U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   FORM 10K-SB

(Mark One)

(X)  Annual Report  Pursuant to Section 13 or 15(d) of the  Securities  Exchange
     Act of 1934 For the Fiscal Year Ended December 31, 1998.

( )  Transition  Report under Section 13 or 15(d) of the  Securities  Exchange
     Act of 1934 For the Transaction Period from ______ to ________.

Commission File Number    000-24957


                             PUSH ENTERTAINMENT INC.
                 (Name of Small Business Issuer in its Charter)

            Delaware                                        51-0384101
(State or other jurisdiction of                 (IRS EmployeeIdentification No.)
Incorporation or organization)


                                    Suite 600
                               520 - 5th Avenue SW
                        Calgary, Alberta, Canada T2P 3R7
                    (Address of Principal executive Offices)

                                 (403) 297-1055
                          (Issuer's Telephone Number:)

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

Securities registered under Section 12(g) of the Exchange Act:

                    Common Shares, $.001 par value per share

Check  whether  the  issuer:  (1) filed all reports to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or such shorter period that
the registrant  was required to file such reports),  and (2) has been subject to
such filing requirements for the past 90 days.

                  Yes                          No   X
                       -----                      -----

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation  S-B is not  contained  in  this  form,  and no  disclosure  will  be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
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 fiscal year: Nil


<PAGE>

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates  computed by reference to the price at which the common equity
was sold,  or the average bid and asked  price of such  common  equity,  as of a
specified  date within the past 60 days (see  definition  of  affiliate  in Rule
12b-2 of the  Exchange  Act.):  $9,715,337  as at December 31, 2000 based on the
Company's last offering price of its common shares of $0.65 per share.

                   (ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
                           DURING THE PAST FIVE YEARS)

     Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Exchange Act after the  distribution of
securities under a plan confirmed by a court.

                  Yes                          No
                       -----                      -----


                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

         State the number of shares  outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 20,084,642 shares of common
stock were outstanding as at December 31, 2000.

                       DOCUMENTS INCORPORATED BY REFERENCE

         If the following  documents  are  incorporated  by  reference,  briefly
describe them and identify the part of the Form 10-KSB  (e.g.,  Part I, Part II,
etc.) into which the document is incorporated: (1) any annual report to security
holders;  (2) any proxy or information  statement;  and (3) any prospectus filed
pursuant to Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act").
The listed documents  should be clearly  described for  identification  purposes
(e.g.,  annual  report to security  holders for fiscal year ended  December  24,
1990).

                                      None.

         Transitional Small Business Disclosure Format (check one):

                  Yes                          No   X
                       -----                      -----



                                       2
<PAGE>


                                TABLE OF CONTENTS

                                     PART I

                                                                            PAGE

Item 1.  Description of Business                                               4

Item 2.  Description of Property                                              10

Item 3.  Legal Proceedings                                                    11

Item 4.  Submissions of Matters to a Vote of Security Holders                 11


                                     PART II


Item 5.  Market For Common Equity and Related Stockholder Matters             11

Item 6.  Management's Discussion and Analysis or Plan of Operation            12

Item 7.  Financial Statements                                                 15

Item 8.  Changes in and Disagreements with Accountants on Accounting
         and Financial Disclosures                                            24


                                    PART III

Item 9.  Directors, Executive Officers, Promoter and Control Persons;
         Compliance with Section 16(a) of the Exchange Act                    24

Item 10. Executive Compensation                                               27

Item 11. Security Ownership of Certain Beneficial Owners and Management       28

Item 12. Certain Relationships and Related Transactions                       29

Item 13. Exhibits and Reports on Form 8K                                      30



                                       3
<PAGE>

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

A.   The Company

     Push  Entertainment,  Inc. was incorporated  under the laws of the State of
Delaware  on  January 7, 1998.  Our  address is Suite 600,  520 - 5th Avenue SW,
Calgary,  Alberta,  Canada,  T2P 3R7.  Our  registered  office  in the  State of
Delaware is 1209 Orange Street, Wilmington, Delaware 19801. Our telephone number
is (403) 297-1055 and our facsimile number is (403) 297-1059.

     On January 7, 1998, we acquired all of the issued and  outstanding  capital
stock of Push  Technologies  Inc.  (formerly  736145  Alberta  Inc.) an Alberta,
Canada corporation incorporated on April 21, 1997 (our "Subsidiary").

     Our Subsidiary  entered into an Agreement  dated August 4, 1997 with E-Zone
Networks  Inc., a Delaware  Corporation,  (the "E-Zone  Agreement")  pursuant to
which it agreed to purchase certain technology and intellectual property,  which
we  refer to as the  "Technology,"  from  E-Zone  in  consideration  for (1) the
payment  of  $200,000  on or  before  March  31,  1998;  and (2)  payment  of an
additional $160,500 for improvements made to the Technology.

     On January 27, 1998, our Subsidiary  assigned to us all of its right, title
and interest in and to the E-Zone  Agreement,  and in and to the Technology.  We
have discharged the obligations of our Subsidiary  under the terms of the E-Zone
Agreement.

     The Technology  consists of a suite of processes and  proprietary  software
which will  facilitate the conversion of existing 2D film and video content to a
3D format. See "Item 1. Description of Business - Our Business."

     As at December 31, 1998, we had a total of seven full time  personnel,  all
of which were contracted consultants. We currently have a total of six full time
personnel, of which three are employees and three are contracted consultants.

B.   Our Business

     Following our acquisition of the Technology,  we expended,  during the year
ended  December 31, 1998,  $304,661 on the  development  and  enhancement of the
Technology and $184,005 (as restated in the 1999 audited  financial  statements)
on  implementing   limited  business  and  channel  (e.g.   potential   markets)
development for the Technology.  To date, we have not yet generated any revenues
as a result of these  business  and channel  expenditures.  E-Zone,  the initial
developer of the Technology,  had not generated any revenues from the Technology
prior to its  acquisition by us. Funds for the activities  mentioned  above were
obtained by us through the sale of shares of our common stock.

1.   The Technology

     The Technology includes the 3D Professional Workstation (the "Workstation")
which consists of a suite of functions designed for  post-production and digital
imaging  professionals.  We believe that the Workstation  significantly improves
the production  process for creating  stereoscopic 3D video,  and when complete,
will generate high quality 3D moving images from existing 2D content.


                                       4
<PAGE>


     The output  processed by the  Technology  is  compatible  with,  and can be
delivered on film, videotape, digital versatile disk ("DVD") and CD-ROM. We have
completed  feasibility  studies of the 3D  conversion  process and have produced
demonstration  segments based on the current  revision of the  Workstation.  The
Workstation is currently  functional and we are continuing to refine and further
develop the Technology.

     The  Technology  does  not  require  any  "raw"  materials  (e.g.  computer
hardware,  disks,  etc.)  that are not  widely and  generally  available  from a
variety of different sources at competitive rates.

2.   Intellectual Property

     We have been  assigned  the rights in and to a certain  patent  application
pertaining  to  specific  aspects  of the  Technology;  and we  intend  to  file
additional  patent, as well as copyright,  applications for our technologies and
processes as and when our management deems such applications timely,  necessary,
and/or advantageous. From our inception in 1997 through to December 31, 1998, we
have spent approximately $665,161 on research and development activities.

3.   Competitive Products

     Although there is a history of real time 2D to 3D conversion processes such
as those  being  developed  by the Sanyo  Corporation,  we are aware of only one
other mature technology development company, Dynamic Digital Depth, Inc. ("DDD")
(formerly,  Xenotech Ltd.) attempting to develop a post production 3D conversion
process. While we and DDD are developing similar and competitive  processes,  we
believe that the Technology will offer greater flexibility than the DDD process.
The DDD process has been in development for a longer period of time and has been
made available to developers.  However, we believe that the Technology will gain
greater  acceptance  because of its  ability  to give the user a wider  range of
artistic control.

