SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                  FORM 10-K/A-3

         ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

                         Commission File Number: 0-25667

                                MEDIUM4.COM, INC.
              Exact name of registrant as specified in its charter)

              Delaware                                      13-4037641
   (State or other jurisdiction of                        I.R.S. Employer
    incorporation or organization)                       Identification No.)

                533 Airport Blvd. Suite 401, Burlingame, CA 94010
               (Address of principal executive offices)(Zip Code)

       Registrant's telephone number, including area code: (650) 685-2403

           Securities registered pursuant to Section 12(b) of the Act:
                     Common Stock, Par Value $0.01 Per Share
                    Redeemable Common Stock Purchase Warrants
                                (Title of Class)

           Securities registered pursuant to Section 12(g) of the Act:
                                      None

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

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not 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-K or any amendment to this
Form 10-K. / /

The aggregate market value of the Registrant's common stock held by
non-affiliates of the Registrant on December 12, 2002 was approximately
$916,117.

As of December 12, 2002 there were 49,797,556 shares of our common stock
outstanding.

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                                     Part I

Item 1. BUSINESS

(a) GENERAL DEVELOPMENT OF BUSINESS

    We were incorporated in Delaware on November 12, 1998, under the name
foreignTV.com, Inc. to pursue opportunities arising out of the Internet's
emergence as a broadcast medium, which resulted, in large part, from the advent
of streaming video technology and the availability of high speed Internet
access.

    We have not achieved profitability since inception in 1999, and we do not
anticipate deriving any significant revenues from advertising or other
activities during the first half of 2002, or even later. As of the end of fiscal
year 2001, we had negligible cash and we will need to obtain substantial
additional financing in order to continue and expand our operations and to
sustain our cash flow needs. Anticipated non-interest bearing loans from an
affiliated person, together with our limited current cash resources and
operating revenues, are expected to be able to support our operations through
the end of the third quarter of the year 2002. Any inability to obtain
additional financing will materially adversely affect us, including possibly
requiring us to significantly curtail or cease business operations.

    Our auditors have qualified their opinion on our financial statements on a
"going concern" basis; that is to say, our financial statements have been
prepared assuming that we will continue as a going concern. Given our recurring
losses from operations, including a net loss of approximately $6.2 million for
the year ended December 31, 2001, and our working capital deficiency as of
December 31, 2001, there is substantial doubt that we will able to continue as a
going concern.

    We commenced our operations in 1999 with a website on the Internet that
simulated a single TV network, which distributed location-specific programming
using streaming video technology. This technology enabled an Internet user to
select and view this "stream" of programming on demand, 24 hours a day. Seeking
to expand this "video-on-demand" business, we increased the breadth of our
programming on the Internet by establishing new content-specific networks, each
hosting and featuring numerous channels offering unique thematic streaming audio
and video content and special-interest programming, or "niche programming," to
select and view from our website.

     In December 1999, we changed our name from foreignTV.com, Inc. to
Medium4.com, Inc. to underscore the Internet's emerging role as the fourth
medium for television broadcasting, after cable, satellite and traditional
television transmission. By the end of 2000, our website was providing streaming
audio and video content over six Internet "television" networks, which in the
aggregate hosted over 100 distinct channels targeted to various market segments
and niches. Most of these audio and video segments were encoded at three
different speeds, for low-, medium- and high-band users, and were made available
for audiences by the use of Windows Media Player (TM) or Real Networks, Inc.'s
Real Player (TM).

    During 2001 we refocused our business model to de-emphasize the offering of
thematic video-on-demand networks in favor of a single network of special
interest, continuously streaming broadband entertainment channels, using a
previously unavailable technology called Simulated Live Stream, or SLS. As of
the date of this report, we offer only a single network, which incorporates the
following elements:

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    - a single SLS channel, entitled StreamingUSATV which encompasses travel
America channel;

    - a selection of video-on-demand jazz, blues, and Americana music videos;

    - two photo-image slideshow channels (SlideChannel and SlideChannel2);

    - a text-only channel (Channel2Read), presently dedicated to inspiring,
patriotic quotations; and

    - an animation channel.

All of these elements are available around the clock, seven days per week.

    Our executive offices are located at 1220 Collins Avenue, Suite 100, Miami
Beach, FL 33139. Our telephone number is (305) 538-0955 and our primary website
is located at www.medium4.com. The information on our website is not a part of
this Report.

RECENT DEVELOPMENTS

    During the fourth quarter of 2001, in light of the September 11th terrorist
attacks, we relaunched our StreamingUSA network, previously a collection of
thematically linked video-on-demand channels, and focused on providing
"American" content, incorporating the following elements:

    - an SLS travel-America channel entitled StreamingUSATV;

    - a selection of video-on-demand jazz, blues, and Americana music videos;

    - two photo-image slideshow channels (SlideChannel and SlideChannel2);

    - a text-only channel (Channel2Read), presently dedicated to inspiring,
patriotic quotations; and

    - an animation channel.

    On October 30, 2001, we privately sold 1,000 shares of our newly designated
Series A convertible preferred stock to Inter Asset Japan LBO No. 1 Fund, a
Japanese institutional investor ("IAJ"), for an aggregate of $1,000,000.

    Each share of Series A convertible preferred stock is convertible into
20,000 shares of our common stock, or an aggregate of 20,000,000 shares if all
of the Series A convertible preferred stock is converted. Had all of the shares
of Series A convertible preferred stock been converted into shares of our common
stock on March 31, 2002, those shares would have represented an approximately
40.3% equity interest in our company. IAJ does not currently hold any shares of
our common stock; however, two affiliates of IAJ--PBAA Fund Ltd. ("PBAA") and
Terra Firma Fund Ltd. ("Terra Firma"), both open-ended limited liability
investment companies incorporated in the British Virgin Islands as a "Private
Funds"--hold in the aggregate approximately 17,109,800 shares of our common
stock. Should IAJ choose to convert all of its shares of Series A convertible
preferred stock into 20,000,000 shares of our common stock, IAJ and its
affiliates would in the aggregate beneficially own 37,109,800 shares of our
common stock, or approximately 74.7% of the outstanding common stock. Thus, the
sale of the 1,000,000 shares of our Series A convertible preferred stock to IAJ
sale represents an event which may lead to a future change of control of our
Company.

(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

    Not applicable

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(c) NARRATIVE DESCRIPTION OF BUSINESS

STREAMING TECHNOLOGY

    In contrast with video-on-demand channels, which require viewers to choose
from an online portfolio of specific videos and then click onto each video clip
they decide to view, viewers of SLS channels simply click on a given link to
tune into a channel's in-progress, continuously-streaming entertainment
programming. The viewer is then able to view/listen to and enjoy the continuous
stream of music contained on the SLS channel and may continue to listen to the
music even after exiting our Website and while working on or surfing the
Internet. We believe SLS channels are less cumbersome and more viewer-friendly
than video-on-demand channels and come closer to a true TV experience. Key
portions of our video-on-demand content are being reorganized by topic or
subject matter (e.g., pets, travel, music), and will be available in a single
section of our main Medium4.com Website, as well as directly accessible at
www.Medium4Video.com.

    All of our content can be accessed through streaming technology. Streaming
multimedia takes standard videotape formats and digitizes and compresses the
information using encoder software. When a user opens or accesses an audio or
video file, a portion of the data is downloaded in a matter of seconds into a
form of computerized holding pens or "buffers" when the data starts to play,
additional data is continuously downloaded to keep the holding pen full.
Streaming technology thereby enables the simultaneous transmission and
reception--or "broadcast"--of continuous "streams" of audio and video content.

    Streaming technologies have evolved to deliver content over narrow bandwidth
modems. At such narrow or "low bandwidth" the quality of broadcasts over the
Internet, such as videos, is still inferior to conventional television
broadcasts. Streaming technologies are now using high speed Internet access that
is provided by DSL, cable modems, T1 lines, and other emerging broadband
technologies. The use of high speed Internet access has helped improve the
picture quality of streaming videos. We believe the continuing improvement of
broadband technologies will soon allow streaming video quality to equal that of
conventional TV broadcasting, and consequently will cause the number of viewers
of streaming content to increase.

THE VTOOB

    StreamingUSA is presented in a specially designed "player," called the
vToob, which has the look and feel of a virtual appliance--specifically, an
online multimedia TV set. All content is "channelized" and formatted for viewing
in a single TV-like screen. The vToob is designed to make room for click-through
banner advertising; TV-like advertising "spots" played before, during and after
programs on the SLS channel. Our video content is encoded for high-speed
(broadband) viewers only. The photos, text, and animation are encoded for low-,
medium-, and high-band users. Viewers can download and install the vToob
(presently at no charge) by visiting the Medium4.com website. The process takes
just seconds with a high-speed (DSL, T1, cable modem) connection, and only a
little longer with a dial-up connection.

    The vToob is based on a publicly available media player that we acquired for
a one-time nominal payment of approximately $150, and no further licensing fees
are due. Our in-house programmers then modified the base code for the media
player to customize it as the vToob, designing it to be directly launched-- at
the click of a mouse--from the viewer's browser toolbar, favorites menu, or
computer screen desktop. This addresses the central marketing challenge
confronting nearly every website today--that a large majority of Internet
traffic now goes to a handful of sites. The vToob positions StreamingUSA as an
always-on-top Internet-based multimedia network with easy, one-click access.

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Moreover, because it is essentially a website packaged as a "player," the vToob
makes it possible for a small staff of website professionals (content managers,
designers, programmers, etc.) to more cost-effectively and efficiently manage
and update the content.

    We believe the vToob, as applied to StreamingUSA, represents a timely and
appropriate content delivery solution, strategy and methodology that may have
commercial potential for other content provides and publishers. We are exploring
the feasibility of offering customized applications on a fee-for-service and/or
joint venture basis.

    We inaugurated the vToob in October 2002. We expect that the "always-on-top"
feature of the vToob will attract more users than our video-on-demand model,
because of its convenience and its ability to allow a user to multitask while
viewing our content.

    As for StreamingUSA's revenue model, current banner advertisements are free
and simply used to generate interest and demonstrate viability and potential. In
fiscal year 2001, we did not realize any significant revenue from advertising
and did not enter into any revenue-producing relationship with advertisers.
Though the world-wide advertising slump shows early signs of recovery, we
believe that advertising will not be sufficient to support the network in the
foreseeable future; instead, we are considering a hybrid subscription/
advertising revenue model.

PLS--PRIVATE LABEL STREAMING

    In order to develop and implement our business as an Internet broadcaster,
we have developed proprietary streaming media technology solutions --
PLS-Private Label Streaming -- to provide back-end content encoding, hosting and
content streaming capabilities. During 2001, we sold several encoding mechanisms
containing the PLS technology.

OUR VIEW OF THE INTERNET

    In recent years, the World Wide Web transformed the Internet from an
academic and government curiosity into a consumer mass medium for communication,
entertainment and information. We believe that over the next several years,
broadband, or high speed Internet connection, will transform the Internet into a
commercially viable broadcasting medium that will merge, or converge, with
digital/satellite TV. We believe an opportunity exists to cost-effectively
create and build broadband entertainment channels in anticipation of this
transformation of the Internet and its eventual convergence with
digital/satellite TV.

OUR CONTENT STRATEGY

    We have changed the way we develop our unique content. We no longer engage
in the costly production of content for our channels. Instead, we have begun to
purchase content produced by others, which has allowed us to consolidate our
facilities and reduce our staff significantly. We believe that by purchasing our
content, we will reduce our operating costs and strengthen our overall business.

    During 1999 and into 2000, we produced professional, worldwide news content
from a facility located in Paris, France. Although this programming helped our
Company evolve into one of the leaders in independent Internet broadcasting, its
production required large amounts of capital. By December 31, 2000, as a result
of the high cost of production, together with a shift in our business strategy
away from content production in general, we ceased producing this news content
and closed our Paris facility.

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    The experience of the cable networks as a broadcast medium has shown that
they can increase revenues by narrowing the overall TV audience (i.e., with
niche, or special interest, channels). This practice can be thought of as
"narrowcasting" as opposed to "broadcasting." Given the growth and success of
the cable TV industry, we believe there exist market opportunities to launch and
build next-generation cable-style niche programming on the Internet, especially
after the convergence of the Internet and digital/satellite TV.

    In the last two years we have attempted to extend cable TV's successful
niche program model to our SLS broadband entertainment channels and to our
video-on-demand channels. We are currently providing only "American" content on
our StreamingUSA network.

    Currently, our programming and content is available to viewers of our
channels free of charge. We are reviewing and testing the possibility of
providing certain content on a pay-per-view basis or a subscriber basis.

