SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C.  20549
                             FORM 10KSB

| | [X] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
          1934 For the fiscal year ended December 31, 2003
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------

| | [  ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
| | ---- | ----------------------------------------------------------------------------------------

For the transition period from  ________ to _________

Commission File No.  000-27233

LIVESTAR ENTERTAINMENT GROUP, INC.
(Exact name of Registrant as specified in its charter)

|NEVADA                                                         | 98-0204736                             
|-------------------------------------------------------------- | ---------------------------------------
|(State or other jurisdiction of
incorporation or organization) | (I.R.S. Employer Identification Number)

62 W. 8th Avenue, 4th
FloorVancouver, British Columbia, Canada V5Y 1M7 
(Address of principal executive offices)     (Zip Code)

Registrant's telephone number, including area code:  (604) 682-6541

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

Securities registered pursuant to
Section 12 (g) of the Act: Common stock authorized at $.0001 par value.

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

Check if there is no disclosure of
delinquent filers in response to Item 405 of Regulation S-B is not contained in this form,
and no disclosure will be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this
Form 10-KSB or any amendment to this Form 10-KSB. [  ]

Revenues for 2003 were
$500.

The aggregate market value of the
voting stock held by non-affiliates computed by reference to the last reported sale price
of such stock as of March 31, 2004 is $927,977. Our common stock is quoted at the present
time. At March 31, 2004, our stocks closing price was $0.0023 per share. This price,
however, is an inter-dealer price without retail mark-up, mark-down or commission and may
not represent an actual transaction.

The number of shares of the
issuers Common Stock outstanding as of March 31, 2004 was 403,468,337.

Transitional Small
Business Disclosure Format (check one):Yes [  ] No [X]

1

# PART I

# Item 1. Description of
Business

CORPORATE HISTORY

United Management, Inc. was
incorporated on January 29, 1997 under the laws of the State of Nevada. In December 2000,
United entered into an agreement to merge with RRUN Ventures, Inc. by acquiring all of
RRUNs issued and outstanding shares of capital stock. RRUN Ventures Inc. was founded
in Vancouver, British Columbia in June of 2000 and incorporated in October 2000 under the
laws of Nevada. Final approval of this merger was obtained from the shareholders in
August, 2001. At the same time as the approval of the merger, United adopted its new name,
RRUN Ventures Network, Inc. Also acquired in the merger was a majority shareholder
position in RAHX, Inc., a Nevada corporation, which was incorporated in 2000
(RAHX). In September, 2001, LIVESTAR co-founded AXXUS Corporation, a Nevada
Corporation, which was incorporated in September 2001. In August of 2002, the Company
formed RVNI Management Ltd., a British Columbia Corporation, as a wholly owned subsidiary.
In November of 2002 the Company divested of its AXXUS Corporation subsidiary. A discussion
of the divestiture of AXXUS Corporation may be found in Form 8-K filed with the Commission
on December 16, 2002. In June 2003, RRUN Ventures Network, Inc. changed its name to
LIVESTAR Entertainment Group, Inc. In October 2003 the Company formed LIVESTAR
Entertainment Establishments, Inc. a Nevada corporation. Through this wholly owned
subsidiary we intend to operate our US based establishments.

GENERAL OVERVIEW

LIVESTAR Entertainment Group, Inc.
LIVESTAR (LSTA or LIVESTAR or the Company) is in the
Amusement Services Sector of the Entertainment Industry. Beginning in the spring of 2002
the Company began to add the development of offline entertainment ventures in order to
establish traditional entertainment revenue streams.

2

As per our Quarterly Statements for
the period ending June 30, 2002 the Company declared it would shift its strategy to one
where we would change to an off-line focus with the on-line focus coming later.
Accordingly we began focusing our immediate efforts on building a network of licensed
entertainment establishments, as the base for our urban lifestyle businesses.

In the final quarter of 2002 the
Company took a major step in implementing its plan to transition from an entertainment and
lifestyle technology oriented venture development company to an entertainment ventures
company focused on live entertainment ventures. This step was the divestiture of it AXXUS
Corporation subsidiary. A discussion of the divestiture of AXXUS Corporation is found in
Form 8-K filed with the Commission on December 16, 2002.

CURRENT BUSINESS STRATEGY

Our business strategy as a live
entertainment venture development and holding company focuses our immediate efforts on
building a network of licensed entertainment establishments, and a live events business as
the core business base for our urban lifestyle businesses. These establishments and events
will still utilize a branding approach so that we can leverage the brand(s) to sell other
urban lifestyle products and services.

As the Company progresses on its
focus, it may venture develop other lifestyle businesses that synergize with its new core
business of licensed entertainment establishments and live events. These other potential
venture development businesses may include, but not be limited to, music, online
entertainment, merchandising, membership services, media publishing and filmed
entertainment. Many of these potential venture development businesses were previously
identified as being in the future plans for the Company.

Currently the Companys RAHX
business unit is non-operational. RAHX houses several entertainment technology based
concepts and properties that, based on the decision of management, may be terminated, or
divested of. RAHX may also be used to house businesses core to, or related to, the
Companys live entertainment strategy. The Companys RRUN Labs unit is
non-operational and at the appropriate time may be wound-down.

Other subsidiaries may be formed to
house core business operations or synergistic secondary business operations.

The Companys key target market
is the 18-34 year old demographic. The current USA market segment is an estimated 70 M
individuals for the 18-34 year old group according to a US Census Bureau report.

According to CBS Marketwatch.com,
this market signifies an attractive demographic group for advertisers as they control over
$140 billon in consumer spending and influence an additional $300 billon in purchases.
This racially diverse group is tech savvy, enjoys live entertainment and make up the large
majority of the rock, hip hop, R&B and dance/electronica listener.

3

The Company intends to initially
focus investment capital it intends to acquire into the following lines of business:

1.  Live Licensed Entertainment Establishments
   ("Establishment(s)")
     o     namely nightclubs
     o     lounges, bars
     o     supperclubs
     o     restaurants

2. Live Events and Concerts
    (Live Events)
     o     special events (single
          events, festivals, etc.)     o      concerts

3. Sponsorship Services

Additional lines of business under
consideration for investment that may synergize with the Companys core business are:

1.       
          Media and Entertainment  businesses that produce and/or distribute content
          for the consumers across various mediums. These include music, filmed
          entertainment, online and offline publishing, online and offline interactive
          gaming, and digital media distribution.

2.       
          Entertainment Technologies  businesses that provide the foundation for
          people to interact and transact with entertainment products through multiple
          technology products.

Our overall implementation plan of
this strategy is to build our lines of businesses through venture development,
acquisitions and mergers.

Our immediate implementation of the
strategy is to: 1) acquire or develop our first establishment so that we can use it as a
flagship for the network and demonstrate our unique and proprietary entertainment concepts
for use in our other establishments; and 2) develop and/or acquire our first live events.

We are confident in our ability to
make this transition and execute this strategy due to the background of our President
& CEO, Ray Hawkins and his prior experience with live entertainment.

REVENUE GENERATION

As a live entertainment venture
development and holding company LIVESTAR hopes to generate revenue from its core
businesses through the following methods:

Entertainment Establishments
revenues: This includes but not limited to:

     food and beverages.
     Door cover charges. 
     Catering.
     Advertising.
     Special event fees.
     Product fees (T-shirts, clothing,
CDs etc).

4

Live Events revenues: This includes
but not limited to:

     Entry charge/ticket sales. Catering.
     Advertising.
     Product fees (T-shirts, clothing, CDs, etc.).
     Sponsorship fees.

Licensing fees: LIVESTAR intends to charge
licensing fees to vendors of urban products and services.

OUR CORE BUSINESS

We believe that there is a large,
unmet demand for live entertainment worldwide. We believe that the live entertainment
business has historically fulfilled only a limited portion of consumer demand because of
inherent constraints of time, geography, availability and cost of live event productions.
We believe there are numerous economically and demographically advantageous markets, which
are under-served by existing live entertainment companies.

We plan to be a leading live
entertainment company with a network of premier entertainment establishments (namely
nightclubs), a robust live events business, a strong brand name and an integrated Internet
and digital strategy.

We believe our new core businesses,
in combination, provides a unique business model in the live entertainment industry.
Currently we believe our combination of a network of nightclubs, lounges, supperclubs,
restaurants and other types of entertainment establishments combined with live events and
concerts further combined with media and internet distribution provides LIVESTAR with a
tremendous market opportunity.

We plan to execute a strategy of
comprehensive integration of our businesses. The integration of LIVESTARs business
units creates competitive advantages for the Company. LIVESTAR believes that while a
variety of competitors exist with each of the Companys divisions, none offer the
unique scope of services provided by LIVESTAR. This intra-company synergy provides
LIVESTAR with an opportunity to create additional sources of revenues and profits for the
Company.

Specifically, as the Company
continues its development of its core businesses, LIVESTAR will be engaged primarily in:
 owning and operating entertainment establishments
  (nightclubs, lounges,
supper clubs, restaurants, venues); and
  promoting live events and concerts;
  selling corporate sponsorships and advertising.

5

Entertainment
Establishments

Today, there exists an opportunity
for a business to enter the entertainment establishment industry. This industry is
sometimes referred to as the bar and tavern industry. The Company plans on entering the
industry with a corporate mindset that is built on a long-term objective, a growth
strategy, and a customer-centric focus on providing the best entertainment experience.

LIVESTAR aims to become the leader
in operating entertainment establishments, namely nightclubs by:
 Developing a
network of establishments under one corporation;
  Transforming each establishment
into different concepts or chains,  each aimed at a different market segment;
    Delivering the best entertainment experience and customer
     service to each establishment's customers;
    Gaining a competitive advantage by standardizing all operating
systems and achieving a lower cost structure; and
  Gaining competitive advantage by
using its Live Events unit to
produce events and concerts exclusively for the LIVESTAR establishments.

We intend that the establishments
will be developed in new and existing locations in major cities throughout the United
States and Canada.

We intend our focus to be centered on
developing dance oriented nightclubs, lounges and supperclubs. As the network develops we
may add more types of establishments, such as restaurants, venues and food only
establishments.

LIVESTAR plans to develop its network
of establishments, through acquiring some properties and developing others. Since each
city market is different it intends to operate each venue under a different entertainment
concept or chain concept aimed at different market segments. By leveraging its Live Events
unit it believes it can gain cost savings and a competitive advantage. This can be done by
having our own establishments host our live events.

LIVESTAR plans on achieving its
vision through the execution of the following strategies:

1.    
          Focus initially on investing capital it intends to acquire into traditional
          offline entertainment businesses such that will generate cash flow and earnings
          quickly.2.     Build a
network of live entertainment establishments through           development and
acquisition.  3.     Build an
efficient central services unit to           support the integration, administration,
accounting and financing of the           entertainment network and to reduce common
cost.  4.    
          Coordinate marketing between the establishments and events units to enhance
          marketing potential. 5.     Develop licensing and other relationships to capitalize
          on the brand name(s) and to broaden the types of products and services that can
          be sold through the brand(s), thus increasing revenue and earnings potential.

As a planned future owner and
operator of entertainment establishments LIVESTAR plans to generate revenues through
liquor beverage sales, cover charges, food sales, merchandise sales, membership sales.

6

Live Events

There are many companies that provide
or organize live events.

However there are no major companies
that focus on events produced for nightclubs, or events strictly aimed at the 18-34 year
old market.

LIVESTARs Live Events unit
plans to service its target market with dynamic live entertainment ranging from concerts,
festivals and special events such as fashion shows and contests.

The Live Events unit will be a stand
alone business although synergistic with other Company units. Therefore the Live Events
unit will produce events outside of the network of establishments in other venues and
possibly in establishments owned by competitors. We plan to be a promoter of live events
in USA, Canada and eventually internationally as our business grows. The live concert
events that we plan to promote and distribute will reflect a diverse array of music
genres, including pop, rock, hard rock, latin, hip hop, rap, blues, R&B, jazz, soul,
funk, and may appeal to an equally diverse demographic base although focused on 18-34 year
olds.

The Live Events unit aims to become
the leader in promoting and marketing special events and concerts targeted at 18-34 year
olds by:


Focusing on producing only entertainment focused special events and concerts.  Being
very DJ and urban music driven. 
Producing hi-concept one of a kind events and tours, whether one time only or recurring
periodically.  Opening regional operations in specific geographic markets. 
Having the exclusive rights to producing events at all LIVESTAR entertainment
establishments.  Obtaining touring rights from touring shows. Touring shows consist
primarily of revivals of previous commercial successes or new
productions of theatrical shows. 
Executing partnerships, mostly exclusive in nature, with local independent event promoters
to produce and promote special events and concerts. Gaining competitive advantage by using
these independent promoters to lower costs, reduce risks, and learn specific market
intelligence of that area.

We plan to execute on this believed
competitive advantage through the following:


LIVESTAR plans to take advantage of the above opportunity by producing events and concerts
primarily for its establishments.


LIVESTAR management has extensive knowledge of the networks of the independent special
events promoters and intends to use this special knowledge to acquire them or form
partnerships with them, and to promote both independent special events and also events
targeted to its establishment operations.

As a producer of live events LIVESTAR
plans to generate revenues through profit sharing agreements with promoters, a percentage
of the promoters ticket sales, merchandising, sponsorships, licensing and the
exploitation of intellectual property and other rights related to the production. LIVESTAR
plans to produce certain tours on both a national and regional basis.