     Moreover,  the  entertainment,  film,  video and  software  industries  are
intensely  competitive.  We compete,  and will compete,  with  companies  having
greater financial and technical  resources.  Therefore to the extent that we are
able to establish sales, revenues and profits there is no assurance that we will
be able to sustain such sales, revenues and profits. In addition, although not a
major factor  today,  if and when we begin  achieving  our  objectives,  larger,
better  financed  companies  in  peripheral  businesses  may be attracted to our
markets. They may be prepared to spend large sums quickly to develop competitive
products  and  to  mount  major  marketing  campaigns.  We  are  aware  of  this
possibility  and hope to establish  ourselves  early in the industry.  Timing is
critical.  Therefore, prompt development of our financing and marketing programs
are essential to minimizing this risk.

4.   Advantages of the Technology

     The  current  revision  of  the  Technology   incorporates  certain  unique
features,  and  when  fully  developed,  will  have  the  following  significant
advantages:

     (a)  The Technology  will allow the processing of film,  video for HDTV and
          large  format  films,  such  as  IMAX,  without  distortion   normally
          associated with less  sophisticated  solutions,  and will enable us to
          pursue the market for commercial quality off-line processing;

     (b)  the  automated  image object  tracking  capability  of the  Technology
          speeds  up  the   extraction   of  images   from  within  a  scene  by
          automatically tracking the image forward and backward in time;


                                       5
<PAGE>

     (c)  the Technology has been designed to aid in enhancement and production,
          and to  become a factor  in the  creative  aspects  of film and  video
          making. It will provide the editor with the unique ability to generate
          the desired final product.  For example,  in order to give an object a
          3D effect, shading,  texturing,  rotations and other manipulations can
          be controlled and combined into a dynamic operation; and

     (d)  the Technology  automatically  fills background  information  after an
          object has been  extracted or moved when  creating  left eye and right
          eye 3D images.

5.   Post Production

     The Technology has the capability of carrying out special  effects film and
video editing by object  manipulation and image  enhancement.  Images which have
been captured on film or video, such as a person or an object,  can be extracted
on a scene by scene or a frame-by-frame  basis.  Through object  recognition and
tracking,  the desired  elements  are  extracted  from the  source,  replicated,
rotated  and  positioned  in  the  appropriate  stereoscopic  perspective.   The
Technology  also allows the extracted  objects to be manipulated in a variety of
methods, which, in addition to allowing the image to be converted from 2D to 3D,
can be used to remove objects such as props or add special effects.

6.   Potential Market, Sales Plans and Strategies

     3D  attractions,  such  as  "Terminator  II 3D" and  "Honey  I  Shrunk  the
Audience"  located at Universal  Studios  Theme Parks,  are viewed by 80% of the
patrons*. In addition,  IMAX has experienced  substantial growth by deploying 3D
content in its  theaters**.  We believe  that  video and DVD  rentals  will soon
include 3D titles,  thereby  providing  a market  for 3D  enhanced  productions,
including new releases and re-released existing products.  We also believe there
will be a market for our  technology  in the  multi-media  and  computer  gaming
industries, and for use in upscale, sophisticated corporate presentations.

     We believe that  revenues can be achieved from  post-production  conversion
services,  box office  percentages  and  royalties,  license  fees,  and sale of
technology and/or its applications. Initially we intend to use the Technology to
provide editing  services  directly to customers;  however,  if we believe it is
appropriate,  we will attempt to establish  industry  alliances  with  potential
industry  partners  for  product  and  process  development,   production,   and
distribution  agreements and to formalize those alliances as may be advantageous
to us.  We plan  to  provide  conversion  services  to the  film  industry  on a
combination of fixed fee, income  sharing,  and royalty basis for the conversion
of existing film libraries; however, no pricing policy has been established. For
corporate  presentations,  we may become involved  directly on a "for fee" basis
for larger  presentations;  we may also license advertising  agencies the use of
the  processes or form business  alliances to implement  our business  strategy.
Currently, we do not have any such alliances.

C.   Risk Factors Associated with Us and Our Business

     We are engaged in the business of developing  and marketing the  Technology
which was acquired by our  Subsidiary.  As no market for the Technology has been
developed  and as the

------------------
*As  published  in the  Hollywood  Reporter,  dated May 28,  1996 in an  article
entitled  "T2 Goes Back to the Future."

** Based upon  information  derived from the IMAX website.


                                       6
<PAGE>

Technology remains under development,  our business is characterized by a number
of significant risks which are set forth below.

1.   We are a recently  organized  company with no operating history and limited
assets.

     We have  limited  assets  and  operating  history.  We have  no  record  of
commercial  production,  earnings  or sales;  therefore,  we must be  considered
promotional  and in our  early  formative  and  development  stage.  There is no
assurance that the Technology will achieve commercial acceptance or, if it does,
that a functionally equivalent product will not be developed by competitors with
access to significantly greater resources to devote to research, development and
marketing.  There is nothing at this time upon which to base an assumption  that
our business plan will prove successful,  and there is no assurance that we will
be able to operate profitably.

2.   We have not generated any revenues from operations.

     We do not have any sales,  revenues  from  operations.  Accordingly,  it is
impossible  to predict the timing of receipt or the  magnitude of  revenues,  if
any,  from the  marketing of the  Technology,  or whether such  revenues will be
realized.  Any material  delay in bringing the Technology to market could result
in  significant   delays  in  the  generation  of  revenues.   In  view  of  the
uncertainties  that exist  concerning  the ability of the  Technology to achieve
commercial  acceptance,  there can be no assurance  that we will be able to ever
achieve or sustain sales and/or profitability.

3.   Since we have no cash flow from operations,  we may need to seek additional
funding from other sources.

     We have limited  financial  resources and no cash flow from operations.  To
date,  we have  funded  our  operations  primarily  by  issuing  equity and from
shareholder  advances.  There is no assurance  that we will  continue to receive
such  support from our  shareholders.  To the extent that  additional  funds are
required  to  implement  our  business  plan,  we will seek to obtain such funds
through equity and/or debt  offerings.  There is no assurance that if additional
funding is needed, it will be available to us on terms and conditions acceptable
to us.  Failure  to obtain  such  additional  funding  could  result in delay or
indefinite  postponement  of the  introduction  of the  Technology to the market
place or the  ability to supply  sufficient  product  to the  market  place on a
continual and profitable basis.  Reference should be made to Page 1 of the Notes
to the Consolidated  Financial Statements,  which state that "the Corporation is
in the  development  stage  and has no  history  of  generating  cash  flow from
operations  which  raises  substantial  doubt about its ability to continue as a
going concern." See also the Independent  Auditor's  Report to the  Consolidated
Financial Statements.

4.   We face competition from larger and better financed companies.

     The  entertainment,  film,  video and  software  industries  are  intensely
competitive  and we compete,  and will compete,  with  companies  having greater
financial and technical resources.  Therefore, to the extent that we are able to
establish  sales,  revenues and profits,  there is no assurance  that we will be
able to sustain such sales, revenues and profits. Moreover, although not a major
factor today,  if and when we begin  achieving our  objectives,  larger,  better
financed  companies in  peripheral  businesses  may be attracted to our markets.
They may be prepared to spend large sums quickly to develop competitive products
and to mount major marketing  campaigns.  Timing is critical to our success, and
the  implementation  of our financing  and  marketing  programs are essential to
minimize this risk.



                                       7
<PAGE>

5.   Our products and  services  may become  obsolete as competing  technologies
continue to be developed and enhanced.

     The entertainment, film, video and software industries are characterized by
rapid and significant technological change, and the introduction of new products
and new services.  The introduction of products embodying new technologies,  the
emergence of new industry standards or changes in these industries may adversely
affect our ability to market and sell the Technology.  Our ability to anticipate
changes in technology, industry standards and needs and to develop and introduce
new (or enhance  existing)  processes  and  products on a timely basis will be a
significant factor in our competitive position and growth prospects.

6.   We lack a sales and distribution network.

     We have not yet established a significant distribution and support network.
If  we  fail  to  put  into  place  an  experienced   and  effective   marketing
infrastructure   in  a  timely  manner,   there  could  be  a  substantial   and
indeterminate delay in the realization of anticipated revenues.

