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

                                 FORM 10-QSB/A2


 (Mark One)
 [X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
     of 1934
     For Quarterly period ended March 31, 1999 or
                                --------------    --------------

 [ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act
     of 1934 For the Transition period from _________ to _________

 Commission File No. 0-21534
                     -------

                                Intelefilm Corporation
                       -----------------------------------
        (Exact name of small business issuer as specified in its charter)

                      Children's Broadcasting Corporation
                      -----------------------------------
                                 (former name)

                 Minnesota                               41-1663712
                 ---------                               ----------
      (State or other jurisdiction of                  (IRS Employer
      incorporation or organization)               Identification Number)

                   5501 Excelsior Blvd., Minneapolis, MN 55416
                   -------------------------------------------
           (Address of principal executive office, including zip code)

                                 (612) 925-8840
                                 --------------
                (Issuer's telephone number, including area code)

  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
       -----       -----

         As of May 13, 1999, there were outstanding 6,503,142 shares of common
stock, $.02 par value, of the registrant.



<PAGE>


INDEX

INTELEFILM CORPORATION

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements (Unaudited)

         Consolidated Balance Sheets-- March 31, 1999 and December 31, 1998.

         Consolidated Statements of Operations -- Three months ended March 31,
         1999 and 1998.

         Consolidated Statements of Cash Flows -- Three months ended March 31,
         1999 and 1998.

         Notes to Consolidated Financial Statements  -- March 31, 1999.


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


<PAGE>

Intelefilm Corporation
Consolidated Balance Sheets
(Unaudited)

<TABLE>
<CAPTION>
                                                              March 31,      December 31,
                                                                1999             1998
                                                          Second Amendment
                                                          ----------------   ------------
             ASSETS

<S>                                                         <C>              <C>
Current assets:
     Cash and cash equivalents                              $  5,708,953     $    253,905
     Accounts receivable                                         894,455           39,000
         Allowance for doubtful accounts                         (38,833)         (39,000)
     Unbilled accounts receivable                                516,491               --
     Accounts receivable - affiliates                            349,473          280,438
     Radio station assets available for sale                          --       11,391,402
     Other accounts receivable                                   273,724          331,527
     Prepaid expenses                                            486,526          279,816
                                                            ------------     ------------
             Total current assets                              8,190,789       12,537,088

Note receivable                                               15,000,000       15,000,000
Investment in & notes receivable from Harmony                  5,930,517        5,421,322
Property and equipment, net                                      167,511          120,385
Goodwill, net                                                  1,135,441               --
Deferred debt issue costs                                             --          742,737
                                                            ------------     ------------
             Total assets                                   $ 30,424,258     $ 33,821,532
                                                            ============     ============

             LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Accounts payable                                       $    589,296     $  2,205,212
     Accounts payable - affiliates                                44,831          363,727
     Accrued interest                                              5,429          143,505
     Accrued income taxes                                      3,297,750          328,000
     Deferred revenue                                                 --        2,675,556
     Other accrued expenses                                    2,609,948        1,227,637
     Line of credit                                                   --          434,974
     Long-term debt - current portion                            159,187       10,665,792
                                                            ------------     ------------
             Total current liabilities                         6,706,441       18,044,403

Long-term debt , less current maturities                         821,505          848,111
                                                            ------------     ------------
             Total liabilities                                 7,527,946       18,892,514
                                                            ------------     ------------

Commitments and Contingencies                                         --               --

Redeemable convertible preferred stock                                --        2,448,486

Shareholders' equity
     Common stock                                                131,444          129,015
         Authorized shares - 50,000,000
         Issued & outstanding shares - voting: 6,386,701
         1999 and 6,261,701 - 1998
         Issued and outstanding shares - nonvoting:
         189,041 - 1999 and 1998
     Additional paid-in capital                               46,008,134       45,773,584
     Accumulated deficit                                     (23,138,266)     (33,292,504)
     Stock subscriptions receivable                             (105,000)        (129,563)
                                                            ------------     ------------
             Total Shareholders' Equity                       22,896,312       12,480,532
                                                            ------------     ------------