7

A key future growth driver for the
Companys Live Event unit is the possible presentation of live performances at our
establishments by digitally capturing a wide array of audio and visual live entertainment
content and distributing it through a variety of media, including the internet, and other
forms of digital media, television and radio. This opportunity is especially apparent for
touring shows that can attract a media viewing audience.

The Company anticipates that
attendees of LIVESTARs live events will remain connected and informed of upcoming
events through various technology based products. The management anticipates that
additional offline and online product and service offerings for its customers will be
evaluated, developed according to feasibility and return on investment.

Sponsorships and
Advertising

LIVESTAR plans to actively pursue the
sale of corporate sponsorships for official event or tour sponsors to
corporate types such as, beverage companies, credit card companies, phone companies, film
manufacturers and radio stations, among others. Sponsorship arrangements can provide
significant additional revenues at negligible incremental cost.

Distribution Model 
The Building of the Establishment Network

LIVESTARs distribution model
is:


To distribute entertainment through its entertainment establishments and events;  To
promote its live events and media through its establishments;  To use licensing to
extend its brand name and potential patronage of its directly operated businesses.

Establishment
Network Building Strategy: 1. Identify a geographic market with high potential. 2.
                                        Open one or more entertainment establishments, whether a one-off concept or a
                    Company chain concept. 3. Establish a regional Live Events unit office and begin
                    producing events for the entertainment establishments. 4.
          Distribute content recorded from the events through various media and internet
          channels. 5. Identify a new geographic market and repeat the whole process.

The end result is a network of
interconnected cities all over North America. Because each line of business is directly
connected to one another, their individual strengths are stronger than if they were on
their own. As a result, each line of business is able to leverage the network to its
target market. For example: 

The entertainment establishments can help ensure a full venue because live entertainment
is readily available. 

The live events can ensure a multi-city tour through the establishments for major artists
and live acts.  A to be developed interactive unit can provide consumers with all
the information they need in regards to their favourite artists coming to
their city to perform and content to view.

8

The first targeted geographic markets
for the research and development and the subsequent building of the establishment network
are Ontario, Canada; British Columbia, Canada; California, USA, and Florida, USA.

LIVE ENTERTAINMENT MARKET
ANALYSIS

Entertainment
Establishments

Nightlife is a big business. Bar
& Nightclub magazine estimates that clubs account for about 60,000 of the 220,000
liquor licenses in the United States. Leaving aside strip clubs there are three general
club formats: mix-and-mingle, live music, and dance. Throw in sports bars, beach clubs,
and so forth, and you start to see why industry sales run in the tens of billions
annually. (Excerpt from inc. magazine, 2002).

In the mid-1990s, the total number of
operating liquor licenses in restaurants and bars in the USA exceeded 225,000 and beer and
wine licenses reached more than half a million. Generally, the number of liquor licenses
distributed is based on the population of the county. In 1996, food and beverage workers
held 4.6 million jobs, with 390,000 of those being bartenders. (Excerpt from entrepreneur
magazine, 2001).

According to the National Restaurant
Associations 2003 Restaurant Industry Forecast: Executive Summary, the bar and
tavern business is estimated to generate $14 billion in 2003.

Live Events and Concerts
(specifically live music entertainment)

According to Pollstar, the industry
leader for the concerts industry, the U.S. industry is now a $2 billion dollar industry.
The industry is dominated by Clear Channel Entertainment and House of Blues Entertainment.

The live music entertainment business
is a large and growing industry. Artists have traditionally embraced live performances as
a critical promotional tool for their recordings, as a platform to maintain direct
interaction with fans and as a way to achieve a sense of authenticity and spontaneity in
their work. Similarly, consumers have typically sought out live performances to experience
a personal connection with their favorite artists and fellow music enthusiasts and a
unique presentation of their favorite songs.

Participants in the Live
Music Entertainment Industry

The process of bringing a live
concert to an audience requires the involvement of four key parties:


artists;

booking agents and other artists representatives;  promoters; and  venue
owners and operators.

9

An artists representative, such
as a booking agent, works with an artist to arrange a venue and date, or series of venues
and dates, for performances and typically enters into contracts with promoters operating
in the various regions of the planned tour. A promoter is responsible for securing
individual venues for the event on given dates, marketing the event, selling tickets and
arranging for local production services, such as stage, set, sound and lighting. The
promoter may also provide limited production services. The promoter offers the artist a
guaranteed dollar amount per show based on the expected attendance and the ticket price
that is negotiated with the artist. The promoter and artists representative also
negotiate how the revenue in excess of the promoters operating expenses and the
artists guaranteed amount will be split.

A venue operator provides the venue
or establishment, which will host the event, and is responsible for supplying, either
through internal means or by subcontracting, all of the necessary supplementary services
required for the event. The venue operator is paid a fee for the use of the venue and
receives a rental payment based on a percentage of ticket revenues. The operator also
generates revenues from the services it supplies, including concessions sales, merchandise
sales, parking and other ancillary services, as well as sponsorships. Additionally, the
operator generates ancillary revenues from other high margin services such as VIP parking,
corporate box seating, and related amenities, which generally command premium pricing.
Industry participants, like House of Blues, often perform more than one of the booking,
promotion and venue operation functions.

Venues
typically fall into one of the following categories:  stadiums, generally
accommodating more than 32,000 patrons;  arenas, generally accommodating 15,000 to
25,000 patrons;  amphitheatres, open air performance spaces generally accommodating
4,000 to 32,000 patrons;  theatres, enclosed venues generally accommodating up to
6,000 patrons in fixed seating; and  concert clubs, generally accommodating 2,000 or
fewer patrons in more casual settings than theatres.

COMPETITORS AND
COMPETITIVE BUSINESS CONDITIONS

Competitors Overview

In its entertainment establishments
and live events business LIVESTAR faces two major competitors. These are:

1. Ministry of Sound2.
House of Blues3. Clear Channel Entertainment

The House of Blues operates in the US
and operates only in large live venues. It has a live events arm and a media arm. However
it is oriented towards a mass market and not specifically to 18-34 year olds.

Likewise Clear Channel Entertainment
primarily operates in the US but is again oriented towards a mass market. It is the
largest live entertainment company in the world and is not focused on developing niches
such as hip-hop or nightclubs.

These competitors are summarized
below.

10

Figure 1 Competitor

|                                                                                                                                                                                                                  | LIVESTAR                                                                                                                                                                                                                                                                                                                                            | Ministry of Sound                                                                                                                                                                                                                            | House of Blues                                                                                                                                                                                                                   | Clear Channel
Entertainment                                                                                                                                    
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|Target consumer 
                
Niche or mass   
market          
                
Live Venues     
                
                
                
Live events     
                
                
Media | 18-34 year old urban.
                     
Niche - urban        
culture, hip hop,    
R&B, dance, rock etc.
Medium to large-size 
nightclubs, 500-1000 
people.              
                     
Urban concerts       
Special Events (ie.  
Fashion shows).      
Plans for On-line    
and offline media.   
On-line information  
exchange. | 18-34 year old    
urban.            
Niche - dance     
culture.          
Medium to         
large-size        
nightclubs,
500-1,000 people.
Dance music       
concerts.         
                  
Online radio.     
Music downloads. | 21-50 year old mass
market.
Mass market, all   
cultures.          
Large concert halls
1,000-2,000 people.
All forms of music.
                   
                   
Online radio.      
Webcasts.          
Music downloads. | All ages.
Mass market, no
cultures.
Large stadiums,
10,000 people and up
All forms of music.
Sporting events and
Theatrical.
Synergy with sister
radio company.

Entertainment
Establishments Competitive Conditions

The nightclub industry is highly
competitive and fragmented. There are an uncountable number of nightclubs and other bar
and tavern and food and beverage service operations that will compete directly and
indirectly with the Company. In addition, many bar and tavern chains have significantly
greater financial resources than the Company. Nightclub revenues are affected by changing
consumer tastes and discretionary spending priorities, local economic conditions,
demographic trends, traffic patterns, the ability of business customers to deduct bar and
tavern expenses, the increasing trend towards prohibition of smoking in nightclubs and the
type, number and location of competing nightclubs. In addition, factors such as inflation
and increased food, liquor, labour and other employee compensation costs can adversely
affect profitability. The Company believes that its ability to compete effectively and
successfully will depend on, among other things, managements ability to offer a
quality entertainment experience for moderate prices, managements ability to control
labour costs, and ultimately on the executive determinations as to extensions of the brand
(i.e., selection of sites for new locations and related strategies).

11

Live Events Competitive
Conditions

We expect to compete for music
consumers, for relationships with artists, their representatives and record companies, as
well as for advertisers and sponsors in markets where we plan to own or operate an
establishment and in markets where LIVESTAR does not now or plan to own or operate
establishment.

In markets where we plan to own or
operate an establishment, LIVESTAR will compete with other venues or establishment to
serve artists likely to perform in that general region.

In markets where LIVESTAR does not
own or operate an establishment, LIVESTAR will compete with other venues for dates for
popular national tours. Consequently, touring artists have significant alternatives to
LIVESTAR establishments in scheduling tours. In addition, in the markets in which LIVESTAR
will promote live events and musical concerts, it will face competition from event
producers, promoters, as well as from certain artists that promote their own concerts.
LIVESTAR believes that barriers to entry into the live events and promotion services
business are low and that certain local promoters are increasingly expanding the
geographic scope of their operations.

In addition to the competitive
factors outlined above for each of the Companys business units, the success of the
Companys entertainment operations are dependent upon numerous factors beyond the
Companys control, including economic conditions, amounts of available leisure time,
transportation costs, lifestyle trends and weather conditions.

INTELLECTUAL PROPERTY

Trademarks

We believe that our success may
depend to a significant extent on the strength of our trademarks, servicemarks, trade
dress, copyrights and other proprietary rights that we plan to file for registration. The
Company plans to file Intent-To-Use Trademark Applications for certain brands we are
developing for our business units, establishments and live events for the various classes
of goods and services in which the Companys marks will be utilized. In addition, the
Company may file Intent-To-Use Trademark Applications for other proprietary programs
developed by the Company. There can be no assurance, however, that these trademarks will
proceed to registration, and if so registered, that the trademarks, in any one or more
classes, will not violate the proprietary rights of others, that any registration of the
trademarks or the Companys use thereof will be upheld if challenged, or that the
Company will not be prevented from using the trademarks.

Patents

The Company is developing propriety
events and venue innovations and certain entertainment technology innovations it may
attempt to protect with patents.

Potential Liability

In addition to the Risk Factors
described in the Exhibit to this filing, the operation of LIVESTARs live
entertainment businesses may result in liabilities or levels of unacceptance that may
affect its profitability. Specifically, one or more of the factors listed below may result
in liability or levels of unacceptance that may harm its present or future operations:

12

GOVERNMENTAL LICENSES AND
APPROVALS

The Company is subject to various
rules, regulations and laws affecting its business. Each of the Companys planned
establishments is subject to licensing and regulations by a number of governmental
authorities, including alcoholic beverage control and health, safety and fire agencies in
the state, province or municipality in which the establishment is located. Difficulties in
obtaining or failure to obtain the required licenses or approvals could prevent or delay
the development of a new establishment in a new location.

Various Canadian federal and
provincial labour laws govern the Companys relationship with its employees,
including such matters as minimum wage requirements, overtime and other working
conditions. Significant additional government-imposed increases in minimum wage, paid
leaves of absences and mandated health benefits, or increased tax reporting and tax
payment requirements for employees who receive gratuities, may impose significant burdens
on the Company. The Companys planned establishments in the United States are subject
to similar requirements.

Alcoholic beverage control
regulations require each of the Companys planned establishments to apply to a state
authority and, in certain locations, county and municipal authorities, for a license and
permit to sell alcoholic beverages in the premises. Typically, licenses must be renewed
annually and may be revoked or suspended for cause at any time. Alcoholic beverage control
regulations relate to numerous aspects of the daily operations of the Companys
planned establishments. The failure to receive or retain, or a delay in obtaining a liquor
license in a particular location could adversely affect the Companys ability to
obtain such a license elsewhere.

EFFECT OF EXISTING AND
PROBABLE GOVERNMENTAL REGULATIONS

The Company is subject to
dram-shop statutes in California and Florida and may become subject to similar
proposed legislation in Canada. Dram-shop statutes generally provide a person
injured by an intoxicated person the right to recover damages from an establishment, which
wrongfully served alcoholic beverages to such a person. The Company plans to carry liquor
liability coverage which it believes to be consistent with the coverage carried by other
entities in the bar and tavern and restaurant industry. Even though the Company may be
covered by insurance, a judgment against the Company under a dram-shop statute
in excess of the Companys liability coverage could have a material adverse effect on
the Company.

REGULATION AND LICENSES

The Company is subject to federal,
state and local laws affecting its business, including various health, sanitation and
safety standards. The Companys entertainment operations are subject to state and
local government regulation, including regulations relating to live music performances.
Each live concert performance must comply with regulations adopted by federal agencies and
with licensing and other regulations enforced by state and local health, sanitation,
safety, fire and other departments. Difficulties or failures in obtaining the required
licenses or approvals can delay and sometimes prevent the promotion of live events and
concerts. The failure to receive or retain, or delay in obtaining, a license to serve
alcohol and beer in a particular location could adversely affect the Companys
operations in that location and impair the Companys ability to obtain licenses
elsewhere. The failure or inability of the Company to obtain and maintain insurance
coverage could materially and adversely affect the Company.

