SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

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

                   For the fiscal year ended December 31, 2001

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

            For the transition period from __________ to __________.

                         Commission File Number: 0-17462

                       FILMAGIC ENTERTAINMENT CORPORATION
         IMMEDIATE PREDECESSOR NAME: "ROEDEINGER MEDICAL SYSTEMS, INC."
                      PREDECESSOR NAME: "COTTON TREE, INC."

             (Exact name of registrant as specified in its charter)

UTAH                                                         87-0404991
(State or other jurisdiction of                             (IRS Employer
Incorporation or organization)                            Identification No.)

2869 India St., San Diego, California                           92103
Mail: 1042 N. Mountain Ave.-Ste#B348, Upland, CA                91786
(Address of principal executive offices)                      (Zip Code)

        Registrant's telephone number including area code: (909) 949-2834

           Securities registered pursuant to Section 12(b) of the Act:
                                      None
           Securities registered pursuant to Section 12(g) of the Act:
                         Common Stock, $0.001 par value
                                (Title of Class)

         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange Act during the past 12 months ( or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing  requirements  for the past 90 days. YES X NO __

         Check if there is no  disclosure  of  delinquent  filers in response to
Item 405 of  Regulation  S-B contained in this form,  and no disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements Incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

                                       1
<PAGE>


         State  issuer's  revenues  for its  most  recent  fiscal  year.  NONE .
                                                                          ----

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant  on May 6, 2002 was $ 311,620.  The number of shares of Common Stock,
$0.001 par value, outstanding on May 6, 2002, was 11,025,506 shares, held by 217
shareholders.

                                     PART I



Item 1.           Description of    Business


Background

         Filmagic  Entertainment  Corporation ( "Filmagic" ) incorporated in the
State  of  Utah in  1983  as  Cotton  Tree,  Inc.  In  1985  it  acquired,  in a
stock-for-stock  acquisition,  MEDX,  Inc.  and changed  its name to  Roedeinger
Medical  Systems,  Inc. In 1988,  Roedeinger  Medical  Systems  sold its line of
medical products to a third party company, and it acquired, on a stock-for-stock
basis,   Filmagic,   Inc.  and  changed  its  name  to  Filmagic   Entertainment
Corporation.


The Company

         Filmagic  was  initially  developed  as a film  distribution  and sales
agency  organization and was the reason Filmagic  acquired  approximately  1,000
half hour films.  During the past four years  Filmagic has  maintained no active
employees,  with all filings,  negotiations,  and sourcing of potential business
opportunities being conducted by the officers and directors of the company.  The
officers  and  directors  have  spent  the  majority  of  time  reviewing  prior
management  directives,  attempting to find  potential  candidates  for mergers,
acquisitions and potential sources of capital.

         Filmagic's future directions and potential  opportunities are discussed
further in Item 6 of this document.


Competition

         Motion  picture  distribution  is a highly  competitive  business.  The
competition  comes from both companies within the same business and companies in
other   entertainment   media,   which  create   alternative  forms  of  leisure
entertainment.  Also,  Filmagic  will compete with  several  independent  motion
picture  and  television  production  companies,  television  networks  and  pay
television systems for the acquisition of literary properties. However, Filmagic
is in a unique  position  in that  some of its  competitors  will be part of its
customer  base as well.  This  occurs  due to the  fact  that  Filmagic  has the
exclusive rights to its current films. In addition, Filmagic's product line will
offer unique programming to independent  television  stations,  cable companies,
and satellite firms, with the NEW AGE DVD processing.



Market Strategy

         Filmagic's primary strategic  objective is to arrange for the potential
distribution  of its

                                       2
<PAGE>

existing  library.  The Management team will provide low financial risk from the
expansion  of the  rights in its film  library  by  entering  into  distribution
agreements,  which offer minimum guarantees prior to release. Further discussion
of  management's  thoughts and potential  directions  are discussed in Item 6 of
this document.



Item 2.           Description of Property

         The company currently has available to it facilities within the offices
of two of its directors. The location at 2869 India St. in San Diego, California
is the law offices of Mr.  Frank  DeSantis,  one of the current  directors.  The
company utilizes the location for mail receipt and board meetings because of the
conference  room. The main mail location is that of the  President,  Mr. R.Bruce
Harris  and is 1042 N.  Mountain  Ave-Ste#B348,  in  Upland,  California  91786.
Filmagic does not pay for any rent nor expenses  incurred with these  locations.
Both officers provide space usage during the normal operations of their existing
businesses.



Item 3.           Legal Proceedings

         The Company is not involved in any legal  proceedings as of the date of
this filing.



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

         None



                                     PART II


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


         Filmagic's  common stock has been traded in the Over the Counter Market
(OTC),  "pink sheets" and has been subject to sporadic trading and pricing.  The
stock has not actively traded in the past several years.  During 1999,  Filmagic
issued 940,000  shares at a board of directors  approved value of $.04 cents per
share.  During 2001,  Filmagic issued  1,662,500  shares at a board of directors
approved value of $ .04 cents per share .

                                       3
<PAGE>

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

PLAN OF OPERATION


         Filmagic  may wish to  seek,  investigate,  and if such  investigations
warrant,  acquire an interest in one or more business opportunities presented to
it by persons or firms  desiring the  perceived  advantages  of a publicly  held
corporation.   At  this  time,  Filmagic  has  no  plan,  proposal,   agreement,
understanding,  or arrangement to acquire or merge with any specific business or
company,  and Filmagic has not identified  any specific  business or company for
investigation  and  evaluation.  Filmagic  will not  restrict  its search to any
specific business,  industry, or geographical  location,  and may participate in
business  ventures of virtually  any kind or nature.  Discussion of the proposed
business  under this caption and throughout  this Annual Report is  purposefully
general and is not meant to restrict Filmagic's  virtually unlimited  discretion
to  search  for and  enter  into a  business  combination.  Filmagic  may seek a
business combination with a firm which only recently commenced operations,  or a
developing  company in need of  additional  funds to expand into new products or
markets  or  seeking to develop a new  product  or  service,  or an  established
business,  which may be  experiencing  financial or operating  difficulties  and
needs additional  capital,  which is perceived to be easier to raise by a public
company.  In some instances,  a business  opportunity  may involve  acquiring or
merging with a corporation  which does not need substantial  additional cash but
which  desires to  establish  a public  trading  market  for its  common  stock.
Filmagic may purchase assets and establish wholly owned  subsidiaries in various
businesses or purchase existing businesses as subsidiaries.

         Selecting a business  opportunity  will be complex and extremely risky.
Because of general economic conditions,  rapid technological advances being made
in some industries, and shortages of available capital, management believes that
there are numerous firms seeking the benefits of a publicly traded  corporation.
Such perceived benefits of a publicly traded corporation may include:

                  -  facilitating  or  improving  the terms on which  additional
                  equity financing may be sought;

                  - providing  liquidity  for the  principals  of a business;  -
                  creating  a means for  providing  incentive  stock  options or
                  similar benefits to key employees; or

                  - providing  liquidity  (subject to restrictions of applicable
                  statutes) for all shareholders.

         Potentially   available   business    opportunities   and/or   business
combination  may occur in many  different  industries  and at various  stages of
development,  all of which will make the task of comparative  investigation  and
analysis of such business opportunities extremely difficult and complex.

