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                                         Document is copied.

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

(MARK ONE)

(X)     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934
        FOR FISCAL YEAR ENDED DECEMBER 31, 2001

( )     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES
        EXCHANGE ACT TO 1934
        FOR THE TRANSITION PERIOD FROM ___ TO___

COMMISSION FILE NUMBER 0-21585

                       MAGNUM SPORTS & ENTERTAINMENT, INC.
                 (Name of Small Business Issuer 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, 39th Floor,     New York, New York  10019
-------------------------------------        --------
(Address of Principal Executive Offices)     (Zip Code)


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


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

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


Title of Each class
-------------------
Common Stock, $.01 par value


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

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

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

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State issuer's revenues for its most recent fiscal year: $528,930

State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the last 60
days. $316,145 based upon a closing price of $0.04 on April 1, 2002.

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

State the number of shares outstanding of each issuer's classes of common
equity, as of the latest practicable date: 7,903,633 shares as of April 12, 2002

Transitional Small Business Disclosure Format (check one):




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



                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None.





                                       2


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                                     PART I


ITEM  1.  DESCRIPTION OF BUSINESS

         This Annual Report on Form 10-KSB 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 Company's
ability to raise capital to finance its operations; the Company's ability to
settle existing creditor claims for modest sums; the effect of the Company's
accounting policies; and other risk factors detailed in the Company's filings
with the Securities and Exchange Commission. The Company does not have any
agreement of any kind with any third party regarding any potential capital
transaction such as a merger, acquisition or similar capital transaction and the
Company can offer no assurances whatsoever that it will be able to effect any
acquisition of any kind with any other company given the Company's current
financial condition, among other things.

Organization

         Magnum Sports & Entertainment, Inc. (the "Company" or "Magnum") is a
publicly traded over-the-counter bulletin board company (OTC BB: MAGZ.OB). The
Company's common stock previously traded on the Nasdaq SmallCap market under the
symbol MAGZ but was delisted from the Nasdaq SmallCap Market effective February
25, 2002. The Nasdaq Stock Market delisted the Company's common stock because
the Company failed to meet certain requirements for continued listing on the
Nasdaq SmallCap Market, including failure to maintain at least $2,000,000 in net
tangible assets; failure to maintain a $1.00 minimum bid closing price for its
common stock and failure to pay listing fees to the Nasdaq Stock Market. The
Company's common stock presently trades on the over-the-counter bulletin board
under the symbol MAGZ.OB. The Company presently has no operating businesses,
having terminated all its existing businesses during 2001 because such
businesses were not profitable. The Company's goal during 2001 was to eliminate
its unprofitable businesses and attempt to grow the Company's revenues through
an acquisition strategy based upon the proposed acquisition of Ford Models, Inc.
("Ford"), a global fashion modeling agency. The Company and Ford had executed a
letter of intent in December 2000, as amended June 20, 2001 (the "Letter of
Intent"), pursuant to which the Company proposed to buy all of the capital stock
of Ford for a purchase price of $22,000,000 in cash. The Company's goal was to
acquire Ford and create a multi-dimensional entertainment company based upon
leveraging the Ford brand name in the worlds of entertainment, sports, music,
sponsorship, and licensing. However, the Company was unsuccessful in raising the
necessary capital to effectuate the acquisition of Ford, the Letter of Intent
expired in 2001 and Ford terminated any continuing discussions in the fall of
2001 with the Company regarding entering into any new agreement with the Company
to acquire Ford. Ford was entitled to keep the sum of $564,994 which the Company
had deposited in escrow in connection with the Letter of Intent. The Letter of
Intent provides that in the event that Ford is sold to any third party on or
before August 11, 2003 for an amount equal to or greater than $15,000,000, then
Ford and the principal Ford stockholders are obligated to repay the sum of
$564,994 to the Company. However, the Company cannot provide any assurances
whatsoever that Ford will be sold to any third party or that if Ford is sold for
an amount equal to or greater than $15,000,000 on or before August 11, 2003,
that Ford and the principal Ford stockholders will repay the sum of $564,994 to
the Company. The Company's failure in acquiring Ford was due to several factors,
including, but not limited to, the challenging environment in the capital
markets for raising equity capital throughout 2001, a situation made even more
difficult by the effect on the capital markets from the terrorist attacks on New
York City and Washington D.C. on September 11, 2001 and Magnum's poor historical
performance and lack of financial resources. As more fully described below, the
Company is seeking to implement an out-of-court reorganization plan to resolve
existing creditor claims and provide working capital but there are substantial
risks associated with this strategy and the Company can provide no assurances
whatsoever that it will be able to execute any out-of-court reorganization plan.
These circumstances have created the possibility that the Company may become
defunct or may file bankruptcy proceedings in the near future.

Loss of Nasdaq Listing

          The Commpany's common stock previously traded on the Nasdaq SmallCap
market under the symbol MAGZ but was delisted from the Nasdaq SmallCap Market
effective February 25, 2002. The Nasdaq Stock Market delisted the Company's
common stock because the Company failed to meet certain requirements for
continued listing on the Nasdaq SmallCap Market, including failure to maintain
at least $2,000,000 in net tangible assets; failure to maintain a $1.00 minimum
bid closing price for its common stock and failure to pay listing fees to the
Nasdaq Stock Market. The Company's common stock presently trades on the
over-the-counter bulletin board under the symbol MAGZ.OB. This delisting of the
Company's common stock may have a material adverse effect on the Company's
ability to implement any out-of-court reorganization plan and may materially
adversely affect the trading market and prices for the Company's securities and
the Company's ability to issue additional securities or to secure additional
financing. In addition to the risk of volatility of


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stock prices, low price stocks are subject to the risks of additional federal
and state regulatory requirements and the potential loss of effective trading
markets. In particular, the Company's common stock could now 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 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.

The Company's Out-Of-Court Reorganization Plan

         In the aftermath of the Company's failure to acquire Ford, the Company
was left with no operating businesses and substantial creditor claims. The
Company evaluated its options during the fourth quarter of 2001 and the first
quarter of 2002 to seek to create some value for creditors and shareholders of
the Company. The Company's management sought to locate a management team with
experience with capital raising and reorganizing small cap companies. As part of
this process, the Company's management is engaged in discussions with a group
led by Mr. Peter Janssen, a principal of Janssen Partners, Inc., (a NASD/SIPC
member) and Mr. Peter Christos and Mr. Arnold Kling, principals of Adelphia
Holdings, LLC, a New York City based investment management firm("Adelphia").
Janssen Partners, Inc. previously acted as an investment banker for the Company
in 1999 and 2000 and raised equity capital for the Company. Such funds were used
for working capital purposes, including working capital purposes during Mr.
Gutkowski's tenure as Chief Executive Officer, primarily in funding the
Company's internet sports ventures, Sportcut.com and Houseofboxing.com.

         The Company working together with Adelphia in the first quarter of 2002
has devised an out-of-court reorganization plan the essential elements of which
are to raise certain funds in a private placement of senior secured convertible
notes to be issued by the Company with the proceeds to be utilized for
settlement of existing creditor claims against the Company and for general
working capital purposes. The key to this plan is for the Company to raise
additional working capital. Provided that such plan can be implemented, the
Company proposes to seek to engage in a merger, acquisition or similar
transaction with another company. The Company believes that as a public company,
it may be an attractive vehicle to certain private companies that are seeking to
become public companies through a merger, acquisition or similar capital
transaction with a public company. The Company cannot provide any assurances of
any kind that it will be successful in any manner whatsoever in implementing any
aspect of this reorganization plan and the Company has not engaged in any
discussions of any material nature with any third party regarding any type of
capital transaction.

         As an initial step in implementing this reorganization plan, Peter
Janssen, a principal of Janssen Partners, Inc., made a $25,000 loan to the
Company in March 2002 (the "Janssen Loan") to enable the Company to pay certain
professional fees, including payment of fees to Friedman Alpren & Green LLP, the
Company's independent accounting firm, in connection with services performed by
Friedman Alpren & Green LLP for the audit of the Company's books and records for
the year ended December 31, 2001. The Janssen Loan carries a 15% interest rate
and is due within 90 days of issuance. As additional consideration for the
Janssen Loan, the Company granted Peter Janssen a warrant to acquire three
percent (3%) of the Company's common stock exercisable at $0.01 per share and
granted him a first lien on proceeds from any contracts of the Company.

         As a second step in the plan, the Company intends to engage Janssen
Partners, Inc. ("Janssen") to act as its exclusive placement agent to seek to
raise a minimum of $250,000 (the "Minimum Offering") and a maximum of $500,000
(the "Maximum Offering") in a private placement of senior secured convertible
notes to be issued by the Company(the "Notes"). These Notes would have an
interest rate of ten percent and the principal and interest would be due and
payable within one year of issuance. The Notes would be secured by a first lien
on all of the Company's assets after repayment of the Janssen Loan. In addition,
the holders of the Notes would have the right to convert the Notes into the
Company's common stock in an amount equal to eighty seven percent (87%) of the
Company's common stock outstanding as of the date of commencement of the
offering of the Notes, assuming that the Maximum Offering is completed and forty
three and one-half percent (43 1/2%) of the Company's common stock in the event
that the Minimum Offering is completed. The Company would have the right to
redeem the Notes by payment of 125% of the principal outstanding amount of the
Notes plus payment of accrued interest, all in cash, although holders of the
Notes would have the opportunity to convert the Notes into the common stock in
lieu of redemption of the Notes by the Company. In consideration for acting as
exclusive


<PAGE>


placement agent, Janssen will receive a cash commission of ten percent of the
sums raised in the offering of the Notes, assuming that the Minimum Offering is
raised plus a non-accountable expense allowance of three percent of the sums
raised in the offering of the Notes. In addition, Janssen will also receive a
warrant to acquire a number of shares of common stock of the Company equal to
the number of shares of the common stock of the Company that the holders of the
Notes are entitled to receive upon full conversion of the Notes into the
Company's common stock. The exercise price on the warrant to be issued to
Janssen will be the par value of the Company's common stock but in no event
greater than the existing par value of the Company's common stock which is
$0.01. The Company and Janssen have also agreed to enter into a consulting
agreement effective upon the completion of the Minimum Offering pursuant to
which Janssen will provide the Company with financial advisory services and the
Company will pay Janssen the sum of $10,000 per month for a two year period.
There can be no assurances of any kind whatsoever that Janssen will be able to
raise moneys sufficient for the Minimum Offering of the Notes to close.