INTERNET ADDRESSES--DOMAIN NAMES FOR PRESENT AND FUTURE CHANNELS

    The Company owns or licenses more than 1,500 unique Internet addresses or
domain names. We currently offer content from approximately 40 of these
addresses. Of the 1,500 domain names, we license approximately 135 pursuant to
exclusive 25-year arrangements with Jonathan Braun, our President and Chief
Executive Officer, and a not-for-profit corporation affiliated with him, the
Center for Contemporary Diplomacy. For these approximately 135 domain names, we
are required to pay annual license fees beginning at $600 per domain name (or
$81,000 in the aggregate annually) escalating to $2,500 per domain name (or
$337,500 in the aggregate annually) through the 25th year. For all other domain
names, we are only required to pay an annual maintenance fee of approximately
$35 per name, or a current aggregate of approximately $70,000. In 1999 and 2000,
we paid $42,750 and $28,500, respectively, to the Center pursuant to its license
agreement with us. In 1999 and 2000, we paid $10,800 and $0, respectively, to
Mr. Braun pursuant to his license agreement with us. We did not make any
payments to Mr. Braun or the Center in 2001. As of December 31, 2001, we were
delinquent in licensing fees due to the Center in the approximate amount of
$99,750, and due to Mr. Braun in the approximate amount of $54,000. Both the
Center and Mr. Braun have waived their right to the fees due them pursuant to
these agreements through December 31, 2001. Given our current financial
condition, we anticipate that they will also waive the fees due them through
fiscal 2002. We actively use only three of the 135 domain names that we license
from Mr. Braun: Medium4.com, foreignTV.com, and StreamingUSA.com.

    As part of our business strategy, we seek to protect the names that we
actually use, or plan to use, by applying for trademark registration for these
names. To conserve our limited cash, we do not plan on maintaining or renew the
domain registration fees on all of the more than 1,500 domain names we currently
use or license, but rather on the 40 from which we currently offer content. The
other domain name registrations will be allowed to expire.

ANTICIPATED REVENUE SOURCES

    Our original revenue model was based on the sale of advertising on our
sites. In that model, we competed with on-line services, other Website operators
and advertising networks, as well as traditional media such as television, radio
and print, for a share of advertisers' total advertising budgets and sales of
advertising spots.

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    Our actual business experience since inception in generating advertising
revenue has not been successful. In fiscal year 2001, for example, we did not
realize any significant revenue from advertising and did not enter into any
revenue-producing relationship with advertisers. The recent industry-wide
decline in advertising dollars expended in the Internet further convinces us of
the need to recast our business model away from advertising revenues and to
alternative revenue sources, such as licensing our vToob viewer to other
corporate users, selling sponsorships for all of part of a channel, and the sale
of PLS encoding mechanisms. To date, we have not generated any significant
revenue from any of these alternative revenue sources.

    We have not yet formulated a strategy for these alternative revenue sources,
nor do we know as yet the cost or the timing for attaining profitability
pursuing these alternative revenue sources. We anticipate defining such strategy
in 2002. Please also refer to the discussion of our on-going business strategy
in the Introduction section in "Management's Discussion and Analysis of
Financial Condition and Results Of Operations."

MARKETING AND PROMOTION

    To encourage the widespread downloading of our vToob and the viewing of our
SLS network, we plan to concentrate our marketing efforts and resources on
hiring outside consultants to facilitate mass e-mail campaigns that target
potential viewers by channel, content and interest.

COMPETITION

    In an advertising-based revenue model, we compete with on-line services,
other Website operators and advertising networks, as well as traditional media
such as television, radio and print, for a share of advertisers' total
advertising budgets and sales of advertising spots. We believe that the
principal competitive factors for attracting advertisers include:

    - the number of users accessing our Website;

    - the demographics of our users;

    - our ability to deliver focused advertising and interactivity through our
Website;

    - the overall cost-effectiveness and value of advertising on our network;
and

    - the ability of our viewers to access the Internet through high-speed
connections.

    There is intense competition for the sale of advertising on high-traffic
Websites, which has resulted in a wide range of rates quoted by different
vendors for a variety of advertising services, making it difficult to project
levels of Internet advertising that will be realized generally or by any
specific company. The competition for advertisers among present and future
Websites, as well as competition with other traditional media for advertising
placements, has resulted in significant price competition. We also compete for
traditional media advertising sales with national radio and television networks,
as well as local radio and television stations. Such radio and television
networks and stations in virtually all instances have larger and more
established sales organizations than ours. These companies may also have greater
name recognition and more established relationships with advertisers and
advertising agencies. Such competitors may be able to undertake more extensive

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marketing campaigns, obtain a more attractive inventory of ad spots, adopt more
aggressive pricing policies and devote substantially more resources to selling
advertising inventory. Moreover, we compete against a variety of businesses that
provide content through one or more mediums, such as print, radio, television,
cable television and the Internet. Moreover, our viewers must make an investment
in technology, including a computer with an acceptable minimal configuration for
comfortable Internet surfing (approximate retail cost $1,500) and a connection
to the Internet (approximate monthly expense $18.00 for a 56kb dial-up
connection and $45.00 for a high-speed broadband connection). Although
approximately half of the US population currently has a computer in their homes,
this figure is dwarfed by the fact that over 95% of the households in the US
already own a television. To compete successfully in an advertising-based model,
we have to provide sufficiently compelling and popular content to attract
viewers and support advertising intended to reach such users. We believe that
the principal competitive factors in attracting Internet users include the
quality of service and the relevance, timeliness, depth and breadth of content
and services offered.

    The Internet broadcasting market is highly competitive. Although many of our
major competitors of streaming video have ceased operations during the last year
or two, we believe that if we were to adhere to an advertising-based revenue
model, we will continue to compete against a variety of content-based Internet
companies. Some of the principal competitive factors in this market include the
ability to adapt to new technologies and enhance the quality of content
transmission, the ability to deliver quality content to your target viewers, the
ability to obtain advertisers and the ability to have available financial
resources.

    We believe that our business focus of providing entertainment niche
programming on a streaming basis through the use of our vToob has differentiated
us from other content-based Internet companies. We believe we do not have any
direct competitors in this new market. However, we can give no assurance that
other companies will not develop competing technology and business strategies
and directly compete in the streaming multimedia entertainment programming.

INTELLECTUAL PROPERTY

    We regard our copyrights, trademarks, trade secrets, domain name rights and
similar intellectual property as significant to our growth and success. We rely
upon a combination of copyright and trademark laws, trade secret protection,
domain name registration agreements confidentiality and non-disclosure
agreements and contractual provisions with our employees and with third parties
to establish and protect our proprietary rights. We have applied for federal
trademark protection for our networks and channels and intend to apply for
federal trademark protection for certain of the marks and names that we use in
the course of our business.

GOVERNMENT REGULATION

    There are few laws or regulations directly applicable to the Internet. For
example, the Digital Millennium Copyright Act, enacted into law in 1998,
protects certain qualifying online service providers from copyright infringement
liability, the Internet Tax Freedom Act, also enacted in 1998, placed a three
year moratorium on new state and local taxes on Internet access and commerce,
and under the Communications Decency Act, an Internet service provider will not
be treated as the publisher or speaker of any information provided by another
information content provider. The appeal of the Internet makes it likely,
however, that state, national or international laws may be implemented in the
future covering such issues as user privacy, defamatory speech, copyright
infringement, pricing and characteristics and quality of products and services.
Any new law or regulation may have the effect of limiting the use of the
Internet and its growth as a new medium to communicate could harm our business.

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    We currently do not collect sales or other taxes with respect to the sale of
services or products in states and countries where we believe we are not
required to do so. One or more states or countries have sought to impose sales
or other tax obligations on companies that engage in online commerce within
their jurisdictions. A successful assertion by one or more states or countries
that we should collect sales or other taxes on products and services, or remit
payment of sales or other taxes for prior periods, could adversely affect our
business.

    The Child Online Protection Act of 1998 imposes criminal penalties and civil
liability on anyone engaged in the business of selling or transferring material
that is harmful to minors, by means of the Internet, without restricting access
to this type of material by underage persons. Numerous states have adopted or
are currently considering similar types of legislation. The imposition upon us
of potential liability for broadcasting content that is harmful to minors could
require us to implement measures to reduce exposure to liability, which may
require the expenditure of substantial resources., or to discontinue various
content offerings. Further, the costs of defending against any claims and
potential adverse outcomes of these claims could have a material adverse effect
on our business.

EMPLOYEES

    As of December 31, 2001, we had 3 full-time employees and 1 part-time
employee. None of our employees is subject to a collective bargaining agreement
and we believe that our relations with our current employees are good.

Item 2. PROPERTIES

    In December 2000, we relocated our executive offices to our Miami Beach
facilities and terminated our lease for the premises located at 120 Fifth
Avenue, without penalty. The rent payable by the Company for our Miami Beach
offices and facilities is approximately $11,000 per month. We believe our
offices and operating facilities are adequate for our current purposes.

Item 3. LEGAL PROCEEDINGS

    As previously reported, we entered into a master affiliate agreement with
Windfire International Corporation, Ltd., a British Virgin Islands corporation,
pursuant to which we granted Windfire the exclusive right for an initial term of
five years to grant licenses solely to persons and entities acceptable to us for
the establishment and operation within the nations of Brunei, Indonesia, Kenya,
Malaysia, the Philippines, Singapore, South Africa, Tanzania, Thailand and
Uganda of Internet sites that will comprise discrete channels upon one or more
of our network of streaming media Websites. The master affiliate agreement
required Windfire to pay us a one-time master license fee of $1.5 million on or
before June 30, 2000, of which $500,000 has been received to date. Windfire also
agreed to pay us commissions over the term of the master affiliation agreement
calculated upon specified percentages of annual gross revenues received by
Windfire from its licensees.

    On or about September 15, 2000, Windfire, which we believe is owned or
otherwise affiliated with Mr. G. Selva Raj, initiated a demand for arbitration
before the American Arbitration Association, New York Region, which sought an
award declaring that the master affiliate agreement between our Company and
Windfire was unenforceable and void. Windfire also asserted that the agreement

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is void or voidable because of alleged omissions of what it categorizes as
essential components of the agreement, thereby demonstrating the absence of a
meeting of the minds between our companies. In addition, Windfire sought
$500,000 and compensatory and punitive damages that were not quantified. We
denied the material allegations asserted by Windfire in its demand for
arbitration and asserted a counterclaim for payment of the $1.0 million
outstanding balance of the master license fee owed to us by Windfire. This
proceeding was dismissed with prejudice by mutual agreement in April 2002 at no
material cost to us.

    On or about September 19, 2000, Cavendish Asset Management Ltd., a British
Virgin Islands corporation, which we believe is also owned or otherwise
affiliated with Mr. Raj , initiated an action against us, Jonathan Braun, our
Chief Executive Officer, Marc D. Leve, our former Vice President-Legal Affairs,
and others in the Supreme Court of the State of New York, County of New York.
Cavendish's complaint alleges that it had entered into a term sheet with
Antafin, B.V., a Netherlands corporation, calling for its acquisition of a
certain political and travel publication known as Executive Class. The complaint
asserts that Antafin was owned and controlled by us. Cavendish further alleges
that we and Messrs. Braun and Leve, as well as certain of our former officers,
fraudulently induced Cavendish to pay $1.0 million to Antafin as a down payment,
and that if Cavendish and Antafin were unable to negotiate a definitive
acquisition agreement, Cavendish would be entitled to its return. Cavendish
asserts that no definitive agreement with respect to the sale of Executive Class
was ever reached between Cavendish and Antafin and that notwithstanding its
repeated demands, Antafin has refused to return Cavendish's downpayment.
Cavendish seeks an injunction against us and each of the other defendants
enjoining the transfer, disposition or concealment of the alleged $1.0 million
downpayment, and a judgment against us and the other defendants, jointly and
severally, in the amount of $1.0 million plus punitive damages, which were not
quantified. We believe that the claims asserted against us by Cavendish are
without merit and we intend to vigorously defend this action.

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

    On December 27, 2001, we held our 2001 annual meeting of stockholders. At
the meeting, our stockholders elected I. William Lane, Jonathan Braun, Junichi
Watanabe and Satoru Hirai to serve as our directors for a term of one year and
until their respective successors are elected by a vote of 25,349,646 shares in
favor and 2,585 shares withheld. Subsequent to the vote, Mr. Hirai declined the
election because we were unable to provide our directors with liability
insurance.

    Also at the annual meeting, our stockholders approved the issuance of up to
20,000,000 shares of our common stock upon the conversion of our Series A
convertible preferred stock by a vote of 25,427,086 shares in favor, 15,170
shares opposed and 2,691,450 shares present but not voting, and approved an
amendment to our certificate of incorporation to increase the authorized number
of shares of our common stock from 30,000,000 to 75,000,000 by a vote of
21,175,684 shares in favor, 2,495 shares opposed and 6,955,617 shares present
but not voting. To obtain funds to meet our working capital needs, in October
2001 we completed a private placement of 1,000 shares of the newly designated
Series A convertible preferred stock to Inter Asset Japan LBO No. 1 Fund, a
Japanese institutional investor, for an aggregate price of $1,000,000. The
purchaser represented to us that it was acquiring these shares for investment.

