<PAGE>

================================================================================


                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

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

                                    FORM 10-Q

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE EXCHANGE ACT

                         COMMISSION FILE NUMBER 0-21534

                             iNTELEFILM CORPORATION
             (Exact Name of Registrant as Specified in Its Charter)


           MINNESOTA                                      41-1663712
  (State or Other Jurisdiction                        (I.R.S. Employer
of Incorporation or Organization)                    Identification No.)

                           CROSSTOWN CORPORATE CENTER
                       6385 OLD SHADY OAK ROAD - SUITE 290
                          EDEN PRAIRIE, MINNESOTA 55344
                                 (952) 925-8840

        (Address of Principal Executive Offices, including Zip Code, and
               Registrant's Telephone Number, including Area Code)

         Indicate by check whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 November 12, 2001, the issuer had outstanding 6,832,646 shares of
common stock.

================================================================================







<PAGE>

<TABLE>
<CAPTION>
                                                                                                               PAGE
                                                                                                               ----
<S>       <C>                                                                                                  <C>
PART I    FINANCIAL INFORMATION..................................................................................1

          Item 1  Financial Statements...........................................................................1
          Item 2  Management's Discussion and Analysis of Financial Condition and
                  Results of Operations..........................................................................9
          Item 3  Quantitative and Qualitative Disclosures About Market Risk....................................14

PART II   OTHER INFORMATION.....................................................................................14

          Item 1  Legal Proceedings.............................................................................14
          Item 2  Changes in Securities and Use of Proceeds.....................................................15
          Item 3  Defaults upon Senior Securities...............................................................15
          Item 4  Submission of Matters to a Vote of Security Holders...........................................15
          Item 5  Other Information.............................................................................15
          Item 6  Exhibits and Reports on Form 8-K..............................................................15

SIGNATURES......................................................................................................16

EXHIBIT INDEX...................................................................................................17
</TABLE>


                                       i




<PAGE>




                                     PART I

ITEM 1 Financial Statements

                             iNTELEFILM CORPORATION
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                               September 30,       December 31,
                                                                    2001              2000
                                                                (Unaudited)         (Audited)
                                                                ------------       ------------
<S>                                                            <C>                <C>
                                     ASSETS
Current assets:
     Cash and cash equivalents                                  $    773,380       $  3,099,496
     Accounts receivable, net of allowance for doubtful
        accounts of $1,000 and $27,600, respectively               3,190,753          7,127,026
     Unbilled accounts receivable                                    469,019          1,122,888
     Accounts receivable - affiliates net allowance of
        $324,835 and $324,835, respectively                          141,981             82,448
     Other accounts receivable                                       981,013            590,956
     Prepaid expenses                                              1,103,100          1,138,738
     Other current assets                                            909,770            676,294
                                                                ------------       ------------
           Total current assets                                    7,569,016         13,837,846
                                                                ------------       ------------
Property and equipment, net                                        2,606,902          3,373,844
Intangible assets, net                                             5,197,508          7,014,358
Other assets                                                              --            471,862
                                                                ------------       ------------
           Total assets                                         $ 15,373,426       $ 24,697,910
                                                                ============       ============

                      LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
     Accounts payable                                           $  4,202,712       $  4,921,347
     Accounts payable - affiliates                                        --             30,000
     Accrued income taxes                                             30,000             30,000
     Deferred revenue                                              1,882,442          2,938,268
     Other accrued expenses                                        5,083,266          4,664,376
     Line of credit                                                  481,157            198,847
     Short-term debt                                                      --          1,087,731
     Long-term debt - current maturities                             157,717            115,134
                                                                ------------       ------------
           Total current liabilities                              11,837,294         13,985,703
                                                                ------------       ------------
Long-term debt, less current maturities                              420,223            610,332
                                                                ------------       ------------
           Total liabilities                                      12,257,517         14,596,035
                                                                ------------       ------------
Commitments and Contingencies                                             --                 --
Minority interest                                                  1,322,484          1,002,580
                                                                ------------       ------------
Shareholders' equity:
     Common stock                                                    136,652            130,227
     Additional paid-in capital                                   46,948,125         46,223,361
     Accumulated deficit                                         (45,242,602)       (36,897,418)
     Stock subscriptions receivable                                  (48,750)          (356,875)
                                                                ------------       ------------
     Total shareholders' equity                                    1,793,425          9,099,295
                                                                ------------       ------------
           Total liabilities and shareholders' equity           $ 15,373,426       $ 24,697,910
                                                                ============       ============
</TABLE>

        See accompanying notes to the consolidated financial statements.


                                       2

<PAGE>


                             iNTELEFILM CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                         Three Months Ended                Nine Months Ended
                                                            September 30,                    September 30,
                                                 ---------------------------------    -------------------------------
                                                      2001                2000             2001             2000
                                                 ---------------   ---------------    -------------   ---------------
<S>                                              <C>               <C>                <C>             <C>
Contract revenues                                $     8,716,020   $    14,012,221    $  31,695,953   $    51,188,954
Costs and expenses:
     Cost of production                                7,148,648        11,865,234       26,124,191        42,730,649
Selling, general and administrative
     (exclusive of all items shown below)              2,073,987         3,125,644        7,341,690         9,219,723
     Corporate                                         1,180,702           906,895        2,733,639         3,263,830
     Stock option compensation                           150,001            84,952          319,904           310,697
     Depreciation and amortization                       643,613           557,567        2,061,574         1,597,866
     Restructuring charges                                    --                --        1,202,006                --
                                                 ---------------   ---------------    -------------   ---------------
Loss from operations                                  (2,480,931)       (2,528,071)      (8,087,051)       (5,933,811)
Loss on sale of subsidiary stock and assets                   --           (18,078)              --           (18,078)
Other income (expenses) - net                             11,646                             53,810
Minority interest                                             --                --          160,000                --
Interest income (expense) - net                         (268,425)           23,731         (468,559)          198,501
                                                 ---------------   ---------------    -------------   ---------------
Net loss from operations before income taxes          (2,737,710)       (2,522,418)      (8,341,800)       (5,753,388)
Income tax provision                                       2,488            39,514            3,452            51,358
                                                 ---------------   ---------------    -------------   ---------------
Net loss                                         $    (2,740,198)  $    (2,561,932)   $  (8,345,252)  $    (5,804,746)
                                                 ===============   ===============    =============   ===============
Basic and diluted net loss per share             $         (0.40)  $         (0.40)   $       (1.24)  $         (0.91)
                                                 ===============   ===============    =============   ===============
Weighted average number of shares outstanding          6,794,000         6,484,000        6,712,000         6,412,000
                                                 ===============   ===============    =============   ===============
</TABLE>

        See accompanying notes to the consolidated financial statements.


