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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON D.C. 20549

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

                                  FORM 10-KSB

(MARK ONE)

<TABLE>
<C>        <S>
   /X/     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</TABLE>

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

<TABLE>
<C>        <S>
   / /     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</TABLE>

      FOR THE TRANSITION PERIOD FROM ________________ TO ________________

                        COMMISSION FILE NUMBER 000-17001

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

                       CHOICES ENTERTAINMENT CORPORATION

                 (Name of small business issuer in its charter)

<TABLE>
<S>                                                           <C>
                          DELAWARE                                          52-1529536
              (State or other jurisdiction of                            (I.R.S. employer
               incorporation or organization)                           identification No.)

      121 VINE STREET, SUITE 1903 SEATTLE, WASHINGTON                       98121-1456
          (Address of principal executive offices)                          (Zip Code)
</TABLE>

         Issuer's telephone number, including area code: (206) 443-6948

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

      Securities registered under Section 12(b) of the Exchange Act:  NONE

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

                     COMMON STOCK, PAR VALUE $.01 PER SHARE

                                (Title of class)

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

    Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes _X_  No ____

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

    Issuer's revenues for the year ended December 31, 1999: $0

    Aggregate market value of the voting stock held by non-affiliates of the
registrant based upon a price of $.32 per share, the closing price of the
registrant's Common Stock at March 28, 2000:  $7,447,794

    For purposes of this calculation, all directors and officers of the
registrant have been considered affiliates.

    Number of outstanding shares of Common Stock at March 28, 2000:  29,274,355

    Transitional Small Business Disclosure Format (check one): Yes ____  No _X_

                      DOCUMENTS INCORPORATED BY REFERENCE

    Portions of the definitive proxy statement (the "Definitive Proxy
Statement") to be filed with the Securities and Exchange Commission relative to
the Company's 2000 Annual Meeting of Stockholders are incorporated by reference
into Part III of this Report.

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<PAGE>
                           FORWARD LOOKING STATEMENTS

    This Annual Report on Form 10-KSB contains forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934, as amended,
and Section 27A of the Securities Act of 1933, as amended. For this purpose, any
statements contained herein that are not statements of historical fact may be
deemed to be forward-looking statements. Without limiting the foregoing, the
words "believes," "anticipates," "plans," "expects" and similar expressions are
intended to identify forward-looking statements. The important factors discussed
under the caption "Risks Relating to Our Business," among others, could cause
actual results to differ materially from those indicated by forward-looking
statements made herein and presented elsewhere by management. Such forward-
looking statements represent management's current expectations and are
inherently uncertain. Investors are warned that actual results may differ from
management's expectations.
<PAGE>
                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

OUR BUSINESS

    The Board of Directors (the "Board") of Choices Entertainment Corporation
(the "Company" or "We") adopted a proposal on January 17, 2000 to change the
business of the Company to that of a technology holding company. We are
acquiring, investing in, and incubating companies engaged in Internet, computing
and other technologies in various stages of development.

WHAT WE HAVE DONE

    We have acquired securities issued by publicly traded Photochannel
Networks Inc. In January 2000, the Company subscribed to a private placement of
CAN$2,300,000 principal amount of Convertible Subordinated Redeemable 0%
Debentures maturing April 30, 2000 (the "Debentures") issued by PhotoChannel
Networks Inc., a British Columbia corporation ("Photochannel"). The subscription
agreement calls for advances to Photochannel in exchange for the issuance of
Debentures as follows: CAN$350,000 by January 31, 2000; CAN$750,000 by
February 29, 2000; and CAN$1,200,000 by April 14, 2000. The Debentures are
convertible into Photochannel common stock, no par value, ("Photochannel Stock")
at the rate of 1 share of Photochannel Stock for each CAN$.50 in debenture
principal amount. Also, the company was granted warrants pursuant to a vesting
schedule to purchase additional shares of Photochannel Stock as follows: 140,000
warrants with an exercise price of CAN$.75; 300,000 warrants with an exercise
price of CAN$1.00; and 480,000 warrants with an exercise price of CAN$1.25. Each
warrant entitles the Company to purchase 1 share of Photochannel Stock at the
exercise price, for cash. The warrants are presently fully vested and will
expire June 30, 2000. As of the date of the filing of this report on
Form 10KSB, the Company had completed its obligations under the subscription
agreement. All of the securities acquired in this transaction as well as the
securities into which the securities acquired are convertible or exercisable
against are restricted securities ad must be held for the applicable holding
period from the date of conversion or exercise, as the case may be. The
applicable holding period in most cases will be 1 year.

    Photochannel is a late-stage development company engaged in E-commerce
selling online photo-finishing services and digital and other cameras and
photographic equipment. Photochannel's website may be viewed at
WWW.PHOTOCHANNEL.COM.

    We have acquired securities of non-publicly traded Tridium Research, Inc. In
March 2000, the Company paid $50,000 cash to acquire 250,000 shares of common
stock of Tridium Research Inc., a Washington corporation ("Tridium") based in
Kirkland, Washington. The 250,000 shares of common stock acquired represents
approximately 5% of all Tridium common stock issued and outstanding. The Company
has also obligated itself to provide an additional $200,000 to Tridium, upon
terms and conditions to be determined.

    Tridium Research Inc. ("Tridium") is a development stage company that
produces and sells a dual monitor video card featuring "dual direct draw" (on
both screens) that plugs into the AGP (as opposed to the PCI) slot on a
computer. The ability to run multiple monitors is particularly applicable to
networked systems for businesses needing to display and provide user interface
to multiple users. The cards also permit multiple monitor arrays of, for
example, advertising displays, stock quoting systems, streaming video, and even
wide-screen movies.

    One of the unique features of the Tridium video card is that it synchronizes
the display of each monitor plugged into the card. This eliminates the constant
periodic horizontal lines running down the computer screens as is experienced
with existing dual monitor video cards.

                                       1
<PAGE>
    Tridium has a patent application pending with respect to the hardware and
the software that it has developed.

    Additional products under development involve multiple screen environment
applications and added software for value added systems. Users of Tridium's
technology include large and small businesses, governmental agencies, medical
companies, schools, power users, and the entertainment industry. More
information about Tridium can be obtained from its website at
WWW.DUALMONITOR.COM.

    We are organizing a wholly owned subsidiary to be called Softuse Corp.
("Softuse"). Softuse has obtained a domain name as Softuse.com. Still in the
early stages of organization and development, SoftUse.com(SM) will be developed
as an application service provider or "ASP". The new subsidiary has developed a
demonstration website still under construction, and is in the process of
establishing strategic alliances with other companies engaged in providing
services to ASP's.

    In deciding to change the direction of the Company, we decided to terminate
a letter of intent to acquire the business plan of Republic Hotel
Investors, Inc. (Republic"). The business plan called for the acquisition of a
substantial hotel portfolio that would have resulted in turning the Company into
a hotel properties holding company. On September 21, 1999, the Company announced
entering into a letter of intent to acquire the business of privately held
Republic Hotel Investors, Inc. of Seattle, Washington and Vancouver B.C. That
letter of intent was intended to lead to an agreement which would have
transferred to Choices all of Republic's assets in exchange for 144,789,382
shares of restricted Choices common stock. The details of the transaction are
contained in a Form 8-K filed with the Securities and Exchange Commission on
September 20, 1999.

    As a result of the termination of the letter of intent, Lorne Bradley has
resigned as our Chairman and President. Also, we have issued 500,000 restricted
shares of the Company's common stock to Republic or its nominee as a negotiated
settlement with Mr. Bradley in connection with the termination of the letter of
intent. The reasons the Board decided to terminate the Republic agreement
included the then current state of the hotel financing market, the overbuilt and
late stage status of the hotel industry and, most importantly, a lack of
enthusiasm for financing the hotel business plan on the part of our existing
shareholders.

    From June 1998 to September 1999, we focused on: (i) satisfying and
compromising various claims and liabilities; (ii) defending and settling
litigation, and paying professional fees, including substantial professional
fees associated with such litigation; (iii) maintaining administrative functions
(at present the Company has no employees); (iv) marshalling the books, documents
and records of the Company and transferring them to the storage facilities in
Coral Springs, Florida: (iv) retaining new independent public auditors to
replace the Company's prior independent public auditors, who resigned;
(v) actively engaging in discussions with various persons for the acquisition of
a new business or business opportunity for the Company; and, (vi) continuing the
status of the Company as a reporting registrant under the Securities Exchange
Act of 1934 and a publicly traded company.

OUR BUSINESS STRATEGY

    We intend to operate in four modalities: providing capital to public
companies, providing capital to start-ups, acquiring operating companies, and
incubating new businesses under the corporate umbrella.

    Our goal is to be the most profitable technology holding company in the
group of publicly traded companies of similar business focus by successfully
implementing our business plan and achieving our objectives.

