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 May 31, 2000

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


                        Commission File Number 033-67536


                       AMERICAN DREAM ENTERTAINMENT, INC.
                       ---------------------------------
               (Exact name of registrant as specified in charter)



           Minnesota                                     59-3169033
  --------------------------                          ---------------
 (State or other jurisdiction                         (IRS Employer
of incorporation or organization)                    Identification No.)


1800 East Sahara Avenue, Suite 107, Las Vegas, Nevada                    89104
-----------------------------------------------------                    -----
     (Address of principal executive offices)                         (Zip Code)



       Registrant's telephone Number, including area code: (702) 734-7557

Securities registered pursuant to Section 12(b) of the Exchange Act: None

     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.

     [ X ] Yes [ ] No

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

State  issuer's   revenues  for  its  most  recent   reporting  period  May  31,
2000........$-0-.

Aggregate  market  value  of the  voting  stock  held by  non-affiliates  of the
registrant at May 31, 2000 was $76,857,310.


<PAGE>


                               FORM 10-KSB - Index


                                     PART I

                                                                           Page
                                                                           ----

Item 1.           Description of Business ................................   2

Item 2.           Description of Property.................................   9

Item 3.           Legal Proceedings.......................................   9

Item 4.           Submission of Matters to a Vote of Security Holders.....   9


                                     PART II


Item 5.           Market of the Registrant's Securities and
                   Related Stockholder Matters............................  10

Item 6.           Management's Discussion and Analysis of
                  Financial Condition and Results of Operations...........  11

Item 7.           Financial Statements and Supplementary Data.............  13

Item 8.           Changes in and Disagreements with Accountants
                   on Accounting and Financial Disclosures................  13

                                    PART III


Item  9.          Directors and Executive Officers of the Registrant......  13

Item 10.          Executive Compensation..................................  14

Item 11.          Security Ownership of Certain Beneficial
                   Owners and Management..................................  15

Item 12.          Certain Relationships and Related Transactions..........  16

Item 13.          Exhibits, Consolidated Financial Statements,
                  Schedules and Reports on Form 8-K.......................  16

                  Signatures..............................................  18


                                       1
<PAGE>

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This  Annual  Report on Form  10-KSB and the  documents  incorporated  herein by
reference contain forward-looking statements that have been made pursuant to the
provisions  of the  Private  Securities  Litigation  Reform  Act of  1995.  Such
forward-looking  statements  are based on current  expectations,  estimates  and
projections about American Dream  Entertainment,  Inc.'s industry,  management's
beliefs,  and  assumptions  made by  management.  Words  such as  "anticipates,"
"expects," "intends," "plans," "believes," "seeks,"  "estimates,"  variations of
such words and similar expressions are intended to identify such forward-looking
statements.  These  statements are not guarantees of future  performance and are
subject to certain risks,  uncertainties  and assumptions  that are difficult to
predict;  therefore, actual results and outcomes may differ materially from what
is expressed or forecasted in any such forward-looking statements.


                                     PART I


ITEM 1.  BUSINESS

GENERAL

American Dream Entertainment, Inc. is an entertainment company that has obtained
the  exclusive  license  for the  territory  of the USA for a creative  animated
cartoon property entitled "Robin and The Dreamweavers," aimed at the young adult
market. The license consist of a feature length animation movie and 26 half hour
episodes for all domestic media, including network and cable television and home
video. Lou Scheimer Productions in Los Angeles,  California, well known for such
animated productions as Superman, Fat Albert & The Cosby Kids, Archie's,  He-Man
and  She-Ra,  is in charge of the  television  production  and will  deliver the
feature  film this Fall 2000 and the first 13  episodes  by Spring  2001.  Final
exhibition is planned at the "MIPCOM" conference in Cannes, France on October 2,
2000, the world-renowned marketplace for television and movie productions.

American Dream  Entertainment,  Inc. acquired the exclusive rights in the United
States for  marketing  and  distributing  the entire media  properties  known as
"Robin and The  Dreamweavers." In March 1999, the Company entered into a License
and Royalty Agreement with Dreamweavers, N.V., a Curacao company, that developed
the "Robin and The  Dreamweavers"  concept  which  consists of a feature  length
animation  movie and 26 half hour episodes . This agreement  granted the Company
exclusive  rights in the North American  market for the feature film, TV series,
Internet merchandising,  music, video and publishing.  The term of the agreement
is for a period  of 15  years,  with an option  to  extend  the  license  for an
additional  five-year  period.  In  consideration  of  this  License  Agreement,
American Dream Entertainment, Inc. issued 16,000,000 shares of restricted common
stock to Dreamweavers N.V. and agreed to pay Dreamweavers,  N.V. a royalty equal
to 3% of gross revenues. In addition, American Dream Entertainment,  Inc. agreed
to pay  $5,500,000,  which shall be payable on the  successful  completion  of a
private placement of the securities of American Dream Entertainment, Inc.

The "Robin and The Dreamweavers"  concept consists of several media products, an
animated feature length movie for television,  animated TV series, music CDs, an
Internet   website  with  e-commerce   capabilities   and   interactive   games,
private-label   fashions   based  on  the   character   of  "Robin,"   ancillary
merchandising  products such as video games, toys, apparel,  school supplies and
cosmetic products.

American  Dream  Entertainment,  Inc.  also  license and intends to market music
properties based on the characters from the animated  series.  The Company plans
to  aggressively  exploit its  proprietary  characters and programs  through the
licensing  of  merchandising  products  targeted  at  the  12  to  28  year  old
demographic.

American Dream  Entertainment,  Inc. has assembled a management  team with broad
experience  and success in the field of animation and  entertainment  to exploit
its  media  properties.   The  team  consists  of  experts  and  specialists  in
production,  sales,  marketing,  distribution,  licensing and technical  advice.
Importantly, in late October 1999, American Dream Entertainment,  Inc. presented
its "Robin and The Dreamweavers" project at "MIPCOM" in Cannes,  France. Because
of that presentation,  the Company entered into an agreement with Tempo Media of
Denmark in cooperation with The Fremantle  Corp.,  granting the exclusive rights
to sell the television productions of "Robin and The Dreamweavers" to the United
States.

                                       2
<PAGE>


On April 10, 2000  American  Dream  Entertainment,  Inc.  acquired,  100% of the
common stock of Robinsdream  Interactive N.V.  ("RDI"),  a Netherlands  Antilles
company  for the  consideration  of  600,000  common  shares of  American  Dream
Entertainment,  Inc. RDI is entitled to the exclusive exploitation of the "Robin
and The  Dreamweavers"  related  trademarks  and  characters  with regard to the
Internet and  Interactive  activities  as well as to the sales of "Robin and The
Dreamweavers"  related  products  through an online  shop on the  Internet  on a
worldwide basis excluding the United States.  According to a license  agreement,
the  license  fee paid to  Dreamweavers,  N.V.  is 15 to 20  percent  of the net
revenues generated by Robinsdream Interactive N.V.

American Dream Entertainment, Inc. has not generated any media revenues to-date,
but plans to generate revenues,  in the future, from the creation,  development,
production, licensing and distribution of animated properties relating to "Robin
and The Dreamweavers"  for exhibition in all domestic media,  which include home
video,  DVD,  pay  television  and  cable  television  markets.  American  Dream
Entertainment, Inc. has also developed plans to market music properties based on
the characters from the animated series.

In addition, American Dream Entertainment, Inc. is currently building a range of
complementary media products to attract the younger audience groups that are its
key target  demographic.  The company is in final negotiations with Lou Scheimer
Productions  in Los Angeles to acquire the  license of two  additional  animated
projects that satisfy the demand for animated media  properties.  These projects
consist of 26 half-hour animated episodes and include such concepts as Hollywood
2090, a  futuristic  Hollywood  action-packed  adventure;  Cleo,  Empress of the
Future,  a family oriented  cartoon with  Cleopatra,  the main character and her
confrontation with the Roman Empire.

The Company's principal office is located at 1800 East Sahara Avenue, Suite 107,
Las Vegas, Nevada 89104.

BUSINESS MODEL AND PRODUCTS

In March 1999, American Dream Entertainment,  Inc. acquired the exclusive rights
in the  United  States to  exploit  the Media  Property  known as "Robin and The
Dreamweavers" under a License and Royalty Agreement granted by Dreamweavers N.V.
a Curacao Company that has developed the "Robin and The  Dreamweavers"  concept.
This concept consists of several media products, an animated feature length show
for television,  animated television series, a soundtrack,  an Internet Site and
games,  a Robin  private  label (a  fashion  label with  designs  based upon the
character of "Robin"),  ancillary  merchandising  products  related to the video
games, toys, apparel, school supplies and cosmetic products.

The feature length animation movie,  exploiting the characters of "Robin and The
Dreamweavers",  in traditional  cell  animation  technique for exhibition in all
domestic and international  media,  including home video and DVD and television,
is planned to be licensed to Television  stations worldwide.  "Robin",  the main
character in the film and the series,  who fights in a  futuristic  (cyber)world
for "good",  the environment and for tolerance,  is contemporary,  hip, sexy and
wise in the  ingenious  way of today's  young  woman and appeals to all ages and
demographics, especially to those who enjoy house and dance music, hip hop music
and R&B. Due to the popularity and audience  recognition of the main  character,
the project can branch out in many directions. In addition to the media products
mentioned above including an animated television series, music CD's, an internet
web site and games and  ancillary  merchandising  products,  the  "Robin and The
Dreamweavers"  concept will consist of the "Robin and The Dreamweavers"  private
label (a fashion label with designs based upon the character of "Robin").

We plan  on  launching  our  marketing  campaign  by  establishing  broadcasting
contracts with "Cable" television network companies. In addition, in conjunction
with these broadcasting  contracts, we plan on establishing marketing agreements
for the merchandising of the music,  fashion wear and related products under the
"Robin and The Dreamweavers" trade mark.

The feature length animation movie, the television  animation series, music CD's
and DVD's ensure that an extensive  multi-channel  platform is established.  The
film and the animated  television  series are expected to stimulate  interest by
broadcasters and advertisers  which will, in turn,  create demand for additional
animated  products,  commercials  during the  broadcast,  advertisements  on the
various  web-sites that target consumer sites and appeal to customers'  specific
interests, data based "chat rooms", sales of CD's, clothing, school supplies and
videogames through a variety of distribution channels.