13

EMPLOYEES

At December 31, 2003, LIVESTAR had
two Executive Officers and two Directors, and employed a total of 7 people including
officers and employees. LIVESTAR and its subsidiaries intend to hire additional employees
in the foreseeable future.

RESEARCH AND DEVELOPMENT
EXPENDITURES

The Company places significant emphasis on the design and interior decor of its planned establishments. The
Company's planned establishments unit designs may require somewhat higher capital costs and furniture and fixtures
investment to open a new establishment than is typical in the industry. Landlord contributions may defray a part or
a substantial part of interior design and decor at a typical new establishment. The Company believes that its
planned design and decor features may enhance the entertainment experience. Certain planned establishments may offer
patio seating, which may add substantially to seasonal capacity, revenues and profits. Table layouts are planned to
be flexible, permitting re-arrangement of seating to accommodate large groups and effective utilization of maximum
seating capacity.

The Company also believes that the location of an establishment is important to its success. In general, significant
time and resources will be spent in determining whether a prospective site is acceptable. Certain planned
establishments may be located at high-profile sites at malls/office complexes within larger metropolitan areas. In
selecting future sites, the Company plans to analyze demographic information for each prospective site, occupancy
capacity, property uses, and factors such as visibility, traffic patterns, accessibility, proximity of shopping
areas, offices, parks, tourist attractions, and competitive establishment.

LIVESTAR expects to incur business development oriented research and development expenditures over the twelve months
following December 31, 2003. The amounts to be incurred are entirely dependent upon the amount of additional funding
we will require to support such efforts. It is impossible to give a meaningful forecast at this time as to the
amounts of business development oriented research and development expenditures that will be incurred.

LIVESTAR has incurred technology related research and development costs of $0 and $78,877, respectively for the
fiscal years ending December 31, 2003, and 2002.  The change in expenditure is due to the Company's change in
business direction.

14

HTML1DocumentEncodingutf-8" As our prior filings have discussed, In October 2003, the
Company, entered into an Amended and Restated Plan of
Acquisition Agreement for the acquisition of 1485684 Ontario
Limited c/o/b as The Sequel Nightclub, located in Toronto,
Canada. We continue to attempt to finalize the transaction.

In December 2003, the Company, entered into a letter of intent for the acquisition of the Manhattan restaurant,
located in La Jolla, California. We have executed a further version of the Letter Intent whereas the Company is
planning to purchase control of the liquor license only and redevelop the business instead of a purchase of the
business. Negotiations are ongoing in regards to the execution of definitive agreement.

The Company's joint venture agreement with Razzor Records has expired as the Tampa Bay area complex that held the
proposed premises is slated for demolition. The Company continues to discuss future business possibilities with the
principals of Razzor records. In addition, the Company has not moved forward on the business relationships with
Klublife Publishing, Inc, Presidential Campaign and the TCAL Investment Group although discussions regarding the
development of future business continue. Subsequently, nothing will be further reported on these matters unless they
rise to a level of substantial materiality.

# Item 2. Description of
Property

We have no real estate property
holdings and at this time we have no agreements to acquire any properties. The Company
currently has its headquarters at premises at 62 W. 8th Avenue, 4th Floor, Vancouver,
British Columbia, Canada V5Y 1M7. The Company is currently occupying the same premises on
a month to month basis while it is considering renegotiating of a new lease.

# Item 3. Legal Proceedings

Other than the proceedings described
herein, LIVESTAR is not a party to any material legal proceedings and to LIVESTARs
knowledge, no such proceedings are threatened or contemplated. At this time we have no
bankruptcy, receivership or similar proceedings pending.

In December 2003 the Company resolved
the matter with Pr Newswire Association Inc.

In November 2003, Kent Colling filed
a lawsuit in the Lynchburg General District Court for the Commonwealth of Virginia. The
action concerned an alleged claim for unpaid wages of an employee of RRUN Labs, Inc., a
subsidiary of LIVESTAR Entertainment Group, Inc. The amount of the lawsuit is $7,329.38,
not including interest accruing from October 30, 2001 plus court costs of $37.

In addition, the Company believes
that there are approximately two-dozen other former employees of RRUN Labs, Inc. who are
owed wages by RRUN Labs, Inc. The total amount of unpaid wages claims, not yet subject to
any lawsuit against the Company, is approximately $160,000. All amounts have been included
in the Financial Statements as of December 31, 2002.

The Company believes that, as it
grows revenue-producing operations and as it raises capital, we will have the resources to
settle the abovementioned case and we have every intention of doing so. We are working to
reduce or prevent collection litigation by creditors or others. Settlements in stock may
result in unforeseen dilution to current shareholders.

15

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

(a)    
          We held an Annual General Meeting of our shareholders (the Annual General
          Meeting) on June 20, 2003 for the fiscal year ended December 31, 2002.

(b)    
          Please refer to Item 4(C)(i) below

(c)    
          Set forth below is a brief description of each matter voted upon at the Annual
          General Meeting and the number of affirmative votes and the number of negative
          votes cast:

(i)    
          the board of directors of the corporation nominated Ray Hawkins and Edwin Kwong
          to stand for election as members of the board of directors for the coming year
          which two persons shall constitute the entire board of directors. No other
          nominations were made.

|Votes for        |  |  | . |  |  |  | 45,552,121 | 
|---------------- |  |  | - |  |  |  | ---------- | 
|Votes against    |  |  | . |  |  |  | 0          | 
|Votes abstaining |  |  |   |  |  |  | 31,170,956 | 

(ii)    
          the board of directors of the corporation requested the shareholders of the
          corporation approve the amendments to the articles of incorporation to change
          the name of the corporation from RRUN Ventures Network, Inc. to LIVESTAR
          Entertainment Group, Inc.

|Votes for        |  |  | . |  |  |  | 45,573,508 | 
|---------------- |  |  | - |  |  |  | ---------- | 
|Votes against    |  |  | . |  |  |  | 0          | 
|Votes abstaining |  |  |   |  |  |  | 31,170,956 | 

(d) Not applicable

---

(a)    
          We held a Special Meeting of our shareholders (the Special Meeting)
          on December 1, 2003.

(b)    
          Not Applicable

(c)    
          Set forth below is a brief description of each matter voted upon at the Special
          Meeting and the number of affirmative votes and the number of negative votes
          cast:

(i)    
          the board of directors of the corporation requested the shareholders of the
          corporation approve the amendments to the articles of incorporation to increase
          the authorized capital from 250,000,000 common shares to 1,000,000,000 common
          shares.

|Votes for        |  |  | . |  |  |  | 231,926,099 | 
|---------------- |  |  | - |  |  |  | ----------- | 
|Votes against    |  |  | . |  |  |  | 3,630,081   | 
|Votes abstaining |  |  |   |  |  |  | 27,308,200  | 

(d) Not applicable

16

# Part II

# Item 5. Market for
Registrants Common Equity and Related Stockholders Matters

TRADING SYMBOL CHANGE

Prior to September 2001, there was no
trading market for our common stock. The Company received approval for listing and in
September, 2001, the Company obtained a trading symbol of RRUN and began
trading on the NASD Over-the-Counter Bulletin Board. In July, 2003 the Company changed its
trading symbol from RRUN to LSTA to reflect the name change of the
Company from RRUN Ventures Network Inc. to LIVESTAR Entertainment Group, Inc. Although we
have a listing on the Bulletin Board, it is impossible to know or predict from day to day
how active that market will be. There presently is a trading market for our stock,
however, we cannot guarantee that a trading market will continue. As at December 31, 2003
there were 159 record holders of the Companys common stock.

MARKET PRICE

Our common stock is quoted at the
present time. At March 31, 2004, our stocks closing price was $0.0023 per share.
This price, however, is an inter-dealer price without retail mark-up, mark-down or
commission and may not represent an actual transaction. The Securities and Exchange
Commission has adopted a Rule that defines a penny stock, for purposes
relevant to us, as any equity security that has a market price of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions. Our common stock is presently considered a penny stock and is
subject to such market rules.

|                                                                                                                                                                                                                                               | HIGH                                                                                                                                                                           | LOW                                                                                      
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -----------------------------------------------------------------------------------------
|2001*          
First Quarter  
Second Quarter 
Third Quarter  
Fourth Quarter 
2002*          
First Quarter  
Second Quarter 
Third Quarter  
Fourth Quarter 
2003*          
First Quarter  
Second Quarter 
Third Quarter  
Fourth Quarter | Not Trading**
Not Trading**
$  3.10      
$  1.50      
     
$  0.42      
$  0.32      
$  0.10      
$  0.026     
     
$  0.008     
$  0.015     
$  0.021     
$  0.017 | $  1.50
$  0.45
$  0.12
$  0.08
$  0.015
$  0.004
$  0.0023
$  0.0035
$  0.0035
$  0.0031

*The prices are all
closing prices and appear as approximate figures. **Trading of our stock did
not begin until late September 2001.

17

The source of these high and low
prices was the OTC Bulletin Board. These quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commissions and may not represent actual transactions.

The market price of our common stock
is subject to significant fluctuations in response to variations in our quarterly
operating results, our public announcements regarding our then business activities,
general trends in the market for the products and services we have been developing, and
other factors, over many of which we have little or no control. In addition, board market
fluctuations, as well as general economic, business and political conditions, may
adversely affect the market for our common stock, regardless of our actual or projected
performance.

DIVIDENDS

We have not paid any dividends to
date, and have no plans to do so in the immediate future.

TRANSFER AGENT

We have retained the services of
Jersey Transfer and Trust as our transfer agent at this time.

RECENT SALES OF
UNREGISTERED SECURITIES

During July of 2003, the Company
issued a total of 1,000,000 preferred shares of its previously authorized, but unissued
preferred stock. The shares were issued to one company as a deposit towards a planned
acquisition transaction. During October of 2003 the Company redeemed 125,000 of the
1,000,000 preferred shares pursuant to a redemption right the Company had in relation to
the planned acquisition transaction. The transaction was valued at 1,000,000 preferred
shares at $0.20 per share and 125,000 preferred shares at $0.40 per share respectively.
The transactions were isolated transactions with a person having a close affiliation with
the Company and was exempt from registration under the Securities Act of 1933 pursuant to
Section 4(2) of the Act because of not being part of a public offering. The offering was
for a limited purpose and did not use the machinery of public distribution.

During October of 2003, the Company
issued a total of 1,177,846 shares of its previously authorized, but unissued common
stock. The shares were issued to two debtholders in exchange for the cancellation of
loans. The transactions were valued at 951,676 shares at $0.0035 per share and 226,170
shares at $0.003 per share respectively. The transaction was an isolated transaction with
a person having a close affiliation with the Company and was exempt from registration
under the Securities Act of 1933 pursuant to Section 4(2) of the Act because of not being
part of a public offering. The offering was for a limited purpose and did not use the
machinery of public distribution.

During October of 2003, the Company
issued 1,000,000 shares of its previously authorized, but unissued common stock. The
shares were issued to one consultant in exchange for the cancellation of debt. The
transactions were valued at $0.01 per share. The transactions were isolated transactions
with persons having a close affiliation with the Company and were exempt from registration
under the Securities Act of 1933 pursuant to Section 4(2) of the Act because of not being
part of a public offering. The offering was for a limited purpose and did not use the
machinery of public distribution.

18

During December 2003, the Company
issued a total of 43,853,957 shares of its previously authorized, but unissued common
stock. The shares were issued to four debtholders in exchange for the cancellation of
loans. The transactions were valued at $0.003 per share respectively. The transaction was
an isolated transaction with a person having a close affiliation with the Company and was
exempt from registration under the Securities Act of 1933 pursuant to Section 4(2) of the
Act because of not being part of a public offering. The offering was for a limited purpose
and did not use the machinery of public distribution.

SECURITIES AUTHORIZED FOR ISSUANCE
UNDER EQUITY COMPENSATION PLANS.

Equity Compensation
Plan Information

|Plan category                                                                                                             | Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
(a) | Weighted average
exercise price of
outstanding options,
warrants and rights
(b) | Number of securities
remaining available for
future issuance
(c)
|------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------- | ----------------------------------------------------------------
|Equity compensation plans 
approved by security
holders
Equity compensation plans 
not approved by security
holders
Total | -0-    
 5,000,000 
 5,000,000                                                                  | n/a   
$0.0027 
$0.0027                                                         | -0-
18,000,000
18,000,000                                       

# Item 6.
Managements Discussion and Analysis or Plan of Operation

The following discussion should be
read along with the financial statements and notes, and by other more detailed financial
information appearing in other parts of this annual report.

RESULTS OF OPERATIONS

For the Year Ended December 31, 2003
compared to Year Ended December 31, 2002.

From inception to the fiscal year
ended December 31, 2003 the Company primarily operated as a development stage Company. The
Companys business is still in its development stage. The Company has generated
little revenue to date.

For the fiscal year ended December
31, 2003, and December 31, 2002, the Company earned revenues of $500, and $5,000,
respectively. Revenues in 2003 were related to one Live Event, which the Company expects
to continue on an annual basis. Revenues in the year 2002 were related to the licensing of
rights for the use of our AXXUS technology. The Company will not generate any future
revenues from these rights as per the divestiture of AXXUS Corporation, as discussed in
the Form 8-K filed with the Commission on December 16, 2002. Future revenues for the
Company are associated with the realization of its new business strategy, the planned
development and operation of a live entertainment business, as outlined below.