     Total Liabilities & Shareholders' Equity               $ 30,424,258     $ 33,821,532
                                                            ============     ============
</TABLE>

<PAGE>

Intelefilm Corporation
Consolidated Statements of Operations
(Unaudited)

<TABLE>
<CAPTION>
                                                             Three Months Ended
                                                                 March 31,
                                                       1999                     1998
                                                 Second Amendment
                                                 ----------------           ------------

<S>                                                <C>                      <C>
Revenues:
     Production contract revenues                  $  1,144,300             $         --
     Broadcast related revenues                          86,902                  835,995
                                                   ------------             ------------
              Total revenues                          1,231,202                  835,995
     Cost of Production                                 965,464                       --
                                                   ------------             ------------
              Gross profit                         $    265,738             $    835,995

Operating expenses:
     Production divisions
              Selling                                    36,943                       --
              General and administrative                263,081                       --
     Broadcast related expenses                         180,315                1,284,981
                                                   ------------             ------------
Income (loss) from operations before corporate,
     depreciation and amortization                     (214,601)                (448,986)

Corporate                                               540,095                1,207,726
Depreciation and amortization                           102,825                  546,891
                                                   ------------             ------------
Income (loss) from operations                          (857,521)              (2,203,603)

Gain on sale of radio station assets                 16,545,507                       --
Equity loss in Harmony                               (1,930,942)                (472,841)
Interest expense net of interest income                (502,806)              (1,002,405)
                                                   ------------             ------------

Net income (loss) before income taxes                13,254,238               (3,678,849)

Income tax provision                                 (3,100,000)                      --
                                                   ------------             ------------

Net income (loss)                                  $ 10,154,238             $ (3,678,849)
                                                   ============             ============

Basic net income (loss) per share                  $       1.56             $      (0.55)
                                                   ============             ============

Weighted average number of shares outstanding         6,492,000                6,656,000
                                                   ============             ============
</TABLE>

<PAGE>

Intelefilm Corporation
Consolidated Statements of Cash Flows
(Unaudited)

<TABLE>
<CAPTION>
                                                                                 Three Months Ended
                                                                                      March 31,
                                                                              1999                1998
                                                                        Second Amendment
                                                                        ----------------      -------------

<S>                                                                        <C>                <C>
Operating activities:
Net income (loss)                                                          $ 10,154,238       $ (3,678,849)
Adjustments to reconcile net income (loss) to net
     cash used in operating activities:
          Provision for doubtful accounts                                          (167)          (126,309)
          Depreciation & amortization                                           102,825            546,891
          Gain on sale of radio stations                                    (16,545,507)                --
          Net barter activity                                                        --             16,708
          Amortization and write-off of deferred debt issue costs               742,737            176,934
          Equity loss in Harmony                                              1,930,942            472,841
          Non-cash interest payment related to sale of stations                  92,008                 --
          Issuance of common stock for payment of interest                           --             27,710
          Decrease (increase) in:
               Accounts receivable                                              (48,862)           822,534
               Other receivables                                               (264,592)            19,013
               Prepaid expenses                                                (193,780)            46,449
          Increase (decrease) in:
               Accounts payable                                              (1,934,812)           360,624
               Accrued interest                                                  (8,362)            62,546
               Other accrued expenses                                         2,381,884             65,714
                                                                           ------------       ------------
                    Net cash used in operating activities                    (3,591,448)        (1,187,194)
                                                                           ------------       ------------

Investing activities:
     Sale/purchase of property & equipment                                      (74,564)           (26,705)
     Investment in & notes receivable from Harmony                           (2,440,137)                --
     Sale/purchase of intangible assets                                              --           (122,906)
     Proceeds from sale of radio stations                                    14,034,415                 --
                                                                           ------------       ------------
                    Net cash provided by (used in) investing activities      11,519,714           (149,611)
                                                                           ------------       ------------