                                       3
<PAGE>

In addition to these products, American Dream Entertainment, Inc. intends in the
future to extend  its  product  portfolio  with  other  (entertainment)  related
activities.


Proposed Products to be Offered

1. Animated Television. The Company will continue to attempt to acquire animated
television series for exhibition in all domestic and  international  media. Each
half-hour episode will be a complete story that deals with a contemporary social
issue relevant to young adults or mature themes.

2. Music CD's.  As music plays an  important  role in the success of the various
animation projects, the best songwriters and most successful producers have been
contracted for the compositions.  To ensure the contemporary  music focus of the
projects, up and coming dance producers will provide new songs by well respected
performers. The music, with a high "house", "dance", "hip hop", "R&B" or "jazzy"
content,  such depending on the specific animation project, will be available on
a (double) CD album.

3. Multi Media Platform.  With the concept of "Robin and The Dreamweavers" still
in its  premature  phase,  it had already  become clear to its creators that the
current  technological  developments would not only provide the right expedient,
but also be the  motive to launch the  various  projects  of the  Company as the
ultimate multi channel  concepts.  In this time of sending enormous data bulk in
seconds,  streaming video on the computer,  broadband, WAP technology and so on,
the  possibilities of putting such multimedia  concepts on the market will prove
to be  endless.  The  Company  focuses on the  combination  between  television,
Internet, video's, games, database marketing, WAP and telecommunications to come
to an optimal use of the  current  multi  channel  possibilities,  enabling  the
Company  to  provide  every  segment in the  target  audience  with the  correct
information, services or products at the proper time.

The Company will utilize broad-based  proprietary digital development techniques
to create leading edge entertainment contents.  CDRom's, Internet web sites data
base marketing will,  amongst others,  feature  multi-player  game  experiences,
sponsorship  and marketing  opportunities  as well a gaming applets and shopping
components.  The  Internet  sites  will  be  used  to  create  awareness  of the
characters,  cross promote all revenue streams,  generating  sales,  advertising
revenues and subscription fees.

4. A "Robin and The Dreamweavers" Private Fashion Label.  Capitalizing on unique
designs  based upon the  character of "Robin" and her friends,  the Company will
develop  a  fashion  label  and  will  use  "Robin"  in  numerous  international
campaigns.

5. Ancillary  Merchandising  Products. As the main aim of the Company is to make
revenues out of  licensing  and  merchandising  of the various  characters,  the
Company will oversee the license and merchandising of consumer products, such as
video games,  toys,  apparel,  school  supplies,  etc. As the various  exciting,
intelligent and fantasy-full  characters lend themselves perfectly to generating
income,  the Company is looking  into  developing  electronic  gadgets such as a
pager  memo  watch  and  a  pocket  e-mail  device  and   stationary,   personal
care/cosmetic products and other young adult oriented merchandise.

Through  identification with the main characters in the feature length animation
movie, the animation series on TV and all corresponding  merchandising products,
the projects of the Company lend  themselves  to generating  various  streams of
revenues.

MATERIAL CONTRACTS

License and Royalty Agreements
The Company is the  beneficiary to Licensing and Royalty  Agreements in terms of
which the Company has obtained an exclusive license for a period of fifteen (15)
years,  with the option to extend for an additional five (5) years,  for the USA
rights to "Robin and The Dreamweavers."


                                       4
<PAGE>


The full range of media products includes the following:

-        Animated Feature Length Movie for Television
-        Animated Television Series
-        Music CD's
-        Internet Web Site and Game
-        A "Robin and The Dreamweavers" Private Label
-        Ancillary Merchandising Products

American  Dream   Entertainment,   Inc.  is  indirectly  benefited  through  its
subsidiary Robinsdream Interactive,  N.V. Robinsdream Interactive,  N.V. entered
into a License Agreement with Dreamweavers, N.V. dated June 16, 1999 granting it
a license for a period of fifteen  (15) years,  with the option to extend for an
additional fifteen (15) years, for the exclusive  exploitation of the "Robin and
The Dreamweavers"  related trademarks and characters with regard to the Internet
and  Interactive  activities.  In addition,  this agreement  grants  Robinsdream
Interactive,  N.V.  the  license  for the sales of "Robin and The  Dreamweavers"
related  products  through an online shop on the  Internet on a worldwide  basis
excluding the United States.

Television Distribution Agreements.  American Dream Entertainment,  Inc. entered
into an agreement with Tempo Media of Denmark, in cooperation with The Fremantle
Corporation,  for the purchase of the  exclusive  rights to sell the  television
production "Robin and The Dreamweavers" in the United States.

MARKETING AND DISTRIBUTION

American  Dream  Entertainment,  Inc. has recognized the value of viewers in the
teen/young  adult  age  group.  This  target  group  gains  increased  financial
independence  beginning at age 13, at which time they typically go  unsupervised
to the  movies or  malls,  shop on their  own,  and make  their  own  purchasing
decisions.  Young adults have an average of $500 per month in disposable income.
They typically  influence 20% of family spending which  represents more than 20%
of the total dollar amount spent on CD's, Electronics, and Video games.

"Robin and The Dreamweavers" was created and designed to attract the appetite of
this market and stimulate  purchases of ancillary products that include lines of
merchandise  that are  designed  for the young adult  market.  Examples of these
products are clothing,  accessories,  compact discs,  stationery items,  fitness
Items, cosmetics, jewelry, watches, cell phones, home furnishing, bank accounts,
limited access credit cards, video games, and computers.

American Dream  Entertainment,  Inc.  intends to use the following media outlets
for the exploitation of its products:

U.S. Television
---------------

Networks.  The United  States  network  television  market is the most  valuable
market  to  producers  of  animated  programming.  In the  past,  networks  have
generally  reached the largest  audiences  and paid the  highest  license  fees,
enabling a  producer  to finance a more  significant  portion of its  production
costs  through  network  license fees than  licensing  the same program to cable
networks  or  first-run  syndicates.   Weekend  morning  children's  programming
currently broadcasts on ABC, CBS, FOX, UPN and WB (the "Networks"). In addition,
FOX and WB broadcast  animated  programming for young  audiences  during weekday
mornings  and  afternoons.  NBC  has  not  broadcasted  children's  programming,
including animation, since 1992.

Syndication.  Syndication  provides an important  first-run,  as well as repeat,
broadcast  market for animated  programs.  Traditionally,  syndication  has been
populated by programs that support merchandise and whose characters are featured
in toy lines,  apparel and other consumer  products.  During the 1996-97 season,
syndicators such as Buena Vista Television  Distribution,  Saban  Entertainment,
Bohbot   Entertainment  and  Claster  Television  were  distributing  top  rated
children's programs, both Monday through Friday and on Saturdays and Sundays.

Cable and Direct Broadcast  Satellite  ("DBS").  Cable and DBS are becoming more
popular  with  children.  The  growth in the  number of cable  channels  and the
development of DBS provides  additional  outlets for animated  programming.  The
cable channels which currently broadcast animated programs include  Nickelodeon,
USA Network,  The Disney Channel,  The Cartoon Network,  The Comedy Channel, The
Family Channel, HBO, Showtime and MTV. Both Disney and Fox Kids Network recently
announced  that they will be  launching  all-kids  programming  cable  channels.


                                       5
<PAGE>


Recent  increases in the  penetration and viewership for  Turner-Warner  Cartoon
Network may indicate that this avenue of  distribution/exhibition  will continue
to  grow  as an  important  outlet  for  animated  programming.  Notwithstanding
potential  growth in the animated  programming  industry,  other  factors  exert
contrary pressures on the number of slots available for animated programming and
we believe that there will be fewer slots available for such  programming in the
coming seasons than existed in the past.

Growth in National Television
-----------------------------

The growth in the number  national  television  outlets has  created  additional
demand  for  animated  programming.  The  commercialization  of  the  television
industry has  encouraged a  ratings/revenue-oriented  focus among  broadcasters,
thereby  increasing  the  demand for higher  quality  television  entertainment.
Animated  programs  produced in the United  States have enjoyed wide  acceptance
nationally.  In addition, the national market has experienced an increase in the
number of cable and  satellite  programming  services.  These added  programming
services have created an opportunity for distributors,  including American Dream
Entertainment,  Inc., to license  simultaneously both traditional  broadcast and
satellite  programming  rights  within the same  territory.  Television,  cable,
satellite  and home video  sales of  animated  programs  produced  in the United
States can account for the majority of the revenue for a given program.  Because
the global  demand has grown,  it has created a need for and an  opportunity  to
produce   internationally   created  animated  programs.   U.S.  producers  work
collaboratively  with their  international peers to develop and produce programs
for  initial  releases  simultaneously  throughout  the  world.  American  Dream
Entertainment,  Inc. is concentrating  its efforts on the U.S. market,  which is
the largest and most  lucrative  market and the market for which it has obtained
exclusive rights under its Licensing and Royalty Agreement.

Home Video and DVD
------------------

The  home  video  distribution  business  involves  the  promotion  and  sale of
videocassettes  and videodisks to local,  regional and national video  retailers
(i.e.  video  specially  stores,  convenience  stores,  record  stores and other
outlets),  which  then  rent or sell such  video  cassettes  and video  disks to
consumers primarily for private viewing.  When video cassettes are sold directly
to the public  they are priced  significantly  lower than the prices  charged to
wholesalers  who will rent the video.  This direct sale to consumers is commonly
referred  to as the  "sell-through  market." In a typical  home video deal,  the
wholesale  distributor  will  receive a  non-refundable  advance  to be  applied
against  royalties which may range from 8% to 25% of the wholesale selling price
of a  video  cassette  or  disk.  Due to the  significant  revenue  that  can be
generated from licensing and merchandising television characters,  producers and
owners of animated  characters  seek to drive  sales of toys and other  licensed
products  through the production and  distribution  of programs  featuring their
characters.  In  addition  to  utilizing  television  to  advertise  products to
children,   children's   programming   itself   provides  broad   licensing  and
merchandising opportunities. Characters developed in a popular series, and often
the series themselves,  achieve a high level of recognition and popularity among
children,  making  them  valuable  assets for the  licensing  and  merchandising
market,  where  they  can  provide  attractive  "branding"  opportunities.   The
children's   market  is  one  of  the  fastest  growing   segments  in  licensed
merchandising  sales,  relating to  children-oriented  products.  Among the most
popular licensed items are toys,  T-shirts,  food,  watches and soft vinyl goods
such as boots,  backpacks and raincoats.  In addition to the distribution venues
described  above,  a number of other sources of revenue exist for American Dream
Entertainment,  Inc. for the  exploitation  of ancillary  rights.  For Instance,
interactive  technology is rapidly  evolving to integrate full motion video with
the  personal  computer,  creating  an  increasing  array of  opportunities  for
distribution rights in a market commonly referred to as "multimedia".