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    Each share of Series A convertible preferred stock is convertible at any
time or from time to time into 20,000 shares of our common stock, or an
aggregate of 20,000,000 shares of our common stock if all of the Series A
Convertible Preferred Stock is converted. No payment is due to us upon the
conversion. The Series A convertible preferred stock carries no voting rights
except as may be required by law, provides for the payment of dividends only
when and if dividends are declared and paid on shares of our common stock and
then in a like amount, provides for a liquidation preference of $1,000 per share
and is not redeemable by us.

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                                     Part II

Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    (a) Our common stock and warrants are listed on the American Stock Exchange
under the symbols "MDM" and "MDM.WS". The following table sets forth the range
of the high and low closing prices for such securities for the periods
indicated.
                                                          Redeemable Common
                                                            Stock Purchase
                                 Common Stock                  Warrants
  Quarter Ended               High            Low        High            Low
 ---------------              -----          -----       -----          -----
March 31, 2000 ............   $6.38          $4.50       $1.25          $0.81
June 30, 2000 .............    6.88           2.88        1.38           0.56
September 30, 2000 ........    5.13           2.63        0.88           0.06
December 31, 2000 .........    2.69           0.19        0.38           0.02
March 31, 2001 ............    0.38           0.10         NQ             NQ
June 30, 2001 .............    0.75           0.15         NQ             NQ
September 30, 2001 ........    0.39           0.10         NQ             NQ
December 31, 2001 .........    0.65           0.10         NQ             NQ

    On April 12, 2002, there were 185 and 63 recordholders of our common stock
and warrants, respectively, although we believe that there are other persons who
are beneficial owners held in street name. We have never paid cash dividends. We
intend to retain any future earnings for the operation and the expansion of our
business and do not anticipate paying any cash dividends in the foreseeable
future.

    (b) During the three month period ended December 31, 2001, we sold 1,000
shares of our Series A convertible preferred stock for $1,000,000 and 23,760
shares of our common stock for an aggregate of $2,376, respectively. No
underwriter was involved in the sale of our Series A convertible preferred
stock. Westminster Securities Corporation acted as placement agent for the sale
of our common stock for which it did not receive a placement fee. Legal and
administrative expenses for this sale totaled approximately $4,000 and these
expenses were recorded as a reduction of the capital raised. For a description
of the terms of the Series A convertible preferred stock, see Item 4 in this
report.

    During fiscal year 2001, we also issued the shares of our Common Stock set
forth in following table. No underwriters were involved in any of these
transactions. Shares issued for services were valued at the fair market value of
the services provided. The Company recorded $2,369,900 of compensation expense
relating to such issuance.
<TABLE>
<CAPTION>
                                                                             Date of Shareholder
                                                       Date of                Authorization (if     Date of
      Shares   Purpose                              Board Approval   Price       Applicable)        Issuance
      ------   -------                              --------------   -----       -----------        --------
<S> <C>        <C>                                     <C>            <C>            <C>            <C>
    2,000,000  Private sale (1)                        5/25/01        .15            N/A            6/8/01

       30,000  Legal services (2)                      5/25/01        .15            N/A            6/8/01

      297,600  Private sale (3)                        5/25/01        .25            N/A            6/8/01

      500,000  Accounting, administrative,             5/25/01        .25            N/A            6/8/01
               clerical and insurance services (4)

      500,000  Credit facility availability,           5/25/01      .25-.50          N/A            6/8/01
               debt renegotiation, and
               managerial consulting services (5)
</TABLE>

                                       12
<PAGE>

<TABLE>
<CAPTION>
<S> <C>        <C>                                     <C>            <C>            <C>            <C>
    1,400,000  (5)                                     7/2/01         .25            N/A            7/6/01

      500,000  Private sale (6)                        7/5/01;        .20            N/A            7/16/01;
                                                       8/20/01        .20                           8/22/01

   10,000,000  (5)                                     9/27/01        .15            N/A            10/17/01

    1,000,000  Marketing services (7)                  10/26/01       .20            N/A            11/30/01

       23,760  Private sale (8)                        10/26/01       .10            N/A            11/30/01

       30,000  Legal Services (2)                      10/26/01       .18            N/A            11/30/01

      250,000  Consulting services (9)                 10/26/01       .18            N/A            11/30/01

      195,000  Consulting services (10)                10/26/01       .18            N/A            11/30/01

       40,000  Compensation of former employees (11)   10/26/01       .18            N/A            11/30/01

    1,000,000  (5)                                     10/26/01       .20            N/A            11/30/01
</TABLE>

---------
(1)   Represents a private sale at $0.15 per share to PBAA JPY Fund Ltd., a
      Japanese institutional investor. The market price of the Company's common
      stock on the date this transaction was authorized by the Company's Board
      of Directors was $0.25 per share.

(2)   Represents shares issued in payment of legal services to Martin A. Stein,
      Esq. The market price of the Company's common stock on the date this
      transaction was authorized by the Company's Board of Directors was $0.25
      per share.

(3)   Represents a private sale at $0.25 per share, the market price of the
      Company's shares of common stock on the date this transaction was
      authorized by the Company's Board of Directors, to Betty Mandus Lane, the
      spouse of I. William Lane, the Company's Chairman of the Board of
      Directors. Mr. Lane disclaims any voting or dispositive right with respect
      to these shares, as well as any pecuniary interest therein.

(4)   Represents shares issued as compensation to Raebrook Group Ltd., a
      non-affiliated insurance brokerage, for accounting, administrative and
      clerical services provided to the Company commencing on or about December
      2000 following a substantial reduction in the Company's workforce and
      removal of its executive offices to Florida and continuing through the
      date hereof; also represents compensation for its payment on the Company's
      behalf of the cost of casualty, health and D&O insurance coverage for the
      Company's remaining employees and management. David Badner is a 50% equity
      owner of Raebrook Group, Ltd. (see Note 5, below). These shares were
      valued at the market price of the Company's common stock on the respective
      dates these issuances were authorized by the Company's Board of Directors.

(5)   Represents shares issued as compensation for the extension to the Company
      by David Badner, a non-affiliated person, of a credit line of up to
      $600,000 at a time when the Company was unable to secure bank or other

                                       13
<PAGE>

      institutional financing. The Company has drawn down approximately $500,000
      under this credit facility, of which $350,000 has been repaid and
      approximately $150,000 remains outstanding. Mr. Badner also loaned
      $200,000 to the Company to enable the Company to settle threatened
      litigation against the Company and one of its former executive officers,
      which sum has been repaid to Mr. Badner. The Company was not charged, and
      will not be charged any interest for these borrowings. At the request of
      the Company's Board of Directors, Mr. Badner undertook to renegotiate the
      terms of the Company's indebtedness to vendors, former employees, and
      consultants approximating $750,000 in the aggregate, which, through his
      efforts has been reduced to a current level of $150,000. Mr. Badner also
      provided and continues to provide managerial, financial and investor
      relationship consulting services to the Company on a per diem basis. These
      shares were valued at the market price of the Company's common stock on
      the respective dates these issuances were authorized by the Company's
      Board of Directors.

(6)   Represents a private sale at $0.20 per share, being the market price of
      the Company's common stock at the time these sales were authorized by the
      Company's Board of Directors, to five persons.

(7)   Represents compensation to Shigeki Mizukami for assisting the Company in
      marketing its streaming video technology and content in Japan and other
      Asian countries. The market price of the Company's common stock on the
      date this transaction was authorized by the Company's Board of Directors
      was $0.20 per share.

(8)   Represents a private sale at $0.10 per share to two non-affiliated
      persons. The market price of the Company's common stock at the time this
      transaction was authorized by the Company's Board of Directors was
      approximately $0.18 per share. Westminster Securities Corporation
      facilitated the placement of these shares for which it did not receive a
      placement fee. Legal and administrative expenses for this sale totaled
      approximately $4,000 and these expenses were recorded as a reduction of
      the capital raised. For a description of the terms of the Series A
      convertible preferred stock, see Item 4 in this report.

(9)   Represents shares issued as compensation to Advanced Multi Media Group, a
      non-affiliated entity, for consulting services, including, among other
      matters, assisting the Company in its ongoing development of vToob
      technology, design of Streaming USA and marketing assistance and advice.
      The market price of the Company's common stock at the time this
      transaction was authorized by the Company's Board of Directors was
      approximately $0.18 per share.

(10)  Represents shares issued as compensation to three internet consultants for
      their respective web design, maintenance and linkage services.

(11)  Represents shares issued as compensation to two former non-executive
      employees.

    Each recipient of our securities (a) was either an accredited investor or
had such knowledge and expertise in financial matters that he was capable of
evaluating the merits and risks of an investment in our securities and (b) was
given the opportunity to ask questions concerning our business. Each recipient
of our securities represented that his or its acquisition was for investment and
not with a view towards a public distribution thereof. All certificates
representing these securities were imprinted with an appropriate restrictive
legend to such effect. Exemption from registration of these securities under the
Securities Act of 1933 is claimed by reason of the provisions of Section 4(2) of
that Act as transactions by an issuer, not involving a public offering. The
offer of these securities did not involve a general solicitation.

                                       14
<PAGE>

Item 6. SELECTED FINANCIAL DATA

                                       Years ended December 31, (in thousands)
                                       ---------------------------------------
                                      2001        2000        1999         1998
                                      ----        ----        ----         ----
Statement of Operations Data                                                 *

Revenue                               $709        $390         $46           $0

Net loss                            (6,239)     (9,531)     (3,760)           0

Net loss per common share            (0.34)      (0.91)      (0.41)           0


Balance Sheet Data

Total assets                           240       2,132       6,482            7

Long term liabilities                  305         785           0            0

Redeemable preferred stock               0           0           0            0

Cash dividends declared                  0           0           0            0

* No operations existed for the short year ended December 31, 1998


                 Summarized Quarterly Financial Data (Unaudited)

                                           Quarter Ended, (in thousands)
                                           -----------------------------
                                     March 31    June 30     Sept 30     Dec 31
                                     --------    -------     -------     ------
Year ended December 31, 2001

Net revenues                            $195        $85        $447        ($18)

Gross profit (loss)                      (40)      (160)        255         (47)

Net loss                                (687)    (1,382)     (1,876)     (2,294)

Net loss per common share              (0.06)     (0.09)      (0.10)      (0.13)


Year ended December 31, 2000

Net revenues                             $67       $135        $312       ($124)

Gross profit                            (201)      (204)       (258)     (1,196)

Net income (loss)                     (1,921)    (1,865)     (1,956)     (3,789)

Net income (loss) per common share     (0.19)     (0.18)      (0.19)      (0.36)

                                       15
<PAGE>

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

INTRODUCTION

    We were incorporated in Delaware on November 12, 1998, under the name
foreigntv.com, Inc. We were founded to pursue to pursue opportunities arising
out of Internet's emergence as a broadcast medium, which resulted, in large
part, from the advent of streaming video technology and the availability of high
speed Internet access.

    We commenced our operations in April 1999 under the name foreignTV.com, Inc.
Our website on the Internet simulated a single TV network, which distributed
location-specific programming using streaming video technology. We then expanded
our website to provide streaming audio and video content over six Internet
"television" networks, which in the aggregate hosted over 100 distinct channels
targeted to various market and segments and niches. In December 1999, we changed
our name to Medium4.com, Inc., to reflect the diversification of our programming
and to underscore the Internet's role as the fourth medium for television
broadcasting, after cable, satellite and traditional television transmission.

    In 2001, we have refocused our business model to de-emphasize the offering
of thematic video-on-demand networks in favor of a single network of special
interest, continuously streaming broadband entertainment channels, using a
previously unavailable technology called Simulated Live Stream, or SLS. After
September 11, 2001, the Company focused its efforts to one SLS channel called
Streaming USA, which included rotating videos on demand.

    The Company has generated revenues from the above programming via geographic
license agreements and technology sales. Initially we sold license rights, from
which we were to derive initial up-front fees as well as continuing annual fees
for each year thereafter. The Company signed two such agreements in the year
2000, which resulted in approximately $1,200,000 received in 2000 and 2001. In
2001 the Company sold technology, software and computer hardware for the
encoding of the aforementioned streaming video data for approximately $220,000
to an affiliate licensee for one-time revenues.

    The Company has incurred net losses of $6.2 million, $9.5 million and $3.8
million for each of the last three years ended December 31, 2001, 2000 and 1999,
respectively. Revenues have been limited during the last three years. These
losses have been mostly financed by the sale of equity in the Company and the
issuance of equity for services.