         To assist the Company in formulating and executing its reorganization
plan, the Company executed a management agreement (the "Management Agreement")
with Adelphia effective February 1, 2002 pursuant to which Adelphia is providing
and will provide management services to the Company at a monthly fee of $10,000
per month for a term of one year plus successive one year renewal terms unless
sixty days prior notice of non-renewal by either party is given. This monthly
fee owed to Adelphia is presently being accrued. The management services to be
rendered by Adelphia include seeking prospective merger candidates for Magnum,
formulating settlement of Magnum creditor claims, and assisting in preparing
regulatory filings and otherwise supervising the reorganization of Magnum. Peter
N. Christos, a principal of Adelphia, is expected to become Chief Executive
Officer of Magnum effective only in the event that there is a closing of the
Minimum Offering to replace Robert M. Gutkowski as Chief Executive Officer who
will resign effective upon completion of the Minimum Offering. The Company has
also executed a retention agreement with John D'Angelo(the "Retention
Agreement"), presently the general counsel of the Company and a member of the
Board of Directors, to continue to render legal services on behalf of the
Company, including preparation of the Form 10-KSB for the year ended December
31, 2001; participate in the drafting of the documents necessary for the Janssen
Loan and the Notes; review of potential merger candidates; and to be involved
with the settlement of creditor claims of the Company and overall reorganization
of the Company. The Retention Agreement provides for a monthly fee of $7,500 per
month for John D'Angelo's services effective February 1, 2002 through May 31,
2002 plus a discretionary bonus that may be awarded by the Company's Board of
Directors after evaluation of John D'Angelo's services on behalf of the Company.

         In the event that the Company is successful in raising at least the
Minimum Offering, the Company is proposing to settle its existing creditor
claims by payment of a very small percentage of the creditor claim amounts. As
part of this plan, Magnum's current management would agree to forego all their
claims in exchange for payment of ten cents on the dollar in stock(no cash) and
Janssen would agree to forego its claim related to its 1999 Consulting Agreement
for payment of ten cents on the dollar in stock(no cash). Magnum's management
has also communicated with some of the substantial trade creditors of the
Company and believes that there is a reasonable prospect that such trade
creditors will accept small cash payments to settle their claims, although the
Company cannot offer any assurances of any kind that it will be able to complete
the Minimum Offering or that its major trade creditors will accept settlements
for their claims for small cash payments.

         If the Company is successful in completing the Minimum Offering, Robert
Gutkowski, the Company's current Chief Executive Officer, has agreed to resign
and Mr. Peter N. Christos has agreed to replace Mr. Gutkowski as the Company's
Chief Executive Officer. Mr. Christos will continue to be a principal of
Adelphia and will render services to the Company on an as needed basis. In
addition, effective upon completion of the Minimum Offering, Mr. Christos has
agreed to become the Chairman of the Board of Directors of the Company and Mr.
Arnold Kling has agreed to become a member of the Company's Board of Directors.
The Company's prior Chairman of the Board of Directors, Charles Koppelman,
resigned from the Company's Board in December 2001 to pursue other interests.

           The Company cannot offer any assurances of any kind whatsoever that
it will be successful in raising any money from the offering of the Notes or
otherwise and it cannot offer any assurances that Mr. Christos will in fact
assume the responsibility of becoming Chief Executive Officer of the Company in
place of Mr. Gutkowski in the event that the Minimum Offering is raised. The
Company also cannot offer any assurances of any kind whatsoever that it will be
successful in settling its existing creditor claims consistent with its
out-of-court reorganization plan. Moreover, the Company cannot offer any
assurances of any kind whatsoever that even if it is successful in raising the
Minimum Offering and settling its existing creditor claims that it will be
successful in engaging in any capital transaction such as a merger, acquisition
or similar transaction with any third party.


<PAGE>


         Even if the Company is successful in raising the Minimum Offering, it
is likely that the Company will have difficulty continuing its operations beyond
July 31, 2002, absent receipt of equity or debt financing for the Company's
operations. The Company cannot offer any assurances of any kind whatsoever that
it will be successful in raising any additional capital even if it is successful
in raising the Minimum Offering.


Other Investments

         Reference is made to the Company's filing on Form 10-QSB for the period
ended September 30, 2001 for additional description of the Company's other
investments. During the third quarter of 2000, Magnum made an investment of
$200,000 in a privately-held company (the "privately-held 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. The privately-held company has been unable to launch 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 throughout 2001. In addition, the privately-held company has
been unable to sell itself to an established internet company that has the
necessary capital to exploit the concept on the internet. Accordingly, Magnum
does not believe that it will receive anything from this investment in the
privately-held company and has taken a write-off of this investment during the
third quarter of 2001.

         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. "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 former
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 "Interview With
the Assassin". There can be no assurance that Interview Productions will be
successful in securing any buyer for "Interview With the Assassin" or what the
terms of any sale will be, even assuming that a buyer is procured for "Interview
With the Assassin" or what the Company would receive if "Interview With the
Assassin" were sold to a third party. Accordingly, the Company has determined to
write-off its investment in Interview Productions in the fourth quarter of 2001.

Discontinuance/Termination of Businesses

         In late 2000 and throughout 2001, the Company sought to terminate the
businesses that it was engaged in because such businesses were not profitable.
As of the fourth quarter of 2001, the Company and its subsidiaries terminated
all of their operating businesses and presently do not have any operating
businesses. The Company's boxing management business was terminated in the


<PAGE>


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. 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. The Company's
employment agreement with one of its former motorsports division employees
provided that the Company is entitled to receive certain percentages of revenues
generated prospectively from Nascar clients procured by such former employee
during his employment with the Company. The Company received approximately
$15,000 during 2001 from this revenue sharing agreement, which ended in December
2001.

         Also, in October 2001, the Company effectively ceased operating its
Magnum Productions division because it lacked cash resources to continue
operating such division. Magnum had formed Magnum Productions in February 2001
headed by Mr. Michael Yudin, an executive with two decades of experience in the
development, marketing, financing and production of television programming. 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, respectively. Each of these contracts provided 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.
However, because of a lack of cash available to continue to fund operations of
Magnum Productions, including salary for Mr. Michael Yudin, in November 2001,
the Company assigned its rights under these two contracts to Mr. Yudin in
exchange for the right to receive certain revenues that may be generated in the
future in the event that either proposed series become series on either Court TV
or the TNN cable network. However, to date, the Company has not received any
revenues under its agreement with Mr. Yudin and there can be no assurances of
any kind that either Court TV or the TNN cable networks will order any series to
be produced by Mr. Yudin under these contracts or that the Company will receive
any revenues under its contract with Mr. Yudin.

          In addition, in October 2001, the Company entered into an agreement
with Mr. Joel Segal, formerly the Chief Executive Officer of the Company's
football agency subsidiary, Worldwide Football Management, Inc. and the only
other two employees of such subsidiary. This agreement effectively ended the
Company's involvement in the representation of professional football players in
the negotiation of their professional football contracts with National Football
League teams. In such agreement, the Company received general releases from each
of these three former employees, including releases from any obligation to make
any payment of any kind to them, including but not limited to, salaries or the
severance payments provided for under each of their employment agreements. In
addition, Mr. Segal agreed to indemnify the Company against any claims of any
kind brought against the Company related to the recruitment or representation of
professional football players by Mr. Segal or the other two employees of
Worldwide Football Management, Inc. As part of this agreement, the Company
delivered a general release in favor of Mr. Segal and the other employees and
agreed that it would have no right to receive any prospective agency fees from
any of the professional football players represented by Worldwide Football
Management, Inc. or such employees. This agreement enabled the Company to
preserve its minimal cash resources and eliminate all its contractual
liabilities owed to the three employees of Worldwide Football Management, Inc.


         The Company's remaining business was an Internet boxing content
website, www.Houseofboxing.com (the "HOB Website") that it operated through its
wholly-owned subsidiary Magnum Houseofboxing.com, Inc.("HOB.com") but the
Company discontinued operations of this website in October 2001. It was
extremely difficult for the HOB Website to generate any material revenues from
advertising and/or sponsorships throughout 2001. Accordingly, the Company
actively sought to find a buyer for the HOB Website in 2001, but was been unable
to find any buyer for the HOB Website because of the substantial downturn in the
valuation of Internet content companies in 2001.


COMPETITION

         Because the Company terminated its sports agency businesses and boxing
content website, www.houseofboxing.com during 2001, the Company presently does
not have any operating businesses. Therefore, the competition that the Company
previously faced from a multitude of sports agencies and sports content
companies is no longer relevant.



<PAGE>


EMPLOYEES

       At December 31, 2001, the Company and its subsidiaries in the aggregate
had three employees. Two of such persons performed executive functions and the
remaining employee performed legal services for the Company. During 2001, the
Company and its subsidiaries substantially reduced their number of employees in
order to materially reduce their operating expenses. In the event that the
Company completes at least the Minimum Offering, its current Chief Executive
Officer, Robert M. Gutkowski, will resign and the Company presently expects that
his position will be assumed by Peter N. Christos, a principal of Adelphia
Holdings LLC, an investment management firm located in New York City who will
continue to act as a principal of Adelphia Holdings LLC and will render services
to the Company on an as needed basis. The Company presently does not have any
plans to hire any more employees.


ITEM 2.  DESCRIPTION OF PROPERTIES

       The Company's principal executive offices are currently located at 1330
Avenue of the Americas, 39th Floor, New York, New York 10019. In the event that
the Company completes the Minimum Offering, the Company expects to occupy space
on a month-to-month basis at the offices of Adelphia Holdings LLC at a monthly
license fee of $2,500 per month. The Company also leases an office of
approximately 1,900 square feet in New York City that it had anticipated
utilizing for the operations of its internet subsidiary,Sportcut.com, Inc., but
because of the discontinuance of such internet business, the Company never
occupied such space. The Company presently subleases such space to an unrelated
third party.

ITEM 3.  LEGAL PROCEEDINGS

         In 1999, the Company's wholly-owned subsidiary, Worldwide Basketball
Management, Inc.("WWBM"),filed a complaint against Mr. Derek Anderson in
Superior Court of New Jersey alleging, among other things, that, Mr. Anderson
breached a marketing contract between Mr. Anderson and WWBM by failing to pay
WWBM an amount equal to fifteen percent of all sums received by Mr. Anderson
under the terms of an endorsement contract between Mr. Anderson and Nike, Inc.
The parties ultimately settled such action pursuant to a Stipulation of
Settlement in 1999. In such Stipulation, Mr. Anderson agreed to pay WWBM the sum
of $170,817 according to a payment schedule over the next twelve months. In
addition, Mr. Anderson agreed to pay WWBM additional sums equal to fifteen
percent (15%) of any sums received by Mr. Anderson from Nike, Inc. after the
date of the settlement under the terms of an endorsement contract between Mr.
Anderson and Nike, Inc. which endorsement contract expired on September 30,
2001. Mr. Anderson made all payments required under the Stipulation of
Settlement to WWBM, which Stipulation of Settlement has now expired.