The Internet
------------

The video game market has grown  exponentially  since it was first introduced in
the late 1970s.  Today,  almost  two-thirds of U.S.  households have a cartridge
game system or a personal  computer on which games can be played.  In  addition,
today's gamers are able to use advanced gaming systems, including networked PCs,
to challenge  other players which is infinitely  more  interesting  than playing
against the  computer.  The  Internet has the  potential of making  multi-player
gaming  explode.  Currently,  more than 5 million users are spending more than 5
hours a week  on-line.  However,  gaming on the  Internet  has not yet taken off
because of several complex technological challenges, one of which is the problem
of "latency" or lag time. American Dream Entertainment,  Inc. plans to develop a
real-time  multi-player  gaming over the Internet.  This multiplayer game "Robin
and The Dreamweavers," will focus on environmental issues and will capitalize on
the natural  desire to explore the world and  participate  in great  adventures.
Participants  will be able to check-out  the latest  multi-player  episodic game
story and test their skills against millions of potential  opponents.  They will
also be able to  participate in contests,  tournaments,  and special events that
are targeted to their individual game and leisure  interests.  This service will


                                       6
<PAGE>


be  speech-enabled,  so players will be able to taunt their opponents,  or cheer
their teams on, as they play. In addition,  text and voice based chat areas will
provide  a place to hang out with  friends,  meet  other  players  and even plot
winning  strategies with their teams.  Industry insiders believe that one of the
next  big  waves  will  be  PC-based,  real-time  multi-player  internet  games,
especially  because PCs have much more built-in  connectivity  than  traditional
video-game platforms.

American Dream Entertainment,  Inc. will maintain an Internet Site that displays
information  regarding  the "Robin and The  Dreamweavers"  media  products,  and
general  information  about the Company and its progress in marketing  products,
news relating to product improvements and new products, distribution agreements,
release  dates of  feature  films,  video  series  Internet  games,  and  future
developments.  In addition, American Dream Entertainment,  Inc. will utilize the
Internet to display and market the various "Robin and The Dreamweavers" products
for direct sale over the Internet.

INDUSTRY

General

Animation  has been a major  entertainment  medium for  decades.  Since  cartoon
characters  appear the same dubbed in any  language,  animation  easily  crosses
national and language barriers. In addition, animation generally does not become
"dated" as does  live-action  programming,  allowing  an  animated  series to be
enjoyed by each new generation of children.

Children  are the primary  target  market for animated  television  programming.
Nielsen data indicate that children aged two to eleven are the nation's heaviest
consumers  of  television,  watching  an  average  of almost 22 hours each week.
Growth In  advertising  spending  targeted at children and the  expansion in the
number of television  channels  dedicated to children's  programming  around the
world have caused an increase in the demand for animated television programming.

Animated  programming  has  expanded  beyond the  traditional  Saturday  morning
line-up.  Monday  through  Friday  mornings and  afternoons  now attract an even
greater  number  of  young  viewers  than  Saturday  morning.   There  are  many
programming  blocks targeted toward children,  including "The Disney Afternoon,"
Fox  Children's  Network and WB Kids.  In addition,  many  first-run  syndicates
provide  programming  blocks of animation  Monday  through  Friday and on Sunday
mornings. Furthermore, programming successes such as "The Simpson's" and "Beavis
& Butthead",  and more recently "King of the Hill",  demonstrate  that animation
also appeals to adults.

Increases in cable and satellite channels world wide and the privatization,  new
entry and expansion in the international broadcast, satellite and cable industry
are  providing  additional  opportunities  for growth for  animation  companies,
especially those companies which own and distribute their own programs.

An increase in the number of channels and broadcasters world-wide, especially in
the United  States,  has caused an increase in competition  among  broadcasters.
This competition has had a negative impact on certain broadcasters that have had
difficulty  competing.  However,  the more successful and committed  programmers
have  grown  significantly.  In this  environment,  access to  distribution  has
emerged as a more limiting factor and a key element of success.

Animation Production

The first step of a typical animation  production is the creation of the script.
A story editor  supervises the  preparation of each episode's  script by various
freelance  script  writers.  Next,  artists  depict  the  story  and  action  In
storyboards  which  provide a blueprint for the  animation  process.  Voices and
songs  are  recorded  and the  recordings  are  analyzed  and  timed so that the
animation  can be  synchronized  to the voice  track.  Based on the  script  and
storyboard, artists create character designs, as well as key background drawings
and paintings.  These  essential  elements are assembled  into a  pre-production
package for each  episode  which is then  shipped to an overseas  subcontractor.
Subcontractors  use  the  pre-production   materials  to  perform  most  of  the
labor-intensive aspects of production.  Most of these subcontractors are located
In low-cost  labor  countries in the Far East,  including  South Korea,  Taiwan,
China and the Philippines.  When completed, the subcontractor ships the negative
and work-print for each episode to the producer.  The film is then taken through
a  post-production  process  which  involves  editing the picture and  dialogue,
transferring the filmed Images to video tape, creating sound effects,  composing
and producing the musical  score and mixing and  synchronizing  the sound to the
picture. After the post-production process, an episode is ready for delivery.


                                       7
<PAGE>


COMPETITION

American Dream  Entertainment,  Inc. will experience  intense  competition  with
respect to its animated  feature  film,  26 half hour episodes and its animation
products.

Movie  Studios.  American Dream  Entertainment,  Inc.'s  animated  property will
compete  with feature  films and other  family-oriented  entertainment  products
produced by major movie studios and later made for television, including Disney,
Pixar,   DreamWorks  SKG  ("DreamWorks"),   Warner  Bros.  Inc.,  Sony  Pictures
Entertainment  ("Sony"),  Twentieth  Century  Fox Film  Corporation  ("Twentieth
Century Fox"), Paramount Pictures  ("Paramount"),  Lucasfilm Ltd. ("Lucasfilm"),
Universal Studios, Inc. and MGM/UA, as well as numerous other independent motion
picture production companies.

In 1998 and 1999, competition  significantly intensified in the animated feature
film market.  Family-oriented  animated  feature films released in 1998 and 1999
included the following:

Released in 1998:

         - A Bug's Life by Pixar

         - Quest for Camelot by Warner Bros.,

         - The Rugrats Movie by Paramount,

         - Prince of Egypt by DreamWorks, and

         -  Antz,  a  fully  computer-animated  movie  by  DreamWorks  with  its
affiliate Pacific Data Images ("PDI").

Released in 1999:

         - Toy Story 2 by Pixar

         - Pokemon: The First Movie by Warner Bros.,

         - Tarzan by Disney, and

         - Iron Giant by Warner Bros.

In 1998,  the  release of A Bug's Life  achieved  domestic  box office  revenues
exceeding  $162 million,  Antz,  The Rugrats Movie and Prince of Egypt  achieved
domestic box office revenues of over $91 million,  $100 million and $98 million,
respectively.  The release of Toy Story 2 in 1999 generated  domestic box office
revenues  that exceeded $241 million.  Other  animated  family-oriented  feature
films released during 1999, such as Pokemon:  The First Movie,  Tarzan, and Iron
Giant,  achieved domestic box office revenues of over $85 million, $171 million,
and $23 million, respectively.

Our animated  feature  film will  compete  with  feature  films and other family
oriented  entertainment  products produced by major movie studios and later made
for television,  including Disney, DreamWorks SKG ("DreamWorks"),  Pixar, Warner
Bros., Inc.,  Twentieth Century Fox Film Corporation  ("Twentieth Century Fox"),
Paramount  Pictures  ("Paramount"),  Columbia Tri-Star Pictures Inc., Lucas film
Ltd.  ("Lucas  film"),  Universal  City  Studios,  Inc.  and MGM/UA,  as well as
numerous other independent motion picture production companies.

We believe  that the  primary  competitive  factors  in the market for  animated
feature films include creative content and talent, product quality,  technology,
access to distribution channels and marketing resources.  Because American Dream
Entertainment,  Inc. is a new company with limited financial resources, there is
no assurance  that we will be able to compete with these  factors.  However,  we
intend, wherever possible to enter into contractual relationships with companies
which have been engaged in the  communications,  marketing and Internet business
for a significant  period of time to allow the Company to utilize its assets and
management team productively.


                                       8
<PAGE>


We expect  competition  to intensify  and increase in this market in the future.
Currently,  the  majority of our  potential  competitors  have longer  operating
histories,  greater  name  recognition,  and  significantly  greater  financial,
technical, marketing and other resources than American Dream Entertainment, Inc.
There can be no assurance that we will be able to compete  successfully  against
these  competitors.  Such  competition  could  materially  adversely  affect our
business, operating results or financial condition.


EMPLOYEES

As of May 31, 2000, American Dream  Entertainment,  Inc. had (4) four employees.
We consider our relations with our employees to be excellent.


ITEM 2.  PROPERTIES

We  currently  lease and occupy an office  located at 20300  Ventura  Boulevard,
Woodland  Hills,  California  91364-2313.  Our monthly lease payment is $825.00.
This lease expires on July 31, 2001.

In addition,  we currently  lease and occupy an office  located at 2325 Lakeview
Parkway, Alpharetta,  Georgia 30004-1976. Our monthly lease payment is currently
$1,818.75. This lease is on a month-to-month basis.

We occupy an office  located at  Amsterdamseweg  511,  1181 BS  AMSTELVEEN,  THE
NETHERLANDS. This office is provided by Dreamweavers,  N.V. and we currently pay
no rent.


ITEM 3.  LEGAL PROCEEDINGS.

American  Dream  Entertainment,   Inc.  is  not  party  to  any  material  legal
proceedings.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURTIY HOLDERS.

