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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-K/A

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2001
Commission File number 0-24294

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Media Arts Group, Inc.(Exact name of registrant as specified in its charter)

Delaware

77-0354419(State or other jurisdiction
of incorporation or organization)

(I.R.S. Employer Identification No.)900 Lightpost Way
Morgan Hill, California

95037(Address of principal executive offices)

(Zip code)


Registrant's telephone number, including area code:(408) 201-5000

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, $0.01 Par Value(Title of class)

Securities
registered pursuant to section 12(g) of the Act:None

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes /x/  No / /

Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statement incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

The
aggregate market value of the voting stock held by non-affiliates of the registrant, based upon the closing price of the Common Stock on May 31, 2001, as
reported on the New York Stock Exchange was approximately $21,348,000. Shares of Common Stock held by each executive officer and director and by each person who owns 5% or more of the outstanding
Common Stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

The
number of shares of the registrant's $0.01 par value Common Stock outstanding on May 31, 2001, was 13,187,549.

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EXPLANATORY NOTE

The registrant amends its Annual Report on Form 10-K for the fiscal year ended March 31, 2001, filed with the Securities and Exchange
Commission ("SEC") on June 29, 2001, by adding the following Items: (1) Part III, Item 10, Directors and Executive Officers of the Registrant, (2) Part III, Item 11,
Executive Compensation, (3) Part III, Item 12, Security Ownership of Certain Beneficial Owners and Management and (4) Part III, Item 13, Certain Relationships and Related
Transactions. No other changes were made.

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PART III

Item 10. Directors and Executive Officers of the Registrant

Set forth below is certain information relating to the Company's executive officers and directors as of July 30, 2001.

|Name                   |  | Age |  | Position                                                                                    
|---------------------- |  | --- |  | --------------------------------------------------------------------------------------------
|Anthony D. Thomopoulos |  | 63  |  | Chairman of the Board, Director and Interim President and Chief Executive Officer           
|Raymond A. Peterson    |  | 55  |  | Vice Chairman and Director                                                                  
|Kenneth E. Raasch      |  | 41  |  | Chairman Emeritus and Director                                                              
|Thomas Kinkade         |  | 43  |  | Director and Art Director                                                                   
|Herbert D. Montgomery  |  | 58  |  | Director and Senior Vice President, Chief Financial Officer and Treasurer                   
|Norman A. Nason        |  | 60  |  | Director                                                                                    
|W. Michael West        |  | 51  |  | Director                                                                                    
|Richard F. Barnett     |  | 47  |  | Senior Vice President, Retail Development                                                   
|Timothy S. Guster      |  | 43  |  | Senior Vice President, General Counsel, Chief Administrative Officer and Corporate Secretary
|Michael J. Catelani    |  | 34  |  | Vice President, Finance                                                                     
|J. Edward Hollender    |  | 60  |  | Executive Vice President, Chief Operating Officer                                           
|John R. Lackner        |  | 62  |  | Senior Vice President, Chief Operations Officer                                             

Anthony
D. Thomopoulos has been the Chairman of the Board of Directors and Interim President and Chief Executive Officer of the Company since June 2001 and a member of the
Board of Directors since July 2000. Mr. Thomopoulos is currently Vice Chairman of OnVANTAGE, Inc. Previously Mr. Thomopoulos was the Chief Executive Officer of MTM
Entertainment and President of The Family Channel, both subsidiaries of International Family Entertainment, Inc. From 1991 to 1995 he was President of Amblin Television, a division of Amblin
Entertainment. In 1989 he founded Thomopoulos Productions, an independent motion picture and television production company. In 1986 he was named
Chairman of the Board of Directors of United Artist Pictures. Prior thereto, he spent 12 years at ABC in positions including Vice President of Prime Time Programs and President of ABC Broadcast
Group.

Raymond
A. Peterson has been a member of the Board of Directors and has been the Vice Chairman of the Board of Directors since January 1999. He was interim Corporate Secretary
from August 1999 to November 1999 and interim Chief Financial Officer from December 1999 to March 2000. He was the President and Chief Executive Officer of the Company from
June 1998 to July 1999. He was the Senior Vice President and Chief Financial Officer of the Company from May 1993 to May 1998. He was the Chief Executive Officer of
Peterson, Sense & Company, a certified public accounting firm, for the previous 15 years, during which time he provided accounting, tax and financial planning services for the Company.
Prior to that, Mr. Peterson was the Corporate Tax Manager for Raychem Corporation, a multi-national manufacturing corporation, and a Senior Tax Accountant with Peat Marwick & Mitchell,
currently KPMG.