                                       3

<PAGE>



                             iNTELEFILM CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                         Nine Months Ended
                                                                                           September 30,
                                                                                 -------------------------------
                                                                                     2001                 2000
                                                                                 ------------       ------------
<S>                                                                              <C>                <C>
OPERATING ACTIVITIES:
     Net loss                                                                    $ (8,345,252)      $ (5,804,746)
     Adjustments to reconcile net loss to net cash used in
        Operating activities:
           Loss on sales of subsidiary stock and assets                                    --             18,078
           Provision for doubtful accounts, stock subscriptions
              and director advances                                                   334,725            731,475
           Depreciation and amortization                                            2,061,574          1,597,866
           Stock and stock option expense                                             344,904            310,697
           Minority interest                                                         (160,000)                --
           Decrease (increase) in:
                    Accounts receivable                                             3,909,674          5,853,105
                    Other receivables                                                 204,279         (1,436,373)
                    Prepaid expenses                                                   72,510            335,264
                    Other assets                                                      638,386                 --
           Increase (decrease):
                    Accounts payable                                                 (718,635)        (1,354,887)
                    Accounts payable - affiliates                                     (30,000)                --
                    Deferred income                                                (1,055,826)        (2,399,512)
                    Other accrued expenses                                            334,195         (1,635,011)
                                                                                 ------------       ------------
                        Net cash used in operating activities                      (2,409,466)        (3,784,044)
                                                                                 ------------       ------------
INVESTING ACTIVITIES:
     Purchase of property and equipment                                              (382,756)        (1,194,601)
     Other capital expenses                                                          (258,678)          (891,353)
                                                                                 ------------       ------------
                        Net cash used in investing activities                        (641,434)        (2,085,954)
                                                                                 ------------       ------------

FINANCING ACTIVITIES:
     Increase (decrease) in line of credit                                            282,310         (3,154,174)
     Repayment of debt                                                               (147,526)        (1,776,270)
     Proceeds from debt financings                                                         --            221,454
     Repurchase of common stock                                                            --            (32,223)
     Proceeds from issuance of subsidiary common stock                                590,000                 --
     Proceeds from issuance of common stock                                                --            306,953
                                                                                 ------------       ------------
                        Net cash provided by (used in) financing activities           724,784         (4,434,260)
                                                                                 ------------       ------------

Decrease in cash and cash equivalents                                              (2,326,116)       (10,304,258)
Cash and cash equivalents at beginning of year                                      3,099,496         15,986,385
                                                                                 ------------       ------------
Cash and cash equivalents at end of period                                       $    773,380       $  5,682,127
                                                                                 ============       ============
</TABLE>

        See accompanying notes to the consolidated financial statements.


                                        4

<PAGE>


iNTELEFILM Corporation
Condensed Notes to Consolidated Financial Statements (unaudited)
September 30, 2001

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-Q and Rule 10-01 of
Regulation S-K. Accordingly, they do not include all of 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) considered necessary for a fair presentation have
been included. Operating results for the nine-month period ended September 30,
2001, are not necessarily indicative of the results that may be expected for the
year ended December 31, 2001. 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, 2000.

         The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern; however, recurring losses,
negative working capital and negative cash flow from operations raise concerns
as to the Company's ability to continue as a going concern. As a result, the
Company's independent certified public accountants included an explanatory
paragraph in their opinion provided with the Company's December 31, 2000
Consolidated Financial Statements wherein they expressed substantial doubt about
the Company's ability to continue as a going concern.

NOTE 2   BUSINESS SEGMENTS

         The Company classifies its operations into two major business segments:
television commercial production and the operations of WebADTV. The television
commercial production operations consist of the Company's production companies:
Curious Pictures, Chelsea Pictures, and DCode. WebADTV is a vertical market
software company the applications of which are designed to protect and leverage
media assets online. The Company evaluates performance of its segments based on
several measurements. The primary financial measure used by the Company is
production service income, which is defined as earnings before interest, taxes,
stock-based compensation, corporate overhead, depreciation, and amortization.
Production service income measures the contribution margin generated by each of
its segments. The accounting policies of the segments are the same as those
described in Note 1.

<TABLE>
<CAPTION>
                                        Nine months ended September 30, 2001 (in thousands)
                         --------------------------------------------------------------------------
                         Television
                         Commercial
                         Production                WebADTV              Corporate       iNTELEFILM
                         -----------            -------------        ------------       -----------
<S>                      <C>                    <C>                  <C>                <C>
Revenues
 from external
 sources                 $    31,484            $         193        $         19       $    31,696
Inter-segment
 revenues                         --                       --                  --                --
Production
 service
 (loss)                  $      (555)           $      (1,161)       $     (2,636)      $    (4,352)
Stock option
 compensation                    320                       --                  --               320
Depreciation and
 amortization                  1,505                      453                 104             2,062
Restructuring costs
 and impaired assets           1,202                       --                  --             1,202
</TABLE>


                                       5

<PAGE>


<TABLE>
<CAPTION>
                                      Nine months ended September 30, 2001 (in thousands)
                         ---------------------------------------------------------------------------
                         Television
                         Commercial
                         Production                WebADTV              Corporate       iNTELEFILM
                         -----------            -------------        ------------       -----------
<S>                      <C>                    <C>                  <C>                <C>
Loss from
 operations                  (2,753)                 (1,614)            (3,720)               (8,087)
Additions to long-
 lived assets                   354                      22                  6                   382
Total assets             $    7,715               $   1,329           $  6,329            $   15,373
</TABLE>


NOTE 3: EXCHANGE OFFER

         Prior to December 31, 2000, the Company commenced an exchange offer to
the shareholders of Harmony Holdings, Inc. ("Harmony") to acquire all of the
remaining outstanding shares of Harmony's common stock in exchange for shares of
the Company's common stock. This exchange offer was completed as of March 2,
2001. The Company exchanged 193,315 shares of its common stock for 2,658,081
shares of Harmony's common stock, thereby owning 90.4% of Harmony. Based on its
stock price of $1.13 per share on March 2, 2001 and $206,271 in transaction
costs, the Company recognized $423,750 of goodwill. On May 10, 2001, the Company
completed the Harmony acquisition by merging Harmony with a wholly owned
subsidiary of iNTELEFILM. In connection with the merger, the Company exchanged
51,565 shares of its common stock for the 709,017 shares of Harmony that
remained outstanding. In addition, the Company incurred approximately $57,000 in
transactions costs and recognized $115,157 of goodwill.

