UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

/X/  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934

                       For the Quarter Ended June 30, 1999
                                       OR

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

        For the transition period from _____________ to _______________.

                         Commission File Number: 0-27256
                                                 -------

                   ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD.
        (Exact name of small business issuer as specified in its charter)

        DELAWARE                                       65-0512785
(State or other jurisdiction of         (I.R.S. Employer Identification number)
incorporation or organization)

        200 East Palmetto Park Road, Suite 200, Boca Raton, Florida 33432
                    (Address of principal executive offices)

Registrant's telephone no., including area code:  (561) 393-6685

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15 (d) of the  Securities  Exchange  Act of 1934 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 CORPORATE ISSUERS

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

          Class                               Outstanding as of August 13, 1999
-------------------------------               ----------------------------------
Common Stock, $.001 par value                             13,375,455


<PAGE>


                                TABLE OF CONTENTS

Heading                                                                     Page


                         PART 1. - FINANCIAL INFORMATION

Item 1.    Financial Statements .............................................2

           Consolidated Balance Sheet - June 30, 1999 (Unaudited)............3-4

           Consolidated Statement of  Income and Comprehensive
           Income (Unaudited) ...............................................5

           Consolidated Statement of Cash Flows - Three Months ended
           June 30, 1999 (Unaudited)   ......................................6-7

           Consolidated Statement of Cash Flows - Six Months ended
           June 30, 1999 (Unaudited)   ......................................8-9

           Notes to Consolidated Financial Statements (Unaudited) .........10-13

Item 2.    Management's Discussion and Analysis of Financial Condition
           and Results of Operations ......................................14-15


                          PART II. - OTHER INFORMATION

Item 1.    Legal Proceedings  ................................................16

Item 2.    Changes In Securities .............................................16

Item 3.    Defaults Upon Senior Securities....................................16

Item 4.    Submission of Matters to a Vote of Securities Holders .............16

Item 5.    Other Information .................................................16

Item 6.    Exhibits and Reports on Form 8-K...................................16

           Signatures ........................................................17


<PAGE>
                                     PART 1


Item 1.    Financial Statements

           The following  unaudited  financial  Statements  for the period ended
           June  30,  1999,   have  been  prepared  by  Atlantic   International
           Entertainment, Ltd. (the "Company") and Subsidiaries.



     ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. AND SUBSIDIARIES

                              Financial Statements

                                  June 30, 1999


                                      2

<PAGE>

           ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEET (UNAUDITED)
                               AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
<S>                                                    <C>
Assets:
Current Assets:
   Investments                                             $2,613,294
   Notes Receivable                                           161,000
   Deferred Tax Asset                                         123,691
   Prepaid Expenses                                            10,007
   Due from Related Parties                                    56,068
   Other Current Assets                                        27,715
                                                           ----------

   Total Current Assets                                     2,991,775
                                                           ----------

Property and Equipment - Net                                  384,261
                                                           ----------

Equipment under Capitalized Lease - Net                       143,817
                                                           ----------

Software [Net of Accumulated Amortization of $1,137,469]    1,514,937
                                                           ----------
Other Assets:
   Other Assets                                               119,515
   Notes Receivable                                         2,400,000
   Investments                                                497,490
                                                           ----------

   Total Other Assets                                       3,017,005
                                                           ----------

   Total Assets                                            $8,051,795
                                                           ==========
</TABLE>

The  Accompanying  Notes are an Integral  Part of these  Consolidated  Financial
Statements.

                                      3

<PAGE>
           ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEET (UNAUDITED)
                               AS OF JUNE 30, 1999
<TABLE>
<CAPTION>



<S>                                                            <C>
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
   Cash Overdraft                                                $     37,357
   Accounts Payable and Accrued Expenses                              968,617
   Notes Payable - Officers                                           283,750
   Current Portion of Capital Lease Obligations                        51,933
   Current Portion of Long Term Debt                                  110,000
                                                                 ------------

   Total Current Liabilities                                        1,451,657

Capital Lease Obligations                                             104,461
                                                                 ------------
   Total Liabilities                                                1,556,118
                                                                 ------------

Stockholders' Equity:
   Convertible Preferred Stock - Par Value $.001 Per Share;
     Authorized 10,000,000 Shares, Issued and Outstanding,
     5,700 shares [Liquidation Preference $570,000]                        57

   Common Stock - Par Value $.001 Per Share;
     Authorized 100,000,000 Shares, Issued - 13,246,634 Shares         13,246

   Additional Paid-in Capital                                      12,791,301

   Treasury Stock, 540,675 Common Shares - At Cost                 (1,253,990)
     Accumulated Comprehensive Loss                                   (43,689)
   Accumulated [Deficit]                                           (3,166,248)

   Deferred Acquisition Costs                                        (400,000)
                                                                 ------------

   Total                                                            7,940,677
   Less:  Subscriptions Receivable                                 (1,445,000)
                                                                 ------------

   Total Stockholders' Equity                                       6,495,677
                                                                 ------------
   Total Liabilities and Stockholders' Equity                    $  8,051,795
                                                                 ============
</TABLE>

The  Accompanying  Notes are an Integral  Part of these  Consolidated  Financial
Statements.