For the fiscal year ended December
31, 2003, and December 31, 2002, the Company incurred operational expenses of $957,011,
and $1,739,325, respectively, of which $251,159 and $908,549 were accrued, respectively.
These operating expenses included: $ 0, and $76,877, respectively, in software
development; $200,539, and $423,404 respectively, in consulting fees; $348,113 and
$502,197, respectively in business development costs; and $104,174 and $133,121,
respectively in Professional Fees. The overall increase in the Companys operating
expenses and changes across all above categories is due to expanded business efforts to
develop and realize its business plan. For the fiscal year ended December 31, 2003, and
December 31, 2002, the Company incurred a net loss from operations of $909,856 and
$1,265,480, respectively.

19

LIQUIDITY AND FINANCIAL
CONDITION AS OF DECEMBER 31, 2003

We had cash-on hand of totaling
$14,892 as of December 31, 2003. Although the Company maintains minimal cash reserves and
continues to experience uncertainty regarding future revenues, management strives to
maintain current operations, remain viable and develop sustainable revenue streams and
positive cash flow. Our sources of liquidity includes sales of our common stock, and loans
from management, shareholders and other close affiliates to the Company, and intended cash
revenues from operations as developed as per the business strategy described below.

Managements current and
business strategy is oriented to maximize our chances of success. Additional financial and
liquidity issues relating to the current business strategy are outlined in the LIVESTAR
Entertainment Group, Inc. Implementation Plan section below.

Our business strategy is to focus our
immediate efforts on building a network of licensed entertainment establishments and a
live events business, as the base for our urban lifestyle businesses. The development of
these core businesses will require a staff of approximately 15 persons consisting of
marketing, business operations, accounting, administration, corporate finance, venture
development and merger and acquisition professionals. These establishments will still
utilize a branding approach so that we can sell other urban lifestyle products and
services.

LIVESTAR intends to develop a
comprehensive program to conduct its research and development of potential locations
for its entertainment establishments. Although the program it develops is hoped to
yield competitive advantages, LIVESTAR expects that others may be able to compete
effectively for its locations. LIVESTAR expects that it must devote a minimum of
approximately 5% of it revenues towards location research and development.

20

Over the twelve months following
December 31, 2003, LIVESTAR will conduct significant research and development, or R &
D for its acquiring and or development of entertainment establishments, namely nightclubs.

The R & D anticipated to be
executed by LIVESTAR for its planned establishments business will include but will not be
limited to:


The Company places significant emphasis on the design and interior decor of its planned
establishments. The Companys planned establishments unit designs may require
somewhat higher capital costs and furniture and fixtures investment to open a new
establishment than is typical in the industry. Landlord contributions may defray a part or
a substantial part of interior design and decor at a typical new establishment. The
Company believes that its planned design and decor features may enhance the entertainment
experience. Certain planned establishments may offer patio seating, which may add
substantially to seasonal capacity, revenues and profits. Table layouts are planned to be
flexible, permitting re-arrangement of seating to accommodate large groups and effective
utilization of maximum seating capacity.


The Company also believes that the location of an establishment is important to its
success. In general, significant time and resources will be spent in determining whether a
prospective site is acceptable. Certain planned establishments may be located at
high-profile sites at malls/office complexes within larger metropolitan areas. In
selecting future sites, the Company plans to analyze demographic information for each
prospective site, occupancy capacity, property uses, availability of site for possible
purchase and factors such as visibility, traffic patterns, accessibility, and proximity of
shopping areas, offices, parks, tourist attractions, and competitive establishments.

LIVESTAR plans to coordinate
operations out of its Vancouver, British Columbia, Canada facility. LIVESTAR currently has
business and operational development offices in La Jolla, California and Las Vegas,
Nevada. At the required time the Company plans to open other business development, finance
or operational offices in other Canadian and U.S. cities.

LIVESTAR IMPLEMENTATION
PLAN

LIVESTAR requires approximately
$6,000,000 in operational capital for the 12 month period following December 31, 2003. The
LIVESTAR implementation is planned over a period of four phases totaling 12 months. Each
phase is three months. The implementation plan during each phase describes the activity of
LIVESTAR across various departments such as Operations, Finance, Mergers and Acquisitions,
Venture Development/Product Development, and Sales/Marketing/Business Development.

Our immediate aim is to acquire or
develop our first establishment so that we can use it as a flagship for the network and
demonstrate our unique and proprietary entertainment concepts for use in our other
establishments. We intend that the later establishments will be developed in new and
existing locations in major cities throughout the United States and Canada.

LIVESTARs 2004 implementation
plan regarding its new core business units of entertainment establishments and live events
is:

21


Phase One (Jan  March 2004): Continue development of business plan for new
entertainment establishment and live events units; commence development of corporate
finance department, Future Establishments Finance Strategy and Real Estate Financing
Strategy; continue debt reduction plan via voluntary creditor write offs and stock based
settlements; headhunt and secure key consultants and possible staff members to execute
development of new business units; continue research of entertainment establishment
acquisition candidates and development locations; secure first entertainment establishment
acquisition or development; secure first live event acquisition or development of live
event; open business development office in California and Nevada; commence additional
staff hiring.


Phase Two (April  June 2004): Launch first phase of Future Establishments Finance
Strategy and Real Estate Financing Strategy, while continuing development of corporate
finance department; Secure first stage of capital; finalize new business plan for new
entertainment establishment and live events units; finalize operations and marketing
plans; continue research of entertainment establishment acquisition candidates and
development locations; secure second entertainment establishment acquisition or
development; secure additional live event acquisitions or development of live events;
continue debt reduction plan via voluntary creditor write offs and stock based
settlements;


Phase Three (July  September 2004): Fully launch corporate finance department,
Future Establishments Finance Strategy and Real Estate Financing Strategy; Secure next
stage of capital; continue research of entertainment establishment acquisition candidates
and development locations; secure third entertainment establishment acquisition or
development; secure additional live event acquisitions or development of live events;
continue debt reduction plan via voluntary creditor write offs and stock based
settlements; continue additional staff hiring if necessary; open business development
office in Miami, Florida.


Phase Four (October  December 2004): Secure next stage of capital; continue research
of entertainment establishment acquisition candidates and development locations; secure
fourth and fifth entertainment establishment acquisition or development; secure additional
live event acquisitions or development of live events; continue additional staff hiring if
necessary; open business development office in New York, NY.

FINANCING STRATEGIES

In order to finance our acquisitions
and developments, and our phases of implementation we plan to raise investment capital
through the execution of a number of development finance strategies.

Current Development
Finance Strategy:

In order to finance the first and
second acquisition or development establishments the Company may use its preferred or
common stock to finance the acquisition or development or to raise the necessary capital
for acquisition or development.

22

Future Development
Financing Strategy:

In the future, we hope to fund the
majority of our new establishment locations through the selling of a minority interest in
the new establishments through the sale of up to 49% of the equity or through limited
partnerships. This minority interest is hoped to be sold to either individual investors
who wish to invest directly into an establishment or into a fund or partnership that will
be funded by investors wishing to diversify their investment over a number of
establishments that the fund or partnership may invest in. This proposed fund is planned
to be formed by LIVESTAR exclusively for LIVESTAR establishments. The Company hopes to
establish an internal corporate finance department and external network or syndicate of
investment advisors, investment bankers and broker dealers that will raise capital via the
direct investments strategy and/or form the fund or partnership that will raise capital
through the fund or partnership strategy. It is planned that investors under this strategy
are planned to receive cash dividends and some capital stock or warrants in the Company.

In addition to the direct investment
and fund or partnership strategy the Company hopes to raise capital for its new
establishments through the forming of a real estate financing plan that is hoped to
utilize real estate financing to fund the purchase of properties and subsequently secure
construction financing to fund the renovations of the establishment.

We believe that this Future
Development Financing Strategy will enable us to achieve our development goals with a hope
over the long-term of reducing the potential dilution to our existing shareholders. By
raising capital directly in each establishment through our planned Future Development
Financing Strategy we may not have to dilute the existing shareholders to any great extent
to grow the business. As our cash producing businesses grow due to the planned
implementation and hopeful success of the Future Development Financing Strategy we plan to
utilize the available cash to pay for operations without having to use stock to pay for
large and important operational items item such as staff and consultants.

The result of this is, that as our
cash flow may grow as our dilution may slow. More specifically, we have developed
comprehensive business and financial plans that result in our development of a network of
entertainment establishments that should operate on a cash positive basis and without
incurring substantial dilution to stockholders such that the Company can possibly increase
its overall valuation substantially. This possible increase in the Companys overall
valuation may be accomplished by using the positive cash flow to buy back the
Companys common stock from the public float. There is no current plans to implement
a stock buy back program, although one is intended over the long-term and will only be
implemented based on the success of the foregoing and solely of the discretion of the
Companys management and board of directors.

In addition to the above we plan we
plan to invite direct investments into the Company to provide funds for general corporate
purposes.

CAPITAL REQUIREMENTS

We believe that the first acquisition
or development of a entertainment establishment will require approximately a minimum of
$500,000 for the acquisition, plus approximately $100,000 in legal, accounting and
administrative expenses. In addition our first acquisition or development will require a
minimum of another $400,000 for working capital and general corporate purposes. This is a
minimum total of approximately $1,000,000 that will be required in the next quarter during
which we are hoping to make the first acquisition or development. In the following 3
months, we plan to execute one or two additional acquisitions or developments. We believe
that the cost of a second and third acquisition or development project will be
approximately a minimum of $1,000,000 each and that approximately another $500,000 minimum
each will be required for the same purposes as listed above for the first acquisition or
development and for working capital and general corporate purposes. Thus, we anticipate
needing a minimum of $4,000,000 of investment capital during the next six months.

23

After the first two acquisitions or
development projects, we intend to develop other entertainment establishments from initial
buildout rather than from acquisitions. Our plan is to open two additional entertainment
establishments by the end of 2004 and we anticipate that additional funding (approximately
$1,000,000) will be required to accomplish this. Management anticipates that funding
requirements for this plan will be less than the overall cost of opening these nightclubs,
since the revenues from the first two or three nightclubs is expected to generate enough
positive cash flow to reduce the level of external capital required. We have developed
comprehensive business and financial plans that result in our development of a network of
entertainment establishments that should operate on a cash positive basis and without
incurring substantial dilution to stockholders such that the Company can possibly increase
its overall valuation substantially. The Company believes it will require approximately
$1,000,000 to launch its live events business unit, including the cost of acquisitions or
development and their subsequent integration and for the venture development of other
potential lines of business for 2003. The total additional working capital financing
described in this section is planned to also include the development of other synergistic
business units such as, including but not limited to, membership services, brand licensing
and merchandising.

CAPITAL ACQUIRING PLANS

Management plans on initiating a
series of securities offerings to raise the investment capital needed to meet our
acquisition and development plans. Although we will make efforts to minimize dilution to
current shareholders, we may not be able to avoid significant dilution due to many
factors, including but not limited to, the closing of financing at lower than the desired
market price of the Companys common stock.

LIVESTAR hopes to secure the
financing to satisfy the capital needs for each phase of its implementation plan through
the execution of various funding methods, primarily financing through its Future
Development Financing Strategy, private placement investments or debt financing. LIVESTAR
hopes to achieve this by securing relationships with accredited individual investors,
investment bankers, venture capitalists, and/or finance investment advisors that have the
experience and relationships to aid LIVESTAR with its capital raising efforts. The source
of the capital may be comprised of a mix of principal shareholders, private investors and
venture capital companies.

If needed capital investment for our
acquisitions or developments is not available, in whole or in part, we intend to delay the
implementation plan regarding our acquisitions or development plans until sufficient
investment capital becomes available. We cannot give any assurances that we will raise
sufficient investment capital to meet the business plan. In addition to delays to the
implementation plan regarding our acquisition or development plans due to insufficiency of
investment capital, we may suffer other consequences, including but not limited to the
following: We may have to significantly alter the scope of our business plan and
subsequent capital requirements; We may have to suspend or discontinue operations of one
or more of our business units or; we may have to suspend or discontinue operations of the
Company if we become insolvent as a result.

24

Until planned acquisitions (current
and future) and new development establishments begin to produce significant revenues and
subsequent positive cash flow, we will be reliant on capital received from private
placements, loans, and the exercise of options and warrants. Due to the depressed market
for our securities, we may not be able avoid significant dilution to current shareholders.
In addition, we expect to continue to retain certain management, staff and consultants,
such as legal counsel, and may need to compensate these individuals through the issuance
of our common stock as compensation. These stock based compensations may result in
significant dilution to current shareholders due to the depressed market for our
securities. We also continue to reduce or prevent collection of outstanding vendor debts
and accounts with creditors, such as suppliers and consultants, which could result in
litigation against the Company. There can be no guarantee that all of these negotiations
will be successful and the outcome of these negotiations may include settlements in cash
and/or issuance of common stock. These stock based settlements may result in significant
dilution to current shareholders due to the depressed market for our securities. We plan
on continuing to meet certain of our expenses through the issuance of our shares of common
stock, which may cause additional and significant dilution to existing shareholders due to
the depressed market for our securities.

FORWARD-LOOKING STATEMENTS

Many statements made in this report
are forward-looking statements that are not based on historical facts. Because these
forward-looking statements involve risks and uncertainties, there are important factors
that could cause actual results to differ materially from those expressed or implied by
these forward-looking statements. The forward looking statements made in this report
relate only to events as of the date on which the statements are made.

