amount 
<S>                                                                    <C>      <C>      <C>         <C>       <C>          <C>
Common stock issued for cash in February 1992 at $10.00 per share . .    98      $  1
Net (loss) for the period February 12, 1992 (inception) to
  December 31, 1992 . . . . . . . . . . . . . . . . . . . . . . . . .                
Balance - December 31, 1992 . . . . . . . . . . . . . . . . . . . . .    98         1
Exchange of shares and change of capital structure in October 1993. .   (98)       (1)                                98    $     1
Common stock issued to founders for cash in October 1993 at $.01 per
  share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                          1,249,902     12,499
Cash contributed by stockholder . . . . . . . . . . . . . . . . . . .
Loan from director contributed to capital . . . . . . . . . . . . . .
Net (loss) for the year . . . . . . . . . . . . . . . . . . . . . . .                                                              
Balance - December 31, 1993 . . . . . . . . . . . . . . . . . . . . .     0          0                         1,250,000     12,500
Issuance of stock for cash in January through June 1994 at $2.00 per
  share in connection with private placement, less expense of
  $254,685. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      535,625   $ 5,356
Issuance of stock as settlement of director and officer loans in
  January through June 1994 at $2.00 per share. . . . . . . . . . . .                       37,500       375
Value assigned to warrants issued in connection with bridge
  financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares forfeited. . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares forfeited and cancelled. . . . . . . . . . . . . . . . . . . .                                           (103,750)    (1,038)
Net (loss) for the year . . . . . . . . . . . . . . . . . . . . . . .                                                              
Balance - December 31, 1994 . . . . . . . . . . . . . . . . . . . . .     0          0     573,125     5,731   1,146,250     11,462
Sale of treasury stock for cash in April 1995 at $.01 per share . . .
Value assigned to warrants issued in connection with bridge
  financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Preferred dividends paid. . . . . . . . . . . . . . . . . . . . . . .
Issuance of units at $5.00 per unit pursuant to initial public
  offering, less expense of $2,254,009. . . . . . . . . . . . . . . .                    3,220,000    32,200
Value assigned to options and warrants issued as compensation . . . .
Value assigned to warrants issued for guarantees of debt. . . . . . .
Net (loss) for the year . . . . . . . . . . . . . . . . . . . . . . .                                                              
Balance - December 31, 1995 . . . . . . . . . . . . . . . . . . . . .     0          0   3,793,125    37,931   1,146,250     11,462
Common stock issued as consideration for programming. . . . . . . . .                      250,000     2,500
Issuance of stock and warrants for cash in October at $3.15 per
  share in connection with private placement (less expenses of
  $1,341,109) . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    2,857,189    28,572
Sale of common B shares . . . . . . . . . . . . . . . . . . . . . . .                       13,241       132     (13,241)      (132)
Granting of common B shares to former employee as a form of
  settlement. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Issuance of warrants as consideration for consulting services . . . .
Net (loss) for the year . . . . . . . . . . . . . . . . . . . . . . .                                                              

BALANCE - DECEMBER 31, 1996 . . . . . . . . . . . . . . . . . . . . .     0      $   0   6,913,555   $69,135   1,133,009    $11,330
</TABLE>
<PAGE>
                     FOOD COURT ENTERTAINMENT NETWORK, INC.
                          (a development stage company)

                  STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                    (Note E)
<TABLE>
<CAPTION>
                                                                        Deficit
                                                                      Accumulated
                                                       Additional       During           Series B
                                                         Paid-in      Development      Treasury Stock    Subscription
                                                         Capital         Stage        Shares    Amount    Receivable        Total   
<S>                                                   <C>             <C>             <C>       <C>      <C>            <C>
Common stock issued for cash in February 1992 at
  $10.00 per share  . . . . . . . . . . . . . . . .   $       979                                           $(980)      $         0
Net (loss) for the period February 12, 1992
  (inception) to December 31, 1992  . . . . . . . .                  $   (154,488)                                         (154,488)
Balance - December 31, 1992 . . . . . . . . . . . .           979        (154,488)                           (980)         (154,488)
Exchange of shares and change of capital
  structure in October 1993 . . . . . . . . . . . .          (979)                                            980                 1
Common stock issued to founders for cash in
  October 1993 at $.01 per share. . . . . . . . . .                                                                          12,499
Cash contributed by stockholder . . . . . . . . . .        32,500                                                            32,500
Loan from director contributed to capital . . . . .       190,000                                                           190,000
Net (loss) for the year . . . . . . . . . . . . . .                      (783,612)                                         (783,612)
Balance - December 31, 1993 . . . . . . . . . . . .       222,500        (938,100)                              0          (703,100)
Issuance of stock for cash in January through
  June 1994 at $2.00 per share in connection with
  private placement, less expense of $254,685 . . .       811,209                                                           816,565
Issuance of stock as settlement of director and 
  officer loans in January through June 1994 at
  $2.00 per share . . . . . . . . . . . . . . . . .        74,625                                                            75,000
Value assigned to warrants issued in connection
  with bridge financing . . . . . . . . . . . . . .       140,000                                                           140,000
Shares forfeited. . . . . . . . . . . . . . . . . .           641                    (64,085)   $(641)                            0
Shares forfeited and cancelled. . . . . . . . . . .         1,038                                                                 0
Net (loss) for the year . . . . . . . . . . . . . .                    (2,645,389)                                       (2,645,389)
Balance - December 31, 1994 . . . . . . . . . . . .     1,250,013      (3,583,489)   (64,085)    (641)          0        (2,316,924)
Sale of treasury stock for cash in April 1995 at
  $.01 per share  . . . . . . . . . . . . . . . . .                                   43,950      440                           440
Value assigned to warrants issued in connection
  with bridge financing. .  . . . . . . . . . . . .        85,000                                                            85,000
Preferred dividends paid. . . . . . . . . . . . . .      (148,112)                                                         (148,112)
Issuance of units at $5.00 per unit pursuant to
  initial public offering, less expense of
  $2,254,009. . . . . . . . . . . . . . . . . . . .    13,778,872                                                        13,811,072
Value assigned to options and warrants issued as
  compensation. . . . . . . . . . . . . . . . . . .        22,580                                                            22,580
Value assigned to warrants issued for guarantees
  of debt . . . . . . . . . . . . . . . . . . . . .        86,003                                                            86,003
Net (loss) for the year . . . . . . . . . . . . . .                    (5,836,851)                                       (5,836,851)
Balance - December 31, 1995 . . . . . . . . . . . .    15,074,356      (9,420,340)   (20,135)    (201)          0         5,703,208
Common stock issued as consideration for
  programming . . . . . . . . . . . . . . . . . . .       697,500                                                           700,000
Issuance of stock and warrants for cash in October
  at $3.15 per share in connection with private
  placement (less expenses of $1,341,109) . . . . .     7,630,319                                                         7,658,891
Sale of common B shares . . . . . . . . . . . . . .                                                                               0
Granting of common B shares to former employee
  as a form of settlement . . . . . . . . . . . . .        28,150                     10,000      100                        28,250
Issuance of warrants as consideration for
  consulting services . . . . . . . . . . . . . . .       327,671                                                           327,671
Net (loss) for the year . . . . . . . . . . . . . .                    (6,270,432)                                       (6,270,432)

BALANCE - DECEMBER 31, 1996 . . . . . . . . . . . .   $23,757,996    $(15,690,772)   (10,135)   $(101)      $   0       $ 8,147,588
</TABLE>