    Our objectives are:

    - to maximize the rate of return on shareholders' equity and enhance
      shareholder value;

                                       2
<PAGE>
    - to earn a rate of return over and above our cost of capital of not less
      than 2 times our cost of capital, including capital provided by debt (if
      any), equity and funds generated from business operations;

    - to grow total assets to $50,000,000 by the end of the year 2000 and
      thereafter to increase our assets until we experience decreasing rates of
      return on investment capital;

    - to generate revenues sufficient to cover our general and administrative
      expenses and to service debt (if any).

    Our strategies include:

    - to acquire by purchase or merger interests in companies focusing on
      commercially viable technological advances;

    - to incubate some companies which we believe have exceptionally good
      prospects for future commercial success but may not generate positive
      economic results in the near term while in a development stage;

    - to maximize the value of the companies we hold, in whole or in part, (our
      "clients") by assisting them in building business operations and
      opportunities having the potential to be highly profitable and becoming
      leaders I their particular industry or sub-industry;

    - to discontinue, sell, spin-off, offer for merger or acquisition, or
      otherwise dispose of those interests or companies which have matured to
      the point where the rate of return based on profitability to be expected
      from continued ownership is equal to our below our cost of capital.

    Our tactics include:

    - presently to focus on Internet and computer related technologies, however,
      nothing in our business plan limits us from taking positions or starting
      companies in other technological areas such as telecommunications,
      bio-medical, micro-scanning and other high-technology fields or
      industries;

    - to acquire and build a highly skilled, experienced and talented team of
      company executives and support people and to maximize their productivity
      through technology;

    - to raise capital at a cost which approaches market rates for companies
      engaged in similar businesses;

    - to maintain at relatively low levels our holding company general and
      administrative expense;

    - to build and expand business relationships between and among the companies
      we own, in whole or in part, as well as other participants in their
      respective industries or sub-industries, such that mutually reciprocal
      business advantage can be achieved and such that we achieve synergy in the
      mix of our corporate holdings.

RISKS RELATING TO OUR BUSINESS

WE MAY NOT HAVE OPERATING INCOME OR NET INCOME IN THE FUTURE.

    During the fiscal year ended December 31, 1999, we had an operating loss of
approximately $840,789 and net income of approximately $(840,789). We may not
have operating income or net income in the future. If we continue to operate at
a loss, we may not have enough money to maintain or grow our business.

                                       3
<PAGE>
OUR OPERATING HISTORY UNDER THE NEW BUSINESS PLAN IS LIMITED.

    We have limited operating history. Our success cannot be guaranteed or
accurately predicted. There can be no assurance that we will be able to acquire,
incubate, own or operate Internet and other technologies profitably. Our
prospects must be considered in light of the risks, expenses and difficulties
frequently encountered in the establishment of a new company or line of business
in a highly competitive market and industry.

    There is no assurance that we will be able to operate and manage our
technology business on a profitable basis or that cash flow from operations will
be sufficient to pay our operating costs. We anticipate the need to raise
additional capital to finance our initial operations. We will seek, if
necessary, additional financing through debt or equity financing. We cannot
assure that additional financing, if needed, will be available to us, or that,
if available, the financing will be on terms acceptable to the Company. There is
no assurance that the our estimate of our reasonably anticipated liquidity needs
is accurate or that new business developments or other unforeseen events will
not occur resulting in the need to raise additional funds. In the event that we
cannot raise needed capital, it will have a material adverse effect on the
Company.

    We expect to incur significant operating losses and to generate negative
cash flow from operating activities during the next several years. There can be
no assurance that we will achieve or sustain profitability or positive cash flow
from operating activities in the future or that it will generate sufficient cash
flow to service any debt requirements.

WE MAY HAVE PROBLEMS RAISING MONEY WE NEED IN THE FUTURE.

    In recent years, we have financed our operating losses in part with loans
from shareholders and private placements of the Company's securities. This
funding source may not be sufficient in the future, and we may need to obtain
funding from outside sources. However, we may not be able to obtain funding from
outside sources. In addition, even if we find outside funding sources, we may be
required to issue securities to them with greater rights than those currently
possessed by holders of shares of the Company's common and preferred stock. We
may also be required to take other actions that may lessen the value of the
Company's common and preferred stock, including borrowing money on terms that
are not favorable to us.

OUR GROWTH PLACES STRAINS ON OUR MANAGERIAL, OPERATIONAL AND FINANCIAL
  RESOURCES.

    Our rapid growth has placed, and is expected to continue to place, a
significant strain on our managerial, operational and financial resources.
Further, as the number of our subsidiaries, client companies, and other business
partners grows, we will be required to manage multiple relationships with
various strategic partners and other third parties. Further growth of our
business will increase the strain on our managerial, operational and financial
resources, which in turn will limit our ability to successfully implement our
business plan. In addition, our success is dependent on our ability to attract,
train, retain and motivate highly skilled people, especially for our management
team. Our success also depends on our ability to attract, train, retain, and
motivate other highly qualified technical and managerial personnel. Competition
for people such as these is intense. In addition, our future success will depend
on our ability to build a support organization commensurate with the growth of
our business and the Internet. Currently, the Company only has two unpaid
executive officers and no employees.

                                       4
<PAGE>
WE MAY INCUR SIGNIFICANT COSTS TO AVOID INVESTMENT COMPANY STATUS AND MAY SUFFER
  OTHER ADVERSE CONSEQUENCES IF DEEMED TO BE AN INVESTMENT COMPANY.

    We may incur significant costs to avoid investment company status and may
suffer other adverse consequences if we are deemed to be an investment company
under the Investment Company Act of 1940. We have made some equity investments
in other businesses that may constitute investment securities under the 1940
Act. A company may be deemed to be an investment company if it owns investment
securities with a value exceeding 40% of its total assets, subject to certain
exclusions. Investment companies are subject to registration under, and
compliance with, the 1940 Act unless a particular exclusion or Securities and
Exchange Commission safe harbor applies. If we were to be deemed an investment
company, we would become subject to the requirements of the 1940 Act. As a
consequence, we would be prohibited from engaging in business or issuing our
securities as we have in the past and we might be subject to civil and criminal
penalties for noncompliance. In the future, contracts we enter into might be
voidable, and a court-appointed receiver could take control of the Company and
liquidate its business.

    Our investment securities currently comprise more than 40% of our assets in
this interim start-up and organizational phase of our business. Unless an
exclusion or safe harbor is available, we will have to attempt to reduce our
investment securities as a percentage of our total assets. This reduction can be
accomplished in a number of ways, including the disposition of investment
securities and the acquisition of non-investment security assets. Our current
business plan includes an emphasis on the latter method and we believe that
during any relevant time period, we will not ultimately be deemed to be an
investment company. If we are wrong, we will be required to sell investment
securities sooner than we otherwise would. These sales may be at depressed
prices and we may never realize anticipated benefits from, or may incur losses
on, these investments. Some investments may not be sold due to contractual or
legal restrictions or the inability to locate a suitable buyer. Moreover, we may
incur tax liabilities when we sell assets. We may also be unable to purchase
additional investment securities that may be important to our operating
strategy. If we decide to acquire non-investment security assets, we may not be
able to identify and acquire suitable assets and businesses upon acceptable
terms.

WE DEPEND ON CERTAIN IMPORTANT EXECUTIVE OFFICERS, AND THE LOSS OF ANY OF THEM
  MAY HARM OUR BUSINESS.

    Our performance is substantially dependent on the performance of our
executive officers and, in particular, Tracy M. Shier, our President and Chief
Executive Officer. His familiarity with the Internet industry and technology in
general, investment methods and structures, financial markets, business
organization, especially in a start-up phase, law, and other matters makes him
especially important at this time to our success. The loss of the services of
any of our executive officers or future key employees may harm our business.

OUR STRATEGY OF EXPANDING OUR BUSINESS THROUGH ACQUISITIONS OF OTHER BUSINESSES
  AND TECHNOLOGIES PRESENTS SPECIAL RISKS.

    We intend to continue to expand our business through the acquisition of
businesses, technologies, products and services from other businesses.
Acquisitions involve a number of special problems, including, depending on the
nature and structure of the acquisition, and not necessarily in the order of
importance: difficulty integrating acquired technologies, operations, and people
with the existing business; diversion of management attention in connection with
both negotiating the acquisitions and integrating the acquired assets; potential
issuance of securities in connection with the acquisition that may lessen the
rights of holders of our currently outstanding securities; the need to incur
additional debt; strain on managerial and operational resources as management
tries to oversee the larger operations; the requirement to record additional
amortization of good will and other intangible assets that could be significant;
and, exposure to unforeseen liabilities of acquired companies.

                                       5
<PAGE>
    We may not be able to successfully address these problems. Moreover, our
future operating results will depend to a significant degree on our ability to
successfully manage growth and integrate acquisitions. In addition, some of our
investments are in early-stage companies with limited operating histories and
limited or no revenues. We may not be able to successfully develop these young
companies.

