<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-QSB

(Mark One)

 X  Quarterly report under Section 13 or 15(d) of the Securities Exchange
--- Act of 1934

For the quarterly period ended June 30, 2001

  Transition report under Section 13 or 15(d) of the Exchange Act

For the transition period from _______________ to _______________

Commission file number          000-21585

                     Magnum Sports & Entertainment, Inc.
        (Exact Name of Small Business Issuer as Specified in Its Charter)

             Delaware                                 22-3393152
(State or Other Jurisdiction of           (I.R.S. Employer Identification No.)
Incorporation or Organization)

               1330 Avenue of the Americas, New York, New York 10019
                    (Address of Principal Executive Offices)

                                 (212)-246-7380
                (Issuer's Telephone Number, Including Area Code)

        (Former Name, Former Address and Former Fiscal Year, if Changed
                               Since Last Report)

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

Yes  X        No
    ---          ---

                     APPLICABLE ONLY TO ISSUERS INVOLVED IN
                        BANKRUPTCY PROCEEDINGS DURING THE
                              PRECEDING FIVE YEARS

         Check whether the registrant 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  X
    ---          ---

                      APPLICABLE ONLY TO CORPORATE ISSUERS

         State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:

Common Stock, $.01 par value 7,803,632 as of August 3, 2001

         Transitional Small Business Disclosure Format (check one):

Yes           No  X
    ---          ---

<PAGE>

PART I.

Item 1. Financial Statements

              MAGNUM SPORTS & ENTERTAINMENT, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                  JUNE 30, 2001
                                   (Unaudited)

                                     ASSETS

<TABLE>
<CAPTION>
Current Assets
<S>                                                                     <C>
    Cash and cash equivalants                                           $581,824

    Accounts receivable, less allowance for
          doubtful accounts of $177,963                                  231,127

    Prepaid expenses and other current assets                            989,001
                                                                     -----------
            Total current assets                                       1,801,952


Property and equipment,at cost, net of accumulated depreciation           49,267

Goodwill, at cost net of accumulated amortization                        132,696

Security deposit and other assets                                        122,905

Investments                                                              325,000

Escrow deposit                                                           630,000
                                                                     -----------
            Total assets                                             $ 3,061,820
                                                                     ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

    Notes payable                                                    $   141,690

    Accounts payable and accrued expenses                                320,450

    Security deposit payable                                              16,200

                                                                     -----------
             Total current liabilities                                   478,340
                                                                     -----------

Stockholders' equity

    Common stock, $.01 par value; 60,000,000 shares authorized,
        7,892,129 shares issued and outstanding                           78,921

    Additional paid-in capital                                        39,765,592

    Accumulated deficit                                              (37,248,683)

    Demand note receivable on private issuance of common stock           (12,350)
                                                                     -----------
                                                                       2,583,480
                                                                     -----------
              Total liabilities and stockholders' equity             $ 3,061,820
                                                                     ===========
</TABLE>

See notes to unaudited condensed consolidated financial statements.

<PAGE>

              MAGNUM SPORTS & ENTERTAINMENT, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                         Three Months Ended June 30,         Six Months Ended June 30,
                                                         ---------------------------         -------------------------
                                                                          (Restated)                         (Restated)
                                                             2001           2000               2001             2000
                                                             ----           ----               ----             ----
<S>                                                     <C>               <C>             <C>                 <C>
REVENUE
     Purse income                                        $        -        $   28,784      $        -          $   45,784
     Contract and agency fees                               158,161           108,421         279,300             148,155
     Endorsements and marketing fees                          6,270           104,481           8,785             160,481
     Ticket revenues                                              -                 -               -               3,465
     Merchandise revenues                                         -             2,409               -               3,082
                                                         ----------        ----------      ----------          ----------
                                                            164,431           244,095         288,085             360,967
                                                         ----------        ----------      ----------          ----------

COSTS AND EXPENSES:
     Cost of revenues                                             -             2,861               -               4,163
     Training and related expenses                           11,500           138,342          14,990             249,604
     Promotional expenses                                    20,746            71,122          98,407             305,463
     Selling, general and administrative expenses         1,901,558         2,971,037       3,865,026           4,825,564
                                                         ----------        ----------      ----------          ----------
                                                          1,933,804         3,183,362       3,978,423           5,384,794
                                                         ----------        ----------      ----------          ----------

     Loss from operations                                (1,769,373)       (2,939,267)     (3,690,338)         (5,023,827)
     Other income                                            51,034             9,890          62,362              23,674
                                                         ----------        ----------      ----------          ----------
     Loss from continuing operations
        before income taxes                              (1,718,339)       (2,929,377)     (3,627,976)         (5,000,153)
     Income taxes                                                 -             4,944           2,581               5,033
                                                         ----------        ----------      ----------          ----------
     Loss from continuing operations                     (1,718,339)       (2,934,321)     (3,630,557)         (5,005,186)

DISCONTINUED OPERATIONS:
     Gain (loss) from operations of the
         discontinued business                                9,409          (756,576)          6,503          (1,992,722)
                                                         ----------        ----------      ----------          ----------
     Net loss                                           $(1,708,930)      $(3,690,897)    $(3,624,054)        $(6,997,908)
                                                         ==========        ==========      ==========          ==========

BASIC AND DILUTED LOSS PER SHARE:
     Continuing operations                                   $(0.23)           $(0.68)         $(0.55)             $(1.24)
     Loss from operations of the
        discontinued business                                     -             (0.18)              -               (0.49)
                                                         ----------        ----------      ----------          ----------
     Net loss                                                $(0.23)           $(0.86)         $(0.55)             $(1.73)
                                                         ==========        ==========      ==========          ==========
    Weighted average common shares                        7,535,671         4,297,762       6,566,019           4,025,967
                                                         ==========        ==========      ==========          ==========
</TABLE>

See notes to unaudited condensed consolidated financial statements.

<PAGE>

             MAGNUM SPORTS AND ENTERTAINEMNT, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                               Three Months Ended June 30,            Six Months Ended June 30,
                                                            ---------------------------------     ---------------------------------
                                                                  2001             2000                 2001             2000
                                                               -----------      -----------          -----------      -----------
<S>                                                            <C>              <C>                  <C>              <C>
Cash flows from operating activities                           $(1,027,250)     $(1,432,360)         $(2,548,157)     $(3,936,658)

Cash flows from investing activities                               134,970         (216,275)             159,000         (525,441)

Cash flows from financing activities                             1,285,731        5,363,781            2,754,866        5,835,755
                                                               -----------      -----------          -----------      -----------

Net increase in cash and cash equivalents                          393,451        3,715,146              365,709        1,373,656

Cash and cash equivalents at beginning of period                   188,373          391,560              216,115        2,733,050
                                                               -----------      -----------          -----------      -----------

Cash and cash equivalents at end of period                     $   581,824      $ 4,106,706          $   581,824      $ 4,106,706
                                                               ===========      ===========          ===========      ===========

Supplemental disclosures of cash flow information:

      Cash paid during the year for income taxes               $       (83)     $     8,098          $    40,624      $    11,878

Noncash Investing and Financing Activities:

Issuance of common stock for consulting and other services               -        2,606,325                    -        2,801,826

Stock-based compensation charged to expense                        216,323        1,286,967              436,137        1,847,667

Undistributed stock in connection with acquisition                       -          120,000                    -          120,000

Issuance of common stock in connection with acquisition                  -          (82,154)                   -           37,846

Amounts payable in connection with acquisition                           -                -                    -           60,000
</TABLE>


See notes to unaudited condensed consolidated financial statements.