7.   Our success will depend on the market acceptance of our products.

     Our  success  is  largely  dependent  upon  the  market  acceptance  of the
conversion  of  existing 2D content  into 3D.  There is no  assurance  that this
process  will  attain a level of  market  acceptance  which  will  allow for the
continuation and growth of our business operations. In addition, we believe that
we will need to develop new processes and products to maintain our operations in
the longer term.  The  development  and launching of such processes and products
may involve  significant  expenditures.  There can be no assurance  that we will
have  sufficient  financial  resources  to fund such  programs  and whether such
undertakings will be commercially successful.

8.   In the future,  if a public  trading market for our shares were to develop,
potential sales of issued and outstanding  shares under Rule 144 could adversely
affect the price of our shares.

     Of the 50,000,000 authorized shares of our common stock, as at December 31,
1998, there were issued and outstanding  18,750,105 shares; all of which, except
for 2,522,581 shares, were "restricted securities" as that term is defined under
the  Securities  Act of  1933,  as  amended,  and in the  future  may be sold in
compliance  with Rule 144 of the  Securities  Act,  pursuant  to a  registration
statement  filed under the Securities Act, or other  applicable  exemptions from
registration  thereunder.  Rule 144 provides,  in essence, that a person holding
restricted  securities  for a period of one year may sell  those  securities  in
unsolicited brokerage transactions or in transactions with a market maker, in an
amount equal to one percent of our outstanding  common stock every three months.
Additionally,  Rule 144 requires  that an issuer of  securities  make  available
adequate current public information with respect to the issuer. Such information
is deemed  available  if the issuer  satisfies  the  reporting  requirements  of
Sections 13 or 15(d) of the Exchange Act and of Rule  15c2-11  thereunder.  Rule
144 also permits,  under certain  circumstances,  the sale of shares by a person
who is not our affiliate and who has satisfied a two year holding period without
any  quantity  limitation  and whether or not there is adequate  current  public
information  available.  Investors should be aware that sales under Rule 144, or
pursuant to a registration  statement filed under the Securities Act, may have a
depressive effect on the market price of our common stock in any market that may
develop  for such  shares.  As at  December  31,  1998,  16,227,524  shares were
"restricted securities" subject to the Rule 144 resale provisions,  all of which
became available for resale at various dates through 1999.


                                       8
<PAGE>

9.   Stockholders may have difficulty transferring or selling shares since there
is no market for our common  stock;  and,  because of the  applicability  of the
Penny Stock Rules to any purported sale.

     There is no current  trading  market for the shares of our common stock and
there can be no  assurance  that a trading  market will  develop,  or, if such a
trading  market does develop,  that it will be  sustained.  To the extent that a
market develops for the shares of our common stock at all, of which there can be
no assurance,  it will likely appear on the NASD Bulletin Board, which may limit
the  marketability and liquidity of our shares.  Thus,  stockholders may find it
difficult to sell their  shares.  To date,  neither we nor anyone  acting on our
behalf has taken any affirmative steps to request or encourage any broker/dealer
to act as a market  maker for our  common  stock.  Further,  there  have been no
discussions or  understandings,  preliminary or otherwise,  between us or anyone
acting on our behalf and any market maker  regarding  the  participation  of any
such market maker in the future trading market, if any, for our common stock.

     Under  Rule  15g-9 of the  Exchange  Act, a broker or dealer may not sell a
"penny stock" to, or effect the purchase of a penny stock by, any person unless:

     (a)  such sale or purchase is exempt from Rule 15g-9;

     (b)  prior to the  transaction  the broker or dealer has (1)  approved  the
          person's  account for  transactions in penny stocks in accordance with
          Rule 15g-9,  and (2) received  from the person a written  agreement to
          the  transaction  setting forth the identity and quantity of the penny
          stock to be purchased; and

     (c)  the purchaser has been provided an appropriate disclosure statement as
          to penny stock investment.

     The United States Securities and Exchange  Commission  adopted  regulations
that  generally  define a penny  stock to be any  equity  security  other than a
security excluded from such definition by Rule 3a51-1.  Such exemptions include,
but are not limited to (1) an equity  security  issued by an issuer that has (i)
net  tangible  assets  of at  least  $2,000,000,  if  such  issuer  has  been in
continuous  operations for at least three years,  (ii) net tangible assets of at
least $5,000,000,  if such issuer has been in continuous operation for less than
three years, or (iii) average  revenue of at least  $6,000,000 for the preceding
three  years;  (2) except for  purposes of Section  7(b) of the Exchange Act and
Rule 419,  any  security  that has a price of $5.00 or more;  and (3) a security
that is  authorized  or approved for  authorization  upon notice of issuance for
quotation on the NASDAQ Stock Market,  Inc.'s Automated  Quotation System. It is
likely  that  shares of our  common  stock,  assuming  a market  were to develop
therefor, will be subject to the regulations on penny stocks; consequently,  the
market  liquidity  for  our  common  stock  may be  adversely  affected  by such
regulations  limiting the ability of broker/dealers to sell common stock and the
ability of stockholders to sell their securities in the secondary market.

     Moreover, our shares may only be sold or transferred by our stockholders in
those jurisdictions in which an exemption for such "secondary trading" exists or
in which the shares may have been registered.

10.  We are dependent on the protection  afforded by intellectual  property laws
in order to ensure that others do not infringe on our rights.

     We have been  assigned  the  rights in and to certain  patent  applications
pertaining to the Technology  and intend to file such other patent  applications
with  respect  to the  Technology  as our


                                       9
<PAGE>

management may deem  advisable.  No assurance can be given that the patents will
be granted or that, even if granted,  that the Technology does not infringe upon
the patents of others.  In the event of  infringement,  the  consequences  to us
could be materially adverse.

11.  Our future  success is dependent on the  availability  of an adequate labor
supply as well as the retention of key personnel.

     We depend  upon the  continued  recruiting  and  maintenance  of  qualified
personnel to staff our operations.  We believe that such personnel are currently
available at reasonable salaries and wages. There can be no assurance,  however,
that such  personnel  will always be  available  in the future.  The  continuing
development of the Technology has been almost  entirely  dependent on the skills
of our  management  and certain key  employees  with whom we have no  employment
agreements.  Loss of the  services  of any of this  management  team  and/or key
employees could have a materially adverse effect upon our operations.

12.  Some of our officers and  directors  may serve in similar  capacities  with
other companies and their  responsibilities  and time  commitments to such other
companies may limit the amount of time that they have available to attend to our
business activities.

     From time to time certain of our directors and executive officers may serve
as directors or executive  officers of other  companies  and, to the extent that
such  other  companies  may  participate  in  the  industries  in  which  we may
participate,  such directors may have a conflict of interest.  In addition,  our
dependence on directors and officers who devote time to other business interests
may create  conflicts of interest,  i.e.  that the fiduciary  obligations  of an
individual  to the  other  company  conflict  with  the  individual's  fiduciary
obligations  to us and vice versa.  Directors and officers  must exercise  their
judgment to resolve all conflicts of interest in a manner  consistent with their
fiduciary  duties to us. In the event that such a conflict of interest arises at
a meeting of the directors, a director who has such a conflict will abstain from
voting for or against the  approval of such a  participation  or such terms.  In
appropriate  cases,  we  will  establish  a  special  committee  of  independent
directors to review matters on which several directors, or management,  may have
a conflict.  We are not aware of the  existence  of any  conflict of interest as
described herein.

13.  Our corporate activities are effectively controlled by our management.

     Our  current  officers  and  directors,  as a group,  currently  own and/or
control  5,137,970  or 25.58% of the current  issued and  outstanding  shares of
common  stock  and,  accordingly,  may be  able  to  influence  and/or  exercise
effective  control over our affairs,  including but not limited to, the election
of directors and other matters which may be subject to shareholder vote.

     Our officers and  directors  as at December  31,  1998,  as a group,  owned
and/or controlled  7,147,960 or 38.12% of the then issued and outstanding shares
of common  stock  and,  accordingly,  were  able to  influence  and/or  exercise
effective control over our affairs.