         Management  believes  that Filmagic may be able to benefit from the use
of "leverage"  to acquire a target  company.  Leveraging a transaction  involves
acquiring  a  business  while  incurring  significant  indebtedness  for a large
percentage  of  the  purchase   price  of  that  business.   Through   leveraged
transactions,  Filmagic would be required to use less of its available  funds to
acquire  a target  company  and,  therefore,  could  commit  those  funds to the
operations of the business,  to combinations with other target companies,  or to
other  activities.  The  borrowing  involved  in a  leveraged  transaction  will
ordinarily be secured by the assets of the acquired  business.  If that business
is not  able to  generate  sufficient  revenues  to make  payments  on the  debt
incurred by  Filmagic  to acquire  that  business,  the lender  would be able to
exercise  the  remedies  provided  by  law  or  by  contract.  These  leveraging
techniques,  while  reducing  the amount of funds that  Filmagic  must commit to
acquire a business, may correspondingly increase the risk of loss to Filmagic.

                                       4
<PAGE>

         No assurance can be given as to the terms or  availability of financing
for any  acquisition  of a  business  opportunity  or  business  combination  by
Filmagic.  During periods when interest rates are relatively  high, the benefits
of  leveraging  are not as great as  during  periods  of lower  interest  rates,
because the  investment in the business  held on a leveraged  basis will only be
profitable  if it  generates  sufficient  revenues to cover the related debt and
other costs of the  financing.  Lenders  from which  funds may be  obtained  for
purposes of a leveraged buy-out may impose restrictions on the future borrowing,
distribution, and operating policies. It is not possible at this time to predict
the restrictions, if any, which lenders may impose, or the impact thereof.

         Filmagic has  insufficient  capital with which to provide the owners of
businesses  significant cash or other assets.  Management believes Filmagic will
offer owners of businesses the  opportunity  to acquire a controlling  ownership
interest in a public company at a  substantially  lower cost than is required to
conduct an initial public offering.  The owners of the businesses will, however,
incur  significant  post-merger or acquisition  registration  costs in the event
they wish to  register a portion of their  common  shares for  subsequent  sale.
Filmagic will also incur  significant  legal and accounting  costs in connection
with  the  acquisition  of  a  business  opportunity  or  business  combination,
including  the  costs  of  preparing  post-effective   amendments,   Form  8-Ks,
agreements,  and related reports and documents.  Nevertheless,  the officers and
directors  have not conducted  market  research and are not aware of statistical
data,  which would  support the  perceived  benefits of a merger or  acquisition
transaction  for the owners of businesses.  Filmagic does not intend to make any
loans to any  prospective  merger or acquisition  candidates or to  unaffiliated
third parties.

         Filmagic  will not restrict its search for any specific  kind of firms,
but may acquire a venture,  which is in its  preliminary or  development  stage,
which is already in  operation,  or in  essentially  any stage of its  corporate
life.  It is  impossible  to predict at this time the status of any  business in
which  Filmagic  may  become  engaged,  in that such  business  may need to seek
additional capital, may desire to have its common shares publicly traded, or may
seek other perceived  advantages which Filmagic may offer.  However, it does not
intend  to  obtain  funds  in one or more  private  placements  to  finance  the
operation  of any  acquired  business  opportunity  until  such  time  as it has
successfully consummated such a merger or acquisition.

The Company

         Filmagic  was  originally  developed as a film  distribution  and sales
agency organization for feature-length  motion picture,  television  programming
and DVD entertainment for Cable and Network channels.  The current management is
of  the  belief  that  this  focus  could  continue  but  is  investigating  all
opportunities  to enhance  shareholder  value.  Management feels the impetus for
Filmagic's  future could be in  developing  a mixture of seasoned  professionals
from both the film and television industries. The strategic alignments developed
by Filmagic will help to provide the investor a potentially lower risk and allow
Filmagic the opportunity to take advantage of some distribution services and DVD
development  that would assist Filmagic with both Network and Cable  programming
business opportunities.

         Management  feels  that if  Filmagic  places  its  focus on the  above,
Filmagic  would be engaged in the  fastest  growing  major  market in the world,
which  is  the  diverse  entertainment   industry.   Most  estimates  place  the
entertainment  industry as the largest world-wide  business by the year 2002. By
placing the emphasis on non-US markets, Filmagic is concentrating on the fastest
growth segment within this market.

         Filmagic and two other  companies began  negotiations  during late 1997
and continued through 1999 with Mr. R. Bruce Harris,  CEO of Filmagic and one of
the heads of Media Continental.  The three companies drafted the first levels of
a Memorandum  of  Understanding

                                       5
<PAGE>

(MOU) with Royal Oaks Film Library, which was tabled until Filmagic could return
to an active trading basis. Once Filmagic returns to active trading,  management
intends to re-visit the potential  opportunity  to make sure this is to the best
interest of the  shareholders.  Management  feels that should the opportunity be
activated,  board and  management  seats could  change  with such an  agreement.
Focusing on additional  mergers  opportunities  or acquisitions  would allow the
company a vehicle to  distribute  it's films  currently  in the Library and will
help  create a  process  to  generate  a cost  efficient  process  for the Cable
networks.  Management  is not,  however,  making this area of business  its only
focus, as is stated in the beginning of this section.



The Opportunity

         Should  the  company  move  forward  with  potential  film MOU's and be
successful in establishing  strategic distribution and sales agency alliances in
Europe,  Latin America,  South Africa,  Asia,  Israel, and the United States the
revenue stream generated for Filmagic could be significant. The quality of films
in the Library Collection and the outstanding delivery process,  could produce a
loyal following of  distributors,  indicating that a second cycle of sales could
generate strong and continuous streams of revenue. One of the library's Filmagic
has in it's sites for acquisition  currently  produces over $2 million in annual
sales in only 28 markets and has the  advantage  of further  exposure to enhance
revenues.  Today,  Filmagic has the rights to just under 1000 titles and expects
to increase this number significantly in the near future.

The Product

         Independent  film  production  companies  that will utilize  Filmagic's
distribution  services will be selected based on their  scripts,  music and star
quality  as well as themes  popular at the time.  A film will not be  considered
merely on its "  artistic"  content.  Given the current  demand  from  theaters,
television,  and aftermarket  video sales and rentals,  Filmagic  anticipates no
slow down in a flow of available product. Filmagic will select its products from
a set of criteria  developed by the management team and applied to all potential
product.

         Filmagic  will  combine  it's  television  assets  and other  potential
acquisitions and depending upon the future negotiations would acquire additional
product to release to World Wide  Television and Video ( NEW DVD) format.  Based
on  our  current   research,   there  are   multiple   entertainment   packaging
opportunities available in today's marketplace.


Major Management Objectives

         The primary objective of Filmagic is to secure the necessary capital to
implement expansion programs.  Once in place,  Filmagic will focus its attention
on those sales and marketing  opportunities,  which offer it the most likelihood
for producing  increased  revenues.  Whether it be directly  involved within the
distribution  market or contracting out films for conversion to the vast growing
DVD market, management intends on focusing on the increase of shareholder value.

Execution

         In order to implement Filmagic's plans, management will concentrate its
initial efforts on the following:

         a. Acquire additional film libraries.

         b. Acquire a DVD developer and processor.

                                       6
<PAGE>

         c. Develop and expand a sales force in all major television markets.

         d. Format packaging for the product line.

         e.  Seek  out  further  business   opportunities  should  they  present
themselves.