                                      4

<PAGE>

           ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. AND SUBSIDIARIES
   CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)

<TABLE>
<CAPTION>
                                                      Three Months ended                 Six Months ended
                                                      ------------------                 ----------------
                                                           June 30,                          June 30,
                                                           --------                          --------
                                                       1 9 9 9         1 9 9 8         1 9 9 9         1 9 9 8
                                                       -------         -------         -------         -------

<S>                                               <C>             <C>             <C>             <C>
Revenue                                           $    469,500    $  1,425,908    $    498,500    $  2,457,908

Cost of Sales                                          222,327         156,126         549,688         269,439
                                                  ------------    ------------    ------------    ------------

Gross [Loss] Profit                                    247,173       1,269,782         (51,188)      2,188,469
                                                  ------------    ------------    ------------    ------------

Operating Expenses:
   General and Administrative                        1,520,377         660,189       2,624,251       1,035,953
   Provision for Doubtful Accounts and Notes           896,820          70,963       1,222,155         177,447
   Depreciation and Amortization                        43,988         107,286          75,427         208,001
                                                  ------------    ------------    ------------    ------------

   Total Operating Expenses                          2,461,185         838,438       3,921,833       1,421,401
                                                  ------------    ------------    ------------    ------------

   [Loss] Income from Operations                    (2,214,012)        431,344      (3,973,021)        767,068
                                                  ------------    ------------    ------------    ------------

Other [Expenses] Income:
   Interest Income                                      22,766            --            30,876           6,443
   Interest Expense                                     (6,503)         (6,360)        (22,632)        (14,225)
   Other Income [Expense]                              (25,046)         (4,100)      1,398,397          (4,100)
                                                  ------------    ------------    ------------    ------------

   Other [Expenses] Income - Net                        (8,783)        (10,460)      1,406,641         (11,882)
                                                  ------------    ------------    ------------    ------------

[Loss] Income from Continuing Operations Before
   Income Tax [Benefit] Expense                     (2,222,795)        420,884      (2,566,380)        755,186

Income Tax [Benefit] Expense                              --           119,057        (123,691)        146,469
                                                  ------------    ------------    ------------    ------------

   [Loss] Income from Continuing Operations         (2,222,795)        301,827      (2,442,689)        608,717

Discontinued Operations:
    [Loss] from Operations of Discontinued
    Business  Segment [Net of Income Tax
    [Benefit] of ($30,521) and $(0), for the
    six months ended June 30, 1999 and 1998,
    Respectively]                                         --           (37,547)        (54,261)        (65,751)
                                                  ------------    ------------    ------------    ------------


   Net [Loss] Income                                (2,222,795)        264,280      (2,496,950)        542,966

Comprehensive Gain:
   Unrealized Holding Gain [Loss]
   arising during period                              (692,074)        (61,615)         52,169         (61,615)
                                                  ------------    ------------    ------------    ------------

   Total Comprehensive [Loss] Income                (2,914,869)        202,665      (2,444,781)        481,351
                                                  ============    ============    ------------    ------------

   Net [Loss] Income                                (2,222,795)        264,280      (2,496,950)        542,966

   Preferred Stock Dividend in Arrears                   7,125              --          19,625              --
                                                  ------------    ------------    ------------    ------------

   Net [Loss] Income Available to
   Common Stockholders                              (2,229,920)        264,280      (2,516,575)        542,966
                                                  ------------    ------------    ------------    ------------

   [Loss] Income Per Common Share:
   Continuing Operations                                 (0.17)         0.03           (0.20)           0.05

   Basic and Diluted Net [Loss] Income
   Per Share of Common Stock                             (0.17)         0.03           (0.20)           0.05

   Weighted Average Shares of Common
   Stock Outstanding                                12,984,561      10,460,921      12,784,845       9,992,219

</TABLE>


The  Accompanying  Notes are an Integral  Part of these  Consolidated  Financial
Statements.