# Item 7. Financial
Statements

The information requested by this
item is set forth in Item 13 of this Report.

Item 8. Changes in and
Disagreements with Accountants on Accounting and Financial Disclosure

There have been no changes in and
disagreements with Accountants on Accounting and Financial Disclosure as of the fiscal
year end 2002.

# Item 8A. Controls and
Procedures.

As required by Rule 13a-14 under the
Securities Exchange Act of 1934 (the Exchange Act), we carried out an
evaluation of the effectiveness of the design and operation of our disclosure controls and
procedures within the 90 days prior to the filing date of this report. This evaluation was
carried out under the supervision and with the participation of our Chief Executive
Officer, Ray Hawkins and Chief Financial Officer, Edwin Kwong. Based upon that evaluation,
our Chief Executive Officer and Chief Financial Officer concluded that our disclosure
controls and procedures are effective in timely alerting management to material
information relating to us which is required to be included in our periodic SEC filings.
There have been no significant changes in our internal controls or in other factors that
could significantly affect internal controls subsequent to the date we carried out our
evaluation.

25

Disclosure controls and procedures
are controls and other procedures that are designed to ensure that information required to
be disclosed our reports filed or submitted under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and Exchange
Commissions rules and forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required to be
disclosed in our reports filed under the Exchange Act is accumulated and communicated to
management, including our Chief Executive Officer and Chief Financial Officer, to allow
timely decisions regarding required disclosure.

# PART III

# Item 9. Directors and
Executive Officers of the Registrant

|Name                                                  | Age      | Offices Held                                                                                                                     
|----------------------------------------------------- | -------- | ---------------------------------------------------------------------------------------------------------------------------------
|Ray A. Hawkins (1)
                  
Edwin Kwong (1) | 34
  
32 | President, Chief Executive
Officer, Director
Chief Operations Officer, Chief Financial Officer,
Treasurer, Secretary and Director

(1)    
          Directors were appointed to the Board on August 17, 2001.

TERMS OF OFFICE

All executive officers provide
services to LIVESTAR on a full-time basis. The above listed directors will serve until the
next annual meeting of the shareholders or until their death, resignation, retirement,
removal, or disqualification, or until their successors have been duly elected and
qualified. Vacancies in the existing Board of Director are filled by majority vote of the
remaining Directors. The officers serve at the will of the Board of Directors. There are
no family relationships between any executive officer and director.

MANAGEMENT

Ray Hawkins 
Director, President & CEO.

As the President & CEO, Mr.
Hawkins duties include the forging of business development, securing of partnerships, and
overseeing product development, and marketing campaigns. Mr. Hawkins is a serial
entrepreneur with over a decade of experience in the fields of media, entertainment, and
marketing. From 1990-1995, Mr. Hawkins operated his own music artist management firm, RAH
Talent. During that time Mr. Hawkins also acted as the CEO of Empire Communications, a
record label that produced a number of cutting edge music artists. Also from 1990 
1995 Mr. Hawkins acted as CEO of RAH Entertainment, a concert and event corporation. From
1993-1997 Mr. Hawkins acted as a music consultant, procuring cutting edge music for movie
and television production houses like Paramount Pictures and video game companies like
Electronic Arts. From 1996-1999 Mr. Hawkins was the founder, President, and CEO of TAXI
Communications Network Inc., a leading edge media and marketing firm that produced a
popular local culture magazine, TAXI Vancouver, and developed urban based marketing
campaigns for companies like Labatt Breweries, Universal Music, Virgin Megastore and
Molson Canada.

26

Edwin Kwong  Director, COO and
CFO.

Mr.
          Kwong uses his background in finance and project management to oversee the
          day-to-day operations of LIVESTAR. Mr. Kwong has over 5 years of international
          management consulting experience in Project Management and Finance in Canada and
          Asia. In 1993 Mr. Kwong received a Bachelor of Commerce in Finance from the
          University of British Columbia. In 1996 Mr. Kwong received a Graduate Diploma in
          Asian Pacific Management. From 1994-1996 Mr. Kwong worked as Investment Advisor
          Assistant for Great Pacific Management in Vancouver. From 1996 to 1997 Mr. Kwong
          acted as a consultant in Hong Kong for Manulife International Ltd. and Ernst and
          Young Management Consulting. From 1997-1998 Mr. Kwong was a Project Executive
          for Hopewell Holdings in Hong Kong and Indonesia. From 1999-2000 Mr. Kwong was
          the Senior Business Specialist for INTRIA Items Inc., a financial technology
          solutions division of Canadian Imperial Bank of Commerce.

SIGNIFICANT EMPLOYEES

Other than those individuals
described above, LIVESTAR does not have any employees who are not executive officers that
are expected to make a significant contribution to the business.

SECTION 16(A) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE

The following persons have failed to
file, on a timely basis, the identified reports required by Section 16(a) of the Exchange
Act during the most recent fiscal year:

|Name and principal position | Number of late
Reports | Transactions not
Timely Reported | Known Failures
to File a
Required Form
|--------------------------- | ---------------------- | -------------------------------- | --------------------------------------
|Ray A. Hawkins              |                        |                                  |                                       
|CEO, President and Director |                        |                                 
|Edwin Kwong                 |                        |                                  |                                       
|COO, CFO, Treasurer,        |                        |                                 
|Secretary and Director      |                        |                                 
|VANTECH Securities Ltd.     |                        |                                  |                                       
|Affiliate                   |                        |                                 

CODE OF ETHICS

The Company has adopted a Code of
Ethics, a copy of which is included with this filing as Exhibit 14.1.

27

# Item 10. Executive
Compensation

The following table sets forth
certain information as to our President and the highest paid officers and directors for
our last fiscal year ended December 31, 2003. No other compensation was paid to any such
officers or directors during this time period.

Annual Compensation Table

|                  |  | Annual Compensation (1) |               
|----------------- |  | ----------------------- | --------------
|
|Ray A. Hawkins(4) |  |                         | President ,CEO
|                  |  |                         | and Director  
|                  |  |                         |               
|                  |  |                         |               
|Edwin Kwong(4)    |  |                         | COO, CFO and  
|                  |  |                         | Director      
|                  |  |                         |               
|                  |  |                         |               
|                  |  |                         |               
|                  |  |                         |               
|                  |  |                         |               

(1)    
          Unless otherwise noted, compensation for Fiscal 2001 is for the six month period
          ended December 31, 2001. There was no compensation paid by the Company to the
          officers or directors of the Company prior to that time. As of December 31,
          2003, no retirement, pension or insurance programs or other similar programs
          have been adopted by LIVESTAR for the benefit of its employees.

(2 In the fiscal year ending December
31, 2003, Mr. Ray Hawkins and RYM Management, Ltd. was entitled to receive an additional
$343,439 of executive compensation, and this entire amount has been accrued.

(3)    
          In the fiscal year ending December 31, 2003, Mr. Edwin Kwong was entitled to
          receive an additional $192,524 of executive compensation, and this entire amount
          has been accrued.

(4)    
          Mr. Hawkins and Mr. Kwong, the Companys Chief Executive Officer and Chief
          Financial Officer respectively, have restructured their Management Services
          Memorandum with the Company, see Section on Related for a description of new
          service arrangements.

Effective January 1, 2002, the
Company executed Management Services Memorandums with two key directors/officers. In
addition to total signing bonuses of $210,000 which have no specific payment date and are
payable in cash or shares of the Company or its subsidiaries. The memorandums provide for
performance bonuses and total annual compensation in the upcoming four fiscal years as
follows:

|Year ended December 31, 2004 |  |  | $ | 200,000 | 
|---------------------------- |  |  | - | ------- | 
|Year ended December 31, 2005 |  |  | $ | 200,000 | 
|Year ended December 31, 2006 |  |  | $ | 200,000 | 

28

Options/SAR Grants in Last Fiscal Year
                              (Individual Grants)

|Name           | Number of
Securities
Underlying
Options/SARs
Granted (#) | Percent of
options/SARs
granted
employees in
fiscal year | Exercise or
base price
($/Sh) | Expiration date
|-------------- | -------------------------------------------------------- | -------------------------------------------------------- | ----------------------------- | ---------------
|Ray A. Hawkins |                                                          |                                                          |                               | 0              
|Edwin Kwong    |                                                          |                                                          |                               | 0              

Aggregated Option/SAR Exercises in Last Fiscal Year
                      and FY-End Option/SAR Values

|Name           | Shares
aquired
on
exercise
(#) | Value
realized
($) | Number of
unexercised options
/SARs at FY-end (#)
exercisable/
unexercisable | Value of unxercised
in-the-money options
/SARs at FY-end($)
exercisable/
unexercisable
|-------------- | ------------------------------ | ------------------ | ---------------------------------------------------------------------------- | --------------------------------------------------------------------------------------
|Ray A. Hawkins |                                |                    |                                                                              | 0                                                                                     
|Edwin Kwong    |                                |                    |                                                                              | 0                                                                                     

# Item 11. Security
Ownership of Certain Beneficial Owners and Management

The following table lists as of March
31, 2003, the beneficial ownership of LIVESTARs common stock by each person known by
LIVESTAR to beneficially own more than 5% of LIVESTARs common stock outstanding and
by the officers and directors of LIVESTAR as a group. Except as otherwise indicated, all
shares are owned directly. LIVESTAR knows of no other person who is the beneficial owner
of more than five percent of LIVESTARs common stock. Unless specifically indicated,
the shareholders listed possess sole voting and investment power with respect to the
shares shown.

|Directors, Officers and 5% Stockholders            | Shares Beneficially Owned
|-------------------------------------------------- | -------------------------
|
|550605 B.C. Ltd                                    |                          
|4th Floor, 62 W. 8th Avenue                        |                          
|Vancouver, B.C. V5Y 1M7                            |                          
|                                                   |                          
|Ray A. Hawkins                                     |                          
|#71-1075 Granville Street                          |                          
|Vancouver, B.C.  V6Z 1L4                           |                          
|                                                   |                          
|RYM Management Ltd                                 |                          
|71 - 1075 Granville St                             |                          
|Vancouver, BC                                      |                          
|Canada V6Z 1L4                                     |                          
|                                                   |                          
|Edwin Kwong                                        |                          
|#5 - 744 West 7th Avenue                           |                          
|Vancouver, B.C. V5Z 1B8                            |                          
|                                                   |                          
|VANTECH Securities Ltd.                            |                          
|Suite 104B, Saffrey Square, Bank Lane              |                          
|Nassau, Bahamas                                    |                          
|                                                   |                          
|All LIVESTAR directors and  officers as a group (2 |                          
|persons)                                           |                          

29

(1)    
          Ray A. Hawkins owns 74% of 550605 B.C. Ltd. (2) Ray A. Hawkins owns 100% of RYM
          Management Ltd.

(3)    
          Includes shares issuable upon the exercise of options within 60 days.

(4)    
          Includes shares issuable upon the conversion of 875,000 Series A Preferred
          Shares, with the Conversion Rights of 40 Common Shares to 1 Preferred Share. (5)
          Includes 580,000 shares issuable upon the exercise of options within 60 days.

For information regarding Equity
Compensation Plans, please refer to Item 5 of this Report.

# Item 12. Certain
Relationships and Related Transactions

Except as disclosed below, none of
the following parties since the date of LIVESTARs incorporation has had any material
interest, direct or indirect, in any transaction with LIVESTAR or in any presently
proposed transaction that, in either case, has or will materially affect LIVESTAR.

           Director or officer of LIVESTAR
           Proposed nominee for election as a director of LIVESTAR
           Person who beneficially owns,
directly or indirectly, shares carrying more than 10% of the voting rights attached to all
outstanding shares of LIVESTAR. 
           Promoter of LIVESTAR
           Relative or spouse of any of the foregoing persons

CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS

1.    
          Incentive Stock Options. Option rights issued to Officers and Directors under
          our Incentive Stock Option Plan. A copy of the Plan as well as Incentive Stock
          Option Agreements for each Executive Officer and Director were attached as
          Exhibits to Form 10-KSB filed on October 15, 2001. Options awarded to Officers
          and Directors have been disclosed in Item 10 of this filing.

2.    
          As of September 1, 2001, LIVESTAR Ventures Network Inc. owed a total of $321,598
          to LIVESTAR Ventures Network Inc.s President and CEO, Ray Hawkins.
          LIVESTAR is obligated to repay such loans as per terms of a Promissory Note
          issued to Ray Hawkins dated September 1, 2001. This debt is interest free and
          has a repayment term of one year from the date of September 1, 2001. In exchange
          for a reduction of $50,544 indebtedness by LIVESTAR, Ray Hawkins subscribed to
          additional shares of common stock of the Company. The Company also repaid
          $11,537 during the fourth quarter of 2001. In addition, at September 1, 2001,
          Ray Hawkins was granted the option to convert to common shares an additional
          $20,000 in debt owed by the Company. The terms of such conversion are that Ray
          Hawkins is granted the right to convert such debt to stock at $0.02 per share;
          however, Ray Hawkins cannot execute such conversion until after February 28,
          2002.