Resource Requirements

         Management  feels to meet its  current  focus they need to seek up to $
10,000,000   which  management  feels  should  be  raised  from  either  private
investors,   or  through  the  market  via  SEC  registrations.   These  capital
requirements  would be necessary for Filmagic to realistically  meet all of it's
objectives and projections which will be contained in it's business plan.


Sources of Opportunities

         Filmagic  will seek a  potential  business  opportunity  from all known
sources,  but will rely  principally  on personal  contacts of its  officers and
directors,  as well as indirect associations between them and other business and
professional  people. It is not presently  anticipated that Filmagic will engage
professional  firms  specializing in business  acquisitions or  reorganizations.
Management,  while not  especially  experienced  in matters  relating to the new
business of  Filmagic,  will rely upon their own  efforts  and, to a much lesser
extent,  the efforts of Filmagic's  shareholders,  in accomplishing the business
purposes of Filmagic.  It is not  anticipated  that any outside  consultants  or
advisors, other than Filmagic's legal counsel and accountants,  will be utilized
by Filmagic to effectuate its business purposes  described herein.  However,  if
Filmagic does retain such an outside consultant or advisor,  any cash fee earned
by  such  party  will  need to be  paid  by the  prospective  merger/acquisition
candidate, as Filmagic has no cash assets with which to pay such obligation.

         There  have  been  no  discussions  ,   understandings,   contracts  or
agreements with any outside  consultants and none are anticipated in the future.
In the  past,  Filmagic's  management  has never  used  outside  consultants  or
advisors in  connection  with a merger or  acquisition.  As is  customary in the
industry,  Filmagic may pay a finder's  fee for the  location of an  appropriate
business opportunity or business  combination.  If any such fee is paid, it will
be approved by Filmagic's  Board of Directors and will be in accordance with the
industry  standards.  Such fees are customarily between 1% and 5% of the size of
the transaction,  based upon a sliding scale of the amount  involved.  Such fees
are typically in the range of 5% on a $1,000,000  transaction and decreased down
to 1% in a $4,000,000  transaction.  Management has adopted a policy that such a
finder's fee could, in certain circumstances,  be paid to any employee, officer,
director or 5% shareholder of Filmagic,  if such person plays a material role in
bringing a transaction to Filmagic.

         Filmagic will not have  sufficient  funds to undertake any  significant
development, marketing, and manufacturing of any products, which may be required
instead of the  acquisition of a business  opportunity or business  combination.
Accordingly, if it acquires the rights to a product, rather than entering into a
merger  or  acquisition,  it most  likely  would  need to  seek  debt or  equity
financing or obtain funding from third  parties,  in exchange for which Filmagic
would  probably be required to give up a substantial  portion of its interest in
any acquired product. There is no assurance that Filmagic will be able either to
obtain  additional  financing or to interest third parties in providing  funding
for  the  further  development,  marketing  and  manufacturing  of any  products
acquired.


                                       7
<PAGE>


Evaluation of Opportunities

         The analysis of new business  opportunities  will be  undertaken  by or
under the  supervision  of the  officers and  directors of Filmagic.  Management
intends to concentrate on identifying prospective business opportunities,  which
may be brought to its attention through present associations with management. In
analyzing prospective business  opportunities,  management will consider,  among
other factors, such matters as:

         - the available technical,  financial and managerial resources; working
         capital and other financial requirements; history of operation, if any;

         - prospects for the future;

         - present and  expected  competition;  the quality  and  experience  of
         management  services  which  may be  available  and the  depth  of that
         management;

         - the  potential  for further  research,  development  or  exploration;
         specific  risk  factors  not now  foreseeable  but  which  then  may be
         anticipated  to  impact  the  proposed  activities  of  Filmagic;   the
         potential for growth or expansion; the potential for profit;

         - the perceived public recognition or acceptance of products,  services
         or trades; and

         - name identification.

         To the extent possible, Filmagic intends to utilize written reports and
personal  investigation to evaluate the above factors.  Filmagic does not intend
to acquire or merge with any  company  for which  audited  financial  statements
cannot be obtained.  Opportunities in which Filmagic  participates  will present
certain risks, many of which cannot be identified  adequately prior to selecting
a specific  opportunity.  Filmagic's  shareholders  must,  therefore,  depend on
management to identify and evaluate such risks.  Promoters of some opportunities
may have been unable to develop a going concern or may present a business in its
development  stage (in that it has not generated  significant  revenues from its
principal  business  activities prior to Filmagic's  participation).  Even after
Filmagic's  participation,  there is a risk that the combined enterprise may not
become  a  going  concern  or  advance  beyond  the  development   stage.  Other
opportunities  may  involve  new and  untested  products,  processes,  or market
strategies,  which may not succeed.  Filmagic,  and therefore its  shareholders,
assume such risks. The investigation of specific business  opportunities and the
negotiation,   drafting,  and  execution  of  relevant  agreements,   disclosure
documents,  and other instruments will require  substantial  management time and
attention as well as substantial costs for accountants,  attorneys,  and others.
If a decision were made not to  participate in a specific  business  opportunity
the costs  incurred  in the  related  investigation  would  not be  recoverable.
Furthermore, even if an agreement is reached for the participation in a specific
business  opportunity,  the failure to consummate that transaction may result in
the loss by Filmagic of the related costs incurred. There is the additional risk
that  Filmagic  will not find a suitable  target.  Management  does not  believe
Filmagic will generate revenue without finding and completing the acquisition of
a suitable business opportunity or a transaction with a suitable target company.
If no such  business  opportunity  target is found,  therefore,  no return on an
investment in Filmagic will be realized,  and there will not, most likely,  be a
market for Filmagic's common shares.

Acquisition of Opportunities

         In  implementing  a structure  for a particular  business  acquisition,
Filmagic may become a party to a merger,  consolidation,  reorganization,  joint
venture,  franchise,  or licensing agreement with another corporation or entity.
It may also purchase stock or assets of an existing business. Once a transaction
is complete,  it is possible that the present  management  and  shareholders  of
Filmagic will not be in control. In addition,  a majority or all of the officers
and directors may, as

                                       8
<PAGE>

part of the terms of the transaction, resign and be replaced by new officers and
directors without a vote of the shareholders.

         It is anticipated  that  securities  issued in any such  reorganization
would be issued in reliance on exemptions  from  registration  under  applicable
federal  and  state  securities  laws.  In  some  circumstances,  however,  as a
negotiated  element of this  transaction,  Filmagic  may agree to register  such
securities  either at the time the  transaction  is  consummated,  under certain
conditions,  or at a specified  time  thereafter.  The  issuance of  substantial
additional  securities and their potential sale into any trading  market,  which
may develop in Filmagic's  common shares,  may have a depressive  effect on such
market.

         While the actual  terms of a  transaction  to which  Filmagic  may be a
party cannot be  predicted,  it may be expected that the parties to the business
transaction  will find it desirable to avoid the creation of a taxable event and
thereby structure the acquisition in a so called "tax free" reorganization under
Sections  368(a)(1) or 351 of the Internal Revenue Code of 1986, as amended (the
"Code").  In order to  obtain  tax-free  treatment  under  the  Code,  it may be
necessary  for the  owners of the  acquired  business  to own 80% or more of the
voting  stock of the  surviving  entity.  In such  event,  the  shareholders  of
Filmagic would retain less than 20% of the issued and outstanding  common shares
of the  surviving  entity,  which could  result in  significant  dilution in the
equity of such shareholders.