ITEM 2.  DESCRIPTION OF PROPERTY

     All of our tangible  assets have been acquired by us since January 1998 and
were new at the time of acquisition. We currently sub-lease 4,925 square feet of
office  and  research  premises,  located  at Suite  600,  520 - 5th  Avenue SW,
Calgary,  Alberta,  Canada from a third party, Paradigm  Geophysical.  Our basic
annual rent is $54,175Cdn. ($4,515Cdn. monthly). In addition, we are responsible
for the payment of additional  rent for operating costs in the current amount of
$40,631Cdn.  annually. Our lease expires on March 31, 2001 and we have an option
to extend the


                                       10
<PAGE>

lease through February 28, 2002.

ITEM 3.  LEGAL PROCEEDINGS

     We are not a party to any legal  proceeding,  and have no  knowledge of any
threatened or pending legal proceeding against us.

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

     No matters  were  submitted to a vote of security  holders  during the last
quarter of the fiscal year ended December 31, 1998.

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     There is no public  trading market for our common stock and there can be no
assurance that a trading market will develop,  or, if such a trading market does
develop, that it will be sustained. To the extent that a market develops for our
common stock at all, of which there can be no  assurance,  it will likely appear
on the NASD Bulletin Board,  which may limit the  marketability and liquidity of
our common stock. Thus, stockholders may find it difficult to sell their shares.
To date,  neither we, nor anyone acting on our behalf has taken any  affirmative
steps to request or encourage any broker/dealer to act as a market maker for our
common  stock.  Further,  there  have  been no  discussions  or  understandings,
preliminary  or  otherwise,  between  us or anyone  acting on our behalf and any
market maker regarding the  participation of any such market maker in the future
trading market,  if any, for our common stock.  See "Part I. Item 1. Description
of Business - Risk Factors Associated with the Us and Our business."

     Of the 50,000,000 authorized shares of our common stock, as at December 31,
1998, there were issued and outstanding  18,750,105 shares; all of which, except
for 2,522,581 shares, were "restricted securities" as that term is defined under
the  Securities  Act of 1933,  as  amended,  and in the future  could be sold in
compliance  with Rule 144 of the  Securities  Act,  pursuant  to a  registration
statement  filed under the Securities Act, or other  applicable  exemptions from
registration  thereunder.  Specifically,  as at December  31,  1998,  16,227,524
shares were "restricted  securities"  subject to the Rule 144 resale provisions,
all of which became available for resale at various dates through 1999.

     As at December 31, 1998, there were approximately 180 holders of our common
stock.

Recent sales of unregistered securities:

     Since inception through December 31, 1998, we sold securities in the manner
set forth  below  without  registration  under the  Securities  Act of 1933,  as
amended.

1. In January 1998, we offered and sold an aggregate of 16,027,524 shares of our
common stock for an aggregate  consideration  of $37,907.  We believe that these
transactions  were exempt from  registration  under the  Securities Act based on
exemptions  afforded  by, and the rules and  regulations  promulgated  under the
Securities Act, including, but not limited to, Regulation S and Section 4(2), as
transactions by an issuer not involving any public offering.

2. From May through  August 1998,  we offered and sold  2,522,581  shares of our
common


                                       11
<PAGE>

stock  for  an  aggregate  cash  consideration  of  $861,290  to 30  persons  in
accordance  with  the  exemption  from  registration  afforded  by  Rule  504 of
Regulation D.

3. During  November  1998, we offered and sold to two non US Persons (as defined
in Regulation S) 200,000 shares of our common stock for aggregate  consideration
of $100,000.  We believe that these  transactions  were exempt from registration
under the Securities Act based on an exemption afforded by Regulation S.

     We have not declared any  dividends  since  inception,  and have no present
intention of paying any cash  dividends  on our common stock in the  foreseeable
future.  The  payment of  dividends,  if any, in the  future,  rests  within the
discretion of our Board of Directors and will depend,  among other things,  upon
our earnings,  our capital requirements and our financial condition,  as well as
other relevant facts.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

A.   Operations To Date

     Our Subsidiary  entered into the E-Zone Agreement dated August 4, 1997 with
E-Zone Networks Inc., a Delaware  Corporation  ("E-Zone")  pursuant to which our
Subsidiary agreed to purchase the Technology from E-Zone in consideration of (1)
the  payment of  $200,000  on or before  March 31,  1998;  and (2) payment of an
additional $160,500 for improvements made to the Technology.

     Pursuant  to an  Assignment  Agreement  dated  January  27,  1998  (1)  our
Subsidiary  assigned  to us all of its right  title and  interest  to the E-Zone
Agreement  and in and to the  Technology;  and (2), we agreed to  discharge  the
obligations of our Subsidiary under the terms of the E-Zone Agreement.

     From  inception  through to December 31, 1998, we had expended (1) $360,500
in  satisfying  our  Subsidiary's  obligation  under the E-Zone  Agreement;  (2)
$304,661 on the development and enhancement of the Technology;  (3) $184,005 (as
restated in the 1999 audited financial  statements) on implementing business and
channel  development for the Technology,  and (4) $88,480 for the acquisition of
capital assets including computer hardware, office furnishings and equipment.

B.   Plan of Operation

     During 1999 and 2000, we continued to enhance and pursue  various  channels
to commercialize the Technology.  We plan for the Technology to be ready for the
first commercial  application during 2001. We intend to pursue various potential
revenue streams,  including the conversion of all film formats. In addition,  we
intend to pursue other potential  applications for the Technology  including the
conversion of simulator ride videos and music videos.

     We will continue to enhance the Technology  through 2001 but the main focus
of our efforts and expenditure of resources through December 31, 2001 will be on
commercializing the Technology. Accomplishment of this plan will depend in great
part on our  ability  to  finance  these  efforts  and  our  ability  to  secure
commercial contracts.

     At December 31, 1998, we were still in the development  stage and we had no
history of generating cash flow or revenues from operations.


                                       12
<PAGE>

     As at December 31, 1998, we had a working  capital  deficiency of $113,449,
comprising accounts payable and accrued liabilities of $105,708 and advances due
to  shareholders  of  $49,004,  less  current  assets of $41,263.  We  commenced
operations  through our subsidiary,  Push Technologies  Inc., on April 21, 1997,
however we did not commence our  activities  until  January 1998. As at December
31,  1997 we had no  currents  assets or  current  liabilities  and a $0 working
capital balance.

     Our  activities  to date have been  financed from the proceeds of the offer
and sale of our common stock and from shareholder and other advances. During the
year  ended  December  31,  1998,  we funded  ourselves  on this  basis and sold
18,750,105 shares of our common stock for an aggregate consideration of $999,198
and  received  shareholder  advances  aggregating  $49,004.  The  balance of our
funding for the year ended December 31, 1998 was financed by our working capital
deficiency discussed above. We anticipate that funding of future operations will
be provided by further  private  placements and advances from  shareholders  and
other parties.

     We funded our  activities  for the year ended December 31, 2000 through the
sales of 956,075  shares of our common stock for an aggregate  consideration  of
$621,448.  However, we will require additional funding,  effected through equity
and/or debt financing,  in order to meet our projected cash requirements through
December 2001. We have no understandings or agreements with any person regarding
any such equity and/or debt financing and no assurance can be given that we will
be able to obtain such  additional  financing on terms that we deem  acceptable.
See "Part I. Item 1. Descriptions of Business - Risk Factors  Associated with Us
and Our Business."

     Our primary focus in 2001 will be on continued research and development, as
well as  increased  business  development  activities  so as to achieve  initial
revenues.  No  assurance  can be  given  that  the  amount  available  for  such
activities  will be  sufficient to achieve our goals.  If  additional  funds are
required we will need to explore the  availability  of such funds either through
the sale of equity and/or debt  securities or borrowings.  To the extent that we
engage in such financing activities, our existing stockholders and/or management
may participate.