    Our current business plan assumes that we will not derive any significant
revenues from advertising or other activities during the first half of 2002, or
even later. Our business plan further assumes that, subject to cash flow
availability, we will continue to invest in and disburse substantial funds to
continue current operations and to develop our single network of special
interest, continuously streaming broadband entertainment channels, for which
purpose we will require additional capital investments.

    Remaining a going concern will require additional financing until such time
as sufficient cash flows are generated from operations. Anticipated non-interest
bearing loans from an affiliated person, together with our limited current cash
resources and operating revenues, are expected to be able to support our

                                       16
<PAGE>

operations through the end of the third quarter of the year 2002. We expect to
incur operating losses through 2002 and we will need to obtain substantial
additional financing in order to continue and expand our operations and to
sustain our cash flow needs. We do not know if additional financing, in excess
of what is currently anticipated, will be available to us on commercially
reasonable terms, or at all. Moreover, if we raise additional capital through
borrowing or other debt financing, we would incur substantial interest expense.
Sales of additional equity securities will dilute on a pro rata basis the
percentage ownership of all holders of common stock. If we do raise more equity
capital in the future, it is likely that it will result in substantial dilution
to our present stockholders. Any inability to obtain additional financing will
materially adversely affect us, including possibly requiring us to significantly
curtail or cease business operations.

    The Company owns or licenses more than 1,500 unique Internet addresses or
domain names. We currently offer content from approximately 40 of these
addresses. Of the 1,500 domain names, we license approximately 135 pursuant to
exclusive 25-year arrangements with Jonathan Braun, our President and Chief
Executive Officer, and a not-for-profit corporation affiliated with him, the
Center for Contemporary Diplomacy. For these approximately 135 domain names, we
are required to pay annual license fees beginning at $600 per domain name (or
$81,000 in the aggregate annually) escalating to $2,500 per domain name (or
$337,500 in the aggregate annually) through the 25th year. For all other domain
names, we are only required to pay an annual maintenance fee of approximately
$35 per name, or a current aggregate of approximately $70,000. In 1999 and 2000,
we paid $42,750 and $28,500, respectively, to the Center pursuant to its license
agreement with us. In 1999 and 2000, we paid $10,800 and $0, respectively, to
Mr. Braun pursuant to his license agreement with us. We did not make any
payments to Mr. Braun or the Center in 2001. As of December 31, 2001, we were
delinquent in licensing fees due to the Center in the approximate amount of
$99,750, and due to Mr. Braun in the approximate amount of $54,000. Both the
Center and Mr. Braun have waived their right to the fees due them pursuant to
these agreements through December 31, 2001. Given our current financial
condition, we anticipate that they will also waive the fees due them through
fiscal 2002. We actively use only three of the 135 domain names that we license
from Mr. Braun: Medium4.com, foreignTV.com, and StreamingUSA.com.

RESULTS OF OPERATIONS

    The following table presents certain consolidated statement of operations
information and a presentation of that data as a percentage of change from
period to period.

                                       17
<PAGE>

<TABLE>
<CAPTION>
                                         YEAR ENDED DECEMBER 31,               2001          2000
                                   -----------------------------------     COMPARED TO   COMPARED TO
                                     2001          2000          1999          2000          1999
                                   -------       -------       -------     -----------   -----------
                                         (dollars in thousands)
<S>                                <C>           <C>           <C>            <C>          <C>
Revenue .....................      $   709       $   390       $    46          81.8%       747.8%

Cost of sales ...............          701         2,249         1,233         (68.8)        82.4

Gross profit (loss) .........            8        (1,859)       (1,187)       (100.4)        56.6

Expenses:

Selling, general and
  adminstrative expenses ....        5,420         7,424         2,641         (27.0)       181.1

Write down of fixed assets ..          250           335             -         (25.4)          *

Write down of capitalized
  development costs .........          535             -             -            *            *

Total expenses ..............        6,205         7,759         2,641         (20.0)       193.8

Loss from operations ........       (6,197)       (9,618)       (3,828)        (35.6)       151.3


Other Income (loss):

Interest income .............            1            87           204         (98.9)       (57.4)

Write down of investments ...          (59)            -             -            *            *

Loss on marketable securities            -             -          (125)           *            *

Other income ................           16             -             3            *            *

Total other income (expense)           (42)           87            82        (148.3)         6.1

Loss before taxes ...........       (6,239)       (9,531)       (3,746)        (34.5)       154.4

Income tax expense ..........            -             -            14             -            -

Net loss ....................       (6,239)       (9,531)       (3,760)        (34.5)       153.5

Deemed dividends ............       (1,000)            -             -             -            -

Net loss to common
    stockholders ............       (7,239)       (9,531)       (3,760)        (24.0)       153.5
</TABLE>
--------
* Not meaningful.

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

    We sustained a net loss of approximately $6.2 million for the year ended
December 31, 2001 on revenues of $700,000, derived from earned licensing fees
and the sale of PLS encoding mechanisms. Revenues for the year ended December
31, 2001 are comprised of earned license fees, which were $500,000 and the sale
of encoding mechanisms amounted to approximately $200,000, while revenues for
the year ended December 31, 2000 are comprised of $400,000 of earned license
fees. The sale of the encoding mechanisms is a one-time sale arrangement with an
affiliate licensee.

    Our cost of sales as restated includes production costs for the development
of our original content for the year ended December 31, 2001 were approximately
$81,000 as compared to approximately $1.5 million for the year ended December
31, 2000. The reduction in production costs reflect the cessation of our own
content production efforts in fiscal year 2001. Production costs include (i)
data communications, (ii) software license fees, (iii) content license fees,
where necessary in order to acquire additional content, and (iv) expenses of
hiring and compensating employees who handle

                                       17A
<PAGE>

production and delivery of our content. A 90% allocation of depreciation and
amortization costs were made to cost of sales. Depreciation and amortization in
total has been reduced marginally from to $624,000 for 2001 from $670,000 for
2000 due to the write down of assets being placed in service for content
production. We have also written down certain of our fixed assets no longer
employed in the production of content due to technological changes with the
digitalization equipment utilized for content production and the relocation of
our executive offices from New York City to Miami, Florida, in the amounts of
$250,000 for the year ended December 31, 2001 and $335,000 for year ended
December 31, 2000, which includes the closure of the Paris operations. We wrote
down capitalized development expenses in the amount of $535,000 during 2001.

    Our selling, general and administrative expenses were approximately $5.4
million for the year ended December 31, 2001, consisting primarily of
approximately $4.1 million in personnel costs (including $2.2 million of equity
compensation), $340,000 in professional and consulting fees and the balance of
$900,000 million is for general administrative expenses such as rent, travel,
telephone and etc., as compared to $7.4 million for 2000, consisting of $3.9
million in personnel costs (including $1.2 million of equity compensation),
$303,000 in professional and consulting fees, $3.2 million in general
administrative expenses such as rent, travel, telephone and etc.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

    We sustained a net loss of approximately $9.5 million for the year ended
December 31, 2000 on revenues of $.4 million, derived from licensing fees.
Revenues for the year ended December 31, 2000 are comprised of earned license
fees were $400,000, while revenues for the year ended December 31, 1999 are
comprised of $46,000 of earned license fees.

    Our cost of sales as restated includes production costs for the development
of our original content for the year ended December 31, 2000 were approximately
$1.5 million as compared to approximately $1.1 million for the year ended
December 31, 1999. The increase in production costs reflects increased
production efforts in fiscal year 2000. Production costs include (i) data
communications, (ii) software license fees, (iii) content license fees, where
necessary in order to acquire additional content, and (iv) expenses of hiring
and compensating employees who handle production and delivery of our content. A
90% allocation of depreciation and amortization costs were made to cost of
sales. Depreciation and amortization in total increased to $670,000 for fiscal
year 2000 as compared to $146,000 for fiscal year 1999 reflecting a full year of
equipment placed in service for content production. We also wrote down certain
of our fixed assets no longer employed in the production of content due to
technological changes with the digitalization equipment utilized for content
production and the closure of our Paris operations for $335,000 in 2000.

    Our selling, general and administrative expenses were approximately $7.4
million for fiscal year 2000, consisting primarily of approximately $3.9 million
in personnel costs (including $1.2 million of equity compensation), $303,000 in
professional and consulting fees, and the balance of $3.2 million in general
administrative expenses such as rent, travel, telephone and etc., as compared to
$2.6 million for fiscal year 1999, consisting of $1.2 million in personnel
costs, $381,000 in professional and consulting fees and the balance of $1.0
million in general administrative expenses such as rent, travel, telephone and
etc.

                                       18
<PAGE>

YEAR ENDED DECEMBER 31,1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

    Comparison to the year ended December 31, 1998 is not possible, since
operations for all intentional purposes began in June 1999, due to the funding
received from the IPO.

    We sustained a net loss of approximately $3.8 million for the year ended
December 31, 1999 on revenues of $46,000, derived from earned licensing fees.

    Our cost of sales as restated includes production costs for the development
of our original content were approximately $1.1 million for the year ended 1999.
Production costs include (i) data communications, (ii) software license fees,
(iii) content license fees, where necessary in order to acquire additional
content, and (iv) expenses of hiring and compensating employees who handle
production and delivery of our content. A 90% allocation of depreciation and
amortization costs were made to cost of sales. Depreciation and amortization in
total was $146,000 for 1999, which reflects a partial year of equipment placed
in service for content production.

    Our selling, general and administrative expenses were approximately $2.6
million for 1999, consisting of $1.2 million in personnel costs, $381,000 in
professional and consulting fees and the balance of $1.0 million in general
administrative expenses such as rent, travel, telephone and etc.

LIQUIDITY AND CAPITAL RESOURCES

    Since inception, we have financed our operations primarily through sales of
our equity securities in our initial public offering, from several private
placements and by means of non-interest bearing loans and capital contributions
from an affiliated person. Net proceeds from these sales have totaled
approximately $12.2 million, with $8.8 million raised in the initial public
offering and the balance raised in the private placements.

    For the year ended December 31, 2001, we used approximately $1.7 million in
connection with our operating activities. Such amount was primarily attributable
to net losses, offset in part by common stock and options issued for services,
increases in accounts payable and deferred revenue, and depreciation,
amortization and unearned compensation expenses. For the year ended December 31,
2001, approximately $76,000 and $1.6 million was provided by investing
activities and financing activities, respectively.

    We believe that continuation and growth of our operations will depend
largely on our ability to develop a source of revenues from our continuously
streaming media entertainment niche programming on the Internet. During the year
ended December 31, 2001, we made no capital investments, since such equipment on
hand was deemed adequate. Accordingly, we do not intend to make any further
significant investments until we develop a meaningful source of revenues for our
product.

    The Company has incurred significant losses since inception: $6.2 million,
$9.5 million and $3.8 million for the years ended December 31, 2001, 2000 and
1999, respectively. We expect to incur operating losses through 2002. These
losses were primarily financed from the sale of equity in the amount of $12.2
million and equity issued for services in the amount of $6.6 million. The
funding from the sale of equity was mostly received at the IPO, in the amount of
$8.8 million in 1999 and additional $1.4 million was received in each of 2000
and 2001 for the sale of additional equity. The Company invested $2.6 million
for equipment to develop content for the Internet based services, with the
balance of such funding primarily being spent for personnel, production costs
and software development. During the last half of 2001, we have reduced our
operations significantly due to our lack of adequate funding.

                                       19
<PAGE>

    At December 31, 2001, we had $18,380 in cash which we believe, together with
anticipated non-interest bearing loans and/or additional capital contributions
from an affiliated person and our limited operating revenues, will support our
operations through the end of the third quarter of 2002. We will require
substantial additional financing to remain a going concern and to expand our
operations. In fiscal year 2001, we were able to maintain our minimal level of
operations through cash advances from a consultant to the Company, David Badner,
and a director, William Lane, of approximately $179,000 and $64,000,
respectively. These advances are unsecured, payable upon demand and bear
interest at 6% per annum. We anticipate that our management and certain of our
shareholders will continue to advance us sufficient funds to maintain minimal
operations, but we have no assurance that they will continue to do so. We do not
know if additional financing, in excess of what is currently anticipated, will
be available to us or, if it is available, whether it will be available on
commercially reasonable terms. Any inability to obtain additional financing will
materially adversely affect us, including possibly requiring us to significantly
curtail or cease business operations, or sell the Company.

FACTORS THAT MAY AFFECT FUTURE RESULTS

    The following factors, in addition to the other information contained in
this report, should be considered carefully in evaluating us and our prospects.
This report (including without limitation the following factors that may affect
operating results) contains forward-looking statements (within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934) regarding us and our business, financial condition,
results of operations and prospects. Words such as "expects," "anticipates,"
"intends," "plans," "believes," "seeks," "estimates" and similar expressions or
variations of such words are intended to identify forward-looking statements,
but are not the exclusive means of identifying forward-looking statements in
this report. Additionally, statements concerning future matters such as the
development of new products, enhancements or technologies, possible changes in
legislation and other statements regarding matters that are not historical are
forward-looking statements.