NOTE 4:  FUNDING FOR WebADTV

         In February and March 2001, a Company subsidiary, WebADTV, raised
$590,000 through the issuance of 5,900,000 shares of WebADTV common stock and
warrants to purchase 5,900,000 shares of WebADTV common stock at $0.10 per
share. As of September 30, 2001, approximately 68% of the outstanding shares of
common stock of WebADTV were held by the Company and approximately 32% of the
outstanding shares of WebADTV common stock had been issued directly to third
parties, employees, directors, and consultants pursuant to stock option plans,
equity financing, and purchase agreements. WebADTV has reserved an aggregate of
10,000,000 shares of its common stock under its two stock option plans. As of
September 30, 2001, 2,881,000 of the 4,550,500 options granted under the plans
had been exercised. If all options and warrants outstanding as of September 30,
2001 were exercised, the Company's ownership in WebADTV would be reduced to
approximately 55%.

         Throughout 2000 and during January 2001, the Company funded the
operations of WebADTV. Effective January 31, 2001, the Company's board of
directors agreed to convert the amount due from the WebADTV to contributed
capital concurrent with the February and March 2001 equity financing.
Accordingly, in February 2001, WebADTV's debt was converted and the Company's
investment in WebADTV increased by $2,605,000. In April 2001, the Company
advanced to WebADTV an additional $60,000 in exchange for 600,000 shares of
WebADTV's common stock and warrants to purchase an additional 600,000 shares for
$0.10 per share. In May through September 2001, the Company advanced to WebADTV
an aggregate of $497,000. These advances, if unpaid for a period of greater than
30 days, convert to demand notes payable with interest at 12% and secured by
WebADTV's assets. As of September 30, 2001, $450,000 of such advances had been
converted to notes payable. In connection with these advances, the Company also
received a warrant to purchase 497,000 shares of WebADTV's common stock at a
price equal to that of WebADTV's next equity financing. These amounts are
eliminated in the consolidated financial statements.

NOTE 5:  DISCONTINUATION OF HARMONY'S SUBSIDIARY, THE END:

         In February 2001, the operations of Harmony's subsidiary, The End, Inc.
("The End") were discontinued. The End consisted of The Beginning, Inc., The
Moment, Inc., Serial Dreamer, Inc., Gigantic Entertainment, Inc., and Unscented,
Inc. and had locations in Los Angeles and New York. The Company accrued closing
costs totaling $1,202,006. These costs consist of the following: continuing
contractual obligations of $735,000 and estimated office, legal, non-refundable
prepayments and other administrative costs of the closure of $467,006. As of
September 30, 2001, approximately, $200,000 of the continuing contractual
obligations and $334,955 of other closing costs had been incurred with no
adjustment necessary to the accrual. At September 30, 2001, $661,446 remained
accrued. In March 2001, the Company was released from all obligations associated
with the lease of The End's New York facility in exchange for the forfeiture of
a portion of the security deposit. In addition to the


                                       6

<PAGE>


restructure charge recognized in the first quarter of 2001, the Company also
recognized a long-lived asset impairment charge of $895,500 related to The End
in the last quarter of 2000. This charge included $150,000 for goodwill,
$614,000 for property and equipment and $131,500 for lease deposits. Based upon
the present value of future cash flows the fair value of assets was reduced to
$0. The End accounted for revenues of $0 and $1,680,000 and operating losses of
$0 and $761,000 for the quarters ended September 30, 2001 and 2000,
respectively. The End accounted for revenues of $531,000 and $15,853,000 and
operating losses of $1,591,000 and $1,512,000 for the nine months ended
September 30, 2001 and 2000, respectively.

         In October 2001, the Company reached an agreement with the landlord of
The End's Los Angeles facility under which the landlord released the Company
from all obligations associated with the lease in exchange for a note payable in
the amount of $300,000 and warrants to purchase 250,000 shares of the Company's
common stock. The warrants have exercise prices as follows: 150,000 of the
warrants are exercisable at a price of $2.00 per share and the note payable may
be used as payment of the exercise price; 100,000 of the warrants are
exercisable at a price of $0.25 per share. The warrants expire in October 2006.

NOTE 6:  LINE OF CREDIT FORBEARANCE AGREEMENT

         The Company has failed to comply with certain financial covenants
relating to minimum net tangible worth, maximum operating losses, and certain
reporting requirements under its loan and security agreement with its senior
lender, General Electric Capital Corporation ("GE Capital"). On June 19, 2001,
GE Capital agreed to forbear from exercising its rights and remedies under the
loan and security agreement related to these defaults until September 30, 2001.
In connection with this forbearance agreement, the Company agreed to a 2%
prepayment fee through July 2002. This fee had previously been 1% for the period
August 2001 to July 2002. In October 2001, the Company repaid the line of credit
in full and has accrued the prepayment penalty of $140,000 and wrote-off
unamortized capitalized loan costs of $70,000 as interest expense in the quarter
ended September 30, 2001.

NOTE 7:  CHELSEA PICTURES OPERATING AGREEMENT AND EMPLOYMENT CONTRACT AMENDMENT

         On June 20, 2001, the Company entered into an operating agreement and
employment contract amendment with members of the management of Chelsea
Pictures. Under the agreement and in exchange for concessions on existing
employment contract provisions, management of Chelsea Pictures received an
option to purchase 20% of the issued and outstanding common stock of Chelsea
Pictures. Such stock options vest as follows: 10% upon Chelsea reaching $300,000
of EBITDA for the period from July 1, 2001 to June 30, 2002; 10% upon Chelsea
reaching $500,000 of EBITDA for the period from July 1, 2002 to June 30, 2003.
In the event that no vesting occurs in the period July 1, 2001 to June 30, 2002,
full vesting may still occur if Chelsea reaches $800,000 of EBITDA for the
period July, 1, 2002 to June 30, 2003. The stock options have an exercise price
of $1.00 for each 1% purchased. Upon vesting, management of Chelsea Pictures may
exchange the options to purchase Chelsea Pictures common stock for warrants to
purchase up to 270,000 shares of the Company's common stock. Such warrants will
have an exercise price of $.01 per share and expire in five years from the grant
date. Further, once vested, management may require Chelsea Pictures to
repurchase such stock options beginning July 2003 at a valuation of Chelsea
Pictures of three times the prior two year average EBITDA. The Company will
recognize stock option compensation for the agreement under the variable method
of accounting based on the estimated fair market value of the stock option put.
The Company has recognized $20,000 of such compensation in the quarter ended
September 30, 2001.