         As part of Filmagic's investigation, officers and directors of Filmagic
may:

         -  meet personally with management and key personnel; visit and inspect
            material facilities;

         -  obtain independent  analysis or verification of certain  information
            provided;

         -  check references of management and key personnel, and;

         -  take  other  reasonable  investigative  measures,  to the  extent of
            Filmagic's limited financial resources and management expertise.

         The manner in which  Filmagic  participates  in an  opportunity  with a
target  company  will depend on the nature of the  opportunity,  the  respective
needs  and  desires  of  Filmagic  and  other  parties,  the  management  of the
opportunity,  and the relative  negotiating  strength of Filmagic and such other
management.  With  respect to any  mergers or  acquisitions,  negotiations  with
target  company  management  will be  expected  to  focus on the  percentage  of
Filmagic which the target company's  shareholders  would acquire in exchange for
their  shareholdings in the target company.  Depending upon, among other things,
the target company's assets and liabilities,  Filmagic's  shareholders  will, in
all  likelihood,  hold  a  lesser  percentage  ownership  interest  in  Filmagic
following any merger or acquisition.  The percentage ownership may be subject to
significant  reduction  in the event  Filmagic  acquires a target  company  with
substantial  assets.  Any merger or  acquisition  effected  by  Filmagic  can be
expected to have a significant  dilative effect on the percentage of shares held
by Filmagic's then shareholders.

         Management  has  advanced,  and will continue to advance  funds,  which
shall be used by Filmagic in  identifying  and pursuing  agreements  with target
companies.  Management  anticipates  that these  funds  will be repaid  from the
proceeds of any agreement with the target  company,  and that any such agreement
may, in fact, be contingent upon their payment of those funds.

Results of Operations for 2001 and 2000


         Filmagic has  effectively  been a development  state  enterprise  since
inception in 1983.  Historically,  its cumulative  revenues have arisen from the
forgiveness of debt. Filmagic has not generated any revenue during the last nine
(9) years.  Filmagic  has no contracts to develop a master tape library of older
television  programming  acquired in 1988. Filmagic' s principal expenses during
this development  period have been due to the amortization and write-down of the

                                       9
<PAGE>

tape  library,  and more  recently to the  administrative  expenses  incurred in
connection with Filmagic bringing it's financial reporting current.

         During the fiscal years ended December 31, 2001 and 2000, respectively,
Filmagic' s only  operating  activity  pertained  to non-cash  transactions  and
expenses  paid on behalf of Filmagic by certain  officers,  Directors  and other
related parties.

         During the year ended December 31, 2001,  Filmagic issued common shares
in exchange for services  rendered by The Board of Directors,  The President and
for legal and accounting services.  The total shares issued were 1,662,500 at an
agreed-upon  value of $.04 per share for a charge to operations of $ 66,500.  In
addition,  Filmagic  accrued  expenses for transfer  agent fees and  independent
auditor fees in the amount of $8,930.  The total expenses  charged to operations
during 2001 were $ 75,430, a decrease of $ 3,570 or 4.5% from the total expenses
charged to operations of $79,000 during 2000.

         During  the  year  ended   December  31,  2000,   Filmagic   agreed  to
contingently issue 1,000,000 common shares (500,000 each to a shareholder at a $
..04 per share  discount and another  500,000  shares to  Filmagic's  President),
should the price of the common stock reach $.10 per share, resulting in a charge
to  operations  of  $70,000.  Another $ 9,000  was  expensed,  writing  down the
impaired  tape  library  for a total  charge  to  operations  of  $79,000.  This
represents  an increase of $ 41,400 or 110.1 % increase over the total charge to
operations of $ 37, 600 in 1999.



                                       10
<PAGE>

Item 7.           Financial Statements



                       FILMAGIC ENTERTAINMENT CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
             FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000 AND THE
  CUMULATIVE PERIOD FROM DECEMBER 7, 1983 (INCEPTION) THROUGH DECEMBER 31, 2001




                                    CONTENTS

                                                                           Page

INDEPENDENT AUDITORS' REPORT                                                12

FINANCIAL STATEMENTS

         Consolidated Balance Sheets                                        13

         Consolidated Statements of Operations                              14

         Consolidated Statement of Changes in Stockholders' Equity          15

         Consolidated Statements of Cash Flows                              20

         Notes to Consolidated Financial Statements                         21

                                       11

<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors
Filmagic Entertainment Corporation

We have  audited  the  accompanying  consolidated  balance  sheets  of  Filmagic
Entertainment  Corporation (A Development Stage Company) as of December 31, 2001
and 2000 and the  related  consolidated  statements  of  operations,  changes in
stockholders'  equity  and cash  flows for each of the two  years in the  period
ended  December  31, 2001 and for the  cumulative  period from  December 7, 1983
(inception of  development  stage) through  December 31, 2001. The  consolidated
financial  statements  are the  responsibility  of the  management  of  Filmagic
Entertainment Corporation.  Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain reasonable  assurance about whether the consolidated
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  consolidated  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 consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
Filmagic  Entertainment  Corporation  as of December 31, 2001 and 2000,  and the
consolidated  results of their  operations  and their cash flows for each of the
two years in the period ended  December 31, 2001 and for the  cumulative  period
from December 7, 1983  (inception of  development  stage)  through  December 31,
2001, in conformity with accounting  principles generally accepted in the United
States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated   financial  statements,   the  Company,  as  a  development  stage
enterprise,  has no  significant  assets and has not  generated  any revenue for
several years which raises  substantial doubt about its ability to continue as a
going  concern.  Management's  plan to raise capital is discussed in Note 2. The
consolidated  financial  statements  do not include any  adjustments  that might
result from the outcome of this uncertainty.




                                                     Hurley & Company


Granada Hills,  CA
April 1, 2002

                                       12
<PAGE>



                       FILMAGIC ENTERTAINMENT CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2001 AND 2000



<TABLE>
<CAPTION>
                                                               2001          2000
                                                            -----------   -----------
<S>                                                         <C>           <C>
                                     ASSETS

Current assets                                              $      --     $      --

Other assets                                                      1,000         1,000
                                                            -----------   -----------
Total assets                                                $     1,000   $     1,000
                                                            ===========   ===========


                      LIABILITIES AND STOCKHOLDERS' EQUITY


Current liabilities                                         $     8,930   $      --


STOCKHOLDERS' EQUITY:

Common Stock, $.001 par value, 100,000,000
  shares authorized, 9,925,506 and 8,263,006 shares issued
  and outstanding                                                 9,926         8,263

Additional paid-in-capital                                    1,596,633     1,531,796

Deficit accumulated during the development stage             (1,614,489)   (1,539,059)
                                                            -----------   -----------
         Total stockholder (deficit) equity                      (7,930)        1,000

Total liabilities and
   stockholders' equity                                     $     1,000   $     1,000
                                                            ===========   ===========

</TABLE>

        See accompanying independent auditors' report and notes to these
                       consolidated financial statements.