IF THE UNITED STATES OR OTHER GOVERNMENTS REGULATE THE INTERNET MORE CLOSELY,
  OUR BUSINESS MAY BE HARMED.

    Because of the Internet's popularity and increasing use, new laws and
regulations may be adopted. These laws and regulations may cover issues such as
privacy, pricing and content. The enactment of any additional laws or
regulations may impede the growth of the Internet and our Internet-related
business and could place additional financial burdens on us.

WE MUST BE ABLE TO RESPOND TO THE RAPID CHANGES IN TECHNOLOGY AND DISTRIBUTION
  CHANNELS RELATED TO THE INTERNET.

    Our success will depend on our ability to adapt to a rapidly evolving
marketplace. We may not be able to adequately adapt our products and services or
acquire new products and services that can compete successfully. In addition, we
may not be able to establish and maintain effective distribution channels.

WE ARE SUBJECT TO INTENSE COMPETITION.

    The market for Internet products and services is highly competitive.
Moreover, the market for Internet products and services lacks significant
barriers to entry, enabling new businesses to enter this market relatively
easily. Competition in the market for Internet products and services may
intensify in the future. Numerous well-established companies and smaller
entrepreneurial companies are focusing significant resources on developing and
marketing products and services that will compete with our products and
services. In addition, many of our current and potential competitors have
greater financial, technical, operational and marketing resources. We may not be
able to compete successfully against these competitors. Competitive pressures
may also force prices for Internet goods and services down and may reduce our
revenues.

OUR STRATEGY OF SELLING ASSETS OF, OR INVESTMENTS IN, THE COMPANIES THAT WE
  ACQUIRE AND DEVELOP PRESENTS RISKS.

    A significant element of our business plan involves selling, in public or
private offerings, the companies, or portions of the companies, that we have
acquired and developed. Market and other conditions largely beyond our control
affect: our ability to engage in such sales; the timing of such sales; and the
amount of proceeds from such sales.

    As a result, we may not be able to sell some of these assets. In addition,
even if we are able to sell, we may not be able to sell at favorable prices. If
we are unable to sell these assets at favorable prices, our business will be
harmed.

THE VALUE OF OUR BUSINESS MAY FLUCTUATE BECAUSE THE VALUE OF SOME OF OUR ASSETS
  FLUCTUATES.

    A portion of our assets includes the equity securities of both publicly
traded and non-publicly traded companies. In particular, we own or have the
right to own a significant number of shares of common stock of Photochannel
Networks Inc., which is a publicly traded company. The market price and
valuations of the securities that we hold in this and other companies may
fluctuate due to market conditions and other conditions over which we have no
control. Fluctuations in the market price and

                                       6
<PAGE>
valuations of the securities that we hold in other companies may result in
fluctuations of the market price of our common stock and may reduce the amount
of working capital available to us.

OUR QUARTERLY RESULTS MAY FLUCTUATE WIDELY.

    Our operating results have fluctuated widely on a quarterly basis during the
last several years, and we expect to experience significant fluctuation in
future quarterly operating results. Many factors, some of which are beyond our
control, have contributed to these quarterly fluctuations in the past and may
continue to do so. These factors include: payment of costs associated with our
acquisitions, timing and sales of assets; specific economic conditions in the
industries in which we do business; and general economic conditions.

    The emerging nature of the commercial uses of the Internet makes predictions
concerning our future revenues difficult. We believe that period-to-period
comparisons of our results of operations will not necessarily be meaningful and
should not be relied upon as indicative of our future performance. It is also
possible that in some future fiscal quarters, our operating results will be
below the expectations of securities analysts and investors. In such
circumstances, the price of our common stock may decline.

THE PRICE OF OUR COMMON STOCK HAS BEEN VOLATILE.

    The market price of our common stock has been, and is likely to continue to
be, volatile, experiencing wide fluctuations. In recent years, the stock market
has experienced significant price and volume fluctuations that have particularly
impacted the market prices of equity securities of many companies engaged in
Internet-related businesses. Some of these fluctuations appear to be unrelated
or disproportionate to the operating performance of such companies. Future
market movements may adversely affect the market price of our common stock.

OWNERSHIP OF OUR COMPANY IS CONCENTRATED.

    Our officers, directors and 5% or greater shareholders beneficially owned
approximately 45% of our voting stock on a fully diluted basis as of March 30,
2000. As a result, this group possesses significant influence over the Company
on matters including the election of directors. The concentration of ownership
may: delay or prevent a change in control; impede a merger, consolidation,
takeover or other business involving the Company; or discourage a potential
acquirer from making a tender offer or otherwise attempting to obtain control of
the Company.

THE SUCCESS OF OUR CROSS-BORDER OPERATIONS IS SUBJECT TO SPECIAL RISKS AND
  COSTS.

    We intend to continue to make investments in and acquire businesses,
technologies and operations outside of the United States. This international
activity requires significant management attention and financial resources. Our
ability to expand internationally will be limited by the general acceptance of
the Internet and intranets in other countries. Accordingly, we expect to commit
substantial time and development resources to selected international markets.

    We expect that the financial results of our international activities will be
denominated in United States dollars. As a result, an increase in the value of
the United States dollar relative to other currencies may make the financial
results of our international activities result in gains or losses on foreign
currency translations.

                                       7
<PAGE>
GENERAL DESCRIPTION--HISTORY

    On June 16, 1997, the Company sold substantially all of its assets and
business to West Coast Entertainment Corporation ("West Coast"). Prior to the
sale to West Coast (the "West Coast Transaction"), the Company operated a chain
of retail video home entertainment stores, principally under the trade name
CHOICES-Registered Trademark- MOVIES AND GAMES, which rented and sold
videocassette tapes, video games and other video home entertainment products.
The Company's home entertainment stores were located in Delaware, New Jersey and
Pennsylvania.

    The Company was incorporated in Maryland in July 1985, under the name PPV
Enterprises, Inc., and was reincorporated in Delaware under the name
DataVend, Inc. in August 1987. In March 1990, the Company changed its name to
"Choices Entertainment Corporation."

ITEM 2.  DESCRIPTION OF PROPERTY

    The Company's temporary executive offices are located at 121 Vine Street,
Suite 1903, Seattle, Washington 98121-1456; its telephone number is
(206) 443-6948. The executive offices are provided rent-free by Tracy M. Shier,
President and Chief Executive Officer of the Company and Interim Chief Financial
Officer.

ITEM 3.  LEGAL PROCEEDINGS

    The Company is a defendant to the lawsuit Dion Signs & Service, Inc. vs.
Choices Entertainment Corporation, Civil Action No. 91-6871. The case is now
pending in the Providence County Superior Court, Providence, Rhode Island. Dion
Signs & Service, Inc. alleges that it is owed approximately $33,000 plus
interest, costs and reasonable attorney's fees for the failure by Choices
Entertainment Corporation to pay for signage that was erected at various
locations pursuant to a contract. The Company is advised that pre-judgment
interest on the claim accrues from the date the cause of action arose and that
the amount of pre-judgment interest could approximate the amount of the claim,
or approximately $33,000. The Company is further advised that the case has not
been set for trial, there has been very little discovery, and that it is not
possible to determine the likelihood of the outcome of this case at this time.

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

    None.

                                       8
<PAGE>
                                    PART II

ITEM 5.  MARKET FOR COMMON EQUITY STOCK AND RELATED STOCKHOLDER MATTERS

    The Company's Common Stock is currently traded in the over-the-counter
market on the Bulletin Board ("OTC-Bulletin Board") under the symbol CECS. The
following table sets forth the high and low inside bid prices as reported by the
Bulletin Board.

<TABLE>
<CAPTION>
                                                                    COMMON
                                                                     STOCK
                                                                    (CESC)
                                                              -------------------
1998                                                            HIGH       LOW
----                                                          --------   --------
<S>                                                           <C>        <C>
First quarter...............................................     .04        .02
Second quarter..............................................     .02        .02
Third quarter...............................................     .02        .02
Fourth quarter..............................................     .01       .002

1999
------------------------------------------------------------
First quarter...............................................     .01       .006
Second quarter..............................................     .03       .006
Third quarter...............................................    .155        .01
Fourth quarter..............................................     .10       .045
</TABLE>

    On April 15, 2000, the closing price for the Company's common stock was $.19
as reported by the OTC-Bulletin Board.

    The quotations set forth above reflect inter-dealer prices, without retail
markup, markdown or commission and may not necessarily represent actual
transactions.

    HOLDERS.  As of March 30, 2000, approximately 533 holders of record held the
outstanding shares of the Company's common stock and 33 holders of record held
the outstanding shares of the Company's preferred stock.