         In October 2001, the Company filed an action against Jay Schulthess in
New York Civil Court to recover the sum of $6,000 due and owing under the terms
of an agreement executed in March 2001 between the Company and Mr. Schulthess.
Mr. Schulthess had been the president of the Company's motorsports division
until his employment was terminated by the Company in February 2001. The Company
and Mr. Schulthess subsequently entered into an agreement pursuant to which,
among other things, Mr. Schulthess was required to turnover a certain percentage
of revenues received by Mr. Schultess from clients generated by Mr. Schulthess
while he was employed by the Company. The Company's complaint alleged that Mr.
Schulthess had failed to turnover the sum of $6,000 as required by the agreement
between the parties. In December 2001, the Company agreed to dismissal of this
action in exchange for receipt of the sum of $6,000 from Mr. Schulthess.

         In September 2001, Thomas Hauser filed an arbitration proceeding in the
American Arbitration Association against the Company seeking $72,000 in damages
for breach of contract. Mr. Hauser and the Company are parties to a writing and
consulting contract pursuant to which Mr. Hauser agreed to render writing and
consulting services to the Company's now defunct boxing content website,
www.houseofboxing.com. The Company ceased operations of this website in October
2001. The Company had made extensive efforts throughout 2001 to sell the
houseofboxing.com website but was unsuccessful because of the sharp downturn in
the value of Internet content companies throughout 2001. In March 2002, the
Company entered in a settlement agreement with Mr. Hauser and Mr. Katz(the
"Settlement Agreement"). Mr. Katz was another writer for the Company's boxing
website www.houseofboxing.com. Mr. Katz had a five year employment agreement
with the Company ending in March 2005. The Company had ceased payment under its


<PAGE>


contracts with Mr. Hauser and Mr. Katz in August 2001 due to insufficient
operating funds. These two contracts required aggregate payments of
approximately $700,000 through March 2005. Under the Settlement Agreement, the
Company agreed to pay $55,000 to Katz and $20,000 to Hauser for a total payment
of $75,000 in cash plus transfer of the rights to the domain names
Houseofboxing.com and Muhammadali.com to Hauser and Katz to settle with
prejudice their contract claims. The payment of $75,000 under the Settlement
Agreement is required to be made on the earlier of seven business days after any
closing of any private placement of Magnum securities or June 11, 2002. In the
event that the Company is unable to pay the sum of $75,000 collectively to Mr.
Katz and Mr. Hauser by such date, then Mr. Katz would be entitled to a judgment
in the amount of $500,000 against Magnum and Mr. Hauser would be entitled to a
judgment of $100,000 against Magnum under the Settlement Agreement.



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

 Submission of Matters to a Vote of Security Holders

         The Company did not submit any matters to its security holders in the
year 2001.


ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

       The Company's Common Stock is traded on the over-the-counter bulletin
board market under the symbol "MAGZ.OB". The Company's Common Stock had
previously traded on the Nasdaq SmallCap market under the symbol "MAGZ" but was
delisted by the Nasdaq Stock Market effective February 25, 2002. The following
reported high and low closing sales prices of the Company's Common Stock for
each quarter since 2000 were as follows:



                                           Common Stock*
                                          --------------
                                          High      Low


 2000  First Quarter                      12.15     7.50
       Second Quarter                     8.10      4.35
       Third Quarter                      5.30      2.80
       Fourth Quarter                     1.688     0.96


  2001 First Quarter                      1.75      0.75
       Second Quarter                     1.05      0.84
       Third Quarter                      0.60      0.09
       Fourth Quarter                     0.18      0.040

         *Adjusted to reflect the Company's reverse five for one stock split,
effective October 19, 2000.

       As of December 31, 2001, the approximate number of holders of record of
shares of the Company's Common Stock was 2,108.

         The Company has not paid a cash dividend on the Common Stock since its
public offering in October 1996. The Company intends to retain future earnings,
if any, for use in its operations and, accordingly, does not intend to pay cash
dividends in the foreseeable future.

          The Company engaged in two private placements of its securities in
2001. In one private placement commencing in January 2001, the Company sold
units with each unit comprised of one share of common stock and one warrant to
acquire one share of common stock. The Company sold a total of 1,060,257 units
in this offering at unit prices ranging from $1.00 per unit to $1.19 per unit
and raised gross proceeds of $1,195,000. In a second private placement
commencing in March 2001, the Company sold units with each unit comprised of one
share of common stock and one warrant to acquire two shares of common stock. The



<PAGE>



Company sold a total of 1,549,622 units in this offering at unit prices ranging
from $1.00 per unit to $1.11 per unit and raised gross proceeds of $1,570,000 in
this private placement. The Company acted as its own placement agent in these
private placements with the exception of a sales commission of $10,000 paid to
an individual as a selling agent. In addition, pursuant to a consulting contract
between the Company and Greenwood Partners LLP, Greenwood Partners LLP provided
consulting services to the Company through December 2001 including financial
advisory services in connection with the structuring of the Company's private
placement commencing in March 2001. Greenwood Partners LLP received 100,000
shares of restricted common stock of the Company and a warrant to acquire
100,000 shares of common stock of the Company at an exercise price of $0.75 for
its services under such consulting contract.

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

RESULTS OF OPERATIONS

General

     Magnum Sports & Entertainment, Inc. (the "Company" or "Magnum"), is
publicly traded company trading on the over-the-counter bulletin board under the
symbol Magz.ob. The Company presently has no operating businesses, having
terminated its sports agency businesses and boxing content website,
www.houseofboxing.com during 2001 because such businesses were unprofitable. The
Company had sought unsuccessfully to grow its revenues and become a profitable
company in 2001 by acquiring Ford Models, Inc., a global fashion agency,
pursuant to the Letter of Intent. The Company was unable to raise the purchase
price of $22,000,000 in cash required to acquire all the capital stock of Ford
Models, Inc. pursuant to the Letter of Intent which expired in August 2001.
Subsequently, the Company engaged in discussions with the Chief Executive
Officer of Ford Models, Inc. regarding a potential new agreement for the Company
to acquire Ford Models, Inc. but in the fall of 2001, Ford Models, Inc.
terminated any discussions of any such acquisition of Ford Models, Inc. by the
Company. The Company's common stock previously traded on the Nasdaq SmallCap
market but was delisted from trading by the Nasdaq Stock Market effective
February 25, 2002 because the Company failed to meet certain listing
requirements of the Nasdaq Stock Market including failure to maintain $2,000,000
in net tangible assets, failure to maintain a $1.00 minimum bid price for its
common stock and failure to pay listing fees owed to the Nasdaq Stock Market.

         During the fourth quarter of 2001 and the first quarter of 2002, the
Company's management sought to develop a reorganization plan that might create
value for the Company's creditors and shareholders, given the difficult
financial circumstances facing the Company. These circumstances included the
Company's lack of any operating business, the Company's having substantial
creditor claims, combined with the Company's lack of cash resources. In
addition, several of the Company's directors had resigned from the Board of
Directors: Herbert Kozlov and Harvey Silverman resigned as directors in August
2001; Charles Koppelman resigned as Chairman of the Board of Directors in
December 2001; Arthur Barron and Chester Simmons resigned as directors in March
2002. Also, Ray Schaetzle resigned as Chief Financial Officer in December 2001.
Against this backdrop, the Company has formulated an out-of-court reorganization
plan to seek to resolve all existing known material creditor claims against the
Company and to provide working capital for the Company. The Company is presently
planning on commencing an offering of the Notes with the proceeds designed to
fund the payments that will be necessary to implement the reorganization plan
and to provide working capital for the Company.

         If the Company is successful in implementing its out-of-court
reorganization plan thereby resolving material creditor claims against the
Company, the Company believes that it will then be in an improved financial
condition compared to its current poor financial condition. With an improved
financial condition upon implementation of its reorganization plan, the Company
believes that it will be better able to engage in a potential capital
transaction, such as an acquisition, merger or like transaction with another
company that has an operating company. Because the Company is a publicly traded
company, the Company believes that there may be privately owned companies that
are interested in engaging in a capital transaction like a merger or an
acquisition with a publicly traded company as a means of becoming a publicly
traded company. However, the Company's out-of-court reorganization plan faces
substantial risks and the Company cannot offer any assurance whatsoever that it
will be able to raise any capital in an offering of the Notes or otherwise, that
it can achieve settlements with creditors of the Company for small cash payments
as envisioned by its out-of-court reorganization plan or that it will have any
success whatsoever in executing any type of capital transaction with any
company. The Company


<PAGE>


presently does not have any agreement of any kind whatsoever with any third
party regarding any type of capital transaction.

          The Company has been assisted in the preparation of its out-of-court
reorganization plan by Adelphia. One of the principals of Adelphia, Peter N.
Christos, is an investment banker experienced in management and capital raising
for smallcap companies. Effective upon completion of the Minimum Offering, Peter
N. Christos has agreed to become the Chief Executive Officer of the Company,
replacing Mr. Robert M. Gutkowski, the Company's current Chief Executive Officer
who will resign. In addition, effective upon completion of the Minimum Offering,
Mr. Christos will become Chairman of the Board of Directors of the Company. Mr.
Christos will continue to be a principal of Adelphia and will devote the time on
an as needed basis as Chief Executive Officer of the Company.  In addition,  Mr.
Arnold  Kling,  another  principal  of Adelphia  and a corporate  attorney  with
experience  in  restructuring  smallcap  companies,  will become a member of the
Company's Board of Directors  effective upon completion of the Minimum Offering.
Since February 1, 2002,  Adelphia has been providing  management services to the
Company  pursuant to the  Management  Agreement  at a monthly fee of $10,000 per
month for a term of one year plus successive one year renewal terms unless sixty
days  prior  notice of  non-renewal  by either  party is given.  The  management
services  to  be  rendered  by  Adelphia  include  seeking   prospective  merger
candidates for Magnum,  formulating  settlement of Magnum creditor  claims,  and
assisting  in  preparing  regulatory  filings  and  otherwise   supervising  the
reorganization of Magnum. The Company has also executed the Retention  Agreement
with John D'Angelo, presently the general counsel of the Company and a member of
the Board of  Directors,  to continue to render legal  services on behalf of the
Company,  including  preparation  of the Form 10-KSB for the year ended December
31, 2001; participate in the drafting of the documents necessary for the Janssen
Loan and the Notes;  review of potential merger  candidates;  and to be involved
with the settlement of creditor claims of the Company and overall reorganization
of the Company. The Retention Agreement provides for a monthly fee of $7,500 per
month for John D'Angelo's  services  effective  February 1, 2002 through May 31,
2002 plus a  discretionary  bonus that may be awarded by the Company's  Board of
Directors after evaluation of John D'Angelo's services on behalf of the Company.