Financing activities:
     Payment of debt                                                            (33,211)           (60,195)
     Proceeds from debt financings                                                   --          1,511,000
     Redemption of convertible preferred stock                               (2,450,002)                --
     Repurchase of common stock                                                 (11,505)                --
     Proceeds from issuance of common stock                                          --              5,000
     Proceeds from stock subscriptions receivable                                21,500                 --
                                                                           ------------       ------------
                    Net cash provided by financing activities                (2,473,218)         1,455,805
                                                                           ------------       ------------

Increase (decrease) in cash and cash equivalents                              5,455,048            119,000
Cash and cash equivalents at beginning of period                                253,905            545,258
                                                                           ------------       ------------

Cash and cash equivalents at end of period                                 $  5,708,953       $    664,258
                                                                           ============       ============
</TABLE>

<PAGE>


Intelefilm Corporation
Notes to Consolidated Financial Statements (unaudited)
March 31, 1999

Note 1            Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310 of
Regulation S-B. Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals with the exception of the adjustments discussed in
Note 2) considered necessary for a fair presentation have been included.
Operating results for the three-month period ended March 31, 1999 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1999. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's Form 10-KSB for the
year ended December 31, 1998.

Note 2            Significant Transactions during 1999

The following significant transactions occurred during 1999 and are considered
non-recurring:

A.       In January and February 1999, the Company advanced Harmony Holdings,
         Inc. ("Harmony") $2,375,000 in cash pursuant to unsecured note
         receivable agreements which bore interest at 10% and are due on demand.
         Additionally, in February 1999, all notes with Harmony were amended to
         provide for interest at 14%. It is management's belief that 14%
         reflects the interest rate that would be charged to Harmony by other
         junior and unsecured lenders. Notes outstanding with Harmony aggregated
         $3.05 million as of May 11, 1999.

B.       In January 1999, the Company closed on the sale of the radio broadcast
         licenses and certain other assets of its radio stations KAHZ(AM),
         Dallas, KIDR(AM), Phoenix, and WJDM(AM), New York, to Radio Unica Corp.
         ("Radio Unica"). The Company received gross proceeds of $29.25 million
         for the stations' assets which had a net book value of approximately
         $11.4 at the time of the sale. The Company incurred approximately $1.5
         million of transaction costs including bonuses paid to management,
         employees and Media Management, LLC.

C.       In January 1999, the Company redeemed all of its 606,061 shares of
         Series B Convertible Preferred Stock which were issued in June 1998.
         The preferred stock was redeemed at $4.04 per share, or $2.45 million,
         utilizing a portion of the proceeds from the Radio Unica transaction
         (Note 2B).

D.       In January 1999, the Company entered into an agreement regarding the
         production of a picture titled "True Rights" based on a screenplay
         written by Meg Thayer. In exchange for providing certain financing of
         the production, the Company received a 33.33% equity interest in the
         screenplay, production of "True Rights' and any other material relating
         thereto. Also, the Company shall receive 30.0% of the net proceeds from
         the distribution and exploitation of "True Rights" in all media and all
         sources worldwide after the Company receives, on a parri passu basis
         with other investors, the sum equal to 125% of its respective
         contribution to the production of "True Rights". The Company's

<PAGE>

         financing obligation totaled $126,000 and was paid in full during the
         filming of the project.

E.       In February 1999, the Company incorporated a new subsidiary, Buffalo
         Rome Films, Inc. ("Buffalo Rome"). Buffalo Rome will seek out
         independent film opportunities and is currently engaged in discussions
         regarding an independent film.