30

In February, 2002, the Company
executed an amendment to the Promissory Note dated September 1, 2001 with Ray Hawkins. The
amended Promissory reflected the amount owning from LIVESTAR to Ray Hawkins as of December
31, 2001, as a total of $259,517.00. LIVESTAR is obligated to repay such loans as per
terms of the amended Promissory Note issued to Ray Hawkins in February, 2002. The debt is
interest free and has a repayment term of one year from the date of the February, 2002
Promissory Note. Ray Hawkins was granted the option to convert to common shares the entire
amount of outstanding debt owed to Ray Hawkins by the Company. The terms of such
conversion are that Ray Hawkins is granted the right to convert such debt to stock at
$0.02 per share. Ray Hawkins cannot execute such conversion until after September 1, 2002.

In August 2002, the Company executed
an amendment to the amended Promissory Note of February 2002 with Ray Hawkins. The
amendment provides that Ray Hawkins cannot execute the conversion provision, as per the
February 2002 Promissory Note, until after November 30, 2003.

In November 2003, the Company
executed an amendment to the amended Promissory Note of February 2002 with Ray Hawkins.
The amendment provides that Ray Hawkins cannot execute the conversion provision, as per
the February 2002 Promissory Note, until after June 30, 2004.

In November 2003, the Company also
repaid $8,000 towards the Promissory Note due to Ray Hawkins.

3.    
          In September, 2001, LIVESTAR Ventures Network, Inc. owed a total of $9,435 to
          LIVESTAR Ventures Network, Inc.s COO, Edwin Kwong. LIVESTAR is obligated
          to repay such loans. This debt is interest free and repayable within one year
          from date of the promissory note issued to Edwin Kwong from LIVESTAR dated
          September 1, 2001. In exchange for a reduction of $3,900 indebtedness by
          LIVESTAR, Edwin Kwong subscribed to additional shares of common stock of the
          Company. In addition, at September 1, 2001, Edwin Kwong was granted the option
          to convert the outstanding balance in debt to common shares at $0.02 per share;
          however, Edwin Kwong cannot execute such conversion until after September 1,
          2002.

In August 2002, the Company executed
an amendment to the Promissory Note of September 2001 with Edwin Kwong. The amendment
provides that Edwin Kwong cannot execute the conversion provision, as per the September
2001 Promissory Note, until after November 30, 2003.

At December 31, 2001 LIVESTAR
Ventures Network Inc. owed a balance of $103,053 to Edwin Kwong. This debt is interest
free and is repayable within one year from the date of each promissory note, respectively,
issued to Edwin Kwong. As of February 7, 2002 LIVESTAR executed two Promissory Notes
totaling $100,035. In addition, Edwin Kwong was granted the option to convert to common
shares the outstanding balance in debt owed by the Company at $0.10 per share; however,
Edwin Kwong cannot execute such conversion until after May 31, 2002. Subsequently in May
2002, the Company executed an amendment to the two Promissory Notes of February 2002. The
amendment provides that Edwin Kwong cannot execute such conversion, as per the two
Promissory Notes of February 2002, till July 31, 2002. In July 2002, the Company executed
an amendment to the two February 2002 Promissory Notes, and reissued two amended
Promissory Notes. The two amended Promissory Notes of July 2002 provide that the debt
remains interest free and is repayable within one year from the date of each promissory
note. In addition, Edwin Kwong was granted the option to convert to common shares the
outstanding balance in debt owed by the Company at $0.05 per share; however, Edwin Kwong
cannot execute such conversion until after August 30, 2002.

In August 2002, the Company executed
an amendment to the two Promissory Notes of July 2002 with Edwin Kwong. The amendment
provides that Edwin Kwong cannot execute the conversion provision, as per the two July
2002 Promissory Note, until after November 30, 2003.

31

As of February 27, 2002, LIVESTAR
executed a Promissory Note totaling $5,550, where by Edwin Kwong was granted the option to
convert to common shares the outstanding balance in debt owed by the Company at $0.17 per
share; however, Edwin Kwong cannot execute such conversion until after August 31, 2002.

In August 2002, the Company executed
an amendment to the Promissory Note of February 27, 2002 with Edwin Kwong. The amendment
provides that Edwin Kwong cannot execute the conversion provision, as per the February 27,
2002 Promissory Note, until after November 30, 2003.

In March of 2003, Edwin Kwong
requested the removal of the conversion restrictions to one of his Promissory Notes. In
May 2003, the Company approved the removal of the Conversion Restriction and subsequently,
Edwin Kwong converted that Promissory Note. Edwin Kwong received 1,584,608 shares at
$0.004 per share, which repaid a total of $6,338.43 of debt.

In November 2003, the Company
executed amendments to the remaining Promissory Notes with Edwin Kwong. The amendment
provides that Edwin Kwong cannot execute the conversion provision, as per the August 2002
Promissory Note Amendments, until after June 30, 2004.

4.    
          In November 2003, LIVESTAR entered into an Agreement with RYM Management Ltd.
          (RYM) for executive management services. Under the Agreement RYM
          will supply LIVESTAR with the services of Mr. Ray Hawkins, who will serve as
          President CEO of LIVESTAR. This Agreement replaces the Agreement between the
          Company and Ray Hawkins dated January 1, 2002.

5.    
          In January, 2004, LIVESTAR entered into an Agreement with 673100 BC Ltd.
          (673) for executive management services. Under the Agreement 673
          will supply LIVESTAR with the services of Mr. Edwin Kwong, who will serve as COO
          and CFO of LIVESTAR. This Agreement replaces the Agreement between the Company
          and Edwin Kwong dated January 1, 2002.

32

# PART IV

# Item 13. Exhibits,
Financial Statements Schedules and Reports on Form 8-K

Exhibits

# Item 13(a) Financial
Statements

LIVESTARs audited
Consolidated Financial Statements, as described below, are attached hereto.

1.
Audited Financial Statements(a) Auditors Report(b)Consolidated Balance
Sheets
(c) Consolidated Statements of Operations and Deficit(d) Consolidated Statements of
Cash Flows(e) Consolidated Statements of Stockholders Deficiency(f) Notes
to Consolidated Financial Statements

# Item 13(b) Exhibits

| | 2.1 | Agreement
and Plan of Reorganization (1)
| | --- | ----------------------------------------

| | 2.2 | Amendment
to Merger Agreement (1)
| | --- | ---------------------------------

| | 3.1 | Amended
Articles of Incorporation (1)
| | --- | -------------------------------------

| | 3.2 | Amended
Bylaws (2)
| | --- | ------------------

| | 3.3 | Stock
Option Plan of LIVESTAR Entertainment Group, Inc. (2)
| | --- | -----------------------------------------------------------

| | 10.1 | Sample
of Form of Promissory Note: Ray Hawkins (2)
| | ---- | --------------------------------------------------

| | 10.2 | Sample
of Form of Promissory Note: Edwin Kwong (2)
| | ---- | --------------------------------------------------

| | 10.3 | Lease
Agreement dated November 9, 1999 with RAH Media (2)
| | ---- | ---------------------------------------------------------

| | 10.4 | Assignment
of Lease dated August 31, 2001 with RAH Media (2)
| | ---- | ------------------------------------------------------------

| | 10.5 | Management
Services Memorandum: Ray Hawkins (2)
| | ---- | -----------------------------------------------

| | 10.6 | Management
Services Memorandum: Edwin Kwong (2)
| | ---- | -----------------------------------------------

| | 10.7 | Management
Services Memorandum: RYM Management Ltd.
| | ---- | ---------------------------------------------------

| | 10.8 | Management
Services Memorandum: 673100 B.C. Ltd.
| | ---- | ------------------------------------------------

| | 14.1 | Code
of Ethics
| | ---- | --------------

| | 16. | Letter
from Cordovano & Harvey (3)
| | --- | ----------------------------------

| | 21. | Subsidiaries
of the Registrant
| | --- | ------------------------------

| | 31.1 | Certification
of CEO pursuant to Securities Exchange Act rules 13a-15 and 15d-15(c) as adopted pursuant
to section 302 of the Sarbanes-Oxley act of 2002.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

| | 31.2 | Certification
of CFO pursuant to Securities Exchange Act rules 13a-15 and 15d-15(c) as adopted pursuant
to section 302 of the Sarbanes-Oxley act of 2002.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

| | 32.1 | Certification
of CEO pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the
Sarbanes-Oxley act of 2002.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------

| | 32.2 | Certification
of CFO pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the
Sarbanes-Oxley act of 2002.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------

| | 99.1 | Risk
Factors
| | ---- | ------------

| | 99.4 | Incentive
Stock Option Agreement with Ray Hawkins (2)
| | ---- | -----------------------------------------------------

| | 99.5 | Incentive
Stock Option Agreement with Edwin Kwong (2)
| | ---- | -----------------------------------------------------

(1)    
          Incorporated into this Form 10-KSB by reference to the Registrants
          previous filing of this Exhibit in its Form 8-K filed with the Commission on
          August 20, 2001.

(2)    
          Incorporated into this Form 10-KSB by reference to the Registrants
          previous filing of this Exhibit in its Form 10-KSB filed with the Commission on
          October 15, 2001.

33

(3)    
Letter dated August 28, 2001 is
incorporated into this Form 10-KSB by reference to the Registrants previous filing
of this Exhibit in its Form 8-K/A filed with the Commission on September 17, 2001.

# Item 13(c) Reports on
Form 8-K

On September 29, 2003, the Company
filed a report on Form 8-K/A It was reported under Item 5 of the report that this Current
Report on Form 8-K/A amends the Current Report on Form 8-K filed on August 11, 2003 (the
Original Report), to include Addendum No. 2 to the Agreement and Plan of
Acquisition, which Agreement and Plan of Acquisition was discussed in the Original Report.
Pursuant to Addendum No. 2, the closing date for the potential acquisition by the
registrant of 1485684 Ontario Limited, an Ontario corporation doing business as The Sequel
Nightclub has been extended from September 29, 2003, to October 29, 2003.

On October 27, 2003, the Company
filed a report on Form 8-K/A.

It was reported under Item 2 of the
report that the Company on October 24, 2003, the registrant, Livestar Entertainment Group
Inc. (the Company) closed its acquisition of 1485684 Ontario Limited, an
Ontario corporation doing business as The Sequel Nightclub (the Sequel) as
originally discussed in its current report on Form 8-K filed with the Securities and
Exchange Commission on August 11, 2003. This filing is an amendment to that original
filing on August 11, 2003. The final terms and conditions of the acquisition are as set
forth in the Amended and Restated Agreement and Plan of Acquisition (the
Agreement) in the form attached as Exhibit 2.1 in the report. It was reported
under Item 7 of the report that the Company will file the required financial statements
and pro forma financial information as an amendment to this Form 8-K as soon as
practicable but not later than sixty (60) days from the date of this filing.

On October 27, 2003, the Company
filed a report on Form 8-K/A.

It was reported under Item 5 of the
report that the Company on August 26, 2003, the registrant, Livestar Entertainment Group
Inc. (the Company) filed a current report on Form 8-K discussing a Memorandum
of Understanding with TCAL Investment Group (TCAL) for the potential
acquisition by TCAL of a controlling ownership position in the Company. The Company and
TCAL have now determined not to pursue the transaction.

# Item 14. Principal
Accountant Fees and Services

# Audit Fees

The aggregate fees billed by our
auditors for professional services rendered in connection with the audit of our annual
financial statements for the fiscal year ended December 31, 2002 was $ 10,915. As of the
date of this filing, the invoices are not completed for the fees for the preparation of
the audited financial statements for the fiscal year ended December 31, 2003, and so those
amounts are unknown.

34

# Audit-Related Fees

Our auditors did not bill any
additional fees for assurance and related services that are reasonably related to the
performance of the audit or review of our financial statements.

# Tax Fees

The aggregate fees billed by our
auditors for professional services for tax compliance, tax advice and tax planning were $0
and $0 for the fiscal years ended December 31, 2002, and 2003.

# All Other Fees

The aggregate fees billed by our
auditors for all other non-audit services, such as attending meetings and other
miscellaneous financial consulting for the fiscal years ended December 31, 2002, and 2003
were $0 and $0, respectively.

SIGNATURES

In accordance with Section 13 or
15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

LIVESTAR Entertainment
Group, Inc.

By:

/s/ Ray Hawkins Ray Hawkins, President
Date: April 14, 2004

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

By:

/s/ Ray Hawkins Ray Hawkins, Director
Principal Executive OfficerDate: April 14, 2004

/s/ Edwin Kwong Edwin Kwong, Director
Principal Financial OfficerPrincipal Accounting OfficerDate: April 14, 2004

35

# LIVESTAR ENTERTAINMENT
GROUP INC.

# (Formerly RRUN
Ventures Network Inc.)(A Development Stage Company)

# CONSOLIDATED FINANCIAL
STATEMENTS

# DECEMBER 31, 2003 AND
2002

# (Stated in U.S.
Dollars)

---

# AUDITORS REPORT

To the Board of Directors and the
Stockholders of Livestar Entertainment Group Inc. (Formerly RRUN Ventures Network Inc.) (A
development stage company)

We have audited the consolidated
balance sheets of Livestar Entertainment Group Inc. (formerly RRUN Ventures Network Inc.)
(a development stage company) as at December 31, 2003 and 2002, and the consolidated
statements of operations and deficit, cash flows and stockholders deficiency for the
years then ended. These consolidated financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

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

In our opinion, these consolidated
financial statements present fairly, in all material respects, the financial position of
the Company as at December 31, 2003 and 2002, and the results of its operations and cash
flows for the years then ended in accordance with United States of America generally
accepted accounting principles.