         In the event that the Company is successful in raising at least the
Minimum Offering, the Company is proposing to settle its existing creditor
claims by payment of small cash payments. The Company is retaining Janssen as
exclusive placement agent for the offering of the Notes. In consideration for
acting as exclusive placement agent for the offering of the Notes, Janssen will
receive a cash commission of ten percent of the sums raised in the offering of
the Notes, assuming that the Minimum Offering is raised plus a non-accountable
expense allowance of three percent of the sums raised in the offering of the
Notes. In addition, Janssen will also receive a warrant to acquire a number of
shares of common stock of the Company equal to the number of shares of the
common stock of the Company that the holders of the Notes are entitled to
receive upon full conversion of the Notes into the Company's common stock. The
Company and Janssen have also agreed to enter into a consulting agreement
effective upon the completion of the Minimum Offering pursuant to which Janssen
will provide the Company with financial advisory services and the Company will
pay Janssen the sum of $10,000 per month for a two year period.

          As part of the Company's proposed out-of-court reorganization plan,
Magnum's current management would agree to forego all their claims in exchange
for payment of ten cents on the dollar in stock(no cash) and Janssen would agree
to forego its claim related to its 1999 Consulting Agreement for payment of ten
cents on the dollar in stock(no cash). Magnum's management has also communicated
with some of the substantial trade creditors of the Company and believes that
there is a reasonable prospect that such trade creditors will accept small cash
payments to settle their claims, although the Company cannot offer any
assurances of any kind that it will be able to complete the Minimum Offering or
that its major trade creditors will accept settlements of their claims for small
cash payments.


           The Company cannot offer any assurances of any kind whatsoever that
it will be successful in raising any money from the offering of the Notes or
otherwise and it cannot offer any assurances that Mr. Christos will in fact
assume the responsibility of becoming Chief Executive Officer of the Company in
place of Mr. Gutkowski in the event that the Minimum Offering is raised. The
Company also cannot offer any assurances of any kind whatsoever that it will be
successful in settling its existing creditor claims consistent with its
out-of-court reorganization plan. Moreover, the Company cannot offer any
assurances of any kind whatsoever that even if it is successful in raising the
Minimum Offering and settling its existing creditor claims that it will be
successful in engaging in any capital transaction such as a merger, acquisition
or similar transaction with any third party.

         Even if the Company is successful in raising the Minimum Offering, it
is likely that the Company will have difficulty continuing its operations beyond
July 31, 2002, absent receipt of equity or debt financing for the Company's
operations. The Company cannot offer any assurances


<PAGE>


of any kind whatsoever that it will be successful in raising any additional
capital even if it is successful in raising the Minimum Offering.


YEAR ENDED DECEMBER 31, 2001 COMPARED WITH THE YEAR ENDED DECEMBER 31, 2000

       A comparison of revenues and expenses of the Company for the year ended
December 31, 2001 compared to the year ended December 31, 2000 is not relevant
because the Company terminated all its existing businesses during 2001 because
such businesses were not profitable. Accordingly, the Company did not have any
operating businesses as of December 31, 2001 and presently does not have any
operating businesses unlike the year ended December 31, 2000 during which the
Company was engaged in sports agency businesses and sports internet content
businesses throughout such year.

         For the year ended December 31, 2001, the Company incurred a net loss
of $7,277,369 as compared to a net loss of $12,749,197 during the year ended
December 31, 2000.


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 December 31, 2001, the Company had a working
capital deficit of $508,108. In March 2001, the Company supplemented its working
capital by receiving net proceeds of $1,195,000 from a private placement of
1,060,257 units with each unit comprised of one share of its common stock and
one warrant. In May 2001, the Company supplemented its working capital by
receiving net proceeds of $1,560,000 from a second private placement of
1,549,622 units with each unit comprised of one share of its common stock and
two warrants.

       The Company's present material commitments for capital expenditure are
its obligation under the Management Agreement with Adelphia and the Retention
Agreement with John D'Angelo and general working capital needs in connection
with the implementation of the Company's out-of-court reorganization plan and
the repayment of the Janssen Loan. The Company presently has minimal cash
resources and does not have any operating businesses. The only source therefore
for the Company to presently fund its working capital requirements is for the
Company to raise operating capital through an offering of its securities. The
Company expects to shortly commence an offering of the Notes to seek to raise a
minimum of $250,000 and a maximum of $500,000 for the Company and expects to
utilize the net proceeds of the offering of the Notes ($210,000 for the Minimum
Offering and $425,000 for the Maximum Offering) for working capital purposes,
including settlement of existing creditor claims against the Company in
accordance with the Company's out-of-court reorganization plan. The Company
presently projects that it will have sufficient working capital available to
fund its operations through July 31, 2002 if it completes the Minimum Offering
and through October 31, 2002 if it completes the Maximum Offering. Accordingly,
the Company may be required to seek additional financing through bank
borrowings, private or public debt or equity financing or otherwise. There can
be no assurance that any such financing will be available to the Company on
favorable terms, if at all. The Company's independent accounting firm, Friedman
Alpren & Green LLP stated in their opinion accompanying the Company's financial
statements that the Company's financial condition indicate that the Company may
be unable to continue as a going concern and its ability to do so is dependent
on its ability to achieve profitable operations and its ability to obtain any
necessary financing.

ITEM 7. FINANCIAL STATEMENTS

       See Financial Statements annexed.

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

       Since December 16, 1997, Friedman Alpren & Green LLP has been engaged as
the independent auditors of the Company. Friedman Alpren & Green LLP's report on
the financial statements for either of the past two years did not contain an
adverse opinion or disclaimer of opinion and was not modified as to uncertainty,
audit scope, or accounting principles.


<PAGE>


                                   PART III

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

       The directors and executive officers of the Company are as follows:

Name                      Age             Position
----                      ---             --------

Robert Gutkowski          53              President, Chief Executive Officer,
                                          of Magnum and Director
John D'Angelo             45              General Counsel and Director
Murray Weiss              44              Executive Vice President


        ROBERT GUTKOWSKI has been President and Chief Executive Officer of the
Company since June 2000. From 1991 through 1994 he was President of Madison
Square Garden. Thereafter, in 1995 he was President of The Marquee Group, Inc.,
a worldwide sports and entertainment firm that was sold in 1999 to SFX
Entertainment, Inc.

       JOHN D'ANGELO has been In-House General Counsel of the Company since
April 1998 and a Director of the Company since July 1999. He is a graduate of
Cornell University and the University of Virginia School of Law where he was a
member of the Law Review. His previous legal experience spans over fifteen
years, principally as a corporate attorney with the firm of Davis Polk &
Wardwell and from 1996 through 1998 he was engaged in a private general law
practice.

         MURRAY WEISS has been Executive Vice President of the Company since
June 2000. From 1998 to 2000 he was Executive Vice President of CAK Universal
Credit Corporation, an investment banking boutique specializing in the
securitization of intellectual property. He was previously an investment banker
as a Senior Vice President at Lehman Brothers from 1986-1995. From 1996 to 1998,
he was a Managing Director at Prudential Securities. He is a graduate from
Queens College, with a BA in Mathematics and holds an MBA degree in Finance from
New York University Graduate School of Business.

       To the Company's knowledge, based upon a review of Forms 4 and 5 and any
amendments thereto, submitted to the Company, all Directors, Officers, and
Beneficial Owners of more than 10% of the Common Stock of the Company have filed
all reports required to be filed pursuant to Section 16(a) of the Securities
Exchange Act of 1934. In August 2001, Herbert Kozlov and Harvey Silverman
resigned from the Company's Board of Directors. In December 2001, Charles
Koppelman resigned as Chairman of the Board of Directors of the Company and Ray
Schaetzle resigned as Chief Financial Officer of the Company. In March 2002,
Arthur Barron and Chester Simmons resigned from the Company's Board of
Directors.

ITEM 10. EXECUTIVE COMPENSATION

       The following table sets forth the aggregate compensation paid by the
Company to the Chief Executive Officer and President, and certain other
executive officers of the Company for services rendered to the Company by such
persons during the years ended December 31, 2001 and 2000.

                          Summary Compensation Table(1)

<TABLE>
<CAPTION>
                                                                         Restricted
                                                                            Stock                     Option
                                                       Salary     Bonus     Award      Options/SAR   Valuation
Name and Principal Position                   Year      ($)        ($)       ($)           (#)          ($)
---------------------------                   ----      ---        ---       ---           ---          ---
<S>                                         <C>     <C>        <C>        <C>          <C>           <C>
Robert Gutkowski                              2001    $157,000      -          -          83,335        $541,755
Chief Executive Officer, President            2000    $150,000      -          -          36,111        $234,759

Murray Weiss                                  2001    $140,049      -          -          25,000         162,525
Executive Vice President                      2000    $122,566   $75,000       -          10,833         $70,428
</TABLE>



<PAGE>


<TABLE>
<CAPTION>
<S>                                         <C>     <C>        <C>        <C>          <C>           <C>
Ray Schaetzle*                                2001    $93,750       -          -           6,945         $26.768
Chief Financial Officer                       2000    $55,384       -          -           3,037         $11,709

John D'Angelo                                 2001    $66,572       -          -            -              -
General Counsel                               2000    $114,938      -      $138,125         -              -
</TABLE>

--------------------
(1)  Other compensation in the form of perquisites and other personal benefits
     has been omitted where the aggregate amount of such perquisites and other
     personal benefits constituted the lesser of $50,000 or 10% of the total
     annual salary and bonus of the Officer for the year. Does not include
     options granted to non-employee directors or independent consultants

* Mr. Schaetzle resigned from the Company in December 2001.

      The Company did not grant any options to its executive officers during the
year ended December 31, 2001.


COMPENSATION OF DIRECTORS

       The Company has no standard arrangements, pursuant to which the directors
of the Company are compensated. The Company did not issue any stock options or
make any stock grants to non-employee directors during 2001.