    Forward-looking statements in this report reflect the good faith judgment of
our management and the statements are based on facts and factors as we currently
know them. Forward-looking statements are subject to risks and uncertainties and
actual results and outcomes may differ materially from the results and outcomes
discussed in the forward-looking statements. Factors that could cause or
contribute to such differences in results and outcomes include, but are not
limited to, those discussed below and in "Management's Discussion and Analysis
of Financial Condition and Results of Operations" as well as those discussed
elsewhere in this report. Readers are urged not to place undue reliance on these
forward-looking statements which speak only as of the date of this report. We
undertake no obligation to revise or update any forward-looking statements in
order to reflect any event or circumstance that may arise after the date of the
report.

    - WE HAVE A LIMITED OPERATING HISTORY

    We have a limited operating history on which to base an evaluation of our
business and prospects, having only commenced our initial business operations in
April 1999. Our prospects must be considered in light of the risks, difficulties
and uncertainties frequently encountered by companies in an early stage of
development, particularly companies in new and rapidly evolving markets such as
the market for Internet broadcasting, services and advertising. These risks
include our ability to

                                       20
<PAGE>

    - provide compelling and unique content to Internet users; - successfully
market and sell our services; and - effectively develop new and maintain
existing relationships with advertisers, content providers, business customers
and advertising agencies and other persons with which do business.

    As we have such a limited history of operations, investors will be unable to
assess our future operating performance or our future financial results or
condition by comparing these criteria against their past or present equivalents.

    - WE HAVE EXTREMELY LIMITED CASH FLOW

    Our business requires substantial capital to continue operations. At the
present time, we have not generated material revenues from operations. To date,
our cash flow has primarily come from intermittent sales of our securities and
from non-interest bearing loans from an affiliated person. We also have minimal
cash on hand. We can give no assurance our cash flow will be sufficient to allow
us to continue our operations at present levels, if at all.

    - WE EXPECT TO INCUR SIGNIFICANT LOSSES FOR THE FORESEEABLE FUTURE

    We have only recently recognized material revenues from services or
advertising and we have experienced net losses since inception. We expect to
incur significant losses on both a quarterly and an annual basis for the
foreseeable future. There can be no assurance that we will ever achieve
profitability.

    - WE WILL NEED SIGNIFICANT ADDITIONAL FINANCING TO CONTINUE OPERATIONS

    We will require substantial additional financing in order to be able to
continue operations beyond the third quarter of 2002. We have no current
definitive arrangements with respect to additional financing and there can be no
assurance that any such financing will be available to us on commercially
reasonable terms, or at all. Moreover, if we raise additional capital through
borrowing or other debt financing, we may incur substantial interest expense.
Sales of additional equity securities will result in substantial pro rata
dilution to our present stockholders. Our inability to obtain additional
financing will materially adversely affect us, including possibly requiring us
to significantly curtail operations or to cease operations altogether.
Technological stock in general have recently experienced significant downturns
on the financial markets, and the trend is expected to continue indefinitely.
Negative investor sentiment for technology stocks will adversely affect our
ability to secure additional financing.

    - LOW PRICE AND TRADING VOLUME IN OUR STOCK MAY RESULT IN DELISTING OF
TRADING ON THE AMERICAN STOCK EXCHANGE

    The price and volume at which our stock has recently traded on the American
Stock Exchange does not meet its criteria for continued listing. Although the
AMEX has not officially communicated any intention to us to delist our stock, if
our stock were to be delisted, it would materially affect the ability of an
investor to dispose of their shares of our stock, and further reduce the
liquidity of their investment.

                                       21
<PAGE>

    - WE WILL BE UNABLE TO ATTRACT VIEWERS TO OUR NETWORKS AND THEIR CHANNELS IF
THE PUBLIC REJECTS STREAMING TECHNOLOGY

    Our success will depend upon market acceptance of streaming technology as an
alternative to broadcast television. Without streaming technology, viewers would
not be able to initiate playback of our programming until such programming is
downloaded in its entirety, resulting in significant waiting times. The
acceptance of streaming technology will depend upon a number of factors,
including market acceptance of streaming players such as Microsoft's Windows
Media Player (TM) , Real Networks' Real Player(TM), and Medium4.com Player,
technological improvements to the Internet infrastructure to allow for improved
video and audio quality and a reduction in Internet usage congestion. In
addition, Internet congestion may interrupt audio and video streams, resulting
in user dissatisfaction. Our prospects will be adversely affected if streaming
media technology fails to achieve or maintain broad acceptance.

    - WE ARE DEPENDENT ON PROVIDERS OF STREAMING MEDIA PRODUCTS

    We currently license software products that enable the broadcast of
streaming media from such companies and others. We may need to acquire
additional licenses to meet our future needs. Users are currently able to
download electronically copies of Microsoft's Windows Media Player(TM), Real
Network's Real Player(TM), and our Medium4.com software free of charge. If
providers of streaming media products substantially increase license fees
charged to us for the use of their products or refuse to license such products
to us, our ability to provide streaming audio and video will be adversely
affected.

    - WE ARE DEPENDENT ON PROVIDERS OF BROADBAND AND HIGH SPEED INTERNET ACCESS

    We rely on providers of broadband and high speed Internet access to
facilitate the viewing of our SLS channels. Because our Medium4.com Player,
which is the software used to play the SLS channels, can only play SLS channels
using high speed Internet access, without such access viewers would not be able
to download our SLS programming. If providers of broadband and high speed
Internet access do not sustain existing operations, or fail to maintain current
access speeds, our ability to provide streaming video will be adversely
affected.

    - WE MAY NOT BE ABLE TO PROTECT OUR PROPRIETARY RIGHTS

    We regard our copyrights, trade secrets, trademarks, patents, and similar
intellectual property as significant to our growth and success. We rely upon a
combination of copyright and trademark laws, trade secret protection,
confidentiality and non-disclosure agreements and contractual provisions with
our employees and with third parties to establish and protect our proprietary
rights. We have applied for federal trademark protection for our networks and
other channels and brands and intend to apply for federal trademark protection
for other marks and names used in our business. Legal standards relating to the
validity, enforceability and scope of protection of certain proprietary rights
in Internet-related industries are uncertain and still evolving. We are unable
to assure investors as to the future viability or value of any of our
proprietary rights or those of other companies within the industry. We are also
unable to assure investors that the steps taken by us to protect our proprietary
rights will be adequate. Furthermore, we can give no assurance that our business
activities will not infringe upon the proprietary rights of others, or that
other parties will not assert infringement claims against us.

                                       22
<PAGE>

    - GOVERNMENT REGULATION OF THE INTERNET COULD HARM OUR BUSINESS

    There are few laws or regulations directly applicable to the Internet. For
example, the Digital Millennium Copyright Act, enacted into law in 1998,
protects certain qualifying online service providers from copyright infringement
liability, the Internet Tax Freedom Act, also enacted in 1998, placed a three
year moratorium on new state and local taxes on Internet access and commerce,
and under the Communications Decency Act, an Internet service provider will not
be treated as the publisher or speaker of any information provided by another
information content provider. The appeal of the Internet makes it likely,
however, that state, national or international laws may be implemented in the
future covering such issues as user privacy, defamatory speech, copyright
infringement, pricing and characteristics and quality of products and services.
Any new law or regulation may have the effect of limiting the use of the
Internet and its growth as a new medium to communicate could harm our business.

    We currently do not collect sales or other taxes with respect to the sale of
services or products in states and countries where we believe we are not
required to do so. One or more states or countries have sought to impose sales
or other tax obligations on companies that engage in online commerce within
their jurisdictions. A successful assertion by one or more states or countries
that we should collect sales or other taxes on products and services, or remit
payment of sales or other taxes for prior periods, could adversely affect our
business.

    The Child Online Protection Act of 1998 imposes criminal penalties and civil
liability on anyone engaged in the business of selling or transferring material
that is harmful to minors, by means of the Internet, without restricting access
to this type of material by underage persons. Numerous states have adopted or
are currently considering similar types of legislation. The imposition upon us
of potential liability for broadcasting content that is harmful to minors could
require us to implement measures to reduce exposure to liability, which may
require the expenditure of substantial resources, or to discontinue various
content offerings. Further, the costs of defending against any claims and
potential adverse outcomes of these claims could have a material adverse effect
on our business.

    - WE ARE DEPENDENT ON CERTAIN THIRD PARTY PROVIDERS

    Our future success depends upon our ability to aggregate and deliver
compelling content over the Internet. We rely exclusively on third party content
providers, such as television stations and networks, businesses and other
organizations, film producers and distributors, and record labels for compelling
and entertaining content. Our ability to maintain and build relationships with
content providers is critical to our success. Although many of our agreements
with third party content providers are for initial terms of more than one year,
such agreements may not be renewed or may be terminated prior to the expiration
of their terms if we do not fulfill our contractual obligations. Our inability
to secure licenses from content providers or the termination of a significant
number of content provider agreements would decrease the availability of content
that we can offer users. Such inability or termination may result in decreased
traffic on our Websites and, as a result, decreased advertising revenue, which
could adversely affect our business.

    We also rely on certain technologies we license from third parties. There
can be no assurance these third-party technology licenses will continue to be
available to us on commercially reasonable terms. The loss of such technology
could require us to obtain substitute technology of lower quality or performance
standards or at greater cost, which could harm our business. However, other than
our trademarks and service marks, we do not believe that the loss of any
particular one of our intellectual property rights would materially harm our
business.

                                       23
<PAGE>

    The Company entered into two license agreements with related parties for the
sole and absolute use of certain Internet domain names. One of the agreements is
with an officer and director of the Company and the other is with a
not-for-profit organization whose board of directors is substantially identical
to that of the Company. The term of the agreements is twenty-five years through
December 31, 2023 with an additional renewal period of twenty-five years
thereafter. The agreements require the Company to pay license fees, which begin
at $600 per domain name and escalate to $2,500 per domain name through the
twenty fifth year of the agreement. Thereafter, the fee increase is based on the
Consumer Price Index. The agreement with the not-for-profit organization also
requires the Company to provide office space, on its premises, for up to four
employees of the not-for-profit organization for up to three years. The director
and the not-for-profit organization have waived all the rights to collection on
past due amounts through December 31, 2001.

    In May 2000, the Company entered into a master affiliate agreement with
Windfire International Corporation, Ltd.("Windfire"), a British Virgin Islands
Corporation, pursuant to which the Company granted Windfire the exclusive right
for an initial term of five years to grant licenses solely to persons and
entities acceptable to the Company for the establishment and operation within
the nations of Brunei, Indonesia, Kenya, Malaysia, the Philippines, Singapore,
South Africa, Tanzania, Thailand and Uganda of Internet sites that will comprise
discrete channels upon one or more of our network of web sites.

    The master affiliate agreement required Windfire to pay us a one time fee of
$1,500,000, of which $500,000 has been received to date. Revenues are being
recognized on a straight line basis over the term of this agreement. The Company
is currently in litigation over payment of the remaining fees for this master
affiliate agreement. Management believes litigation will be settled in 2002.

    In 2001, the Company has received $34,000 for the purchase of a foreignTV
network. Such monies have been recorded as deferred revenue until a definite
sales agreement is in place.

    - THE COMPANY IS EXPOSED TO LEGAL CLAIMS

    The Company has been, currently is, or in the future may be involved in
legal proceedings or claims. Such claims are detailed in Part 1, Item 3, Legal
Proceedings. Such claims, whether with or without merit, could be time-consuming
and expensive to defend and could divert management's time and attention. There
can be no guarantee that the Company will be successful in resolving such
claims.

    - WE ARE DEPENDENT ON KEY PERSONNEL

    Our success depends to a significant degree upon the continued contributions
of key management and other personnel, some of whom could be difficult to
replace. We do not maintain key man life insurance covering our officers. Our
success will depend on the performance of our officers, our ability to retain
and motivate our officers, our ability to integrate new officers into our
operations and the ability of all personnel to work together effectively as a
team. Our failure to retain and recruit officers and other key personnel could
have a material adverse effect on our business, financial condition and results
of operations.

                                      23A
<PAGE>

    - THE MARKET PRICE OF OUR COMMON STOCK MAY BE VOLATILE

    The market price of our common stock has been and is likely in the future to
be highly volatile. Our common stock price may fluctuate significantly in
response to factors such as:

    - Quarterly variations in our operating results,

    - Announcements of technological innovations,

    - New product introductions by us or our competitors,

    - Competitive activities,

    - Announcements by us regarding significant acquisitions, strategic
relationships, capital expenditure commitments, liquidity and our AMEX listing,

    - Additions or departures of key personnel,

    - Issuance of convertible or equity securities for general or merger and
acquisition purposes,

    - Issuance of debt or convertible debt for general or merger and acquisition
purposes,

    - General market and economic conditions, and

    - Defending significant litigation.

