<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

     [ X ]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                    For the quarter ended September 30, 1999

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
               SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
          For the transition period from ____________ to ____________

                         Commission file number 33-80321

                                 FTM MEDIA, INC.
             (Exact Name of Registrant as Specified in its Charter)

                  Colorado                                    84-1295270
        (State or other jurisdiction                        I.R.S. Employer
      of incorporation or organization)                  Identification number

   6991 East Camelback Road, #D103, Scottsdale, AZ                       85251
      (Address of principal executive offices)                        (Zip Code)

       Registrant's telephone number, including area code: (480) 425-0099


Securities to be registered under Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.004 par value

Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [ x ] No [ ]

The number of shares of the registrant's $.004 par value Common Stock
outstanding as of December 31, 1999 was 6,514,000

<PAGE>   2

                                      INDEX
<TABLE>
<CAPTION>

PART I.  FINANCIAL INFORMATION

Item 1.       Consolidated Financial Statements
<S>                                                                                                 <C>
                  Consolidated Balance Sheet as of
                  December 31, 1999 and March 31, 1999............................................   3

                  Consolidated Statements of Operations for the
                  Three months ended December 31, 1999 and December 31, 1998 and
                  nine months ended December 31, 1999 and December 31, 1998.......................   4

                  Consolidated Statements of Cash Flows for the Nine months
                  ended December 31, 1999 and December 31,
                  1998............................................................................   5

                  Notes to Consolidated Financial Statements......................................   6

Item 2.           Management's Discussion and Analysis or
                  Plan of Operations..............................................................  18

PART II. OTHER INFORMATION

         Item 1.           Legal Proceedings......................................................  27

         Item 2.           Changes in Securities..................................................  27

         Item 3.           Defaults under Senior Securities.......................................  27

         Item 4.           Submission of Matters to a vote of security holders....................  27

         Item 5.           Other Matters..........................................................  27

         Item 6.           Exhibits and Reports on Form 8-K.......................................  27

                           Signatures.............................................................  28
</TABLE>

<PAGE>   3

                         FTM MEDIA, INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                       December 31, 1999  March 31, 1999
                                                                           (unaudited)       (audited)
                                     ASSETS
<S>                                                                    <C>                <C>
Current Assets
  Cash and Cash Equivalents                                                  400,621         2,027,833
  Accounts Receivable                                                         24,208                 0
  Notes Receivable                                                         1,193,700                 0
  Prepaid Expenses                                                           200,228            23,968
                                                                          ----------        ----------
                          Total Current Assets                             1,818,757         2,051,801



Property and Equipment - Net of Accumulated Depreciation                   1,947,170            70,499

Other Assets
  Lease Deposits                                                             102,173            20,535
  Web Site Design In Progress                                                      0           131,568
  Goodwill - Net of Amortization                                              70,661            76,550
                                                                          ----------        ----------
                          Total Assets                                     3,938,761         2,350,953
                                                                          ----------        ----------

                      LIABILITIES AND STOCKHOLDERS DEFICIT

Liabilities
  Accounts Payable                                                         1,166,579           208,101
  Accrued Expenses                                                            41,798            64,820
  Short Term Portion of Notes Payable                                      2,542,636                 0
                                                                          ----------        ----------
                          Total Liabilities                                3,751,013           272,921

Minority Interest
  Preferred Stock of Subsidiary                                              438,747           415,889
  Common Stock of Subsidiary                                               1,997,060         2,771,261
                                                                          ----------        ----------
                          Total Minority Interest                          2,435,807         3,187,150

Stockholders Deficit
  Preferred Stock - $.04 Par, 2,500,000 shares authorized
              273,504 issued and outstanding                                  10,974                 0
  Common Stock - $.004 Par, 12,500,000 shares authorized
              6,514,000 shares issued and outstanding                         26,056            25,278
  Additional Paid In Capital                                               2,502,522                 0
  Deficit accumulated During Development stage                            (4,787,613)       (1,134,396)
                                                                          ----------        ----------
                          Total Stockholders Deficit                      (2,248,059)       (1,109,118)
                                                                          ----------        ----------
                          Total Liabilities and Stockholders Equity        3,938,761         2,350,953
                                                                          ==========        ==========
</TABLE>

<PAGE>   4

                            FTM MEDIA, INC. AND SUBSIDIARY

                         CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
                                            3 months    3 months   9 months      9 months
                                              ended       ended      ended         ended
                                            12/31/99    12/31/98   12/31/99       12/31/98
<S>                                       <C>          <C>      <C>             <C>
Revenues

E-Commerce                                     30,828         0      30,828           0
Local Advertising                              14,831         0      14,831           0
Total Revenues                                 45,659         0      45,659           0

Cost of Goods Sold

Website development costs                   1,166,693         0   2,484,530           0
E-Commerce costs                               86,745         0     113,437           0
Total COGS                                  1,253,438         0   2,597,967           0

Net Income                                 (1,207,779)        0  (2,552,308)          0


Capital Formation Expense                      56,650         0     199,438           0
Consulting Fees                               114,686    30,000     341,586      30,000
Contract Labor                                 (9,935)        0      25,673           0
Depreciation and Amortization                 115,024         0     228,743           0
Education & Training                            6,207         0      14,365           0
Employment Fees and Costs                      20,781         0      34,968           0
Insurance                                      35,154         0      91,659           0
Legal and Accounting Fees                      99,969         0     360,619           0
Media & Public Relations                       18,040         0      51,762           0
Office and Computer supplies                   16,762         0      41,548           0
Other                                          78,413         0     136,994           0
Payroll                                       119,413         0     341,122           0
Payroll Taxes and Benefits                     20,673         0      54,864           0
Rent                                           54,318         0     128,708           0
Sales & Marketing                             172,854         0     321,928           0
Telephone                                       7,392         0      38,821           0
Travel and Entertainment                       45,281         0      99,392           0

            Total Expenses                    971,682         0   2,512,188           0

Loss Before other Income                   (2,179,462)  (30,000) (5,064,496)    (30,000)

Other Expenses

Interest Expense net of interest income       (31,218)        0     (13,958)          0

Loss Before Provision of Income Taxes      (2,210,680)  (30,000) (5,078,454)    (30,000)

Provision for Income taxes                          0         0           0           0
                                          ---------------------------------------------
Loss Before minority interest             (2,256,339)  (30,000) (5,078,454)     (30,000)

Minority Interest                            655,289         0   1,425,239            0

Net Loss                                  (1,557,391)  (30,000) (3,653,215)     (30,000)
                                          =============================================
Basic Loss Per common share                   (0.242)   (0.004)     (0.573)      (0.004)

Weighted Average number of common shares    6,439,498 6,319,542   6,379,811   6,319,542
</TABLE>

<PAGE>   5

                           FTM MEDIA, INC. AND SUBSIDIARY

                        CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                          9 months                     9 months
                                                                            ended                        ended
                                                                      December 31, 1999            December 31, 1998
                                                                          (unaudited)                 (unaudited)
<S>                                                                   <C>                          <C>
OPERATING ACTIVITIES

Net Income (loss)                                                         (3,653,215)                 (30,000)
Adjustments to reconcile net income (loss)
   to net cash used in operating activities:
      Depreciation and amortization                                          228,743                        0
      Decrease in Capitalized development costs                              131,568                        0
      Minority Interest                                                   (1,425,239)                       0
      Increase in liquidation value - minority interest                       22,858                        0
      Changes in Operating Assets & Liabilities
       Increase in Accounts Receivable & Unbilled revenue                    (24,208)                       0
       Increase in Prepaid assets                                           (176,260)                       0
       Increase in Notes Receivable                                       (1,193,700)                       0
       Increase in Deposits                                                  (81,638)                       0
       Increase in Accounts Payable                                          958,478                   30,000
       Decrease in Accrued Expenses                                          (23,022)                       0
       Increase in short term notes payable                                   82,636                        0