EMPLOYMENT AGREEMENTS

         The Company entered into a three-year employment agreement in June
2000 with Mr. Gutkowski as Chief Executive Officer and President of the Company
that provides for annual salaries of $300,000, $325,000 and $350,000 during the
first, second and last years of the term of such employment agreement. In
addition, Mr. Gutkowski's employment agreement provides for the following stock
option grant: an option to acquire the Company's common stock in two tranches:
the first stock option grant is an option to acquire 200,000 shares of the
Corporation's common stock at an exercise price of $5.00 per share, exercisable
for a ten-year term and vesting pro-rata over the three-year term of the
contract, or at the rate of 66,666 options per year (the "First Tranche
Options"); and the second option grant is an option to acquire 200,000 shares of
the Company's common stock at an exercise price of $5.00 per share, exercisable
over a ten year term and vesting according to the following schedule: 66,666
options vesting when the closing bid price of the Company's common stock price
equals $15.00 per share for at least 10 consecutive trading days; and 66,666
options vesting when the closing bid price of the Company's common stock price
equals $30.00 per share for at least 10 consecutive trading days; and 66,666
options vesting when the closing bid price of the Company's common stock price
equals $45 per share for at least 10 consecutive trading days (the "Second
Tranche Options"). Mr. Gutkowski has agreed to resign as Chief Executive Officer
of the Company effective upon completion of the Minimum Offering of the Notes,
assuming that the Company is able to complete the Minimum Offering of the Notes.

         Concurrently with Mr. Gutkowski's employment agreement, the Company
also entered into a three year employment agreement with Mr. Murray Weiss as
Executive Vice President. Mr. Weiss's employment agreement provides for annual
salaries of $225,000, $250,000 and $275,000 during the first, second and last
years of the term of such employment agreement. It also provides for a $75,000
signing bonus to be paid to Mr. Weiss by the Company. In addition, Mr. Weiss's
employment agreement provides for a similar stock option package to the stock
option package approved by the Company for Mr. Gutkowski with the same $5.00 per
share exercise price and the same vesting criteria, except that the first
tranche of options are for a total of 60,000 options and the second tranche of
options are for a total of 60,000 options instead of 200,000 Second Tranche
Options as were granted to Mr. Gutkowski. Mr. Weiss has agreed to resign as
Executive Vice President of the Company effective upon completion of the Minimum



<PAGE>


Offering of the Notes, assuming that the Company is able to complete the Minimum
Offering of the Notes.

         The Company also entered into a three year employment agreement with
Mr. Ray Schaetzle as Chief Financial Officer pursuant to which Mr. Schaetzle is
to receive an annual salary of $180,000 plus a minimum annual bonus of $20,000
in September 2001, 2002 and 2003. In addition, Mr. Schaetzle's employment
agreement provides that the Company shall grant to Mr. Schaetzle an option to
acquire 30,000 shares of the Company's common stock vesting pro-rata during the
three-year term of his employment agreement at an exercise price of $5.00 per
share with the exercise price for the second and third year equal to 110% of the
common stock's closing price on September 30, 2001 and 2002. Mr. Schaetzle
resigned as the Company's Chief Financial Officer in December 2001.

         The Company also entered into four month retention agreement with John
D'Angelo in February 2002 pursuant to which Mr. D'Angelo will render legal
services to the Company. This agreement provides for monthly payments of $7,500
per month to John D'Angelo from February 2002 through May 2002 plus a
discretionary bonus that may be awarded by the Company's Board of Directors
after evaluation of John D'Angelo's services during such four month period.

         The Company also entered into an agreement with Mr. Koppelman in June
2000 to become Chairman of the Board of Directors of the Company for a minimum
three year term, subject to his re-election as Chairman by the shareholders of
the Company; and the Company granted Koppelman a stock option package similar to
the stock option package approved by the Company for Mr. Gutkowski with the same
$5.00 per share exercise price and the same vesting criteria, except that the
first tranche of options are for a total of 50,000 options and the second
tranche of options are for a total of 50,000 options. Mr. Koppelman resigned as
the Chairman of the Board of Directors of the Company in December 2001.

ITEM 11. SECURITY OWNERSHIP AND CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


         The following table sets forth information as of April 1, 2002 based on
information obtained from the persons named below, with respect to the
beneficial ownership of shares of the Company's Common Stock, including stock
options and warrants, by (i) each director of the Company, (ii) certain
executive officers of the Company, (iii) each person known by the Company to be
the owner of more than five percent (5%) of its outstanding shares of Common
Stock and (iv) all executive officers and directors as a group:


PERCENTAGE OF COMMON STOCK
NAME AND ADDRESS(1)                                   NUMBER
BENEFICIARY OWNED                                    OF SHARES
-------------------                                  ---------
Robert Gutkowski                                     256,916(2)

John D'Angelo                                         98,731(3)

Murray Weiss                                          17,000(4)

Janssen Partners, Inc.                                456,269(6)
and Peter Janssen
1979 Marcus Avenue, Suite 210, Room 142
Lake Success, New York 11042

All officers and directors as
a group (3 persons)(5)                               372,647

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

(1)  All addresses of the officers and directors are care of the Company's
     principal executive office.
(2)  Includes 143,458 options which are currently exercisable options.
(3)  Includes 57,699 options which are currently exercisable options.
(4)  Includes 5,000 options which are currently exercisable options.
(5)  Includes 206,157 shares that may be acquired upon the exercise of currently
     exercisable options and warrants.
(6)  Includes 260,296 warrants that are currently exercisable.


<PAGE>


          AGGREGATE OPTIONS AND WARRANTS HELD BY OFFICERS AND DIRECTORS


                                                Number of Securities
                            Total              Underlying Options Not
Name                   Options/Warrants    Exercisable at March 31, 2002
----                   ----------------    -----------------------------
Robert Gutkowski           400,000                  350,000
Murray Weiss               120,000                  105,000
John D'Angelo               40,000                        0


STOCK OPTION PLAN


         In December 1999, the shareholders of the Company approved the
Company's adoption of the 1999 Stock Option Plan(the "SOP"), covering 2,000,000
shares of the Company's Common Stock, $.01 par value, pursuant to which
officers, directors and key employees of the Company are eligible to receive
incentive and/or non-qualified stock options. In October 2000, the shareholders
of the Company approved a resolution to increase the number of shares reserved
under the plan from 2,000,000 to 10,000,000. The SOP is administered by the
Board of Directors or a committee designated by the Board of Directors. The
selection of participants, allotment of shares, determination of price and other
conditions of purchase of options is determined by the Board or committee at its
sole discretion. The purpose of the SOP is to attract and retain persons
instrumental to the success of the Company. Incentive stock options granted
under the SOP are exercisable for a period of up to 10 years from the date of
grant at an exercise price which is not less than the fair market value of the
Common Stock on the date of the grant, except that the term of an incentive
stock option granted under the SOP to a stockholder owning more than 10% of the
outstanding Common Stock may not exceed five years and its exercise price may
not be less than 110% of the fair market value of the Common Stock on the date
of the grant. As of December 31, 2001, the Company had issued 815,000 options
under the SOP.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTION

         In June 1999, the Company announced that Mr. Charles Koppelman had
joined the Company's Board of Directors. Mr. Koppelman has a long and
distinguished career in the entertainment industry and is currently Chairman and
Chief Executive Officer of CAK Universal Credit Corp., a boutique finance
company to the entertainment industry. He is also former Chairman and Chief
Executive Officer of EMI Records Group North America. In connection with such
appointment, the Company issued Mr. Koppelman a total of 100,000 restricted
shares of Common Stock in exchange for Mr. Koppelman's agreement to serve on the
Company's Board of Directors.

        Pursuant to an Agreement dated as of October 12, 1999 among Charles
Koppelman ("Koppelman"), Worldwide Entertainment & Sports Corporation ("the
Company") and Sportcut.com, Inc. ("Sportcut"), Koppelman agreed to serve as
Chairman of Sportcut for a minimum three-year term through October 31, 2002.
Sportcut.com operated a sports content Internet website that was launched in
November 1999 and the Company discontinued the operation of this website as of
September 30,2000. As compensation for Koppelman's services as Chairman, the
Company and Sportcut compensated Koppelman as follows: (A) Sportcut issued 250
shares of Sportcut common stock representing 5% of Sportcut's outstanding
capital stock to Koppelman, and the Company shall issue Koppelman a warrant to
purchase up to an aggregate of 75,000 shares of Common Stock at an exercise
price of $2.00 per share.

         The Company entered into an agreement with Mr. Koppelman in June 2000
to become Chairman of the Board of Directors of the Company, subject to his
re-election as Chairman by the shareholders of the Company; and the Company
granted Koppelman a stock option package similar to the stock option package
approved by the Company for Mr. Gutkowski with the same $5.00 per share exercise
price and the same vesting criteria, except that the first tranche of options
are for a total of 50,000 options and the second


<PAGE>


tranche of options are for a total of 50,000 options. These stock and option
grants reflect the subsequent five for one reverse stock split that the Company
implemented effective October 19, 2000. Mr. Koppelman resigned as Chairman of
the Board of Directors of the Company and Sportcut in December 2001.

         During the third quarter of 2000, Magnum made an investment of $200,000
in a privately-held company (the "privately-held 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. The
privately-held company has been unable to launch 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
throughout 2001. In addition, the privately-held company has been unable to sell
itself to an  established  internet  company that has the  necessary  capital to
exploit the concept on the internet.  Accordingly,  Magnum does not believe that
it will receive anything from this investment in the privately-held  company and
has taken a write-off of this investment during the third quarter of 2001.

     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 production 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 track records of success in
the motion picture business, having 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. Interview Productions has completed the
filming of "Interview With The Assassin" and Interview Productions is presently
seeking to sell this firm to a third party. Presently, Interview Productions has
not entered into any transaction to sell "Interview With The Assassin" to any
third party. The Company received a 16.66% ownership interest in Interview
Productions in exchange for its $125,000 investment. In the event of a sale or
other disposition of the film "Interview With the Assassin", investors in
Interview Productions will be entitled to recoup 110% of invested capital first
before any sharing of distributable cash, if any, between investors and the
managers of Interview Productions which will shared equally, fifty percent each,
to the investors and the managers of Interview Productions. Brian Koppelman is
the son of Charles Koppelman, the former Chairman of the Board of Directors of
the Company. The Company determined to write-off its investment in Interview
Productions in December 2001.