NOTE 8:  RESCISSION OF COSMIC INVENTIONS ACQUISITION

         In May 2001, the sellers of Cosmic Inventions ("Cosmic") notified the
Company of its default of the payment provisions of the seller note payable
entered into in connection with the Company's acquisition of Cosmic. Under the
note payable agreement, the seller's only remedy of the default was to affect a
rescission of the acquisition transaction, which occurred effective April 30,
2001. Under the terms of the rescission, WebADTV returned 100% of the acquired
Cosmic membership interests and the sellers cancelled the $650,000 note payable
and returned 560,000 of 660,000 shares of WebADTV common stock issued in the
acquisition transaction. Cosmic's results from operations were not material to
the Company's ongoing results from operations.


                                       7

<PAGE>


NOTE 9:  CANCELLATION OF THE SEVERANCE POLICY

On April 23, 2001, the Board of Directors accepted director Mr. Richard W.
Perkins' request that he receive no compensation under the Severance Policy
dated January 2000 and effective April 1999. In September 2001, the Company
entered into an agreement with its former CEO, Christopher T. Dahl, providing
for the cancellation of Mr. Dahl's rights under the Serverance Policy,
the terms of which are set forth in Note 11 below.

NOTE 10:  BRIDGE NOTES PAYABLE

In October 2001, the Company closed on $1,530,000 of bridge notes payable with
warrants to purchase 300,000 shares of the Company's common stock. The bridge
notes payable carry an interest rate of 12% payable quarterly and were sold at a
discount of 98% of face value resulting in proceeds of $1,500,000. The notes are
due upon the earlier of i) 18 months, ii) the sale of Curious Pictures, or iii)
an award or settlement of the ABC/Disney lawsuit. The notes payable carry an
additional lending fee payable when the notes become due equal to 4% of the face
value if repaid in the first six months, 8% if repaid in months 7-12, 12% if
repaid in months 13-18. The notes are secured by the assets of Chelsea and
Curious Pictures and are subordinated to any existing or future senior debt
holder. The warrants carry an exercise price of $1.00 and expire in October
2006. The Company utilized the proceeds for working capital purposes and
financing WebADTV. The WebADTV financing was facilitated by the Company's
purchase of 6,666,667 shares of WebADTV common stock and warrants to purchase
6,666,667 shares of WebADTV common stock for $1,000,000 thereby increasing the
Company's ownership of WebADTV to 73.9% and 54.0% on a primary and fully diluted
basis, respectively.

NOTE 11:  EMPLOYMENT, CONSULTING AND SEVERANCE AGREEMENTS

         In September 2001 the Company and its former Chief Executive Officer
reached an employment agreement whereby the former CEO will continue as an
employee of the Company for three years. Under the agreement and as compensation
for ongoing responsibilities concerning the production companies and the
ABC/Disney litigation, the former CEO will receive a salary of $175,000 per
annum and shall be reimbursed for administrative, travel and office expenses up
to an additional $50,000 per annum for a maximum of three years. The Company
also agreed to pay the former CEO a portion of an award, if any, from the
ABC/Disney lawsuit, equal to 2.75% of the award net of all litigation and tax
expenses. As further consideration for the former CEO's release of the Company's
obligation to pay approximately $1.5 million in accordance with the terms of the
Severance Policy effective April 1999, the Company agreed to forgive stock
subscription receivables and the related interest totaling $386,621.

         In October 2001, the Company hired a new CEO and President. In
accordance with the terms of the employment agreement, the CEO received
non-qualified options to purchase 1,000,000 shares of the Company's common stock
for $0.85 per share. These options vest over three years and expire in September
2011. The new CEO and President also received 1,500,000 incentive stock options
and 11,489,333 non-qualified stock options to purchase shares of WebADTV for
$0.10 per share. These options vest over three years and expire in September
2011.

         In October 2001, the Company entered into a consulting agreement with a
former officer of the Company in connection with the ABC/Disney litigation.
According to the terms of the consulting agreement, the officer received options
to purchase 93,192 shares of the Company's common stock for $1.00 per share. The
options vested immediately and expire in August 2004. Further, the Company
agreed to pay the officer a portion of an award, if any, from the ABC/Disney
lawsuit equal to a 1.5% of an award, if any, net of all litigation and tax
expenses.

NOTE 12:  AMENDMENT TO SOFTWARE LICENSE AGREEMENT

In October 2001, WebADTV amended its software license agreement with Convera
Technology, Inc. (f/k/a Excalibur Technologies Corporation) ("Convera") that was
originally entered into in July 2000. Under the amendment, payments due under
the original agreement totaling $475,000 were restructured to be payable as
follows: $200,000 upon execution of the amendment, $75,000 in January 2002,
$100,000 in March 2002 and


                                       8

<PAGE>


$100,000 in June 30, 2002. The amendment also terminates the Company's
advertising agency exclusivity which was due to expire in January 2002. The
amended software agreement expires in October 2003 and provides for renewal
beyond this initial term under similar financial terms. To terminate the
agreement, notice of at least one year by either party is required.

NOTE 13:  CHANGE IN ACCOUNTING STANDARDS

         In June 2001, the Financial Accounting Standards Board finalized FASB
Statements No. 141, "Business Combinations" (SFAS 141), and No. 142, "Goodwill
and Other Intangible Assets" (SFAS 142). SFAS 141 requires the use of the
purchase method of accounting and prohibits the use of the pooling-of-interests
method of accounting for business combinations initiated after June 30, 2001.
SFAS 141 also requires that the Company recognize acquired intangible assets
apart from goodwill if the acquired intangible assets meet certain criteria.
SFAS 141 applies to all business combinations initiated after June 30, 2001 and
for purchase business combinations completed on or after July 1, 2001. It also
requires, upon adoption of SFAS 142 that the Company reclassify the carrying
amounts of intangible assets and goodwill based on the criteria in SFAS 141.