<PAGE>

             MAGNUM SPORTS AND ENTERTAINMENT, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - NATURE OF ORGANIZATION AND BASIS OF PRESENTATION:

         1. Nature of Organization:

         Magnum Sports & Entertainment, Inc. formerly known as Worldwide
         Entertainment & Sports Corp. (the "Company") was incorporated in
         Delaware on August 15, 1995 to provide management, agency and marketing
         services to professional athletes and entertainers, principally boxers.
         On October 18, 2000 the Company changed its name to Magnum Sports &
         Entertainment, Inc.

         2. Basis of Presentation:

         The condensed consolidated financial statements included herein have
         been prepared by the Company, without audit, pursuant to the rules and
         regulations of the Securities and Exchange Commission. Certain
         information and footnote disclosures normally included in financial
         statements prepared in accordance with generally accepted accounting
         principles have been condensed or omitted pursuant to such rules and
         regulations. However, the Company believes that the disclosures are
         adequate to make the information presented not misleading. The
         condensed consolidated financial statements should be read in
         conjunction with the financial statements and notes thereto included in
         the Company's annual report on Form 10KSB for the year ended December
         31, 2000.

         The condensed consolidated financial statements included herein
         reflect, in the opinion of management, all adjustments (consisting
         primarily only of normal recurring adjustments) necessary to present
         fairly the results for the interim periods. The results of operations
         for the six months ended June 30 2001, are not necessarily indicative
         of results to be expected for the entire year ending December 31, 2001.

NOTE B - GOING CONCERN

         The Company's condensed consolidated financial statements have been
         presented assuming that the Company will continue as a going concern.
         Management's plans include obtaining continued financing by issuing
         common stock while reducing expenses and either discontinuing, selling
         or divesting unprofitable operations. Such plans also include analyzing
         potential acquisition candidates that will help the Company become a
         profitable multi-dimensional entertainment company. There is no
         assurance that the Company will achieve or sustain profitable
         operations.

         These conditions indicate that the Company may be unable to continue as
         a going concern. Its ability to do so is dependent on its ability to
         achieve profitable operations, and its ability to obtain any necessary
         financing. The condensed consolidated financial statements do not
         include any adjustments that might result from the outcome of this
         uncertainty.

         During the three months ended June 30, 2001, the Company raised gross
         proceeds of $1,570,000 through a private placement of units with each
         unit comprised of one share of the Company's common stock and two
         warrants each to acquire one share of common stock. After deduction of
         offering expenses, including commissions, the sale of the units
         generated net proceeds of approximately $1,560,000. The Company sold an
         aggregate of 1,549,622 shares of common stock and an aggregate of
         3,099,244 warrants at purchase prices

<PAGE>

         ranging from $1.00 to $1.11 per unit in this private placement. The
         exercise prices of the warrants to acquire common stock range was fixed
         at $.75 per share and are exercisable for a five year term.

         The Board of Directors has decided that the Company will focus its
         future business on talent management, marketing, and content. Due to
         the change in focus the following subsidiaries, Worldwide Team Sports,
         Inc., Worldwide Basketball Management, Inc. and Worldwide Sports
         Promotions, Inc. are in a wind-down process and had no new activities
         during the second quarter of 2001.

         The operations of these subsidiaries during the first six months of
         2001 included net losses of $24,000. The Company is actively seeking a
         buyer for the HOB Website.

         Proposed Acquisition

         On December 11, 2000, the Company and Ford Models, Inc. ("Ford")
         entered into a letter of intent setting forth the intentions of the
         parties with respect to a proposed acquisition by the Company of all
         the issued and outstanding capital stock of Ford. Magnum deposited
         $630,000 with an escrow agent to secure its obligations under the
         terms of the letter of intent. The Company is trying to arrange
         financing, although the Company cannot provide any assurance that it
         will be able to secure the necessary financing to acquire Ford on
         acceptable terms or at all. In addition, there can be no assurance
         that the Company will enter into a definitive agreement to acquire
         Ford or consummate such acquisition. The letter of intent with Ford
         expired on August 11, 2001 and Magnum and the Chief Executive Officer
         of Ford are negotiating an extension of the letter of intent, although
         no assurances can be given that Ford will agree to an extension of the
         letter of intent.

NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

         1. The condensed consolidated financial statements include the accounts
         of the Company and all of its wholly owned and majority owned
         subsidiaries. All significant intercompany balances and transactions
         have been eliminated.

         2. Ticket and commission revenues are recognized at the time of the
         fight. Contract and agency fee revenues are recognized ratably over the
         various athletic seasons. Merchandise revenue is recognized upon the
         sale of memorabilia merchandise.

         3. Basic and diluted net loss per share is computed by dividing net
         loss by the weighted average number of shares of common stock
         outstanding during the year. Diluted EPS has not been presented
         separately because the effect of potential common stock would be
         anti-dilutive.

         4. The Company files a consolidated federal income tax return and has
         net operating loss carryforwards for Federal income tax purposes, which
         will expire in 2020, amounting to approximately $18,100,000. No
         deferred tax asset is reflected in the accompanying condensed
         consolidated balance sheet due to a related valuation allowance equal
         to the balance of the deferred tax asset.

         5. For purposes of the statement of cash flows, all highly liquid
         investments with original maturities of three months or less are
         considered to be cash equivalents. Cash balances are maintained in
         several financial institutions insured by the Federal Deposit Insurance
         Corporation up to $100,000 for each bank.

         6. Certain reclassifications have been made to the prior period
         financial statements to conform to the current period presentation.

NOTE D - DISCONTINUED OPERATIONS

         In September 2000, management decided to discontinue its internet
         subsidiary, Sportcut.com. The wind-down process of Sportcut.com was

<PAGE>

         completed at March 31, 2001. Operating results of Sportcut.com for the
         period ended June 30, 2001 are shown separately in the accompanying
         statement of operations for the six month period ended June 30, 2001.
         The condensed consolidated statement of operations for the six months
         and three months period ended June 30, 2000 has been restated and
         operating results of Sportcut.com are also shown separately.

NOTE E - STOCK OPTION GRANTS

         During the six months ended June 30, 2001, the Company did not grant
         any stock options.

NOTE F - GOODWILL

         Goodwill represents cost in excess of fair value of net assets acquired
         from the purchase of the internet website transaction, and is being
         amortized over 10 years. The Company periodically re-evaluates its
         recoverability. In management's opinion there has been no impairment of
         goodwill at June 30, 2001.