F.       On March 4, 1999, the Company acquired all of the issued and
         outstanding common stock of Chelsea Pictures, Inc. ("Chelsea") for
         consideration totaling approximately $1,135,000, representing 125,000
         shares of common stock with a value of $250,000 and the assumption of
         approximately $885,000 liabilities net of assets. Chelsea is a
         television commercial production company with principal operations in
         New York. The acquisition has been accounted for as a purchase,
         whereby, all assets purchased and liabilities assumed were recorded at
         their fair market value. Additional consideration for the transaction
         may consist of issuance of up to an aggregate of 75,000 additional
         shares of the Company's common stock. Any future issuance is dependent
         on Chelsea meeting certain performance goals, and the value of shares
         issued will be treated as an adjustment to the purchase price at the
         time of issuance.

         The unaudited pro forma results of operations which follow assume that
         the acquisition of Chelsea had occurred at January 1, 1998. In addition
         to combining the historical results operations of the Company and the
         acquired business, the pro forma calculations include adjustments for
         the estimated effect on the historical results of operations for
         depreciation, interest and issuances of common stock related to the
         business acquisition.

                                                    Three months ended
                                                    ------------------
                                               3/31/99              3/31/98
                                               -------              -------
         Revenues                             $2,752,300          $4,087,568

         Gross profit                            432,012           1,189,194

         Loss from operations                 (1,080,583)         (2,202,304)

         Net income                           11,314,614          (3,671,148)

         Net income per share                       1.71               (0.54)

         Weighted average number of
           shares outstanding                  6,617,000           6,781,000

         The unaudited pro forma results do not purport to be indicative of the
         results of operations which actually would have resulted had the
         acquisition occurred on January 1, 1998 or of future results of
         operations of the consolidated entities.

G.       In April 1999, the Company's Board of Directors authorized the
         repurchase of up to 500,000 shares of its common stock, representing
         approximately 7.6% of the then outstanding common stock, over a period
         of 12 months. Repurchases have been and will be made in accordance with
         Exchange Act Rule 10b-18, and will be subject to the availability of
         stock, trading price, market conditions and the Company's financial
         performance. The repurchased shares will be canceled and returned to
         the Company's authorized capital stock. As of May 11, 1999, the Company
         had repurchased an aggregate of 72,600 shares at a prices ranging from
         $1.63 to $1.88 per share.


<PAGE>

H.       In April 1999, the Company made a purchase of 225,000 shares of
         Harmony's common stock at a price of $1.03 per share including
         commissions. This purchase increased the Company's ownership in Harmony
         to approximately 52.1%. For reporting purposes, the Company will
         prepare consolidated financial statements under the purchase method of
         accounting for the acquisition of a majority interest in a subsidiary.

Note 3            Investment in Harmony

         With the purchase of 225,000 shares of Harmony's common stock (see Note
         2H), the Company holds a majority interest in Harmony through the
         ownership of 3,907,962 shares of Harmony's common stock. As of May 11,
         1999, the Company's investment represented 52.1% of Harmony's
         outstanding common stock. Harmony's most recent fiscal year end was
         June 30, 1998. Harmony's operations are summarized as follows for the
         quarter and nine months ended March 31, 1999:

                                               *Three Months     Nine Months
                                               Ended 3/31/99     Ended 3/31/99
                                               -------------     -------------

                  Contract revenues            $16,274,699       $47,658,983
                  Cost of production            13,889,304        40,718,058
                                                ----------        ----------

                  Gross profit                   2,385,395         6,940,925
                  Operating expenses             3,686,348         9,860,923
                  Restructuring cost &
                     impairment of assets         (175,000)        3,357,495

                  Loss from
                     operations                 (1,125,953)       (6,277,493)
                  Interest expense                 (79,089)         (266,374)
                                               -----------       ------------

                  Loss before
                     income taxes               (1,205,042)       (6,543,867)
                  Income taxes                          -              9,601
                                               -----------       ------------

                  Net loss                     $(1,205,042)      $(6,553,468)
                                               -----------       ------------

                  * Harmony shut down its Harmony Pictures division during the
                  quarter ended December 31, 1998, resulting in a one-time
                  restructuring cost of $3,357,495.