         SFAS 142 requires, among other things, that companies no longer
amortize goodwill, but instead test goodwill for impairment at least annually.
In addition, SFAS 142 requires that the Company identify reporting units for the
purposes of assessing potential future impairments of goodwill, reassess the
useful lives of other existing recognized intangible assets, and cease
amortization of intangible assets with an indefinite useful life. An intangible
asset with an indefinite useful life should be tested for impairment in
accordance with the guidance in SFAS 142. SFAS 142 is required to be applied in
fiscal years beginning after December 15, 2001 to all goodwill and other
intangible assets recognized at that date, regardless of when those assets were
initially recognized. SFAS 142 requires the Company to complete a transitional
goodwill impairment test six months from the date of adoption. The Company is
also required to reassess the useful lives of other intangible assets within the
first interim quarter after adoption of SFAS 142.

         As a result of the adoption of SFAS 141 and 142, all future business
combinations will be accounted for under the purchase method, which may result
in the recognition of goodwill and other intangible assets, some of which will
be recognized through operations, either by amortization or impairment charges,
in the future. For purchase business combinations completed prior to September
30, 2001, the net carrying amount of goodwill is $5,198,000. Amortization
expense during the nine-month period ended September 30, 2001 was $1,237,000.
Currently, the Company is assessing but has not yet determined how the adoption
of SFAS 141 and SFAS 142 will impact its financial position and results of
operations.

NOTE 14:  LEGAL PROCEEDINGS

         On August 26, 1997, a former employee of Harmony Pictures, Inc.
("Harmony Pictures") commenced legal action in California against Harmony
Holdings, Inc. ("Harmony") and Harmony Pictures alleging breach of employment
contract. Summary judgment in favor of Harmony and Harmony Pictures was granted
by the trial court and subsequently reversed by the Court of Appeals. A judgment
in the amount of $309,000 was rendered against Harmony and Harmony Pictures at
trial on July 24, 2001. Harmony and Harmony Pictures intend to appeal the
judgment.

         A bank that was a former lender to Harmony filed suit against Harmony
alleging default on a $250,000 guaranteed line of credit on October 20, 1999. On
February 27, 2001, the Los Angeles Superior Court entered final judgment against
Harmony in the amount of $328,208.

         In 1999, the Company filed suit against Oklahoma Sports Properties,
Inc. and Fred Weinberg ("the Defendants") seeking recovery of five promissory
notes, aggregating $495,000, plus interest and attorney costs for a total of
approximately $670,000. The United States District Court for the District of
Minnesota granted summary judgment for the Company. Upon appeal by the
Defendants, in February 2001, the United States Court of Appeals for the Eighth
Circuit affirmed the lower courts decision holding the Defendants liable for the
notes. These promissory notes had previously been written off as un-collectable.


                                       9

<PAGE>



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

         The following discussion contains various forward-looking statements
within the meaning of Section 21E of the Exchange Act. Although the Company
believes that, in making any such statement, its expectations are based on
reasonable assumptions, any such statement may be influenced by factors that
could cause actual outcomes and results to be materially different from those
projected. When used in the following discussion, the words "anticipates,"
"believes," "expects," "intends," "plans," "estimates" and similar expressions,
as they relate to the Company or its management, are intended to identify such
forward-looking statements. These forward-looking statements are subject to
numerous risks and uncertainties that could cause actual results to differ
materially from those anticipated. Factors that could cause actual results to
differ materially from those anticipated, certain of which are beyond its
control, are set forth in the Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 2000, under the caption "Management's Discussion
and Analysis or Plan of Operation -- Cautionary Statement." Accordingly, the
Company cannot be certain that any of the events anticipated by forward-looking
statements will occur or, if any of them do occur, what impact they will have on
it. The Company cautions you to keep in mind the risks described in its
Cautionary Statement and to refrain from attributing undue certainty to any
forward-looking statements, which speak only as of the date of the document in
which they appear.

OVERVIEW

         The Company is an independent source of services for television
commercial production within the entertainment industry, offering extensive
production capability and the exclusive directorial services of certain
established industry talent. Its commercial production strategy is to offer an
end-to-end commercial production solution for advertising agencies, enabling
them to provide the highest level of service to their clients. Historically, the
Company sought expansion opportunities for its television commercial production
service business and holdings through strategic partnerships, financed
acquisitions of rental, editing, designing/marketing, post-production or music
companies, and/or opportunities within its present divisions. In April 2001,
consistent with its efforts to explore all possible strategic alternatives and
in response to an unsolicited offer for the sale of the divisions, the Company
engaged an investment banker to assist in investigating and negotiating the
potential sale of its production subsidiaries, Curious Pictures and Chelsea
Pictures. The investigation led to the determination that Curious Pictures has
greater market value than Chelsea Pictures and accordingly the Company is
currently devoting more of its divestiture efforts on the sale of Curious
Pictures than on the sale of Chelsea Pictures. If the Company is unable to sell
Curious Pictures on acceptable terms, it intends to continue to advance the
business in the industry.

         The Company is concentrating on the growth of its operating subsidiary,
WebADTV, a vertical market software company the applications of which are
designed to protect and leverage media assets online. WebADTV has developed its
first product, InteleSource, a web-enabled, video asset management system that
provides clients with the ability to digitize, encode, archive and stream video
via ASP hosted and client intranet installations. Before the introduction of
digital management of media assets, businesses that utilize video content
primarily managed their creative libraries using bulky and costly reels of film.
WebADTV anticipates generating revenues through software licensing and hardware
sales, on-line digital storage and service income.

NINE MONTHS ENDED SEPTEMBER 30, 2001 AND SEPTEMBER 30, 2000

The Company's operating results, expressed as a percentage of total revenue,
were as follows:

<TABLE>
<CAPTION>
                                                    Nine Months Ended
                                                       September 30,
                                                  ----------------------
                                                  2001              2000
                                                  ----              ----
<S>                                               <C>               <C>
Net sales:
         Commercial income                        99.6%             99.7%
         Insurance income                          0.1%              0.1%
         New system sales                           --                --
</TABLE>