                                        5

<PAGE>
           ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>
                                                                    Three Months Ended
                                                                         June 30,
                                                                         --------
                                                                   1 9 9 9        1 9 9 8
                                                                   -------        -------

<S>                                                         <C>             <C>
Operating Activities:
   [Loss] Income from Continuing Operations                    $(2,222,795)   $   264,280
   Adjustments to Reconcile Net [Loss] Income to
     Net Cash [Used for] Operating Activities:
     Depreciation and Amortization                                 264,830        143,185
     Provision for Doubtful Accounts                               896,820         48,976
     Regulated Loss on Carrying Value of Investments                   324         51,289
     Loss on Sale of Subsidiary                                     24,722         16,827

 Changes in Assets and Liabilities:
     [Increase] Decrease in:
       Accounts Receivable                                          11,801          7,462
       Prepaid Expenses                                             25,627             --
       Notes Receivable                                           (106,765)    (1,278,187)
       Restricted Cash                                             (10,165)            --
       Other Assets                                                   --           11,564

  Increase [Decrease] in:
       Accounts Payable and Accrued Expenses                       134,760        (62,978)
       Income Taxes Payable                                           --          118,999
       Other Current Liabilities                                      --          (18,670)
       Due to Customer                                                --          (75,000)
                                                               -----------    -----------

   Net Cash - Continuing Operations                             (980,841)        (772,253)
                                                               -----------    -----------

Investing Activities - Continuing Operations:
   Increase in Due from Related Parties                               --          (25,759)
   Purchase of Investments                                        (200,000)      (600,000)
   Purchase of Property, Equipment, and Capitalized Software       (24,012)      (264,226)
   Sale of Investments                                              69,236        156,650
                                                               -----------    -----------

   Net Cash - Investing Activities - Forward                   $  (154,776)   $  (733,335)
</TABLE>

The  Accompanying  Notes are an Integral  Part of these  Consolidated  Financial
Statements.

                                        6

<PAGE>

           ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>
                                                                              Three Months Ended
                                                                                   June 30,
                                                                                   --------
                                                                              1 9 9 9      1 9 9 8
                                                                              -------      -------

<S>                                                                        <C>            <C>
   Net Cash - Operating Activities - Forwarded                             $  (980,841)   $  (772,253)
                                                                           -----------    -----------

   Net Cash - Investing Activities - Continuing Operations -
     Forwarded                                                                (154,776)      (733,335)
                                                                           -----------    -----------

Financing Activities - Continuing Operations:
   Purchase of Treasury Stock                                                   (9,250)            --
   Proceeds from Issuance of Common Stock                                      217,369      4,000,000
   Proceeds from Issuance of Preferred Stock                                   569,943        906,850
   Increase in Loan Payable to Shareholder                                     263,750         17,421
   Proceeds from Long Term Debt                                                110,000         25,423
   Payment from Notes Receivable                                                  --           70,000
   Payment of Notes Payable                                                       --          (41,733)
   Payment of Lease Payable                                                    (13,130)       (12,053)
   Decrease in Loan Receivable                                                 (49,524)            --
                                                                            ----------    -----------

   Net Cash - Financing Activities                                           1,089,158      4,965,908
                                                                            ----------    -----------

[Decrease] Increase in Cash and Cash Equivalents                               (46,459)     3,460,320

Cash and Cash Equivalents - Beginning of Period                                  9,102         (2,486)
                                                                            ----------    -----------

   Cash and Cash Equivalents - End of Period                               $   (37,357)   $ 3,457,834
                                                                           ===========    ===========

Supplemental Disclosures of Cash Flow Information:
   Cash paid during the quarter for:
     Interest                                                              $    17,214    $       782

Supplemental Schedule of Non-Cash Investing and Financing Activities:
   Purchase of Assets under Capital Lease Financing                        $    67,778    $        --
</TABLE>

The  Accompanying  Notes are an Integral  Part of these  Consolidated  Financial
Statements

                                       7

<PAGE>
           ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>
                                                                     Six Months Ended
                                                                     ----------------
                                                                           June 30,
                                                                           --------
                                                                     1 9 9 9        1 9 9 8
                                                                     -------        -------

<S>                                                            <C>            <C>
Operating Activities:
   [Loss] Income from Continuing Operations                      $(2,442,689)   $   608,717
   Adjustments to Reconcile Net [Loss] Income to
     Net Cash [Used for] Operating Activities:
     Depreciation and Amortization                                   516,217        208,001
     Deferred Tax Asset                                             (123,691)            --
     Provision for Doubtful Accounts                               1,222,155        177,447
     Loss on Sale of Assets                                            3,100             --
     Realized Loss on Carrying Value of Investments                      648         55,455
     Gain on Sale of Subsidiary                                   (1,231,750)            --