         Note 4            Reclassifications

         Certain amounts in the 1998 financial statements have been reclassified
         to conform with the 1999 presentation. These reclassifications have no
         effect on the accumulated deficit or net income or loss previously
         reported.


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

                  This discussion and analysis contains certain forward-looking
         terminology such as "believes," "expects," "anticipates," and
         "intends," or comparable terminology. Such statements are subject to
         certain risks and uncertainties that could cause actual results to
         differ materially from those projected. Potential purchasers of the
         Company's securities are cautioned not to place undue reliance on such
         forward-looking


<PAGE>

         statements which are qualified in their entirety by the cautions and
         risks described herein.

         General

                  The Company currently engages in the television commercial
         production and related media business. During 1998, the Company focused
         on the sale of the radio stations it had acquired pursuant to its
         former business strategy. The last of such were sold on January 14,
         1999. In exchange for its radio stations, the Company obtained
         approximately $55.0 million in cash and a note receivable for $15
         million, yielding 10% per annum, due April 2000. The Company intends to
         reposition itself through additional acquisitions in the television
         commercial production industry. The Company believes that the expanded
         number of television channels, advances in digital technology and the
         demand for effective advertising concepts and efficient delivery of
         production services create potential opportunities for the Company in
         television commercial production.

                  Since July 1997, the Company has utilized its resources to
         increase its ownership interest in Harmony to 52.1%. Harmony produces
         television commercials, music videos and related media. In July 1998
         and February 1999, the Company incorporated two new subsidiaries;
         Populuxe Pictures, Inc. ("Populuxe"), and Buffalo Rome. Populuxe is
         based in New York and currently is comprised of two directors along
         with an executive staff. Populuxe produces television commercials and
         related media. Buffalo Rome will seek out independent film
         opportunities and is currently engaged in discussions regarding an
         independent film. In January 1999, the Company acquired a 33.3% equity
         interest in the screenplay, production of, and any other material
         relating to the film "True Rights"(see Note 2D). In March 1999, the
         Company acquired the stock of Chelsea, which is based in New York and
         engages in the production of television commercials, independent films
         and related media.

         Results of Operations:

                  Three Months ended March 31, 1999 compared to Three Months
         ended March 31, 1998.

                  The Company's total revenues increased $395,000 or 47% from
         $836,000 in first quarter of 1998 to $1,231,000 in the first quarter of
         1999. During in the first quarter of 1999, Chelsea and Populuxe, two of
         the Company's new production companies, provided $1,144,000 of this
         revenue while the remaining revenues were related to the broadcasting
         entities the Company held until mid-January 1999. Populuxe is a
         start-up company which is building a new base of talent and directors
         with which to produce revenues. Management believes that revenues will
         increase over time as this base becomes fully developed. The Company
         began operating Chelsea in March 1999. Chelsea currently has a base of
         talent and directors from which to draw, but intends to continue to
         build that base to increase revenues.

                  Cost of production is directly related to revenues and
         includes all direct costs incurred in connection with the production of
         television commercials including film, crews, location fees and
         commercial directors' fees. Cost of production as a percentage of
         production contract revenues was 84% at the production companies during
         the first quarter of 1999. Management believes the cost of production
         as a percentage of revenues will


<PAGE>

         decrease as the production companies retain more directors and these
         directors become more established.

                  Selling expenses at Populuxe and Chelsea consist of sales
         commissions, advertising and promotional expenses, travel and other
         expenses incurred in the securing of television commercial contracts.
         These expenses were $37,000 during the first quarter of 1999.

                  General and administrative expenses at the Populuxe and
         Chelsea consist of overhead costs such as office rent and expenses,
         executive, general and administrative payroll, and related items. These
         expenses were $263,000 during the first quarter of 1999.