                                       10

<PAGE>


<TABLE>
<CAPTION>
                                             Nine Months Ended
                                                September 30,
                                            -------------------
                                            2001          2000
                                            ----          ----
<S>                                        <C>           <C>
         Other sales                         0.2%           0.2%
                                           -----          -----
   Television commercial production         99.9          100.0
   WebADTV                                   0.1             --
   Corporate                                  --             --
                                           -----          -----
Total net sales                            100.0          100.0
Cost of sales                               82.4           83.5
                                           -----          -----
Gross Profit                                17.6           16.5
Selling, general and administrative         23.2           18.0
Corporate                                    8.6            6.4
Stock option compensation                    1.0            0.6
Depreciation and amortization                6.5            3.1
Restructuring charges                        3.8             --
                                           -----          -----
Loss from operations                       (25.5)         (11.6)
Minority interest                            0.5             --
Other income (expenses) -net                 0.2             --
Interest income (expense) - net             (1.5)           0.4
Income tax provision                          --           (0.1)
                                           -----          -----
Net loss                                   (26.3%)        (11.3)%
                                           =====          =====
</TABLE>

RESULTS OF OPERATIONS FOR THE QUARTERS AND NINE MONTHS ENDED SEPTEMBER 30, 2001
AND SEPTEMBER 30, 2000

         The Company's total revenues decreased $5,296,000 from $14,012,000 in
the third quarter of 2000 to $8,716,000 in the third quarter of 2001. The
Company's revenues for the nine months ended September 30, 2001 decreased from
$51,189,000 in 2000 to $31,696,000 in 2001, a $19,493,000 reduction. The End,
which discontinued operations in February 2001, accounted for revenues totaling
$1,680,000 and $15,853,000 during the three and nine months ended September 30,
2000, respectively. During the third quarter of 2001, revenues at Curious
Pictures and Chelsea Pictures decreased $3,639,000 from $11,930,000 in the third
quarter of 2000 to $8,291,000 in 2001. DCode had total revenue in the third
quarter of 2001 of $215,000 compared to $353,000 in the same quarter of 2000.
For the nine months ended September 30, 2001, Curious Pictures sales decreased
$3,316,000 from revenues of $15,950,000 in 2000 to $12,634,000 in 2001. Chelsea
Pictures revenues decreased by $1,166,000 from revenues of $18,295,000 in the
first nine months of 2000 to $17,129,000 in the first nine months of 2001.

         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 82.0% in
the third quarter 2001 compared to 84.7% in the third quarter of 2000. Cost of
production for the first nine months of 2001 was 82.4% representing a 1.1%
decrease in the overall cost over the first nine months of 2000 of 83.5%.

         Selling expenses at the production companies consist of sales
commissions, advertising and promotional expenses, travel and other expenses
incurred in securing television commercial contracts. Selling costs for the
Company as a whole decreased $460,000 and $608,000 during the three and nine
months ended September 30, 2001, respectively. The End, which discontinued
operations in February 2001, incurred selling expense of $148,000 and $809,000
in the nine months ended September 2001 and 2000, respectively. The End incurred
no selling costs in the third quarter of 2001 compared to $189,000 of selling
cost in the third quarter of 2000.

         General and administrative expenses at the operating company level
consist of overhead costs such as office rent and expenses, executive, general
and administrative payroll, and related items. General and


                                       11

<PAGE>


administrative costs for the Company were $1,711,000 and $5,533,000 for the
three and nine months ended September 30, 2001, respectively. General and
administrative expenses for The End were $254,000 and $2,078,000 in the nine
months ending September 30, 2001 and 2000, respectively. The End incurred no
general and administrative expenses in the second and third quarters of 2001.
General and administrative expenses at Chelsea Pictures were $2,066,000 for the
first nine months 2001. WebADTV realized a decrease of $139,000 in the first
nine months of 2001 in general and administrative expenses compared to the same
period of 2000. The majority of this decrease was the result of a decrease in
payroll expense and a decrease in consulting fees.

         Stock option compensation in the third quarter of 2001 was $150,000 for
a total of $320,000 for the nine month period ended September 30, 2001. Stock
option compensation of $300,000 and $20,000 for the nine months ended September
30, 2001 was related to stock options granted to Curious Pictures and Chelsea
Pictures management, respectively.

         Corporate charges incurred in the third quarter of 2001 were $1,181,000
and $907,000 in the third quarter of 2000. During the first nine months of 2001,
corporate charges decreased from $3,264,000 in 2000 to $2,734,000. The decrease
was related to restructuring plans implemented in January 2001. Corporate
salaries and related benefits were significantly reduced through the elimination
of several positions as part of a restructuring plan that management began
implementing in January 2001. As a result, corporate charges totaled $610,000
for the quarter ended June 30, 2001 compared to $942,000 for the quarter ended
March 31, 2001 The corporate charges increased to $1,181,000 in the quarter
ended September 30, 2001 an increase of $571,000 over the previous quarter. This
increase was attributed to the following items not incurred in the previous
quarter: Compensation expense of $386,000 recognized in connection with
negotiations for the cancellation of the Severance Policy with the former CEO,
litigation fees and recruiting fees totaling $239,000. Exclusive of the
aforementioned items, ongoing corporate expenses were reduced $54,000 from the
previous quarter ended June 30, 2001.

         Depreciation and amortization expenses incurred in the third quarter of
2001 were $644,000 and $558,000 in the third quarter of 2000. The $286,000
increase was primarily a result of amortizing WebADTV software licenses
capitalized subsequent to second quarter 2000.

         Net interest expense was $268,000 in the third quarter of 2001 compared
to net interest income of $24,000 in the same period in 2000. Of this increase,
$140,000 was related to the prepayment penalty and $70,000 was related to the
write-off of capitalized loan costs in connection with the Line of Credit
pay-off in October 2001. The remaining increase was related to use of the credit
line and reduced interest bearing cash balances. The interest income in third
quarter of 2000 was earned on the Company's excess working cash balance.

         A tax provision of $3,000 and $51,000 for state tax minimum fees was
recorded in the first three quarters of 2001 and 2000, respectively.

         A restructuring charge was incurred in the first quarter of 2001 in the
amount of $1,202,000. This is a one-time charge relating to the discontinuation
of operations of Harmony's operating division, The End.

         A net loss of $2,740,000 was recognized in the third quarter of 2001
compared to a net loss of $2,562,000 in the third quarter of 2000. Year to date,
the Company has incurred an $8,345,000 net loss. The current net loss has been
impacted significantly by the following factors: a net loss of $1,590,000
associated with Harmony's subsidiary, The End, operations of which ceased in
February 2001; a net loss of $1,612,000 associated with WebADTV which was, in
part self-funded by a private placement of the subsidiary's common stock; and a
net loss of $659,000 at Chelsea Pictures and $493,000 at Curious Pictures. These
losses are related to a decreased advertising demand as a result of the economic
slow-down further complicated by the events of September 11, 2001.