   Changes in Assets and Liabilities:
     [Increase] Decrease in:
       Accounts Receivable                                            13,715          4,046
       Prepaid Expenses                                                1,250            141
       Notes Receivable                                              (21,790)    (1,972,705)
       Other Assets                                                   66,650         (4,087)

     Increase [Decrease] in:
       Accounts Payable and Accrued Expenses                        (106,364)      (138,298)
       Income Taxes Payable                                             --          149,627
       Other Current Liabilities                                        --           (2,429)
       Due to Customer                                                  --          (20,721)
                                                                 -----------    -----------

     Net Cash - Continuing Operations                             (2,102,549)      (934,806)
                                                                 -----------    -----------

Discontinued Operations:
   [Loss] from Discontinued Operations                               (54,261)       (65,751)
   Adjustments to Reconcile Net [Loss] to Net Cash Operations:
     Depreciation and Amortization                                    38,220         71,936
     Provision for Doubtful Accounts                                  18,915             --
     Changes in Net Assets and Liabilities                           238,577         71,998
                                                                 -----------    -----------

   Net Cash - Discontinued Operations                                241,451         78,183
                                                                 -----------    -----------

   Net Cash - Operating Activities - Forward                      (1,861,098)      (856,623)
                                                                 -----------    -----------

Investing Activities - Continuing Operations:
   Increase in Due from Related Parties                                 (828)       (26,506)
   Purchase of Investments                                          (318,429)      (818,278)
   Purchase of Property, Equipment, and Capitalized Software         (66,222)      (390,864)
   Sale of Investments                                             2,557,770        156,660
                                                                 -----------    -----------

   Net Cash - Investing Activities - Continuing Operations -
     Forward                                                     $ 2,172,291    $(1,078,988)
</TABLE>

The  Accompanying  Notes are an Integral  Part of these  Consolidated  Financial
Statements.

                                       8
<PAGE>
           ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                      Six Months Ended
                                                                                           June 30,
                                                                                           --------
                                                                                    1 9 9 9         1 9 9 8
                                                                                    -------         -------

<S>                                                                               <C>            <C>
   Net Cash - Operating Activities - Forwarded                                    $(1,861,098)   $  (856,623)
                                                                                  -----------    -----------

   Net Cash - Investing Activities - Continuing Operations -
     Forwarded                                                                      2,172,291     (1,078,988)
                                                                                  -----------    -----------

Investing Activities - Discontinued Operations:
   Purchase of Property and Equipment                                                 (29,715)        (9,231)
   Disposition Gain on Sale of Discontinued Operations                                     --             --
                                                                                  -----------    -----------

   Net Cash Investing Activities - Discontinued Operations                            (29,715)        (9,231)
                                                                                  -----------    -----------

Financing Activities - Continuing Operations:
   Proceeds from Conversion of Debt to Equity                                              --             --
   Proceeds from Issuance of Common Stock                                             217,312      4,309,600
   Proceeds from Issuance of Preferred Stock                                          570,000        906,850
   Purchase of Treasury Stock                                                        (975,293)            --
   [Decrease] Increase in Loan Payable to Shareholder                                 133,750        105,930
   Payment of Notes Payable                                                          (100,000)       (10,061)
   Payment of Lease Payable                                                           (20,584)            --
   Decrease in Loan Receivable                                                       (324,286)            --
   Proceeds from Long Term Debt                                                       110,000         53,500
                                                                                  ------------   -----------

   Net Cash - Financing Activities - Continuing Operations                           (389,101)     5,365,819
                                                                                  ------------   -----------

Financing Activities - Discontinued Operations:
   Proceeds from Long-Term Debt                                                        50,000            400
   Payment of Note Payable                                                            (41,500)       (23,652)
   Payment of Lease Payable                                                            (5,769)            --
                                                                                  -----------    -----------

   Net Cash Financing Activities Discontinued Operations                                2,731        (23,252)
                                                                                  -----------    -----------

Net Increase [Decrease] in Cash and Cash Equivalents                                 (104,892)     3,397,725

Cash and Cash Equivalents - Beginning of Years                                         67,535          8,774
                                                                                  -----------    -----------

   Cash and Cash Equivalents - End of Years                                       $   (37,357)   $ 3,406,499
                                                                                  ===========    ===========