         In February 2002, the Company entered into a management agreement with
Adelphia Holdings LLC ("Adelphia") pursuant to which Adelphia agreed to provide
management services to the Company, including services related to the
formulation of the Company's out-of-court restructuring plan. In exchange for
such services, the Company agreed to pay Adelphia the sum of $10,000 per month
effective February 1, 2002 for a twelve month period subject to extension by
mutual agreement between the parties. Peter N. Christos, a principal of
Adelphia, has agreed that in the event that the Company closes on the Minimum
Offering, he will become the Chief Executive Officer of the Company replacing
Robert M. Gutkowski, who will resign effective upon the completion of the
Minimum Offering.

         Janssen Partners, Inc. and the Company had executed an engagement
agreement in 1999 with Janssen Partners, Inc. acting on behalf of the Company as
an investment banker(the "`1999 Consulting Agreement"). The 1999 Consulting
Agreement provided, inter alia, that the Company was


<PAGE>


required to pay Janssen Partners, Inc. a monthly consulting fee of $20,000 for a
three year period. The Company had been unable to make such payments in 2001 and
under the terms of the 1999 Consulting Agreement Janssen Partners, Inc. is owed
approximately $500,000 and is one of the Company's largest creditors.

       The Company believes the terms and conditions of the foregoing
transactions are no less favorable to the Company than those available from
unaffiliated parties. Future transactions between the Company and any affiliate
will be on terms and conditions approved by a majority of the independent,
disinterested members of the Board of Directors on terms that are no less
favorable to the Company than those available from unaffiliated parties. The
independent directors who approve such transactions will have access, at the
Company's expense, to the Company's or independent legal counsel.

                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



                                 MAGNUM SPORTS & ENTERTAINMENT, INC.

                                 By: /s/ Robert M. Gutkowski
                                     ------------------------------------
                                     (Robert M. Gutkowski Chief Executive
                                     Officer)

                                 Date:    April 15, 2002

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons, on behalf of the
Registrant in the capacities indicated and on the 15th of April 2002.

         Name                                              Title
         ----                                              -----
Directors:


   /s/ John R. D'Angelo               General Counsel and Director
---------------------------------
    (John R. D'Angelo)

   /s/ Robert M. Gutkowski              Chief Executive Officer and Director
---------------------------------
   (Robert M. Gutkowski)


ITEM 13. Exhibits, List and Reports on Form 8-K

1. The Company did not file any Form 8K during the year ended December 31, 2001.




<PAGE>


                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Independent Auditors' Report                                                1

Consolidated Balance Sheet as of December 31, 2001                          2

Consolidated Statement of Operations
   Years Ended December 31, 2001 and 2000                                   3

Consolidated Statement of Cash Flows
   Years Ended December 31, 2001 and 2000                                   4

Consolidated Statement of Changes in Stockholders' Equity (Deficiency)
   Years Ended December 31, 2001 and 2000                                   5

Notes to Consolidated Financial Statements                                 6-16




<PAGE>


                                    FRIEDMAN
                                    ALPREN &                1700 BROADWAY
                                   GREEN LLP                NEW YORK, NY 10019
CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS                212-582-1600
                                                            FAX 212-265-4761
                                                            www.nyccpas.com


                          INDEPENDENT AUDITORS' REPORT


TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
   MAGNUM SPORTS & ENTERTAINMENT, INC.


           We have audited the accompanying consolidated balance sheet of MAGNUM
SPORTS & ENTERTAINMENT, INC. and Subsidiaries as of December 31, 2001, and the
related consolidated statements of operations, cash flows and changes in
stockholders' equity (deficiency) for the years ended December 31, 2001 and
2000. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

           In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated financial
position of MAGNUM SPORTS & ENTERTAINMENT, INC. and Subsidiaries as of December
31, 2001, and the consolidated results of their operations and their
consolidated cash flows for the years ended December 31, 2001 and 2000 in
conformity with accounting principles generally accepted in the United States of
America.

           The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has suffered recurring losses
that raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 2. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.



                                          Friedman Alpren & Green LLP


New York, New York


APRIL 8, 2002


                                       1


<PAGE>


              MAGNUM SPORTS & ENTERTAINMENT, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

                                DECEMBER 31, 2001


                                     ASSETS

Current assets
   Cash                                                            $     14,436
   Prepaid expenses and other current assets                             28,034
                                                                   ------------

           Total current assets                                    $     42,470
                                                                   ============

             LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current liabilities
   Notes payable                                                        $18,134
   Accounts payable and accrued expenses                                516,244
   Security deposit payable                                              16,200
                                                                   ------------
                                                                        550,578
                                                                   ------------
           Total current liabilities

Commitments and contingencies                                                 -

Stockholders' deficiency
   Preferred stock, $.01 par value; 5,000,000 shares
      authorized, none issued                                                 -
   Common stock, $.01 par value; 60,000,000 shares
    authorized, 7,903,633 shares issued and outstanding                  79,036
   Additional paid-in capital                                        40,327,204
   Accumulated deficit                                              (40,901,998)
   Demand note receivable for common stock                              (12,350)
                                                                   ------------
                                                                       (508,108)
                                                                   ------------

                                                                   $     42,470
                                                                   ============


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

                                       -2-

<PAGE>


              MAGNUM SPORTS & ENTERTAINMENT, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF OPERATIONS

                     YEARS ENDED DECEMBER 31, 2001 AND 2000


<TABLE>
<CAPTION>
                                                                 2001               2000
                                                             -----------        -----------
<S>                                                        <C>               <C>
Revenues
   Purses                                                    $      -          $     60,112
   Contract and agency fees                                      459,227            729,229
   Endorsements and marketing fees                                69,703            391,561
   Ticket revenues                                                  -                 3,465
   Merchandise revenues                                             -                26,736
                                                             -----------       ------------
                                                                 528,930          1,211,103
                                                             -----------       ------------
Costs and expenses
   Cost of revenues                                                 -                69,451
   Training and related expenses                                   5,168            770,279
   Promotion                                                     117,882            963,734
   Selling, general and administrative expenses                6,068,252         10,357,949
   Restructuring and contract termination charges                   -               130,985
   Loss on disposal of businesses during the
     phase-out period                                          1,074,806          1,712,643
   Loss of escrow deposit                                        564,994               -
                                                             -----------       ------------

                                                               7,831,102         14,005,041
                                                             -----------       ------------

                                                              (7,302,172)       (12,793,938)

Other income
   Interest and dividend income                                   27,370             90,076
                                                             -----------       ------------

           Loss from discontinued operations
              before income taxes                             (7,274,802)       (12,703,862)

Income taxes                                                       2,567             45,335
                                                             -----------       ------------

           Net loss from discontinued operations             $(7,277,369)      $(12,749,197)
                                                             ===========       ============

Weighted average common shares outstanding                     7,201,221          4,586,648
                                                             ===========       ============

Basic and diluted loss per share
   Continuing operations                                     $     -           $       -
                                                             ===========       ============

   Discontinued operations                                   $     (1.01)      $      (2.78)
                                                             ===========       ============
</TABLE>


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

                                       -3-


<PAGE>

              MAGNUM SPORTS & ENTERTAINMENT, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF CASH FLOWS

                     YEARS ENDED DECEMBER 31, 2001 AND 2000

<TABLE>
<CAPTION>
                                                                                      2001             2000
                                                                                  -----------     ------------
<S>                                                                             <C>             <C>
Cash flows from operating activities
   Net loss from discontinued operations                                          $(7,277,369)    $(12,749,197)
   Adjustments to reconcile net loss from discontinued operations
     to net cash used in operating activities
       Depreciation and amortization                                                   23,628          341,627
       Provision for (recovery of) doubtful accounts                                 (151,563)         404,379
       Common stock issued for consulting and other services                          100,000        1,396,510
       Stock-based compensation                                                       997,863        2,323,520
       (Gain) loss on disposal of property and equipment                               (7,315)           9,633
       Noncash portion of loss on disposal of businesses                              676,949        1,702,729
       Loss of escrow deposit                                                         564,994            -
       Restructuring and contract termination charges                                    -              75,000
       Changes in assets and liabilities
         Accounts and other receivables                                               356,888           16,071
         Prepaid expenses and other current assets                                  1,398,181          294,008
         Inventories                                                                     -              55,762
         Accounts payable and accrued expenses                                        227,461         (609,779)
         Security deposit payable                                                        -              10,200
                                                                                  -----------      -----------
           Net cash used in operating activities                                   (3,090,283)      (6,729,537)
                                                                                  -----------      -----------
Cash flows from investing activities
   Proceeds of certificates of deposit and mutual funds                               159,000           10,092
   Acquisition of property and equipment                                                 -            (394,502)
   Proceeds from sales of property and equipment                                        7,315            9,620
   Acquisition of business                                                               -             (28,630)
   Investments                                                                           -            (325,000)
   Escrow deposit refund (payment)                                                     65,006         (630,000)
                                                                                  -----------      -----------
           Net cash provided by (used in) investing activities                        231,321       (1,358,420)
                                                                                  -----------      -----------
Cash flows from financing activities
   Issuance of common stock                                                         2,765,001        6,258,799
   Repayment of notes payable                                                         (62,406)        (262,390)
   Private placement costs                                                            (45,312)        (425,387)
                                                                                  -----------      -----------
           Net cash provided by financing activities                                2,657,283        5,571,022
                                                                                  -----------      -----------
Net decrease in cash and cash equivalents                                            (201,679)      (2,516,935)
Cash and cash equivalents, beginning of year                                          216,115        2,733,050
                                                                                  -----------      -----------
Cash and cash equivalents, end of year                                            $    14,436      $   216,115
                                                                                  ===========      ===========
Supplemental cash flow disclosures
   Income taxes paid                                                              $    39,927      $     2,800

Noncash investing and financing activities
   Issuance of common stock for consulting and other services                         100,000        1,396,510
   Issuance of common stock and notes for purchase of business                           -             125,746
   Stock-based compensation charged to expense                                        997,863        2,323,520
   Issuance of common stock in connection with private placement costs                   -            1,444,095
</TABLE>

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

                                       -4-

<PAGE>


              MAGNUM SPORTS & ENTERTAINMENT, INC. AND SUBSIDIARIES

     CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)