                  Expenses related to the Company's broadcasting entities held
         until mid-January 1999 were $180,000. These expenses decreased
         $1,105,000 from $1,285,000 in the first quarter of 1998. These expenses
         decreased as the radio stations were sold and the network discontinued
         producing programming.

                  Corporate charges were $540,000 in the first quarter of 1999
         compared to $1,208,000 in the first quarter of 1998, representing a
         decrease of 55%. This decrease is attributable in part to a decrease of
         $76,000 in legal, accounting, and outside service fees which were
         elevated in the first quarter if 1998 due to the activity related to
         the sale of the radio stations. Additionally, there was a decrease in
         litigation expenses of $619,000 as the trial against ABC/Disney was
         concluded in the last quarter of 1998. A less costly appeals process
         continues at this time.

                  Depreciation and amortization decreased $444,000 in the first
         quarter of 1999 compared to the first quarter of 1998. The decrease in
         depreciation and amortization is a result of the Company's sale of its
         radio stations.

                  A net gain of $16,546,000 was realized in the first quarter of
         1999 from the sale of three of the Company's radio stations to Radio
         Unica.

                  For the period ended March 31, 1999, the equity loss in
         Harmony totaled $1,931,000. This amount includes amortization of
         $206,000, the Company's prorata share of Harmony's losses of $847,000,
         and losses of $878,000 attributed to the minority ownership interest,
         which are in excess of the minority ownership's prorata share of
         Harmony's equity capital. In the event that Harmony reports net income
         in the future, the Company will recognize income in excess of its
         prorata share until such time as the cumulative amount of losses
         recognized that are attributed to the minority ownership are fully
         offset.

                  Net interest expense for the first quarter of 1999 was
         $503,000, a decrease of $500,000 compared to the same period in 1998,
         as a result of the payoff of the Foothill debt and all but $981,000 of
         the Company's other debt in January 1999. Interest expense was offset
         primarily by the $375,000 interest earned from the $15.0 million note
         receivable due from CRN in April 2000.

                  A tax provision of $3,100,000 was recorded in the first
         quarter of 1999. This represents approximately $700,000 of federal
         income tax and $2,400,000 of state taxes estimated to be due as a
         result of the sale of the radio stations.


<PAGE>

                  Net income of $10,154,000 was realized in the first quarter of
         1999 compared to a net loss of $3,679,000 in the first quarter of 1998.
         This increase of $13,833,000 is due primarily to the sale of the radio
         stations and the reduction of operating losses.

         Liquidity and Capital Resources

                  The Company's liquidity, as measured by its working capital,
         was $1,484,000 at March 31, 1999 compared to a deficit of $5,507,000 at
         December 31, 1998. This increase in working capital is due to the sale
         of three radio stations to Radio Unica and the payoff of related debt.

                  In January 1999, the Company closed on the sale of the radio
         broadcast licenses and certain other assets of its radio stations
         KAHZ(AM), Dallas, KIDR(AM), Phoenix, and WJDM(AM), New York, to Radio
         Unica. The Company received gross proceeds of $29.25 million for the
         stations' assets which had a net book value of approximately $11.4
         million at the time of the sale. The Company recognized approximately
         $1.5 million in transaction costs including bonuses paid to management,
         employees and Media Management, LLC, recorded a tax provision of $3.1
         million, and paid off all but $981,000 of its remaining debt.

                  Utilizing the proceeds from the Radio Unica transaction, the
         Company redeemed 606,061 shares of Series B Convertible Preferred Stock
         which were issued in June 1998. An aggregate of $2.45 million was used
         to redeem this stock at $4.04 per share.