    DIVIDENDS.  The Company has not declared or paid any dividends on its common
stock since its inception. The Board of Directors does not contemplate the
payment of dividends in the foreseeable future.

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

    The following is management's discussion and analysis of certain significant
factors that have affected the Company's financial condition, changes in
financial condition and results of operations. It also includes a discussion of
the Company's liquidity and capital resources at December 31, 1999, and later
dated information, where practicable. This discussion should be read together
with the Company's Financial Statements and the Notes thereto beginning on page
F-1.

                                       9
<PAGE>
    This schedule contains summary unaudited financial information taken from
the financial statements of Choices Entertainment Corporation and is qualified
in its entirety by reference to such financial statements.

<TABLE>
<CAPTION>
                                   1999          1998          1997          1996          1995
                                -----------   -----------   -----------   -----------   -----------
<S>                             <C>           <C>           <C>           <C>           <C>
STATEMENT OF OPERATIONS DATA:
Net Sales.....................  $        --   $        --   $        --   $        --   $ 4,760,684
Cost of Sales.................           --            --            --            --     3,323,740
                                -----------   -----------   -----------   -----------   -----------
Gross Profit..................           --            --            --            --     1,436,944
Operating Expenses............      825,816       117,736       716,369       655,059     3,947,208
                                -----------   -----------   -----------   -----------   -----------
Income (Loss) From
  Operations..................      825,816      (117,736)     (716,369)     (655,059)   (2,510,264)
Other Income (Expense)........      (14,973)      353,307       (37,081)      (51,830)      370,937
                                -----------   -----------   -----------   -----------   -----------
Income (Loss) from Continuing
  Operations..................  $  (840,789)  $   235,571   $  (753,450)  $  (706,889)  $(2,139,327)
                                ===========   ===========   ===========   ===========   ===========
PER SHARE DATA:
Continuing Operations.........  $      (.03)  $       .01   $      (.03)  $      (.03)  $      (.10)
                                ===========   ===========   ===========   ===========   ===========
Weighted Average Shares
  Outstanding (Basic).........   24,489,327    22,004,000    22,004,000    22,004,000    21,652,000
                                ===========   ===========   ===========   ===========   ===========
BALANCE SHEETS:
Total Assets..................       20,113         2,220       201,996     1,179,859     1,556,910
Total Liabilities.............      625,936        92,254       524,939     2,506,406     2,250,777
                                -----------   -----------   -----------   -----------   -----------
Stockholders' Equity..........     (605,823)      (90,034)     (322,943)   (1,326,547)     (693,867)
                                ===========   ===========   ===========   ===========   ===========
</TABLE>

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

    On June 16, 1997, the Company sold substantially all of its assets and
business to West Coast Entertainment Corporation ("West Coast"). Notwithstanding
the sale of its operating business, the Company's financial statements included
herein have been presented on the basis that the Company is a going concern,
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. The accounting affect of the sale of
substantially all of the Company's assets and business to West Coast (the "West
Coast Transaction") was a net loss of $2,663 for the year ended December 31,
1998, before extraordinary income of $303,799 relating to the affects of the
West Coast Transaction. There was no material accounting effect on the financial
statements of the Company due to the West Coast Transaction for the period ended
December 31, 1999. As of December 31, 1999, the Company had a net working
capital deficiency of approximately $531,442. As of April 20, 2000, the Company
had approximate cash balances of $64,205 (unaudited).

    From June 1998 to August 1999, current directors of the Company have:
(i) satisfied and compromised various claims and liabilities; (ii) defended and
settled litigation, and paid professional fees, including substantial
professional fees associated with such litigation; (iii) maintained
administrative functions (at present the Company has no employs);
(iv) marshaled the books, documents and records of the Company and transferred
them to the Company's offices in Coral Springs, Florida: (iv) retained new
independent public auditors to replace the Company's prior independent public
auditors, who resigned; (v) actively engaged in discussions with various persons
for the acquisition of a new business or business opportunity for the Company;
and, (vi) attempted to continue the status of the Company as a reporting
registrant under the Securities Exchange Act of 1934 and a publicly traded
company.

                                       10
<PAGE>
    The primary source of funds for the year ended December 31, 1999 was
shareholder loans. The Company borrowed $300,000 at interest rates of 10% and
12%. The Company had no revenues.

    In February 2000, the Company closed a self-offered private offering of 390
of the Company's Series C Preferred Stock in the aggregate offering amount of
$780,000. Offering expenses were less than $3,000. Each share of the Preferred
Stock is convertible into 40,000 shares of the Company's common stock, par value
$.01, the ("Common Stock") and carries the voting rights of the underlying
Common Stock. The proceeds from this offering were used to retire all notes
payable, to pay down the obligations of the Company to officers and directors of
the Company, to pay down accounts payable to an immaterial amount, and to
acquire minority interests in two companies.

    In the event the Company is not successful in securing needed capital in the
near term, as to which no assurance can be given, the Company does not believe
that there will be any amounts available for distribution to the Company's
stockholders.

CAPITAL EXPENDITURES

    The Company's capital expenditures were $0 during the year ended
December 31, 1999.

MATERIAL CHANGES IN FINANCIAL CONDITION

    The following material changes in financial condition reflect changes
occurring during the period from December 31, 1998 through December 31, 1999.

AS OF DECEMBER 31, 1999 AND 1998:

Assets:

    Total assets increased by approximately $17,893 between December 31, 1998
and December 31, 1999, as the result of an increase in borrowing by the Company.

Liabilities:

    Total liabilities increased by approximately $533,682 between December 31,
1998 and December 31, 1999, primarily due to the recognition by the Board of
Directors of the Company of certain obligations to existing and former officers
and directors to compensate them for services rendered to the Company and due to
increased borrowing.

Stockholders' Deficit:

    Between December 31, 1999 and December 31, 1998, the increase in
stockholders' deficit was due to net loss of approximately $840,789 for the year
ended December 31, 1999. Included in net loss was the cash and non-cash payment
to existing and former officers of the Company of certain obligations owing to
them.

MATERIAL CHANGES IN RESULTS OF OPERATIONS

    The following material changes in results of operations occurred during the
two-year period from January 1, 1998 through December 31, 1999.

CONTINUING OPERATIONS:

    Losses from continuing operations were approximately $840,789 during 1999,
compared to income of approximately $235,571 during 1998. The decrease of
approximately $1,076,360 primarily related to an increase in the recognized
expenses of the Company, increased business activity at the Company and the fact
that the results for 1998 included the accounting affects of the West Coast
Transaction.

                                       11
<PAGE>
DISCONTINUED OPERATIONS:

    There was a loss from discontinued operations of approximately $0 and $2,663
for the periods ending December 31, 1999 and December 31, 1998 respectively.

NET LOSS:

    As a result of the foregoing, the Company had a net loss of approximately
$840,789 during 1999, which included no extraordinary income compared to net
income of approximately $232,908 in 1998, which included net income due to the
West Coast Transaction of approximately $235,571.

ITEM 7.  FINANCIAL STATEMENTS

    The Company's Financial Statements and Notes thereto are filed together with
this report starting at Page F-1. The Financial Statements and Notes for the
period ending December 31, 1999 are audited by Miller and Co. LLP and are
included herein based on their auditor's report dated April 28, 2000, except for
Note J, for which the date is May 3, 2000.

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

    None.

                                    PART III

    The information called for by Items 9 - 12 of Form 10KSB are contained in
the definitive proxy statement (the "Definitive Proxy Statement") to be filed
with the Securities and Exchange Commission relative to the Company's 2000
Annual Meeting of Stockholders and is hereby incorporated by reference to the
Definitive Proxy Statement, as filed.

ITEM 13.  EXHIBITS, LIST AND REPORTS ON FORM 8-K

    (a) Exhibits: The exhibits are listed in the Index to Exhibits appearing on
Page E-1.

    (b) Reports on Form 8-K: During the quarter ended December 31, 1999, the
Company filed no reports on Form 8-K.

                                       12
<PAGE>
                                   SIGNATURES

    In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report on Form 10KSB for the period ending December 31, 1999 to be
signed on its behalf by the undersigned, thereunto duly authorized.