Kenneth
E. Raasch co-founded Media Arts, through a preceding company in 1990 and has been a member of the Board of Directors since its inception. Mr. Raasch has
served as the Chairman Emeritus since September 2000. He served as Chairman of the Board of Directors since the Company's inception until September 2000. In addition, he was President
and Chief Executive Officer of the Company from March 1990 to May 1997 and Chief Executive Officer from May 1997 until October 1997. Mr. Raasch was an independent
consultant to the Company from May 1999 to December 2000. Currently, Mr. Raasch is the Chairman of the Board of Directors of

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OnVANTAGE, Inc. Prior to joining Media Arts, Mr. Raasch was the President and majority shareholder of First Med Corp., Inc., a medical billing and management company, from
August 1988 until January 1990 when it was sold to Medaphis Corp., a public company.

Thomas
Kinkade co-founded Media Arts through a preceding company in 1990 and has been the Art Director and a member of the Board of Directors since its inception.
Mr. Kinkade has provided artwork to the Company for its productions since the Company's inception. In addition, Mr. Kinkade's role includes providing strategic vision for the Thomas
Kinkade brand, assisting in product development and communicating the Company's brand message through public appearances and books. Prior to March 1990, Mr. Kinkade was a
self-employed artist.

Herbert
D. Montgomery has been a member of the Board of Directors of the Company since July 2000 and in May 2001, joined the Company as Senior Vice President, Chief
Financial Officer and Treasurer. Prior to joining the Company, he was Executive Vice President, Chief Financial Officer and Treasurer of Standard Media International from November 1999 to
May 2000. From January 1998 to November 1999, he was the Senior Vice President, Chief Financial Officer and Treasurer of Cotelligent, Inc. From June 1994 to
January 1998, Mr. Montgomery was Senior Vice President, Chief Financial Officer and Treasurer of Guy F. Atkinson. Mr. Montgomery has specialized in high growth,
high technology and turn-around environments. He has taken three companies public and has served as Chief Financial Officer of technology, product and services companies over the last
20 years.

Norman
A. Nason has been a member of the Board of Directors of the Company since April 1993. Mr. Nason is President of Saratoga Commercial Real Estate Brokerage
Corporation and Saratoga Management Corporation, companies that he founded in 1976.

W.
Michael West has been a member of the Board of Directors of the Company since September 1998. Mr. West currently serves as Chairman of the Board of Directors of VINA
Technologies. In addition, he serves on the Boards of Directors of several private companies and on advisory boards of three non-profit organizations. From September 1997 to
January 1998, he served as Executive Vice President of Lucent Technologies following its acquisition of Octel Communications Corporation. From September 1986 to September 1997, he
served at Octel Communications Corporation as Vice Chairman of the Board of Directors and President and Chief Operating Officer from 1995 to 1998 and Executive Vice President, Worldwide Sales and
Marketing from 1986 to 1995.

Richard
F. Barnett has been the Senior Vice President of Retail Development for MAGI Sales, Inc., a wholly-owned subsidiary of the Company, since February 2000. He was
the Vice President of Retail Development for MAGI Sales, Inc. from June 1998 to February 2000. Mr. Barnett was the Vice President of Retail Development of the Company from
October 1995 to May 1998. Prior thereto, Mr. Barnett operated seven independently owned Thomas Kinkade Galleries in California. He previously held various management positions
over a 20 year period with the Kirby Company.

Timothy
S. Guster has been the Senior Vice President, General Counsel, Chief Administrative Officer and Corporate Secretary of the Company since November 1999. From
July 1989 to November 1999, Mr. Guster was Vice President and General Counsel for the Scott Fetzer Company, a wholly-owned subsidiary of Berkshire Hathaway Inc. Prior
thereto, he was an associate attorney with Roetzel & Andress in Akron, Ohio where he specialized in trial and appellate work.

Michael
J. Catelani has been the Vice President of Finance of the Company since August 1999 as well as the Principal Accounting Officer since October 1999. In addition,
he served as the Principal Financial Officer from October 1999 to December 1999 and from September 2000 to May 2001. He was Corporate Controller of the Company from
June 1999 to August 1999 and he was the Controller of Lightpost Publishing, Inc., a wholly-owned subsidiary of the Company, from May 1998 to June 1999. Prior to
joining the Company, Mr. Catelani held various management positions in finance and

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operations at Air Toxics Ltd., an environmental laboratory, and Alldata LLC, an automotive repair information database developer. Prior thereto, he was a Senior Auditor with Ernst &
Young LLP.