                  In January and February 1999, the Company advanced Harmony
         $2,375,000 in cash pursuant to unsecured note receivable agreements
         which are due on demand and bear an interest rate of 14% annually (see
         Note 2A). As of May 11, 1999, the Company had note receivable
         agreements with Harmony totaling $3.05 million. In April 1999, the
         Company purchased 225,000 shares of Harmony's common stock for
         $231,750. This purchase increased the Company's ownership in Harmony to
         52.1% (see Note 2H and Note 3).

                  In March 1999, the Company acquired all of the issued and
         outstanding common stock of Chelsea for consideration totaling
         approximately $1,135,000, representing 125,000 shares of common stock
         with a value of $250,000 and the assumption of approximately $885,000
         liabilities net of assets. Additional consideration for the transaction
         may consist of issuance of up to an aggregate of 75,000 additional
         shares of the Company's common stock. Any future issuance is dependent
         on Chelsea meeting certain performance goals, and the value of shares
         issued will be treated as an adjustment to the purchase price at the
         time of issuance. Of the assumed liabilities, the Company placed
         $605,000 in an escrow account to be used to pay the directors working
         on jobs in production at the time of the transaction. To date, director
         fees of approximately $332,000 have been paid from that escrow account
         leaving a balance of approximately $273,000 in the account.

                  In April 1999, the Company's Board of Directors authorized the
         repurchase of up to 500,000 additional shares of its common stock. As
         of May 11, 1999, the Company has repurchased an aggregate of 72,600
         shares of common stock at prices ranging from $1.63 to $1.88 per share
         (see Note 2G).

                  The Company intends, either directly or through Harmony, to
         further expand its television commercial production business and
         holdings through acquisitions of commercial production companies


<PAGE>

         in an effort to increase its commercial production director pool. The
         Company believes that it can substantially increase gross revenues, and
         ultimately profits, through the acquisition of private production
         companies. The Company intends to build on Harmony's expertise and
         established reputation for quality to consolidate additional commercial
         production companies, enabling the resulting entity to realize benefits
         from economies of scale, centralization of accounting, marketing and
         sales functions, and the ability to receive more competitive rates from
         support service providers.

                  The Company believes it has adequate capital to initiate this
         new acquisition strategy and business plan over the course of the next
         12 months. The Company believes that a number of potential acquisitions
         similar in nature to its most recent acquisition exist. However, should
         a potential acquisition be greater than the Company's current cash
         sources, the Company may need to obtain additional financing. If the
         Company is not able to obtain adequate financing, or financing on
         acceptable terms, it could possibly cause a delay in the implementation
         of its full business plan until such time it is able to collect on its
         $15.0 million note receivable due from CRN in April 2000. If for any
         reason there is a delay in collecting on the CRN note, the Company may
         be forced to slow the pace of or discontinue its future acquisitions or
         other projects. In the interim, the Company has begun to execute the
         initial phase of its business plan to acquire production companies
         through the acquisition of Chelsea in March 1999. There can be no
         assurance that the Company will consummate any additional acquisition
         or that any acquisition, if consummated, will ultimately be
         advantageous or profitable for the Company.

                  Consolidated cash was $5,709,000 at March 31, 1999 and
         $254,000 at December 31, 1998, a increase of $5,455,000.

                  Cash used in operating activities during the three months
         ended March 31, 1999 was $3,591,000 and the operating cash flows
         reflected are net of account increases occurring as a result of
         acquisitions. Accounts receivable at March 31, 1999 increased $49,000
         from December 31, 1998, other receivables at March 31, 1999 increased
         $265,000, and prepaid expenses at March 31, 1999 increased $194,000
         from December 31, 1998. Accounts payable At March 31, 1999 decreased
         $1,935,000 from December 31, 1998, accrued interest at March 31, 1999
         decreased $8,000, and other accrued expenses at March 31, 1999
         increased $2,382,000 from December 31, 1998.