<TABLE>
<S>                                                    <C>  <C>
                                                       CHOICES ENTERTAINMENT CORPORATION

Date: May 12, 2000                                     By:              /s/ TRACY M. SHIER
    --------------------------                              -----------------------------------------
                                                                          Tracy M. Shier
                                                                     CHIEF EXECUTIVE OFFICER

Date: May 12, 2000                                     By:              /s/ TRACY M. SHIER
    --------------------------                              -----------------------------------------
                                                                          Tracy M. Shier
                                                                 INTERIM CHIEF FINANCIAL OFFICER
</TABLE>

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

<TABLE>
<S>                                                    <C>
                  /s/ JAMES D. SINK                     May 12, 2000
    --------------------------------------------
                    James D. Sink
                      Director

                 /s/ TRACY M. SHIER                     May 12, 2000
    --------------------------------------------
                   Tracy M. Shier
                      Director

                  /s/ THOMAS RENNA                      May 12, 2000
    --------------------------------------------
                    Thomas Renna
                      Director
</TABLE>

                                       13
<PAGE>
                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                PAGE
                                                              --------
<S>                                                           <C>
Independent auditors' report................................    F-2

Balance Sheets..............................................    F-3

Statements of Income........................................    F-4

Statements of accumulated deficit...........................    F-5

Statements of cash flows....................................    F-6

Notes to financial statements...............................    F-7
</TABLE>

                                      F-1
<PAGE>
                                  [LETTERHEAD]
                          INDEPENDENT AUDITORS' REPORT

To the shareholders
Choices Entertainment Corporation
Seattle, Washington

    We have audited the accompanying balance sheet of Choices Entertainment
Corporation as of December 31, 1999, and the related statements of income and
accumulated deficit, and cash flows for the years ended December 31, 1999 and
1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

    In our opinion, the 1999 financial statements referred to above present
fairly, in all material respects, the financial position of Choices
Entertainment Corporation, as of December 31, 1999, and the results of its
operations and its cash flows for the years ended December 31, 1999 and 1998 in
conformity with generally accepted accounting principles.

    The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note B to the
financial statements, the Company suffered recurring losses from operations and
had a working capital deficiency at December 31, 1999. Those conditions raise
substantial doubt about its ability to continue as a going concern. Management's
plans regarding those matters are also described in Note B. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

                                          /s/ Miller and Co. LLP
                                          Certified Public Accountants

Santa Monica, California
April 28, 2000 except for Note J, for which the date is May 3, 2000

                                      F-2
<PAGE>
                       CHOICES ENTERTAINMENT CORPORATION

                                 BALANCE SHEETS

                               DECEMBER 31, 1999

<TABLE>
<S>                                                           <C>
                           ASSETS

CURRENT ASSETS
Cash........................................................  $     19,494
Accounts receivable.........................................            --
                                                              ------------

TOTAL CURRENT ASSETS........................................        19,494

OTHER ASSETS
Other assets................................................           619
                                                              ------------

TOTAL ASSETS................................................  $     20,113
                                                              ============

            LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable and accrued expenses.......................  $    375,936
Accrued merger and acquisition expenses.....................            --
Notes payable--current......................................       175,000
                                                              ------------

TOTAL CURRENT LIABILITIES...................................       550,936
                                                              ------------

LONG-TERM LIABILITIES
Notes payable--noncurrent...................................        75,000
                                                              ------------

TOTAL LONG-TERM LIABILITIES.................................        75,000
                                                              ------------

TOTAL LIABILITIES...........................................       625,936
                                                              ------------

SHAREHOLDERS' EQUITY
Preferred stock, par value $0.01 per share, authorized 5,000
  shares, 109.1 shares issued and outstanding in 1999.......             1
Common stock, par value $0.01 per share, authorized
  50,000,000 shares, issued and outstanding 28,504,395
  shares in 1999............................................       285,044
Additional paid-in capital..................................    21,496,035
Accumulated deficit.........................................   (22,386,903)
                                                              ------------

TOTAL SHAREHOLDERS' EQUITY..................................      (605,823)
                                                              ------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY..................  $     20,113
                                                              ============
</TABLE>

                                      F-3
<PAGE>
                       CHOICES ENTERTAINMENT CORPORATION

                              STATEMENTS OF INCOME

                     YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                1999         1998
                                                              ---------   -----------
                                                                          (UNAUDITED)
<S>                                                           <C>         <C>
EXPENSES:
Selling, general and administrative.........................  $  29,985     $ 65,587
Professional and consulting.................................    770,831       51,181
Acquisition termination.....................................     25,000           --
Depreciation and amortization...............................         --          968

TOTAL EXPENSES..............................................    825,816      117,736

OTHER INCOME AND EXPENSES:
Interest expense............................................     14,973           --
Interest income.............................................         --        1,035
Other income................................................         --       48,473
Reduction of accrued legal fees.............................         --      303,799

TOTAL OTHER INCOME AND EXPENSES.............................    (14,973)     353,307

INCOME (LOSS) FROM CONTINUING OPERATIONS....................   (840,789)     235,571

DISCONTINUED OPERATIONS
Income (loss) from discontinued operations..................         --       (2,663)

INCOME (LOSS) FROM DISCOUNTINUED OPERATIONS.................         --       (2,663)

NET INCOME (LOSS)...........................................  $(840,789)    $232,908
                                                              =========     ========

NET INCOME (LOSS) PER SHARE OF COMMON STOCK BASIC INCOME
  (LOSS) PER SHARE:

CONTINUING OPERATIONS.......................................  $   (0.03)    $   0.01

DISCONTINUED OPERATIONS.....................................  $      --     $     --

NET INCOME (LOSS)...........................................  $   (0.03)    $   0.01

DILUTED INCOME (LOSS) PER SHARE:

CONTINUING OPERATIONS.......................................  $   (0.03)    $   0.01

DISCONTINUED OPERATIONS.....................................  $      --     $     --

NET INCOME (LOSS)...........................................  $   (0.03)    $   0.01
</TABLE>

                                      F-4
<PAGE>
                       CHOICES ENTERTAINMENT CORPORATION
                       STATEMENTS OF ACCUMULATED DEFICIT
                     YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
                                 PREFERRED                              ADDITIONAL
                                   STOCK     COMMON STOCK                 PAID-IN     ACCUMULATED
                                  SHARES        SHARES        AMOUNT      CAPTIAL       DEFICIT        TOTAL
                                 ---------   -------------   --------   -----------   ------------   ---------
<S>                              <C>         <C>             <C>        <C>           <C>            <C>
Balance at December 31,
  1997........................     109.1      22,004,395     $220,044   $21,236,035   $(21,779,022)   (322,943)

Net income for the year ended
  December 31, 1998...........        --              --           --            --        232,908     232,908

Balance at December 31,
  1998........................     109.1      22,004,395      220,044    21,236,035    (21,546,114)    (90,035)

Issuance of common stock in
  exchange for services.......                 6,000,000       60,000       240,000             --     300,000

Issuance of common stock in
  exchange for acquisition
  termination settlement......        --         500,000        5,000        20,000             --      25,000

Net income for the year ended
  December 31, 1999...........        --              --           --            --       (716,451)   (716,451)

Balance at December 31,
  1999........................     109.1      28,504,395     $285,044   $21,496,035   $(22,386,903)  $(605,823)
                                   =====      ==========     ========   ===========   ============   =========
</TABLE>

                                      F-5
<PAGE>
                       CHOICES ENTERTAINMENT CORPORATION
                            STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                1999        1998
                                                              ---------   --------
<S>                                                           <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)...........................................  $(840,789)  $232,908
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization...............................         --        968
Loss on retirement of assets................................         --      2,663
Issuance of stock in exchange for services..................    325,000         --
Change in assets and liabilities:
Change in accounts receivable...............................         --      1,123
Change in other assets......................................       (473)       (21)
Change in accounts payable..................................   (122,605)   (21,253)
Change in accrued merger and acquisition expenses...........    (50,000)  (303,799)
Change in accrued professional fees.........................    (30,403)   (99,355)
Change in accrued salaries..................................         --     (2,859)
Change in other accrued expenses............................    241,480     (5,418)
                                                              ---------   --------

TOTAL ADJUSTMENTS...........................................    608,209   (427,951)
                                                              ---------   --------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES.........   (232,580)  (195,043)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable.................................  $ 300,000   $     --
Repayment of notes payable..................................    (50,000)        --
                                                              ---------   --------

NET CASH PROVIDED BY FINANCING ACTIVITIES...................    250,000         --
                                                              ---------   --------

NET INCREASE (DECREASE) IN CASH.............................     17,420   (195,043)

CASH AT BEGINNING OF YEAR...................................      2,074    197,117

CASH AT END OF YEAR.........................................  $  19,494   $  2,074

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest......................  $   3,800   $     --
</TABLE>

                                      F-6
<PAGE>
                       CHOICES ENTERTAINMENT CORPORATION

                         NOTES TO FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE A--SUMMARY OF ACCOUNTING POLICIES

    BUSINESS ACTIVITY

    The Company was incorporated under the laws of the State of Maryland on
July 11, 1985, as "PPV Enterprises, Inc." On August 18, 1987, the Company
changed its name to "DataVend, Inc." and reincorporated under the laws of the
State of Delaware. On March 14, 1990, the Company changed its name to Choices
Entertainment Corporation. On June 16, 1997, the Company sold substantially all
of its assets and business to West Coast Entertainment Corporation. On
August 30, 1999 the Company entered into an agreement the effect of which would
have been to change the company to a hotel properties holding and operating
company. On January 16, 2000 the Company's Board of Directors adopted a plan to
change the business of the Company to that of a technology holding company and
terminated the plan to become a hotel company effective as of December 30, 1999.