              Net Cash Flow from Operating Activities                     (5,152,999)                       0

INVESTMENT ACTIVITIES

Acquisition of Fixed Assets                                               (2,099,300)                       0

Financing Activities

  Private Placement - Common Stock of subsidiary                             360,036                        0
  Private Placement - Sale of Preferred Stock                              1,649,998                        0
  Sale of Common Stock                                                     1,353,054                        0
  Payment of Preferred Dividends                                           (198,000)                        0
  Private Placement - Notes                                                2,460,000                        0
                                                                          -----------------------------------
              Net Cash Flow from financing                                 5,625,088                        0
                                                                          -----------------------------------
Net increase in Cash and Cash Equivalents                                 (1,627,212)                       0

Cash and Cash Equivalents beginning of year                                2,027,833                    2,796
Cash and Cash Equivalents 12/31                                              400,621                    2,796
</TABLE>

<PAGE>   6

                        FTM MEDIA, INC. AND SUBSIDIARIES

                          NOTES TO FINANCIAL STATEMENTS

1.       General

The accompanying unaudited financial statements of FTM Media, Inc. formerly
Redwood Broadcasting, Inc. have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-QSB and article 10 of Regulation S-X. Accordingly they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. The balance
sheet at March 31, 1999 has been derived from audited consolidated financial
statements at that date but does not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.

The accompanying financial statements are unaudited and reflect all adjustments
which are in the opinion of management necessary for a fair presentation of the
financial position and operating results for the interim periods. The
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto, together with management's
discussion and analysis of financial condition and results of operations,
contained in the Company's annual report on Form 10-KSB for the fiscal year
ended March 31, 1999. Results of operations for interim periods are not
necessarily indicative of results which may be expected for the year as a whole.

2.       Nature of Operations and Summary of Significant Accounting Policies

         FTM Media, Inc.

                  The Corporation was formed in December 1994 pursuant to the
         laws of the State of Colorado with the name Redwood Broadcasting, Inc.
         On July 19, 1999 at a special meeting of shareholders, the shareholders
         approved changing the name of the Corporation to FTM Media, Inc. On
         December 31, 1998, substantially all of the assets and liabilities of
         FTM/Redwood were transferred to a wholly owned subsidiary. The common
         stock of the subsidiary was then to be distributed to the FTM/Redwood
         shareholders. As a result of this and the reverse acquisition of the
         Corporation by Interactive Radio Group, Inc. (INRG), the prior
         operations of FTM/Redwood are not reflected in these financial
         statements. Accordingly the financial statements reflect the operating
         activity of FTM/Redwood beginning with the acquisition of the majority
         interest in INRG. The Corporation is in the development stage as its
         operations involve the raising of capital, market research and start up
         production. Because it is in the development stage, the Corporation has
         had minimal revenue from product sales, which is not regarded as
         typical for normal operating periods. On January 7, 2000 pursuant to
         the approval of a majority of shareholders the Corporation consummated
         its merger into its wholly owned subsidiary FTM Media, Inc. a Delaware
         Corporation (FTM Delaware), with FTM Delaware to be the surviving
         Corporation. All shareholders of FTM Media, Inc of Colorado will
         receive one share of FTM

<PAGE>   7

         Media, Inc of Delaware in exchange for one share of FTM Media of
         Colorado common stock.

         Interactive Radio Group, Inc.

                  Interactive Radio Group, Inc. was formed in February 1994
         pursuant to the laws of the State of Delaware. The company was inactive
         until April, 1998 when it began its business of designing and hosting
         Internet websites for radio stations. The acquisition of the majority
         interest in INRG by FTM/Redwood was accounted for as a reverse
         acquisition, resulting in the historic operations of INRG being treated
         as the historical operations of the Corporation. Accordingly the
         accompanying historic financial statements have been restated to
         reflect the financial position, results of operations and cash flows
         for all periods presented as if the recapitalization had occurred at
         the beginning of the earliest period presented.

         Cybermusic Acquisition Corp.

                  Cybermusic Acquisition Corp. was formed in February, 1996
         pursuant to the laws of the State of Delaware. Cybermusic was acquired
         by INRG and became a wholly owned subsidiary in December, 1998.
         Cybermusic's principal business of designing websites for radio
         stations has been carried on by INRG since the acquisition. The
         acquisition of Cybermusic by INRG was accounted for as a reverse
         acquisition, resulting in the historic operations of Cybermusic being
         treated as the historical operations of the Corporation. Accordingly
         the accompanying historic financial statements have been restated to
         reflect the financial position, results of operations and cash flows
         for all periods presented as if the recapitalization had occurred at
         the beginning of the earliest period presented.

         Method of Accounting

                  The Corporation maintains its books and prepares its financial
         statements on the accrual basis of accounting.

         Cash and Cash Equivalents

         Cash and cash equivalents include time deposits, certificates of
         deposit and all highly liquid debt instruments with original maturities
         of three months or less. The Company maintains cash and cash
         equivalents at financial institutions which periodically may exceed
         federally insured amounts.

         Fixed Assets and Depreciation

                  Fixed Assets are stated at cost, less accumulated depreciation
         computed using the straight line method over the estimated useful lives
         as follows:

                           Computer Equipment and
                           Software                           3-5 years
                           Office Furniture                     5 years
                           Automobiles                          5 years
                           Leasehold Improvements               7-16 months

<PAGE>   8

         Maintenance and repairs are charged to expense. The cost of assets
         retired or disposed of and their related accumulated depreciation are
         removed from the accounts.

         Web Site Design - In progress

                  The Corporation had previously capitalized its costs incurred
         in developing its websites for radio stations. The Company now charges
         to expense all such costs. The Company has expensed all such previously
         capitalized costs.

         Goodwill

                  Goodwill has been capitalized and is being amortized over ten
         years.

         Net Loss Per Common Share

                  Net income (loss) per common share is computed in accordance
         with SFAS 128, "Earnings Per Share" by dividing the income available to
         common stockholders by the weighted average number of common shares
         outstanding for each period after reflecting the recapitalization. The
         effects of conversion of Convertible Preferred Stock were not included
         in the calculation of diluted loss per share because the Corporation
         has experienced losses in all of the periods presented and therefore
         the effect would be anti-dilutive.

         Income Taxes

                  The Corporation accounts for income taxes in accordance with
         SFAS 109 "Accounting for Income Taxes", using the asset and liability
         approach, which requires recognition of deferred tax liabilities and
         assets for the expected future tax consequences of temporary
         differences between the carrying amounts and the tax basis of such
         assets and liabilities. The method uses enacted statutory tax rates in
         effect for the year in which the temporary differences are expected to
         reverse and gives immediate effect to changes in income tax rates upon
         enactment. Deferred tax assets are recognized, net of any valuation
         allowance, for temporary differences and net operating loss and tax
         credit carry forwards. Deferred income tax expense represents the
         change in net deferred assets and liability balances. The Corporation
         had no material deferred tax assets or liabilities for the period
         presented.

3.       Stockholder's Equity

         1. During June and July, 1999 the Corporation received $1,600,000 in a
         private placement of 273,504 shares of $.04 par value Series B
         Convertible Preferred Stock. Pursuant to the terms of the Series B
         Convertible Preferred Stock, the Corporation in June and July 1999 paid
         $192,000 in dividends to the holders of the Series B Convertible
         Preferred Stock. The rights, privileges and restrictions of the Series
         B Convertible Preferred Stock are as follows:

                  a.       The stock ranks senior to Common Stock and any other
                           class or series of capital stock of the Corporation
                           with respect to liquidation, dissolution or winding
                           up of the business.