Supplemental Disclosures of Cash Flow Information:
   Cash paid during the years for:
     Interest                                                                     $    24,719    $     1,098

Supplemental Schedule of Non-Cash Investing and Financing Activities:
   Conversion of Preferred Stock into Common Stock                                $       649    $       --
   Purchase of Assets under Capital Lease Financing                               $    73,989    $       --
   Sale of Subsidiary for Note Receivable                                         $ 2,400,000    $       --
</TABLE>

The  Accompanying  Notes are an Integral  Part of these  Consolidated  Financial
Statements

                                       9
<PAGE>
           ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (Unaudited)
                                  June 30, 1999

Note 1 -    Basis of Preparation
            --------------------

            The accompanying  unaudited interim financial statements include all
            adjustments  (consisting only of those of a normal recurring nature)
            necessary  for a fair  statement  of the  results  for  the  interim
            periods.  The results of operations  for the six-month  period ended
            June 30,  1999,  are not  necessarily  indicative  of the results of
            operations  to be  reported  for the full year ending  December  31,
            1999.

Note 2 -    Sale of Subsidiary
            ------------------

            On March 31, 1999 the Company sold 81% of its interest in its wholly
            owned subsidiary,  the Eminet Domain, Inc. to Centerline Associates,
            Inc., a shareholder  of the Company.  The sale price was  $2,500,000
            paid as  follows:  (i)  $10,000 at sale date,  (ii)  $90,000 in cash
            payable at the rate of  $14,000  per month  commencing  on April 15,
            1999 and (iii)  $2,400,000  by the  delivery  of a  promissory  note
            collateralized by shares of the Company's stock with interest at the
            annual  rate of six  percent  (6%) and  payable  two years  from the
            closing date.

            The sale  resulted in a gain of  $1,231,751  which is  reflected  in
            other income.  The  transaction  resulted in the Eminet Domain,  Inc
            being treated as a discontinued operation

Note 3 -    Major Customers
            ---------------

            Income fees derived from major customers are tabulated as follow:

                                     Three Months Ended     Six Months Ended
                                            June 30             June 30
                                          1999    1998        1999     1998

        Customer A (Software System)   247,500      --     247,500      --
        Customer B (Software System)    60,000      --      60,000      --
        Customer C (Software System)   130,000      --     130,000      --
        Customer D (Software System)      --        --        --     250,000
        Customer E (Software System)      --        --        --     220,000
        Customer F (Software System)      --        --        --     350,000
        Customer G (Software System)      --     675,000      --     675,000
        Customer H (Software System)      --     100,000      --     100,000

Note 4 -    Capital Stock
            -------------

            In the second quarter of 1998, the Company sold 1,250,000 shares for
            a  total  of   $4,000,000   pursuant  to   Regulation  D  to  Hosken
            Consolidated Industries

            Also in the second quarter of 1998, 9,700,000 shares of common stock
            were issued to Atlantic  International  Entertainment  Australia,  a
            wholly  owned  subsidiary  for  use in a  proposed  takeover  of the
            Australian  Company,  Coms21.  As the proposed takeover did not take
            place, the 9,700,000 shares issued were cancelled.  However,  in the
            third  quarter  of  1998,   1,217,647   shares  were  exchanged  for
            12,176,470 shares of Coms21 in a one for ten stock swap. 10 ATLANTIC
            INTERNATIONAL   ENTERTAINMENT,   LTD.  AND  SUBSIDIARIES   Notes  to
            Consolidated Financial Statements  (Unaudited)  (Continued) June 30,
            1999

                                       10
<PAGE>
           ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. AND SUBSIDIARIES
       Notes to Consolidated Financial Statements (Unaudited) (Continued)
                                  June 30, 1999

Note 4 -   Capital Stock - Continued
           -------------------------

           In the  second  quarter  of 1998,  10,000  shares  of 5%  Convertible
           Preferred Stock, $.001 par value, were issued to the Shaar Fund for $
           1,000,000.00 Each share is convertible into common stock by virtue of
           a formula  contained  in the Purchase  Agreement  which is 78% of the
           three day average closing bid price for the corporations common stock
           for the twenty five (25)  trading  days prior to the  delivery of the
           notice of redemption. The amount of such non-cash discounts, which is
           analogous to a dividend, is $ 269,443. Holders of the above preferred
           stock are entitled to (i) quarterly cumulative dividends at the rate
           of 5% per annum of the original  issue price of the preferred  stock,
           (ii) a  liquidation  preference  equal  to the sum of $100  for  each
           outstanding share of the preferred stock.