The accompanying consolidated
financial statements have been prepared assuming the Company will continue as a going
concern. As discussed in Note 1(c) to the consolidated financial statements, the Company
has suffered recurring losses and net cash outflows from operations since inception. These
factors raise substantial doubt about the Companys ability to continue as a going
concern. Managements plans in regard to these matters are also discussed in Note
1(c). The consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

|Vancouver, B.C.
April 7, 2004 | Chartered Accountants
|----------------------------- | ---------------------

F-1

# LIVESTAR ENTERTAINMENT
GROUP INC. (Formerly RRUN
Ventures Network Inc.)(A Development Stage Company)

# CONSOLIDATED BALANCE
SHEETS(Stated in U.S.
Dollars)

|                                                              | DECEMBER 31
|------------------------------------------------------------- | -----------
|
|ASSETS                                                        |            
|Current                                                       |            
|Cash                                                          |            
|Goods and Services Tax recoverable                            |            
|Prepaid expense                                               |            
|Notes receivable                                              |            
|                                                              |            
|                                                              |            
|Capital Assets (Note 4)                                       |            
|Advances Receivable (Note 5)                                  |            
|                                                              |            
|                                                              |            
|                                                              |            
|LIABILITIES                                                   |            
|Current                                                       |            
|Accounts payable                                              |            
|Loans and advances payable (Note 8)                           |            
|                                                              |            
|                                                              |            
|                                                              |            
|STOCKHOLDERS' DEFICIENCY                                      |            
|Share Capital                                                 |            
|Authorized:                                                   |            
|1,000,000,000 common shares, par value $0.0001 per share      |            
|200,000,000 preferred shares, par value $0.0001 per share     |            
|Issued and outstanding:                                       |            
|280,468,337 common shares at December 31, 2003 and 45,654,790 |            
|at December 31, 2002                                          |            
|875,000 preferred shares at December 31, 2003 and Nil at      |            
|December 31, 2002                                             |            
|Add:  Share subscriptions received:                           |            
|Nil common shares at December 31, 2003 and 36,250 at December |            
|31, 2002                                                      |            
|Additional paid-in capital                                    |            
|Deficit                                                       |            
|                                                              |            
|                                                              |            
|                                                              |            
|                                                              |            
|                                                              |            

F-2

# LIVESTAR ENTERTAINMENT
GROUP INC. (Formerly RRUN
Ventures Network Inc.)(A Development Stage Company)

# CONSOLIDATED
STATEMENTS OF OPERATIONS AND DEFICIT(Stated in U.S.
Dollars)

|                                                     | YEARS ENDED
DECEMBER 312003                  2002 | INCEPTION
OCTOBER 12
2000 TO
DECEMBER 31
2003
|---------------------------------------------------- | ------------------------------------------------- | ---------------------------------------------
|Revenue                                              |                                                   |                                              
|                                                     |                                                   |                                              
|Expenses                                             |                                                   |                                              
|Administrative services                              |                                                   |                                              
|Amortization                                         |                                                   |                                              
|Business development                                 |                                                   |                                              
|Consulting                                           |                                                   |                                              
|Equipment leases                                     |                                                   |                                              
|Investor relations                                   |                                                   |                                              
|Marketing                                            |                                                   |                                              
|Media design                                         |                                                   |                                              
|Office, rent and sundry                              |                                                   |                                              
|Professional fees                                    |                                                   |                                              
|Software development                                 |                                                   |                                              
|Travel                                               |                                                   |                                              
|Wages and benefits                                   |                                                   |                                              
|                                                     |                                                   |                                              
|                                                     |                                                   |                                              
|                                                     |                                                   |                                              
|Loss Before The Following                            |                                                   |                                              
|Forgiveness Of Debt                                  |                                                   |                                              
|Write Down Of Investment                             |                                                   |                                              
|Minority Interest In Loss Of Subsidiary              |                                                   |                                              
|                                                     |                                                   |                                              
|Loss From Continuing Operations                      |                                                   |                                              
|Gain On Disposition Of Subsidiary                    |                                                   |                                              
|Gain From Discontinued Operations                    |                                                   |                                              
|                                                     |                                                   |                                              
|Net Loss For The Year                                |                                                   |                                              
|                                                     |                                                   |                                              
|Net Loss Per Share Before Discontinued Operations,   |                                                   |                                              
|Basic and diluted                                    |                                                   |                                              
|                                                     |                                                   |                                              
|Net Loss Per Share, Basic and diluted                |                                                   |                                              
|                                                     |                                                   |                                              
|Weighted Average Number Of Common Shares Outstanding |                                                   |                                              
|                                                     |                                                   |                                              

F-3

# LIVESTAR ENTERTAINMENT
GROUP INC. (Formerly RRUN
Ventures Network Inc.)(A Development Stage Company)CONSOLIDATED
STATEMENTS OF CASH FLOWS (Stated in U.S.
Dollars)

|                                                      | YEARS ENDED
DECEMBER 312003                  2002 | INCEPTION
OCTOBER 12
2000 TO
DECEMBER 31
2003
|----------------------------------------------------- | ------------------------------------------------- | ---------------------------------------------
|Cash Flows From Operating Activities                  |                                                   |                                              
|Loss for the year from continuing operations          |                                                   |                                              
|Adjustments To Reconcile Net Loss To Net Cash Used By |                                                   |                                              
|Operating Activities                                  |                                                   |                                              
|Amortization                                          |                                                   |                                              
|Stock based compensation                              |                                                   |                                              
|Issue of common stock for expenses                    |                                                   |                                              
|Write down of investment                              |                                                   |                                              
|Minority interest in loss of subsidiary               |                                                   |                                              
|Goods and Services Tax recoverable                    |                                                   |                                              
|Prepaid expense                                       |                                                   |                                              
|Notes receivable                                      |                                                   |                                              
|Advances receivable                                   |                                                   |                                              
|Accounts payable                                      |                                                   |                                              
|Loans and advances payable                            |                                                   |                                              
|                                                      |                                                   |                                              
|                                                      |                                                   |                                              
|                                                      |                                                   |                                              
|Cash Flows From Investing Activities                  |                                                   |                                              
|Net asset deficiency of legal parent at date of       |                                                   |                                              
|reverse take-over transaction                         |                                                   |                                              
|Purchase of capital assets                            |                                                   |                                              
|                                                      |                                                   |                                              
|                                                      |                                                   |                                              
|                                                      |                                                   |                                              
|Cash Flows From Financing Activities                  |                                                   |                                              
|Shares issued for cash                                |                                                   |                                              
|Share subscriptions received                          |                                                   |                                              
|                                                      |                                                   |                                              
|                                                      |                                                   |                                              
|                                                      |                                                   |                                              
|Increase (Decrease) In Cash                           |                                                   |                                              
|Net Cash From Discontinued Operations                 |                                                   |                                              
|Cash Acquired On Acquisition Of Subsidiary            |                                                   |                                              
|                                                      |                                                   |                                              
|Cash, Beginning Of Year                               |                                                   |                                              
|                                                      |                                                   |                                              
|Cash, End Of Year                                     |                                                   |                                              
|                                                      |                                                   |                                              
|                                                      |                                                   |                                              

F-4

# LIVESTAR ENTERTAINMENT
GROUP INC. (Formerly RRUN
Ventures Network Inc.)(A Development Stage Company)

# CONSOLIDATED STATEMENT
OF STOCKHOLDERS DEFICIENCY DECEMBER 31, 2003 (Stated in U.S.
Dollars)

|                                            | Preferred Stock | Common Stock |  |           |  
|------------------------------------------- | --------------- | ------------ |  | --------- | -
|
|Balance, December 31, 2001                  |                 |              |  | --        |  
|Shares issued for debt                      |                 |              |  | --        |  
|Shares issued for services                  |                 |              |  | --        |  
|Shares issued for cash and notes receivable |                 |              |  | --        |  
|Shares cancelled                            |                 |              |  | --        |  
|Forgiveness of shareholder debt             |                 |              |  | --        |  
|Loss for the year                           |                 |              |  | --        |  
|                                            |                 |              |  |           |  
|Balance, December 31, 2002                  |                 |              |  | --        |  
|Shares issued for debt                      |                 |              |  | --        |  
|Shares issued for services                  |                 |              |  | --        |  
|Shares issued for cash                      |                 |              |  | --        |  
|Shares issued                               |                 |              |  | 1,000,000 |  
|Shares redeemed                             |                 |              |  | (125,000  | )
|Stock based compensation                    |                 |              |  | --        |  
|Loss for the year                           |                 |              |  | --        |  
|                                            |                 |              |  |           |  
|Balance, December 31, 2003                  |                 |              |  | 875,000   |  
|                                            |                 |              |  |           |  

F-5

# LIVESTAR ENTERTAINMENT
GROUP INC. (Formerly RRUN
Ventures Network Inc.)(A Development Stage Company)

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTSDECEMBER 31, 2003 AND 2002 (Stated in U.S.
Dollars)

| | 1.
NATURE OF OPERATIONS
| | -----------------------

| | a)          Organization
| | ------------------------

| | The
Company was incorporated in the State of Nevada, U.S.A., on October 12, 2000.
| | ---------------------------------------------------------------------------------

| | b)
Development Stage Activities
| | -------------------------------

| | The
Company was organized as a holding company to develop or acquire innovative ventures with
an emphasis on serving the lifestyle needs of the 18  34 year Digital Generation
through the production and marketing of lifestyle products and services. The
Companys initial venture is RAHX, a business concept previously focused on
delivering, for its customers, a consolidated Entertainment Experience Network comprised
of many services ranging from digital media peer to peer file exchange to live
entertainment and online video games. At this time, the Companys focus is the
developing of a live entertainment business, specifically nightclubs and live events.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c)
 Going Concern
| | -----------------

| | Since
inception, the Company has suffered recurring losses, net cash outflows from operations
and, at December 31, 2003, has a working capital deficiency of $1,828,855. The Company
expects to continue to incur substantial losses to complete the development of its
business. Since its inception, the Company has funded operations through common stock
issuances and related party loans in order to meet its strategic objectives. Management
believes that sufficient funding will be available to meet its business objectives,
including anticipated cash needs for working capital, and is currently evaluating several
financing options. However, there can be no assurance that the Company will be able to
obtain sufficient funds to continue the development of and, if successful, to commence the
sale of its products under development. As a result of the foregoing, there exists
substantial doubt about the Companys ability to continue as a going concern. These
consolidated financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2.
SIGNIFICANT ACCOUNTING POLICIES
| | ----------------------------------

| | The
consolidated financial statements of the Company have been prepared in accordance with
generally accepted accounting principles in the United States of America. Because a
precise determination of many assets and liabilities is dependent upon future events, the
preparation of consolidated financial statements for a period necessarily involves the
use of estimates which have been made using careful judgement.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-6

# LIVESTAR ENTERTAINMENT
GROUP INC.(Formerly RRUN
Ventures Network Inc.)(A Development Stage Company)

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS DECEMBER 31, 2003 AND 2002 (Stated in U.S.
Dollars)

| | 2.    SIGNIFICANT
ACCOUNTING POLICIES(Continued)
| | ------------------------------------------------

| | The
consolidated financial statements have, in managements opinion, been properly
prepared within reasonable limits of materiality and within the framework of the
significant accounting policies summarized below:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a)              Consolidation
| | -----------------------------

| | These
consolidated financial statements include the accounts of the Company, its 100% owned
subsidiaries, RRUN Labs Inc., Livestar Entertainment Canada Inc. and Livestar
Entertainment Establishment Ltd., its 67% owned subsidiary, RAHX, Inc., and its
discontinued wholly owned subsidiary, AXXUS Corporation. On November 27, 2002, the Company
disposed of its 100% interest in AXXUS Corporation.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b)
Development Stage Company
| | ----------------------------

| | The
Company is a development stage company as defined in the Statements of Financial
Accounting Standards No. 7. The Company is devoting substantially all of its present
efforts to establish a new business and none of its planned principal operations have
commenced. All losses accumulated since inception have been considered as part of the
Companys development stage activities.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c)              Investments
| | ---------------------------

| | Investments
in companies owned less than 20% are recorded at the lower of cost or fair market value.
| | ----------------------------------------------------------------------------------------------------

| | d)
Software Development Costs
| | -----------------------------

| | The
costs to develop new software products and enhancements to existing software products will
be expensed as incurred until technological feasibility has been established. Once
technological feasibility has been established, any additional costs will be capitalized.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | e)              Income
Taxes
| | ----------------------------

| | The
Company has adopted Statement of Financial Accounting Standards No. 109 
Accounting for Income Taxes (SFAS 109). This standard requires the use of an
asset and liability approach for financial accounting and reporting on income taxes. If it
is more likely than not that some portion or all if a deferred tax asset will not be
realized, a valuation allowance is recognized.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-7