LIQUIDITY AND CAPITAL RESOURCES

Overview

         During the nine months ended September 30, 2001, the Company incurred a
net loss of $8,345,000 and used $2,409,000 in cash for operations resulting in a
working capital deficit of $4,268,000 compared to a deficit of


                                       12

<PAGE>


$148,000 at December 31, 2001. On September 30, 2001, $1,934,000 of the
Company's working capital deficit related to the discontinuance of operations of
The End. Additionally, the Company has failed to comply with certain financial
covenants relating to minimum net tangible worth, maximum operating losses, and
certain reporting requirements under its loan and security agreement with its
senior lender, General Electric Capital Corporation. On June 19, 2001, GE
Capital agreed to forbear from exercising its rights and remedies under the loan
and security agreement related to these defaults until September 30, 2001. GE
Capital was repaid in full in October 2001 and the Company is currently
operating without a working capital line of credit. As a result of the Company's
recurring losses, negative working capital and negative cash flow from
operations, the Company's independent certified public accountants included an
explanation paragraph in their opinion on the Company's December 31, 2000
Consolidated Financial Statements wherein they expressed a substantial doubt
about its ability to continue as a going concern.

Short-Term Liquidity Plans

         In response to the aforementioned adversities management has and
continues to implement the following plans. During the first quarter of 2001,
the Company began executing restructuring plans to eliminate all non-profitable
commercial production subsidiaries and to significantly reduce corporate and
WebADTV operating expenses. During the first quarter of 2001, the Company began
the process of discontinuing the operations of The End. The End had been
adversely affected by the Screen Actors Guild strike as the well as by the
non-renewal of several key commercial director contracts. The Company also
reduced corporate and WebADTV operating expenses during 2001 by eliminating
several positions, thereby reducing payroll and benefits costs. The Company
moved to smaller, less expensive corporate and WebADTV facilities to accommodate
its smaller staff in August 2001. Additionally, WebADTV funded its own
operations for the period from February 1 to April 15, 2001 as a result of a
private placement of its common stock that generated net proceeds of
approximately $590,000. The Company has provided $497,000 of funding to WebADTV
from April - September 2001 (See Note 4). In October 2001, the Company, received
$1,500,000 in proceeds from the closing of its bridge notes payable. Of this
amount, $1,000,000 was utilized for the funding of WebADTV through the purchase
of additional WebADTV common stock (See Note 10).

         The Company requires substantial additional financing to continue to
support its operations and fund the cost of the lawsuit against ABC/Disney in
2002. The Company is also seeking to raise this capital by selling certain of
its existing business holdings, and by seeking to raise capital directly or
through its subsidiary WebADTV. The Company has engaged an investment banker to
assist in negotiating the potential sale of its production subsidiaries and the
banker's divestiture efforts are now concentrated primarily on the sale of
Curious Pictures. The investment banking firm has initiated a general market
solicitation for the sale of Curious Pictures and is in the process of
responding to inquiries. If the Company is unable to sell Curious Pictures on
acceptable terms, it plans to maintain and grow the business of Curious Pictures
in the industry.

         There can be no assurance that the Company will obtain financing when
required, or that such financing, if available, will be on terms acceptable or
favorable to us. Additional financing could require the Company to sell
additional equity securities, which would result in dilution to its current
shareholders. If such financing is not available, the Company may be forced to
further reduce or terminate its operations or potentially default on obligations
to creditors, all of which may be materially adverse to its operations and
prospects.

         As more fully described in Part II, Item 1 "Legal Proceedings", the
Company has outstanding judgment awards that total $637,000. The payment of
these judgments will have an adverse affect on the Company's cash position.
Consolidated cash was $773,000 at September 30, 2001 and $3,099,000 at December
31, 2000, a decrease of $2,326,000.

         Cash used in operating activities during the nine months ended
September 30, 2001 was $2,409,000. Accounts receivable at September 30, 2001
decreased $3,910,000 from December 31, 2000. Other receivables at September 30,
2001 decreased $204,000 from December 31, 2000, and prepaid expenses at
September 30, 2001 decreased $73,000 during the same period. Accounts payable at
September 30, 2001 decreased $719,000 from December 31, 2000, accrued expenses
at September 30, 2001 increased $334,000 from December 31, 2000, and deferred
income decreased $1,056,000 during the same period. The changes in the balance
sheet that affect cash-flow occurred


                                       13

<PAGE>


primarily because the Company's operations are derived from large contracts that
typically range from $100,000 to $1,000,000 and these contracts are at various
stages of completion at any given point in time. Additionally, the
discontinuation of operations of The End accounted for a significant portion of
the difference between the net loss from operations of $8,345,000 and the cash
used in operations of $2,409,000 as collections of existing receivables at The
End were utilized primarily to fund current discontinuation expenses.

         During the nine months ended September 30, 2001, net cash used in
investing activities was $641,000 and was used for capital expenditures.

         Cash provided by financing activities in 2001 amounted to $725,000.
This amount related to the use of a bank line of credit and the issuance of
subsidiary common stock.

Seasonality and Inflation

         The Company does not believe that seasonality or inflation have
affected the results of its operations, and does not anticipate that inflation
will have an impact on its future operations.

New Accounting Pronouncements

         In June 2001, the Financial Accounting Standards Board finalized FASB
Statements No. 141, "Business Combinations" (SFAS 141), and No. 142, "Goodwill
and Other Intangible Assets" (SFAS 142). SFAS 141 requires the use of the
purchase method of accounting and prohibits the use of the pooling-of-interests
method of accounting for business combinations initiated after June 30, 2001.
SFAS 141 also requires that the Company recognize acquired intangible assets
apart from goodwill if the acquired intangible assets meet certain criteria.
SFAS 141 applies to all business combinations initiated after June 30, 2001 and
for purchase business combinations completed on or after July 1, 2001. It also
requires, upon adoption of SFAS 142, that the Company reclassify the carrying
amounts of intangible assets and goodwill based on the criteria in SFAS 141.