<PAGE>   9

                  b.       Holders of the Series B Convertible Preferred Stock
                           are entitled to receive annual dividends in the
                           amount of $.702 per share payable on each semi-annual
                           anniversary of the Series B Convertible Preferred
                           Stock Issue Date. The dividends payable for the
                           twelve month period immediately following the Series
                           B Convertible Preferred Stock Issue Date shall be
                           paid on the Series B Convertible Preferred Stock
                           Issue Date.

                  c.       Holders of the Series B Convertible Preferred Stock
                           have no voting rights except for those minimum voting
                           rights required by the Business Corporation Act of
                           the State of Colorado, in which case the Series B
                           Convertible Preferred Stock shall vote together with
                           the Common Stock as a single class, unless the
                           Business Corporation Act of the State of Colorado
                           requires that the Series B Convertible Preferred
                           Stock has the right to vote separately as a single
                           class.

                  d.       Holders of the Series B Convertible Preferred Stock
                           have the option to convert their Series B Convertible
                           Preferred Stock to common shares anytime at an amount
                           equal to $5.85 divided by the conversion price. The
                           conversion price shall be equal to $5.85 minus the
                           aggregate amount of accrued dividends per share which
                           are then unpaid for fifteen days or more multiplied
                           by .64103.

                  e.       The Corporation may cause each share of Series B
                           Convertible Preferred Stock to be automatically
                           converted into shares of common stock at an amount
                           equal to $5.85 minus the aggregate amount of accrued
                           dividends per share which are then unpaid for fifteen
                           days or more multiplied by .64103. as of any date on
                           which the closing price for each of the twenty
                           trading days preceding such date equals or exceeds
                           $8.35 per share. Such conversion cannot occur prior
                           to the first anniversary of Series B Convertible
                           Preferred Stock Issue Date.

                  f.       In the case of a capital reorganization or
                           reclassification of outstanding shares of Common
                           Stock or in case of any merger of the Corporation
                           into another corporation or in case of a sale or
                           conveyance to another corporation of all or
                           substantially all of the assets or property of the
                           Corporation each share of Series B Convertible
                           Preferred Stock shall thereafter be convertible into,
                           in lieu of the Common Stock issuable upon such
                           conversion, the kind and amount of shares of stock
                           and other securities and property receivable upon the
                           consummation of such transaction by a holder of that
                           number of shares of Common Stock into which one share
                           of Series B Convertible Preferred Stock was
                           convertible immediately prior to such transaction.

                  2. As incentives for certain employees to accept employment
         with the Corporation, the Corporation issued 192,100 shares of the
         Corporation's

<PAGE>   10

         $.004 par value common stock in exchange for Secured Recourse Notes in
         the amount of $916,700. These Notes accrue no interest and are secured
         by the underlying common stock. As part of the terms of the Employment
         Agreements, the Corporation will forgive the notes upon the Employee's
         one-year anniversary of employment. If an employee leaves the
         Corporation's employ prior to his/her one-year anniversary, the former
         Employee has five (5) business days to satisfy the note or the
         Corporation transfer the stock to the Corporation as full payment of
         the note.

4.       Notes Receivable

                  Notes Receivable consist of $902,700 of notes received from
         certain employees in conjunction with the issuance of the Corporation's
         common stock and $291,000 of notes received from certain employees in
         conjunction with the issuance of INRG's common stock as employment
         signing bonuses. Such notes accrue no interest and are secured by the
         underlying stock. As part of the terms of the Employment Agreements,
         the Corporation will forgive the notes upon the Employee's one-year
         anniversary of employment. If an employee leaves the Corporation's
         employ prior to his/her one year anniversary, the former Employee has
         five (5) business days to satisfy the note or the Corporation transfer
         the stock to the Corporation as full payment of the note.


5.       Fixed Assets

                  Fixed Assets are recorded at cost and consisted of the
         following at December 31, 1999 and March 31, 1999:

<TABLE>
<CAPTION>
                                                            12/31/99         3/31/99
                                                            --------         -------
<S>                                                        <C>                <C>
Computer Equipment                                         1,858,886          56,548
Office Equipment                                             234,622          16,065
Automobiles                                                   14,500               0
Leasehold Improvements                                        64,131               0
                                                           ---------       ---------
                                                           2,172,139          72,613
Less Accumulated Depreciation                                224,969           2,114
                                                           ---------       ---------
Net Fixed Assets                                           1,947,170          70,499
</TABLE>

                  Depreciation expense for the quarters ended December 31, 1999
         and March 31, 1999 was $113,061 and 0 and for the nine months ended
         December 31, 1999 and March 31, 1999 $222,854 and 0 respectively

6.       Goodwill

                  The Corporation acquired goodwill with INRG's purchase of
         Cybermusic. Goodwill is being amortized over ten years and consisted of
         the following at December 31, 1999 and March 31, 1999.

<TABLE>
<CAPTION>
                                       1999         1998
                                     ------       ------
<S>                                  <C>          <C>
Goodwill                             78,513       78,513
Less: Accumulated Amortization        7,852        1,963
                                     ------       ------
Net Goodwill                         70,661       76,550
</TABLE>

<PAGE>   11

                  Amortization expense for quarters ended December 31, 1999 and
         March 31, 1999 was $1,963 and 0 and for the nine months ended December
         31, 1999 and March 31, 1999 was $5,869 and 0 respectively

7.       Notes Payable

                  Notes Payable consist at December 31, 1999 of the following:

                  i)       a note payable to AICCO, for the payment of insurance
                           premiums, with interest at 8.95% payable in monthly
                           installments of principal and interest $10,976.99
                           through February 2000 with the remaining balance due
                           at that date. The balance as of December 31, 1999 was
                           $32,636

                  ii)      $200,000 Convertible Note payable to a non-related
                           entity, with interest accruing at a rate of 6% per
                           annum, payable when the note is retired. The note is
                           due on March 15, 2000, but the Company has the right
                           to prepay without penalty. Noteholder, may, at his
                           discretion, elect to receive all or any portion of
                           the outstanding principal and accrued interest, in
                           the Company's common stock or other securities, under
                           the same terms and conditions as Company is offering
                           such common stock or securities to other investors.
                           The note is secured by Company equipment in an amount
                           not to exceed $500,000. Along with the Note,
                           Noteholder received 40,000 warrants to purchase the
                           Company's common stock for three years at an exercise
                           price of $8 per share.

                  iii)     $1,700,000 of Convertible Notes payable to
                           non-related entities with interest accruing at a rate
                           of 10% per annum which is payable when the note is
                           retired. These notes are due between May 1, 2000 and
                           June 7, 2000, but the Company has the right to prepay
                           the notes without penalty. At Company's option, the
                           due date of the principal amount of this notes and
                           interest can be extended for successive thirty day
                           periods, upon the payment in cash on or prior to such
                           due date an amount equal to 1% of the then
                           outstanding principal amount of the note. Noteholders
                           may elect to receive all or any portion of the
                           outstanding principal and accrued interest, in common
                           stock or our other securities, under the same terms
                           and conditions that Company is offering such common
                           stock or securities to other investors. Along with
                           the Note, Noteholders received 340,000 warrants to
                           purchase the Company's common stock for three years
                           at an exercise price of $8 per share.

                  iv)      $550,000 of Convertible Notes payable mostly to
                           non-related entities (See Section 9 "Related Party
                           Transactions") with interest accruing at a rate of
                           10% per annum which is payable when the notes are
                           retired. The notes are due between December 22, 2000
                           and December 31, 2000 but Company has the right to
                           prepay without penalty. Note Holders may demand
                           repayment of all or any unpaid portion of the Note on
                           March 1, 2000, or from time to time convert in whole
                           or in part any

<PAGE>   12

                           unpaid portion of the principal amount of the Note,
                           including any accrued interest thereon (Conversion
                           Amount), into a number of fully paid and
                           nonassessable Shares of the Company's common stock
                           equal to the number determined by dividing (A)
                           Conversion Amount by (B) $7.50. In the event that
                           this formula results in a fractional share, the
                           resulting number of shares will be rounded down to
                           the nearest whole share. Along with the Note,
                           Noteholders received 110,000 warrants to purchase the
                           Company's common stock for three years at an exercise
                           price of $8 per share.

                  v)       $60,000 of Notes, without interest, payable to Ron
                           Conquest, the Company's Chief Executive Officer and
                           Greg Mastroieni a Director and Consultant to the
                           Company.