                                       13
<PAGE>


                       FILMAGIC ENTERTAINMENT CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 YEARS ENDED DECEMBER 31, 2001 AND 2000 AND THE
  CUMULATIVE PERIOD FROM DECEMBER 7, 1983 (INCEPTION) THROUGH DECEMBER 31, 2001



                                                                   Dec. 07, 1983
                                                                    (Inception)
                                                                      Through
                                        2001            2000       Dec. 31, 2001
                                    --------------   -----------   -------------

Revenues                            $         --     $      --      $   261,023

Expenses                                    75,430        79,000      1,875,512
                                    --------------   -----------    -----------

Net loss                            $     ( 75,430)  $   (79,000)   $(1,614,489)
                                    ==============   ===========    ===========
Net loss per share -
  Basic and diluted                 $         (.01)  $      (.01)
                                    ==============   ===========

Weighted average number of
  shares outstanding                     8,331,328     8,263,006
                                    ==============   ===========


        See accompanying independent auditors' report and notes to these
                        consolidated financial statements


                                       14
<PAGE>


                       FILMAGIC ENTERTAINMENT CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
           FROM DECEMBER 7, 1983 (INCEPTION) THROUGH DECEMBER 31, 2001



                                                           Deficit
                                                         Accumulated
                                              Additional  During the
                             Common Stock      Paid-in   Development
                            Shares    Amount   Capital      Stage       Total
                           ---------  ------  ---------   ---------   ---------
Issuance of
 stock -
 Dec. 7, 1983                 63,006  $   63  $     (13)  $    --     $      50
                           ---------  ------  ---------   ---------   ---------
Balance
Dec. 31, 1983                 63,006      63        (13)       --            50

Net loss                        --      --         --           (16)        (16)
                           ---------  ------  ---------   ---------   ---------
Balance
Dec. 31, 1984                 63,006      63        (13)        (16)         34

Issuance of
 stock                       300,000     300      7,596        --         7,896

Acquisition of
 MEDX                      6,600,000   6,600    508,293        --       514,893

Issuance of
 stock to effect
 MEDX
 acquisition                 360,000     360       (240)       --           120

Net loss                        --      --         --       (58,661)    (58,661)
                           ---------  ------  ---------   ---------   ---------
Balance
Dec. 31, 1985              7,323,006  $7,323  $ 515,636   $ (58,677)  $ 464,282



        See accompanying independent auditors' report and notes to these
                       consolidated financial statements.


                                       15
<PAGE>


                       FILMAGIC ENTERTAINMENT CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
           FROM DECEMBER 7, 1983 (INCEPTION) THROUGH DECEMBER 31, 2001
                                   (Continued)

                                                           Deficit
                                                         Accumulated
                                              Additional  During the
                             Common Stock       Paid-in  Development
                            Shares    Amount    Capital     Stage       Total
                           ---------  ------  ----------  ---------   ---------
Shareholder
  contribution                  --    $ --    $    2,800  $    --     $   2,800

Net loss                        --      --          --      (63,917)    (63,917)
                           ---------  ------  ----------  ---------   ---------
Balance
Dec. 31, 1986              7,323,006   7,323     518,436   (122,594)    403,165

Shareholder
 contribution                   --      --         6,700       --         6,700
Net loss                        --      --          --      (55,278)    (55,278)
                           ---------  ------  ----------  ---------   ---------
Balance
Dec. 31, 1987              7,323,006   7,323     525,136   (177,872)    354,587

Acquisition of
 Filmagic, Inc.                 --      --       800,000       --       800,000
Net loss                        --      --          --     (202,612)   (202,612)
                           ---------  ------  ----------  ---------   ---------
Balance
Dec. 31, 1988              7,323,006   7,323   1,325,136   (380,484)    951,975

Cancellation of
 note relative
 to purchase of
 film library                   --      --       100,000       --       100,000

Net loss                        --      --          --     (340,532)   (340,532)
                           ---------  ------  ----------  ---------   ---------
Balance
Dec. 31, 1989              7,323,006  $7,323  $1,425,136  $(721,016)  $ 711,443



        See accompanying independent auditors' report and notes to these
                       consolidated financial statements.

                                       16
<PAGE>

                       FILMAGIC ENTERTAINMENT CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
           FROM DECEMBER 7, 1983 (INCEPTION) THROUGH DECEMBER 31, 2001
                                   (Continued)

                                                          Deficit
                                                        Accumulated
                                            Additional   During the
                            Common Stock     Paid-in    Development
                          Shares    Amount   Capital       Stage        Total
                         ---------  ------  ----------  -----------   ---------
Net loss                      --    $ --    $     --    $  (180,007)  $(180,007)
                         ---------  ------  ----------  -----------   ---------
Balance
Dec. 31, 1990            7,323,006   7,323   1,425,136     (901,023)    531,436

Net income                    --      --          --         28,964      28,964
                         ---------  ------  ----------  -----------   ---------
Balance
Dec. 31, 1991            7,323,006   7,323   1,425,136     (872,059)    560,400

Net loss                      --      --          --        (70,200)    (70,200)
                         ---------  ------  ----------  -----------   ---------
Balance
Dec. 31, 1992            7,323,006   7,323   1,425,136     (942,259)    490,200

Net loss                      --      --          --        (70,200)    (70,200)
                         ---------  ------  ----------  -----------   ---------
Balance
Dec. 31, 1993            7,323,006   7,323   1,425,136   (1,012,459)    420,000

Net loss                      --      --          --        (70,000)    (70,000)
                         ---------  ------  ----------  -----------   ---------
Balance
Dec. 31, 1994            7,323,006   7,323   1,425,136   (1,082,459)    350,000

Net loss                      --      --          --        (70,000)    (70,000)
                         ---------  ------  ----------  -----------   ---------
Balance
Dec. 31, 1995            7,323,006  $7,323  $1,425,136  $(1,152,459)  $ 280,000



        See accompanying independent auditors' report and notes to these
                       consolidated financial statements.


                                       17
<PAGE>


                       FILMAGIC ENTERTAINMENT CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
           FROM DECEMBER 7, 1983 (INCEPTION) THROUGH DECEMBER 31, 2001
                                   (Continued)

                                                          Deficit
                                                         Accumulated
                                            Additional   During the
                           Common Stock      Paid-in    Development
                          Shares    Amount   Capital       Stage        Total
                         ---------  ------  ----------  -----------   ---------
Net loss                      --    $ --    $     --    $   (70,000)  $ (70,000)
                         ---------  ------  ----------  -----------   ---------
Balance
Dec. 31, 1996            7,323,006   7,323   1,425,136   (1,222,459)    210,000

Net loss                      --      --          --        (70,000)    (70,000)
                         ---------  ------  ----------  -----------   ---------
Balance
Dec. 31, 1997            7,323,006   7,323   1,425,136   (1,292,459)    140,000

Net loss                      --      --          --       (130,000)   (130,000)
                         ---------  ------  ----------  -----------   ---------
Balance
Dec. 31, 1998            7,323,006   7,323   1,425,136   (1,422,459)     10,000

Stock issued
 for services              940,000     940      36,660         --        37,600

Net loss                      --      --          --        (37,600)    (37,600)
                         ---------  ------  ----------  -----------   ---------
Balance
Dec. 31, 1999            8,263,006   8,263   1,461,796   (1,460,059)     10,000

Contingent
 issuance of
 1,000,000 shares
 for services                 --      --        70,000         --        70,000

Net loss                      --      --          --        (79,000)    (79,000)
                         ---------  ------  ----------  -----------   ---------
Balance
Dec. 31, 2000            8,263,006  $8,263  $1,531,796  $(1,539,059)  $   1,000






        See accompanying independent auditors' report and notes to these
                       consolidated financial statements.