# LIVESTAR ENTERTAINMENT
GROUP INC.(Formerly RRUN
Ventures Network Inc.)(A Development Stage Company)

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS DECEMBER 31, 2003 AND 2002 (Stated in U.S.
Dollars)

| | 2.    SIGNIFICANT
ACCOUNTING POLICIES(Continued)
| | ------------------------------------------------

| | f)              Amortization
| | ----------------------------

| | Capital
assets are being amortized on the declining balance basis at the following rates:
| | -----------------------------------------------------------------------------------------

|Computer equipment             |  |  |  | 30  | %
|------------------------------ |  |  |  | --- | -
|Computer software              |  |  |  | 100 | %
|Office furniture and equipment |  |  |  | 20  | %

| | g)
 Stock Based Compensation
| | ----------------------------

| | The
Company accounts for stock based employee compensation arrangements in accordance with the
provisions of Accounting Principles Board Opinion No. 25  Accounting for Stock
Issued to Employees (APB No. 25) and complies with the disclosure provisions of
Statement of Financial Accounting Standards No. 123  Accounting for Stock
Based Compensation (SFAS No. 123). Under APB No. 25, compensation expense is
recognized based on the difference, if any, on the date of grant between the estimated
fair value of the Companys stock and the amount an employee must pay to acquire the
stock. Compensation expense is recognized immediately for past services and rateably for
future services over the option vesting period.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | h)
 Financial Instruments
| | -------------------------

| | The
Companys financial instruments consist of cash, GST recoverable and accounts
payable.
| | ------------------------------------------------------------------------------------------

| | Unless
otherwise noted, it is managements opinion that this Company is not exposed to
significant interest or credit risks arising from these financial instruments. The fair
value of these financial instruments approximate their carrying values, unless otherwise
noted.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | i)
 Net Loss Per Share
| | ----------------------

| | In
February 1997, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 128  Earnings Per Share (SFAS 128).
Under SFAS 128, basic and diluted earnings per share are to be presented. Basic earnings
per share is computed by dividing income available to common shareholders by the weighted
average number of common shares outstanding in the period. Diluted earnings per share
takes into consideration common shares outstanding (computed under basic earnings per
share) and potentially dilutive common shares. Diluted loss per share is not presented
separately from loss per share as the exercise of any options and warrants would be
anti-dilutive.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-8

# LIVESTAR ENTERTAINMENT
GROUP INC.(Formerly RRUN
Ventures Network Inc.)(A Development Stage Company)

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS DECEMBER 31, 2003 AND 2002 (Stated in U.S.
Dollars)

| | 2.    SIGNIFICANT
ACCOUNTING POLICIES(Continued)
| | ------------------------------------------------

| | j)
 Foreign Currency Translation
| | --------------------------------

| | Transaction
amounts denominated in foreign currencies are translated at exchange rates prevailing at
transaction dates. Carrying values of monetary assets and liabilities are adjusted at each
balance sheet date to reflect the exchange rate at that date. Non-monetary assets and
liabilities are translated at the exchange rate on the original transaction date. Gains
and losses from restatement of foreign currency monetary and non-monetary assets and
liabilities are included in the statements of operations. Revenues and expenses are
translated at the rates of exchange prevailing on the dates such items are recognized in
the statements of operations.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.
DISCONTINUED OPERATIONS
| | --------------------------

| | By
an agreement dated November 27, 2002, the Company disposed of its 100% interest in Axxus
Corporation (Axxus) for cash consideration of $1. The revenue and expenses
related to the business of Axxus for the years ended December 31, 2002 and 2001, and for
the period from inception to December 31, 2002, are reflected as discontinued operations
in the statements of operations and cash flows.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.
CAPITAL ASSETS
| | -----------------

|                               | COST | 2003
ACCUMULATED
AMORTIZATION | NET BOOK
VALUE | 2002
NET BOOK
VALUE
|------------------------------ | ---- | ----------------------------- | -------------- | -------------------
|Computer equipment             |      |                               | $              | 11,910             
|Computer software              |      |                               |                | 456                
|Office furniture and equipment |      |                               |                | 2,430              
|                               |      |                               |                |                    
|                               |      |                               | $              | 14,796             
|                               |      |                               |                |                    

| | 5.
ADVANCES RECEIVABLE
| | ----------------------

| | The
Company has entered into an agreement to acquire 100% of the issued and
outstanding common shares of 1485684 Ontario Limited, an Ontario, Canada
corporation, doing business as The Sequel Nightclub ("Sequel"). Completion of
the acquisition is subject to certain conditions precedent which had not been
satisfied at December 31, 2003.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As
at December 31, 2003, the Company has issued 1,000,000 preferred shares at a value
of $200,000 to acquire certain amounts owed by Sequel to its shareholder. In
addition, the Company has made working capital advances to Sequel totaling $81,219.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                 | 2003 | 2002
|-------------------------------------------------------------------------------- | ---- | ----
|Kaph Data Engineering Inc. - 159 common shares representing 15% of the Company's |      |     
|issued and outstanding common share capital                                      |      |     
|Write down of investment                                                         |      |     
|                                                                                 |      |     
|                                                                                 |      |     
|                                                                                 |      |     

F-9

# LIVESTAR ENTERTAINMENT
GROUP INC.(Formerly RRUN
Ventures Network Inc.)(A Development Stage Company)

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS DECEMBER 31, 2003 AND 2002 (Stated in U.S.
Dollars)

| | 6.
STOCK OPTIONS AND WARRANTS OUTSTANDING
| | -----------------------------------------

| | Stock
options
| | -------------

| | As
at December 31, 2003, options were outstanding for the purchase of common shares as
follows:
| | -----------------------------------------------------------------------------------------------

|NUMBER
OF SHARES | PRICE
PER SHARE | EXPIRY
DATE
|---------------- | --------------- | -----------
|                 | 200,000         |            
|                 | 380,000         |            
|                 | 3,000,000       |            
|                 | 2,000,000       |            

| | In
accordance with the vesting provisions of these agreements, 5,580,000 stock options are
exercisable at December 31, 2003.
| | ----------------------------------------------------------------------------------------------------------------------------

| | A
summary of the changes in stock options for the year ended December 31, 2003 is presented
below:
| | --------------------------------------------------------------------------------------------------

|                           | SHARES | WEIGHTED
AVERAGE
EXERCISE
PRICE
|-------------------------- | ------ | -------------------------------
|Balance, December 31, 2001 |        |                                
|Granted                    |        |                                
|Exercised                  |        |                                
|Expired                    |        |                                
|                           |        |                                
|Balance, December 31, 2002 |        |                                
|Granted                    |        |                                
|Exercised                  |        |                                
|Expired                    |        |                                
|                           |        |                                
|Balance, December 31, 2003 |        |                                
|                           |        |                                

F-10

# LIVESTAR ENTERTAINMENT
GROUP INC.(Formerly RRUN
Ventures Network Inc.)(A Development Stage Company)

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS DECEMBER 31, 2003 AND 2002 (Stated in U.S.
Dollars)

| | 6.    STOCK
OPTIONS AND WARRANTS OUTSTANDING (Continued)
| | --------------------------------------------------------

| | Share
Purchase Warrants
| | -----------------------

| | As
at December 31, 2003, share purchase warrants were outstanding for the purchase of common
shares as follows:
| | ---------------------------------------------------------------------------------------------------------------

|NUMBER
OF SHARES | PRICE
PER SHARE
|---------------- | ---------------
|                 | 1,882,355      
|                 | 1,332,000      
|                 | 2,230,000      
|                 | 168,795        
|                 | 567,500        
|                 | 420,000        
|                 | 100,000        
|                 | 340,000        
|                 | 100,000        
|                 | 1,648,750      

| | The
warrants expire between September 4, 2004 and January 17, 2006.
| | -------------------------------------------------------------------

| | A
summary of the changes in share purchase warrants for the year ended December 31, 2003 is
presented below:
| | ------------------------------------------------------------------------------------------------------------

|                           | SHARES | WEIGHTED
AVERAGE
EXERCISE
PRICE
|-------------------------- | ------ | -------------------------------
|Balance, December 31, 2001 |        |                                
|Granted                    |        |                                
|Exercised                  |        |                                
|Cancelled                  |        |                                
|                           |        |                                
|Balance, December 31, 2002 |        |                                
|Granted                    |        |                                
|                           |        |                                
|Balance, December 31, 2003 |        |                                
|                           |        |                                

F-11

# LIVESTAR ENTERTAINMENT
GROUP INC.(Formerly RRUN
Ventures Network Inc.)(A Development Stage Company)

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS DECEMBER 31, 2003 AND 2002 (Stated in U.S.
Dollars)

| | 7.
STOCK BASED COMPENSATION
| | ---------------------------

| | On
September 5, 2003 and October 15, 2003 respectively, the Board of Directors approved the
Employee Stock Incentive Plan for the Year 2003 No. 1 and No. 2, under which designated
officers and employees of the Company and its subsidiaries may be granted stock options.
The Company may grant options to acquire up to 85,000,000 shares of common stock under the
plans.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
the year ended December 31, 2003, the Company granted stock options to officers and
employees to acquire up to 67,000,000 shares of common stock at a weighted average
exercise prices of $0.01 per share, expiring between September and December 2013. All of
these options vest immediately.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
fair value of the options granted during the period was estimated at the date of grant
using the Black-Scholes option pricing model with the following assumptions: risk free
interest rate of 3.10%, expected volatility ranging from 41% to 432%, an expected option
life of one week, and no expected dividends. Had the Company determined compensation cost
based on the fair value at the date of grant for its employees stock options, the net loss
would have increased by $69,992 for the year ended December 31, 2003. During the year
ended December 31, 2003, the Company recognized stock based compensation for the intrinsic
value of employee awards in the amount of $65,093.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                | 2003 | 2002
|--------------------------------------------------------------- | ---- | ----
|Net loss, as reported                                           |      |     
|Add:  Stock based compensation expense included in net loss, as |      |     
|reported                                                        |      |     
|Deduct:  Stock based compensation expense determined under fair |      |     
|value method                                                    |      |     
|                                                                |      |     
|Net loss, pro-forma                                             |      |     
|                                                                |      |     
|Net loss per share (basic and diluted), as reported             |      |     
|                                                                |      |     
|Net loss per share (basic and diluted), pro-forma               |      |     
|                                                                |      |     

F-12

# LIVESTAR ENTERTAINMENT
GROUP INC.(Formerly RRUN
Ventures Network Inc.)(A Development Stage Company)

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS DECEMBER 31, 2003 AND 2002 (Stated in U.S.
Dollars)

| | 8.
LOANS AND ADVANCES PAYABLE
| | -----------------------------

| | Loans
and advances payable are interest free and are repayable within one year. Certain of the
loans and advances are convertible to common shares as follows:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------

|AMOUNT | CONVERSION
PRICE | CONVERSION
AFTER
|------ | ---------------- | ----------------
|$      | 11,570           |                 
|$      | 1,000            |                 
|$      | 400              |                 
|$      | 263,087          |                 
|$      | 107,321          |                 

| | 9. | RELATED PARTY TRANSACTIONS
| | -- | --------------------------

| | a) | Included in accounts payable at December 31, 2003 is $546,152 (2002 
               $476,177) owing to directors or companies controlled by a director.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | Included in loans and advances payable at December 31, 2003 is $373,009 (2002
                $372,011) owing to directors or a company controlled by a director.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) | During the year ended December 31, 2003, the Company incurred $200,285 (2002
                $508,000) in consulting and business development expenses with directors,
               and $Nil (2002  $132,547) in business and technology development expenses
               with former directors.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | d) | During the year ended December 31, 2003, the Company incurred $9,854 (2002
                $43,818) in administration, office, and equipment rental expenses with a
               company controlled by a director.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.
COMMITMENT
| | --------------

| | During
the year ended December 31, 2002, the Company executed Management Services Memorandums
with three key directors/officers which were effective January 1, 2002. In addition to
total signing bonuses of $200,000 which have no specific payment date and are payable in
cash or shares of the Company or its subsidiary, RAHX, Inc., the memorandums provide for
performance bonuses and total annual compensation as follows:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                             | 
|---------------------------- | 
|Year ended December 31, 2004 | 
|Year ended December 31, 2005 | 
|Year ended December 31, 2006 | 
|                             | 

F-13

# LIVESTAR ENTERTAINMENT
GROUP INC.(Formerly RRUN
Ventures Network Inc.)(A Development Stage Company)

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS DECEMBER 31, 2003 AND 2002 (Stated in U.S.
Dollars)

| | 11.
INCOME TAXES
| | ----------------

A reconciliation
of income taxes at statutory rates with the reported taxes is as follows:

|                                                     | 2003 | 2002
|---------------------------------------------------- | ---- | ----
|Loss before income taxes                             |      |     
|                                                     |      |     
|Income tax recovery                                  |      |     
|Unrecognized benefit of operating loss carryforwards |      |     
|                                                     |      |     
|Income tax recovery                                  |      |     
|                                                     |      |     

Significant
components of the Companys future tax assets based on statutory tax rates are as
follows:

|                    | 2003 | 2002
|------------------- | ---- | ----
|Deferred tax assets |      |     
|Loss carryforwards  |      |     
|Valuation allowance |      |     
|                    |      |     
|                    |      |     
|                    |      |     

| | The
Company has approximately $3,875,000 (2002  $2,966,000) of operating loss
carryforwards which expire beginning in 2020.
| | ----------------------------------------------------------------------------------------------------------------------------

| | The
Company has provided a valuation allowance against its deferred tax assets given that it
is in the development stage and it is more likely than not that these benefits will not be
realized.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 12.
SUBSEQUENT EVENT
| | --------------------

| | Subsequent
to December 31, 2003, the Company issued 118,000,000 common shares on the exercise of
stock options, 36,000,000 common shares on the settlement of debt, and 75,000,000 common
shares for services pursuant to consulting agreements.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-14