8.       Minority Interest

                  The minority interest in INRG has two components:

                  1. Preferred Stock of Subsidiary

                     INRG issued 40,637 shares of series A Preferred Stock, par
                     value $.001 to the former shareholders of Cybermusic, upon
                     acquisition in December 1998, The minority interest in the
                     Preferred stock of INRG was recorded at the stocks
                     liquidation value of $10 per share and goodwill was
                     recorded for $78,513. Rights, privileges and restrictions
                     of the Series A Preferred Stock are as follows:

                     a.     The stock ranks senior to Common Stock and any other
                            class or series of capital stock of the Corporation
                            with respect to liquidation, dissolution or winding
                            up of the business.

                     b.     Holders of the stock are not entitled to receive
                            dividends or other distributions except upon
                            liquidation, dissolution or winding up of the
                            business.

                     c.     Holders of the stock have a right to vote with the
                            Common stockholders as a single class unless the
                            Delaware General Corporation Law requires the Series
                            A Preferred stockholders to vote separately as a
                            class.

                     d.     Holders have the option to convert their stock to
                            common shares equal to the Series A Preferred Stock
                            liquidation value anytime after September 30, 2000,
                            or to common stock of a parent corporation if more
                            than 80% of the issued and outstanding Common Stock
                            of INRG is owned by another corporation.

                     e.     Holders may redeem their stock for cash equal to the
                            liquidation value anytime after December 7, 2001.
                            INRG may elect to redeem any or all of the
                            outstanding shares of series A Preferred stock
                            anytime, at the liquidation value.

                     f.     The liquidation value of each share of Series A
                            Preferred Stock is $10, increased with interest
                            compounded annually at 7.5%

<PAGE>   13

                            for three years commencing on the issuance date. The
                            Corporation recorded interest expense on the
                            liquidation value in the amount of $22,857 during
                            the nine months ended December 31, 1999. The Series
                            A Preferred Stock liquidation value consisted of the
                            following at December 31, 1999:

<TABLE>
<S>                                                                             <C>
                                    Liquidation value at issuance               $406,370
                                    Accrued interest to date                      32,377
                                                                                --------
                                    Total Liquidation Value                     $438,747
</TABLE>

                     2.     Common Stock of Subsidiary

                            On March 31, 1999, FTM/Redwood acquired 90.85% of
                            the issued and outstanding Common Stock of INRG. The
                            remaining 9.15% of Common Stock represented a
                            minority interest in INRG. The parent corporation
                            and the minority interest share pro rata in the net
                            income or loss of INRG.

                            During March and April, 1999, subsequent to the
                            acquisition, INRG received $3,243,933 from a private
                            placement offering for 1,080,628 common shares. The
                            $3,243,933 of stock purchased is included on the
                            balance sheet under Minority Interest - Common Stock
                            of Subsidiary.

                            During the first two quarters, INRG received Secured
                            Notes in the amount of $291,000 in connection with
                            the issuance of 97,000 shares of the INRG's common
                            stock. These notes carry no interest and are secured
                            by the underlying common stock. With the issuance of
                            these shares the minority interest in INRG increased
                            to 26.87% and will increase further if additional
                            common shares are issued. The $291,000 of stock
                            purchased is included on the balance sheet under
                            Minority Interest - Common Stock of Subsidiary.


9.       Related Party Transactions

                  The Corporation has entered into a management agreement to pay
                  consulting fees on a monthly basis to Ingenious Enterprises,
                  Inc. a Nevada corporation in the amount of $120,000 annually
                  commencing October 1, 1998 on behalf of the services provided
                  by Ron Conquest. Conquest, an employee of Ingenious
                  Enterprises, Inc. is the President, Chief Executive Officer
                  and a Director of the Corporation. Effective January 1, 2000,
                  the consulting fees were increased to $180,000 annually.
                  Consulting fees paid pursuant to this agreement during the
                  nine months ended December 31, 1999 and December 31, 1998 were
                  $90,000 and $30,000 respectively.

                  The Corporation has entered into a management agreement to pay
                  consulting fees on a monthly basis to EchoMedia in the amount
                  of $75,000 annually commencing February 1, 1999 on behalf of
                  the

<PAGE>   14

                  services provided by Greg Mastroieni. Mastroieni, the owner of
                  EchoMedia is a member of the Board of Directors of the
                  Corporation. Consulting fees paid pursuant to this agreement
                  during the nine months ended December 31, 1999 and December
                  31, 1998 were $56,250 and 0 respectively.

                  The Corporation has entered into a management agreement to pay
                  consulting fees on a monthly basis to Four Score
                  Entertainment, Inc. in the amount of $75,000 annually
                  commencing February 1, 1999 on behalf of the services provided
                  by Jeffrey Pollack. Pollack, an employee of Four Score
                  Entertainment, Inc. was, until January 12, 2000 a member of
                  the Board of Directors of the Corporation. Consulting fees
                  paid pursuant to this agreement during the quarters ended
                  December 31, 1999 and December 31, 1998 were $56,250 and 0
                  respectively.

                  The Corporation has entered into a management agreement to pay
                  consulting fees on a monthly basis to BW Productions in the
                  amount of $120,000 annually commencing February 1, 1999 on
                  behalf of the services provided by Robert Wilson. Wilson, an
                  employee of BW Productions is Vice Chairman and a member of
                  the Board of Directors of the Corporation. Consulting fees
                  paid pursuant to this agreement during the quarters ended
                  December 31, 1999 and December 31, 1998 were $90,000 and 0
                  respectively.

                  On August 27, 1999, the Corporation purchased from Unicorp,
                  Inc. an automobile for $14,500. Greg Mastroieni, the President
                  of Unicorp, Inc. is a member of the Board of Directors of the
                  Corporation.

                  On December 22, 1999, Robert Buziak, who was elected to the
                  Board of Directors of the Company on January 12, 2000
                  purchased from the Company for $98,000, a $100,000 Note with
                  interest accruing at a rate of 10% per annum which is payable
                  when the note is retired. The note is due December 22, 2000
                  but Company has the right to prepay without penalty. Mr.
                  Buziak may demand repayment of all or any unpaid portion of
                  the Note on March 1, 2000, or from time to time convert in
                  whole or in part any unpaid portion of the principal amount of
                  the Note, including any accrued interest thereon (Conversion
                  Amount), into a number of fully paid and nonassessable Shares
                  of the Company's common stock equal to the number determined
                  by dividing (A) Conversion Amount by (B) $7.50. In the event
                  that this formula results in a fractional share, the resulting
                  number of shares will be rounded down to the nearest whole
                  share. Along with the Note, Mr. Buziak received 20,000
                  warrants to purchase the Company's Common stock at an exercise
                  price of $8 per share for three years.

                  On October 29, 1999 Ron Conquest, the Company's Chief
                  Executive Officer and Greg Mastroieni a Director and
                  Consultant to the Company lent to the Company $200,000 without
                  interest. As of December 31,

<PAGE>   15

                  1999 the Company owed $60,000 to Messrs. Conquest and
                  Mastroieni. The Company subsequent to December 31, 1999 repaid
                  Mr. Conquest a further $30,000.