On May 28, 1999, pursuant to an action by Dreamweavers, N.V., as the holder of a
majority of our outstanding shares of Common Stock, an Amendment to our Articles
of  Incorporation  was filed with the State of Minnesota,  which (i) changed our
corporate  name from Federal  Affordable  Housing  Corporation to American Dream
Entertainment, Inc. and (ii) increased our authorized Common Stock to 50,000,000
shares, par value $.0001. Dreamweavers, N.V., as the holder of a majority of the
outstanding shares of Common Stock, also appointed Mr. Dirk W. Peschar, Arjen de
Groot and Mr. Jules H. van Marken as our officers and  directors  and the former
officers and directors of Federal Affordable Housing Corporation resigned.


                                       9
<PAGE>


                                     PART II


ITEM 5. MARKET PRICE OF AND  DIVIDENDS  ON THE  REGISTRANT'S  COMMON  EQUITY AND
OTHER SHAREHOLDER MATTERS

Our Common Stock is listed and traded on the NASDAQ OTC Bulletin Board under the
symbol  AMDM.  As noted below,  our Common  Stock  ceased  trading in the fourth
quarter of 1997 and did not begin  trading  again  until the  second  quarter of
1999.  The transfer  agent and registrar  for the Common Stock is  Computershare
Investor Services,  (f/k/a American  Securities  Transfer and Trust, Inc.) 12039
West Alameda Parkway,  Lakewood,  Colorado 80226. The following table sets forth
for the periods  indicated the high and low sale prices for shares of the Common
Stock as reported on the OTC.  These  quotations  reflect  inter-dealer  prices,
without retail mark-up,  mark-down or commission,  and may not represent  actual
transactions.

                                                         Sales Price
                                               High                       Low

Fiscal Year Ended 1998
         Fourth Quarter                        --                         --
         Third Quarter                         --                         --
         Second Quarter                        --                         --
         First Quarter                         --                         --

Fiscal Year Ended 1999
         Fourth Quarter                        --                         --
         Third Quarter                         --                         --
         Second Quarter                        --                         --
         First Quarter                         --                         --

Fiscal Year Ended 2000
         Fourth Quarter                        12                         8-1/2
         Third Quarter                         8-3/4                      5-3/8
         Second Quarter(1)                     8-1/2                      2-1/8
         First Quarter                         --                         --


(1) Our Common Stock recommenced trading on approximately September 28, 1999.

As of May 31,  2000,  there  were  approximately  100  holders of record for our
common stock.

American  Dream  Entertainment,  Inc.'s common stock is listed and traded on the
NASDAQ OTC Bulletin  Board under the symbol AMDM.  Accordingly,  an investor may
find it more  difficult to dispose of, or obtain  accurate  quotations as to the
market value of the common stock.  Further,  in the absence of a security  being
quoted on NASDAQ, a market price of at least $5.00 per share or a company having
in excess of  $4,000,000  in net  tangible  assets,  trading in  American  Dream
Entertainment,  Inc.'s  securities  may be covered by a Securities  and Exchange
Commission ("SEC") rule that imposes  additional sales practice  requirements on
broker-dealers  who sell such  securities  to  persons  other  than  established
customers and accredited  investors  (generally  institutions  with net worth in
excess of  $1,000,000 or annual income  exceeding  $200,000 or $300,000  jointly
with their spouse). For transactions covered by the rule, the broker-dealer must
make a special  suitability  determination  for the  purchaser  and  receive the
purchasers'   written   agreement  to  the   transaction   prior  to  the  sale.
Consequently,  the  rule  affects  the  ability  of  broker-dealers  to sell our
securities  and also may affect the ability of  purchasers  in this  offering to
sell their securities in the secondary market.

Previously,  the SEC adopted seven rules ("Rules") under the Securities Exchange
Act  of  1934   requiring   broker/dealers   engaging  in  certain   recommended
transactions with their customers in specified equity securities  falling within
the definition of "penny stock"  (generally  non-NASDAQ  securities priced below
$5.00 per share) to provide to those customers  certain  specified  information.


                                       10
<PAGE>


Unless  the  transaction  is exempt  under the Rules,  broker/dealers  effecting
customer transactions in such defined penny stocks are required to provide their
customers  with: (1) a risk disclosure  document;  (2) disclosure of current bid
and  ask  quotations,  if  any;  (3)  disclosure  of  the  compensation  of  the
broker/dealers and its sales person in the transaction;  and (4) monthly account
statements  showing the market value of each penny stock held in the  customer's
account.

Recent changes to Rule 15c2-11  require that  companies,  such as American Dream
Entertainment,  Inc.,  must be  reporting  issuers  under  Section  12(g) of the
Securities  Exchange  Act of 1934,  as  amended  in order  to  maintain  trading
privileges on the  "Electronic  Bulletin  Board".  As such our inability to file
form 10-K's,  and other reports  required  under Section 12(g) on a timely basis
would adversely effect the marketability of our securities.

As a result of the aforesaid rules regulating penny stocks, the market liquidity
for American Dream Entertainment,  Inc.'s securities could be severely adversely
affected by limiting the ability of  broker-dealers  to sell our  securities and
the ability of shareholders sell their securities in the secondary market.

DILUTION AND ABSENCE OF DIVIDENDS

We have not paid any cash  dividends on our common  stock and do not  anticipate
paying any such cash dividends in the foreseeable future. Earnings, if any, will
be retained to finance future growth.  We plan to issue our shares in private or
public  offerings to obtain  financing,  capital or to acquire other  businesses
that can improve our  performance  and growth.  Future  issuance and or sales of
substantial  amounts of common stock could adversely  affect  prevailing  market
prices in our common stock.

TRANSFER AGENT AND WARRANT AGENT

Computershare  Investor Services,  (f/k/a American  Securities Transfer & Trust,
Inc.) of Denver,  Colorado  acts as the  Company's  Transfer  Agent and  Warrant
Agent.


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

Federal  Affordable   Housing   Corporation  was  restructured  March  5,  1999,
reflecting a new line of business for the  exploitation  of media products known
as "Robin  and The  Dreamweavers"  within  the  United  States.  All  assets and
liabilities were transferred to a newly formed  subsidiary,  AAA Homes, Inc. The
stock of AAA Homes,  Inc. was  distributed to our  shareholders  of record as of
February  1,  1999.  In  May,  1999  we  changed  our  name  to  American  Dream
Entertainment, Inc. to reflect this new line of business.

There have been no  revenues  from  December  31, 1998 until May 31, 2000 in the
animated film business and we have incurred  significant  losses associated with
the promotion of our animated feature film. American Dream  Entertainment,  Inc.
does not expect to  generate  revenues  until the  "Robin and The  Dreamweavers"
animated  film is completed  by  Dreamweavers,  N.V.  and becomes  contractually
available  for  telecasting  or  exhibition.  The  amount  of  distribution  and
licensing  revenues  earned  by  American  Dream  Entertainment,  Inc.  will  be
dependent on its distribution by others.

RESULTS OF OPERATIONS

FISCAL YEAR 2000 COMPARED TO FISCAL YEAR 1999

There were no revenues for the years ended May 31, 2000 and 1999.

For the year ended May 31,  2000,  total  selling,  general  and  administrative
expenses were  $1,067,097 as compared to $383,432 for the previous  fiscal year,
an increase of $683,665 or 179%. Of this $683,665  increase in selling,  general
and  administrative,  approximately  $305,000  consisted of consulting  expenses
related to our  promotional  efforts.  Legal fees and management  fees increased
approximately  $179,000 for the year ended May 31, 2000 as compared to the prior
year.   Additionally,   an  increase  of  approximately   $190,000  was  due  to
promotional,  marketing, and administrative efforts associated with our animated
feature film.

                                       11
<PAGE>


Interest expense was $511,000 for the year ended May 31, 2000 as compared to -0-
in the  prior  year.  This  increase  was  attributed  to  imputed  interest  on
shareholder advances at the Company's prevailing market rate.

Net loss was  $1,578,842  for the year ended May 31, 2000,  as compared to a net
loss of  $372,243  for the  previous  fiscal  year  ended  May  31,  1999.  This
$1,206,599  increase  in net loss is  primarily  attributed  to  consulting  and
promotional  efforts  related to our animated  feature film.  In addition,  this
increase was attributed to interest  expense  recorded on  shareholder  advances
during the fiscal year ended May 31, 2000.  There were no revenues in the fiscal
year ended May 31, 2000 and 1999 to absorb selling,  general, and administrative
expenses incurred during the years.

FISCAL YEAR 1999 COMPARED TO FISCAL YEAR 1998

There were no revenues  for the year ended May 31,  1999.  Revenues for the year
ended May 31, 1998 were  $481,400  which  consisted  of the sales of real estate
involving 32 lots and 3 houses.

Cost of sales for the  fiscal  year  ended  May 31,  1998  were  $457,275  which
represents a percentage of revenues of 95%.  There were no cost of sales for the
fiscal year ended May 31, 1999.

For the year ended May 31,  1999,  total  selling,  general  and  administrative
expenses were  $261,069 as compared to $90,413 for the previous  fiscal year, an
increase of $170,656 or 189%. Of this $170,656 increase in selling,  general and
administrative, approximately $142,170 was due to promotional efforts associated
with our animated feature film which was not pertinent in the prior year.

The decrease in interest  expense was  primarily  due to the sale of the 32 lots
and 3 houses and the complete  payment of notes payable and long-term  debt upon
sale of these  properties.  Interest  expense  for the fiscal year ended May 31,
1999 was $ -0- as compared to $20,555 in the previous year.

Net loss was $249,880 for the year ended May 31, 1999, as compared to a net loss
of $77,800 for the previous fiscal year ended May 31, 1998. This increase in net
loss is associated  with  promotional  efforts  related to our animated  feature
film. In addition,  there were no revenues in the fiscal year ended May 31, 1999
to absorb selling,  general,  and  administrative  expenses  incurred during the
period.


LIQUIDITY AND CAPITAL RESOURCES

Management  contemplates  continuation  of the Company as a going concern during
the initial  development and marketing of its medial properties.  American Dream
Entertainment,  Inc. has sustained  substantial operating losses in recent years
and has no revenue. Further, at May 31, 2000, current liabilities exceed current
assets by approximately  $7,043,000 and total liabilities exceed total assets by
approximately  $1,390,000.  These  factors  raise  substantial  doubt  about the
ability of the Company to continue as a going concern.