     As at December 31, 1998,  we had seven full time  personnel who were all in
house consultants.  We currently have six full time personnel (3 employees and 3
in house consultants) and anticipate hiring additional employees during the year
ending December 31, 2001 as our needs and resources permit.

     There can be no  assurance  of our ability to continue as a going  concern.
Our success in  continuing  as a going  concern is  dependent  on the  continued
support of our  shareholders,  our ability to raise new capital and to achieve a
commercial level of production and sales from profitable operations.

C.   Forward Looking Statements

     This report  includes  "Forward-Looking  Statements"  within the meaning of
Section  27A of the  Securities  Act and Section 21E of the  Exchange  Act.  Any
statements  that express or involve  discussions  with  respect to  predictions,
expectations,  beliefs, plans,  projections,  objectives,  assumptions or future
events or  performance  (often,  but not always,  using words or phrases such as
"expects"  or "does  not  expect",  "is  expected",  "anticipates"  or "does not
anticipate", "plans", "estimates" or "intends", or stating that certain actions,
events or results "may", "could",  "would", "might" or "will" be taken, occur or
be  achieved)  are not  statements  of  historical  fact  and may be  considered
"forward  looking  statements".  These types of statements  are included,  among
other places in this report, in the sections entitled  "Management's  Discussion
and Analysis or Plan of Operation,"  "Description of Business" and  "Description
of Property."  Forward-looking  statements


                                       13
<PAGE>

are based on expectations,  estimates and projections at the time the statements
are made that  involve a number of risks and  uncertainties  which  could  cause
actual results or events to differ materially from those presently  anticipated.
See "Part I. Item 1. Description of Business-Risk Factors Associated with Us and
Our  Business."  Although we believe  that the  expectations  reflected  in such
forward-looking  statements are  reasonable,  we can give no assurance that such
expectations will prove to have been correct.



                                       14
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS

                                                                            Page

         Independent Auditors' Report dated March 23, 1999                   16

         Consolidated Balance Sheet as at December 31, 1998                  17

         Consolidated Statements of Operations and Deficit For the year
                  ended December 31, 1998 And for the Period from
                  Commencement of Operations on April 21, 1997 to
                  December 31, 1997                                          18

         Consolidated Statements of Cash Flows for the year ended
                  December 31, 1998 and for the Period from Commencement
                  of Operations on April 21, 1997 to December 31, 1997       19

         Notes to Consolidated Financial Statements                          20




                                       15
<PAGE>

AUDITORS' REPORT TO THE SHAREHOLDERS

We have audited the  consolidated  balance sheet of Push  Entertainment  Inc. (a
Development  Stage  Enterprise)  as at December  31,  1998 and the  consolidated
statements of operations  and deficit and cash flow for the year ended  December
31, 1998 and for the period from the date of commencement of operations on April
21, 1997 to December 31, 1997. These financial statements are the responsibility
of the Corporation's management.  Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In our opinion,  these consolidated  financial statements present fairly, in all
material respects,  the financial position of the Corporation as at December 31,
1998 and the  results  of its  operations  and its cash flow for the year  ended
December 31, 1998 and for the period from the date of commencement of operations
on April 21, 1997 to December 31, 1997 in  accordance  with  generally  accepted
accounting principles in the United States.

Signed "KPMG LLP"

Chartered Accountants

Calgary, Canada
March 23, 1999



COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA U.S. REPORTING CONFLICTS

In the United States,  reporting  standards for auditors require the addition of
an  explanatory  paragraph  following  the  opinion  paragraph  when  there  are
substantial uncertainties about the Corporation's ability to continue as a going
concern,  as referred to in Note 1 to these consolidated  financial  statements.
Our report to the  shareholders  dated March 23, 1999 is expressed in accordance
with  Canadian  reporting  standards  which do not  permit a  reference  to such
matters in the auditors'  report when the facts are adequately  disclosed in the
financial statements.

Signed "KPMG LLP"

Chartered Accountants

Calgary, Canada
March 23, 1999

                                       16
<PAGE>

PUSH ENTERTAINMENT INC.
(A Development Stage Enterprise)
Consolidated Balance Sheets

December 31, 1998
(Expressed in U.S. Dollars)



Assets

Current assets:
     Cash                                                           $    29,623
     Accounts receivable                                                 11,640
                                                                    -----------
                                                                         41,263

Capital assets (note 3)                                                  77,492

                                                                    -----------
                                                                    $   118,755
                                                                    ===========

Liabilities and Shareholders' Deficiency

Current liabilities:
     Accounts payable                                               $    34,060
     Accrued liabilities                                                 71,648
     Shareholder advances                                                49,004
                                                                    -----------
                                                                        154,712

Shareholders' deficiency:
     Share capital (note 5)                                             986,128
     Deficit accumulated during the development stage                (1,022,085)
                                                                    -----------
                                                                        (35,957)

Future operations (note 1)

                                                                    -----------
                                                                    $   118,755
                                                                    ===========


See accompanying notes to consolidated financial statements.


                                       17
<PAGE>


PUSH ENTERTAINMENT INC.
(A Development Stage Enterprise)
Consolidated Statements of Operations and Deficit

(Expressed in U.S. Dollars)


                                                                Period from date
                                                                 of commencement
                                                                of operations on
                                                                    April 21,
                                                Year ended             1997
                                               December 31,      to December 31,
                                                  1998                 1997
                                               -----------      ----------------

Expenses:
      Technology and product development        $  304,661          $360,500
      Business and channel development             242,608              --
      General and administration                   103,328              --
      Depreciation                                  10,988              --
                                                ----------          --------
                                                   661,585           360,500

                                                ----------          --------
Net loss                                           661,585           360,500

Deficit, beginning of period                       360,500              --

                                                ----------          --------
Deficit, end of period                          $1,022,085          $360,500
                                                ==========          ========

Loss per share (note 9)                         $     0.04          $   --
                                                ==========          ========


See accompanying notes to consolidated financial statements.


                                       18
<PAGE>


PUSH ENTERTAINMENT INC.
(A Development Stage Enterprise)
Consolidated Statements of Cash Flow

(Expressed in U.S. Dollars)


                                                                Period from date
                                                                 of commencement
                                                                of operations on
                                                                    April 21,
                                                Year ended             1997
                                               December 31,      to December 31,
                                                  1998                 1997
                                               -----------      ----------------

Cash provided by (used in):

Operations:
     Net loss                                   $ (661,585)       $ (360,500)
     Item not involving cash:
         Depreciation                               10,988               -
     Net changes in non-cash working capital:
         Accounts receivable                       (11,640)              -
         Accounts payable                           34,060               -
         Accrued liabilities                        71,648               -
         Shareholder advances                       49,004               -
         Due to company under common control
           (note 4)                               (360,500)          360,500
                                                ----------        ----------
                                                  (868,025)              -

Financing activity:
     Issuance of share capital                     986,128                 1

Investing activities:
     Acquisition of capital assets                 (88,480)              -
     Acquisition of subsidiary                          (1)              -
                                                ----------        ----------
                                                   (88,481)              -
                                                ----------        ----------

Increase in cash                                    29,622                 1

Cash, beginning of period                                1               -

                                                ----------        ----------
Cash, end of period                             $   29,623        $        1
                                                ==========        ==========


See accompanying notes to consolidated financial statements.


                                       19
<PAGE>

PUSH ENTERTAINMENT INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements

Year ended December 31, 1998 and for the period from the date of commencement of
operations on April 21, 1997 to December 31, 1997
(Expressed in U.S. Dollars)
--------------------------------------------------------------------------------


Incorporation and basis of presentation:

     Push Entertainment Inc. (the "Corporation") was incorporated under the laws
     of the State of Delaware on January 7, 1998.  Effective January 7, 1998 the
     Corporation  acquired for cash  consideration  consisting  of $1 all of the
     issued  outstanding  capital stock of Push  Technologies  Inc.  ("PTI"),  a
     company   incorporated   under  the  laws  of  Alberta,   Canada.  PTI  was
     incorporated  as 736145  Alberta  Inc.  on April 21,  1997 with all capital
     stock  being  issued  to  a  provisional  shareholder  to  hold  until  the
     incorporation of its ultimate shareholder, which was to be the Corporation.
     As a result, the Corporation has accounted for the operations of PTI on the
     continuity  of  interests  basis,  as if PTI had  always  been owned by the
     Corporation.   The   Corporation   is  in  the   business  of   developing,
     manufacturing  and  distributing  technologies  for the  conversion  of two
     dimensional film and video images into three dimensional content.