    The stocks of technology companies have experienced extreme price and volume
fluctuations. These fluctuations often have been unrelated or disproportionate
to the operating performance of these companies. These broad market and industry
factors may have a material adverse effect on the market price of our common
stock, regardless of our actual operating performance. Factors like this could
have a material adverse effect on our business, financial condition and results
of operations.

    - OUR PRINCIPAL STOCKHOLDER HAS SUBSTANTIAL INFLUENCE OVER OUR COMPANY

    As of December 31, 2001, Inter Asset Japan LBO No. 1 Fund, PBAA Fund Ltd.,
and Terra Firma Fund Ltd. ("IAJ") collectively held approximately 74.7% of the
common stock. Such entities stated in a Schedule 13D that they may be deemed to
constitute a "group" for the purposes of Rule 13d-3 under the Exchange Act. Mr.
Margerison, our Director, President and Chief Executive Officer, currently
serves as the Chairman of Inter Asset Japan Co. Ltd, a Japanese venture capital
company.

    IAJ has the ability to cause a change of control of the board of directors
of the Company by electing candidates of its choice to the board at a
stockholder meeting, approve or disapprove any matter requiring stockholder
approval, regardless of how our other stockholders may vote. Further, under
Delaware law, IAJ has significant influence over our affairs, including the
power to cause, delay or prevent a change in control or sale of the Company,
which in turn could adversely affect the market price of our common stock.

    - THE SALE OF A SIGNIFICANT NUMBER OF OUR SHARES COULD DEPRESS THE PRICE OF
OUR STOCK.

Sales or issuances of a large number of shares of common stock in the public
market or the perception that sales may occur could cause the market price of
our common stock to decline. As of December 2, 2002, 49.8 million shares of
common stock were outstanding. Significant shares were held by our principal
stockholder and other company insiders. As an "affiliate" (as defined under Rule
144 of the Securities Act ("Rule 144") of the Company, they may only sell his
shares of common stock in the public market in compliance with the volume
limitations of Rule 144.

                                       23B
<PAGE>

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    We do not engage in trading market risk sensitive instruments and do not
purchase hedging instruments or "other than trading" instruments that are likely
to expose us to market risk, foreign currency exchange, commodity price or
equity price risk. We have purchased no options and entered into no swaps. We
have no bank borrowing facility that could subject us to the risk of interest
rate fluctuations.

Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    The report of our independent auditors and our Consolidated Financial
Statements and Related Notes thereto appear on pages F-1 through F-16 of this
report and are incorporated herein by reference.

Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

    None.

                                       24
<PAGE>
                                    Part III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT DIRECTORS AND
         EXECUTIVE OFFICERS

    The following table sets forth certain information with respect to each of
our current executive officers and directors.

         NAME                      AGE     POSITION
         ----                      ---     --------
         I. William Lane           79      Chairman of the Board of Directors
         Jonathan Braun            51      Chief Executive Officer,
                                           Chief Financial Officer and Director
         Junichi Watanabe          46      Director

    I. William Lane, PhD has served as our Chairman of the Board since our
inception in 1998. Since 1994, he has served as a consultant to Lane Labs, a
natural medicine company founded upon "Dr. Lane" teachings, primarily dealing
with cancer research. Since 1989, he has also been the Chairman of Cartilage
Consultants, Inc., a company that researches and provides consulting services
for the use of shark cartilage and other natural medicines. Dr. Lane is Chairman
of the Center of Contemporary Diplomacy, Inc. He received his B.S. and Masters
in Nutritional Science from Cornell University and his PhD in Agricultural
Biochemistry and Nutrition from Rutgers University.

    Jonathan Braun is the originator of the foreignTV.com concept. He has served
as our Chief Executive Officer and a director since our inception. He currently
also serves as our Principal Financial and Accounting Officer. From 1995 to
1997, Mr. Braun was the President of Marinex Multimedia Corporation, a CD-ROM
publishing and Internet content provider company. He was the founder and, from
1991 to 1995, the President of Marinex, Inc., a public relations firm. He
currently serves on the editorial board of Midstream, a monthly journal
specializing in Israel and the Middle East. Mr. Braun is also president of the
Center of Contemporary Diplomacy, Inc. He received his M.S. from the Columbia
University School of Journalism and his B.A. in Political Science from the City
College of New York, where he graduated phi beta kappa and magna cum laude. Mr.
Braun is a member of our compensation committee.

    Junichi Watanabe has served as one of our directors since 1999. Mr.
Watanabe, an executive with extensive international business experience, has
worked in the United Arab Emirates, Japan, Kuwait, Canada and other countries.
Mr. Watanabe is a graduate of Keio University, Tokyo, Japan with a degree in
economics. Mr. Watanabe is a member of our audit and compensation committee.

BOARD COMMITTEES; DIRECTOR COMPENSATION

    Our compensation committee consists of Junichi Watanabe and Jonathan Braun,
and our audit committee consists of Junichi Watanabe. The compensation committee
reviews our compensation policies and administers our stock option plans. The
audit committee reviews the scope of our audit, the engagement of our
independent auditors and their audit reports.

    All of our directors hold office until the next annual meeting of
stockholders and the election and qualification of their successors. Our
directors receive no compensation for serving on our board other than
reimbursement of reasonable expenses incurred in attending meetings. Officers
are elected annually by the board and serve at the direction of the board.

                                       25
<PAGE>

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT

    Section 16(a) of the Securities Exchange Act of 1934 requires our officers
and directors, as well as those persons who own more than 10% of our common
stock, to file reports of ownership and changes in ownership with the SEC. These
persons are required by SEC rule to furnish us with copies of all Section 16(a)
forms they file.

    Based solely on our review of the copies of such forms, or written
representations from certain reporting persons that no such forms were required,
we believe that during the year ended December 31, 2001, all filing requirements
applicable to our officers, directors and greater than 10% owners of our common
stock were complied with except that Inter Asset Japan LBO No. 1 Fund and David
Badner, each at differing times a greater than 10% stockholder, was not timely
in its or his filing, as applicable, of his initial statement of beneficial
ownership of our shares of common stock. Mr. Badner also was not timely in his
filing of one monthly report of one purchase transaction.

Item 11. EXECUTIVE COMPENSATION

The following table sets forth shows the compensation of Jonathan Braun, our
Chief Executive Officer, the only executive officer of the Company whose total
annual compensation exceeded $100,000 for the year ended December 31, 2001 (the
"Named Officer"):

                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
                                                                 Long Term
                                                                Compensation
                                    Annual Compensation           Awards
                                ---------------------------     -----------
                                                     Other
Name and Principal                                   Annual     Securities
Position as of                                       Compen-    Underlying        All Other
December 31, 2001       Year     Salary     Bonus    sation     Options (#)     Compensation
-----------------       ----     ------     -----    ------     -----------     ------------
<S>                     <C>     <C>          <C>      <C>            <C>            <C>
Jonathan Braun,         2001    $ 22,500     $ 0      $ 0            0              $ 0
President and Chief     2000     183,150       0        0            0                0
Executive Officer(1)    1999     156,900       0        0            0                0
</TABLE>

Option Grants in 2001

No options to purchase our common stock were granted to the Mr. Braun in 2001,
and he did not hold any options to purchase our common stock in 2001.


EMPLOYMENT ARRANGEMENTS

    Jonathan Braun entered into a five-year agreement with us, effective
commencing January 1, 1999, that sets forth the terms of his employment. Under
the terms of the agreement, Mr. Braun's annual base salary shall be $150,000,
with annual increases at a rate of not less than 10%. Mr. Braun will also
receive a one-time bonus of $25,000 if and when we first achieve profitability.

                                       26
<PAGE>

The agreement requires Mr. Braun to devote substantially his full-time business
efforts to our affairs. The agreement also provides for the payment of severance
to Mr. Braun in the event of our terminating his employment other than for
"cause." The severance will be an aggregate lump sum equal to one year of Mr.
Braun's minimum base salary at the date of termination, augmented by a like
amount for each year of prior employment.

    Given our financial condition, Mr. Braun voluntarily agreed to permanently
waive the receipt of payment of any increase in his base salary for fiscal year
2001. Mr. Braun has also indicated that he will forego any increase in his
salary for fiscal year 2002.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The following table sets forth the number and percentage of outstanding
shares of our common stock as of March 31, 2002 by:

    -   each person that is known by us to beneficially own five percent or more
        of our common stock;

    -   each of our directors, nominated directors and named executive officers;
        and

    -   all of our directors and executive officers as a group.

                                            Number
                                          of Shares        Percentage
                                         Beneficially     of Beneficial
 NAME                                      Owned(1)       Ownership(1)(2)
 ------------------------------------    -------------    ---------------
 Inter Asset Japan LBO No. 1 Fund(3)     37,109,800(4)        74.7%
 David Badner(5)                            911,650(6)         1.8%
 I. William Lane (7)                      2,595,750            5.2%
 Jonathan Braun (8)                       3,013,900            6.1%
 Junichi Watanabe                            30,833(9)          * %
 All executive officers and directors
 as a group (3 persons)                   5,640,483           11.3%

--------
*     Less than 1.0%

(1)   As used in this table, beneficial ownership means the sole or shared power
      to vote, or direct the voting of, as security, or the sole or shared power
      to invest or dispose, or direct the investment or disposition, of a
      security. Except as otherwise indicated, all persons named herein have
      sole voting power and investment power with respect to their respective
      shares of our common stock, except to the extent that authority is shares
      by spouses under applicable law, and record and beneficial ownership with
      respect to their respective shares of our common stock. With respect to
      each stockholder, any shares issuable upon exercise of all options and
      warrants held by such stockholder that are currently exercisable or will
      become exercisable within 60 days of March 31, 2002 are deemed outstanding
      for computing the percentage of the person holding such options, but are
      not deemed outstanding for computing the percentage of any other person.

(2)   Except as otherwise indicated, percentage ownership of our common stock is
      based on 29,672,556 shares of our common stock outstanding as of March 31,
      2002, adjusted for 20,000,000 shares of our common stock issuable upon
      conversion of our Series A Convertible Preferred Stock held by Inter Asset
      Japan LBO Fund No. 1.

                                       27
<PAGE>

(3)   The address of Inter Asset Japan LBO No. 1 Fund is Atago Green Hills Mori
      Tower 35F, 2-5-1, Atago, Minato-Ku, Tokyo 105-6235, Japan.

(4)   Includes 20,000,000 shares of our common stock issuable upon conversion of
      our Series A Convertible Preferred Stock. Also includes 2,000,000 shares
      of our common stock owned by PBAA Fund Ltd., as well as an additional
      2,000,000 shares underlying warrants; also includes 13,100,000 shares of
      our common stock owned by Terra Firma Fund Ltd. The ultimate control
      person of each of Inter Asset Japan LBO No. 1 Fund, PBAA Fund Ltd. and
      Terra Firma Fund Ltd. is Mr. Hiroki Isobe.

(5)   The business address of Mr. Badner is 275 Madison Avenue, Suite 1500, New
      York, New York 10016.

(6)   Based on information contained in a Schedule 13D jointly filed by David
      Badner and companies controlled by him on February 12, 2002, controlled
      13,411,650 shares of our common stock. He sold 12,500,000 of these shares
      to Inter Asset Japan LBO No. 1 Fund and other affiliated entities in
      November, 2001.

(7)   The address of Mr. Lane is 80 Woodland Road, Apt. 4, Short Hills, New
      Jersey 07078.

(8)   The address of Mr. Braun is 20 Holly Hill Lane, Katonah, New York 10536.

(9)   Includes 3,333 shares of common stock underlying currently exercisable
      options.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

DOMAIN NAME LICENSE AGREEMENTS

    The Center of Contemporary Diplomacy, Inc. is a New York not-for-profit,
tax-exempt organization formed in 1997 for the purpose of promoting and
preserving world peace through public awareness and understanding of diplomacy
in international relations. The Center was founded by I. William Lane, our
Chairman, and Jonathan Braun, our Chief Executive Officer. Dr. Lane is currently
serving as the Center's chairman and Mr. Braun is the Center's president. There
are no other members or officers. The Center had no significant business
activity in fiscal year 2001 other than licensing the domain names to us.

    On January 1, 1999, we entered into exclusive license agreements with the
Center and Mr. Braun, personally. Each of the agreements has substantially
similar terms. The agreements afford us a 25-year exclusive license for
unlimited use of (i) 95 different Internet Web site addresses (domain names)
owned by the Center and (ii) 36 different addressed owned by Mr. Braun,
including the name of our corporate home page, medium4.com. These 135 name
constitute less than 10% of the approximately 1,500 domain names that we own. We
actively use only three of the 135 domain names that we license from Mr. Braun:
Medium4.com, foreignTV.com, and StreamingUSA.com. We own and license more domain
names than we use since we believe that over the next several years high speed
connections to the Internet will transform the Internet into a commercially
viable broadcasting medium and as a result, the demand, as well as our need, for
such portfolio of domain names will increase.