           In August  1998,  5,000  shares of the  Company's  common  stock were
           issued to a consultant for services performed.

           In September 1998,  26,098 shares of the Company's  common stock were
           issued to adjust the issuance of shares to certain individuals at the
           time of the Company's reverse merger in 1996.

           During  the  third  and  fourth  quarter  of 1998,  2,740  shares  of
           convertible  preferred  stock valued at $274,000 were  converted into
           147,002  shares of common  stock by virtue of a formula  contained in
           the Purchase  Agreement  which relates to the average price per share
           of common stock within the conversion period.

           In  October  of  1998,  the  Company  entered  into a stock  purchase
           agreement with Axxsys International,  [Seller] to purchase the assets
           of Axxsys for  $400,000.  Under the agreement  200,000  shares of the
           Company's  common stock were  delivered  and are held in escrow for a
           period of 12 months as the purchase  price is  contingent  on average
           monthly revenues being achieved.

           During  the  first  quarter  of 1999,  5,000  shares  of  convertible
           preferred stock valued at $500,000 were converted into 395,823 shares
           of common  stock by virtue of a  formula  contained  in the  purchase
           agreement  which  results  to the  average  price per share of common
           stock within the conversion period.

           During  the  second  quarter  of 1999,  2260  shares  of  convertible
           preferred stock valued at $226,000 were converted into 253,933 shares
           of common  stock by virtue of a  formula  contained  in the  purchase
           agreement  which  results  to the  average  price per share of common
           stock within the conversion period.

           In the  second  quarter  of  1999,  5,700  shares  of 5%  Convertible
           Preferred Stock,  $.001 par value,  were issued to the Shaar Fund for
           $570,000.00  Each share is convertible into common stock by virtue of
           a formula contained in the Purchase Agreement which is 78%

                                       11

<PAGE>
           ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. AND SUBSIDIARIES
       Notes to Consolidated Financial Statements (Unaudited) (Continued)
                                  June 30, 1999

Note 4 -   Capital Stock - Continued
           -------------------------

           of the  three day  average  closing  bid  price for the  corporations
           common  stock for the  twenty  five (25)  trading  days  prior to the
           delivery  of the notice of  redemption.  The amount of such  non-cash
           discounts,  which is analogous to a dividend,  is $3,027.  Holders of
           the above  preferred  stock are entitled to (i) quarterly  cumulative
           dividends at the rate of 5% per annum of the original  issue price of
           the preferred stock,  (ii) a liquidation  preference equal to the sum
           of $100 for each outstanding share of the preferred stock.

           On April 6, 1999 certain  individual  employees  were issues  110,000
           shares of common stock of the company as a signing  bonus  pertaining
           to employment agreements between the company and the individuals.

           In the second quarter of 1999,  75,000 shares of the company's common
           stock were issued to a consultant for services performed.


Note 5 -   Per Share Data
           --------------

           Per share  data are based on the  weighted  average  number of common
           shares  outstanding  during the respective  periods.  The diluted net
           income per share is based upon the options issued and  outstanding as
           well  as  the  assumed   conversion  of  the  Company's   issued  and
           outstanding preferred stock.

Note 6 -   Business Agreements
           -------------------

           On  September  28,  1998,  the Company  entered into and closed on an
           agreement  with  Cybergames,  Inc. for the purchase of several of the
           company's  licensees  and  the  exchange  of the  company's  accounts
           receivable  from  said  licensees.  The  total  purchase  price was $
           3,147,000  payable  $  227,000  in cash  and  $2,920,000  in stock of
           Cybergames, Inc. (530,000 shares).

           On April 6, 1999 the Company  signed an  agreement  to  purchase  the
           patent rights, inventions and know-how of Excel Communications,  Inc.
           The  major  product  expected  to  be  produced  is a  multi-function
           portable gaming device.  In consideration  the Company issued seventy
           five  thousand  (75,000)  shares of common stock of the Company.  The
           Company also  entered  into an agreement to  compensate a third party
           for termination of an exclusive manufacturing,  licensing,  marketing
           and  distribution  of the invention with the seller.  The third party
           received two hundred thousand dollars  ($200,000) plus a stock option
           to purchase  50,000  shares of the common  stock of the  company.  In
           addition,  the Company entered into employment  agreements with three
           of the key employees of Excel Communications,  Inc. and granted those
           individuals options to purchase Company stock.