J.
Edward Hollender has been the Executive Vice President and Chief Operating Officer of the Company since June 2000. He was the Senior Vice President and Chief Information
Officer/E-Business Officer of the Company from November 1999 to June 2000. Prior to joining Media Arts, Mr. Hollender was a private consultant specializing in
e-business, technology and direct marketing strategy. He has held the position of Vice President and Chief Information Officer for The Franklin Mint, The Bradford Exchange, Metromail (now
part of Experian), an international direct marketing service business, and the Signature Group, a direct marketing financial services business.

John
R. Lackner has been the Senior Vice President and Chief Operations Officer of Lightpost Publishing, Inc. since June 2000. He was the Senior Vice President and Chief
Operating Officer of Lightpost Publishing, Inc. from June 1998 to June 2000. He was the Senior Vice President and Chief Operating Officer of the Company from October 1997
to May 1998. Prior to joining the Company, Mr. Lackner was employed for over 25 years with the Kirby Company, an established manufacturer and retailer of quality vacuum cleaners.
His most recent position with the Kirby Company was as Senior Vice President of Research, Product Development and Technology, which position he had held since 1990. Mr. Lackner also served as a
Vice President in manufacturing and production for the Kirby Company from 1981 to 1990.

There
are no family relationships between the directors and officers of the Company.

Section 16(A) Beneficial Ownership Reporting Compliance

During the fiscal year ended March 31, 2001 all of the officers, directors and 10% stockholders of the Company complied with requirements for reporting
ownership and changes in ownership of Company Common Stock under Section 16(a) of the Securities Act of 1934.

Item 11. Executive Compensation

Executive Compensation Summary

The table below shows, for the last three fiscal years, compensation information for the Company's Chief Executive Officer, the next four most highly
compensated executive officers and individuals for whom disclosure would have been required but for the fact that they were not executive officers at the end of the fiscal year ended March 31,
2001. All of these individuals are referred to as the "Named Officers." On June 18, 2001, Craig A. Fleming resigned as President and Chief Executive Officer of the
Company and Anthony D. Thomopoulos was appointed as Interim President and Chief Executive Officer of the Company.

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SUMMARY COMPENSATION TABLE

|                                                                                                   |  |                |  | Annual Compensation     |  | Long-Term
Compensation
Awards |           |                     
|-------------------------------------------------------------------------------------------------- |  | -------------- |  | ----------------------- |  | ----------------------------- | --------- | --------------------
|
|Craig A. Fleming
President & Chief
Executive Officer                                               |  | 2001
2000
1999 |  | 392,000
275,000
259,000 |  | 245,016
183,619
326,436       |           | 22,312
24,158
21,429
|Richard F. Barnett
Senior Vice President,
Retail Development                                       |  | 2001
2000
1999 |  | 132,000
147,625
207,000 |  | 2,419,022
2,101,323
1,921,422 | (5)(5)(5) | 9,244
10,529
11,533 
|J. Edward Hollender
Executive Vice President & Chief Operating Officer                             |  | 2001           |  | 215,000                 |  | 127,207                       |           | 37,458              
|Timothy S. Guster
Senior Vice President,
General Counsel, Chief
Administrative Officer & Secretary |  | 2001           |  | 212,499                 |  | 124,087                       |           | 29,605              
|John R. Lackner
Senior Vice President & Chief Operations Officer                                   |  | 2001
2000      |  | 203,750
175,000         |  | 117,842
107,111               |           | 10,354
12,576       
|Patricia A. Watson (7)
Vice President, Sales                                                       |  | 2001           |  | 225,000                 |  | 148,067                       | (8)       | 11,124              