NOTE G - NASDAQ STAFF NOTIFICATION

         The Company recently received notification from the staff of The
         Nasdaq Stock Market Inc. that the Company's common stock failed to
         maintain a minimum bid price of $1.00 per share. Further, the Nasdaq
         staff advised the Company that unless it satisfies the minimum bid
         price of $1.00 per share for a minimum of ten consecutive trading
         days on or before October 30, 2001 the Nasdaq staff will provide the
         Company with written notification that its securities will be delisted
         from Nasdaq.


Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations

         The following is intended to update the information contained in the
Company's annual report on Form 10-KSB for the year ended December 31, 2000 and
presumes that readers have access to, and will have read, "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained in such Form 10-KSB.

         This Quarterly Report on Form 10-QSB contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act. Words such as "will" and "should"
and similar expressions reflecting something other than historical fact are
intended to identify such statements. These forward-looking statements involve a
number of risks and uncertainties, including, but not limited to: the success
and achievement of the athletes managed by the Company; demand for their
services; the ability of the Company to attract additional clients; the effect
of the Company's accounting policies; the ability of Magnum Productions to be
engaged to produce any television or cable projects and other risk factors
detailed in the Company's filings with the Securities and Exchange Commission.
The Company's ability to consummate acquisitions also is dependent upon the
Company's ability to secure additional financing. The consummation of the
acquisition of Ford Models, Inc. is subject to the ability of the Company to
negotiate and enter into a definitive acquisition agreement to acquire Ford
Models, Inc., the ability of the Company to procure the necessary financing to
complete the transaction, the possibility of requiring stockholder approval and
obtaining other regulatory approvals and consent.

Overview

          Magnum Sports & Entertainment, Inc. (the "Company" or "Magnum") is
headed by Chief Executive Officer Robert M. Gutkowski and Charles A. Koppelman,
Chairman of the Board, who were appointed to their respective positions by the
Company's Board of Directors on June 15, 2000. The Company's goal in the period
since then has been to dispose of the poorly performing businesses inherited
from the Company's prior management and to attempt to grow the Company's
revenues through carefully executed acquisitions and the hiring of experienced
individuals in the fields of fashion, music, sports and film/television. The
Company's new management team explored a range of acquisition candidates as a
means to commence implementation of this strategy, culminating in December 2000,
when the Company signed a letter of intent to acquire Ford Models, Inc.("Ford"),
a global fashion modeling agency as more fully described below. There can be no
assurances that the Company will be successful in implementing this strategy in
any manner. Magnum's poor historical performance and lack of financial resources
have made it difficult for the Company's new management team to execute its
acquisition strategy, particularly in light of the challenging environment in
the capital markets for raising equity capital throughout 2001 to date.
Currently, the Company has not been able to raise the necessary funds to

<PAGE>

purchase Ford under the terms of the letter of intent and there can be no
assurance that the Company will be able to acquire Ford.

         In June 2000, the Company announced that it appointed Robert M.
Gutkowski, former President and Chief Executive Officer of both Madison Square
Garden and The Marquee Group, Inc. as President and CEO of the Company and had
elevated Charles A. Koppelman, former Chairman and CEO of EMI Records
Group-North America, to Chairman of the Company's Board of Directors. Mr.
Koppelman is also currently Chairman and CEO of CAK Entertainment, Inc.,
Chairman of Medalist Entertainment, an affiliate of Alliance Entertainment, and
is Executive Chairman of the Office of the Chairman of Steve Madden Ltd.

Proposed Business Strategy

         The Company's strategy for enhancing long-term shareholder value is
based on four entertainment pillars: fashion, music, sports and film/television.
The Company will seek to build entertainment in all these sectors, enhance
client careers and produce and co-own content created by its clients. The
Company has made progress at identifying the industry sectors as well as the
companies and individuals who it wants to be involved with in creating the new
Magnum Sports & Entertainment, Inc. The Company intends to grow through the
acquisition of companies and through the addition of key executives who have
succeeded in their respective fields. It is especially interested in acquiring
companies that have strong brand names that the Company can extend all along the
sports and entertainment spectrum. The Company will be subject to numerous
risks, expenses, problems and difficulties typically encountered in the
implementation of a new business plan. There can be no assurance that the
Company will be able to successfully implement its strategy in light of these
uncertainties. These risks are particularly substantial because the Company does
not have the financial resources to make acquisitions and is dependent upon
raising capital from third parties. The Company's poor financial history, lack
of financial resources, coupled with a difficult environment in the capital
markets throughout 2001 for raising capital makes execution of this new business
strategy particularly uncertain. In addition, as more fully set forth below, the
Company recently received notification from the staff of The Nasdaq Stock
Market, Inc. that the Company's common stock failed to maintain a minimum bid
price of $1.00 per share as required by Nasdaq Marketplace Rule 4310(c)(4).
Further, the Nasdaq staff advised the Company that unless it satisfies the
minimum bid price of $1.00 per share for a minimum of ten consecutive trading
days on or before October 30, 2001, the Nasdaq staff will provide the Company
with written notification that its securities will be delisted from the Nasdaq
Small Cap Market. At that time, the Company would have the right to appeal any
such determination of failure to meet Marketplace Rule 4310 (c)(4) to a Nasdaq
Listing Qualifications Panel thereby staying any delisting of the Company's
common stock from Nasdaq pending the outcome of such hearing. In the event that
the Company's common stock was delisted by Nasdaq from the Nasdaq SmallCap
Market, it would have a material adverse effect on the Company's ability to
raise any capital to make any acquisitions.

The Ford Models, Inc. Letter of Intent

         In executing its strategy, the Company announced on December 12, 2000,
that it had signed a letter of intent with Ford Models, Inc., an international
modeling agency("Ford"), to acquire 100% of Ford (the "Ford Letter of Intent").
Ford has been instrumental in the careers of Kim Basinger, Christie Brinkley,
Sharon Stone, Lauren Hutton, Elle MacPherson, Christie Turlington, Cheryl Tiegs,
Rene Russo, Vendela, Ali McGraw, Veronica Webb and Stephanie Seymour over an
illustrious fifty-six year history. The Ford Letter of Intent provides, among
other things, that Ford agreed that during a 180 day period from December 11,
2000, including any mutually agreed extensions of this 180 day period, none of
Ford or the principal stockholders of Ford shall solicit, or encourage the
solicitation of, or enter into, negotiations of any type directly or indirectly,
or enter into a letter of intent or purchase agreement, merger agreement or
other similar agreement with any person, firm or corporation other than the
Company with respect to a merger, consolidation, business combination, sale of
all or substantially all of the capital stock or assets of Ford or its
subsidiaries. The Ford Letter of Intent also provides, among other things, that
the purchase price for the acquisition of Ford is $22,000,000 in cash (the "Ford
Acquisition"). Upon execution of the Ford Letter of Intent the Company deposited
into escrow the sum of $630,000 as a deposit to be used towards the purchase
price as more fully described in the Ford Letter of Intent.