Attention is directed to the foregoing accountants' report and to
the accompanying notes to financial statements.
<PAGE>
             FOOD COURT ENTERTAINMENT NETWORK, INC.
                  (a development stage company)

                    STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                                                       February 12,
                                                                                                                           1992
                                                                                                                       (Inception)
                                                                                                                         Through
                                                                                          Year Ended December 31,      December 31,
                                                                                            1995           1996            1996    
<S>                                                                                     <C>            <C>            <C>
Cash flows from operating activities:
  Net (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $(5,836,851)   $(6,270,432)   $(15,690,772)
  Adjustments to reconcile net (loss) to net cash (used in) operating activities:
    Depreciation and amortization. . . . . . . . . . . . . . . . . . . . . . . . . .        541,907        390,093         964,086
    Loss on disposal of equipment. . . . . . . . . . . . . . . . . . . . . . . . . .                        26,182          26,182
    Write-off of debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . .        146,397                        146,397
    Value assigned to options and warrants issued as compensation and for
      guarantees of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        108,583                        108,583
    Common stock issued as consideration for programming . . . . . . . . . . . . . .                       700,000         700,000
    Common stock and warrants issued as consideration for compensation . . . . . . .                        38,002          38,002
    Changes in operating assets and liabilities:
      (Increase) decrease in other assets. . . . . . . . . . . . . . . . . . . . . .         38,641       (210,825)       (213,789)
      Increase in accrued expenses and other liabilities . . . . . . . . . . . . . .        232,842        366,639       1,299,231

        Net cash (used in) operating activities. . . . . . . . . . . . . . . . . . .     (4,768,481)    (4,960,341)    (12,622,080)

Cash flows from investing activities:
  Purchase of equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     (1,512,129)    (1,391,583)     (3,024,077)
  Organization costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                       (11,336)

          Net cash (used in) investing activities. . . . . . . . . . . . . . . . . .     (1,512,129)    (1,391,583)     (3,035,413)

Cash flows from financing activities:
  Net proceeds from sale of units of common stock and warrants . . . . . . . . . . .     13,811,512      7,658,891      23,370,719
  Redemption of preferred stock. . . . . . . . . . . . . . . . . . . . . . . . . . .     (1,146,250)                    (1,146,250)
  Preferred dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       (148,112)                      (148,112)
  Capital contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                        32,500
  Proceeds from bridge loan. . . . . . . . . . . . . . . . . . . . . . . . . . . . .        850,000                      2,250,000
  Repayment of bridge loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     (2,250,000)                    (2,250,000)
  Deferred financing fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       (110,500)                      (292,500)
  Proceeds from director and officer loans . . . . . . . . . . . . . . . . . . . . .         50,000                        390,000
  Repayment of director and officer loans. . . . . . . . . . . . . . . . . . . . . .        (50,000)                       (50,000)
  Proceeds from note payable . . . . . . . . . . . . . . . . . . . . . . . . . . . .        642,972                        954,572
  Repayment of note payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . .       (954,572)                      (954,572)

          Net cash provided by financing activities. . . . . . . . . . . . . . . . .     10,695,050      7,658,891      22,156,357

NET INCREASE IN CASH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      4,414,440      1,306,967       6,498,864

Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . . .        777,457      5,191,897                

CASH AND CASH EQUIVALENTS AT END OF PERIOD . . . . . . . . . . . . . . . . . . . . .    $ 5,191,897    $ 6,498,864    $  6,498,864

Supplemental schedule of noncash financing activities:
  Warrants issued in connection with bridge loan . . . . . . . . . . . . . . . . . .    $    85,000                   $    225,000
  Warrants issued in connection with deferred consulting . . . . . . . . . . . . . .                   $   317,919         317,919
  Director and officer loans exchanged for common and preferred stock. . . . . . . .                                       150,000
  Director loan contributed to capital . . . . . . . . . . . . . . . . . . . . . . .                                       190,000

Supplemental disclosure of cash flow information:
   Cash paid for interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        317,334                        336,406
</TABLE>
Attention is directed to the foregoing accountants' report and to
the accompanying notes to financial statements.
<PAGE>
             FOOD COURT ENTERTAINMENT NETWORK, INC.
                  (a development stage company)

                  NOTES TO FINANCIAL STATEMENTS


(NOTE A) - The Company and Basis of Presentation:

     Food Court Entertainment Network, Inc. (the "Company") is a
Delaware corporation which was incorporated on February 12, 1992. 
The Company's initial plan had been to establish a national
television network to broadcast a high quality television program
called Cafe USA, specifically to large, enclosed shopping mall
food courts across the United States.  While the development of a
national television network remains the core business, the
Company intends to expand its mission.  The Company plans to
promote, introduce, and operate electronic entertainment,
information and transaction systems in various high traffic
consumer areas utilizing both new and traditional media and
contemporary communication technologies.  The Company is in the
development stage and to date its activities have consisted
primarily of designing, developing and producing its Cafe USA
programming, establishing contacts and entering into agreements
with potential advertisers and mall operators, producing and
evaluating market tests of its programming, developing a system
for delivery of programming into mall food courts, engaging
management, employees and consultants for operations, including
marketing, installing and operating Cafe USA in various mall food
courts.

     As shown in the accompanying financial statements, the
Company has incurred substantial losses from operations since
inception.  Such losses are expected to continue until the
Company is able to attract a significant number of advertisers. 
The Company currently has no paid advertisers and it is
anticipated that revenues will not be sufficient to cover the
Company's operating expenses until it has achieved a presence in
a significant number of malls.  Mall expansion is dependent upon
the Company obtaining financing for the lease or purchase and
installation of equipment necessary for the broadcasting of its
programming in mall food courts.  Without additional financing,
the Company will not be able to pursue its expansion plan.  These
factors raise substantial doubt about the Company's ability to
continue as a going concern.  The Company is negotiating with
potential suppliers of equipment and programming to provide such
financing.  The Company is also negotiating an arrangement with a
mall developer whereby the developer will fund the installations
in certain mall food courts for a portion of the related
advertising revenues.  In addition, the Company is pursuing other
sources of financing required for expansion into additional
malls.  There is no assurance that such financing will be
available.  The financial statements do not include any
adjustments that might be necessary if the Company is unable to
continue as a going concern.

(NOTE B) - Summary of Significant Accounting Policies:

     [1]  Depreciation:

          Depreciation is provided using the straight-line method
over the five-year estimated useful life of the assets.

     [2]  Revenue recognition:

          Revenue will generally be recognized by the Company
when media placements appear.

     [3]  Development costs:

          Development and start up costs expended prior to
commencement of operations have been expensed as incurred.

     [4]  Programming costs:

          The Company charges programming costs to expense as
they are incurred.

     [5]  Loss per share of common stock:

          Net loss per share of common stock is based on the
weighted average number of shares outstanding during each period,
as modified in accordance with certain rules of the Securities
and Exchange Commission.  Accordingly, the weighted average
number of shares outstanding during 1995 includes options and
warrants issued within twelve months of the Company's initial
public offering using the treasury stock method as if they were
outstanding from January 1, 1995  through June 30, 1995.  The
weighted average number of shares outstanding for 1995 and 1996
excludes Series B shares in escrow.  In addition, the net loss
per share of common stock for 1995 is adjusted for the
amortization of an assumed discount on the Series A redeemable
preferred stock through the effective date of the Company's
initial public offering.

     [6]  Use of estimates in the preparation of financial
statements:

          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.