                                       12
<PAGE>
           ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. AND SUBSIDIARIES
       Notes to Consolidated Financial Statements (Unaudited) (Continued)
                                  June 30, 1999

Note 7 -   Subsequent Events
           -----------------

           On July 1, 1999,  the Company's  largest  institutional  stockholder,
           Hosken  Consolidated  Industries,  a South African  corporation  (the
           investment  company  for the Mine  Workers  Union and  South  African
           Clothing  Workers Union),  consummated its purchase of  approximately
           1,100,000 shares of the Company's common stock from Norman J. Hoskin,
           the Company's  Chairman of the Board of Directors,  which  represents
           substantially all of Mr. Hoskin's holdings in the Company. Mr. Hoskin
           has resigned his  positions as Chairman and  Secretary/Treasurer  and
           will limit his  activities  as a consultant to the Company due to his
           health. With its purchase,  HCI share holdings increases to 2,361,935
           shares or approximately 19% of total shares outstanding.

                                       13
<PAGE>
           ATLANTIC INTERNATIONAL ENTERTAIMENT, LTD. AND SUBSIDIARIES

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

         Result of Operations

         Three Months Ended June 30, 1999 and 1998
         -----------------------------------------

         Net Revenues. The Company's revenues decreased approximately 67% in
         1999 over the same period in 1998. Revenues from operations in the
         first quarter 1999 were $ 469,500, as compared with $ 1,425,908 for the
         same period in 1998. The decrease in revenues was the result of the
         company's implementation of its new product line. The investment in
         sales and marketing resources have also not yet fully impacted revenues
         as anticipated. The Company expects sales and market efforts to
         substantially increase revenues going forward.

         Cost of Revenues.  Cost of revenues increased 42% in 1999 over the same
         period in 1998. The increase resulted from the increase in amortization
         of capitalized  software  development costs, which is reflected in cost
         of revenues.  The Company expects  amortization of development costs to
         be consistent going forward.

         Operating  Expenses.  Operating expenses increased by 103% or $ 796,890
         in the second  quarter 1999 over the same period in 1998.  The increase
         was  largely  due to global  expansion  efforts,  expenses  related  to
         product development and increased support staffing.

         Provision for Doubtful Accounts. Provision for doubtful accounts in the
         second  quarter  1999 were $ 896,820 as compared  with $ 70,963 for the
         same period in 1998.  The increase  resulted from  management  taking a
         conservative  approach in recording its provision for doubtful accounts
         and a customer  going out of business.  The Company does not anticipate
         any  additional  provisions  for  doubtful  accounts  going  forward as
         revenue is now recorded on cash basis.

         Six Months Ended June 30, 1999 and 1998
         ---------------------------------------

         Net Revenues. The Company's revenues decreased approximately 80% in
         1999 over the same period in 1998. Revenues from operations for the six
         months ended June 30, 1999 were $ 498,500, as compared with $ 2,457,908
         for the same period in 1998. The decrease in revenues was the result of
         the company's implementation of its new product line. The investment in
         sales and marketing resources have also not yet fully impacted revenues
         as anticipated. The Company expects sales and market efforts to
         substantially increase revenues going forward

         Cost of Revenues.  Cost of revenues  increased  104% for the six months
         ended June 30, 1999 over the same period in 1998. The increase resulted
         from the increase in amortization of capitalized  software  development
         costs,  which is  reflected in cost of  revenues.  The Company  expects
         amortization of development costs to be consistent going forward.

                                       14
<PAGE>
           ATLANTIC INTERNATIONAL ENTERTAIMENT, LTD. AND SUBSIDIARIES

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

         Result of Operations - Continued
         --------------------------------

         Six Months Ended June 30, 1999 and 1998
         ---------------------------------------

         Operating Expenses. Operating expenses increased by 117% or $ 1,455,724
         for the six months  ended June 30,  1999 over the same  period in 1998.
         The  increase  was largely due to global  expansion  efforts,  expenses
         related to product development and increased support staffing.

         Provision for Doubtful  Accounts.  Provision for doubtful  accounts for
         the six months ended June 30, 1999 were $ 1,222,155 as compared  with $
         177,447  for the  same  period  in 1998.  The  increase  resulted  from
         management  taking a  conservative  approach in recording its provision
         for doubtful accounts and a customer going out of business. The Company
         does not  anticipate any  additional  provisions for doubtful  accounts
         going forward as revenue is now recorded on cash basis.

         Other Income.  Other income  increased by  approximately  $1,400,000 in
         1999  over  the  same  period  in  1998.  A gain on sale of  $1,231,751
         resulted from a percentage  interest sold of the Company's wholly owned
         subsidiary.  A  $170,000  gain  was  recognized  in a  full  and  final
         settlement of a payable.