                     YEARS ENDED DECEMBER 31, 2001 AND 2000

<TABLE>
<CAPTION>
                                                                                                                  Demand Note
                                                    Common Stock                ADDITIONAL                         Receivable
                                             ---------------------------         PAID-IN         ACCUMULATED       for Common
                                                Shares          Amount           CAPITAL           DEFICIT           Stock
                                             -----------     -----------     --------------     -------------     -----------
<S>                                          <C>           <C>             <C>                <C>               <C>
Balance, January 1, 2000                       3,487,475     $    34,875     $   26,934,625     $ (20,875,432)    $  (12,350)
Issuance of common stock
   Consulting and other services                 275,667           2,757          1,393,753              -              -
   Purchase of HOB.com                            20,000             200             65,546              -              -
   Private placements                          1,410,611          14,105          7,688,789              -              -
   Cost of private placements                       -               -            (1,869,482)             -              -
Stock-based compensation - options                  -               -             2,323,520              -              -
Net loss                                            -               -                  -          (12,749,197)          -
                                             -----------     -----------     --------------     -------------     ----------

Balance, December 31, 2000                     5,193,753          51,937         36,536,751       (33,624,629)       (12,350)
Issuance of common stock
   Consulting and other services                 100,000           1,000             99,000              -              -
   Private placements                          2,609,880          26,099          2,738,902              -              -
   Cost of private placements                       -               -               (45,312)             -              -
Stock-based compensation - options                  -               -               997,863              -              -
Net loss                                            -               -                  -           (7,277,369)          -
                                             -----------     -----------     --------------     -------------     ----------

Balance, December 31, 2001                     7,903,633     $    79,036     $   40,327,204     $ (40,901,998)    $  (12,350)
                                             ===========     ===========     ==============     =============     ==========
</TABLE>


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

                                       -5-

<PAGE>


              MAGNUM SPORTS & ENTERTAINMENT, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 1 - ORGANIZATION

          Magnum Sports & Entertainment, Inc., formerly known as Worldwide
     Entertainment & Sports Corp. ("WWES"), 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, WWES changed its name to Magnum Sports & Entertainment, Inc.
     ("Magnum"). During 2001, the Company terminated and discontinued all its
     existing businesses and those of its subsidiaries because such businesses
     were not profitable.

 2 - GOING CONCERN

          The Company's consolidated financial statements have been presented
     assuming that the Company will continue as a going concern. As shown in the
     accompanying consolidated financial statements, the Company has incurred
     losses of $40,901,998 through December 31, 2001 and had operating costs of
     approximately $8,000,000 in 2001 and no significant sources of revenue to
     mitigate these operating expenses.

          The Company's goal during 2001 was to eliminate its unprofitable
     businesses and attempt to grow the Company's revenues through an
     acquisition strategy based upon the proposed acquisition of Ford Models,
     Inc. ("Ford"), a global fashion modeling agency. The Company and Ford had
     executed a letter of intent in December 2000, as amended June 11, 2001 (the
     "Letter of Intent"), pursuant to which the Company proposed to buy all of
     the capital stock of Ford for a purchase price of $22,000,000 in cash. The
     Company's goal was to acquire Ford and create a multi-dimensional
     entertainment company based upon leveraging the Ford brand name in the
     worlds of entertainment, sports, music, sponsorship, and licensing.
     However, the Company was unsuccessful in raising the necessary capital to
     effectuate the acquisition of Ford, the Letter of Intent expired in 2001
     and Ford terminated any continuing discussions with the Company in the fall
     of 2001 regarding entering into any new agreement with the Company to
     acquire Ford. As a result, the Company forfeited $564,994 of the escrow
     deposit submitted in conjunction with its proposed purchase of Ford.

          The Company's common stock was delisted for trading from the Nasdaq
     SmallCap Market effective February 25, 2002 because the Company failed to
     meet several listing requirements of the Nasdaq SmallCap Market. The
     Company's common stock presently trades on the over-the-counter bulletin
     board market under the symbol MAGZ.OB. As of April 8, 2002, the Company is
     seeking to implement an out-of-court reorganization plan to resolve
     existing creditor claims against the Company and provide working capital
     for the Company, but there are substantial risks associated with this
     strategy and the Company can provide no assurances whatsoever that it will
     be able to execute any out-of-court reorganization plan. These
     circumstances have created the possibility that the Company may become
     defunct or may file bankruptcy proceedings in the near future.


<PAGE>


              MAGNUM SPORTS & ENTERTAINMENT, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 2 - GOING CONCERN (Continued)

          As discussed above, the Company is presently seeking to implement an
     out-of-court reorganization plan to resolve existing creditor claims and
     provide working capital. As part of this plan, the Company is presently
     planning on commencing an offering of senior secured convertible notes to
     raise a minimum of $250,000 in gross proceeds (the "Minimum Offering") and
     a maximum of $500,000 in gross proceeds (the "Maximum Offering"). If
     successful in concluding either the Minimum Offering or the Maximum
     Offering of senior secured convertible notes, the Company will settle its
     existing creditor claims for modest sums and/or stock and then seek to
     engage in a capital transaction, including a merger, acquisition or like
     transaction with a third party that may involve an operating company. In
     conjunction with these plans, the Company has engaged consultants to
     provide financial advisory, marketing, and merger and acquisition services.
     To conserve cash, the Company will be paying for a portion of these
     consulting agreements with common stock and options. 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 financial statements do not include any adjustments that
     might result from the outcome of this uncertainty.

     Discontinued Operations

          The Company ceased all of its operations at December 31, 2001 because
     of its inability to generate sufficient revenue to mitigate its operating
     expenses. As a result, the operating results for 2001 and 2000 are
     presented as discontinued operations. Charges resulting from losses from
     the disposal of business units and assets have been shown separately and
     include the write-off of an investment of $325,000, property and equipment
     with a carrying value of $44,313, goodwill with a carrying value of
     $132,696 and a settlement with former employees of $174,940.


                                  (Continued)

                                       -7-

<PAGE>


              MAGNUM SPORTS & ENTERTAINMENT, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




 2 - GOING CONCERN (Continued)

     Restructuring and Contract Termination Charges

          On October 23, 2000, the Board of Directors approved the senior
     management's decision to terminate Magnum's boxing management business. As
     a result, Magnum terminated the two joint venture agreements with Munisteri
     Sports & Entertainment ("Munisteri") and Bulldog Boxing Management, LLC
     ("Bulldog"). In connection with the termination of the Munisteri agreement,
     Magnum issued 4,000 shares of stock options valued at $5,985. On December
     5, 2000, Magnum terminated the joint venture agreement with Bulldog. Magnum
     agreed to assign all boxing management contracts to Bulldog and forgive any
     debts owed by the boxers to Magnum. In addition, Magnum agreed to pay
     Bulldog a sum of $50,000 in three equal installments on December 5, 2000,
     January 5, 2001 and February 5, 2001. As a result of exiting the above
     activities, Magnum incurred approximately $131,000 of restructuring and
     contract termination charges.


 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Principles of Consolidation

          The consolidated financial statements include the accounts of Magnum
     and its wholly owned and majority-owned subsidiaries (collectively, the
     "Company"). All significant intercompany balances and transactions have
     been eliminated.

     Use of Estimates

          Management uses estimates and assumptions in preparing financial
     statements. Those estimates and assumptions affect the reported amounts of
     assets and liabilities, the disclosure of contingent assets and
     liabilities, and the reported revenues and expenses.



                                  (Continued)

                                       -8-

<PAGE>


              MAGNUM SPORTS & ENTERTAINMENT, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Basic and Diluted Loss Per Share

          Basic and diluted loss per share is computed by dividing net loss by
     the weighted average number of shares of common stock outstanding during
     the year, which has been adjusted for the effect of the five-for-one
     reverse stock split that took place in October 2000. Diluted EPS has not
     been presented separately because the effect of potential common stock
     would have been anti-dilutive.

     Revenue Recognition

          Purse revenue was recognized upon completion of a fight as a
     percentage of the boxer's purse. Ticket and commission revenues were
     recognized at the time of the fight. Contract and agency fee revenues were
     recognized during the various athletic seasons. Merchandise revenue was
     recognized upon the sale of memorabilia merchandise.

     Income Taxes

          Magnum and its subsidiaries file a consolidated Federal income tax
     return. The Company calculates deferred tax assets and liabilities using
     the asset and liability method. Deferred taxes are recorded on net
     operating loss carryforwards and differences between financial reporting
     and income tax bases of assets and liabilities, using applicable income tax
     rates. Valuation allowances are established until realization is reasonably
     assured.

     Restructuring and Contract Termination Charges

          The Company accounts for restructuring and contract termination
     charges in accordance with Staff Accounting Bulletin No. 100 and Emerging
     Issues Task Force No. 94-3, which relates to costs to exit an activity.

     Stock-Based Compensation

          The Company adopted the provisions of SFAS No. 123, "Accounting for
     Stock-Based Compensation", which prescribes accounting and reporting
     standards for all stock-based compensation plans, including employee stock
     options, restricted stock, and stock appreciation rights. As such, the
     Company recognizes the fair value of all stock-based awards on the date of
     grant as an expense over the vesting period.



                                  (Continued)

                                       -9-

<PAGE>


              MAGNUM SPORTS & ENTERTAINMENT, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Cash and Cash Equivalents

          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.

     New Accounting Pronouncements

          In the third quarter of 2001, the Financial Accounting Standards Board
     issued Statements of Financial Accounting Standards (SFAS) No. 141,
     "Business Combinations", and No. 142, "Goodwill and Other Intangible
     Assets". SFAS No. 141 eliminates the pooling-of-interests method for
     business combinations and requires use of the purchase method. SFAS No. 142
     changes the accounting for goodwill and indefinite life intangibles by
     requiring periodic tests for impairment of the asset instead of amortizing
     those assets over time. Upon adoption on January 1, 2002, SFAS No. 142
     requires discontinuance of amortization of goodwill and indefinite life
     intangibles which had been recorded in connection with previous business
     combinations. The Company will adopt these statements beginning January 1,
     2002. The Company has not yet determined the effect, if any, of these
     pronouncements on its financial position or results of operations.

          In the third quarter of 2001, the FASB also issued SFAS No. 144,
     "Accounting for the Impairment or Disposal of Long-Lived Assets". This
     Statement addresses the conditions under which an impairment charge should
     be recorded related to long-lived assets to be held and used, except for
     goodwill, and those to be disposed of by sale or otherwise. The provisions
     of this Statement are effective on January 1, 2002. At this time, the
     Company is evaluating the potential impact of this Statement on its
     financial position, results of operations and cash flows.