    Each of our exclusive licenses includes the right to sublicense the use of
the licensed Internet names to others. These agreements require us to pay the
Center or Mr. Braun, as the case may be, an annual license fee of $600 per
address for each of the first five years of the 25-year term, increasing by 5%
each year thereafter through the 13th year, by 7% each year thereafter through
the 21st year, by 10% each year through the 24th year and at a rate of $2,500
per address for the final year. These fees are payable irrespective of whether
or not we us any or all of such addresses.

    The annual payment by us to the Center was initially $57,000, increasing to
$237,500 for the final year. Our annual payment to Mr. Braun was initially
$21,600, increasing to $90,000 for the final year. In addition, we are obligated
to pay an annual maintenance fee for the addresses, currently $35 per address,
to a domain name registration service for each of the 25-year terms of these

                                       28
<PAGE>

agreements. We are also obligated to indemnify the Center and Mr. Braun against
any and all claims asserted against either of them relating to our use of the
addresses. In addition, our agreement with the Center requires us to provide
office space, on our premises, to the Center for three years for up to four
employees of the Center. We have not provided such space to the Center, and the
Center has waived any claim to such space for 2001 and intends to waive the same
for 2002.

    In 1999 and 2000, we paid $42,750 and $28,500, respectively, to the Center
pursuant to its license agreement with us. In 1999 and 2000, we paid $10,800 and
$0, respectively, to Mr. Braun pursuant to his license agreement with us. We did
not make any payments to Mr. Braun or the Center in 2001. As of December 31,
2001, we were delinquent in licensing fees due to the Center in the approximate
amount of $99,750, and due to Mr. Braun in the approximate amount of $54,000.
Both the Center and Mr. Braun have waived their right to the fees due them
pursuant to these agreements through December 31, 2001. Given our current
financial condition, we anticipate that they will also waive the fees due them
through fiscal 2002.

    The licenses will automatically renew upon their scheduled expiration for
additional terms of 25 years unless we, the Center and/or Braun agree otherwise.
However, we may unilaterally terminate either license at any time by paying the
Center or Braun, as the case may be, a sum equal to (i) the aggregate license
fees payable to such licensor in the year in which we terminate the respective
license and (ii) the aggregate respective license fee we would have been
required to pay in the immediately subsequent year.

    The Center and Mr. Braun have agreed that for the term of our license, they
will not register any further addresses containing the letters "TV" or stating
or implying streaming or any other similar aspect of our business. Moreover,
should they license any further addresses to us for our exclusive us, our
license fee shall be equal to the initial registration fee paid by the licensor
for its rights to use such addresses. Although we believe that the terms of the
respective licensing arrangements are no less favorable to us than those we
could have negotiated with persons having no relation to us, these arrangements
should be viewed by investors as being non-arms-length in their nature.

    The other 1365 domain names are owned by us directly and are registered in
the company name. The annual fee for maintaining each of those other
registrations is approximately $35 per domain name. We offered content from
approximately 37 domain names of these other 1365 domain names as of the end of
fiscal 2001. To conserve cash, we intend to let the registration for the domain
names that we do not use expire.

INVESTMENT IN FOREIGNTVJAPAN.COM

    We acquired a 10% ownership interest on January 8, 2000 for $159,000 when we
signed a Local Affiliate Agreement ("Agreement") with foreignTVJapan.com. This
company was formed to develop associations with foreign entities with such
foreign entities paying us for the use of one our domain names, a link to our
website and the use of some content on our website. The agreement had a ten year
term. In July 2000, we entered into an amended agreement with
foreignTVJapan.com, which addressed their needs for additional content for their
channel. Under the amended agreement, foreignTVJapan, Inc. agreed to double the
affiliate license fees payable under the original agreement, from $10,000 month
to $20,000 per month and to prepay $300,000 of this increased licensing fees in
a single lump sum. We received the $300,000 lump sum payment in September 2000.
Junichi Watanabe, one of our directors, has the right to attend the meetings of
the board of directors of foreignTVJapan, Inc. We do not exercise significant
influence over the operating or financial policies of this entity.

                                       29
<PAGE>

STOCK PURCHASE BY DIRECTOR'S SPOUSE

    In May 2001, we privately sold 297,600 shares of our common stock to Betty
Mandus Lane, the spouse of our chairman, I. William Lane, at a price of $0.25
per share, being the market price of our common stock on the sale date, or an
aggregate of $74,400.

RELATIONSHIP WITH DAVID BADNER

    During the year ended December 31, 2001, David Badner, either directly or
through an affiliated entity, loaned us an aggregate of $178,759 to help defray
our cash flow needs. These loans bore no interest and were repaid prior to
December 31, 2001. Mr. Badner is an independent investor who has held, a various
times since our inception, a significant number of shares of our common stock.
During 2001 he did not hold any executive or employment position with our
company, but rendered consultant services from time to time in the area of cost
control and revenue development. The affiliated entity is Raebrook Inc., a New
York corporation and an investment consulting firm owned by Mr. Badner and
Joseph N. Savasta.

    During fiscal year 2000, Mr. Badner assisted us in identifying
inefficiencies in our operations and in reducing or eliminating redundant
overhead and unnecessary expenses. During the year ended December 31, 2001, Mr.
Badner also assisted us in negotiating the reduction of our accounts payable to
various unaffiliated third parties, with resultant savings to us of
approximately $500,000. J.N. Savasta Corp., an insurance brokerage owned by Mr.
Badner and Mr. Savasta, also paid approximately $75,000 of our insurance
premiums and replaced our several insurance policies in effect at various times
during that year with comparable coverages at substantially lower rates, with
resultant savings to us in excess of $135,000 over an 18-month period. For these
and other services rendered on our behalf during the year ended December 31,
2001, as well as in the immediately preceding year--and in recognition of the
fact that Mr. Badner has essentially acted as our lender of last resort when we
exhausted all other possibilities for short-term financing--we privately issued
to Mr. Badner and to companies controlled by him 13,411,650 shares of our common
stock. We valued 12,411,650 of these shares at $.15 per share, which represented
the market price of our common stock on their respective dates
of issuance during fiscal 2001. We valued 1,000,000 of these shares at
approximately $.18 per share, which represented the approximate market price of
our common stock on their respective dates of issuance during fiscal year 2001.

CORPORATE APARTMENT

    In February 2001, we leased a corporate apartment in Miami, Florida for the
use of our president, Jonathan Braun and David Badner. These individuals used
the apartment while in the process of relocating our executive offices to Miami.
The monthly rental expense was approximately $3,800. The corporate apartment was
justified as being more cost effective than hotel expense for those two
individuals while in Miami on Company business. In mid-2001, David Badner began
paying for two-thirds of the monthly rental expense and using the apartment for
his personal use in such proportion. Mr. Badner began paying 100% of the monthly
rental expense in April 2002.

                                       30
<PAGE>
                                     Part IV

Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

      (a) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES:
          ------------------------------------------------------
          (i) Financial Statements:

              Report of Independent Auditors ................................F-1

              Consolidated Balance Sheet as of December 31, 2001 and 2000 ...F-2

              Consolidated Statements of Operations for the Years Ended
                  December 31, 2001, 2000 and 1999 ..........................F-3

              Consolidated Statements of Stockholders' Equity (Deficiency)
                  for the Years Ended December 31, 2001, 2000 and 1999 ......F-4

              Consolidated Statements of Cash Flows for the Years Ended
                  December 31, 2001, 2000 and 1999 ..........................F-5

              Notes to Consolidated Financial Statements ....................F-6

          (ii) Financial Statement Schedules:

      All financial statement schedules are omitted because the conditions
requiring their filing do not exist or the information required thereby is
included in the Financial Statements contained herein, including the Notes
thereto.

      (b) REPORT ON FORM 8-K:
          ------------------
      We filed one current report on Form 8-K during the fourth quarter of the
year ended December 31, 2001, as follows:

      -     On November 8, 2001, we reported the sale of 1,000 shares of our
            Series A convertible preferred stock (Items 1 and 7) and the
            issuance of 10,000,000 shares of our common stock (Item 5).

      (c) EXHIBITS:
          --------
       3.1  Certificate of Incorporation of the Registrant, as amended (1)

       3.2  Certificate of Designation of Preferences and Rights of the
            Registrant's Series A convertible preferred stock (2)

       3.3  By-laws of the Registrant, as amended (3)

       4.1  Form of Certificate evidencing shares of Common Stock (1)

      10.1* 1999 Stock Option Plan (1)

      10.2  License Agreement between Registrant and the Center for
            Contemporary Diplomacy, Inc. (1)

      10.3  License Agreement between Registrant and Jonathan Braun (1)

      10.4* Employment Agreement between Registrant and Jonathan Braun (1)

      21.1  Subsidiaries of the Registrant (4)

      31.1  Rule 13a-14(a)/15d-14(a) Certifications

      32.2  Section 1350 Certifications

                                       31
<PAGE>

---------------
* Indicates management contract or compensatory plan or arrangement.

(1)   Denotes documents filed as an exhibit to Registrant's Registration
      Statement on Form S-1, as amended (File No. 333-71733), and incorporated
      herein by reference.

(2)   Denotes document filed as an exhibit to Registrant's Current Report on
      Form 8-K, filed November 8, 2001, incorporated herein by reference.

(3)   Denotes document filed as an exhibit to Registrant's Registration
      Statement on Form 8-A (File No. 0-15863), incorporated herein by
      reference.

(4)   Denotes document filed as an exhibit to Registrant's Annual Report on Form
      10-K for the year ended December 31, 1999, incorporated herein by
      reference.


                                       32
<PAGE>
                                    SIGNATURE


    Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.




Dated:  December 29, 2003               Medium4.com, Inc.





                                        By: /s/Alan Margerison
                                            ------------------
                                            Alan Margerison,
                                            Chief Executive Officer


                                       33
<PAGE>
                          INDEPENDENT AUDITOR'S REPORT

                                                                  March 18, 2002

Shareholders and Directors
Medium4.com, Inc.

We have audited the accompanying consolidated balance sheets of Medium4.com,
Inc. (A development stage enterprise) as of December 31, 2001 and 2000, and the
related consolidated statements of operations, shareholders' deficiency and cash
flows for each of the three years ended December 31, 2001, 2000, 1999 and the
cumulative period November 12, 1998 (inception) to December 31, 2001. 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 auditing standards generally accepted
in the United States. 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Medium4.com, Inc. as
of December 31, 2001 and 2000, and the results of its operations and its cash
flows for each of the three years ended December 31, 2001, 2000, 1999, and the
cumulative period November 12, 1998 (inception) to December 31, 2001 in
conformity with accounting principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has suffered recurring
losses from operations, including a net loss of approximately $6.2 million for
the year ended December 31, 2001, and has a working capital deficiency as of
December 31, 2001. These factors raise substantial doubt the Company's ability
to continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

As discussed in Note 3, the Company restated its consolidated financial
statements for the years ended December 31, 2001, 2000 and 1999.