     The  consolidated   financial   statements  include  the  accounts  of  the
     Corporation and its wholly-owned subsidiary PTI.

     These consolidated  financial statements are presented in U.S. Dollars, and
     are prepared in accordance with accounting principles generally accepted in
     the United States.


1.   Future operations:

     These  financial  statements  have been prepared on the basis of accounting
     principles applicable to a going concern, which assume that the Corporation
     will continue in operation for the  foreseeable  future and will be able to
     realize its assets and  discharge its  obligations  in the normal course of
     operations.

     The  Corporation  is in  the  development  stage  and  has  no  history  of
     generating cash flow from operations which raises  substantial  doubt about
     its ability to continue as a going  concern.  The  Corporation  is actively
     pursuing various initiatives, most particularly the development,  marketing
     and  production  of  its  products  and  capabilities  so as to  achieve  a
     commercial level of operations,  and the sourcing of additional  financing.
     The financial  statements do not include any adjustments  that might result
     from the outcome of this uncertainty.


                                       20
<PAGE>

2.   Significant accounting policies:

     (a)  Capital assets:

          Capital assets are recorded at cost. Depreciation is provided over the
          estimated  useful lives of the assets using the following  methods and
          annual rates:


          Assets                                Basis                     Rate
          -----------------------         -----------------               ----

          Furniture and equipment         Declining balance               20%
          Computer equipment              Declining balance               30%


     (b)  Technology and product development costs:

          Technology  and product  development  costs are expensed in the period
          incurred.

     (c)  Deferred technology and product development costs:

          Costs  incurred  in the  development  of  new  software  products  are
          capitalized  once  technological  and commercial  feasibility has been
          established,  and are amortized  over the life of the product once the
          product is available for general release to customers. There have been
          no costs capitalized to date.

     (d)  Income taxes:

          The  Corporation  uses the liability  method of accounting  for income
          taxes.   The   Corporation  has  not  recognized  in  these  financial
          statements the potential benefits of income tax losses.

     (e)  Use of estimates:

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

     (f)  Foreign currency translation:

          The Company  translates foreign currency  denominated  monetary assets
          and  liabilities  at the rate of  exchange in effect as at the balance
          sheet date, and foreign currency  denominated revenues and expenses at
          the average rates in effect during the year.

     (g)  Loss per share:

          In accordance  with SFAS No. 128,  "Earnings per Share",  the loss per
          share has been  calculated  based upon weighted  average common shares
          outstanding.


                                       21
<PAGE>


3.   Capital assets:

                                                  Accumulated      Net book
                                      Cost       depreciation       value
                                    --------     ------------      --------
     Furniture and equipment        $ 47,697       $  4,921        $ 42,776
     Computer equipment               40,783          6,067          34,716
                                    --------     ------------      --------
                                    $ 88,480       $ 10,988        $ 77,492
                                    ========     ============      ========


4.   Related party transactions:

     (a)  During  1998 the  Corporation  was charged  $87,000  (1997 - $nil) for
          technology and product development expenditures by related parties.

     (b)  During  1998 the  Corporation  was charged  $77,000  (1997 - $nil) for
          business promotion and development expenditures by related parties.

     (c)  During the period from the date of commencement of operations on April
          21, 1997 to December 31, 1997 the Corporation was charged $360,500 for
          technology  and product  development  expenditures  by a company under
          common control.

          Related  parties   include   directors,   officers,   and  significant
          shareholders of the Corporation and companies under their control.


5.   Share capital:

     (a)  Authorized:

          50,000,000 common shares with a par value of $.001 per share 5,000,000
          preferred shares with a par value of $.001 per share

     (b)  Common shares issued and outstanding:


                                                  Number
                                                 of Shares            Amount
                                                 ----------        ----------
         Balance, January 7, 1998                      -           $    -

         Issued:
              For cash                           18,750,105          999,198
              Less share issue costs                                 (13,070)
                                                 ----------        ----------
         Balance, December 31, 1998              18,750,105        $ 986,128
                                                 ==========        ==========


                                       22
<PAGE>

6.   Commitments:

     Minimum  future annual lease  commitments  in respect of office rent are as
     follows:

     1999                                                $     16,000
     2000                                                       2,600


7.   Fair value of financial assets and liabilities:

     The fair value of the Corporation's  financial assets and liabilities as at
     December 31, 1998 approximate  their carrying  amounts,  due to their short
     terms to maturity.


8.   Income taxes:

     The Corporation has  approximately  $1,075,000  (1997 - $360,500) of income
     tax losses and depreciable  property  pools,  which begin expiring in 2004,
     available to reduce future periods'  taxable  income.  No benefit for these
     losses and pools has been recognized in these financial statements.


9.   Loss per share:



     Net loss                                            $    661,585
     Weighted average common shares                        17,040,295
                                                         ------------
     Loss per common share                               $       0.04
                                                         ------------

     No  calculation  has  been  prepared  for  the  period  from  the  date  of
     commencement  of  operations  on April 21, 1997 to December 31, 1997 as the
     only share outstanding for this period related to the subsidiary company.


10.  Year 2000 Issue:

     The Year 2000 issue is the result of computer  programs being written using
     two digits rather than four to identify a year.  The  Corporation is in the
     process of implementing systems and management believes the Corporation has
     no existing software that requires  modification or replacement.  The costs
     of Year 2000  compliance  efforts  are  expected  to be minimal and will be
     undertaken as part of developmental  efforts. The Corporation has adopted a
     policy to purchase  systems from reputable  software  companies who provide
     assurance  of Year 2000  compliance  or to look to an industry  test agency
     that can provide such assurance.  It is not possible to be certain that all
     aspects of the Year 2000 issue affecting the  Corporation,  including those
     relating to the efforts of customers,  suppliers,  or other third  parties,
     will be fully resolved.


                                       23
<PAGE>

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

     There have been no  changes  in or  disagreement  with our  accountants  on
accounting and financial disclosures.

                                    PART III

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

     The following persons are our current directors and executive officers:


Name                 Age      Position Held                         Term
---------------      ---      --------------------------------      ------------
Danny D. Lowe        52       Director, Chairman of the Board,
                              and President                         Since 1/7/98

Todd G. Simpson      35       Director & Vice President             Since 1/7/98

Mark H. Holden       43       Director & Vice President             Since 1/7/98

Ian T. Tweedie       52       Director & Chief Financial Officer    Since 3/4/98


     Norman R. Hess  served  from  January  7,  1998 to August  30,  1999 as the
Secretary,  Treasurer and a Director.  On August 30, 1999,  Mr. Hess resigned in
order to pursue an appointment to the Provincial Court of Calgary.

     Dan Matthew  served as Director  from March 4, 1998 to December 8, 1999. On
December 8, 1999, Mr. Matthews resigned in order to pursue other interests.

     All of our  directors  and officers  are elected  annually to serve for one
year or until their successors are duly elected and qualified.

     We currently  have six full time  personnel and are supported to the extent
required by outside consultants.  Additional staff will be recruited as required
to support  our growth and  development.  Three of the full time  personnel  are
employees and three are contracted  consultants.  Key personnel also have equity
positions  and have executed  confidentiality  and  non-competition  agreements.
Compensation  levels are, and will  continue to be,  commensurate  with industry
standards with incentive programs extended to the key personnel.