Our  operations  are  currently  funded  through  advances made on our behalf by
Dreamweavers,  N.V.  and its  principal  shareholders.  Through  May  31,  2000,
Dreamweavers has advanced approximately  $1,227,851 on our behalf. These amounts
primarily  relate  to  promotional  costs  and  payments  made  to  consultants,
advisors,  reimbursement  of  travel  expenses  and lease  expenses.  We are not
presently  generating  sufficient  revenues  from  operations  to  fund  capital
requirements.  Our ability to alleviate our working  capital  deficit and obtain
capital  adequate to fund future costs  associated  with our  operations and our
expansion  plans and the $5,500,000  acquisition  payment for the "Robin and The
Dreamweavers"  license  right  is  dependent  upon  Dreamweavers,  N.V.  and its
principal  shareholders  commitment  to  continue  funding our  operations,  the
private  placement of our securities and the  realization of projected sales for
our products. There is no assurance that such revenues will be generated or that
other funding will be available.


INFLATION

Inflation  has not  proven to be a factor in the  Company's  business  since its
inception  and is not  expected  to  have a  material  impact  on the  Company's
business in the foreseeable future.


                                       12
<PAGE>


YEAR 2000

To the best of our knowledge  and belief,  the Company has not  experienced  any
disruption in data processing on our financial reporting and operational systems
or malfunction in equipment  containing  microprocessors as a result of the year
2000  issue.  We cannot be sure that some  condition  relating  to the year 2000
exists, but has not been identified.


ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this item is presented at page F-1.


ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE.

The  information  required by this item is incorporated by reference to the Form
8-K's  filed on July  13,  July 26 and  August  6,  1999  regarding  Changes  in
Registrant's Certifying Accountant.

                                    PART III
                                    --------


ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS , PROMOTERS AND CONTROL PERSONS.

DIRECTORS

The members of American Dream Entertainment, Inc.'s Board of Directors as of May
31, 2000 are as follows:

<TABLE>
<CAPTION>

NAME                                                 AGE                  POSITION
----                                                 ---                  --------
<S>                                         <C>               <C>
Dirk W. Peschar                                      42       Chairman of the Board of Directors
                                                              President, Chief Executive Officer

Arjen de Groot                                       37       Vice President of Operations, Director

Jules H. van Marken                                  66       Director
</TABLE>


Executive  officers are elected by the Board of Directors  and serve until their
successors are duly elected and qualify, subject to earlier removal by the Board
of Directors.  Directors are elected at the annual  meeting of  shareholders  to
serve for their term and until their respective  successors are duly elected and
qualify, or until their earlier resignation,  removal from office, or death. The
remaining  directors  may fill any  vacancy  in the  Board of  Directors  for an
unexpired  term.  See "Board of Directors"  for a discussion  of the  Directors'
terms.

Dirk W. Peschar is our President,  Chief  Executive  Officer and Chairman of the
Board.  Mr.  Peschar is also a shareholder  of  Dreamweavers,  N.V. Mr.  Peschar
conceived of the "Robin and The Dreamweavers" concept in 1997. In the 1980's Mr.
Peschar was a client services  director at Saatchi & Saatchi.  His clients there
included high profile companies such as Proctor and Gamble and Mercedes Benz. In
1992,  Mr.  Peschar  founded  Shore   Communications   Network,   a  Netherlands
corporation,  which  was an  advertising  agency,  specializing  in fast  moving
consumer products.  He developed his business to four offices in The Netherlands
before it was sold in 1996. In 1996,  Mr. Peschar was client  Services  Director
for Pay-Per-View Netherlands, where he met Mr. de Groot.

Arjen de Groot is our Vice  President of  Operations  and a Director.  From 1994
through  1997,  Mr.  de  Groot  was  the  financial  director  of  Pay-Per-View,
Netherlands.  Mr. de Groot is also a shareholder of Dreamweavers,  N.V. In 1997,
Mr.  de Groot  met with Mr.  Peschar  and  became  involved  in  "Robin  and The
Dreamweavers"  project. Mr. de Groot has been an entrepreneur in The Netherlands
since 1985, and has been involved in numerous start-up business interests.


                                       13
<PAGE>


Jules H. van Marken is a Director  of the  Company.  Mr. van Marken is a retired
television  pioneer and continues to consult  businesses in the  television  and
entertainment  industry. He was recently senior consultant for Graf Pay Per View
TV (New York), and in Europe for Phillips and KPN.


BOARD OF DIRECTORS

The Company's Bylaws fix the size of the Board of Directors at no fewer than one
and no more than 10 members,  to be elected annually by a plurality of the votes
cast by the holders of Common Stock,  and to serve until the next annual meeting
of  stockholders  and until their  successors  have been  elected or until their
earlier resignation or removal. Currently, there are three (3) directors.


ITEM 10.  EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION

The following  table shows the  compensation  paid or accrued by the Company for
the fiscal year ended May 31, 2000, to or for the account of the Chief Executive
Officer. No other executive officer of the Company received an annual salary and
bonus in excess of $100,000 or more during the stated period.  Accordingly,  the
summary  compensation  table does not include  compensation  of other  executive
officers.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>

                                    Annual Compensation           Long-Term Compensation Awards

                                                                 Restricted
                                                  Other Annual   Stock     Options/  LTIP      All Other
Name & Principal              Salary    Bonus     Compensation   Award(s)  SARs      Payouts   Compensation
Position            Year        ($)      ($)          ($)          ($)      ($)       ($)         ($)


<S>                <C>        <C>       <C>       <C>            <C>       <C>        <C>         <C>
Dirk W. Peschar
President, CEO      1999      ---        ---        18,000         ---      ---       ---         ---

Dirk W. Peschar
President, CEO      2000      ---        ---        60,000         ---      ---       ---         ---

</TABLE>

------------------------

We do not have employment  agreements with any of our employees.  We do not have
any stock option plans.

AGGREGATED  OPTION  EXERCISES  IN LAST  FISCAL  YEAR AND FISCAL  YEAR END OPTION
VALUES

         The information  provided in the table below provides  information with
respect to each  exercise  of stock  options  during  fiscal 2000 by each of the
executive  officers named in the summary  compensation table and the fiscal year
end value of unexercised options.

<TABLE>

<S>                        <C>                   <C>                 <C>                       <C>
-------------------------- --------------------- ------------------- ------------------------  -----------------------
(a)                        (b)                   (c)                 (d)                       (e)
-------------------------- --------------------- ------------------- ------------------------  -----------------------
-------------------------- --------------------- ------------------- ------------------------  -----------------------
                                                                                               Value of Unexercised
                                                                     Number of Unexercised     In-the Money Options
                           Shares Acquired                           options at FY-End         at FY-End($)
Name                       Exercise              Value Realize($)(1) Exercisable/Unexercisable Exercisable/Unexercisable(1)
-------------------------- --------------------- ------------------- ------------------------  -----------------------
Dirk W. Peschar                    -0-                 -0-                      -0-                      -0-
===================
</TABLE>

                                       14
<PAGE>


(1)      The  aggregate  dollar  values in column (c) and (e) are  calculated by
         determining the difference  between the fair market value of the Common
         Stock  underlying  the options and the exercise price of the options at
         exercise or fiscal year end,  respectively.  In calculating  the dollar
         value realized upon exercise,  the value of any payment of the exercise
         price is not included.


DIRECTOR COMPENSATION

         A director  who is an employee of the  Company  receives no  additional
compensation  for services as director or for attendance at or  participation in
meetings except  reimbursement  of out-of-pocket  expenses and options.  Outside
directors  will  be  reimbursed  for  out-of-pocket   expenditures  incurred  in
attending or otherwise participating in meetings and may be issued stock options
for serving as a  director.  The  Company  has no other  arrangements  regarding
compensation for services as a director.


ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  following  table  sets  forth  certain  information  with  respect  to  the
beneficial ownership known to Company of shares of Company Common Stock owned as
of May 31, 2000  beneficially by (i) each person who beneficially owns more than
5% of the outstanding  Company Common Stock,  (ii) each director of the Company,
(iii) the Officers of the Company,  and (iv) directors and executive officers of
the Company as a group:

                                   Amount and Nature of
Name of Beneficial Owner(3)        Beneficial Ownership(1)  Percent of Class(2)
---------------------------        -----------------------  -------------------

Dirk W. Peschar (4) (5)                   3,231,958               18.0%
Arjen de Groot (6)                          840,311                4.7%
Jules H. van Marken                             ---                  0%
Elenora Shumsky                                 ---                  0%
Dreamweavers, N.V.                        6,162,000               34.4%
La Salle Group, Ltd.                        980,000                5.5%
All directors and executive officers
as a group (4 persons) (5)(6)             4,072,269               22.7%



     (1)  Represents   sole  voting  and  investment   power  unless   otherwise
          indicated.

     (2)  Based on  approximately  17,920,000  shares of  Company  Common  Stock
          outstanding  as of May 31, 2000 plus, as to each person  listed,  that
          portion of the  unissued  shares of Company  Common  Stock  subject to
          outstanding  options which may be exercised by such person,  and as to
          all directors and executive  officers as a group,  unissued  shares of
          Company  Common  Stock as to which the  members of such group have the
          right to  acquire  beneficial  ownership  upon the  exercise  of stock
          options within the next 60 days.

     (3)  The address of each individual is in care of the Company.

     (4)  May be deemed to be a "founder"  of the Company for the purpose of the
          Securities Act.

     (5)  The  number  of  shares  shown in the above  tables  reflect  indirect
          ownership  through  Dreamweavers,  N.V.  Mr.  Peschar  owns  25.9%  of
          Dreamweavers, NV. and accordingly indirectly owns 9% of American Dream
          Entertainment, Inc. (34% ownership of Dreamweavers, N.V. multiplied by
          25.9%).

     (6)  The  number  of  shares  shown in the above  tables  reflect  indirect
          ownership through Dreamweavers,  N.V. Mr. de Groot owns, personally or
          through   affiliate   entities,   4.76%  of  Dreamweavers,   N.V.  and
          accordingly  indirectly owns 2% of American Dream Entertainment,  Inc.
          (34% ownership of Dreamweavers, N.V. multiplied by 5.2%).