         Liquidity and Capital Resources
         -------------------------------

         Cash,  cash  equivalents  and  marketable  securities,   which  consist
         primarily of high risk,  priced securities  totaled  $2,575,937 at June
         30, 1999 compared to $1,993,655 at June 30, 1998. The increase in cash,
         cash  equivalents  and marketable  securities was due primarily to cash
         proceeds  from  the  sale of  Common  Stock  ($2,000,000)  pursuant  to
         Registration  Statement  S-8,  exchange of the  Company's  shares to an
         Australian listed Company for shares of the Australian company in a one
         for ten stock swap  resulting  in  ($3,351,000)  proceeds,  issuance of
         Common Stock of a public traded company  (Purchaser) in lieu of certain
         assets sold to the  purchaser  ($2,137,000)  and  issuance of preferred
         stock for $570,000.

         The  increase  was  offset by cash used for  operations,  a  $1,400,000
         debenture note issued by a foreign  corporation  and $1,200,000 for the
         purchase of treasury  stock.  Management  believes that existing  cash,
         cash  equivalents  and  marketable  securities  will be  sufficient  to
         satisfy the Company's currently anticipated cash requirements.

                                       15
<PAGE>
           ATLANTIC INTERNATIONAL ENTERTAINMENT, LTD. AND SUBSIDIARIES

                                     PART II
Item 1.  Legal Proceedings

         Litigation - On June 9, 1999,  the Company was  determined to be liable
         in a civil action by Kelley & Kelley  Advertising,  Inc., the Company's
         advertising  consultant during the Company's initial stage in 1996. The
         jury trial,  which  extended  over three days,  involved an October 23,
         1996  agreement  drafted  and  executed  by a former  employee  who was
         subsequently  fired by the  Company.  The trial  concluded  in the jury
         verdict  of  approximately   $26,000.00  in  compensatory  damages  and
         $350,000.00 in punitive  damages.  The jury verdict reflects the belief
         that the Company's former employee never intended to provide additional
         assignments  to Kelley & Kelley.  The  evidence  presented at trial did
         show that Kelley & Kelley did receive all of the payments due under the
         above  agreement  but  only  received  one  additional  assignment.  In
         addition,  the  undisputed  facts at  trial  showed  that  the  Company
         performed all of its future  advertising  in-house and did not engage a
         firm to replace  Kelley & Kelley.  Counsel  for the  Company  has filed
         motions with the trial court for a directed  verdict  (overturning  the
         jury verdict) based on Florida's  "Economic Loss Rule" which  precludes
         tort damages in a breach of contract case. In addition, counsel for the
         Company has  requested  that the Court reduce the  punitive  damages in
         accordance  with Florida  Statute  768.73 which  considers any punitive
         damages in excess of three times the compensatory damages as excessive.
         The hearing on the above  motions is set for August 20,  1999.  Counsel
         for the Company has advised the Company that the verdict is against the
         manifest  weight of the evidence and the law and if not reversed by the
         trial  judge,  then the Company  should be  successful  on appeal.  The
         Company  will use any and all  resources  to  reverse  the  above  jury
         decision  and will,  if  necessary,  vigorously  prosecute  its  appeal
         rights.

Item 2.  Changes in Securities

         This Item is not applicable to the Company.

Item 3.  Defaults upon Senior Securities

         This Item is no applicable to the Company.

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

         This Item is not applicable to the Company.

Item 5.  Other Information

         This Item is not applicable to the Company.

Item 6.  Exhibits and Reports on Form 8-K

         (a) Exhibits

               27  Financial Data Schedule

         (b) Form 8-K - filed  July 6, 1999,  relating  to the  purchase  of the
         Company's shares of common stock by Hosken Consolidated Industries from
         Norman J.  Hoskin,  Mr.  Hoskin's  resignation  from his  positions  as
         Chairman and  Secretary/Treasurer  and the  litigation  with Kelley and
         Kelley Advertising, Inc.

                                       16
<PAGE>
         In accordance with the  requirements of the Securities  Exchange Act of
1934,  the  Registrant  caused  this  report to be  signed on its  behalf by the
undersigned, thereunto duly authorized.


                                      Atlantic International Entertainment, Ltd.



Date:  August 16, 1999                By: /s/ Richard A. Iamunno
                                          --------------------------------------
                                          (Signature)
                                          Richard A. Iamunno, President
                                          And Chief Executive Officer



Date:    August 16, 1999              By: /s/ Peter Lawson
                                          --------------------------------------
                                          (Signature)
                                          Peter Lawson, Chief Financial Officer


                                       17