Danny D. Lowe
Director, Chairman of the Board and President

         From  January  7, 1998  through  the  present,  Mr.  Lowe has served in
several  capacities in our company including as Director,  Chairman of the Board
and President.  From January, 1996 to December 2000, Mr. Lowe worked with E-Zone
Networks,  Inc. and its  subsidiary,  E-Zone Research and  Development,  Inc. At
various times during that period, he held the offices of director, President and
Chief Executive Officer.  Mr. Lowe co-founded QSound Labs, Inc. (NASDAQ) in 1988
and served as an


                                       24
<PAGE>

officer and director  thereof until January,  1996. Mr. Lowe was the inventor of
QSound's proprietary 3D audio technology,  widely recognized as a standard in 3D
audio.  QSound's technology has been licensed by Intel, Sega and NEC and used by
such  recording  artists as Sting,  Madonna  and Pink Floyd.  E-Zone  provides a
closed  television  network  designed  specifically  for the fitness industry to
alleviate the boredom associated with the use of stationary  exercise equipment.
E-Zone  systems have been  deployed in over 300  facilities in the United States
with a membership of 1.5 million consumers. Mr. Lowe was one of our co-founders.

Todd G. Simpson, Ph.D.
Director and Vice President - Technical Direction & Intellectual Property

     Dr.  Simpson's  career has been  exclusively  in Calgary,  Alberta.  He was
employed  on a full time  basis by  Alberta  Government  Telephones  (now  Telus
Corporation) as a Research Analyst between 1991 and 1993. For the period of 1992
through  1995 Dr.  Simpson  held the part  time  position  of an  Instructor  in
programming  and  system  design  courses  with  Continuing   Education  at  the
University  of Calgary.  From 1993 through 1995,  Dr.  Simpson was employed full
time at Q Sound  Labs Inc.  as a Project  Leader  and from 1995  through  to the
present,  Dr.  Simpson has held the position of Vice  President,  Engineering at
E-Zone  Networks Inc. Dr.  Simpson was the President of Push  Technologies  Inc.
until August 1, 2000 and since 1997 has been one of our directors and officers.

Mark Holden
Director and Vice President- Film & Video Acquisition

     Mr. Holden  co-founded  Tanisys  Technologies  Inc. in  Vancouver,  British
Columbia in 1990 where he was employed  until 1994.  In 1994 Mr. Holden became a
self-employed  consultant to Rainmaker Digital Imaging Inc. and between 1995 and
1998 he  consulted  to E-Zone  Networks  Inc.  Mr.  Holden  provides  consulting
services to us, on an as need basis.

Ian T. Tweedie, C.A.
Director and Chief Financial Officer

     From October 1996 to August 1999,  Mr. Tweedie was a Director and President
of Digital  Armor Inc.  (NASD  OTC).  Prior to October  1996,  Mr.  Tweedie  was
President and a Director of Virtual Universe Corporation, a public company whose
shares  trade on the  Canadian  Venture  Exchange.  Mr.  Tweedie  has  served as
Director  and Chief  Financial  Officer of our  company  since March 4, 1998 and
became a full time consultant to our company in December 1999.

     The following individuals, although not officers or directors, are expected
to make a significant contribution to our business:

David Spooner, Ph.D.
Senior Software Engineer

     Dr. Spooner, age 37, has 13 years of experience in software engineering and
design.  Dr.  Spooner has  consulted  to us as senior  software  engineer  since
January 1998.  From 1995 to 1997, Dr. Spooner  consulted to E-Zone  Research and
Development,  Inc. and prior thereto,  consulted to Shell Canada.  Dr. Spooner's
Ph.D. was granted in computer  science and his thesis was related to programming
language  semantics.  Dr. Spooner's  responsibilities  include the architectural
design and implementation of the Technology.


                                       25
<PAGE>

Len Bruton, Ph.D.
Technical Consultant

     Dr.  Bruton,  age 57, has been a Professor in the Faculty of Engineering at
the University of Calgary since 1970.  During this period he also served as Head
of Electrical and Computer Engineering, Dean of Engineering, and Vice President,
Research.  In addition to his academic  responsibilities  Dr. Bruton  carries on
research  in the  areas of  digital  video  and 3D  filtering.  Dr.  Bruton  has
published  extensively and is recognized worldwide for his work in filter design
and intellectual property.

     Our consultants have entered into agreements with us, which provide in part
for the description of the services to be provided by them, the  compensation to
be paid  for  their  services  and the  reservation  by us of all  existing  and
developed  intellectual  property.  Each  of the  consulting  agreements  can be
terminated  by  us  or  the  consultant  upon  thirty  (30)  days  notice.   The
non-disclosure/non-competition  agreements  which  we  have  with  each  of  the
consultants  provides in part that the consultants  will not disclose or utilize
our intellectual property and that the intellectual property will be kept in the
strictest confidence. The non-disclosure/non-competition agreements also provide
that the consultants will not compete,  either directly or indirectly with us or
carry on a business  similar to that  carried on by us for a period of three (3)
years from the  termination of the consulting  agreements.  We acknowledge  that
such agreements are not strictly enforced by the courts in the United States and
Canada and may be enforced in part only and in some cases not at all.

     Except  as  described  below,  during  the  past  five  years  none  of our
directors, executive officers, promoters or control persons were:

     (1) the subject of any bankruptcy petition filed by or against any business
of which such person was a general  partner or executive  officer  either at the
time of the bankruptcy or within two years prior to that time;

     (2) convicted in a criminal  proceeding or is subject to a pending criminal
proceeding (excluding traffic violations and other minor offenses);

     (3) subject to any order,  judgment, or decree, not subsequently  reversed,
suspended or vacated,  of any court of competent  jurisdiction,  permanently  or
temporarily enjoining, barring, suspending or otherwise limiting his involvement
in any type of business, securities or banking activities; or

     (4) found by a court of competent  jurisdiction  (in a civil  action),  the
Commission  or the  Commodity  Futures  Trading  Commission  to have  violated a
federal or state securities or commodities law.

     Messrs. Lowe and Simpson were officers of E-Zone Networks,  Inc. ("E-Zone")
and its Canadian  subsidiary,  E-Zone Research and  Development,  Inc.  ("E-Zone
Canada") until December 2000. In addition, Mr. Lowe served as Director of E-Zone
until June 2000.  In September  2000,  E-Zone and E-Zone Canada were acquired by
Netpulse Communications,  Inc. ("Netpulse").  In January 2001, Netpulse,  E-Zone
and E-Zone Canada filed a petition for  bankruptcy  under Chapter 7. At the time
of such filing, neither of Messrs. Lowe or Simpson were officers or directors of
E-Zone or E-Zone Canada.


                                       26
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

     The following table sets forth  information  concerning the compensation of
the named executive  officers and directors from April 21, 1997 through December
31, 1998.

<TABLE>
<CAPTION>
                                                    Annual Compensation                        Long-Term Compensation
                                             ---------------------------------   ----------------------------------------------
                                                                                            Awards                   Payments
                                                                                 ----------   ----------    -------    --------
                                                                  Other Annual                Securities                 All
                                   Year                              Compen-     Restricted      Under-                  Other
       Name And                     or                               sation        Stock         lying       LTIP      Compen-
  Principal Position              Period     Salary    Bonuses        ($)         Award(s)      Options/    Payouts     sation
                                  Ended       ($)        ($)                        ($)          SARs         ($)        ($)
----------------------------     --------    ------    -------    ------------   ----------   ----------    -------    --------
<S>                              <C>           <C>       <C>        <C>              <C>          <C>          <C>        <C>
Danny D. Lowe                    12/31/97      -         --           --             -            -            -          --
President/Director               12/31/98      -         --         55,879(1)        -            -            -          --

Todd G. Simpson Ph.D             12/31/97      -         --           --             -            -            -          --
Vice President/Director          12/31/98      -         --         50,303(2)        -            -            -          --

Mark Holden                      12/31/97      -         --           --             -            -            -          --
Vice President/Director          12/31/98      -         --         37,086(3)        -            -            -          --

Norman R. Hess                   12/31/97      -         --           --             -            -            -          --
Secretary/Treasurer/Director     12/31/98      -         --         20,736(4)        -            -            -          --

Dan Matthews                     12/31/97      -         --           --             -            -            -          --
Director                         12/31/98      -         --           --             -            -            -          --

Ian Tweedie                      12/31/97      -         --           --             -            -            -          --
CFO/Director                     12/31/98      -         --           --             -            -            -          --

     Total                                     -         --        164,004           -            -            -          --
</TABLE>

(1)  Paid to T.I. - The Idea Company Ltd., a corporation controlled by Danny D.
     Lowe.
(2)  Paid to Quadri Inc., a corporation controlled by Todd G. Simpson.
(3)  Paid to M. Holden Productions Ltd., a corporation controlled by Mark Holden
(4)  Paid to Norman R. Hess Professional  Corporation,  a corporation controlled
     by Norman Hess. Mr. Hess resigned on August 30, 1999.