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Option Grants

The table below shows stock option grants to the Named Officers during the year ended March 31, 2001:

|                    |  |        |  |      |  |      |  |          |  | Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Option Term (3)
|------------------- |  | ------ |  | ---- |  | ---- |  | -------- |  | --------------------------------------------------------------------------------------------------
|
|
|
|Craig A. Fleming    |  |       |  |     |  |     |  |         |  |                                                                                                  
|Richard F. Barnett  |  |       |  |     |  |     |  |         |  |                                                                                                  
|J. Edward Hollender |  | 50,000 |  | 19.6 |  | 5.25 |  | 11/16/10 |  | 165,085                                                                                           
|Timothy S. Guster   |  | 30,000 |  | 11.8 |  | 5.25 |  | 11/16/10 |  | 99,051                                                                                            
|John R. Lackner     |  |       |  |     |  |     |  |         |  |                                                                                                  
|Patricia A. Watson  |  |       |  |     |  |     |  |         |  |                                                                                                  

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Aggregated Option Exercises and Fiscal Year End Option Values

The following table shows stock option exercises during fiscal year 2001 and the value of unexercised stock options held by the Named Officers on
March 31, 2001.

|                    |  |   |  |   |  | Number of Unexercised
Options Held at
March 31, 2001 (1) |  | Value of Unexercised
In-The-Money Options at
March 31, 2001 (2)
|------------------- |  | - |  | - |  | -------------------------------------------------------- |  | ---------------------------------------------------------------
|
|
|Craig A. Fleming    |  |  |  |  |  | 229,512                                                  |  | 200,488                                                        
|Richard F. Barnett  |  |  |  |  |  |                                                         |  |                                                               
|J. Edward Hollender |  |  |  |  |  | 16,664                                                   |  | 83,336                                                         
|Timothy S. Guster   |  |  |  |  |  | 16,664                                                   |  | 63,336                                                         
|John R. Lackner     |  |  |  |  |  | 86,265                                                   |  | 59,735                                                         
|Patricia A. Watson  |  |  |  |  |  | 28,810                                                   |  | 74,190                                                         

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Compensation of Directors

The Company does not pay directors who are also officers of the Company additional compensation for their service as directors. In fiscal 2001, compensation
for directors who were not employees of the Company or any of its subsidiaries, also called "non-employee directors," included the following:



Under
the Media Arts Group, Inc. 1998 Stock Incentive Plan, non-employee directors receive an annual, automatic grant of an option to purchase 5,000 shares of
common stock at 85% of the fair market value of the Company's common stock on the date of grant. "Fair market value" is defined in the Media Arts Group, Inc. 1998 Stock Incentive Plan as the
closing price of the Company's stock on the date the option is granted. In fiscal 2001, the annual, automatic option grant to non-employee directors of 5,000 shares of common stock was
made on September 29, 2000, at an exercise price of $2.86875 per share.

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

Richard F. Barnett, Senior Vice President of Retail Development of MAGI Sales, Inc. entered into a three year employment agreement effective as of
April 1, 1996. The agreement provides for four options of three years each to extend the term of the employment agreement. Mr. Barnett developed the branded Thomas Kinkade Signature
Gallery retail concept as an independent entrepreneur. The Company employed Mr. Barnett to develop the independently owned Thomas Kinkade Signature Gallery retail concept
nationally. The agreement provides for an annual base salary of $228,000 during the initial term of the employment agreement and an annual base salary of $132,000 during any renewal term. The
agreement provides for, among other benefits, a commission plan which pays Mr. Barnett a commission based on the Company's sales to Thomas Kinkade Signature Galleries as well as the annual
growth in such sales.

John
R. Lackner, Senior Vice President and Chief Operations Officer of Lightpost Publishing, Inc. entered into a five year employment agreement effective October 10, 1997. The
agreement provides for an annual base salary of $175,000, ($205,000 effective April 2000) the opportunity to participate in any

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bonus plan adopted for the benefit of senior executives, a $5,000 art allowance, a relocation expense payment and a four month living allowance, in addition to other benefits. The Company also granted
to
Mr. Lackner under the agreement an option to purchase 15,000 shares of the Company's common stock at fair market value on the effective date of the agreement and an option to purchase 18,000
shares of the Company's common stock at fair market value on October 29, 1997.

The
employment agreements of Messrs. Barnett and Lackner each provide for the officer to receive all salary and bonus payments that would have been payable to him for the
remaining term of the agreement after a "Change in Control" which provides "Good Reason" for the officer to terminate his employment. "Good Reason" is defined to include, among other things, the
assignment to duties inconsistent with his senior executive status, a reduction in his base salary, a relocation of the officer or the Company's principal office and the termination of any
compensation or other employee benefits plans in which he was eligible to participate.