         SFAS 142 requires, among other things, that companies no longer
amortize goodwill, but instead test goodwill for impairment at least annually.
In addition, SFAS 142 requires that the Company identify reporting units for the
purposes of assessing potential future impairments of goodwill, reassess the
useful lives of other existing recognized intangible assets, and cease
amortization of intangible assets with an indefinite useful life. An intangible
asset with an indefinite useful life should be tested for impairment in
accordance with the guidance in SFAS 142. SFAS 142 is required to be applied in
fiscal years beginning after December 15, 2001 to all goodwill and other
intangible assets recognized at that date, regardless of when those assets were
initially recognized. SFAS 142 requires the Company to complete a transitional
goodwill impairment test six months from the date of adoption. The Company is
also required to reassess the useful lives of other intangible assets within the
first interim quarter after adoption of SFAS 142.

         As a result of the adoption of SFAS 141 and 142, all future business
combinations will be accounted for under the purchase method, which may result
in the recognition of goodwill and other intangible assets, some of which will
be recognized through operations, either by amortization or impairment charges,
in the future. For purchase business combinations completed prior to June 30,
2001, the net carrying amount of goodwill is $5,198,000. Amortization expense
during the nine-month period ended September 30, 2001 was $1,237,000. Currently,
the Company is assessing but has not yet determined how the adoption of SFAS 141
and SFAS 142 will impact its financial position and results of operations.

ITEM 3   Quantitative and Qualitative Disclosures About Market Risk

         Not applicable.

PART II  OTHER INFORMATION

ITEM 1   Legal Proceedings


                                       14

<PAGE>


         On August 26, 1997, Ron Hoffman, a former Harmony Pictures employee,
commenced legal action in Superior Court of the State of California against
Harmony Holdings and Harmony Pictures alleging breach of an employment contract.
Summary judgment in favor of Harmony Holdings and Harmony Pictures was granted
by the trial court and subsequently reversed by the Court of Appeals. Judgment
for $309,000 was rendered against Harmony Holdings and Harmony Pictures at trial
on July 24, 2001. Appeal of the judgment has commenced.

         The Company filed suit against ABC/Disney in the United States District
Court for the District of Minnesota on September 26, 1996. On September 30,
1998, a jury in the United States District Court for the District of Minnesota
ruled in favor of the Company in connection with litigation for breach of
contract and misappropriation of trade secrets that the Company had commenced
against ABC Radio and Disney and awarded the Company $20 million for breach of
contract against ABC Radio, $10 million for misappropriation of trade secrets by
ABC Radio and $10 million for misappropriation of trade secrets against Disney.
On January 15, 1999, the court upheld the jury's findings that ABC Radio had
breached its contract with the Company and that ABC Radio and Disney
misappropriated its trade secret information; however, the court disagreed with
the jury's conclusions that the evidence showed that those actions caused the
Company damages and that the amount of damages awarded by the jury was supported
by the evidence, and set aside the jury's verdict. The court further ruled, in
the event that the decision is reversed or remanded on appeal, that the
defendants be granted a new trial on the issues of causation and damages. The
Company filed a Notice of Appeal in February 1999. Following its February 16,
2000 oral argument to the Eighth Circuit Court of Appeals in St. Paul,
Minnesota, on April 10, 2001, the Eighth Circuit Court of Appeals reversed the
grant of judgment as a matter of law for ABC Radio and Disney and affirmed the
grant of a new trial limited to the issue of quantifying damages. The Company
intends to vigorously pursue its claim in a trial for damages and, to this end,
certain personnel and financial resources will be used.

         The Company filed suit against Oklahoma Sports Properties, Inc. and
Fred Weinberg to collect on several unpaid promissory notes and guarantees
totaling $495,000 on June 2, 1999. On March 31, 2000, United States District
Court entered summary judgment in favor of the Company in the amount of $495,000
plus interest and collection costs. On May 10, 2000, an additional $163,818 in
accrued interest and $14,017 in attorneys' fees was awarded. On appeal, the
Eighth Circuit affirmed the award. Collection of this judgment has commenced.

         Imperial Bank filed suit against Harmony Holdings alleging default on a
$250,000 guaranteed line of credit on October 20, 1999. On February 27, 2001,
the Los Angeles Superior court entered final judgment against Harmony Holdings
in the amount of $328,208. On July 2, 2001 Harmony Holdings received notice of
entry of foreign judgment in Minnesota.

         Except as described above, the Company was not a party to any material
legal proceedings as of October 22, 2001.

ITEM 2   Changes in Securities and Use of Proceeds

         Not Applicable

ITEM 3   Defaults upon Senior Securities

         Not Applicable

ITEM 4   Submission of Matters to a Vote of Security Holders

         Not applicable.

ITEM 5   Other Information

         Not applicable.

ITEM 6   Exhibits and Reports on Form 8-K




                                       15


<PAGE>


         See "Index to Exhibits."

(b)      Reports on Form 8-K

         On August 23, 2001, the Company filed a Current Report on Form 8-K
relating to the delisting of the Company's common stock from The NASDAQ Stock
Market. On September 13, 2001 the Company filed a Current Report on Form 8-K
relating to the election of Mark A. Cohn as Chairman of the Board, President and
Chief Executive Officer of the Company and its majority owned subsidiary,
WebADTV, Inc.

         The Company filed no other Current Reports on Form 8-K during the
quarter ended September 30, 2001.


                                       16

<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 thereunto duly authorized.

                                     iNTELEFILM Corporation

Date: November  14, 2001             By /s/  Richard A. Wiethorn
                                        ----------------------------
                                        Richard A. Wiethorn
                                        Chief Financial Officer



                                       17
<PAGE>


INDEX TO EXHIBITS

Exhibit
Number         Description
------         -----------

10.34          Employment Agreement dated September 11, 2001, between the
               Registrant and Mark Cohn
10.35          Mark Cohn WebADTV Stock Option Agreement dated September 5, 2001
               and its Amendment dated October 11, 2001
10.36          Mark Cohn iNTELEFILM Stock Option Agreement dated September 5,
               2001
10.37          Ronald C. Breckner Subordinated Bridge Note Purchase Agreement
               dated October 4, 2001 plus Form of Subordinated Bridge Note
               Purchase Agreement, Subordinated Bridge Note, Warrant, Security
               Agreement
10.38          Mutual Release and Settlement Agreement, Promissory Note,
               Warrants to Purchase Common Stock of iNTELEFILM, between
               Westminster Properties, Inc. and The End, Intelefilm and Harmony
               Holdings, Inc. dated October 9, 2001
10.39          Employment Agreement dated October 4, 2001 between Christopher
               T. Dahl and the Registrant
10.40          Consulting Agreement dated October 11, 2001 between Jim
               Gilbertson and the Registrant



                                       18