                  During the three months ended March 31, 1999, net cash
         obtained through investing activities was $11,520,000 and was provided
         primarily by the sale of the radio stations to Radio Unica net of
         proceed utilized for the direct payment of outstanding debt. As of
         March 31, 1999, advances made to Harmony under note receivable
         agreements were $2,440,000. Proceeds from the sale of radio stations
         totaled $14,034,000, net of advance payments received prior to December
         31, 1998.

                  Cash used in financing activities amounted to $2,473,000
         during the three months ended March 31, 1999. This represents the
         redemption of the convertible preferred stock for $2,450,000 and the
         cash used to repay debt.

         Year 2000 Readiness Disclosure


<PAGE>

                  The term "Year 2000" is used to describe general problems that
         may result from improper processing of dates and date-sensitive
         calculations by computers or other machinery as the year 2000 is
         approached and reached. This problem stems from the fact that many of
         the world's computer hardware and software applications have
         historically used only the last two digits to refer to a year. As a
         result, many of these computer programs do not or will not properly
         recognize a year that begins with "20" instead of the familiar "19". If
         not corrected, this could result in a system failure or miscalculations
         which may cause disruptions in operations, including among other
         things, a temporary inability to process transactions, send invoices,
         or engage in similar business activities.

         State of Readiness

                  To operate its business, the Company relies on certain
         information technology ("IT") and non-technology systems, including its
         payroll, accounts payable, banking and general ledger systems. The
         Company does not maintain any proprietary IT systems and has not made
         any modifications to any of the IT systems provided to it by outside
         vendors. The Company has hired an outside IT consultant to assess the
         readiness of its hardware and software. This assessment has been
         completed and it is anticipated that any remediation needed to bring
         our systems into compliance, including the replacement of the Company's
         voice-mail system, will be completed by July 31, 1999.

                  The Company also relies upon certain suppliers and service
         providers, over which it can assert little control. The Company is in
         the process of contacting critical suppliers and service providers to
         assess the readiness of such parties and to determine the extent to
         which the Company may be vulnerable to such parties' failure to resolve
         their own Year 2000 issues. This effort is expected to be completed by
         July 31, 1999.

         Costs to Address Year 2000 Issues

                  The Company anticipates that it may incur up to approximately
         $40,000 in costs to bring the internal telecommunications system into
         Year 2000 compliance. Based on the results of the Company's assessment,
         the Company believes that any future expenses that may be incurred,
         will not have a material adverse effect on the Company's business,
         operating results or financial condition.

         Risks of Year 2000 Issues

                  The Company recognizes that Year 2000 issues constitute a
         material known uncertainty. The Company also recognizes the importance
         of ensuring that Year 2000 issues will not adversely affect its
         operations. The Company believes that the processes described above
         will be effective to manage the risks associated with the problem.
         However, there can be no assurance that the processes can be completed
         on the timetable described above or that remediation will be fully
         effective. The failure to identify and remediate Year 2000 issues, or
         the failure of key vendors, suppliers and service providers or other
         critical third parties who do business with the Company to timely
         remediate their Year 2000 issues could cause an interruption in the
         business operations of the Company. At this time, however, the Company
         does not possess information necessary to estimate the overall
         potential financial impact of Year 2000 compliance issues.



<PAGE>

         Seasonality and Inflation

                  In the past, the Company's revenues generally followed retail
         sales trends, with the fall season, September through December,
         reflecting the highest revenues for the year, due primarily to
         back-to-school and holiday season retail advertising, and the first
         quarter reflecting the lowest revenues for the year. Presently, the
         Company has not determined the impact of seasonality on its future
         revenues. The Company does not believe inflation has affected the
         results of its operations, and does not anticipate that inflation will
         have an impact on its future operations.


<PAGE>



                                   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 hereunto duly authorized on October 8, 1999.

                                             INTELEFILM CORPORATION


                                    BY:      /s/ James G. Gilbertson
                                             ----------------------------------
                                             James G. Gilbertson
                                    ITS:     Chief Operation Officer and
                                             Chief Financial Officer