10.      Income Taxes

                  The Corporation has approximately $4,787,613 of consolidated
                  net operating loss carryforwards for federal tax purposes as
                  of December 31, 1999, which are available to offset future
                  taxable income and expire during the years 2011 through 2020.
                  The corporation has not fully reserved for any future tax
                  benefits from the net operating loss carryforwards since it
                  has not generated any revenues to date.

11.      Year 2000

                  The Corporation's computer systems are currently year 2000
                  complaint. The Corporation is not aware of any material risks
                  associated with its vendors regarding year 2000 compliance,
                  however there is no guarantee that such risks do not exist and
                  will not have an adverse effect on operations. It is not
                  anticipated that any impact would be material, however the
                  cost of a potential impact is not determinable. The Company is
                  unaware of any adverse effect as a result of Year 2000.

12.      Subsequent Events

                  1.       On January 7, 2000 pursuant to the approval of a
                           majority of shareholders the Corporation's
                           consummated its merger into its wholly owned
                           subsidiary FTM Media, Inc. a Delaware Corporation
                           (FTM Delaware), with FTM Delaware to be the surviving
                           Corporation. All shareholders of FTM Media, Inc of
                           Colorado will receive one share of FTM Media, Inc of
                           Delaware in exchange for one share of FTM Media of
                           Colorado common stock.

                  2.       On October 18, 1999 the Corporation filed a form S-4
                           with the Securities and Exchange Commission so that
                           the Corporation can register approximately 2,153,000
                           shares of it's common stock. The purpose of this
                           share issuance is so that the Corporation can
                           effectuate the purchase of the minority interest in
                           INRG, by exchanging 1.25 shares of the Corporation's
                           common stock in exchange for each share of INRG
                           commons stock not held by the corporation. On
                           December 30,1999 and January 4, 2000, the Company
                           filed Amendments to the aforementioned S-4. On
                           January 7, 2000, SEC declared such S-4 effective.

                  3.       On October 18, 1999 the Corporation filed an
                           application with the National Association of
                           Securities Dealers (NASD) so as to have the
                           Corporation's common stock listed for trading on the
                           NASDAQ SmallCap Stock Market. On December 2, 1999
                           NASD replied to the Company's application requesting
                           additional information. On February 9, 2000, the
                           Company responded to NASD's request.

                  4.       On January 12, 2000 the Board of Directors of the
                           Company accepted the resignations of Jeffrey Pollack
                           and Vickie Collier from

<PAGE>   16

                           the Board of Directors and also Ms. Collier's
                           resignation as Company's General Manager. At the same
                           Board meeting the Corporation elected Robert Buziak
                           to the Company's Board of Directors and promoted
                           David Kendrick to President and Chief Operating
                           Officer. Mr. Kendrick previously was the Company's
                           Vice President of Sales and Marketing.

                  5.       Subsequent to December 31, 1999, the Company issued
                           $200,000 of Convertible Notes payable to non-related
                           entities with interest accruing at a rate of 10% per
                           annum which is payable when the notes are retired.
                           The notes are due between January 6, 2000 and January
                           10, 2001 but Company has the right to prepay without
                           penalty. Note Holders may demand repayment of all or
                           any unpaid portion of the Note on March 1, 2000, or
                           from time to time convert in whole or in part any
                           unpaid portion of the principal amount of the Note,
                           including any accrued interest thereon (Conversion
                           Amount), into a number of fully paid and
                           nonassessable Shares of the Company's common stock
                           equal to the number determined by dividing (A)
                           Conversion Amount by (B) $7.50. In the event that
                           this formula results in a fractional share, the
                           resulting number of shares will be rounded down to
                           the nearest whole share. Along with the Notes,
                           Noteholders received 40,000 warrants to purchase the
                           Company's common stock for three years at an exercise
                           price of $8 per share.

                  6.       On January 27,2000, Frank Wood, The Company's
                           Chairman purchased from the Company for $98,000, a
                           $100,000 Note with interest accruing at a rate of 10%
                           per annum which is payable when the note is retired.
                           The note is due January 27, 2001 but Company has the
                           right to prepay without penalty. Mr. Wood may demand
                           repayment of all or any unpaid portion of the Note on
                           March 1, 2000, or from time to time convert in whole
                           or in part any unpaid portion of the principal amount
                           of the Note, including any accrued interest thereon
                           (Conversion Amount), into a number of fully paid and
                           nonassessable Shares of the Company's common stock
                           equal to the number determined by dividing (A)
                           Conversion Amount by (B) $7.50. In the event that
                           this formula results in a fractional share, the
                           resulting number of shares will be rounded down to
                           the nearest whole share. Along with the Note, Mr.
                           Wood received 20,000 warrants to purchase the
                           Company's Common stock for three years at an exercise
                           price of $8 per share.

                  7.       On February 1 and 2, 2000 the Company issued $350,000
                           of Convertible Notes payable to certain employees and
                           their family of Spencer Trask Securities, Inc., with
                           interest accruing at a rate of 10% per annum which is
                           payable when the note is retired. The notes are due
                           on the earlier of February 1, 2001 or completion of a
                           financing in an amount of $3,000,000 or more but
                           company has right to prepay without penalty. Holders
                           may from time to time convert in whole or in part any
                           unpaid portion of the principal amount of the Note,
                           including any accrued interest thereon (Conversion
                           Amount), into a number of fully paid and

<PAGE>   17

                           nonassessable Units of the Company's common stock
                           equal to the number determined by dividing (A)
                           Conversion Amount by (B) $7.50. In the event that
                           this formula results in a fractional share, the
                           resulting number of shares will be rounded down to
                           the nearest whole share. Units consist of one share
                           of Company Common Stock along with one Class A
                           warrant and one Class B warrant.

                  8.       During January, 2000 the Company signed an agreement
                           with Spencer Trask Securities, Inc. regarding a
                           proposed private placement of the Company's
                           securities. The Company proposes to sell between
                           800,00 and 1,600,000, consisting of one share of
                           Company Common stock and one Class A warrant and one
                           Class B warrant for a unit price of $7.50. As of this
                           date the Company had not commenced the selling of the
                           proposed securities.

<PAGE>   18

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

         Overview

         The following is a discussion of the consolidated financial condition
         and results of operations of the Company as of and for the two fiscal
         periods ended December 31, 1999 and December 31, 1998. This discussion
         should be read in conjunction with the Consolidated Financial
         Statements of the Company and the notes related thereto included in the
         Company's Form 10-KSB for the fiscal year ended March 31, 1999.

         The forward looking statements included in Management's Discussion and
         Analysis of Financial Condition and Results of Operations, which
         reflect Management's best judgement based on factors currently known,
         involve risks and uncertainties. Actual results could differ materially
         from those anticipated in these forward looking statements as a result
         of a number of factors, including but not limited to those discussed
         herein.

         Introduction

         The Company was incorporated on February 22, 1994. Prior to March 1998,
         the Company had not engaged in any form of commercial business
         activity. In March 1998, the Company's principal business focus became
         the Internet and the production of interactive, multi-media, 2-D/3-D
         Internet Web Sites for the Radio Industry.

         On December 7, 1998, the Company acquired Cybermusic in the Cybermusic
         Merger. The business of Cybermusic consisted primarily of developing a
         network of linked, interactive, multi-media, 2-D/3-D Internet Web Sites
         to be operated by the Company for participating Radio Stations (the
         "FTM Internet Network"). The Company's business plan is to develop,
         operate and maintain the FTM Internet Network, perform related services
         and provide Internet access to participating Radio Stations in order to
         produce new sources of revenue for the Radio Stations. It is expected
         that the Internet Web Site for participating Radio Stations will
         feature multi-media interactive capability, streaming audio and video,
         local and national chat, games, P1 targeting and music sampling. The
         Company also expects to provide market and audience research with daily
         and weekly analysis, licenses, e-commerce, and technical
         support/customer service through a Company run operations center
         available seven days per week.