These shares of Common Stock held by beneficial  owners are "Restricted"  within
the  meaning  of Rule 144  adopted  under the  Securities  Act (the  "Restricted
Shares"),  and may not be sold unless they are  registered  under the Securities
Act or sold pursuant to an exemption from  registration,  such as the exemptions


                                       15
<PAGE>


provided by Rule 144 and Rule 701  promulgated  under the  Securities  Act.  The
Restricted Shares were issued by the Company in private transactions in reliance
upon exemptions from registration  under the Securities Act and may only be sold
in accordance with the provisions of Rule 144 or Rule 701 of the Securities Act.

In general,  under Rule 144 as currently in effect any person (or persons  whose
shares are  aggregated),  including an  affiliate,  who has  beneficially  owned
shares  for a  period  of at least  one year is  entitled  to sell,  within  any
three-month period, a number of shares that does not exceed the greater of:

         (1)      1% of the then-outstanding shares of common stock; and

         (2) the average  weekly  trading  volume in the common stock during the
four calendar weeks  immediately  preceding the date on which the notice of such
sale on Form 144 is filed with the Securities and Exchange Commission.

Sales  under Rule 144 are also  subject  to  provisions  relating  to notice and
manner of sale and the availability of current public  information  about us. In
addition,  a person (or persons whose shares are aggregated) who has not been an
affiliate of us at any time during the 90 days immediately preceding a sale, and
who has beneficially  owned the shares for at least two years, would be entitled
to sell such shares under Rule 144(k)  without  regard to the volume  limitation
and other conditions described above. While the foregoing discussion is intended
to summarize the material provisions of Rule 144, it may not describe all of the
applicable  provisions  of Rule 144,  and,  accordingly,  you are  encouraged to
consult the full text of that Rule.

The  possibility  of future  sales by  existing  stockholders  under Rule 144 or
otherwise  may, in the future,  have a depressive  effect on the market price of
the Common Stock, and such sales, if substantial might also adversely affect the
Company's ability to raise additional capital.

ITEM 12:  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

On  March  5,  1999,   Dreamweavers,   N.V.,  Curacao,  a  Netherlands  Antilles
corporation,  entered  into a Royalty and License  Agreement  granting  American
Dream  Entertainment,  Inc. an exclusive  license  agreement to exploit a medial
concept known as "Robin and The Dreamweavers". The holding company of this media
concept,  Dreamweavers  NV, owns 100% of the rights of the animated  properties.
Upon execution of the License Agreement, the President,  Secretary and Director,
Mr. Dick Metz,  resigned and Mr. Dirk W. Peschar,  a resident and citizen of The
Netherlands, was appointed President and Director of the Company. Mr. Peschar is
also the founder of Dreamweavers N.V.

Dreamweavers,  N.V., was  originally  issued  16,000,000  shares of the Issuer's
Common Stock in connection  with the Royalty and License  Agreement and American
Dream Entertainment,  Inc. agreed to pay Dreamweavers,  N.V.  $5,500,000,  which
shall be payable on the  successful  completion  of a private  placement  of the
securities of American Dream Entertainment, Inc., and a royalty of three percent
of gross revenue.  Dreamweavers,  N.V. has transferred  9,913,000  shares of the
Issuer's Common Stock to certain stockholders and consultants in connection with
pre-existing agreements and understandings.  All but 2 of the 34 transferees are
non-U.S. resident/citizens,  and all reissued shares contain a restricted legend
under  Rule 144.  Dreamweavers,  N.V.  currently  owns  6,162,000  shares of the
Issuer's  Common Stock,  which includes  75,000 shares issued in connection with
the  acquisition  of  RobinsDream  Interactive,  N.V.,  a  Netherlands  Antilles
corporation,  of which  Dreamweavers,  N.V. held a 12.5% interest.  Accordingly,
Dreamweavers,   N.V.  currently  owns   approximately   35.6%  of  the  Issuer's
outstanding Common Stock.

Through May 31, 2000, Dreamweavers, N.V. and other related parties have advanced
us approximately $1,228,000.


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

(a)      The following documents are filed as part of this report:

         (1)(2) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES.

         Financial Statements filed as part of this Report are set forth in Item
         7 and  are  presented  at  page  F-1 of  this  Report;  which  list  is
         incorporated herein by reference. The Financial Statement Schedules and
         the Report of Independent Auditors as to Schedules follow the Exhibits.


                                       16
<PAGE>


(a)(3) EXHIBITS.

(b)      Reports on Form 8-K

     (i)  Form 8-K filed June 16,  1999  containing  information  regarding  the
          Change of Control and Acquisition of Royalty and License Agreement.

     (ii) Form 8-Ks filed on July 13, July 26, and August 6, 1999, regarding the
          change in our Certified Public Accountant.

(c) Exhibits. See the Indexes to Exhibits below.

INDEX TO EXHBITS.

All of the  items  below  are  incorporated  by  reference  to the  Registrant's
Registration  Statement on Form SB-2, File No.  33-67536-A,  effective March 10,
1995,  except for Exhibits 3.1 and 99.3,  which are included with the filing and
Exhibits 99.4 and 99.5,  which were filed with the Form 8-K dated March 5, 1999,
which is included with this filing.

         Number                                      Description
         ------                                      -----------

     3.1  Amendment to Articles of  Incorporation  changing name and  increasing
          authorized common stock - May, 1999 (3)

     4.1  Form of Common Stock Certificate (Exhibit 4.A of Form SB-2)

     4.2  Form of Investor's Stock Purchase Warrant Certificate  (Exhibit 4.B of
          Form SB-2)

     99.3 Office Real Estate Lease - 20300 Venture  Boulevard,  Woodland  Hills,
          California - dated February 12, 1999 (3)

     99.4 Agreement  between  Dreamweavers,  N.V.,  Federal  Affordable  Housing
          Corporation and AAA Homes,  Inc. relating to restructuring and license
          agreement (2)

     99.5 Heads of the License and Royalty Agreement will Dreamweavers, N.V. for
          "Robin and The Dreamweavers" concepts in the United States (2)


     1.   Filed herewith.
     2.   Filed as exhibits to Form 8-K filed on June 16, 1999.
     3.   Files as exhibits to Form 10-KSB filed on September 7, 1999

                                       17
<PAGE>

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 its
behalf by the undersigned, thereunto duly authorized.


                                              American Dream Entertainment, Inc.


Date:   September 13, 2000                    By:      /s/Dirk W. Peschar
                                                       ------------------
                                                       Dirk W. Peschar
                                                       President & CEO

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<TABLE>

<S>                                               <C>                                          <C>
         SIGNATURE                                   TITLE                                       DATE
         ---------                                   -----                                       ----

/s/ Dirk W. Peschar                                  President and Chief Executive
--------------------------                           Officer (Principal Executive                September 13, 2000
Dirk W. Peschar                                      Officer) and Director

/s/ Jules H. van Marken                              Director                                    September 13, 2000
----------------------------------
Jules H. van Marken

/s/ Arjen de Groot                                   Vice-President of Operations                September 13, 2000
--------------------------                           Director
Arjen de Groot
</TABLE>


                                       18
<PAGE>


                        Consolidated Financial Statements

                       American Dream Entertainment, Inc.
                                and Subsidiaries

                        Years Ended May 31, 2000 and 1999
                          Independent Auditors' Report


<PAGE>


               American Dream Entertainment, Inc. and Subsidiaries

                        Consolidated Financial Statements

                        Years Ended May 31, 2000 and 1999






                                    Contents



Independent Auditors' Report on Consolidated Financial Statements..........  F-2

Consolidated Financial Statements:

    Consolidated Balance Sheet.............................................  F-3
    Consolidated Statements of Operations..................................  F-4
    Consolidated Statements of Changes in Stockholders' Deficit............  F-5
    Consolidated Statements of Cash Flows............................  F-6 - F-7
    Notes to Consolidated Financial Statements....................... F-8 - F-14




<PAGE>


                          Independent Auditors' Report





Board of Directors
American Dream Entertainment, Inc. and Subsidiaries
Las Vegas, Nevada


We have audited the  accompanying  consolidated  balance sheet of American Dream
Entertainment,  Inc.  and  Subsidiaries  as of May  31,  2000  and  the  related
consolidated  statements of operations,  changes in stockholders'  deficit,  and
cash  flows  for the  years  ended May 31,  2000 and  1999.  These  consolidated
financial  statements are the responsibility of the management of American Dream
Entertainment,  Inc.  and  Subsidiaries.  Our  responsibility  is to  express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  These  standards  require  that we plan and
perform the audits 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  consolidated  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  financial  position of American  Dream
Entertainment,  Inc. and  Subsidiaries as of May 31, 2000 and the results of its
operations  and its cash  flows  for the years  ended  May 31,  2000 and 1999 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 shown in the consolidated
financial  statements,   the  Company  incurred  a  net  loss  of  approximately
$1,579,000  as of May 31, 2000 and has  incurred  substantial  net losses in the
previous  year. At May 31, 2000,  current  liabilities  exceed current assets by
approximately   $7,043,000  and  total   liabilities   exceed  total  assets  by
approximately  $1,390,000.  These factors,  and the others  discussed in Note 2,
raise  substantial  doubt  about the  Company's  ability to  continue as a going
concern.  The consolidated  financial  statements do not include any adjustments
relating to the  recoverability  and  classification  of recorded assets, or the
amounts and  classification  of liabilities that might be necessary in the event
the Company cannot continue in existence.