     [7]  Concentration of credit risk:

          The Company maintains all of its cash and cash
equivalents in one commercial bank. 

     [8]  Stock options:

          In October 1995, the FASB issued SFAS 123 "Accounting
for Stock-Based Compensation Arrangements" ("SFAS 123"). 
SFAS 123 permits the Company to choose either a new fair value-
based method of accounting for stock-based compensation to
employees and directors, or retain the intrinsic value-based
method of accounting for such stock-based compensation.  The
statement requires pro forma disclosures of net income and
earnings per share computed as if the fair value-based method had
been applied in financial statements of companies that continue
to follow the intrinsic value-based method of accounting.  The
Company has adopted SFAS 123 for disclosure purposes only, and as
a result, the adoption of SFAS 123 will not materially impact the
Company's financial position or results of operations.

(NOTE C) - Equipment:

     Equipment is summarized as follows at December 31, 1996:

          Installations . . . . . . . . . . . .   $2,708,473
          Office furniture and fixtures . . . .       13,540
          Transmission system in progress . . .      205,000      
          Computer equipment. . . . . . . . . .       67,587

                    T o t a l . . . . . . . . .    2,994,600 

          Less accumulated depreciation . . . .      579,485

                    B a l a n c e . . . . . . .   $2,415,115

     [1]  Installations:

          Installations includes the cost of equipment necessary
to transmit and receive the Company's programming and the related
costs of installing such equipment.  At December 31, 1996 the
cost basis of installations includes $1,538,370 of equipment and
the remaining balance represents the aggregate costs of
technicians, engineers, general contractors, architects and other
installation consultants.

     [2]  Transmission system in progress:

          The cost basis of transmission system in progress
consists of costs related to the development of software
applications and hardware necessary to deliver the Cafe USA
program digitally through telephone wires into malls nationwide. 
The Company has entered into a consulting agreement which
provides for payments aggregating approximately $1 million and
such costs will be depreciated when the related asset is placed
into service.  The Company will be required to write off these
costs and any additional amounts due if it does not proceed with
this agreement (Note F[4]).

(NOTE D) - Income Taxes:

     At December 31, 1996, the Company has available net
operating loss carryforwards of approximately $7,350,000, which
expire at various dates through 2011.  Under Section 382 of the
Internal Revenue Code of 1986, as amended, the Company is subject
to an annual limitation on the utilization of approximately
$600,000 of its net operating loss carryforwards because an
ownership change of more than 50% has occurred.

     Prior to the commencement of operations the Company was
required to treat certain costs as start-up costs for tax
purposes.  Accordingly, development and general and
administrative expenses were not deducted for tax purposes until
April 1996.  The Company's financial statements do not reflect a
benefit from its net operating loss carryforwards or from
temporary differences (primarily due to the unamortized balance
of expenses which were capitalized as start-up costs for tax
purposes), because a valuation allowance, which increased by
approximately $2,558,000 for the year ended December 31, 1996,
has been provided against the deferred tax asset.  The valuation
allowance has been provided due to management's uncertainty
regarding the future profitability of the Company.  At
December 31, 1996 the principal components of deferred tax assets
(liabilities) are as follows:

     Net operating loss carryforwards. . . .   $ 2,940,000
     Start-up costs. . . . . . . . . . . . .     3,358,000
     Depreciation. . . . . . . . . . . . . .      (213,000)
     Other . . . . . . . . . . . . . . . . .       171,000
                                                 6,256,000
     Valuation allowance . . . . . . . . . .    (6,256,000)

     Net deferred tax. . . . . . . . . . . .   $   - 0 -  

(NOTE E) - Stockholders' Equity:

     [1]  Capital stock:

          In connection with the Company's private placement in
1993, 646,250 shares of Series B common stock are held in escrow
to be released based on attaining certain net earning levels. 
The shares will also be released if the Company is sold in a
private sale obtaining specified per share prices.  If the above
conditions have not been met, the escrow shares will be
cancelled.

          Upon the release of any of the Series B shares held in
escrow, the Company will incur a reportable earnings charge for
compensation expense in the amount of the then fair value of the
shares released.  Such charge is not deductible for income tax
purposes.

          The holders of Series A shares are entitled to one vote
per share.  The holders of the Series B shares are entitled to
five votes per share.  The Series B stock is primarily held by
the current management of the Company.

     [2]  Stock options:

          (a)  Consultants and advisors stock option plan:

               During 1994, the Board of Directors and the
stockholders of the Company approved a stock option plan (the
"Plan") which provides for the granting of options to purchase up
to 100,000 shares of Series A common stock.  Consultants and
advisors of the Company are eligible to receive nonqualified
options to purchase shares under the Plan.  Options granted under
the Plan are exercisable for a period of four years from the date
of grant at an exercise price as determined by the Company's
compensation committee, of not less than $2.00 per share. 
Options for 104,800 shares were outstanding under the Plan as at
December 31, 1996.

          (b)  Employee stock option plan:

               In August 1995, the Board of Directors and the
stockholders approved the Company's Employee Stock Option Plan
(the "Employee Plan"), for the benefit of officers and key
employees of the Company or any of its current or future parents
or subsidiaries.  The Employee Plan, as amended, provides that
options to purchase an aggregate of 2,000,000 shares of the
Company's Series A common stock may be granted pursuant to the
Employee Plan.  Options granted under the Employee Plan may be
incentive stock options or nonqualified stock options.  The term,
the exercise price, and the rate at which options may be
exercised will be determined by the Company's Board of Directors
or by the compensation committee.  Unexercised options expire
five to ten years after the date of grant.

               The Company granted options to purchase
100,000 shares of its Series A common stock to an officer in 1995
at $5.00 per share. No other options were granted under the
Employee Plan during 1995.

               During the year ended December 31, 1996 the
options for 100,000 shares previously granted under the Employee
Plan were cancelled and options to purchase 503,000 shares of the
Company's Series A common stock were granted to employees.

               In October 1996 the Company agreed to issue
options to purchase 1,000,000 shares of Series A common stock in
connection with employment agreements with its chairman and
president and the resignation of its former president.  Options
for all of these shares are subject to vesting provisions,
900,000 of which are based on the Company's attaining specified
earnings thresholds.  There will be a charge to operations equal
to the difference between the exercise price and the fair value
of the stock on the date that these options vest.

          (c)  The Director Plan:

               In July 1996, the stockholders of the Company
approved the Director Plan, pursuant to which the Company granted
to seven directors options to purchase all of the 630,000 shares
of Series A common stock available under such plan at an exercise
price of $5.00.  Options to purchase 210,000 shares are
immediately exercisable, options to purchase 210,000 shares
become exercisable in each of July 1997 and July 1998 provided
the directors are re-elected.  In October 1996, 180,000 options
were forfeited due to the resignation of two members of the Board
of Directors.

          (d)  Other stock options:
               
               The Company has outstanding options to purchase
120,000 shares of its Series A common stock which were granted to
directors outside of any of the plans.