                                       18
<PAGE>

                       FILMAGIC ENTERTAINMENT CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
           FROM DECEMBER 7,1983 (INCEPTION) THROUGH DECEMBER 31, 2001
                                   (Continued)


                                                         Deficit
                                                       Accumulated
                                          Additional    During the
                         Common Stock       Paid-in     Development
                       Shares     Amount    Capital        Stage         Total
                      ---------   ------   ----------   -----------    --------

Balance
Dec 31, 2000          8,263,006   $8,263   $1,531,796   $(1,539,059)   $  1,000

Issuance of
Shares for
Services              1,662,500    1,663       64,837          --        66,500

Net loss                   --       --           --         (75,430)    (75,430)
                      ---------   ------   ----------   -----------    --------

Balance
Dec 31, 2001          9,925,506   $9,926   $1,596,633   $(1,614,489)   $ (7,930)
                      =========   ======   ==========   ===========    ========



        See accompanying independent auditors' report and notes to these
                       consolidated financial statements.

                                       19
<PAGE>


                       FILMAGIC ENTERTAINMENT CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 YEARS ENDED DECEMBER 31, 2001 AND 2000 AND THE
  CUMULATIVE PERIOD FROM DECEMBER 7, 1983 (INCEPTION) THROUGH DECEMBER 31, 2001

                                                                   Dec. 7, 1983
                                                                    (Inception)
                                                                     Through
                                                2001       2000    Dec. 31, 2001
                                              --------   --------  ------------
Cash flows from operating activities:
         Net loss                             $(75,430)  $(79,000)  $(1,614,489)
         Non-cash items:
          Stock issued for services and
            payment of expenses                 66,500     70,000       784,618
          Debt forgiveness                        --         --        (250,156)
          Write-down of assets                    --        9,000       539,895
          Depreciation and amortization           --         --         513,756
          Increase in current liabilities        8,930       --           8,930
                                              --------   --------   -----------
         Net cash used by
           operating activities                   --         --         (17,446)

Cash flows from investing activities:             --         --            --

Cash flows from financing activities:
           Issuance of stock                      --         --           7,946
           Shareholder contributions              --         --           9,500
                                              --------   --------   -----------
           Net cash provided by
              financing activities                --         --          17,446

Net increase in cash and cash equivalents         --         --            --
Cash and cash equivalents,
     beginning of year                            --         --            --
                                              --------   --------   -----------
Cash and cash equivalents, end of year        $   --     $   --     $      --
                                              ========   ========   ===========
Supplemental Disclosures:
         Interest paid                        $   --     $   --     $      --
         Income taxes paid                    $   --     $   --     $      --
Non-cash investing and financing activities:
           Assets acquired for stock          $   --     $   --     $ 1,315,013




        See accompanying independent auditors' report and notes to these
                       consolidated financial statements.

                                       20

<PAGE>

                       FILMAGIC ENTERTAINMENT CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001


Note 1.           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Organization

         Filmagic Entertainment  Corporation (the "Company") was incorporated in
         Utah in 1983 as Cotton Tree, Inc. In 1985, the Company acquired all the
         shares of MEDX,  Inc.  (an  Arizona  Corporation)  through  a  tax-free
         exchange of stock with all the MEDX shareholders,  and changed its name
         to Roedinger Medical Systems, Inc. The primary business of MEDX was the
         development and marketing of patented  medical products under the names
         Vida and Prevent.

         In 1988, the Company  acquired all the shares of Filmagic  Incorporated
         (a Delaware  Corporation)  through a tax-free  exchange  of stock,  and
         changed its name to Filmagic Entertainment  Corporation.  All shares of
         Roedinger  Medical  Systems,  Inc.  required for the  acquisition  were
         donated back to the Company by the then principal shareholder.

         Filmagic Incorporated was organized in 1987. Its principal business was
         to acquire  tape masters of half-hour  television  programming  and the
         rights to  license  those  tapes for  television  and home video in the
         United States and foreign markets where such programming is applicable.
         Its  principal  asset  was a  library  of over  900  tape  masters.  No
         licensing transactions have been made since inception.

         The Company has conducted  minimal  operations  since  inception and is
         currently an inactive development stage enterprise.

         Other Assets

         The other assets  consist of a film library and story rights.  The cost
         of these assets has been amortized to a de minimus value.

         Use of Estimates

         The  preparation of financial  statements in accordance  with generally
         accepted  accounting  principles  requires management to make estimates
         and  assumptions  that  affect  the  reported  amounts  of  assets  and
         liabilities and the reported  amounts of income and expenses during the
         reported period. Actual results may differ from these estimates.

                                       21
<PAGE>

                       FILMAGIC ENTERTAINMENT CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001


Note 1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         Income Taxes

         The Company  accounts for income  taxes in  accordance  with  Financial
         Accounting  Standards  Board  Statement 109, which provides for the tax
         effect of transactions reported in the financial statements and consist
         of taxes  currently  due plus any deferred  taxes.  Deferred  taxes are
         recognized  for temporary  differences  between the basis of assets and
         liabilities  for  financial  statements  and income tax  purposes.  The
         deferred  tax  assets  and  liabilities  represent  future  tax  return
         consequences of those differences.  Deferred taxes are reviewed for the
         probability of realization and reserves are recorded accordingly.

         Loss Per Share - Basic and Diluted

         Loss per share is calculated  based on the weighted  average  number of
         common shares and common share equivalents  outstanding for the periods
         presented.  Common  share  equivalents  represent  shares that would be
         issued on exercise of  options,  reduced by the number of shares  which
         would be purchased from the related proceeds.  Common share equivalents
         are not  included at December  31, 2001  because  their effect would be
         anti-dilutive.


Note 2.           BASIS OF PRESENTATION

         The Company has no ongoing  operations or any  significant  assets that
         could generate  revenue.  As such there is substantial  doubt about the
         Company's  ability  to  continue  as a  going  concern.  Management  is
         presently   engaged  in   activities   related  to  possible   business
         combinations  and other  options  that would bring about an infusion of
         capital or significant business operations. Management will continue to
         seek financing from various  shareholders  in exchange for the issuance
         of restricted shares.

         The ability of the Company to continue as a going  concern is dependent
         upon its  securing  additional  financing  and  commencing  significant
         operations.  The financial statements do not include any adjustments to
         reflect the uncertainty of discontinuing operations.


                                       22
<PAGE>

                       FILMAGIC ENTERTAINMENT CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001



Note 3. RELATED PARTY TRANSACTIONS


         The officers of the Company have provided certain services and incurred
         some  costs on  behalf  of the  Company  for the last few  years  ended
         December 31, 2001,  that were nominal in amount,  and as such,  are not
         valued in the financial statements.

         In 2001, the Company issued Bruce Harris, the president of the Company,
         500,000 shares for his services in 2001.  Further the Company committed
         to issue him 1,000,000 shares a year for four years, beginning in 2002.
         Additionally,  the Company  granted  him  options to  purchase  500,000
         shares at $.04.

         In 2001,  the Company  issued 50,000 shares to a board member for legal
         services  rendered in 2001.  Further,  the Company committed to pay him
         either $1,500 a month in cash or issue 37,500 shares each month for the
         year ending December 31, 2002.