/s/ Pender Newkirk & Company, CPAs
----------------------------------
Certified Public Accountants
Tampa, Florida
September 1, 2000

                                      F-2
<PAGE>



               American Dream Entertainment, Inc. and Subsidiaries

                           Consolidated Balance Sheet

                                  May 31, 2000





Assets
Current assets:
    Cash                                                       $         1,420
    Other receivables                                                   18,679
                                                               ---------------
Total current assets                                                    20,099

Other assets:
    Trademark and license                                            5,501,600
    Website development                                                147,781
    Deposits                                                             4,187
                                                               ---------------
Total other assets                                                   5,653,568


                                                               $     5,673,667
                                                               ===============


Liabilities and Stockholders' Deficit Current liabilities:
    Due to stockholders                                        $     6,727,851
    Accounts payable                                                   195,363
    Accrued expenses                                                   140,000
                                                               ---------------
Total current liabilities                                            7,063,214


Stockholders' deficit:
    Common stock; $.0001 par value; 50,000,000 shares
        authorized; 17,920,000 shares issued and outstanding             1,792
    Capital in excess of par value                                     670,324
    Accumulated deficit                                             (2,105,657)
    Accumulated other comprehensive income                              43,994
                                                               ---------------
Total stockholders' deficit                                         (1,389,547)


                                                               $     5,673,667
                                                               ===============




The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.

                                      F-3
<PAGE>



               American Dream Entertainment, Inc. and Subsidiaries

                      Consolidated Statements of Operations





                                                       Year Ended May 31,
                                              ----------------------------------
                                                    2000               1999
                                              ----------------------------------


Revenues                                    $            0     $             0
                                              ----------------------------------


Operating expenses:
    General and administrative expenses         (1,067,097)           (383,432)
    Interest expense                              (511,745)
    Other income                                                        11,189
                                              ----------------------------------


Net loss                                    $   (1,578,842)    $      (372,243)
                                              ==================================


Loss per share                                       $(.08)              $(.08)
                                              ==================================


Weighted average shares outstanding             18,252,712           4,891,230
                                              ==================================



The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.

                                      F-4
<PAGE>



               American Dream Entertainment, Inc. and Subsidiaries

           Consolidated Statements of Changes in Stockholders' Deficit

                        Years Ended May 31, 2000 and 1999


<TABLE>
<CAPTION>


                                                                                                           Accumulated
                                                                      Capital In                             Other
                                            Common Stock              Excess Of       Accumulated         Comprehensive
                                        Shares         Amount         Par Value         Deficit              Income
                                      -----------------------------------------------------------------------------------
<S>                                <C>                <C>            <C>             <C>               <C>
Balance, May 31, 1998                     493,500      $     49       $   319,416     $     (154,572)

Corporate restructuring                   506,500            51               (51)

Distributions of assets to
    stockholders                                                         (166,792)

Issuance of common stock
    for trademark and
    license and consulting
    agreement                          16,980,000         1,698

Net loss for year                                                                           (249,880)

Adjustment in connection
    with pooling of interest              600,000            60             5,940           (122,363)
                                     --------------------------------------------------------------------------------------

Balance, May 31, 1999                  18,580,000         1,858           158,513           (526,815)

Shares returned and retired
    due to termination of
    an agreement                         (660,000)          (66)               66

Imputed interest on
    stockholder advances                                                  511,745

Foreign currency
    translation adjustment                                                                                   $   43,994

Net loss for year                                                                         (1,578,842)
                                     ----------------------------------------------------------------------------------------
Balance, May 31, 2000                  17,920,000      $  1,792       $   670,324     $   (2,105,657)        $   43,994
                                     ========================================================================================

</TABLE>




The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.

                                      F-5
<PAGE>



               American Dream Entertainment, Inc. and Subsidiaries

                      Consolidated Statements of Cash Flows


<TABLE>
<CAPTION>



                                                                                           Year Ended May 31,
                                                                                   --------------------------------
                                                                                         2000              1999
                                                                                   --------------------------------
<S>                                                                               <C>                 <C>
Operating activities
    Net loss                                                                       $   (1,578,842)     $   (372,243)
                                                                                   --------------------------------
    Adjustments to reconcile net loss to net cash
        used by operating activities:
           Imputed interest on stockholder advances                                       511,745
           Write-off of prepaid offering costs                                            104,098
           Increase in:
               Other receivables                                                          (12,679)
               Other assets                                                                (3,637)             (550)
               Accounts payable and accrued expenses                                       (3,367)          245,491
                                                                                   --------------------------------
    Total adjustments                                                                     596,160           244,941
                                                                                   --------------------------------
    Net cash used by operating activities                                                (982,682)         (127,302)
                                                                                   --------------------------------


Financing activities
    Advances from stockholders                                                            984,102           189,103
    Interest on mortgage                                                                                     (1,188)
    Payments to stockholders                                                                                (11,514)
    Cash transfer to subsidiary                                                                             (53,313)
    Payments on prepaid offering costs                                                                      (64,000)
                                                                                   --------------------------------
    Net cash provided by financing activities                                             984,102            59,088
                                                                                   --------------------------------


Net increase (decrease) in cash                                                             1,420           (68,214)


Cash, beginning of year                                                                         0            68,214
                                                                                   --------------------------------


Cash, end of year                                                                  $        1,420      $          0
                                                                                   ================================

</TABLE>

The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.


                                      F-6
<PAGE>



               American Dream Entertainment, Inc. and Subsidiaries

                      Consolidated Statements of Cash Flows




Supplemental  disclosures  of cash flow  information  and noncash  investing and
    financing activities:

    During the year  ended May 31,  1999,  the  Company  transferred  all of its
    assets and liabilities  that relate to the operations of Federal  Affordable
    Housing  Corporation  (subsequently  known as American Dream  Entertainment,
    Inc.) to AAA Homes, Inc., its then wholly owned subsidiary. The net value of
    those assets and liabilities  was $166,792.  Then all of the common stock of
    AAA Homes,  Inc. was distributed to stockholders of record as of February 1,
    1999. The assets and liabilities distributed to AAA Homes, Inc. are as
    follows:

        Cash                                                 $     53,313
        Construction in progress                                    7,273
        Mortgage receivable                                       222,688
        Deposits                                                      424
        Stockholder payable                                       (35,676)
        Dividends payable                                         (81,230)
                                                              ------------
                                                             $    166,792
                                                              ============

    On March 5, 1999, the Company  acquired the trademark and license for "Robin
    and The Dreamweavers"  (see Note 1). The Company agreed to pay $5,500,000 on
    the completion of a private placement offering.  Also,  16,000,000 shares of
    stock were issued at $.0001 per share.

    During the year ended May 31, 1999,  the Company  issued  980,000  shares of
    stock in  connection  with a consulting  agreement for  assistance  with the
    raising of capital.  These  shares of stock were valued at $.0001 per share.
    The  recipient of these shares also received  $100,000 in  consulting  fees,
    which were  capitalized as prepaid  offering costs. On December 2, 1999, the
    consulting  agreement  was  terminated  and  660,000  shares  of stock  were
    returned  and  retired.  The  $104,098  of prepaid  offering  costs that was
    associated  with this  agreement was expensed  during the year ended May 31,
    2000.

    During the years ended May 31, 2000 and 1999, the Company  incurred  website
    development  costs  amounting  to $113,262 and  $34,519,  respectively.  The
    website  development  was funded by the  stockholder  and accounts  payable;
    hence, this is a noncash transaction.

    During the year ended May 31, 2000,  the Company  incurred a gain of $43,994
    on foreign currency translation.



The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.

                                      F-7
<PAGE>



               American Dream Entertainment, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

                        Years Ended May 31, 2000 and 1999



1.      Background Information and Change In Control

American Dream Entertainment,  Inc. is a Minnesota  corporation  incorporated on
March  5,  1993 as  Federal  Affordable  Housing  Corporation.  Originally,  the
principal line of business was  developing  land for the purpose of building and
selling  residential  housing.  The Company  changed its name to American  Dream
Entertainment,  Inc.  on May  28,  1999,  increased  the  shares  authorized  to
50,000,000,  and  established  a par value of $.0001  per share.  The  corporate
headquarters is located in Las Vegas, Nevada.

On March 5, 1999, American Dream Entertainment,  Inc. entered into a license and
royalty agreement with Dreamweavers  N.V., a company organized under the laws of
Curacao.  American  Dream  Entertainment,   Inc.  purchased  the  trademark  and
exclusive right to market "Robin and The  Dreamweavers"  from  Dreamweavers N.V.
and its affiliated companies.  "Robin and The Dreamweavers" is a feature cartoon
film being produced by  Dreamweavers  N.V. This agreement  includes the right to
distribute media products,  as well as the feature film,  together with licenses
for television production,  music videos, and private label merchandising in the
United  States of America.  American  Dream  Entertainment,  Inc.  agreed to pay
$5,500,000,  which shall be payable on the  successful  completion  of a private
placement of the securities of American Dream Entertainment,  Inc., and to pay a
royalty of three  percent of gross  revenue.  As further  consideration  for the
granting of the exclusive  license and royalty agreement in the United States of
America,  American Dream  Entertainment,  Inc. issued  16,000,000  shares of its
restricted  common stock to Dreamweavers  N.V. The 16,000,000  shares  represent
approximately  89  percent  of the total  outstanding  stock of  American  Dream
Entertainment,  Inc.  These  shares were  valued at a par value of $.0001  since
American Dream Entertainment, Inc. was inactive and had not been trading.

On April 10, 2000, Robinsdream Interactive N.V. became a wholly owned subsidiary
of American  Dream  Entertainment,  Inc.  through an exchange of common stock of
companies  under common  control.  This  reorganization  was  accounted for in a
manner  similar  to a pooling of  interest,  and the  accompanying  consolidated
financial  statements  for 2000 are based on the  assumption  that the companies
were combined for the entire year. The 1999 financial  statements  were restated
to show the combined operations of both entities.


                                      F-8
<PAGE>



               American Dream Entertainment, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

                        Years Ended May 31, 2000 and 1999



1.      Background Information and Change In Control (continued)

The  following  is a  reconciliation  of the  amounts of net  income  previously
reported for May 31, 1999 with restated amounts:

 Net income:
  As previously reported by American Dream Entertainment, Inc.    $    (249,880)
  Acquired company - Robinsdream Interactive N.V.                      (122,363)
                                                                   -------------
           As restated                                            $    (372,243)
                                                                   =============

Robinsdream Interactive N.V. is a Netherlands Antilles corporation  incorporated
on April 15, 1999. This company has the exclusive worldwide right, excluding the
United States of America, to market "Robin and The Dreamweavers"  trademarks and
characters with regard to the Internet and interactive activities, as well as to
the sale of "Robin and The Dreamweavers" related products through an online shop
at the Internet.