               The Company applies APB Opinion 25 and related
interpretations in accounting for its options.  Accordingly, no
compensation cost has been recognized for its stock option grants
to employees and directors.  However, the Company recognized
compensation of approximately $23,000 and $10,000 in 1995 and
1996, respectively, related to options and warrants granted to
others.  Had compensation cost for the company's stock option
grants to employees and directors been determined based on the
fair value at the grant dates for awards consistent with the
method of FASB Statement 123, the Company's net income and
earnings per share would have been reduced to the pro forma
amounts indicated below:

<TABLE>
<CAPTION>
                                       1995           1996    
<S>                  <C>           <C>            <C>            
Net loss             As reported   $(5,836,851)   $(6,270,432)
                     Pro forma     $(5,960,601)   $(7,181,020)

Net loss per share   As reported   $     (2.32)   $     (1.32)
                     Pro forma     $     (2.36)   $     (1.52)

</TABLE>
          A summary of the status of the Company's stock options
as of December 31, 1995 and December 31, 1996, and changes during
the years ending on those dates is presented below:

<TABLE>
<CAPTION>
                                 1995                1996        
                                   Weighted-            Weighted-
                                   Average              Average
                                   Exercise              Exercise
      Fixed Options        Shares   Price      Shares     Price  
<S>                       <C>      <C>       <C>        <C>
Outstanding at beginning
  of year. . . . . . . .  117,800    $2.00      310,800    $3.42
Granted. . . . . . . . .  193,000     4.28    2,363,000     3.03
Cancelled. . . . . . . .                       (390,000)    3.64
Forfeited. . . . . . . .                       (191,000)    4.87
Outstanding at end of
  year                    310,800     3.42    2,092,800     2.81
Options exercisable at
  year-end . . . . . . .  190,800     2.74      777,800     2.92 
Weighted-average fair
  value of options
  granted during
  the year . . . . . . .    $1.75                 $2.03
</TABLE>

               The following table summarizes information about
fixed stock options outstanding at December 31, 1996:

<TABLE>
<CAPTION>
                            Options Outstanding               Options Exercisable  
                     Number       Weighted-                   Number
                   Outstanding     Average     Weighted-    Exercisable   Weighted-
                       at         Remaining     Average         at         Average 
Range of          December 31,   Contractual   Exercise    December 31,    Exercise
exercise prices       1996           Life        Price         1996         Price  
<S>               <C>            <C>           <C>         <C>            <C>
$2.00 - $2.83      1,562,800            9       $2.12        547,800        $2.20
$3.87 - $5.00     530,000            9        4.84        230,000         4.63

                   2,092,800            9       $2.81        777,800        $2.92
</TABLE>

               The fair value of each option grant is estimated
on the date of grant using the Black-Scholes option-pricing model
with the following weighted-average assumptions used for grants
in 1995 and 1996:  dividend yield of 0%, expected volatility of
45% and 70%, respectively, risk-free interest rate of 6% and
expected lives ranging from 4 to 7.5 years.

     [3]  Warrants:

          Warrants outstanding and exercisable at December 31,
1996 are summarized as follows:

<TABLE>
<CAPTION>
                                 Shares
                              Covered by  Exercise
                                Warrants     Price   Expiration  
<S>                           <C>          <C>      <C>
Class A warrants (i) . . . .   8,796,797    $5.13   October 2000
Class B warrants . . . . . .   7,097,447     6.85   October 2000
Financial advisor's warrants     401,321     2.00   October 2000
Placement agent's warrants .     124,212     2.00   January 1999
Warrants to mall developer .      25,000     5.00   October 2000

                              16,444,777
</TABLE>

          (i)  Upon the exercise of each Class A warrant, the
holder will receive a share of Series A common stock and a
Class B warrant.

          In connection with the Company's initial public
offering in 1995, the underwriter purchased, for nominal
consideration, an option to purchase up to 280,000 units, each
consisting of one share of Series A common stock, one Class A
warrant and one Class B warrant.

          In connection with the Company's private placement in
1996, the placement agent received an option to purchase up to
999,999 of such units.

(NOTE F) - Commitments and Other Matters:

     [1]  Employment and consulting agreements:

          The Company has employment agreements with three
officers which provide for aggregate annual compensation of
approximately $363,000, $250,000 and $187,000 in 1997, 1998 and
1999, respectively, plus increases and bonuses as determined by
the board of directors.  The agreements also provide for
aggregate severance payments of up to $900,000 plus the granting
of options to purchase 100,000 shares of common stock at $2.00.

          The Company has employment agreements with four
executives and a consulting agreement which provide for aggregate
compensation of $569,000, $448,000 and $450,000 for the years
ending December 31, 1997, December 31, 1998 and December 31,
1999, respectively.

          Pursuant to employment agreements with two former
officers, the Company is obligated to make severance payments
aggregating $187,500 through September 30, 1997.  Such
compensation was charged to operations during the fourth quarter
of 1996.  Additionally, the Company agreed to grant options to
purchase 100,000 shares of Series A common stock to one of the
former officers.

     [2]  Leases:

          Through June 30, 1996, the Company leased office and
other space on a month-to-month basis.  Rent expense was
approximately $89,132 and $121,000 for the years ended
December 31, 1996, and December 31, 1995, respectively.

          Effective July 1, 1996 the Company entered into an
operating lease for office space.  The agreement expires
December 29, 2000 and provides for monthly payments of rent, real
estate taxes and operating expenses.

          Future minimum lease payments as at December 31, 1996
are as follows:

     1997. . . . . . . . . . . . . .  $124,950
     1998. . . . . . . . . . . . . .   124,950
     1999. . . . . . . . . . . . . .   124,950
     2000. . . . . . . . . . . . . .   124,950

               T o t a l . . . . . .  $499,800

     [3]  Employee settlement:

          The Company reached an agreement with a former employee
to settle claims relating to continued employment and rights to
additional ownership interest in the Company.  The agreement
requires the Company to pay the employee $200,000 plus accrued
interest from excess cash flow (as defined) of the Company; the
unpaid balance of the obligation is due on December 31, 1997 and
interest at the prime rate began accruing on January 1, 1996.

     [4]  Other commitments:

          The Company has entered into an agreement with a
consultant for approximately $1,000,000 in connection with the
development of software applications and hardware necessary to
deliver the Cafe USA program digitally through telephone wires
into malls nationwide.  Through December 31, 1996 $150,000 has
been paid in connection with this agreement.  The Company is
considering other similar systems and should this agreement be
terminated, additional amounts may be due.

          Under a previous agreement with an advisor, the Company
may be required to pay consideration, including warrants, for any
future financing obtained from sources within the scope of such
agreement.

          In December 1996, the Company entered into a financial
advisory agreement with an investment banking firm (the "Firm"). 
Pursuant to the agreement the Firm will provide financial
advisory services to the Company for a period of 18 months.  In
connection with the agreement, the Firm received warrants to
purchase 401,321 shares of Series A common stock at an exercise
price of $2.00 per share.  The Company recognized a charge to
operations of $9,000 in the fourth quarter and will amortize the
remaining deferred consulting fees of $319,000 over an 18-month
period.  In the event additional warrants are issued in
accordance with certain antidilution provisions, the fair value
of such warrants will be charged to operations over the remaining
term of the agreement.

(NOTE G) - Subsequent Events:

     In January 1997, the Company entered into a six-year
agreement with an exclusive sales representative, subject to the
right of the parties to terminate after two years.  Under the
terms of the agreement, the sales representative will receive a
guaranteed minimum first year commission of $100,000 to be
applied towards commissions earned in the first year, 15% on the
first $15 million of net advertising revenue, 10% on the net
advertising revenue between $15 million and $30 million and 7.5%
on net advertising over $30 million.
<PAGE>
ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES

          Not Applicable.

                            PART III

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

Directors and Executive Officers

          Information regarding the directors and executive
officers of the Company as of March 31, 1997 is set forth below.