         The Company will initially seek to build the FTM Internet Network
         through obtaining the participation of Radio Stations owned by
         CBS/Infinity Broadcasting. On March 9, 1998 the Company entered into
         the CBS Agreement pursuant to which Infinity Broadcasting will arrange
         for the Company to meet with the general managers of Radio Stations
         owned by CBS/Infinity Broadcasting for the purpose of discussing the
         participation of such Radio Stations in the FTM Internet Network(s).

<PAGE>   19

         The Company anticipates three initial sources of revenue which are: (1)
         the sale of radio advertising units received from Radio Stations in the
         top twenty five U.S. markets in exchange for the Company's various Web
         site products and services and for participation in the FTM Internet
         Network, (2) the sale of local and national advertising, "integrated
         interactive advertising and sponsorships" on the FTM Internet Network
         of Radio Station Internet Web site, and (3) the sale of merchandise, in
         addition to other e-commerce activities generated within the Company's
         Internet Network.

         The Company acknowledges increasing competition for limited advertising
         dollars on the Internet and seeks to differentiate itself through the
         sale of sponsorships and "integrated advertising." Integrated
         advertising is a unique program that involves advertisers in the
         creation of a message allowing them to better target a specific
         audience or audience segment. The Company's growth strategy depends, in
         part, on its ability to increase advertising revenue by the ongoing
         introduction of new and enhanced Internet products and services to its
         flagship Internet Network and Web site. In addition, the Company will
         attempt to increase advertising revenue through the introduction of new
         and enhanced Internet products and services to its Internet Network and
         Web site by the creation of new features, promotions, games and
         simulations, in order to provide sponsors and advertisers with even
         greater ability to target a specific audience.

CBS AGREEMENT

         Pursuant to the CBS Agreement, CBS/Infinity Broadcasting will provide,
         until March 2003, access and assistance to the Company to contact Radio
         Stations owned and/or operated by CBS/Infinity for the purposes of
         soliciting such stations to (1) participate in the FTM Internet
         Network, (2) to engage the Company to develop, operate and maintain
         World Wide Web sites for such stations and to provide related services
         and (3) to engage the Company to function as an Internet access
         Provider for such stations in order for the station to generate new
         sources of revenue. In exchange for such rights and assistance, the
         Company has agreed to (i) use commercially reasonable efforts to
         provide unimpeded and uninterrupted access and operability of World
         Wide Web site to the Participating Stations, (ii) propose to its
         shareholders that, for so long as CBS/Infinity Broadcasting continues
         to own at least ten percent (10%) of the issued and outstanding shares
         of the Company's Common Stock (on a fully diluted basis), a
         representative designated by CBS Radio or Infinity be elected to the
         Company's board of directors, and to use its best efforts to cause all
         of its insiders and affiliates to vote their shares in favor of the
         election of said representative, and (iii) allow CBS Infinity
         Broadcasting to audit the Company's books and records not more than
         once each calendar year on behalf of those stations who participate in
         the FTM Internet Network with respect to the accounting statements
         tendered to such Radio Stations under their agreements with the
         Company.

<PAGE>   20

OTHER POTENTIAL INTERNET PRODUCTS AND SERVICES

         The Company anticipates that advertising revenues generated from the
         sale of Internet Web site advertising and sponsorships will represent
         only a portion of the Company's operating revenues and profits, and
         further, the Company believes that its future success will depend, in
         part, on its ability to generate revenues and profits from other
         sources. The Company intends to explore other opportunities to increase
         revenues through new game platforms, co-branding relationships,
         cross-licensed technologies, merchandise opportunities, specialized
         CD-ROM's, classified advertising, personals, archiving fees, specialty
         Web-based-only entertainment events, emerging artist management,
         publishing and music distribution, and market specific consumer
         research.

         The Company's business is still in the very early stages of
         development. The Company is in discussions with various CBS/Infinity
         Broadcasting affiliated Radio Stations along with non CBS/Infinity
         Broadcasting Radio Stations regarding the providing of Internet
         products and services, but does not yet have binding agreements with
         any Radio Stations to provide such products and services. In addition,
         while the Company has developed prototypes of Radio Station Internet
         Web sites for Los Angeles Radio Station "KROQ", San Francisco Radio
         Stations "KITS" and "KCBS" Chicago Radio Station "B96" and Boston Radio
         Station "WBCN", the prototypes developed do not incorporate all of the
         currently available technical features that the Company expects to
         include in its fully operational Internet Web site. The Company has
         generated minimal revenues and has limited operating history upon which
         an evaluation of the prospects for the acceptance of its Internet
         products and services and the related sale of Internet advertising may
         be based.

THE MARKET

         Consumer household usage of the Internet is growing exponentially. The
         market for interactive multimedia Web sites, promotions, games,
         information, and online commerce is a rapidly growing segment of the
         United States economy. An estimate of 1999 Web use by Nielsen Media
         Research current Web users at 92 million persons, up from 70 million in
         1998. A January 1999 Arbitron/Edison Media Research survey of
         Arbitron's Fall '98 diarykeepers found that 57% of United States
         households have a computer, and more than half of all Americans are
         currently online (at home, work, school, or other locations).

         As the Internet becomes more accessible, functional, and widely used by
         consumers and businesses, its commercial potential continues to grow
         dramatically in terms of both e-commerce and ad spending. The number of
         people making purchases online has jumped 40% in the last nine months,
         up to 28 million people, according to a recent Nielsen/ CommerceNet
         study.

         The overlap between potential Web users and radio listeners is
         significant, according to the recent Arbitron/Edison study. Fully 82%
         of partisan

<PAGE>   21

         Alternative Rock listeners have computers at home, compared to the 57%
         of total homes. Of those PC-owning Alternative Rock listeners, 91%
         already have Internet access. In fact, most young people - the most
         active radio listeners -- are online. Fully 81% of those 12-17 and 71%
         of those 18-24 are online. Penetration is high among older listeners
         also, as well over half of those 25-54 are online.

         Broadcast advertising is one of the most powerful drivers of Web
         traffic. Radio is well positioned to capitalize on this, because of its
         convenience, reach, and devoted audience. According to Arbitron/Edison,
         two-thirds of those surveyed had heard a station promote its Web site
         on-air, and a third had actually visited a station Web site (rising to
         44% among Modern Rock listeners).

         Consumer-focused Internet companies (such as AOL, eBay, Amazon, and
         Priceline.com) clearly believe that radio listeners can drive listeners
         to their sites. Online companies spent more than $37 million on
         traditional radio advertising during the first quarter of 1999, up from
         just $6 million in the same period a year ago, according to a recent
         Competitive Media/Industry Standard report. PaineWebber recently
         upgraded its estimate of total 1999 online companies' advertising
         spending to $800 million. PaineWebber expects 40% of the increase to go
         to radio, for a total of $320 million in 1999 radio ad revenues.
         PaineWebber estimates the dot-coms' 1999 offline advertising breakdown
         will be 40% radio, 40% TV, and 20% other media.


         SALES AND MARKETING

         Our sales and marketing activities are directed toward two principal
         groups, major market radio stations and national advertisers. Our
         affiliate stations are largely responsible for generating local ad
         sales and driving listeners to their web sites.

         RADIO STATIONS

         We will present our Web site services to the managers of targeted Top
         25 market radio stations, through our team of Radio and Internet
         experts. We will emphasize the following features and benefits:

         -        Two-thirds of the advertising space on each radio station Web
         site will be dedicated to "local" advertising. Because we share in this
         revenue, we will take an active role in training and supporting local
         station sales personnel;

         -        As we build station Web sites in the Top 25 markets, we aim to
         become a lifestyle demographic "vertical portal." While emphasis will
         always remain focused on the individual radio station Web sites, each
         "vertical portal" with local entry points which will become an
         advertising and marketing vehicle for national advertisers.
         Participation in a "national portal" creates significant new revenue
         sources for each radio station.