         Magnum executed a commitment letter from Citibank, N.A. dated May 3,
2001 (the "Citibank Commitment Letter"), in which Citibank has agreed to loan
Magnum a total of $15,000,000 in connection with its proposed purchase of Ford
and to fund working capital if certain conditions are satisfied. Of this amount,
$10,000,000 is a six-year term loan which would be used towards the purchase of
Ford. The interest rate on this term loan is Citibank's prime rate of interest
plus 2% and the first year of the loan requires payment of interest only without
payments of the principal of the loan. Citibank's present prime

<PAGE>

rate of interest is 6 3/4%. The remainder of $5,000,000 will be a revolving
credit loan to fund Ford's working capital which will replace Ford's existing
revolving credit loan with another lender and therefore these funds will not be
used for the purchase price of Ford, assuming, among other things, that Magnum
is able to acquire Ford. The Citibank Commitment Letter is conditioned upon,
among other things, Magnum's executing a loan agreement with Citibank and
Magnum's executing a purchase agreement with Ford. Citibank's commitment letter
is also conditioned upon there being no material adverse change in Ford's
business, financial condition or otherwise. In addition, the Citibank Commitment
Letter expires on October 31, 2001, and Magnum cannot offer any assurances that
Magnum will be able to obtain any extension of this commitment letter beyond
October 31, 2001. Magnum will need to raise an additional sum of approximately
$12,000,000 net of any expenses incurred in raising these funds in order to have
sufficient funds to acquire Ford in addition to the $10,000,000 proposed to be
provided in a loan from Citibank. Ford and the principal stockholders of Ford
agreed to extend the period until August 11, 2001 during which Ford will not
negotiate with any party (other than Magnum) regarding the purchase of Ford(the
"Ford Extension Letter"). In addition, Ford and the principal stockholders of
Ford agreed to extend Magnum's exclusive right to buy Ford beyond August 11,
2001 to at least September 11, 2001, provided that Magnum deposited in
escrow the sum of $10,000,000 by August 11, 2001 to be used towards the purchase
of Ford in addition to the funds proposed to be provided by Citibank. Magnum has
not been able to raise this additional sum of $10,000,000 by August 11, 2001.
Magnum and Ford's chief executive officer are in negotiations regarding an
extension of Magnum's exclusive right to buy Ford beyond August 11, 2001. Magnum
cannot offer any assurances that it will be successful in extending this time
period. The Ford Extension Letter provides that Ford and the principal Ford
stockholders can extend this August 11, 2001 date in their sole and absolute
discretion. Therefore, Ford may terminate the Ford Letter of Intent with Magnum
after August 11, 2001, thereby terminating Magnum's right to buy Ford under the
Ford Letter of Intent.

         In the event that the Citibank Commitment Letter expired, Magnum would
likely not be able to acquire Ford unless it can raise $22,000,000 from other
sources, of which there can be no assurance. The acquisition of Ford is subject
to a number of conditions, including entering into a definitive agreement with
respect to the acquisition and obtaining sufficient financing to fund the
acquisition. There can be no assurance given that the Company can enter into a
definitive acquisition agreement or that it can raise the capital necessary to
consummate the Ford Acquisition or that the Company can consummate the
acquisition of Ford pursuant to the terms of the Ford Letter of Intent.

         In the event that the Company is unsuccessful in acquiring Ford, the
Company may have difficulty continuing its operations beyond November 2001,
absent receipt of equity or debt financing for the Company's operations. The
Company can provide no assurances that it would be successful in securing any
equity or debt financing to continue its operations beyond November 2001. If the
Company were unable to secure any additional financing in these circumstances,
the Company would consider all available options, including, but not limited to,
the sale of the Company, the discontinuance of some or all of the Company's
operations and the liquidation of the Company.

         Recently, the Company has also entered into negotiations with a
financier and several investment banking firms with experience with
entertainment companies who have recommended pursuing the acquisition of Ford
through an entity other than Magnum in which Magnum would obtain a minority
ownership interest in Ford and/or other consideration as part of the
transaction. Such negotiation is ongoing and no agreement has been reached with
this financier or any investment bank regarding terms and conditions of any
acquisition of Ford by any acquirer other than Magnum. Magnum may pursue this
alternative if it is unable to obtain financing for the Ford acquisition to
consummate the acquisition. In addition, there can be no assurance that Ford and
its stockholders will agree to any such alternative arrangements.

         In the event that the Company is successful in acquiring Ford (although
no assurances can be given that Magnum can acquire Ford), the Company intends to
maintain Ford's existing management staff, including Katie Ford, its Chief
Executive Officer, who will continue as Chief Executive Officer of Ford as well
as join the Board of Directors of the Company. The Company believes that the
Ford brand name is very valuable and the Company's growth strategy for Ford is
to expand the Ford brand name across all facets of the entertainment, fashion,
music, sports and film/television industries. The Company believes that Ford
will be an integral part in the Company's implementing its strategy to create a
multi-dimensional talent management, marketing and content company that provides
its clients with wide ranging opportunities across all facets of the
entertainment business. Ford presently maintains offices in eleven cities around
the world, including New York, Los Angeles, Miami, Toronto, Paris, Sao Paolo,
and Rio de Janeiro, and the

<PAGE>

Company believes that these offices provide it with a global platform to
implement this business strategy.

         Ford's historic model roster provides an example of the Company's
"crossover" strategy. Rene Russo, Lauren Hutton, Kim Basinger, Sharon Stone and
Candice Bergen are among the prominent Ford models who went on to have
successful careers in film and television, but none of them were represented by
Ford in Hollywood because Ford did not have management capabilities that
extended beyond modeling. Under the Magnum umbrella, the Company believes that
Ford will be able to service its talent across the entertainment spectrum and
retain commission income and participate in ownership of content, such as
television programs developed and produced by its talent.

         Magnum believes that the Ford brand can be developed into exciting and
profitable television programming on a worldwide basis, although no assurances
can be given that it can be developed into television programming on acceptable
terms if at all. Twenty years ago, Ford launched the "Supermodel of the
World(TM)" contest, which has become the largest and most prestigious model
search in the world. Over the course of a year, young women from around the
world vie for modeling contracts totaling $500,000 and the opportunity to become
one of the world's most recognizable new faces in modeling. The contest is held
in over forty countries culminating in an international finals held most
recently in Puerto Rico. The event draws top models, celebrities and recording
artists and has been seen on cable television as a half-hour program. Magnum
believes that the Ford "Supermodel of the World(TM)" is a valuable property
which has not been materially commercially exploited to date. The search leading
up to the Ford Supermodels finals has been developed as a successful
multi-episode "behind-the-scenes" reality-based television program that achieved
high ratings in the local Australian market in 2000 with young female viewers.
The Company believes that both the international finals and the Supermodels
search have the potential to be successful broadcast properties that can draw
significant multi-year corporate sponsorship on both a national and
international level, although there cannot be any assurances that these events
can be developed into successful broadcast properties or that such multi-year
corporate sponsorships can be procured.