<TABLE>
<CAPTION>
Name                Age            Position
<S>                 <C>       <C>
Robert H. Lenz      57        Chairman of the Board of Directors

James N. Perkins    63        President, Chief Executive Officer
                              and Director

Gary D. Penisten    65        Director

Howard W. Phillips  66        Director

Robert J. Wussler   58        Director

Benjamin Frank      62        Director

E. Donald Shapiro   65        Director

Darren M. Sardoff   31        Senior Vice President, Business
                              Affairs, Chief Financial Officer
                              and Secretary
</TABLE>

Robert H. Lenz,
Chairman of the Board of Directors

          Mr. Lenz has served as the Company's Chairman since
May, 1993.  From 1979 to 1991, Mr. Lenz was a principal, Creative
Director and co-founder with five partners of the advertising
firm of Backer & Spielvogel Inc.  After the merger of Backer &
Spielvogel with Ted Bates, Inc. in 1988, Mr. Lenz was Chairman
and Creative Director of Backer Spielvogel Bates U.S. until 1991. 
Subsequent to his departure from Backer Spielvogel Bates U.S. in
1991, Mr. Lenz has been pursuing personal interests including the
development of Cafe USA.

James N. Perkins,
President, Chief Executive Officer and Director

          Mr. Perkins has served as President, Chief Executive
Officer and Director of the Company since October 1, 1996. 
Mr. Perkins served as Executive Vice President and Chief
Operating Officer of the Company from February, 1996 to
October 1, 1996.  From 1988 to 1996, Mr. Perkins was President of
US Tel, Inc., a telecommunications development company
specializing in new media.  From 1985 to 1988, Mr. Perkins
organized and managed an interactive media research venture of
Citibank, NYNEX and RCA.  From 1981 to 1985, Mr. Perkins
organized and managed the cable television programming venture of
Hearst Corporation and ABC that led to the development of the
Arts & Entertainment and Lifetime Networks.  From 1980 to 1981,
Mr. Perkins created and produced "The Home Shopping Show," the
forerunner of The Home Shopping Network.  Mr. Perkins is a
graduate of Dartmouth College and a former Captain in the U.S.
Air Force.

Gary D. Penisten,
Director

          Mr. Penisten has been a director of the Company since
October, 1993.  Mr. Penisten was employed with General Electric
from 1953 to 1974, including as Manager of Finance for General
Electric's Power Generation Group from 1972 to 1974.  From 1974
to 1977 Mr. Penisten served as Assistant Secretary of the Navy,
Financial Management.  In 1977 he joined Sterling Drug, Inc.
where he was Senior Vice President, CFO, and member of the Board
of Directors of Sterling until 1988.  After Sterling Drug was
acquired by Eastman Kodak in 1988, Mr. Penisten remained with
Kodak for two years as CFO of the Health Group until he took
early retirement to pursue personal business interests in 1990. 
Mr. Penisten was a minority owner and director of Network
Communications, Inc. which in December, 1990 filed a petition
pursuant to Chapter 11 of the Federal Bankruptcy laws. 
Currently, Mr. Penisten is Chairman of the Board and a director
of Acme United Corporation and a Director of D.E. Foster
Partners, Inc.

Howard W. Phillips,
Director

          Mr. Phillips has been a director of the Company since
October, 1993.  From 1983 until August, 1995, Mr. Phillips was
Director of Corporate Finance at D.H. Blair Investment Banking
Corp.  Mr. Phillips was a partner and Director of Corporate
Finance of Oppenheimer & Co., Inc., an investment banking firm
from 1970 to 1980.  Mr. Phillips is currently a financial
consultant and private investor and is a director of Pioneer
Healthcare.

Robert J. Wussler,
Director

          Mr. Wussler has been a director of the Company since
October, 1993.  Mr. Wussler was President of CBS Sports and CBS
Television, Senior Executive Vice President with Turner
Broadcasting Systems (1980-1989), and CEO with Comsat Video
Enterprises (1989-1992).  Since leaving Comsat Video in 1992,
Mr. Wussler has remained active in the industry serving as
Treasurer to the Board of Governors of the National Cable
Television Association (NCTA), the Board of Governors of the
National Academy of Cable Programming (NACP) and the Board of
Advisors of the Cable Television Public Affairs Association
(CTPAA).  Mr. Wussler is currently the President and Chief
Executive Officer of New Venco, Inc., a private corporation owned
by ABC affiliated television stations organized to explore new
media ventures and is also a Director of the Nostalgia Channel, a
publicly held corporation.

Benjamin Frank,
Director

          Mr. Frank has been a Director of the Company since
October, 1995.  Currently, Mr. Frank, an Attorney, is the
Chairman of Benjamin Frank & Associates, a business engaged in
real estate development, international trade and mergers and
acquisitions.  Prior thereto, Mr. Frank had served as a Senior
Vice President of Allied Stores Corporation and on President
Reagan's Advisory Committee for Trade Negotiations.

E. Donald Shapiro,
Director

          Mr. Shapiro has been a Director of the Company since
October, 1995.  Mr. Shapiro is currently a Joseph Solomon
Distinguished Professor of Law at New York Law School and a
Supernumerary Fellow at St. Cross College at Oxford University. 
Mr. Shapiro is a member of the Board of Directors of Loral
Space & Communications, a NYSE company, Bank Leumi, Eyecare
Products PLC, a London Stock Exchange company, Kranzco Realty
Trust, a NYSE company, Vion, Inc., a NASDAQ company, Vascomedical
Products, Inc., a NASDAQ company, Telepad, Inc., a NASDAQ
company, Premier Laser Systems, Inc., a NASDAQ company and United
Industrial Corporation, a NYSE company.

Darren M. Sardoff,
Senior Vice President, Business Affairs, Chief Financial Officer
and Secretary

          Mr. Sardoff has served as Senior Vice President,
Business Affairs and Chief Financial Officer, since September
1995.  From 1993 to 1995, Mr. Sardoff was a Manager of Strategic
Planning and Business Development with the Warner Music Group (a
division of Time Warner Inc.) involved in the evaluation and
start-up of new media ventures.  Prior to Time Warner,
Mr. Sardoff was an Associate with the investment banking firm of
Alpine Capital Group Inc. from 1990 to 1993.  Prior thereto, he
held positions with the international accounting firm of Ernst &
Young.  Mr. Sardoff is a certified public accountant and holds a
Master of Business Administration degree from the Wharton School
of the University of Pennsylvania.

Beneficial Ownership Reports

          Section 16(a) of the Securities Exchange Act of 1934
requires the Company's directors and executive officers, and
persons who own more than ten percent of the Company's Common
Stock, to file with the Securities and Exchange Commission
("SEC") initial reports of ownership and reports of changes in
ownership of Common Stock and other securities of the Company. 
Such persons are required by the SEC to furnish the Company with
copies of all Section 16(a) forms that they file.

          To the Company's knowledge, during the year ended
December 31, 1996, based solely on a review of the copies of the
Section 16(a) reports furnished to the Company, all of the
Company's directors, officers and ten percent stockholders have
complied with Section 16(a) of the Exchange Act, except that
Messrs. Frank and Perkins were late in filing initial statements
of beneficial ownership on Form 3, Messrs. Lenz and Perkins were
each late in filing a Form 4 for one transaction, and
Mr. Penisten was late in filing a Form 5 for one transaction.

ITEM 10 - EXECUTIVE COMPENSATION

Executive Compensation

          The following table sets forth information for each of
the three years ended December 31, 1996, concerning compensation
for services in all capacities awarded to, earned by or paid to
(i) each person serving as the chief executive officer, and
(ii) the other executive officers of the Company who earned more
than $ 100,000 during 1996 (collectively, the "Named
Executives").  There were no other executive officers for whom
disclosure would have been provided but for the fact that such
individuals were not serving at December 31, 1996.