In
the event of the termination by the Company of a Named Officer, the Named Officer would be eligible to receive severance compensation. Messrs. Fleming, Hollender and Guster
would receive two times their current annual base salary and Ms. Watson would receive one time her current annual base salary.

Compensation Committee Interlocks and Insider Participation

During fiscal 2001, no executive officer of the Company served on the board or compensation committee of another company that had an executive officer serve on
the Company's board or its compensation committee.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The table below shows how much Company common stock was owned by the directors and executive officers, as of July 9, 2001. Except as otherwise indicated
below, the persons listed below have advised the Company that they have sole voting and investment power with respect to the securities shown as owned by them. On July 9, 2001, there were
13,190,943 shares of the Company's common stock outstanding.

|Name of Beneficial Owners and Addresses (1) |  | Number of
Shares Owned (2) |     | Right to
Acquire (3) |     | Total Amount of
Beneficial
Ownership |  | Percentage of
Outstanding
Shares |  
|------------------------------------------- |  | -------------------------- | --- | -------------------- | --- | ------------------------------------ |  | -------------------------------- | -
|Thomas Kinkade                              |  | 3,140,651                  | (4) | 600,000              |     | 3,740,651                            |  | 27.1                             | %
|Kenneth E. Raasch                           |  | 3,271,691                  | (5) | 170,681              | (6) | 3,442,372                            |  | 25.8                             | %
|Richard F. Barnett                          |  | 144,775                    | (7) |                     |     | 144,775                              |  | *                                |  
|John R. Lackner                             |  | 2,000                      |     | 86,265               |     | 88,265                               |  | *                                |  
|Norman A. Nason                             |  |                           |     | 47,681               |     | 47,681                               |  | *                                |  
|W. Michael West                             |  | 10,000                     |     | 15,000               |     | 25,000                               |  | *                                |  
|Michael J. Catelani                         |  | 2,000                      |     | 20,672               |     | 22,672                               |  | *                                |  
|J. Edward Hollender                         |  | 3,000                      |     | 16,664               |     | 19,664                               |  | *                                |  
|Timothy S. Guster                           |  |                           |     | 16,664               |     | 16,664                               |  | *                                |  
|Raymond A. Peterson                         |  | 3,000                      |     | 5,000                |     | 8,000                                |  | *                                |  
|Herbert D. Montgomery                       |  |                           |     | 5,000                |     | 5,000                                |  | *                                |  
|Anthony D. Thomopoulos                      |  |                           |     | 5,000                |     | 5,000                                |  | *                                |  

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Item 13. Certain Relationships and Related Transactions

License Agreement with Thomas Kinkade.Effective December 3, 1997, the Company entered into a new license
agreement with Thomas Kinkade. The new license agreement supersedes a previous license agreement under which Mr. Kinkade received a flat fee of $18,750 per painting delivered to the Company for
reproduction, a royalty agreement under which the Company paid Mr. Kinkade a royalty of 5.0% of net sales of Company owned stores using his name and certain other arrangements. Under the new
license agreement, Mr. Kinkade receives a flat fee of $25,000 per painting delivered to the Company for reproduction and he is paid a royalty of 4.5% of the net sales of Thomas Kinkade branded
artwork and products through May 8, 2000 and 5.0% of the net sales of Thomas Kinkade branded artwork and products thereafter. Mr. Kinkade is also employed by the Company as Art Director.
Mr. Kinkade and Kenneth E. Raasch have an understanding whereby Mr. Kinkade through May 8, 2000, paid to Mr. Raasch 45.5% of royalty payments payable to Mr. Kinkade
by the Company from the sale of studio proofs. In the past Mr. Kinkade paid Mr. Raasch 50% of the royalty payments payable to Mr. Kinkade by the Company from the sale of studio
proofs. In fiscal 2001, Mr. Kinkade and Mr. Raasch shared approximately $206,000 in royalty payments from the sale of studio proofs.

Under
the new license agreement Thomas Kinkade granted the Company perpetual and exclusive rights to each image produced by Mr. Kinkade under the new license agreement, as well
as to the library of over 170 existing Thomas Kinkade images, subject to certain exceptions. In particular, the Company has the exclusive right to produce, sell, distribute and promote reproductions
of Mr. Kinkade's artwork in any form and the right to use the name and likeness of the artist in promoting the sale of its products and development of any brand name associated with
Mr. Kinkade. The new license agreement requires Mr. Kinkade to deliver 150 paintings to the Company during the period commencing December 3, 1997 and ending 15 years
thereafter, with at least 10 paintings to be delivered during each of the first five years. Mr. Kinkade has the right to approve the Company's products based upon his artwork, as well as
promotional materials, business plans and strategic relationships relating to such products or the use of his name or likeness. Mr. Kinkade retains ownership of the original paintings he
produces.