         In 2001,  the  Company  issued  112,500  shares  to a  shareholder  for
         accounting services rendered in 2001. Further, the Company committed to
         pay him $1,000 a month or issue 25,000  shares a month,  valued at $.04
         per share, for the year ending December 31, 2002.

         In 2001,  the Company  issued  200,000  shares to each board  member as
         compensation  for board services during the year.  Further,  each board
         member was granted an option to purchase 100,000 shares at $.04.

         In 2000, the Company agreed to grant Bruce Harris, the president of the
         Company, 500,000 shares for his services in 2000 should the stock price
         reach  $.10 per  share.  There  was no time  limit set for the stock to
         reach the target price. Stock-based employee compensation, along with a
         corresponding  increase to additional  paid-in capital in the amount of
         $50,000 (500,000 shares times the $.10 target price) were recognized on
         this transaction,  in accordance with Statement of Financial Accounting
         Standards No. 123.

                                       23
<PAGE>

                       FILMAGIC ENTERTAINMENT CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001


Note 3. RELATED PARTY TRANSACTIONS (continued)


         In 2000,  the Company  agreed to sell Triad  Investment  Group  500,000
         shares at a discount of 40% of the market  price should the stock price
         hit $.10 per  share.  There is no time limit set for the stock to reach
         the target price. Stock-based compensation,  along with a corresponding
         increase  to  additional  paid-in  capital  in the  amount  of  $20,000
         (500,000  shares  times the $.04  discount  to the target  price)  were
         recognized  on  this  transaction,  in  accordance  with  Statement  of
         Financial Accounting Standards No. 123.




Note 4. COMMITMENTS AND CONTINGENCIES

         The tape library is held by an independent company.  Since Filmagic has
         not paid storage  charges for several  years,  the storage  company has
         filed a lien against those charges. Management has not pursued recovery
         of the tapes due to a lack of  capital,  and the  library is carried on
         the balance sheet at a nominal value due to this  impairment.  There is
         no  certainty  that the  Company  can obtain the  library and it is now
         likely that the actual library will be abandoned. The Company still has
         story rights and may pursue obtaining other copies of the tapes to make
         copies in other media.  Those costs have not been accrued and may prove
         to  be  so  significant  as to  make  the  marketing  of  those  rights
         unfeasible.

         Michael Roedinger,  a former principal  shareholder,  has asserted that
         the Company owes him  approximately  $75,000 for funds  advanced to the
         Company prior to 1988. Management contends that this issue was resolved
         by an exchange of property,  equipment and cash. Management and counsel
         believe neither claim will adversely affect the Company. Further, Bruce
         Harris has placed  restrictions  on the 318,276 shares owned by Michael
         Roedinger. Those shares are currently included in the shares issued and
         outstanding and the Company has no specific remedy noted for the shares
         to be traded.

         Management  and  council  believe  neither  of the  above  claims  will
         adversely affect the Company.

                                       24
<PAGE>

                       FILMAGIC ENTERTAINMENT CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001



Note 5. INCOME TAXES

         The Company has a net operating  loss  carry-forward  of  approximately
         $1,700,000 that may be used to offset future taxable  income.  However,
         the tax benefit has not been  recorded  due to the  uncertainty  of the
         utilization of these  carry-forwards.  The carry-forwards all expire by
         2021. The Company has not filed federal tax returns since 1993.

                                                       2001             2000
                                                     --------         --------
         Deferred tax benefit of
          net operating loss carry-forwards          $570,000         $560,000

         Valuation allowance                         (570,000)        (560,000)
                                                     --------         --------
         Income tax benefit                          $      0         $      0
                                                     ========         ========



Note 6. STOCK OPTIONS

         As of  December  31,  2001,  the  Company  had  the  following  options
         outstanding:

                                                                 Black-Scholes
                                    Shares     Price  Expires   Value     Total
                                  ---------    ----    ----     -----    -------
         Bruce Harris               600,000    $.04    2006    $.0307    $18,420
         Four other board members   400,000    $.04    2006     .0307     12,280
                                  ---------                              -------
                                  1,000,000                              $30,700
                                  =========                              =======

         All options were issued in 2001 and vest over the next 12 months.

         In March,  2002,  the Company  committed  to issue  options to purchase
         400,000 shares of common stock to each board member, at a price of $.04
         per share,  exercisable at 100,000 shares per quarter.  The options are
         non-cumulative,  and expire at the end of each quarter. No options have
         been exercised to date.


                                       25
<PAGE>

                       FILMAGIC ENTERTAINMENT CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001




Note 6. STOCK OPTIONS (continued)

         In accordance  with APB Opinion No. 25, the fair market value of option
         grants  is  estimated  on the date of grant  with the  intrinsic  value
         recorded  for any excess of the market  price of the  underlying  stock
         over the exercise  price of the option.  The  1,000,000  commons  stock
         options  issued  in  December  2001  were  all  issued  at  market.  In
         accordance with SFAS No. 123, the Company uses the Black-Scholes option
         pricing  model for  proforma  footnote  disclosure  purposes,  with the
         following  assumptions  used  for  grants  in  all  periods  presented:
         dividend  yield of 0%, risk free interest rate of 5%,  expected  option
         life of 5 years and expected  volatility  of 100% at the date of issue.
         Had the Company  fully  adopted SFAS No. 123, the net loss for the year
         ended December 31, 2001 would have been  $(106,130),  and the basic and
         diluted loss per share would still have been $(.01).


Note 7. COMMITMENTS

         The Company has the following commitments as of December 31, 2001:

         Bruce Harris is to receive 1,000,000 shares of stock each year for four
         years.

         Each of the five board members is to receive  200,000  shares of stock,
         50,000 shares each quarter for 2002.

         The Company's legal counsel,  a board member, is also to receive either
         $1,500 in cash or 37,500 shares each month during 2002.

         The Company's  accountant,  a  shareholder,  is also to receive  either
         $1,000 in cash or 25,000 shares each month in 2002.

                                       26
<PAGE>
Item 8. Changes In and Disagreements With Accountants on Accounting and
        Financial Disclosure.

         None



                                    Part III


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


         Mr. R. Bruce  Harris:  Age 50, CEO, and  Director.  Mr. Harris has been
         involved  in  International  Business  for many years.  Mr.  Harris has
         experience in international mergers and acquisitions,  management,  and
         development.

         Mr. Frank DeSantis:  Age 44, Director,  Corporate Counsel, Mr. DeSantis
         has been involved in all phases of corporate law,  investment  banking,
         trial litigation, contracts, and franchise agreements.

         Ms.  Aubrye  Harris:  Age 27,  Director.  Ms. Harris has a BS degree in
         International  Management and has many years experience in finance. She
         has worked with corporate accounts,  financial  planning,  and investor
         relations.

         Mr. Harvey Lalach:  Age 35,  Director.  Mr. Lalach has been involved in
         all areas of retail equity markets for the past 14 years. He previously
         served, as a Branch Manager for a major retail brokerage firm in Canada
         and most  recently  was involved  with a number of small cap  companies
         with a variety of responsibilities.