Nasdaq Staff Notification

         The Company's common stock is listed for trading on the Nasdaq SmallCap
Market under the symbol MAGZ. Nasdaq Marketplace Rule 4310 (c)(4) requires that
the Company's common stock maintain a minimum bid price of $1.00 per share. The
Company recently received notification from the staff of The Nasdaq Stock
Market, Inc. that the Company's common stock failed to maintain a minimum bid
price of $1.00 per share. Further, the Nasdaq staff advised the Company that
unless it satisfies the minimum bid price of $1.00 per share for a minimum of
ten consecutive trading days on or before October 30, 2001, the Nasdaq staff
will provide the Company with written notification that its securities will be
delisted from Nasdaq. At that time, the Company would have the right to appeal
any such determination of failure to meet Marketplace Rule 4310 (c)(4) to a
Nasdaq Listing Qualifications Panel thereby staying any delisting of the
Company's common stock from Nasdaq pending the outcome of such hearing. The
Company has not received any notification from Nasdaq that it does not otherwise
meet the listing requirements of Nasdaq for continued listing on the Nasdaq. It
is the Company's view that delisting from Nasdaq would have a materially adverse
effect on the Company's business, including, but not limited to, its ability to
secure capital financing for funding of the Company's existing operations as
well as its ability to secure capital financing for funding the Ford Acquisition
and any other proposed acquisition by the Company. Delisting may materially
adversely affect the trading market and prices for such securities and the
Company's ability to issue additional securities or to secure additional
financing. In addition to the risk of volatility of stock prices and possible
delisting, low price stocks are subject to the additional risks of additional
federal and state regulatory requirements and the potential loss of effective
trading markets. In particular, if the Company's common stock was delisted from
trading on Nasdaq and the trading price of the Company's common stock was less
than $5.00 per share, the common stock could be subject to Rule 15g-9 under the
Securities Exchange Act of 1934, which, among other things, requires that
broker/dealers satisfy special sales practice requirements, including making
individualized written suitability determinations and receiving any purchaser's
written consent prior to any transaction. In such case, the Company's securities
could also be deemed penny stocks under the Securities Enforcement and Penny
Stock Reform Act of 1990, which would require additional disclosure in
connection with trades in the Company's securities, including the delivery of a
disclosure schedule explaining the nature

<PAGE>

and risks of the penny stock market. Such requirements could severely limit the
liquidity of the Company's securities and the ability of stockholders of the
Company to sell their securities in the secondary market.

Magnum Productions

         In February 2001 Magnum started a new division called Magnum
Productions. This business is at its beginning stage in the
television/cable/film production business and there can be no assurance that
Magnum will be able to operate this business successfully. Magnum currently
intends to focus on opportunities to create entertainment programming in the
areas of sports, music and fashion-oriented programming. Magnum does not
presently have the money available to produce television, cable or film
productions and there can be no assurance that Magnum can obtain financing
necessary in the future for the production of this kind of programming. If
Magnum is able to buy Ford, it will also seek to use models represented by Ford
in the entertainment programming that it seeks to produce and believes that
having a production business may enhance Ford's ability to recruit models
because of potential opportunities in the entertainment business that may be
generated by Magnum Productions.

         Magnum will also seek to be hired by entertainment companies as a
producer for hire to produce programming for third parties. Magnum believes that
this will enable it to receive fees as a producer without having to finance the
cost of production of programming. However, Magnum can offer no assurance that
it will be successful in obtaining any assignments as a producer for hire,
subject to the two development production contracts set forth below. The
film/television/cable productions business is highly competitive and there are
many companies and individuals involved in such business who have established
track records of success and much greater financial strength compared to Magnum.
Because Magnum is significantly smaller than its competitors, it may lack the
financial resources needed to produce entertainment programming compared to its
competitors.

         Magnum's philosophy will be the development of programming for specific
distributor needs. Magnum intends to focus on opportunities to create television
series that can reach the milestone of 65 episodes, which make shows eligible
for daily strip syndication. Magnum intends to initially focus on
family-oriented, sports and urban television and low-budget theatrical or
direct-to-video projects. By leveraging the strengths of its other divisions,
Magnum will seek to develop sports, music and fashion oriented programming.
Through its sponsorship division, Magnum intends to seek corporate partners in
program development. In addition, Magnum will seek to control the ancillary
revenue streams that its programming assets will generate, including music
soundtracks, video games and licensing opportunities. Magnum will also be in
position to earn packaging fees (i.e. commissions) by placing talent that it
represents, such as Ford models (assuming that Magnum acquires Ford), into
programming that Magnum hopes to produce.

         Magnum has hired Michael Yudin as the President of Magnum Productions,
reporting to Robert Gutkowski, Magnum's Chief Executive Officer. Mr. Yudin has
two decades of experience in the development, marketing, financing and
production of successful television programming. Mr. Yudin joins Magnum from
Telescene Film Group Inc., a major independent film and television programming
company headquartered in Montreal. At Telescene, Mr. Yudin was President of
Telescene Entertainment where he was instrumental in the development and
production of television programming. Among the successful television series
overseen by Mr. Yudin are Sir Arthur Conan Doyle's The Lost World, (22 episodes
completed and syndicated in the US by New Line Television, with 22 more under
production), Student Bodies (65 episodes, distributed in the US by Twentieth
Century Fox Television), Big Wolf on Campus (36 episodes, with 29 additional
ordered, seen in the US on Fox Family Channel) and Live Through This, the first
one-hour dramatic series ever produced for MTV. Mr. Yudin's career also spans
ten years as a programming executive at Paramount Television Group, Viacom Inc.,
Reeves Communications, Inc. and Chelsea Communications, Inc. and ten years in
the marketing and media divisions of major advertising agencies.

         In August 2001, Magnum entered into two development contracts with
Courtroom Television Network LLC and Games Productions Inc., a subsidiary of the
TNN cable network. Each of these contracts provides for Magnum to prepare
treatments for proposed series for broadcast on the Courtroom Television
Network's Court TV cable network and the TNN cable network, respectively.
Magnum's ability to earn producer fees related to these projects is subject to
several conditions, including, but not limited to, the cable networks
determination after receipt of the treatments prepared by Magnum to proceed with

<PAGE>

production of a pilot and thereafter to proceed with production of a series.
There cannot be any assurance that Magnum will be able to successfully operate
Magnum Productions, including but not limited to being able to develop any
programming of any kind or being able to locate any financial partners to bear
some or all of the financial risk from any kind of programming that Magnum seeks
to develop or that Magnum will be hired as a producer for hire by any third
party. In addition, there can be no assurance that Magnum can continue to fund
the operating budget for Magnum Productions. Magnum Productions is not likely to
generate any significant revenues in the immediate future. Presently Magnum
Productions monthly operating expenses average approximately $35,000 per month
during the second quarter of 2001. Magnum therefore will have to fund Magnum
Productions' operating budget out of its cash reserves unless Magnum is
successful in raising capital through equity or debt financing or until Magnum
Productions generates significant revenues. As of June 30, 2001, Magnum had cash
of $581,824. If Magnum does not raise additional funds, it believes it will have
to reduce significantly or cease operations of Magnum Productions by November 1,
2001.