    ACCOUNTING ESTIMATES

    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

    RECLASSIFICATION

    In order to facilitate comparison of financial information, certain amounts
reported in the prior year comparative totals have been reclassified to conform
with the current year presentation.

NOTE B--LIQUIDITY

    On June 16, 1997, the Company sold substantially all of its assets and
business to West Coast Entertainment Corporation (the "West Coast Transaction").
Notwithstanding the sale of its operating business, the Company's financial
statements included herein have been presented on the basis that the Company is
a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company has
net losses aggregating $22,386,903 and a working capital deficit of
approximately $531,442 for the year ended December 31, 1999. Although the
Company posted net losses in each year since its existence, after the sale of
substantially all of the Company's assets and business to West Coast (the "West
Coast Transaction"), the Company was able to show income in the amount of
$232,908 for the year ended December 31, 1998. The West Coast Transaction had no
material affect on the Company's financial statements for the year ended
December 31, 1999.

    Under the terms of the West Coast Transaction, the purchase price of
$2,430,000 was paid to the Company in cash on June 16, 1997, less $243,000 that
was held by West Coast in escrow, pursuant to the terms of a escrow agreement
between the Company and West Coast, to satisfy certain indemnity obligations of
the Company, if any, to West Coast, and which was, subject to amounts withheld
pursuant to any claims made by West Coast, to be released to the Company over a
period of eighteen months. On December 22, 1997, the Company negotiated a
compromise and full release of the escrow upon the payment by West Coast to the
Company of $211,000 on that date. The release of the escrow

                                      F-7
<PAGE>
                       CHOICES ENTERTAINMENT CORPORATION

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                     YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE B--LIQUIDITY (CONTINUED)
did not affect in any manner the Company's indemnity obligations to West Coast
pursuant to the terms of the asset purchase agreement between the Company and
West Coast.

    On September 8, 1997, a lawsuit was filed by the Company against a former
officer, in the Superior Court of California, in which the Company sought
repayment of a loan made by the Company to the former officer in 1995. A
settlement of this lawsuit was concluded on February 25, 1998, pursuant to which
the former officer agreed to pay the Company $40,000 in monthly installments
beginning March 1, 1998 through September 1, 1998, which were paid on a timely
basis.

    From the closing of the West Coast Transaction on June 16, 1997, to
August 30, 1999, the Company has principally (i) satisfied and compromised
various claims and liabilities; (ii) defended and settled litigation, and paid
professional fees, including substantial fees associated with such litigation;
(iii) maintained administrative functions (at present the Company has no
employees); and (iv) attempted to identify and consider new business
opportunities.

    The Company's former President and Chief Executive Officer, took a position
with an unrelated company, effective October 6, 1997, but continued as the
Company's Chairman, President and Chief Executive Officer, under a consulting
agreement pursuant to which his compensation was reduced accordingly. The
consulting agreement expired in accordance with its terms on April 30, 1998.

    As of December 31, 1997, claims and liabilities included but were not
limited to professional fees billed in connection with the Company's
discontinued acquisition program in the amount of $353,799, which was unpaid to
a law firm retained in that connection. On February 9, 1999, the Company settled
this obligation for $50,000. As of December 31, 1999, these claims and
liabilities were $0.

    The primary source of funds for the year ended December 31, 1999 was
shareholder loans. The Company borrowed $300,000 at interest rates of 10% and
12%. The Company had no revenues.

    As of the date of this report, the Company has approximately $19,494 in
cash. The Company's viability in raising needed capital is seriously in
question. In the event the Company is not successful in securing needed capital
in the near term, as to which no assurance can be given, the Company does not
believe that its viability as an ongoing business is assured.

NOTE C--WEST COAST TRANSACTION AND DISCONTINUED OPERATIONS

    The Company recognized a net loss on the retirement of its assets of
approximately $2,663, which has been reported in discontinued operations on the
Statements of Income for the year ended December 31, 1998.

NOTE D--NOTES PAYABLE

    As of December 31, 1999, the Company has notes payable outstanding in the
amount of $250,000. The Company's 10% unsecured promissory notes in the
principal amount of $75,000 will mature in mid 2001. The second set of unsecured
notes in the amount of $175,000 at 12% interest rate are 90-day notes, which
matured on December 29, 1999. See Note K--Subsequent Events.

                                      F-8
<PAGE>
                       CHOICES ENTERTAINMENT CORPORATION

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                     YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE E--DISCLOSURE OF INFORMATION ABOUT CAPITAL STRUCTURE

    The Financial Accounting Standards Board issued in February 1997, SFAS
no. 129 "Disclosure of Information about Capital Structure". SFAS 129 requires
disclosure of descriptive information about securities, e.g. rights and
privileges of the various securities outstanding, the number of shares issued
upon conversion, exercise, or satisfaction or required conditions are the
liquidation preference of preferred stock (Convertible Preferred Shares).

1.  CONVERTIBLE PREFERRED SHARES:

<TABLE>
<CAPTION>
                                                              AUTHORIZED   ISSUED AND    PREFERRED
                                                                SHARES     OUTSTANDING     STOCK
                                                              ----------   -----------   ---------
<S>                                                           <C>          <C>           <C>
Balance at December 31, 1997................................     5,000        109.1       $ 1.09
Issuance of preferred stock in lieu of cash to investors....        --           --           --
Balance at December 31, 1998................................     5,000        109.1         1.09
                                                                 -----        -----       ------
Issuance of preferred stock in lieu of cash to investors....        --           --           --
                                                                 -----        -----       ------
Balance at December 31, 1999................................     5,000        109.1       $ 1.09
                                                                 =====        =====       ======
</TABLE>

    Each share of Preferred Stock is entitled to vote on all matters submitted
to a vote of the Company's stockholders together with the Common Stock and not
as a separate class, unless otherwise required by law, with each share of
Convertible Preferred Shares entitled to 40,000 votes.

2.  COMMON STOCK:

<TABLE>
<CAPTION>
                                                                            ISSUED
                                                             AUTHORIZED       AND        COMMON
                                                               SHARES     OUTSTANDING    STOCK
                                                             ----------   -----------   --------
<S>                                                          <C>          <C>           <C>
Balance at December 31, 1997...............................  50,000,000   22,004,395    $220,044
Issuance...................................................          --           --          --
                                                             ----------   ----------    --------
Balance at December 31, 1998...............................  50,000,000   22,004,395    $220,044
                                                             ----------   ----------    --------
Issuance of common stock in exchange for services..........          --    6,000,000      60,000
                                                             ----------   ----------    --------
Issuance of common stock in exchange for acquisition
  termination settlement...................................          --      500,000       5,000
                                                             ----------   ----------    --------
Balance at December 31, 1999...............................  50,000,000   28,504,395    $285,044
                                                             ==========   ==========    ========
</TABLE>

    The Company's common stock is currently traded in the over-the-counter
market on the OTC-Bulletin Board. On March 31, 2000 the last sale price was $.32
as reported by the OTC-Bulletin Board.

    The Company has not declared or paid any dividends on its preferred or
common stock.The Board of Directors does not contemplate the payment of
dividends in the foreseeable future,.

    In August 1999, the Company's Board of Directors passed a resolution
expressly recognizing the obligation of the Company to compensate each of Jim
Sink, George Pursglove, Thomas Renna and Tracy Shier for services rendered and
to be rendered to the Company in connection with the change of

                                      F-9
<PAGE>
                       CHOICES ENTERTAINMENT CORPORATION

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                     YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE E--DISCLOSURE OF INFORMATION ABOUT CAPITAL STRUCTURE (CONTINUED)
control of the Company and the maintenance of it as an existing, reporting
corporation. Pursuant to that resolution, the Board fixed the obligation to each
of the named individuals at $120,000 and gave each the option to take some part
or that entire amount in securities of the Company. On December 29, 1999 the
Board of Directors of the Company passed a resolution instructing the Company's
transfer agent to issue restricted shares of the Company's common stock to the
named individuals, in an amount of shares and in exchange for release of an
amount of the Company's obligation as follows: Jim Sink--2,400,000
shares--$120,000; George Pursglove--1,200,000 shares--$60,000; Thomas
Renna--1,200,000 shares--$60,000; and Tracy Shier--1,200,000 shares--$60,000. At
or about the time of the adoption of the December 29th resolution, the price of
the stock was approximately $.05 per share.

    Included in the December 29(th) resolution was an instruction to the
Company's transfer agent to issue 500,000 shares of the Company's common stock
to Railex Republic Industrial Development LLC, an affiliate of Lorne Bradley and
Republic Hotel Investors, Inc. This issuance of the Company's common stock
related to the termination agreement by and between Republic Hotel
Investors, Inc. and the Company pursuant to which the Company ended its plans to
become a hotel property holding and operating company.