         Ms. Song Liping: Age 44, Director.  Ms. Song Liping has an MBA, British
         and American Language & Literature.  She has been a Foreign Development
         Manager with the Development  Department of Shanghai Pudong Real Estate
         Company. Ms. Song has been a Lecturer, Director and Interpreter, of the
         First  Teaching & Research  Office and  Business  Head for the External
         Cooperation Department for Shanghai New Asia.


                                       27
<PAGE>

Item 10. Executive Compensation.


Name and Principal       Year       Salary         Bonus     Other Annual
Position                                                     Compensation
--------                                                     ------------

 R. Bruce Harris         2001      $  -0-         $  -0-     $ 28,000 (2)(3)
                         2000      $  -0-         $  -0-     $ 20,000 (1)
   Pres./CEO             1999         -0-            -0-         -0-
                         1998         -0-            -0-         -0-

 Aubrye A. Harris        2001      $  -0-         $  -0-     $  8,000 (3)
                         2000         -0-            -0-         -0-
    Secretary            1999         -0-            -0-         -0-
                         1998         -0-            -0-         -0-

 Frank DeSantis          2001      $  -0-         $  -0-     $  8,000 (3)
                         2000         -0-            -0-         -0-
   Director              1999         -0-            -0-         -0-
                         1998         -0-            -0-         -0-

 Harvey Lalach           2001      $  -0-         $  -0-     $  8,000 (3)
                         2000         -0-            -0-         -0-
   V.P./Director         1999         -0-            -0-         -0-
                         1998         -0-            -0-         -0-

 Song Liping             2001      $  -0-         $  -0-     $  8,000 (3)
                         2000         -0-            -0-         -0-
  Director               1999         -0-            -0-         -0-
                         1998         -0-            -0-         -0-

(1)      During 2000, R. Bruce Harris was granted the right to be issued 500,000
         shares for his services in 2000 should the stock price reach a level of
         $.10 per share.

(2)      During  2001,  R.  Bruce  Harris  was  issued  500,000  shares  as  his
         compensation   for  2001,   additionally   the  Board   established  as
         compensation for 2002, 500,000 shares for each six month period.

(3)      During  2001,  the Board of  Directors  authorized  and issued  200,000
         shares of stock to each of the directors for 2001, and authorized  that
         (3)  50,000  shares of stock be issued  on a  quarterly  basis for each
         board member as board compensation for 2002.


                                       28
<PAGE>

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

   The following "Table" represents the Ownership of Certain Beneficial Owners
                    and Management as of December 31, 2001:



<TABLE>
<CAPTION>

(1) Title of Class     (2) Name and Address            (3) Amount and Nature           (4) Percent of
                           of beneficial owner             of beneficial ownership         Class(2)

<S>                     <C>                                 <C>                            <C>
Common Stock
Par value $.001

                        R. Bruce Harris  (1)                1,200,000(3)                   10.98%
                        President/ Board Chairman
                        1042 N. Mountain #B348
                        Upland, California 91786


                        Aubrye A. Harris (1)(5)                200,000                      1.83%
                        Secretary/ Director
                        1042 N. Mountain #B348
                        Upland, California 91786

                        Harvey Lalach    (1)                    200,000                     1.83%
                        Vice Pres./ Director
                        2575 Alberta Court
                        Kelowna, BC  V1W2X8

                        Frank DeSantis   (1)                    250,000                     2.29%
                        Director
                        2869 India St.
                        San Diego, California 92103

                        Song Liping (1)                         200,000                     1.83%
                        Director
                        Rm504 Bldg #305,Datong RD
                        Gaquaiao, Shanghai, PRChina

                              Total of all officers
                              and directors as a group         ---------                    -----
                               ( Five Persons):                2,050,000                    18.76%
                                                               ---------                    -----

                        R. G. Harris (4)                          35,000                       .3%
                        1777 Woodland St-Ste G1
                        Upland, Calif. 91786

                                       29
<PAGE>

                        Drones Financial Ltd.                    500,000                     4.58%
                        Union Bank Plaza Suite 2600
                        445 South Figueroa Street
                        Los Angeles, CA 90071-1630

                        Triad Investment Group                 1,200,000 (6)                10.98%
                        Unit A 6F Two Chinache Pl
                        135 Des Voeux Rd.
                        Hong Kong

                        Twin Rainbow Investments, Inc            500,000                     4.58%
                        P.O. Box 552
                        Lakeport, Ca. 95453
</TABLE>

         (1) Denotes Officers or Directors

         (2) Based on 9,925,506  shares issued and  outstanding,  plus 1,000,000
         contingently issuable shares

         (3) Includes 500,000 contingently  issuable shares to be deliverable if
         share value exceeds $.10/share

         (4) R. G.  Harris is the father of R. Bruce  Harris,  CEO.  Mr.  Harris
         disclaims all beneficiary interest in any of his father's shares

         (5) Aubrye A. Harris is also the daughter of the President

         (6) Includes  500,000  contingently  issuable shares to be purchased at
         $.06/share if share value exceeds $.10/share

Item 12. Certain Relationships and Related Transactions.

         Based  solely  upon a review  of Forms  3, 4,  and 5  furnished  to the
registrant  under  Section  16(a) of the  Securities  Exchange Act of 1934,  the
following persons failed to timely file reports required by Section 16(a) during
the most recent fiscal year or prior years:



R. Bruce  Harris,  President  and Board  Chairman,  beneficial  owner of 500,000
contingently issuable common shares (5.71%)

No Form 3 - initial filing of equity securities by directors and officers -
            for the fiscal year ended December 31, 2000

No Form 5 - annual statement of ownership of securities by directors and
            officers - for the fiscal year ended December 31, 2000

Triad Investment  Group,  beneficial owner of 700,000 common shares plus 500,000
contingently issuable common shares ( 16.43%)

No Form 3 - initial filing of equity securities by a 10 percent owner (700,000)
            common shares shares  (11.38%) - for the fiscal year ended
            December 31, 1999

No Form 4 - changes to a previously filed Form 3,
            beneficial owner ( 11.38% to 16.43 %) - for the fiscal year ended
            December 31,2000

No Form 5 - annual statement of ownership of securities by a 10 percent owner
            for the fiscal years ended December 31, 2000 and 1999, respectively

                                       30
<PAGE>

Rowland J. Mosser, beneficial owner of 1,030,583 common shares (10.38%). No Form
5- annual  statement of ownership of  securities  of a 10 percent  owner for the
fiscal year ended  December  31, 2001 has been filed.  However,  the  beneficial
owner has transferred his shares after December 31, 2001 to the Depository Trust
Corporation and the shares no longer appear in his name.

Ronald Webber, beneficial owner of 1,030,583 common shares (10.38%). No Form 5 -
annual statement of ownership of securities of a 10 percent owner for the fiscal
year ended December 31, 2001 has been filed.  However the  beneficial  owner has
transferred  his  shares  after  December  31,  2001  to  the  Depository  Trust
Corporation and the shares no longer appear in his name.


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

         A Form 8-K was filed on November 9th,  2001  indicating a change in the
officers and directors of the Registrant.




                                   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.

FILMAGIC ENTERTAINMENT CORPORATION
----------------------------------
         REGISTRANT

By:____________________________________
         R. Bruce Harris, President

By:____________________________________
         Frank DeSantis, Director

By: ____________________________________
         Harvey Lalach, Director

By:_____________________________________
         Aubrye A. Harris, Director

By: _____________________________________
         Song Liping, Director


Dated:            May 15, 2002


                                       31