Other Investments

         During the third quarter of 2000, Magnum made an investment of $200,000
in a privately-held company (the "company") that intended to develop an
innovative, celebrity-based marketing and sponsorship concept. The concept
intended to use the Internet for the delivery of a customized video electronic
greetings from celebrities in the worlds of television, film, sports, music and
fashion to consumers. In exchange for the investment, Magnum received 246,600
shares in the privately held company's Series B convertible preferred stock,
which are convertible to 2% of the current outstanding common stock of the
privately-held company. In addition, Magnum entered into a consulting agreement,
pursuant to which the Company agreed to use its reasonable efforts for a
two-year period to assist the privately-held company in procuring the
participation of celebrities in the concept. In exchange for such consulting
services, Magnum was granted an option to acquire an additional 606,596 shares
of common stock, equating to 5% of the current outstanding common stock of the
privately-held company, on a fully diluted basis, subject to certain vesting
requirements. The privately-held company also agreed to place Charles Koppelman
and Bob Gutkowski on its Board of Advisors, for which Messrs. Koppelman and
Gutkowski each received options to purchase 60,656 shares of common stock,
equating to 0.5% each of the current common stock of the privately-held company,
on a fully diluted basis, subject to certain vesting requirements. To date, the
company has not launched an internet website with this concept because of an
inability to raise additional funding due to the severe downturn in the
availability of funding for internet start-up companies in 2001. At the present
time, the company is seeking to sell itself to an established internet company
that has the necessary capital to exploit the concept on the internet. However,
there can be no assurance of any kind that the company will be successful in
effecting any such sale on acceptable terms, if at all or what, if anything,
that Magnum would receive in the event of a sale of the company to a third
party. In the event that the company is unable to procure a buyer in the near
future, it is reasonably likely that the company will discontinue its operations
because of a lack of realistic prospects to raise additional capital to fund its
operations.

         In addition, during the third quarter of 2000, the Company also
invested the sum of $125,000 in Interview Productions, LLC ("Interview
Productions"), a limited liability company formed to finance, produce and
distribute an independent motion picture for release in theatrical and all other
worldwide markets and media. Interview Productions has raised a total of
$750,000, including the $125,000 invested by the Company for the promotion and
marketing budget of the motion picture. Interview Productions owns an original
screenplay entitled "Interview With the Assassin" that has been produced into a
motion picture by producers David Levien and Brian Koppelman who together with
Neil Burger, the writer/director of "Interview With the Assassin", are the
managers of Interview Productions. David Levien and Brian Koppelman have
previously written the screenplay for the well-received movie "Rounders"
starring Matt Damon and Edward Norton and released by Miramax Films in 1998.
"Rounders" debuted as the number one box office movie during the second weekend
of September 1998. Messrs. Levien and Koppelman have also co-directed,
co-written and co-produced "Knockaround Guys" starring Vin Diesel, Seth Green,
Barry Pepper, Andrew Davili, Dennis Hopper and John Malkovich, which is
presently scheduled to be released by New Line Cinema in January 2002.
"Interview With The Assassin" is a completed film that Interview Productions
produced within budget. The Company received a 16.66% ownership interest in
Interview Productions in exchange for its $125,000 investment. Investors in
Interview Productions will be entitled to recoup 110% of invested capital first
before any sharing of distributable cash, if any, between the investors and the
managers which will be shared equally, fifty percent each. Brian Koppelman is
the son of Charles Koppelman, the Chairman of the Board of Directors of the
Company. Interview Productions has engaged Endeavor Agency, a Hollywood based
talent agency, to assist Interview Productions in connection with seeking to
procure a buyer for

<PAGE>

"Interview With the Assassin". There can be no assurance that Interview
Productions will be successful in securing any buyer for "Interview With the
Assassin". The Company has also commenced seeking a buyer for the Company's
minority ownership interest in Interview Productions. There can be no assurance
that the Company will be able to find a buyer for its minority ownership
interest in Interview Productions on acceptable terms or at all or that the
Company's investment in Interview Productions will result in any return on the
Company's investment.

Potential Future Acquisitions

         In the event that Magnum is successful in acquiring Ford, the Company
may seek to acquire one or more other modeling agencies that would be
complementary to the Ford name both in the U.S. and overseas markets. In
addition, the Company may attempt to acquire one or more companies that provide
talent management services in the film, television, music and sports fields that
will enable the Company to offer its expanding talent roster, if Magnum is able
to acquire Ford, of which there can be no assurance, a wide range of career
opportunities under one integrated corporate umbrella. In addition, the Company
may attempt to acquire one or more companies or hire certain individuals with
expertise in the area of corporate sponsorship and product licensing, which will
enable the Company to link the creative and corporate communities together to
create valuable commercial opportunities. Although the Company regularly
evaluates potential acquisitions, to date the Company has not entered into any
definitive agreement with respect to any such acquisitions. There can be no
assurance that the Company will be able to make any of these kinds of
acquisitions or hire such individuals. The Company presently does not have
sufficient resources to make any of these types of acquisitions without
obtaining equity and/or debt financing from third parties and no assurances can
be given that any such equity and/or debt financing will be available on
acceptable terms, if at all.

Discontinuance/Termination of Several Poorly Performing Businesses Inherited By
Current Management

       The Company's current management inherited a number of businesses that
had poor historical performance and uncertain economic prospects. As part of the
transformation, the Company's boxing management business was terminated in the
fourth quarter of 2000. In connection therewith, the Company consensually
terminated its boxing management agreement with Shannon Briggs, a heavyweight
boxer and two joint venture relationships with Munisteri Sports & Entertainment,
Inc. and Bulldog Boxing Management LLC, respectively. For the year ended
December 31, 2000, the Company recognized revenues of approximately $17,000
attributable to the Company's share of its boxers' purses, and from its joint
venture agreements and ticket sales while in December 31, 1999, the Company
recognized revenues of approximately $64,000 attributable to the Company's share
from these activities. Also, the operations of an Internet subsidiary,
Sportcut.com, Inc. were discontinued during the third quarter of 2000. In
addition, the Company terminated the employment agreements of its two executives
who were operating the Company's motorsports division in February 2001. The
Company's motorsports division had been engaged in the business of representing
professional race car drivers, seeking to procure sponsorships for race car
teams on the NASCAR racing circuit and procuring licensing opportunities for
NASCAR race car teams and drivers. As part of its termination of the employment
agreements of its executives of its motorsports division, the Company will be
entitled to receive certain percentages of revenues generated prospectively from
clients of the motorsports division without incurring any additional expenses in
the operation of the motorsports division. The Company cannot, however, provide
any estimate of such prospective revenues, although the Company did receive
approximately $9,000 during the second quarter of 2001 from this revenue sharing
agreement. The Company also sold all remaining items of sports memorabilia
during 2000 that remained in inventory from its memorabilia division that it had
discontinued in 1999.