<PAGE>   22

         -        Our Web site services are "turn-key" and include all Web site
         development, ongoing maintenance, content refreshing, and technology
         upgrades. Through our "turn-key" Web sites, individual radio stations
         will be able to offer Web site services far superior than they could
         afford to do individually;

         -        Each Web site we create and manage will be customized for each
         participating radio station;

         -        Our radio station Web sites will be equipped with a
         sophisticated tracking and reporting system that will provide each
         station with timely and accurate loyal listener data and demographics.

         Our key marketing executives have already begun to make in-person
         presentations to the general managers and program directors of the top
         25 market radio stations that fit our affiliate profile.

         NATIONAL ADVERTISERS

         Our marketing efforts to national advertisers will be through
         advertising agencies and, to a lesser extent, direct sales. We will
         focus on communicating to advertisers the benefits of individually
         targeted, interactive ad on our network of Web sites. These
         advertisements can be closely matched to a consumer's lifestyle and
         demographics and allow consumer interaction, and are believed to be
         more effective at building brand equity and generating sales and
         revenue than traditional banner ads.

         RADIO STATION LISTENERS/WEB TRAFFIC

         Radio station listeners will be directed to the radio station's Web
         site through on-air mentions, radio station off-air events such as
         concerts and remote broadcasts, radio station related print media and
         promotional materials, and other radio station advertising media such
         as billboards.

         Additionally, we have marketing, promotional and database specialists
         within the Company who will work closely with each radio station to
         maximize the effectiveness of each of the above-referenced outreach
         programs.


         COMPETITION

         FTM's direct competitors include:

-    OnRadio - OnRadio supplies basic, template-based Web sites to radio
     stations in exchange for the radio station providing a "link" to OnRadio
     national content. There is also a banner ad revenue split, and the
     participating radio stations barter some advertising time to OnRadio in
     exchange for its services. OnRadio has been in operation for more than
     three years and operates over 600 radio station web sites, mostly in small
     and medium-sized markets.

<PAGE>   23

-    AMFMi - AMFMi is the in house web development group for AMFM inc. As such,
     AMFMi assists AMFM affiliates in establishing web sites. AMFMi was formed
     as an in-house Web development group with goals very similar to FTM's. AMFM
     is currently being acquired by Clear Channel Communications Inc.

-    FIMC/RadCity - First Internet Media Corporation offers stations a
     market-exclusive licensing arrangement for each "RadCity," a local web
     portal comprised of third-party information providers. The strategy is
     currently being tested in six small markets and one major city (San
     Francisco).

-    Magnitude Network - Owned by Web investment firm CMGI, Magnitude has about
     200 radio station web sites, primarily in small to medium markets. Services
     include traffic data tracking, Web hosting, update tools, station-branded
     listener e-mail, streaming audio, and content drawn from third-party
     suppliers such as Rolling Stone/Jam TV.

-    Radio Data Group, Inc. - RDG is owned by CBS, Clear Channel, and Colfax
     Communications. RDG helps radio stations set up Web sites and markets
     radio-oriented Web site software to them. Its software package includes ad
     tracking, invoicing, ad placements, and Web site administration, among
     other programs. RDG claims to have created "over 250" Web sites.

-    MP3Radio.com - Cox Enterprises and MP3 have recently created this joint
     venture company that builds radio station sites using templates The content
     of each site, currently 20 in number, is identical and MP3 driven.

         We anticipate that the number of direct and indirect competitors will
         increase significantly in the future. The market for Internet products
         and services is growing exponentially and there are relatively few
         barriers to entry into the marketplace. There can be no assurance that
         our current or potential competitors will not develop Internet products
         and services comparable or superior to those to be developed by us or
         adapt more quickly than us to new technologies, evolving industry
         trends or changing Internet user preferences. Increased competition
         could result in price reductions, reduced margins or loss of market
         share. In addition, if we expand internationally, we may face new
         competition in these marketplaces.

         There can be no assurance that the Company's current or potential
         competitors will not develop Internet products and services comparable
         or superior to those to be developed by the Company or adapt more
         quickly than the Company to new technologies, evolving industry trends
         or changing Internet user preferences. Increased competition could
         result in price reductions, reduced margins or loss of market share,
         any of which would materially and adversely affect the Company's
         business, prospects, financial condition or operating results. In
         addition, as the Company expands internationally it may face new
         competition. There can be no assurance that the Company will be able to
         compete successfully against current and future competitors, or that
         competitive pressures faced by the Company will not

<PAGE>   24

         have a material adverse effect on its business, prospects, financial
         condition or operating results.

GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES

         The Company is subject to various laws and governmental regulations
         applicable to businesses generally. The Company believes it is
         currently in material compliance with such laws and that such laws do
         not have a material adverse impact on its operations. In addition,
         although there are currently few laws or regulations directly
         applicable to access to or commerce on the Internet, due to the
         increasing popularity and use of the Internet, it is possible that more
         stringent federal, state, local and international laws and regulations
         may be adopted with respect to the Internet. A variety of issues may
         prompt such regulations including problems involving participant
         privacy and expression, consumer protection, pricing, payment
         methodologies, financing practices, intellectual property, information
         security, anti-competitive practices, the convergence of traditional
         channels with Internet commerce, characteristics and quality of
         products and services and the taxation of subscription fees or gross
         receipts of Internet service providers. The enactment or enforcement of
         such laws or regulations or others in the future may increase the
         Company's cost of doing business or decrease the growth of the
         Internet, which could in turn decrease the demand for the Company's
         Internet products and services, increase the Company's costs, or
         otherwise have an adverse effect on the Company's business, financial
         condition or operating results. Moreover, the applicability to the
         Internet of existing laws in various jurisdictions including laws and
         regulations relating to matters such as property ownership, libel and
         personal privacy is uncertain, may take years to resolve and could
         expose the Company to substantial liability for which the Company might
         not be indemnified by content providers or other third parties. Any
         such new legislation or regulation or the application of existing laws
         and regulations to the Internet could have a material adverse effect on
         the Company's business, prospects, financial condition or operating
         results.

         The Company's use of prizes associated with its features, promotions,
         games and simulations may be subject to federal, state, local and
         international laws governing lotteries and gambling. Such laws vary
         from jurisdiction to jurisdiction and are complex and uncertain. The
         Company seeks to design its prizing structure to fall within exemptions
         from such laws, but there can be no assurance that the Company's
         prizing structure will be exempt from all applicable laws. Failure to
         comply with applicable laws could have a material adverse affect on the
         Company's business, prospects, financial condition or operating
         results.

Liquidity and Capital Resources - December 31, 1999 compared to March 31, 1999

At December 31, 1999, the Company had total assets of $3,938,761 representing an
increase in the total assets of $1,587,808 over total assets at March 31, 1999.
Total Liabilities increased to $3,751,013 at December 31, 1999 from $272,921 at
March 31, 1999. Minority Interest decreased to $2,435,807 at December 31, 1999
from

<PAGE>   25

$3,187,150 at March 31, 1999. Total Stockholders Deficit increased to $2,248,059
at December 31, 1999 from $1,109,118 at March 31, 1999.

Total current assets at December 31, 1999 were $1,818,757, which consisted of
cash and cash equivalents of $400,621, employee note receivables in the amount
of $1,193,700, Accounts Receivable of $24,208 and prepaid expenses of $200,228.
Total current liabilities at December 31, 1999 were $3,751,013 consisting of
accounts payable of $1,161,579 and the current portion of note payables in the
amount of $2,542,636. Working capital at December 31, 1999 was $(1,932,256)
compared to $1,778,880 at March 31, 1999. This represented a decrease in the
Company's Working Capital position of $3,711,136.