2.      Going Concern

The  accompanying  consolidated  financial  statements  have  been  prepared  in
conformity with accounting principles generally accepted in the United States of
America,  which  contemplates  continuation  of the Company as a going  concern.
However, the Company has sustained  substantial operating losses in recent years
and has no revenue. Further, at May 31, 2000, current liabilities exceed current
assets by approximately  $7,043,000 and total liabilities exceed total assets by
approximately  $1,390,000.  These  factors  raise  substantial  doubt  about the
ability of the  Company  to  continue  as a going  concern.  These  consolidated
financial   statements   do  not  include  any   adjustments   relating  to  the
recoverability  and  classification  of  recorded  assets  or  the  amounts  and
classification  of liabilities  that might be necessary in the event the Company
cannot continue in existence.


3.      Significant Accounting Policies

The significant accounting policies followed are:

        The consolidated  financial  statements include the accounts of American
        Dream Entertainment,  Inc. and its wholly owned subsidiary,  Robinsdream
        Interactive  N.V. These entities will  hereinafter be referred to as the
        "Company." All significant intercompany accounts have been eliminated in
        consolidation.


                                      F-9
<PAGE>



               American Dream Entertainment, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

                        Years Ended May 31, 2000 and 1999



3.      Significant Accounting Policies (continued)

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

        The  Company's  trademark  and license will be amortized on the ratio of
        current gross  revenues to expected total gross  revenues.  Estimates of
        total gross revenues can change significantly due to the level of market
        acceptance  of  film  and  television  products.  Accordingly,   revenue
        estimates are reviewed  periodically and amortization is adjusted.  Such
        adjustments  could have a material  effect on results of  operations  in
        future periods.  As of May 31, 2000, no  amortization  has been recorded
        since the film is still in production.

        The  Company  has  adopted   Statement  of  Position  98-1  (SOP  98-1),
        "Accounting for the Costs of Computer Software Developed or Obtained for
        Internal Use." In accordance  with SOP 98-1, the Company has capitalized
        certain website development costs totaling $147,781 at May 31, 2000. The
        estimated  useful  life  of  costs   capitalized  is  three  years.  The
        completion of the website was May 2000;  therefore,  no amortization was
        taken for the year ended May 31, 2000.

        The Company continually reviews the recoverability of the carrying value
        of long-term  assets using the  methodology  prescribed in SFAS 121. The
        Company also reviews long-lived assets and the related intangible assets
        for impairment whenever events or changes in circumstances  indicate the
        carrying amount of such assets may not be recoverable. Recoverability of
        these assets is determined by comparing the forecasted  undiscounted net
        cash flows of the operation to which the assets relate,  to the carrying
        amount including associated intangible assets of such operation.  If the
        operation is determined  to be unable to recover the carrying  amount of
        its assets,  then intangible assets are written down first,  followed by
        the other long-lived assets of the operation,  to fair value. Fair value
        is  determined  based on  discounted  cash  flows or  appraised  values,
        depending on the nature of the assets.  As of May 31, 2000,  the Company
        has determined that no such impairment has occurred.


                                      F-10
<PAGE>



               American Dream Entertainment, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

                        Years Ended May 31, 2000 and 1999



3.      Significant Accounting Policies (continued)

        In connection with the Company's private  placement,  offering costs are
        deferred and are offset against the proceeds of the offering or expensed
        if the total offering is unsuccessful,  both on a pro rata basis. During
        the year ended May 31, 2000,  offering  costs were expensed  because the
        related  private  placement  offering was  terminated  and no funds were
        raised.

        Deferred tax assets and  liabilities  are  recognized  for the estimated
        future  tax  consequences   attributable  to  differences   between  the
        consolidated  financial  statements  carrying amounts of existing assets
        and  liabilities  and their  respective  income tax bases.  Deferred tax
        assets and  liabilities are measured using enacted tax rates expected to
        apply  to  taxable  income  in  the  years  in  which  those   temporary
        differences  are  expected to be  recovered  or  settled.  The effect on
        deferred  tax  assets  and  liabilities  of a  change  in tax  rates  is
        recognized in income in the period that includes the enactment date.

        The Company follows Statement of Financial  Accounting  Standards (SFAS)
        No. 130,  "Reporting  Comprehensive  Income."  SFAS No. 130  established
        standards  for the reporting  and display of  comprehensive  income (net
        income  and  other   comprehensive   income)  and  its   components   in
        consolidated  financial statements.  Other comprehensive income includes
        all   non-stockholder   changes  in  equity  and  is  reflected  in  the
        stockholders' deficit section of the consolidated balance sheets.

        Other  comprehensive  income consists of foreign currency  translation
        adjustments   associated   with  the  translation  of  the  functional
        currencies  of  Robinsdream   Interactive  N.V.  (Guilders)  into  the
        reporting  currency  of  American  Dream  Entertainment,   Inc.  (U.S.
        Dollars).

        Basic loss per share is computed by dividing income  available to common
        stockholders by the weighted average number of common shares outstanding
        for the period.

        The Company  records  shares of common stock as  outstanding at the time
        the Company becomes contractually obligated to issue shares.



                                      F-11
<PAGE>



               American Dream Entertainment, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

                        Years Ended May 31, 2000 and 1999



3.      Significant Accounting Policies (continued)

        The Company has not recognized revenue from the distribution of the film
        because it is not yet available for its first telecast.

        In July 2000,  Statement of Position  (SOP) No.  00-02,  "Accounting  by
        Producers or Distributors of Film," was issued by the American Institute
        of Certified  Public  Accountants.  Under the new SOP, revenue should be
        recognized only when all of the following conditions have been met:

          -    Persuasive evidence of a sale exists;
          -    The film is complete and has been delivered,  or is available for
               immediate and unconditional delivery;
          -    The  licensing  period  has begun and the  customer  can begin to
               exploit, exhibit, or sell the film;
          -    The fee is fixed or determinable; and
          -    Collection of the fee is reasonably assured.

        The SOP is effective for years  beginning  after  December 15, 2000. The
        Company  is  assessing  the  impact  this  statement  will  have  on the
        consolidated financial statements.

        The  Company  will  recognize   revenue  on   merchandising   and  other
        development   activity  in  accordance   with  Securities  and  Exchange
        Commission (SEC) Staff Accounting Bulletin 101, `Revenue  Recognition in
        Financial  Statements."  Any  deposits  received  in  advance of revenue
        recognition  are reflected as a liability.  As of May 31, 2000 and 1999,
        the Company did not have any revenue.

        The  Company has imputed  interest  on its  stockholder  advances at the
        Company's  prevailing market rates. The imputed  interest,  which totals
        $511,745,  has been recorded as an expense and as an additional  capital
        contribution in accordance with SEC Staff Accounting Bulletin Topic 5:T.


4.      Related Party Transactions

The  Company  has  received  advances  and/or  has  had  bills  paid  for by its
stockholders  that amount to $1,227,851 as of May 31, 2000.  These  transactions
are non-interest  bearing, are unsecured,  and have no specific repayment terms.
These transactions were to pay for expenses on behalf of the Company and various
other  related  party  charges  in the  approximate  amounts of  $1,000,000  and
$200,000 for the years ended May 31, 2000 and 1999, respectively.


                                      F-12
<PAGE>



               American Dream Entertainment, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

                        Years Ended May 31, 2000 and 1999



4.      Related Party Transactions (continued)

The Company  entered into a license and royalty  agreement with the new majority
stockholder.  The Company has agreed to purchase from  Dreamweavers N.V. and its
affiliated  companies the trademark and exclusive right to distribute "Robin and
the  Dreamweavers,"  a feature  film,  together  with  licenses  for  television
production, music videos, and private label merchandising,  in the United States
of America for $5,500,000,  which shall be payable on the successful  completion
of a private placement of the Company's securities. As further consideration for
the granting of the exclusive license and royalty agreement,  the Company issued
16,000,000  shares of its  restricted  common  stock to  Dreamweavers  N.V.  The
Company will pay a royalty fee of three percent of the gross revenues  generated
from the marketing and/or operation of "Robin and The Dreamweavers." The initial
term of the agreement is for 15 years, which may be extended for an additional 5
years.  As of May 31, 2000, no royalties have been accrued or paid.

Robinsdream  Interactive N.V. entered into a license agreement with Dreamweavers
N.V. on June 16, 1999.  This license  grants  Robinsdream  Interactive  N.V. the
exclusive  worldwide  right,  excluding the United States of America,  to market
"Robin  and The  Dreamweavers"  trademarks  and  characters  with  regard to the
Internet and interactive activities.  The term of the license is for a period of
15 years with an option to extend for an additional 15 years.  As  consideration
for the  license  agreement,  the  Company  will pay a license  fee that  ranges
between 15 and 20 percent of net revenues of Robinsdream Interactive N.V.

The above transactions are not necessarily indicative of transactions that would
have been entered into by independent parties.


5.      Income Taxes

Income tax consists of the following:

                                             2000              1999
                                           --------------------------
        Deferred tax asset              $   574,000       $   140,000
        Less valuation allowance            574,000           140,000
                                           --------------------------
        Net deferred tax asset          $         0       $         0
                                           ==========================

The amount of unused tax losses  available  to carry  forward and apply  against
future years' taxable  income is  approximately  $1,688,000.  Deduction of these
losses  will be limited  due to the change of control of the  Company  that took
place on March 5, 1999.  The losses will expire in various years ending in 2020.
Management  has  established  a valuation  allowance  equal to the amount of the
deferred tax assets due to the uncertainty of the Company's  realization of this
benefit.


                                      F-13
<PAGE>



               American Dream Entertainment, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

                        Years Ended May 31, 2000 and 1999



6.      Loss Per Share

The net loss per share amount is based on weighted  average  shares  outstanding
for the  years  ended  May  31,  2000  and  1999 of  18,252,712  and  4,891,230,
respectively.

Diluted net loss per share amounts are not  presented  because the Company has a
simple capital structure that consists of common stock and includes no potential
securities that would cause dilution of the number of shares.


7.      Subsequent Event

Subsequent to year-end, the Company has borrowed $422,498,  with interest at six
percent,  pursuant to a note agreement.  The agreement contains  provisions that
state the note holder may convert the balance of the loan into a combination  of
shares and  warrants,  and that 5,000  additional  shares  will be issued to the
lender at the time of repayment.



                                      F-14