RIGHTS AND PRIVILEGES:

    The holders of outstanding shares of Common Stock are entitled to receive
dividends out of assets legally available therefore at such times and in such
amounts as the board may from time to time determine. The shares of Common Stock
are neither redeemable nor convertible, and the holders thereof have no
preemptive or subscription rights to purchase any securities of the Company.
Upon liquidation, dissolution or winding up of the company, the holders of
Common Stock are entitled to receive the assets of the company which are legally
available for distribution, after payment of all debts, other liabilities and
any liquidation preference of any outstanding preferred stock. Each outstanding
share of Common Stock is entitled to one vote on all matters submitted to a vote
of stockholders. There is no cumulative voting and no preemptive right.

    The Convertible Preferred Shares are the company's only authorized and
outstanding series or class of preferred shares.

    The Convertible Preferred Shares have no liquidation preference. With
respect to rights to participate in distributions or payments in the event of
liquidation, dissolution or winding up of the company, the Convertible Preferred
Shares ranks the same as the Company's Common Stock (defined above) and any
other capital shares of the company which do not, by their terms, rank senior to
or pari passu with the Convertible Preferred Shares.

    Dividends on the Convertible Preferred Shares are non-cumulative and will
only be paid when, as and if declared by the Board of Directors of the Company,
in its sole discretion, in an amount per share equal to the amount of the
dividend declared on the Common Stock, if any.

    Convertible Preferred Shares are convertible, in whole or in part, at any
time, at the option of the holder, into Common Stock at a ratio of 40,000 shares
of the Company's Common Stock (as more fully described above) for each
Convertible Preferred Share. Holders of the Convertible Preferred Shares are not
entitled to any distributions unless declared by the Board of Directors as
described above.

                                      F-10
<PAGE>
                       CHOICES ENTERTAINMENT CORPORATION

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                     YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE E--DISCLOSURE OF INFORMATION ABOUT CAPITAL STRUCTURE (CONTINUED)
    The holders of Convertible Preferred Shares have voting rights equivalent to
the rights of holders of the Common Stock. Each Convertible Preferred Share
bears 40,000 votes on any matter brought before the stockholders such as the
election of Directors and are entitled to notice of annual or special
stockholder meetings. The Board of Directors of the Company is not prohibited
from adopting and submitting to the Company's voting stockholders any proposed
amendment to the Certificate of Incorporation of the Company or a Certificate of
Designation which would create a class of preferred shares ranking senior to the
Convertible Preferred Shares as to dividends and liquidation preference.

    Convertible Preferred Shares are not redeemable by the Company.

    Upon liquidation, dissolution or winding up of the Company, the holders of
Convertible Preferred Shares will receive an amount equal to the amount, if any,
received by holders of the Common Stock, in pari passu.

NOTE F--STOCK OPTIONS

    OPTIONS

    The following table sets forth certain information regarding stock options
granted by the Company, which were outstanding at December 31, 1999:

<TABLE>
<CAPTION>
                                                      SHARES OF       EXERCISE
                                       NUMBER       COMMON STOCK        PRICE        EXPIRATION      REGISTRATION
DATE OF GRANT                        OF HOLDERS   SUBJECT TO OPTION   PER SHARE         DATE            RIGHTS
-------------                        ----------   -----------------   ---------   ----------------   ------------
<S>                                  <C>          <C>                 <C>         <C>                <C>
January 31, 1991...................      2             510,000          $0.43     January 31, 2001    Registered
  TOTAL............................                    510,000
                                                       =======
</TABLE>

STOCK OPTION AND APPRECIATION RIGHTS PLAN

    The Company has an unallocated reserve of 1,694,000 shares of its common
stock for grant under its 1987 Stock Option and Appreciation Rights Plan (the
"1987 Plan"). Pursuant to the 1987 Plan, the Company may grant either incentive
stock options, intended to comply with the requirements of Section 422A of the
Internal Revenue Code of 1986, as amended (the "Code"), or non-qualified stock
options, as well as stock appreciation rights.

    All matters relating to the 1987 Plan are administered by a committee
selected by the Company's Board of Directors, including selection of
participants, allotment of shares, determination of price and other conditions
of purchase. The exercise price of incentive stock options granted under the
1987 Plan may not be less than the fair market value of the common stock on the
date of grant and the term of the option may not exceed ten years from the date
of grant. In the case of incentive options granted to individuals who own more
than 10% of the outstanding common stock of the Company, the exercise price may
not be less than 110% of the fair market value of the common stock on the date
of the 1987 Plan grant and the term of the option may not exceed five years from
the date of grant. All options and stock appreciation rights granted under the
1987 Plan are non-transferable other than by will or by the laws of descent and
distribution.

                                      F-11
<PAGE>
                       CHOICES ENTERTAINMENT CORPORATION

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                     YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE F--STOCK OPTIONS (CONTINUED)
    The following table sets forth information with respect to incentive stock
options under the Plan for the two years ended December 31, 1999:

<TABLE>
<CAPTION>
                                                          NUMBER OF
                                                         SHARES UNDER   PRICE PER
                                                          OPTION(1)       SHARE
                                                         ------------   ---------
<S>                                                      <C>            <C>
Outstanding at December 31, 1998, and 1999.............        --           --
</TABLE>

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

(1) Gives effect to the expiration of options due to termination of employment

                                      F-12
<PAGE>
                       CHOICES ENTERTAINMENT CORPORATION

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                     YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE F--STOCK OPTIONS (CONTINUED)

NON-QUALIFIED MANAGEMENT INCENTIVE STOCK OPTIONS

    On January 31, 1991, the Board of Directors approved the grant of 4,750,000
1991 Management Options to four executive officers of the Company. One officer
has subsequently retired and two other officers have left the Company. One
ex-officer exercised his options in full, one ex-officer exercised 540,000
options leaving 510,000 options outstanding, and 1,000,000 options held by the
second officer who has left the Company remains outstanding. All of the 1991
Management Options were issued at an exercise price of $.4325 per share, which
represented the bid price for the Company's common stock on the date of the
grant of such options. The 1991 Management Options vested fully as of August 2,
1991, and expire January 31, 2001.

    On February 9, 1994, the Board of Directors approved the grant of 915,000
1994 Management Options to three officers and one director of the Company at an
exercise price of $.23 per share, which represented the bid price for the
Company's common stock on the date of grant of such options. The 1994 Management
Options vested fully as of April 7, 1994, and expire on January 31, 2001.

    Registration statements under the 1933 Act have been filed by the Company
with respect to the 8,425,001 shares underlying the 1987 Stock Option and
Appreciation Rights Plan (the "1987 Plan"), the outstanding Long-Term Management
Incentive Options, the 1991 Management Options, and the 1994 Management Options,
and an option held by a director. Of these options, 3,591,501 have either been
cancelled, exercised or have expired and 1,694,500 options remained unissued
under the 1987 SOP. Generally, such registration permits the immediate sale of
the 3,139,500 vested shares upon exercise, subject to the volume limitations
imposed by Rule 144.

    Holders of these options are afforded certain anti-dilution and piggyback
rights under the 1933 Act with respect to the shares of common stock issuable
upon exercise of said options.

    On September 27, 1995, the Company granted a five-year non-qualified stock
option to purchase 100,000 shares of the Company's common stock to a director of
the Company at an exercise price of $.19 per share, the average fair market
value on that date.

    On February 13, 1997, the Board of Directors of the Company authorized the
grant of non-qualified stock options to purchase 450,000 shares of the Company's
common stock at $.05 per share, the fair market value of the common stock on
that date, to three directors of the Company. The options became fully vested
after six months from the date of grant.

NOTE G--NET LOSS PER SHARE OF COMMON STOCK

    Basic income per share for the years ended December 31, 1999 and 1998, were
computed by dividing the net income by the weighted average number of common
shares outstanding during the periods.

    Diluted income per share for the years ended December 31, 1999 and 1998,
were computed by dividing the net income by the weighted average number of
common shares outstanding during the period, as well as, the number of common
shares that would be outstanding as a result of the

                                      F-13
<PAGE>
                       CHOICES ENTERTAINMENT CORPORATION

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                     YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE G--NET LOSS PER SHARE OF COMMON STOCK (CONTINUED)
conversion of the Company's Convertible Preferred Shares. The approximate number
of shares used in the computation of income or loss per share amounts is as
follows:

<TABLE>
<CAPTION>
                                                               NUMBER OF SHARES
YEAR ENDED DECEMBER 31,                                       USED IN CALCULATION
-----------------------                                       -------------------
<S>                                                           <C>
1999
  Basic.....................................................      24,489,387
  Diluted...................................................      28,853,327
1998
  Basic.....................................................      22,004,000
  Diluted...................................................      26,364,395
</TABLE>

    The difference between basic and diluted weighted average number of shares
is due to the Convertible Preferred Shares.