At December 31, 1999 the Company reported total assets of $3,938,761 which
consisted of $1,818,757 of current assets described above, $1,947,170 of Net
Property and Equipment, $102,173 of Lease Deposits and $70,661 of Net Goodwill.

Total liabilities at December 31, 1999 are comprised entirely of the current
liabilities described above.

Minority interest at December 31, 1999 totaled $2,435,807, which consisted of
Preferred Stock of a subsidiary in the amount of $438,747 and Common Stock of a
subsidiary in the amount of $1,997,060.

At December 31, 1999, the Company reported a Stockholders Deficit of $2,248,059.
This represents an increase of $1,131,941 over March 31, 1999 Stockholders
Deficit of $1,109,118. This decrease was the result of the sale of 273,504
shares of Series B Convertible Preferred Stock in which the Company received
$1,600,000, increased by the payment of $192,000 of dividends to the
shareholders of Series B Convertible Preferred Stock, decreased by the issuance
of 192,100 shares of Common Stock to employees in which the corporation received
notes in the amount of $916,700 and increased by the net loss for the nine
months of $3,653,215.

Results of Operations - Three Months Ended December 31, 1999 compared to the
Three Months Ended December 31, 1998

Net Revenues for the three months ended December 31, 1999 were $45,659 compared
to net revenue of 0 for the same period a year ago. This is attributable to the
Company continuing to be in its development stage and therefore not yet
generating any significant revenue from operations.

Cost of goods Sold for the three months ended December 31, 1999 were $1,253,438
compared to Cost of Goods Sold of 0 for the same period a year ago.

Operating expenses for the three months ended December 31, 1999 were $971,682,
which consisted of general and administrative expenses of $683,804, sales and
marketing expenses of $172,854 and depreciation and amortization of $115,024.
Operating expenses for the three months ended December 31, 1998 were 30,000.

<PAGE>   26

The Company recorded net interest expense (interest expense offset by interest
income) of $31,218 for the quarter ended December 31, 1999. The interest expense
was money interest paid or accrued on company liabilities less interest earned
on the Company's Cash and Cash Equivalents.

As a result of the foregoing the Company posted a net loss of $2,210,680 before
minority interest. The minority interest in the Company's net loss was $652,289
resulting in a net loss to the Company of $1,557,391 for the three months ended
December 31, 1999 or $(.242) per share compared to a net loss of 30,000 for the
three months ended December 31, 1998 or $(.004) per share.

Results of Operations - Nine Months Ended December 31, 1999 compared to the Nine
Months Ended December 31, 1998

Net Revenues for the nine months ended December 31, 1999 were $45,659 compared
to net revenue of 0 for the same period a year ago. This is attributable to the
Company continuing to be in its development stage and therefore not yet
generating any significant revenue from operations.

Cost of goods Sold for the nine months ended December 31, 1999 were $2,597,967
compared to Cost of Goods Sold of 0 for the same period a year ago.

Operating expenses for the nine months ended December 31, 1999 were $2,890,330
which consisted of general and administrative expenses of $1,961,517, sales and
marketing expense of 321,928 and depreciation and amortization of $228,743.
Operating expenses for the nine months ended December 31, 1998 consisted of
general and administrative expense of $30,000.

The Company recorded net interest expense (interest expense offset by interest
income) of $13,958 for the nine months ended December 31, 1999. The interest
expense was money interest paid or accrued on company liabilities less interest
earned on the Company's Cash and Cash Equivalents.

As a result of the foregoing the Company posted a net loss of $5,078,454 before
minority interest. The minority interest in the Company's net loss was
$1,425,439 resulting in a net loss to the Company of $3,653,215 for the nine
months ended December 31, 1999 or $(.573) per share compared to a net loss of
30,0000 for the nine months ended December 31, 1998 or $(.004) per share.

<PAGE>   27

                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

         None

Item 2.  Changes in Securities

         None

Item 3.  Defaults Upon Senior Securities

         None

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


         On October 15, 1999, the Corporation at a Special Meeting of
         Shareholders approved:

                  i)       The merger of the Corporation with FTM Media, Inc of
                           Delaware a wholly owned subsidiary of the
                           Corporation, with FTM of Delaware being the surviving
                           entity.

                  ii)      The adoption of the FTM Media, Inc. 1999 stock option
                           plan

         No other matters were submitted to a vote of security holders

Item 5. Other Information

         None

Item 6.  Exhibits and Reports on Form 8-K

                  (a)      Exhibit No.           Exhibit Name

                           27                    Financial Data Schedule

                  (b)      The Company filed a form 8-K on November 5,1999
                           reporting that at an October 15, 1999 Special Meeting
                           of Stockholders of FTM Media, Inc., a Colorado
                           corporation (the "Company"), the Company's
                           stockholders voted to approve the reincorporation of
                           the Company from Colorado to Delaware by the adoption
                           of a Plan and Agreement of Merger pursuant to which
                           the Company will be merged with and into FTM Media,
                           Inc., a Delaware corporation ("FTM Delaware")(the
                           "Reincorporation Merger"). In addition to the
                           Reincorporation Merger discussed above, the Board of
                           Directors of the Company, as the majority shareholder
                           of Interactive Radio Group, Inc., a Delaware
                           corporation ("INRG"), authorized its approval of the
                           merger of

<PAGE>   28

                           INRG with and into FTM Delaware (the "INRG Merger").
                           In this INRG Merger, (i) each holder of INRG common
                           stock will receive 1.25 shares of FTM Delaware common
                           stock for each share of INRG common stock that they
                           own, and (ii) each holder of INRG Series A Preferred
                           Stock will be converted into the Series A preferred
                           stock of FTM Delaware that they own, with
                           substantially similar terms. The INRG Merger will
                           result in the elimination of the minority interest in
                           INRG

                  (c)      The Company filed a form 8-K on January 25, 2000
                           reporting that at an October 15, 1999 Special Meeting
                           of Stockholders of FTM Media, Inc., a Colorado
                           corporation ("FTM Colorado"), FTM Colorado's
                           stockholders voted to approve the reincorporation of
                           FTM Colorado from Colorado to Delaware by the
                           adoption of a Plan and Agreement of Merger pursuant
                           to which FTM Colorado was to be merged with and into
                           FTM Media, Inc., a Delaware corporation ("FTM
                           Delaware") (the "Reincorporation Merger"). The
                           Reincorporation Merger was closed on January 7, 2000.
                           In addition to the Reincorporation Merger discussed
                           above, FTM Colorado, as the majority shareholder of
                           Interactive Radio Group, Inc., a Delaware corporation
                           ("INRG"), authorized its approval of the merger of
                           INRG with and into FTM Delaware (the "INRG Merger").
                           In this INRG Merger, (i) each holder of INRG common
                           stock received 1.25 shares of FTM Delaware common
                           stock for each share of INRG common stock that they
                           owned, and (ii) each holder of INRG Series A
                           Preferred Stock was converted into Series A preferred
                           stock of FTM Delaware with substantially similar
                           terms. FTM Colorado owned approximately 72% of the
                           outstanding shares of INRG's common stock before the
                           INRG Merger. The INRG Merger resulted in the
                           elimination of the minority interest in INRG. The
                           INRG Merger was consummated on January 7, 2000, after
                           the consummation of the Reincorporation Merger.


                           In accordance with the Exchange Act, this report has
                  been signed below by the following persons on behalf of the
                  Registrant and in the capacities and dates indicated.

Signature                 Title                               Date

/s/ Ron Conquest          Chief Executive Officer        February 10,2000


/s/ Scott M. Manson       Chief Financial and            February 10, 2000
                          Accounting Officer

<PAGE>   29
                                EXHIBIT INDEX

                       27      Financial Data Schedule