<TABLE>
<CAPTION>
                           Summary Compensation Table

                                                                                           Long-Term Compensation     
                                                        Annual Compensation                   Awards           Payouts
                                                                         Other                     Securities            All
                                                                         Annual                    Underlying            Other
                                                                        Compensa-   Restricted      Options/    LTIP     Compen-
                                                                         tion(1)    Stock Awards    SARs(2)    Payouts   sation
Name and Principal Position           Year    Salary ($)   Bonus($)        ($)          ($)           (#)        ($)       ($)  
<S>                                   <C>     <C>          <C>          <C>         <C>            <C>         <C>       <C>
Robert H. Lenz................        1996    $100,000     $  N/A       $  N/A      $   N/A          600,000   $ N/A     $ N/A
  Chairman of the                     1995      82,083        N/A          N/A          N/A            N/A       N/A       N/A
  Board and Director                  1994     118,749        N/A          N/A          N/A            N/A       N/A       N/A

James N. Perkins..............        1996     151,667        N/A          N/A          N/A          500,000     N/A
  President and Chief                 1995       N/A          N/A          N/A          N/A            N/A       N/A       N/A
  Executive Officer                   1994       N/A          N/A          N/A          N/A            N/A       N/A       N/A

Darren M. Sardoff.............        1996     155,000        N/A          N/A          N/A          100,000     N/A       N/A
  Chief Financial Officer             1995      29,583        N/A          N/A          N/A            N/A       N/A       N/A
                                      1994       N/A          N/A          N/A          N/A            N/A       N/A       N/A

Stephen G. Bowen..............        1996     175,000        N/A          N/A          N/A          100,000     N/A       N/A
  Former President and                1995     165,208        N/A            A          N/A            N/A       N/A       N/A
  Chief Executive Officer             1994      97,920        N/A            A          N/A            N/A       N/A       N/A

_______________
</TABLE>

"N/A" indicates that the column is not applicable because no
compensation of the category required to be disclosed in the
column was received.

"A" indicates that the column is applicable but that no amount is
required to be disclosed.

(1)  The costs of certain perquisites and other personal benefits
     are not included because they did not exceed, in the case of
     each Named Executive, the lesser of $50,000 or 10% of the
     total of annual salary and bonus reported in the columns
     above.

(2)  Indicates number of shares for which options were granted
     during the applicable periods.

     The following table sets forth information concerning grants
of stock options for the fiscal year ended December 31, 1996 to
the Named Executives.
<PAGE>
              Option/SAR Grants in Last Fiscal Year

<TABLE>
<CAPTION>
                             Individual Grants   
                         Number of     % of Total
                        Securities      Options/      Number of
                        Underlying        SARs         Shares/
                         Options/      Granted to     Exercise
                           SARs         Employees      or Base
                         Granted        in Fiscal     Price(2)     Expiration
                         (#)(1)           Year         ($/Sh)         Date   
<S>                     <C>            <C>          <C>            <C>
Robert H. Lenz.......    600,000          43.17     600,000/2.00    11/14/06
James N. Perkins.....    500,000          35.97      25,000/2.81     2/06/06
                                                    475,000/2.00    11/14/06
Darren M. Sardoff....    100,000           7.19      85,000/2.81     2/06/06
                                                     15,000/2.00    11/14/06
Stephen G. Bowen.....    100,000           7.19     100,000/2.00    11/14/06
_______________
</TABLE>

(1)  All amounts represent stock options to purchase shares of
     Series A Common Stock granted under the terms of the 1995
     Employee Stock Option Plan (the "Plan").  No SARs or SARs
     granted in tandem with options were granted during 1996. 
     Options terminate three months (but not later than the
     scheduled termination date) after the date on which
     employment is terminated (whether such termination be
     voluntary or involuntary) other than by reason of death or
     disability.  The option terminates one year from the date of
     termination due to death or disability (but not later than
     the scheduled termination date).

(2)  Under the terms of the Plan, the exercise price per share
     must equal the fair market value on the date the option is
     granted.  Certain options granted to Messrs. Perkins and
     Sardoff were repriced.  See " -- Compensation Committee
     Report on Option Repricing," herein.  The exercise price may
     be paid in cash, in shares of Series A Common Stock valued
     at fair market value on the date of exercise, or in any
     combination of cash and shares of Series A Common Stock.

          The following table sets forth information concerning
the exercise of options to purchase shares of Series A Common
Stock by the Named Executives during the fiscal year ended
December 31, 1996, as well as the number of securities underlying
unexercised options and potential value of unexercised options
(both options which are presently exercisable and options which
are not presently exercisable) as of December 31, 1996.

<TABLE>
<CAPTION>
               Aggregated Option/SAR Exercises in Last Fiscal Year
                     and Fiscal Year-End Option/SAR Value(1)

                                                          Number of         Value of
                                                          Securities        Unexercised
                                                          Underlying        In-the-Money
                                                          Options/SARs at   Options/SARs at
                                                          Fiscal Year-End   Fiscal Year-End
                                                              (#)                 ($)(2)
                       Shares Acquired   Value Realized   Exercisable/      Exercisable/
     Name              on Exercise(#)          ($)         Unexercisable     Unexercisable 
<S>                    <C>               <C>              <C>               <C>
Robert H. Lenz.......         0                $0            0/600,000          $0/0
James N. Perkins.....         0                 0         200,000/300,000        0/0
Darren M. Sardoff....         0                 0          85,000/15,000         0/0
Stephen G. Bowen.....         0                 0            100,000/0           0/0
</TABLE>
_____________________

(1)  All amounts represent stock options to purchase shares of
     Series A Common Stock.  No SARs or SARs granted in tandem
     with stock options were either exercised during 1996 or
     outstanding at fiscal year-end 1996.

(2)  "In-the-money options" are stock options with respect to
     which the market value of the underlying shares of Series A
     Common Stock exceeded the exercise price at December 31,
     1996.  The value of such options is determined by
     subtracting the aggregate exercise price for such options
     from the aggregate fair market value of the underlying
     shares of Series A Common Stock on December 31, 1996.

Employment Contracts, Termination of Employment and Change-in-
Control Arrangements

          Effective October 1, 1996, Robert H. Lenz, the
Company's Chairman, entered into a three-year employment
agreement with the Company which provides for:  (1) a base salary
of $100,000 per year, with increases in subsequent years as may
be determined in the discretion of the Board of Directors,
(2) bonus compensation as determined from time to time in the
discretion of the Board of Directors, (3) a special bonus
consisting of 3.75% of the fair market value of any strategic
alliance or merger or acquisition transaction, (4) options to
purchase 600,000 shares of Series A Common Stock at an exercise
price of $2.00 per share, with certain vesting provisions as
described below, (5) severance payments upon a change in control
of the Company, termination of employment or voluntary
resignation for "good reason" (as defined in the agreement) equal
to 2.99 times his then base compensation, and (6) benefits
provided to all other senior management employees of the Company.

          Effective October 1, 1996, James N. Perkins, President
and Chief Executive Officer, entered into an employment agreement
with the Company on substantially similar terms to that between
the Company and Mr. Lenz except that Mr. Perkins will receive
base compensation of $150,000 and options to purchase 500,000
shares of Series A Common Stock at an exercise price of $2.00 per
share, with certain vesting provisions as described below.