The
new license agreement permits Mr. Kinkade to reproduce up to two pieces annually to raise money for the City of Placerville, California. Mr. Kinkade also retained
the right to use his name, likeness and certain artwork in association with non-profit organizations. In addition, Mr. Kinkade retained the right to use his name in connection with
for-profit ventures with the Company's prior consent, provided that he first offers the opportunity to the Company. Mr. Kinkade is otherwise subject to a non-compete
agreement with the Company under the new license agreement.

The
new license agreement is terminable by either party after failure by the other party for 90 days to cure a material breach of the agreement. In addition, Mr. Kinkade
may terminate the new license agreement in the event of the Company's insolvency or upon a change of control of the Company. A change in control is defined to occur on the date when any person or
group (as defined in Rule 13(d)(3) under the Securities Exchange Act of 1934) beneficially owns (as defined in such Rule) a number of shares of common stock of the Company in excess of the
number of shares then beneficially owned by Mr. Kinkade. The computation excludes stockholders as of December 3, 1997, to the extent of their beneficial holdings of Common Stock as of
such date. The right of termination may not be invoked by Mr. Kinkade if it is triggered as a result of Mr. Kinkade's transfer of shares. After December 3, 2012, the perpetual
nature of the new license agreement may be terminated by Mr. Kinkade if the Company engages in any material business enterprises unrelated to his work or brand name to which he objects. Upon
any termination of the new license agreement by Mr. Kinkade, the Company would be prohibited from selling any products based upon Mr. Kinkade's artwork, other than the Company's then
existing product inventory.

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In addition, pursuant to the new license agreement, the Company and Thomas Kinkade entered into a stock option agreement as of December 3, 1997, wherein the Company granted to
Mr. Kinkade a fifteen-year non-statutory option to purchase 600,000 shares of common stock of the Company at $12.375, the closing price on the date of grant.

Separation and Consulting Agreement and Stock Sale Agreement.The Company entered into a Separation and Consulting
Agreement with Kenneth E. Raasch as of May 27, 1999. Under the agreement, Mr. Raasch's employment was terminated and he became an independent contractor to provide consulting services to
the Company, as requested by the President and Chief Executive Officer, for a monthly fee of $110,000 and the reimbursement of certain expenses. In addition, Mr. Raasch was subject to a
non-compete clause with the Company under the agreement, although he would be reasonably permitted by the Company to conduct business in areas identified by the parties under
confidentiality or nondisclosure agreements.

In
addition, under a separate but related Stock Sale Agreement dated as of May 27, 1999, Mr. Raasch, Mrs. Raasch and the Raasch Family Trust gave a right of first
refusal to the Company with respect to the purchase or other transfer of shares of the Company's common stock they held. Under this agreement, as long as Mr. Raasch remained a ten percent or
more stockholder, he would continue to have access to certain financial information about the Company beyond that normally given to stockholders.

Both
the Separation and Consulting Agreement and the Stock Sale Agreement terminated on December 31, 2000 and were not renewed by the Company.

Ownership and Sale of Thomas Kinkade Gallery, Valley Fair.On June 30, 1995, the Company purchased the Thomas
Kinkade Gallery, Valley Fair from Linda L. Raasch, spouse of Kenneth E. Raasch, who was President, Chairman and Chief Executive Officer of the Company at the time, for an aggregate purchase price of
approximately $1,500,000, of which $1,200,000 was paid in the form of an 8.0% subordinated convertible promissory note due October 10, 2002. The note is convertible into common stock of the
Company at a price of $7.25 per share. The entire principal amount of the note is due at maturity, unless converted prior to maturity. Prior to the consummation of the sale transaction, an independent
appraisal of the gallery was performed and the terms of the purchase were approved by a special committee of the board.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on
July 30, 2001 on its behalf by the undersigned, thereunto duly authorized.

Media
Arts Group, Inc.

|/s/ Michael J. CatelaniMichael J. Catelani
Vice President of Finance
(Principal Accounting Officer) |  | 
|--------------------------------------------------------------------------------------------------- |  | 

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