     No  officer  or  director  was paid more  than  $100,000  in 1998.  We made
additional  payments to our officers and directors,  totaling $87,805 for the 12
month period ending  December 31, 1999, and $60,000 for the year ending December
31, 2000. We do not have any employee stock option or other compensatory  plans,
however it is our intention to implement such a plan.

     There are no standard or other arrangements pursuant to which our directors
are  compensated  for any  services  provided  as a  director  or for  which any
director was compensated during 1998 for any service provided as a director.

     There  are no  employment  contracts  between  us and any  named  executive
officers.


                                       27
<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain  information as of December 31, 1998
regarding the  beneficial  ownership of the common stock of, (1) each person who
was  known  by us to  own  beneficially  more  than  five  percent  (5%)  of our
outstanding  common stock; (2) each of the directors and officers as at December
31, 1998;  and (3) all of the directors and officers as at December 31, 1998, as
a group.

<TABLE>
<CAPTION>
                                         Shares of             Approximate
                                         Common                Percentage
                                         Stock                 of Issued and
Name and Address of                      Beneficially          Outstanding as at
Beneficial Owner                         Owned                 December 31, 1998
---------------------------------------- --------------------- -----------------
<S>                                      <C>                       <C>
Directors and Officers:
  Danny Lowe                             1,799,990(1)(3)           9.60%
  37 Woodhaven View SW
  Calgary, Alberta, Canada
  T2W 5P6

  Todd Simpson                           1,517,990(1)(2)(4)(8)     8.10%
  133 Edgebrook Crescent NW
  Calgary, Alberta, Canada
  T3A 5A4

  Mark Holden                            1,799,990(1)(5)           9.60%
  2397 Palmerston Avenue
  West Vancouver, BC, Canada
  V7V 2W2

  Dan Matthews                           1,779,990(6)              9.60%
  2710 Bellevue Avenue
  West Vancouver, BC, Canada
  V7V 1E6

  Norman R. Hess(10)                      130,000                  0.69%
  202e, 500 Eau Claire Ave SW
  Calgary, Alberta
  T2P 3R8

  Ian Tweedie                             100,000(2)(7)            0.53%
  3922 - 4th Street SW
  Calgary, Alberta, Canada
  T2S 1Y5

  5% Stockholders:

    Buchaneer Holdings Ltd.(9)          1,290,000(1)              6.88%

Directors and Officers as a Group
    (6 persons)                         7,147,960                38.12%
</TABLE>


                                       28
<PAGE>

(1)  Direct ownership.

(2)  Beneficial ownership.

(3)  Does not  include  1,290,000  shares  owned as at  December  31,  1998 by a
     Bahamian corporate foundation, as to which Mr. Lowe disclaims any direct or
     beneficial interest but from which certain members of Mr. Lowe's family and
     other third parties may benefit.

(4)  Does not include 750,000 shares owned as at December 31, 1998 by a Bahamian
     corporate  foundation  as to which  Dr.  Simpson  disclaims  any  direct or
     beneficial  interest  but from which  members of Dr.  Simpson's  family and
     other third parties may benefit.

(5)  Does not include 535,500 shares owned as at December 31, 1998 by a Bahamian
     corporate  foundation  as to which  Mr.  Holden  disclaims  any  direct  or
     beneficial interest but from which members of Mr. Holden's family and other
     third parties may benefit.

(6)  These  shares  are  registered  in the name of Abacus  (Nominee)  Limited -
     M1636,  a corporation  , as trustee for the Matthews  Family Trust of which
     Mr.  Matthews  is one  of the  discretionary  beneficiaries.  Mr.  Matthews
     resigned as a director of our company on December 8, 1999.

(7)  These shares are  registered in the name of Barracuda  Financial  Corp.,  a
     private Alberta, Canada corporation controlled by Mr. Tweedie.

(8)  Includes  18,000 shares which are  registered in the name of Quadri Inc., a
     private Alberta, Canada corporation controlled by Dr. Simpson.

(9)  Buchaneer Holdings Ltd. is a Bahamian corporate  foundation whose principal
     is Richard W. DeVries of Calgary, Alberta, Canada.

(10) Mr. Hess resigned as a director of our company on August 30, 1999.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The  Technology  was acquired from E-Zone by our  subsidiary in August 1997
and  subsequently  assigned to us. Mr. Lowe and Dr. Simpson are  stockholders of
E-Zone and at that time were also officers and directors of E-Zone.  Mr. Hess, a
former  director who resigned on August 30, 1999, is a stockholder of E-Zone and
was also an officer of E-Zone at that time.

     In  December,  1998,  we entered  into a  sub-lease  agreement  with E-Zone
Canada, a wholly owned subsidiary of E-Zone.  The sub-lease provided for payment
of basic and  additional  rent of  $52,888Cdn.  annually.  We  believe  that the
sublease, which expired on February 28, 2000, was on terms and conditions as, or
more favorable than, we could have been obtained from unrelated third parties.

     Through December 31, 1998  corporations  controlled by certain officers and
directors received fees aggregating $164,004.  See "Part III. Item 10. Executive
Compensation."

     We have not formulated any policy towards entering into future transactions
with related parties.

     In 2000, Mr. Lowe, our President and Director, transferred 1,709,990 shares
to a Canadian  spousal trust for the benefit of Mr.  Lowe's wife,  Dian Lowe. In
2000, Mr. Lowe also transferred 90,000 shares to Katana Trading  Corporation,  a
Bahamian  corporation,  in  consideration  for establishing and maintaining such
trust.

     In 2000, Mr. Holden, our Vice-President and Director, transferred 1,709,990
shares to a Canadian spousal trust for the benefit of his wife, Debra Holden. In
2000, Mr. Holden also transferred 90,000 shares to Katana Trading Corporation, a
Bahamian  corporation,  in  consideration  for establishing and maintaining such
trust.


                                       29
<PAGE>

     In 2000,  100,000  shares  were sold to Mr.  Tweedie,  our Chief  Financial
Officer and  Director,  from Mr. Mike Lowe in  consideration  for the payment of
$0.003 per share or $334.00 in the aggregate.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8K.

     (a) Exhibits: Exhibit 21- Subsidiaries
     (b) Reports on Form 8K: No  reports  were filed on Form 8K during the last
                             quarter of the fiscal year ended December 31, 1998.


                                       30
<PAGE>

                                   SIGNATURES

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

Dated: February 27, 2001               Push Entertainment Inc.



                                          By: /s/ Danny D. Lowe
                                          Danny D. Lowe, President


                                          By: /s/ Ian Tweedie
                                          Ian Tweedie, Chief Financial Officer

     In  accordance  with the Exchange Act, this report has been signed below by
the following  persons on behalf of the  registrant and in the capacities and on
the dates indicated.


By: /s/ Danny D. Lowe
-------------------------------------------------      February 27, 2001
Danny D. Lowe, President and Director

By: /s/ Todd G. Simpson
-------------------------------------------------      February 27, 2001
Todd G. Simpson, Vice President and Director

By: /s/ Ian Tweedie
-------------------------------------------------      February 27, 2001
Ian Tweedie, Chief Financial Officer and Director


                                       31
<PAGE>


                                   EXHIBIT 21



                              List of Subsidiaries



Push Technologies Inc. - An Alberta, Canada corporation.





                                       32