          The options granted to Messrs. Lenz and Perkins under
their employment agreements shall vest in three equal annual
installments on November 14, 1997, 1998 and 1999 provided that
(a) the first installment shall vest if and only if the Company
(i) reports positive earnings before extraordinary items,
interest, taxes, depreciation and amortization for the fiscal
year ending December 31, 1997, or (ii) reports earnings (before
extraordinary items) per primary share ("EPS") of at least $0.35
for the fiscal year ending December 31, 1998, or (iii) reports
EPS of at least $0.60 for the fiscal year ending December 31,
1999, or (iv) reports EPS of at least $0.90 for the fiscal year
ending December 31, 2000, (b) the second installment shall vest
if and only if the Company achieves a target set forth in
preceding sub-clauses (a)(ii), (a)(iii) or (a)(iv), and (c) the
third installment shall vest if and only if the Company achieves
a target set forth in sub-clause (a)(iii) or (a)(iv).

          On October 9, 1995, the Company entered into an
employment agreement with Darren M. Sardoff as the Senior Vice
President, Business Affairs and Chief Financial Officer of the
Company.  Under the employment agreement, Mr. Sardoff is entitled
to a minimum base salary of $150,000 per year, and bonus and
incentive compensation as determined by the Board of Directors. 
The contract will continue from year to year unless terminated by
either party.  Under the employment agreement, Mr. Sardoff
received options to purchase 100,000 shares of Series A Common
Stock at an exercise price equal to the fair market value on the
date of the grant.  Under his employment agreement, Mr. Sardoff
is entitled to severance payments of $150,000 and 100,000 options
on a fully-vested basis if his employment is terminated by the
Company other than for "Cause" (as defined in the agreement), and
a severance payment of the lesser of $50,000 or the balance of
his year salary and 50,000 options which vested as of January 1,
1996 if his employment is terminated by him for other than
"Cause."  On February 6, 1996, the Compensation Committee of the
Board of Directors determined to replace the options granted to
Mr. Sardoff with an exercise price of $5.00 per share with an
option with an exercise price of $2.81 per share, based upon the
last reported trade price of the Series A Common Stock at the
time of such replacement.  Prior to Completion of the Private
Offering on November 14, 996, the Compensation Committee of the
Board of Directors determined to replace options to purchase
15,000 shares of Series A Common stock with an exercise price of
$2.81 per share with options with an exercise price of $2.00 per
share.  See " -- Compensation Committee Report on Option
Repricing," herein.

          On October 24, 1996, the Company entered into a
severance agreement with Stephen Bowen, former President and
Chief Executive Officer of the Company.  Under the severance
agreement, Mr. Bowen is entitled to receive severance pay of
$175,000 which is payable by the Company in 52 weekly
installments beginning on October 1, 1996.  In addition,
Mr. Bowen was granted options to purchase 100,000 shares of
Series A Common Stock which are fully vested and immediately
exercisable at the price of $2.00 per share.

Compensation Committee Report on Option Repricing

          Prior to the completion of the Company's Private
Offering on November 14, 1996, the Company agreed to (i) reset
the exercise price of all outstanding options to purchase
200,000 shares of Series A Common Stock granted to Mr. Perkins
from $2.81 per share to $2.00 per share, and (ii) reset the
exercise price of all outstanding options to purchase
15,000 shares of Series A Common Stock granted to Mr. Sardoff
from $2.81 per share to $2.00 per share.  The Compensation
Committee believes that Mr. Perkins and Mr. Sardoff have each
made valuable contributions to the Company and accordingly
determined in November, 1996 to reset the exercise price of their
outstanding options.  The reset exercise price of the options is
equal to the closing bid price of the Series A Common Stock in
the over-the-counter market as reported by Nasdaq on November 13,
1996, the last business day immediately preceding the date on
which the Private Offering was completed.

Directors' Compensation

          In 1996, non-employee directors of the Company who were
not also holders of Series B Common Stock and have not been
nominated pursuant to a contractual undertaking by the Company
receive a fee of $1,000 per meeting, $500 for each committee
meeting attended in conjunction with a Board meeting and $1,000
per committee meeting attended not in conjunction with a Board
meeting.  In addition, in July 1996, the Company granted options
to purchase 90,000 shares of Series A Common Stock at an exercise
price of $5.00 to each of Messrs. Penisten, Phillips, Wussler,
Frank and Shapiro pursuant to the Company's Director Stock Option
Plan.

ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

          The following table sets forth, as of April 1, 1997,
the ownership of the Company's Common Stock by (i) each person
who is known by the Company to own, of record or beneficially,
more than five percent of the Company's Series A Common Stock or
Series B Common Stock, (ii) each of the Company's Directors and
Executive Officers, and (iii) all Directors and Executive
Officers as a group.  Except as otherwise indicated, the
stockholders listed in the table have sole voting and investment
powers with respect to the shares indicated.

<TABLE>
<CAPTION>

                                     Shares of    Percentage of      Shares of    Percentage of
                                     Series A        Series A        Series B        Series B
                                   Common Stock    Common Stock    Common Stock    Common Stock
                                   Beneficially    Beneficially    Beneficially    Beneficially   Voting
       Name(1)                       Owned(2)          Owned      Owned(2)(3)(4)     Owned(5)     Control
--------------------------------   ------------   -------------   --------------  -------------  ---------
<S>                                <C>            <C>             <C>             <C>            <C>
Robert H. Lenz.................    1,024,471(6)        12.89        440,748(7)        41.39        21.73%

Stephen G. Bowen...............      349,045(8)         4.78        206,545(9)        19.40         9.45

Jeffrey Steinberg..............      169,545(10)        2.38        163,386(9)        15.34         6.70

Joseph Mercaldo................      188,786(11)        2.64        178,786(9)        16.79         7.36

Harvey S. Wilson...............      101,526(12)        1.44         75,300(13)        7.07         3.16

Gary Penisten..................       60,000(14)          *             -0-             -0-            *

Howard W. Phillips.............       93,488(15)        1.32            -0-             -0-            *

Robert S. Wussler..............       60,000(14)          *             -0-             -0-            *

Benjamin Frank.................       45,000(16)          *             -0-             -0-            *

E. Donald Shapiro..............       45,000(16)          *             -0-             -0-            *

James Perkins..................      215,873(17)        2.79            -0-             -0-         1.73

Darren M. Sardoff..............      100,000(18)        1.42            -0-             -0-            *

All Officers and Directors
  as a Group (8 persons).......    1,643,832(19)       19.22%       440,748           41.39%       25.36%

</TABLE>
_______________

*    Denotes less than 1%

(1)  Except as otherwise indicated, the address of all of the
     named individuals is c/o Food Court Entertainment Network,
     Inc., 220 East 42nd Street, New York, New York 10017.

(2)  The securities "beneficially owned" by an individual are
     determined in accordance with the definition of "beneficial
     ownership" set forth in the regulations of the Securities
     and Exchange Commission.  Accordingly, they may include
     securities owned by or for, among others, the wife and/or
     minor children of the individual and any other relative who
     has the same home as such individual, as well as other
     securities as to which the individual has or shares voting
     or investment power or has the right to acquire under
     outstanding stock options, warrants or convertible
     securities within 60 days after the date of this table. 
     Beneficial ownership may be disclaimed as to certain of the
     securities.

(3)  Certain holders of Series B Common Stock have placed a
     portion of their shares of Series B Common Stock in escrow
     and may vote such shares but not transfer them as of this
     time ("Escrow Shares").