NOTE H--INCOME TAXES

    The Company accounts for income taxes in accordance with SFAS No. 109,
Accounting for Income Taxes. SFAS No. 109 requires the liability method of
accounting for deferred income taxes. Deferred tax assets and liabilities are
determined based on differences between financial reporting and tax bases of
assets and liabilities, and are measured by applying enacted tax rates for the
taxable years in which those differences are expected to reverse. Recognition of
deferred tax assets is subject to a valuation allowance if it is more likely
than not that some or all of a deferred tax asset will not be realized.

    As of December 31, 1999 the Company had approximately $18,735,000 of net
operating loss carry-forwards for tax purposes which may be available to offset
future federal income, if any, through 2010. The amount ultimately available, if
any in future years, is subject to certain limitations. Should the Company
operate profitably in future years, it may be subject to current tax expense in
certain states for which no net operating loss carry-forwards are available.

NOTE I--COMMITMENTS

    The Company currently has no material lease commitments. The Company's
executive office is provided rent-free by the Company's President.

    Rent expenses for 1999 and 1998 were $ 0.

NOTE J--PENDING LITIGATION

    The Company is a defendant to the lawsuit Dion Signs & Services, Inc. vs.
Choices Entertainment Corporation, Civil Action No. 91-6871. The case is now
pending in the Providence County Superior Court, Providence, Rhode Island. Dion
Signs & Services, Inc. alleges that it is owed approximately $33,000 plus
interest, costs and reasonable attorney's fees for the failure by Choices
Entertainment Corporation to pay for signage that was erected at various
locations pursuant to a contract. If the plaintiff is successful, the case has a
potential verdict of approximately $33,000.00 plus close to 100% interest. In
addition, Rhode Island statute would allow for the imposition of counsel fees
because it's premised upon a contract action. Accordingly, the total exposure
could be in the range of $70,000 to

                                      F-14
<PAGE>
                       CHOICES ENTERTAINMENT CORPORATION

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                     YEARS ENDED DECEMBER 31, 1999 AND 1998

NOTE J--PENDING LITIGATION (CONTINUED)
$75,000. Since the case has not been set for trial, and very little discovery
has been done, it is not possible to determine the likelihood of the outcome of
the case at this time.

NOTE K--SUBSEQUENT EVENTS

    In January 2000, the Company subscribed to a private placement of
CAN$2,300,000 principal amount of Convertible Subordinated Redeemable 0%
Debentures maturing April 30, 2000 (the "Debentures") issued by PhotoChannel
Networks Inc., a British Columbia corporation ("Photochannel"). The subscription
agreement calls for advances to Photochannel in exchange for the issuance of
Debentures as follows: CAN$350,000 by January 31, 2000; CAN$750,000 by
February 29, 2000; and CAN$1,200,000 by April 14, 2000. The Debentures are
convertible into Photochannel common stock, no par value, ("Photochannel Stock")
at the rate of 1 share of Photochannel Stock for each CAN$.50 in debenture
principal amount. Also, the company was granted warrants pursuant to a vesting
schedule to purchase additional shares of Photochannel Stock as follows: 140,000
warrants with an exercise price of CAN$.75; 300,000 warrants with an exercise
price of CAN$1.00; and 480,000 warrants with an exercise price of CAN$1.25. Each
warrant entitles the Company to purchase 1 share of Photochannel Stock at the
exercise price, for cash. The warrants are presently fully vested and will
expire June 30, 2000. As of the date of the filing of this report on
Form 10KSB, the Company had completed its obligations under the subscription
agreement. All of the securities acquired in this transaction as well as the
securities into which the securities acquired are convertible or exercisable
against are restricted securities and must be held for the applicable holding
period from the date of conversion or exercise, as the case may be. The
applicable holding period in most cases will be 1 year.

    In February 2000, the Company closed a self-offered private offering of 390
of the Company's Series C Preferred Stock in the aggregate offering amount of
$780,000. Offering expenses were less than $3,000. Each share of the Preferred
Stock is convertible into 40,000 shares of the Company's common stock, par value
$.01, the ("Common Stock") and carries the voting rights of the underlying
Common Stock. The proceeds from this offering were used to retire all notes
payable, to pay down the obligations of the Company to officers and directors of
the Company, to pay down accounts payable to an immaterial amount, and to
acquire minority interests in two companies. Certain convertible debt were
converted to Convertible Preferred Shares.

    In March 2000, the Company paid $50,000 cash to acquire 250,000 shares of
common stock of Tridium Research Inc., a Washington corporation ("Tridium")
based in Kirkland, Washington. The 250,000 shares of common stock acquired
represents approximately 5% of all Tridium common stock issued and outstanding.
The Company has also obligated itself to provide an additional $200,000 to
Tridium, upon terms and conditions to be determined.

                                      F-15
<PAGE>
                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
       EXHIBIT
         NO.                                  DESCRIPTION OF EXHIBIT
       -------                                ----------------------
<C>                        <S>
            3(a)           Certificate of Incorporation, as amended(1)

             (b)           Certificate of Designations of Series C Preferred Stock, as
                           amended(2)

             (c)           Amended and Restated By-Laws,(13)

            4              Form of certificate evidencing shares of Common Stock(4)

           10(a)           Stock Option and Appreciation Rights Plan of 1987(4)

             (b)           Form of Long-Term Management Incentive Stock Option
                           Agreement(5)

             (c)           Form of 1991 Management Option Agreement(5)

             (d)           Consulting Agreement between Registrant and Ronald W.
                           Martignoni(6)

             (e)           Severance Benefits Agreement, as amended, between Registrant
                           and Lorraine E. Cannon(7)

             (f)           Form of 1994 Management Option Agreement(7)

             (g)           Non-Employee Director Stock Option Agreement between
                           Registrant and Fred E. Portner(8)

             (h)           Non-Employee Director Stock Option Agreement between
                           Registrant and Fred E. Portner(9)

             (i)           Non-Employee Director Stock Option Agreement between
                           Registrant and James D. Sink(9)

             (j)           Asset Purchase Agreement, dated December 16, 1996, as
                           amended, between West Coast Entertainment Corporation and
                           Registrant(10)

        10.99(a)           Consulting Agreement between Registrant and Thomas Renna(11)

             (b)           Letter of Intent to Acquire Republic Hotel Investors,
                           Inc.(12)

             (c)           Termination Contract with Republic Hotel Investors, Inc.(13)

           23              Consent of Miller and Co.(13)

           27              Financial Data Schedule(13)
</TABLE>

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

 (1) Filed as an Exhibit to Registrant's Registration Statement on Form S-8 File
     No. 33-87016) and incorporated herein by reference.

 (2) Filed as an Exhibit to Registrant's 1996 Annual Report on Form 10-KSB, and
     incorporated herein by reference.

 (3) Filed as an Exhibit to Registrant's 1992 Annual Report on Form 10-K and
     incorporated herein by reference.

 (4) Filed as an Exhibit to Registrant's Registration Statement on Form S-1,
     inclusive of Post-Effective Amendment No. 1 thereto (File No.: 33-198983)
     and incorporated herein by reference.

 (5) Filed as an Exhibit to Registrant's Post-Effective Amendment No. 1 to
     Form S-1 Registration Statement (File No.: 33-32396), and incorporated
     herein by reference.

 (6) Filed as an Exhibit to Registrant's Quarterly Report on Form 10-QSB, for
     the quarter ended September 30, 1997, and incorporated herein by reference.

 (7) Filed as an Exhibit to Registrant's 1993 Annual Report on Form 10-K, and
     incorporated herein by reference.

                                      E-1
<PAGE>
 (8) Filed as an Exhibit to Registrant's Quarterly Report on Form 10-QSB, for
     the quarter ended March 31, 1996, and incorporated herein by reference.

 (9) Filed as an Exhibit to Registrant's Quarterly Report on Form 10-QSB, for
     the quarter ended March 31, 1997, and incorporated herein by reference.

 (10) Filed as an Exhibit to Registrant's definitive Proxy Statement, dated
      February 11, 1997, with regard to a Special Meeting of Stockholders held
      on March 12, 1997, as further amended by Second and Third Amendments
      thereto filed as Exhibits to Registrant's Forms 8-K, dated April 28, 1997,
      and May 29, 1997, all of which Exhibits are incorporated herein by
      reference.

 (11) Filed as an Exhibit to Registrant's Quarterly Report on Form 10-QSB, for
      the quarter ended June 30, 1999, and incorporated herein by reference.

 (12) Filed as an Exhibit to Registrant's Current Report on Form 8-K dated
      August 30, 1999 and incorporated herein by reference.

 (13) Filed herewith.

                                      E-2