     Reclassifications

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


                                   (Continued)

                                      -10-

<PAGE>


              MAGNUM SPORTS & ENTERTAINMENT, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 4 - INCOME TAXES AND DEFERRED INCOME TAXES

          Income taxes and components of deferred tax assets are as follows:

                                                  2001              2000
                                             ------------       ------------
   Income taxes
      State income taxes                     $      2,567       $    45,335
                                             ============       ===========

   Deferred tax assets
      Net operating loss carryforwards       $ 11,217,000       $ 6,147,000
      Stock-based compensation                  4,001,000         3,628,000
                                             ------------       -----------

                                               15,218,000         9,775,000

      Less - Valuation allowance              (15,218,000)       (9,775,000)
                                             ------------       -----------

              Net deferred tax asset         $        -0-       $       -0-
                                             ============       ===========

          The Company has available net operating loss carryforwards of
     approximately $33,000,000, which may be utilized to reduce Federal taxable
     income through 2021.


 5 - Common Stock

          On October 22, 1996, the Company, in its initial public offering, sold
     1,400,000 units. Each unit consisted of one share of common stock and one
     redeemable common stock purchase warrant to purchase one share of common
     stock at $7.20 expiring March 21, 2001. The Company filed an amended
     certificate of incorporation on December 22, 1999 to increase its
     authorized shares of common stock to 60,000,000 and preferred stock to
     5,000,000.

          On October 18, 2000, the stockholders approved a five-for-one reverse
     stock split of the Company's $.01 par value common stock. As a result of
     the split, the number of outstanding shares was reduced from 25,968,766 to
     5,193,753 and additional paid-in capital was increased by $207,750. All
     references in the accompanying financial statements to the number of common
     shares and per-share amounts have been restated retroactively to reflect
     the reverse stock split.

          On March 20, 2001, Magnum completed a private placement offering of
     1,148,753 units for approximately $1,195,000. Each unit was comprised of
     one share of common stock and one warrant to acquire one share of common
     stock. Share prices for the units range from $1.07 to $1.19.


                                   (Continued)

                                      -11-

<PAGE>


              MAGNUM SPORTS & ENTERTAINMENT, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 5 - Common Stock (Continued)

          In May 2001, Magnum completed a private placement offering of
     1,549,623 units for approximately $1,569,000. Each unit was comprised of
     one share of common stock and one warrant to acquire one share of common
     stock. The share price for the units was approximately $1.01.

          The Company issued additional shares and stock options for consulting,
     legal and other services based on fair value at the date of issuance (see
     Note 7). The following represents issuances of stock to stockholders,
     directors and officers:

              On August 1, 2001 issued 100,000 shares of restricted common
              stock, with a fair value of $100,000, for consulting services
              performed.

              On February 5 and October 1, 2000 issued, respectively, 5,000 and
              15,000 shares of restricted common stock, with a fair value of
              $65,746, in connection with the purchase of HOB.

              On March 7, 2000 issued 20,000 shares of restricted common stock,
              with a fair value of $138,125, for services performed by an
              officer.

              On March 7, 2000 issued 6,000 shares of restricted common stock,
              with a fair value of $41,439, for consulting services performed by
              a technology company.

              On April 4, 2000 issued 200,000 shares of restricted common stock,
              with a fair value of $982,600, for services to a member of the
              Board of Directors for the period April 4, 2000 to October 4,
              2002.

              On May 1, 2000 issued 30,000 shares of restricted common stock,
              with a fair value of $183,345, as part of the Bulldog Boxing
              Management, LLC joint venture and affiliation agreement.

              On May 10, 2000 issued 2,000 shares of restricted common stock,
              with a fair value of $12,223, for consulting services performed
              by an outside contractor.

              On October 1, 2000 issued 16,667 shares of restricted common
              stock, with a fair value of $38,778, to Munisteri and 1,000 shares
              to a trainer for the boxers in connection with the joint venture
              and affiliation agreement.

              During the year 2000 issued through a private placement 1,410,611
              shares of restricted common stock, with a fair value of
              $7,702,894.


                                   (Continued)

                                      -12-

<PAGE>


              MAGNUM SPORTS & ENTERTAINMENT, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 6 - STOCK OPTION PLANS

          The Company adopted a plan which provides options intended to qualify
     as "incentive stock options" under the Internal Revenue Code. Nonqualified
     options may also be granted under the plan. In October 2000, the Company
     increased the number of shares reserved under the plan from 2,000,000 to
     10,000,000. The option price per share will be determined at the time of
     grant, but will not be less than the fair market value of the common stock
     on such date or, in the case of a 10% stockholder, not less than 110% of
     the fair market value of the stock on the grant date.

          The Company's stock option plan provides for the granting of both
     qualifying and nonqualifying stock options to officers, key employees,
     directors and outsiders. The status of the plans at December 31, 2001 and
     2000 is summarized as follows:

<TABLE>
<CAPTION>
                                                           Number of         Weighted Average
                                                             Shares           Exercise Price
                                                         -------------       ----------------
<S>                                                      <C>               <C>
    Outstanding at January 1, 2000                             642,000           $  10.45
    Granted                                                    774,200               6.69
    Exercised                                                    -                    -
    Cancelled                                                    -                    -
    Expired                                                      -                    -
                                                           -----------            -----

    Outstanding at December 31, 2000                         1,416,200              11.32
    Granted                                                  4,159,501               0.85
    Exercised                                                    -                    -
    Cancelled                                                    -                    -
    Expired                                                    (39,500)            (13.26)
                                                           -----------            -------

    Outstanding at December 31, 2001                         5,536,201            $  2.86
                                                           ===========            =======

    Options exercisable at
      December 31, 2001                                      5,375,262            $  2.71
      December 31, 2000                                      1,095,347               9.80
</TABLE>



                                   (Continued)

                                      -13-

<PAGE>


              MAGNUM SPORTS & ENTERTAINMENT, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 6 - STOCK OPTION PLANS (Continued)

          The Company accounts for stock options under the fair value method,
     pursuant to SFAS No. 123 (see Note 3). The fair value of these options was
     calculated at the date of grant using a black-scholes option pricing model
     assuming the following:

              Risk-free interest rate                   5.70% - 6.53%
              Volatility factor                        61.49% - 180.55%
              Dividend yield                                  -%
              Expected life                               3-10 years

          Under the provisions of SFAS No. 123, Magnum's compensation expense
     arising from the grant of stock options for the years ended December 31,
     2001 and 2000 was $997,863 and $2,323,520, respectively. The related
     deferred tax asset of $339,000 and $790,000 for the years ended December
     31, 2001 and 2000, respectively, was recorded based on a 34% tax rate for
     the resulting temporary difference.

          Summary information about Magnum's stock options outstanding at
December 31, 2001 is as follows:

<TABLE>
<CAPTION>
                                                Weighted
                                                 Average         Weighted
       Range of           Outstanding at       Contractual        Average          Exercisable at
       Exercise             December 31,         Periods         Exercise           December 31,
         Price                   2001           in Years           Price               2001
  --------------------    ------------------   --------------   ------------      ---------------
<S>                               <C>                 <C>       <C>                    <C>
  $14.375                           110,100             5.7       $ 14.375               110,100
   14.375                            23,000             0.7         14.375                23,000
    7.500                            64,000             6.1          7.500                64,000
    7.190 - 14.375                  218,100             1.9         10.135               218,100
   10.650                            62,500             7.2         10.650                62,500
   10.000 - 12.500                   84,800             1.8         11.550                84,800
    7.900 - 15.000                   40,000             0.9         11.050                40,000
    7.500 - 10.000                   96,500             3.8          8.290                96,500
    5.000 -  8.750                  663,000             6.1          6.918               502,061
    5.000                             3,900             4.0          5.000                 3,900
    5.000 - 10.000                   10,800             8.6          5.370                10,800
    1.130                         1,060,257             5.0          1.130             1,060,257
    0.750                         3,099,244             5.0          0.750             3,099,244
                             --------------                                       --------------
                                  5,536,201             4.4          2.700             5,375,262
                             ==============          ======       ========        ==============
</TABLE>


                                   (Continued)

                                      -14-

<PAGE>


              MAGNUM SPORTS & ENTERTAINMENT, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 7 - COMMITMENTS AND CONTINGENCIES

     Management Contracts

          As part of the Company's out-of-court reorganization plan, the
     Company's management has agreed to settle its existing employment
     agreements for a total of $50,000, to be paid in the form of the Company's
     restricted common stock.

     Consulting and Other Agreements

          The Company entered into a written settlement agreement on March 19,
     2002 with Michael Katz and Thomas Hauser, who agreed to the settlement of
     their employment agreement and consulting/writing agreement, respectively,
     with the Company in exchange for an aggregate cash payment of $75,000
     ($55,000 payable to Mr. Katz and $20,000 payable to Mr. Hauser). Mr. Katz
     and Mr. Hauser had claims under their contracts aggregating approximately
     $700,000 against the Company. The Company is required to make the payments
     of $75,000 to Mr. Katz and Mr. Hauser no later than June 11, 2002. If the
     Company fails to make such $75,000 payment to Mr. Katz and Mr. Hauser, then
     Mr. Katz shall be entitled to a judgment against the Company for $500,000
     and Mr. Hauser shall be entitled to a judgment against the Company for
     $100,000.

          The Company is in the process of settling certain additional
     outstanding creditor claims totaling approximately $1,400,000. As of April
     8, 2002, the Company has agreements with certain major creditors regarding
     settlement of their claims for modest cash payments and/or stock. The
     Company has accrued $102,800 of claims not yet settled.

          In March 2002, the Company entered into a management agreement with
     Adelphia Holdings LLC which is cancelable upon 60 days' prior written
     notice by either party to provide management services at $10,000 per month
     for one year.

          In March 2002, the company entered into a retention agreement with
     John D'Angelo pursuant to which Mr. D'Angelo agreed to provide legal
     services to the Company for the period February 2002 through March 2002 for
     a monthly fee of $7,500 plus a bonus that may be awarded by the Company's
     Board of Directors in its sole discretion after review of Mr. D'Angelo's
     performance under the retention agreement.


                                   (Continued)

                                      -15-

<PAGE>


              MAGNUM SPORTS & ENTERTAINMENT, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 7 - COMMITMENTS AND CONTINGENCIES (Continued)

     Lease Commitments

          The Company has a noncancelable operating lease and a month-to-month
     lease for office facilities. In conjunction with its reorganization (see
     Note 2), the company has vacated the premises subject to the noncancelable
     lease and sublet it for a rent approximating its own lease payments.
     Approximate minimum annual lease payments, excluding sublet payments to be
     received, are as follows:

                    Year Ending
                   December 31,
                   ------------
                       2002                      $   59,000
                       2003                          59,000
                       2004                          59,000
                       2005                           5,000
                                                 ----------
                                                 $  182,000
                                                 ==========

          Rent expense for office facilities for the years ended December 31,
     2001 and 2000 was approximately $141,000 and $164,000, respectively.