(4)  Each share of Series B Common Stock is entitled to five
     votes per share, is convertible into one share of Series A
     Common Stock at the option of the holder, and will
     automatically convert into an equivalent number of shares of
     Series A Common Stock upon the sale or transfer by the
     record holder to any person other than another holder of
     Series B Common Stock.

(5)  Excludes 20,135 shares of Series B Common Stock held in
     treasury.

(6)  Includes warrants to purchase 542,850 shares of Series A
     Common Stock and 440,748 shares of Series A Common Stock
     which may be acquired upon the conversion of Series B Common
     Stock.  Does not include (i) 55,668 shares of Series A
     Common Stock underlying warrants which are not exercisable
     until November 14, 1997 or (ii) 600,000 shares of Series A
     Common Stock underlying unvested options.

(7)  Includes 241,180 Escrow Share.

(8)  Includes (i) 100,000 shares of Series A Common Stock which
     may be acquired upon the exercise of currently exercisable
     options, (ii) 30,000 shares of Series A Common Stock
     underlying currently exercisable warrants and (ii) 206,545
     shares of Series A Common Stock which may be acquired upon
     the conversion of Series B Common Stock.

(9)  Includes 106,545 Escrow Shares.

(10) Includes 163,386 shares of Series A Common Stock which may
     be acquired upon the conversion of Series B Common Stock.

(11) Includes 178,786 shares of Series A Common Stock which may
     be acquired upon the conversion of Series B Common Stock.

(12) Includes warrants to purchase 14,026 shares of Series A
     Common Stock and 75,300 shares of Series A Common Stock
     which may be acquired upon the conversion of Series B Common
     Stock.

(13) Includes 75,300 Escrow Shares.

(14) Represents 60,000 shares of Series A Common Stock which may
     be acquired upon the exercise of currently exercisable
     options.  Does not include 60,000 shares of Series A Common
     Stock underlying unvested options.

(15) Represents 93,488 shares of Series A Common Stock which may
     be acquired upon the exercise of currently exercisable
     options and warrants.  Does not include 154,560 shares of
     Series A Common Stock which may be acquired upon exercise of
     a unit purchase option not exercisable until October, 1998. 
     Does not include 60,000 shares of Series A Common Stock
     underlying unvested options.

(16) Represents 45,000 shares of Series A Common Stock which may
     be acquired upon the exercise of currently exercisable
     options.  Does not include 60,000 shares of Series A Common
     Stock underlying unvested options.

(17) Includes 200,000 shares of Series A Common Stock which may
     be acquired upon the exercise of currently exercisable
     options.  Does not include (i) 55,668 shares of Series A
     Common Stock underlying warrants which are not exercisable
     until November 14, 1997 or (ii) 300,000 shares of Series A
     Common Stock underlying unvested stock options.

(18) Represents 100,000 shares of Series A Common Stock which may
     be acquired upon the exercise of currently exercisable
     options.

(19) Includes 964,338 shares of Series A Common Stock which may
     be acquired upon the exercise of currently exercisable
     options and warrants and 629,534 shares of Series A Common
     Stock which may be acquired upon conversion of Series B
     Common Stock.

ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

          Not Applicable.
<PAGE>
ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K

          (a)  Exhibits

Number         Title

3.1       Amended and Restated Certificate of Incorporation of
          the Company

3.2*      Bylaws of the Company

4.1*      Specimen Form of Series A Common Stock Certificate

4.2*      Forms of Unit Purchase Options

4.3*      Form of Warrant Agreement, with Specimen Form of
          Class A and Class B Warrant Certificate attached

10.1*     Stock Option Plan for Consultants and Advisers

10.4      Employment Agreement with Robert H. Lenz**

10.5      Employment Agreement with James N. Perkins**

10.6      Employment Agreement with Darren M. Sardoff
          (incorporated by reference from Exhibit 10.10 to the
          Registrant's Annual Report on Form 10-KSB for the
          fiscal year ended December 31, 1995)**

10.7      Sales Representation Agreement with ABC New Media Sales

10.8      Financial Advisory Agreement with Furman Selz LLC

10.9*     Escrow Agreement

10.10*    Employee Stock Option Plan**

10.11     Severance Agreement with Stephen G. Bowen.**

23        Consent of Richard A. Eisner & Company, LLP

27        Financial Data Schedule

____________
 *   Incorporated by reference from Amendment No. 1 to
     Registration Statement on Form SB-2 (File No. 33-91054).

**   Denotes a management contract or compensatory plan or
     arrangement.

          (b)  Reports on Form 8-K

               On December 18, 1996, the Company filed a Current
Report on Form 8-K, dated November 26, 1996, reporting
information under Items 5 and 7.  No Financial Statements were
included in the Report.
<PAGE>
                           SIGNATURES

          In accordance with Section 13 or 15(d) of the Exchange
Act, the Registrant caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                              FOOD COURT ENTERTAINMENT NETWORK,
                              INC.

                              By: /s/ James N. Perkins           
                                   James N. Perkins, President
                                   and Chief Executive Officer

                              Date:  April 11, 1997


          In accordance with the Exchange Act, this report has
been signed below by the following persons on behalf of the
Registrant and on the dates indicated.
<TABLE>
<CAPTION>
Signature              Capacity                    Date
<S>                    <C>                         <C>
/s/ James N. Perkins   President, Chief Executive  April 11, 1997
James N. Perkins       Officer, Director (Principal
                       Executive Officer)

/s/ Robert H. Lenz     Chairman of the Board of    April 11, 1997
Robert H. Lenz         Directors

/s/ Darren M. Sardoff  Senior Vice President and   April 11, 1997
Darren M. Sardoff      Chief Financial Officer
                       (Principal Financial and
                       Accounting Officer)

/s/ Benjamin Frank     Director                    April 11, 1997
Benjamin Frank

/s/ Gary D. Penisten   Director                    April 11, 1997
Gary D. Penisten

/s/ Howard W. Phillips Director                    April 11, 1997
Howard W. Phillips

/s/ E. Donald Shapiro  Director                    April 11, 1997
E. Donald Shapiro

/s/ Robert S. Wussler  Director                    April 11, 1997
Robert S. Wussler
</TABLE>
<PAGE>
                          EXHIBIT INDEX

Number         Title

3.1       Amended and Restated Certificate of Incorporation of
          the Company

3.2*      Bylaws of the Company

4.1*      Specimen Form of Series A Common Stock Certificate

4.2*      Forms of Unit Purchase Options

4.3*      Form of Warrant Agreement, with Specimen Form of
          Class A and Class B Warrant Certificate attached

10.1*     Stock Option Plan for Consultants and Advisers

10.4      Employment Agreement with Robert H. Lenz**

10.5      Employment Agreement with James N. Perkins**

10.6      Employment Agreement with Darren M. Sardoff
          (incorporated by reference from Exhibit 10.10 to the
          Registrant's Annual Report on Form 10-KSB for the
          fiscal year ended December 31, 1995)**

10.7      Sales Representation Agreement with ABC New Media Sales

10.8      Financial Advisory Agreement with Furman Selz LLC

10.9*     Escrow Agreement

10.10*    Employee Stock Option Plan**

10.11     Severance Agreement with Stephen G. Bowen.**

23        Consent of Richard A. Eisner & Company, LLP

27        Financial Data Schedule

____________
 *   Incorporated by reference from Amendment No. 1 to
     Registration Statement on Form SB-2 (File No. 33-91054).

**   Denotes a management contract or compensatory plan or
     arrangement.