The Company's Current Operations and Certain Potential Claims Against the
Company

         The Company's remaining current businesses are an agency that provides
agency services to professional football players, principally in the form of
contract negotiation with National Football League ("NFL") teams and an Internet
boxing content website, www.Houseofboxing.com (the "HOB Website") that it
operates through its wholly-owned subsidiary Magnum Houseofboxing.com,
Inc.("HOB.com"). Each of these businesses were in operation at the time that
Messrs. Gutkowski and Koppelman assumed their positions as Chief Executive
Officer and Chairman of the Board, respectively, in June 2000. The Company
presently employs two agents who are licensed as contract advisors with the NFL
Players' Association to operate its football agency business. Agency fees for
negotiation

<PAGE>

of professional football contracts are regulated by the NFL Collective
Bargaining Agreement and typically range from 1-3% of the player's contract,
payable after receipt by the player of his moneys from the NFL team (which
includes the player's base salary, signing bonus and any performance bonus
actually received by the player, during the length of the contract which the
Agent negotiated for his client with the team. That revenue stream continues for
so long as the player is paid pursuant to such contract, even if the client
changes Agents during that span.). The Company's football agency presently
represents approximately 40 professional football players, including, among
others, Tyrone Wheatley of the Oakland Raiders, Darren Sharper, safety of the
Green Bay Packers who was named to the 2000 NFL All-Pro Team, and Antonio
Freeman, wide receiver of the Green Bay Packers.

         In addition, the Company's football agency enjoyed its finest results
in its history in connection with the April 2001 NFL draft in which two of the
Company's clients were selected in the first round: Gerard Warren, defensive
lineman from the University of Florida who was the 3rd player selected in the
draft by the Cleveland Browns and Rod Gardner, wide receiver, Clemson University
who was the 15th player selected in the draft by the Washington Redskins as well
as four other players who were selected in later rounds of the NFL
draft--Delawrence Grant, defensive end from the University of Oregon and Corey
Bird, safety from Virginia Tech who were both selected in the 3rd round of the
NFL draft and Quentin McCord, wide receiver from the University of Kentucky and
Anthony Denman, linebacker from Notre Dame University who were both selected in
the 7th round of the NFL draft. In August 2001, the Company's NFL agency
negotiated a $44,000,000 five year contract for Mr. Warren with the Cleveland
Browns with an option for a sixth year, including $12,000,000 in guaranteed
bonuses payable over three years. The Company is entitled to an agency fee of 1%
of moneys received by Mr. Warren under this contract for so long as the Company
operates its NFL agency. In addition, in August 2001, the Company's NFL agency
negotiated a $7.7 million 5 year contract on behalf of Mr. Rod Gardner with the
Washington Redskins that provides for a $5.3 million signing and reporting bonus
payable over two years. The Company is entitled to an agency fee of 3% of moneys
received by Mr. Gardner under this contract for so long as the Company operates
its NFL agency. Except for the signing bonuses, the remaining moneys under both
Mr. Warren and Mr. Gardner's contracts are not guaranteed and the contracts
contain numerous criteria that Mr. Warren and Mr. Gardner will have to satisfy
in order to earn all or substantially all the potential amounts under the
contract. The Company is presently evaluating its NFL agency and determining
whether such operation should be continued, sold or otherwise disposed of. The
Company cannot provide any assurances that it would be able to secure any buyer
of its NFL agency on acceptable terms, if at all.

         With respect to the HOB Website, management has determined that it does
not fit with the Company's new business strategy. The HOB Website is a sports
content website that focuses on the sport of boxing, producing high quality
editorial content and audio and video content regarding top flight boxers and
boxing personalities. It has been called "boxing's premier website" by Sports
Illustrated. The HOB Website, however, faces intense competition from numerous
Internet sports and entertainment companies, many of which are better
capitalized than the HOB Website and/or have relationships or are owned by major
media companies such as CBS Sportsline, ESPN and CNN/SI. It addition, it has
been extremely difficult for the HOB Website to generate any material revenues
from advertising and/or sponsorships. Accordingly, the Company is actively
seeking to find a buyer for the HOB Website, although there can be no assurance
that it will be able to locate a buyer for the HOB Website. If the Company is
unable to locate a buyer for the HOB Website, it will either discontinue the
operations of the HOB Website or materially reduce the staff operating the HOB
Website in order to reduce the operating expenses incurred in connection with
the HOB Website. The Company has already reduced the staff operating the HOB
Website by five employees, which resulted on a monthly salary savings of
approximately $31,000. The Company is presently engaged in negotiation with at
least one potential buyer of the HOB Website. However, the Company cannot offer
any assurances that the Company will be successful in selling the HOB Website.
Even if the Company were successful in selling the HOB Website, the Company does
not expect to receive any moneys in any sale. Because of the substantial
downturn in the valuation of Internet content companies in 2001, the principal
benefit that the Company is presently seeking to obtain in any sale of the HOB
Website is to be relieved from the contractual obligations that may be owed to
Michael Katz and Thomas Hauser who are the principal writers for the HOB
Website. Magnum's previous management provided a contemporaneous guarantee by
Magnum in 2000 of the HOB Website's obligations to Michael Katz and Thomas
Hauser. However, in the event that the Company is unable to sell the HOB Website
and determines to discontinue the HOB Website, it may be faced with claims from
Michael Katz and Thomas Hauser. Mr. Katz is employed as the senior writer of the
HOB Website pursuant to a five year

<PAGE>

employment agreement dated March 14, 2000 and Mr. Hauser as a consultant and a
writer for the HOB Website pursuant to a consulting contract expiring in April
2002. Mr. Katz' employment agreement with the HOB Website calls for salaries of
$157,000 per year for the first three years of the agreement, increasing to
$172,500 in the fourth year and $182,500 in the fifth year of the agreement
ending in March 2005. Mr. Hauser's contract calls for payment of a monthly
consulting fee of $4,000 per month through April 2002 and a fee of $1,000 per
article written by Mr. Hauser for the HOB Website. The Company and Mr. Katz and
Mr. Hauser are presently engaged in negotiations regarding a standstill
arrangement in which, among other things, the Company will not have to make any
payments to Mr. Katz or Mr. Hauser beyond August 15, 2001 for an agreed upon
period of time while the Company actively seeks a buyer for the HOB Website.
There can be no assurance that the Company and Mr. Katz and Mr. Hauser will
enter into a standstill agreement. In the event that either Mr. Katz or Mr.
Hauser pursued legal proceedings and obtained a judgment against Magnum for all
remaining salary or consulting obligations under their contracts, Magnum
presently does not have sufficient cash assets to pay any such judgment and
would have to consider curtailing its operations and other alternatives,
including commencement of bankruptcy proceedings. Magnum believes that it would
have certain defenses to claims by Mr. Katz and Mr. Hauser, although Magnum can
offer no assurances that it would be successful in asserting these defenses in
the event that Mr. Katz or Mr. Hauser commenced legal proceedings against
Magnum. Neither Mr. Katz nor Mr. Hauser has commenced any proceedings of any
kind at the present time against Magnum or the HOB Website, although Magnum
cannot provide any assurances that either or both of them will not commence
legal proceedings against Magnum and the HOB Website in the event that the HOB
Website discontinues its operations.

         Also, during the second quarter, the Company received a written demand
from counsel for Janssen Partners, Inc. ("Janssen"), an investment banking firm,
claiming that the Company owed Janssen the sum of $282,250 plus 671,042 unit
purchase options and 8,849.55 warrants. Janssen alleges that such compensation
is due related to three separate transactions: a consulting contract requiring
payment of a $20,000 monthly consulting fee, cash commissions and unit purchase
options related to services allegedly rendered by Janssen in connection with a
private placement of Magnum securities in the Spring 2000 and cash commissions
and warrants related to services allegedly rendered by Janssen in connection
with a private placement of Magnum securities in February 2001. The Company
believes that it has certain defenses to these claims by Janssen, although the
Company can offer no assurances that it would be successful in asserting these
defenses in the event that Janssen commenced legal proceedings against Magnum.
Janssen has not commenced any proceedings of any kind with respect to these
claims. In the event that Janssen pursued legal proceedings and obtained a
judgment against Magnum for the cash amounts claimed by Janssen, Magnum
presently does not have sufficient cash assets to pay any such judgment and
would have to consider curtailing its operations and other alternatives,
including commencement of bankruptcy proceedings.

Three Months Ended June 30, 2001 Compared with Three Months Ended June 30, 2000

         Net revenues for the three months ended June 30, 2001 were $164,431,
as compared to a restated total of $244,095 for the three months ended June 30,
2000. During the three months ended June 30, 2001 there was no purse income,
ticket revenues or merchandise revenues as compared to $28,784, $0 and $2,409,
respectively for the 2000 period. This was the result of the Company eliminating
its activities in these areas. During the quarter ended June 30, 2001 the
Company generated $158,161 of contract and agency fees, as compared to $108,421
of contract agency fees reflected during the comparable 2000 period. This
increase was primarily generated by one of the Company's professional football
clients, Antonio Freeman, who paid an agency fee of $74,000 in June 2001. In
addition, during the 2001 period, endorsement and marketing fee income was
$6,270, as compared to $104,481 for the 2000 period, as a result of the
Company's reduced activities in these areas.

         Total expenses for the three months ended June 30, 2001 decreased to
$1,933,804, as compared to $3,183,362 for the 2000 period. Training and related
expenses amounted to $11,500 for the three months ended June 30, 2001 compared
to $138,342 for the 2000 period. The principal reason for this decrease is the
Company's elimination of boxing management. Promotion and selling, general and
administrative expenses decreased to $1,922,304 for the 2001 three-month period
as compared to $3,042,159 for the corresponding 2000 three-month period. Such
decreases were attributable to the promotions, salaries, travel and
entertainment, telephone, office and depreciation offset by an increase in
consultant fees.

<PAGE>

         As a result of the foregoing, net continuing operations loss for the
three months ended June 30, 2001 decreased to $1,718,339 as compared to
$2,934,231 for the comparable June 30, 2000 period.

Liquidity and Capital Resources

         The Company's principal source of operating capital has been provided
by public and private sales of the Company's equity securities, as supplemented
by revenues from operations. At June 30, 2001, the Company had working capital
of $1,323,612 which amount was primarily the remaining net proceeds from the
Company's private placements of its common stock, which was completed in May
2001 and the receipt of agency and marketing fees of $113,800 in the month of
June 2001.

         The Company's material commitments for expenditures are the purchase
price of Ford along with related professional fees, employment agreements with
various executives, and office space obligations. Management salaries are
approximately $ 1,275,000 per annum, which could increase if the Company
develops a need for additional executive management if the Company is successful
in acquiring Ford, for which no assurance can be given. The foregoing represents
the expected significant uses of working capital during the next twelve months
(excluding working capital requirements of Ford if such acquisition is
consummated.). The Company believes that it has sufficient funds to operate its
business through the end of November 2001, assuming that the Company receives
presently expected revenues from its NFL agency and marketing fees in the range
of $150,000 before September 30, 2001. If the Company does not receive these
revenues by such date, it will likely have to curtail operations before November
2001. There can be no assurance that the Company will have sufficient revenues
after such time to fund its operating requirements, including the implementation
of its new business strategy. Accordingly, the Company will likely be required
to seek additional financing through bank borrowings, private or public debt,
equity financing or otherwise. There can be no assurance that any such financing
will be available to the Company on acceptable terms or at all. The Company's
inability to obtain necessary additional financing would have a material adverse
effect on the Company's operations. In addition, the failure to obtain
additional financing raises substantial doubt about the Company's ability to
continue as a going concern, and in such event the Company will most likely have
to curtail or discontinue its operations. Management has taken several steps to
reduce expenses including the shutting down of its office in Fort Lee, New
Jersey effective July 1, 2001 and the deferral of 50% of salaries of several
members of senior management of the Company, including its Chief Executive
Officer Robert Gutkowski, since May 15, 2001. In addition, the Company is
actively seeking to sell its internet boxing content website,
www.houseofboxing.com to further reduce its expenses. If the Company is
unsuccessful in selling this boxing content website, it will likely discontinue
its operations. The Company's results of operations in the near future will
depend in large part upon whether it is successful in acquiring Ford and in
successfully operating its newly formed productions division. There is no
guarantee that the Company can either acquire Ford or successfully operate its
productions division. Prior to the time Magnum achieves profitability, it will
be required to rely on equity, debt or other sources of financing in addition to
its revenues from its existing operations. The Company believes that it has
sufficient funds for its operations through November 2001, assuming that Magnum
receives revenues from its NFL agency and marketing fees in the range of
$150,000 before September 30, 2001. If the Company does not receive these
revenues by such date, it will likely have to curtail operations before November
2001.

                                     PART II

                                OTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds

                  During April and May, 2001, the Company raised proceeds of
          $1,570,000 through a private placement of units dated March 19, 2001
          with each unit comprised of one share of the Company's common stock
          and two warrants to acquire one share each of the Company's common
          stock. After deduction of commissions, the sale of units generated net
          proceeds of approximately $1,560,000. The Company sold 1,531,604
          shares of common stock and 3,063,208 warrants at prices of $1.00 and
          $1.06 per unit in this private placement.

<PAGE>

          These warrants to acquire common stock are exercisable at $0.75 per
          share and are exercisable for a five year term. In July 2001, the
          Company registered the common stock and common stock underlying the
          warrants in this private placement. The registration statement filed
          by the Company with the Securities and Exchange Commission also
          covered the registration of securities sold by the Company in an
          earlier private placement dated January 19, 2001 pursuant to which the
          Company offered for sale units with each unit comprised of one share
          of its common stock and one warrant to acquire one share of its common
          stock. The Company sold an aggregate of 1,060,257 units in this
          earlier private placement.

                  The units sold in both of these above-referenced private
          placements were sold to accredited investors and such offerings were
          made in accordance with the exemptions from registration provided for
          under Section 4(2) of the Securities Act of 1933, as amended(the
          "Act") and Rule 506 of Regulation D promulgated under the Act.

                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                      Magnum Sports & Entertainment, Inc.
                                      (Registrant)

Date: August 13, 2001                  /s/Robert Gutkowski
                                      ------------------------------------------
                                      Robert Gutkowski, President

Date: August 13, 2001                  /s/Ray Schaetzle
                                      ------------------------------------------
                                      Ray Schaetzle, Chief Financial Officer