                                       Radin, Glass & Co., LLP
                                       Certified Public Accountants
                                       New York, New York

                                       F-1
<PAGE>

<TABLE>
                            MEDIUM4.COM, INC. AND SUBSIDIARIES
                             (A Development Stage Enterprise)

                                CONSOLIDATED BALANCE SHEET
<CAPTION>
                                                                      December 31,
                                                             ---------------------------
                                                                 2001           2000
                                                             ------------   ------------
                                                               Restated       Restated
                                                                Note 3         Note 3
                                          ASSETS
<S>                                                          <C>            <C>
CURRENT ASSETS:
Cash ......................................................  $     18,380   $     50,462
Marketable securities .....................................             -            220
Other current assets ......................................           376         14,136
                                                             ------------   ------------
Total Current Assets ......................................        18,756         64,818

INVESTMENT IN FOREIGNTVJAPAN.COM ..........................       100,000        159,000

LEASEHOLD IMPROVEMENTS AND EQUIPMENT, NET .................        93,511        686,582

SOFTWARE, NET .............................................             -        890,967

OTHER ASSETS ..............................................        27,569        330,659
                                                             ------------   ------------
                                                             $    239,836   $  2,132,026
                                                             ============   ============

                    LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

CURRENT LIABILITIES:
Accounts payable ..........................................  $    343,960   $    514,639
Accrued expenses ..........................................       211,844        353,497
Loan payable - related party ..............................       243,478         50,000
                                                             ------------   ------------
Total Current Liabilities .................................       799,282        918,136

LONG-TERM LIABILITIES:
Deferred Revenue ..........................................       305,000        785,000
                                                             ------------   ------------
Total Liabilities .........................................     1,104,282      1,703,136
                                                             ------------   ------------

STOCKHOLDERS' EQUITY (DEFICIENCY)
Preferred stock $.01 par value 5,000 shares authorized,
1,000 and -0- issued and outstanding ......................            10              -
Common stock, $.01 par value; 75,000,000 shares authorized,
29,672,556 and 12,266,196 issued and outstanding,
respectively ..............................................       296,726        122,662
Paid in capital ...........................................    18,664,745     14,998,143
Deficit accumulated during development stage ..............   (19,530,138)   (13,291,247)
Unearned compensation expense .............................      (245,789)    (1,400,668)
Treasury stock ............................................       (50,000)             -
                                                             ------------   ------------
Total Stockholder's Equity (Deficiency) ...................      (864,446)       428,890
                                                             ------------   ------------
                                                             $    239,836   $  2,132,026
                                                             ============   ============

                      See notes to consolidated financial statements
                                           F-2
</TABLE>

<PAGE>

<TABLE>
                                   MEDIUM4.COM, INC. AND SUBSIDIARIES
                                    (A Development Stage Enterprise)

                                 CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
                                                                                           Cumulative
                                                                                          November 12,
                                                                                             1998
                                                   For the Years Ended December 31,      (inception) to
                                              -----------------------------------------   December 31,
                                                  2001           2000           1999          2001
                                              ------------   ------------   -----------   ------------
                                                Restated       Restated       Restated      Restated
                                                 Note 3         Note 3         Note 3        Note 3
<S>                                           <C>            <C>            <C>           <C>
REVENUE ....................................  $    708,803   $    390,354   $    45,800   $  1,144,957

COST OF SALES ..............................       700,443      2,249,397     1,232,339      4,182,179
                                              ------------   ------------   -----------   ------------

GROSS PROFIT (LOSS) ........................         8,360     (1,859,043)   (1,186,539)    (3,037,222)
                                              ------------   ------------   -----------   ------------

EXPENSES:
Selling, general and administrative expenses     5,420,437      7,423,916     2,640,512     15,484,865
Write down of fixed assets .................       250,000        334,922             -        584,922
Write down of capitalized development costs        534,498              -             -        534,498
                                              ------------   ------------   -----------   ------------
Total expenses .............................     6,204,935      7,758,838     2,640,512     16,604,285
                                              ------------   ------------   -----------   ------------
LOSS FROM OPERATIONS .......................    (6,196,575)    (9,617,881)   (3,827,051)   (19,641,507)
                                              ------------   ------------   -----------   ------------

OTHER INCOME (EXPENSE):
Interest income ............................         1,351         86,810       203,707        291,868
Write down of investments ..................       (59,000)             -             -        (59,000)
Loss on marketable securities ..............             -              -      (125,445)      (125,445)
Other income ...............................        15,334              -         2,613         17,946
                                              ------------   ------------   -----------   ------------
Total other income (expense) ...............       (42,315)        86,810        80,875        125,369
                                              ------------   ------------   -----------   ------------

LOSS BEFORE TAXES ..........................    (6,238,890)    (9,531,071)   (3,746,176)   (19,516,138)

INCOME TAX EXPENSE .........................             -              -        14,000         14,000
                                              ------------   ------------   -----------   ------------

NET LOSS ...................................    (6,238,890)    (9,531,071)   (3,760,176)   (19,530,138)
Deemed dividends ...........................    (1,000,000)             -             -     (1,000,000)
                                              ------------   ------------   -----------   ------------
NET LOSS to common shareholders ............    (7,238,890)    (9,531,071)   (3,760,176)   (20,530,138)
Other comprehensive income, net of tax:
Foreign currency translation adjustments ...             -              -       (17,052)       (17,052)
                                              ------------   ------------   -----------   ------------

Comprehensive Income (Loss) ................  $ (7,238,890)  $ (9,531,071)  $(3,777,228)  $(20,547,190)
                                              ============   ============   ===========   ============


Weighted average shares of common stock
outstanding ................................    18,334,433     10,494,789     9,139,217

Net loss per share to common shareholders ..  $      (0.39)  $      (0.91)  $     (0.41)
                                              ============   ============   ===========

                             See notes to consolidated financial statements
                                                  F-3
</TABLE>

<PAGE>

<TABLE>
                                          MEDIUM4.COM, INC. AND SUBSIDIARIES
                                           (A Development Stage Enterprise)

                             CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)

<CAPTION>

                                        Preferred Stock           Common Stock           Additional
                                      -------------------   -------------------------     Paid in      Accumulated
                                       Shares     Amount      Shares         Amount       Capital        Deficit
                                      ---------  --------   -----------    ----------   ------------   ------------
<S>                                   <C>        <C>        <C>            <C>          <C>            <C>
Balance as of November 12, 1998
    (inception) ......................       -   $     -      8,300,000    $   83,000   $          -   $          -
                                      ---------  --------   -----------    ----------   ------------   ------------

Balance as of December 31, 1998 ......       -         -      8,300,000        83,000              -              -

Receipt of stock subscription ........       -         -              -             -              -              -
Sale of common stock - initial
    public offering ..................       -         -      1,678,433        16,784      8,766,768              -
Sale of common stock -
    private placement ................       -         -        200,000         2,000        598,000              -
Stock options issued for services ....       -         -              -             -      2,424,246              -
Accumulated other comprehensive
    income ...........................       -         -              -             -              -              -
Unearned Compensation
    expense ..........................       -         -              -             -              -              -
Net loss .............................                                -             -              -     (3,760,176)
                                      ---------  --------   -----------    ----------   ------------   ------------

Balance as of December 31, 1999 ......       -   $     -     10,178,433    $  101,784   $ 11,789,014   $ (3,760,176)

Proceed from sale of common
    stock, net of expenses ...........       -         -      1,727,763        17,278      1,363,104              -
Stock issued for services ............       -         -        360,000         3,600        356,400              -
Stock options issued for services ....       -         -              -             -      1,489,625              -
Accumulated other comprehensive
    income ...........................       -         -              -             -              -              -
Unearned Compensation
    expense ..........................       -         -              -             -              -              -
Net loss .............................                                -             -              -     (9,531,071)
                                      ---------  --------   -----------    ----------   ------------   ------------

Balance as of December 31, 2000 ......       -   $     -     12,266,196    $  122,662   $ 14,998,143   $(13,291,247)

Proceeds from sale of preferred stock    1,000        10              -             -        995,990              -
Proceed from sale of common stock ....       -         -      2,821,360        28,214        446,562             (1)
Stock issued for services ............       -         -     14,585,000       145,850      2,224,050              -
Treasury Stock .......................       -         -              -             -              -              -
Unearned Compensation expense ........       -         -              -             -              -              -
Net loss .............................       -         -              -             -              -     (6,238,890)
                                      ---------  --------   -----------    ----------   ------------   ------------

Balance as of December 31, 2001 ......   1,000   $    10     29,672,556    $  296,726   $ 18,664,745   $(19,530,138)
                                      =========  ========   ===========    ==========   ============   ============

                                    See notes to consolidated financial statements
                                                        F-4-A
</TABLE>

<PAGE>

<TABLE>
                                          MEDIUM4.COM, INC. AND SUBSIDIARIES
                                           (A Development Stage Enterprise)

                             CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                                                     (continued)
<CAPTION>
                                                       Accumulated                                      Total
                                                          Other                       Unearned       Stockholders'
                                      Subscription    Comprehensive    Treasury     Compensation        Equity
                                      Receivable         Income          Stock        Expense        (Deficiency)
                                      -----------    ---------------   ---------   ---------------   -------------
<S>                                   <C>            <C>               <C>         <C>               <C>
Balance as of November 12, 1998
    (inception) ......................$   (83,000)   $             -   $       -   $            -    $          -
                                      -----------    ---------------   ---------   --------------    ------------

Balance as of December 31, 1998 ......    (83,000)                 -           -                -               -

Receipt of stock subscription ........     83,000                  -           -                -          83,000
Sale of common stock - initial
    public offering ..................          -                  -           -                -       8,783,552
Sale of common stock -
    private placement ................          -                  -           -                -         600,000
Stock options issued for services ....          -                  -           -                -       2,424,246
Accumulated other comprehensive
    income ...........................          -            (17,052)          -                -         (17,052)
Unearned Compensation
    expense ..........................          -                  -           -       (2,121,215)     (2,121,215)
Net loss .............................          -                  -           -                -      (3,760,176)
                                      -----------    ---------------   ---------   --------------    ------------

Balance as of December 31, 1999 ......$         -    $       (17,052)  $       -   $   (2,121,215)   $  5,992,355

Proceed from sale of common
    stock, net of expenses ...........          -                  -           -                -       1,380,382
Stock issued for services ............          -                  -           -                -         360,000
Stock options issued for services ....          -                  -           -                -       1,489,625
Accumulated other comprehensive
    income ...........................          -             17,052           -                -          17,052
Unearned Compensation
    expense ..........................          -                  -           -          720,547         720,547
Net loss .............................          -                  -           -                -      (9,531,071)
                                      -----------    ---------------   ---------   --------------    ------------

Balance as of December 31, 2000 ......$         -    $             -   $       -   $   (1,400,668)   $    428,890

Proceeds from sale of preferred stock           -                  -           -                -         996,000
Proceed from sale of common stock ....          -                  -           -                -         474,775
Stock issued for services ............          -                  -           -                -       2,369,900
Treasury Stock .......................          -                  -     (50,000)               -         (50,000)
Unearned Compensation expense ........          -                  -           -                -               -
Net loss .............................          -                  -           -        1,154,879      (5,084,011)
                                      -----------    ---------------   ---------   --------------    ------------

Balance as of December 31, 2001 ......$         -    $             -   $ (50,000)  $     (245,789)   $   (864,446)
                                      ===========    ===============   =========   ==============    ============

                                    See notes to consolidated financial statements
                                                        F-4-B
</TABLE>

<PAGE>

<TABLE>
                                      MEDIUM4.COM, INC. AND SUBSIDIARIES
                                       (A Development Stage Enterprise)

                                     CONSOLIDATED STATEMENT OF CASH FLOWS
<CAPTION>
                                                                                                  Cumulative
                                                                                                 November 12,
                                                                                                     1998
                                                       Year ended    Year ended    Year ended   (inception) to
                                                       December 31,  December 31,  December 31,  December 31,
                                                          2001           2000          1999          2001
                                                       -----------   -----------   -----------   ------------
                                                        Restated      Restated      Restated       Restated
                                                         Note 3        Note 3        Note 3         Note 3
<S>                                                    <C>           <C>           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ............................................  $(6,238,890)  $(9,531,071)  $(3,760,176)  $(19,530,137)
Adjustments to reconcile net loss to net cash used in
operating activites:
Depreciation ........................................      267,605       372,961       125,001        765,567
Amortization ........................................      659,559       297,264        20,866        977,689
Impairment of fixed assets /
  investment in foreignTVJapan.com ..................      309,000             -             -        309,000
Write down of fixed assets ..........................            -       334,922             -        334,922
Write down of sofware development costs .............      534,498             -             -        534,498
Unearned compensation expense .......................    1,154,879       720,547             -      1,875,426
Common stock and options issued for services ........    2,369,900     1,849,625       303,031      4,522,556
Accounts receivable .................................           (1)       12,800       (12,800)            (1)
Other current assets ................................       13,760       364,686      (378,823)          (377)
Accounts payable ....................................     (170,679)      258,245       256,394        343,960
Accrued expenses ....................................     (141,653)      120,191       233,307        211,845
Deferred revenue ....................................     (480,000)      785,000             -        305,000
Due to related parties ..............................            -             -        (6,670)             -
                                                       -----------   -----------   -----------   ------------
NET CASH USED IN OPERATIONS .........................   (1,722,022)   (4,414,830)   (3,219,870)    (9,350,052)
                                                       -----------   -----------   -----------   ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Deferred offering costs .............................            -             -             -         (6,670)
Investment in foreignTVJapan.com ....................            -             -      (159,000)      (159,000)
Other assets ........................................            -      (147,201)     (176,788)      (323,989)
Purchases of capital expenditures ...................       75,466    (1,097,503)   (1,631,060)    (2,653,097)
Marketable securities ...............................          220     4,159,198    (4,159,418)             -
                                                       -----------   -----------   -----------   ------------
NET CASH PROVIDED BY (USED) IN INVESTING ACTIVITIES .       75,686     2,914,494    (6,126,266)    (3,142,756)
                                                       -----------   -----------   -----------   ------------

CASH PROVIDED BY FINANCING ACTIVITIES:
Sale of common stock ................................      474,775     1,380,382     9,383,552     11,321,709
Sale of preferred stock .............................      996,000             -             -        996,000
Purchase of treasury stock ..........................      (50,000)            -             -        (50,000)
Change in subscription receivable ...................            -             -        83,000              -
Loan payable - related party ........................      193,478        50,000             -        243,478
Accumulated other comprehensive income ..............            -        17,052       (17,052)             -
                                                       -----------   -----------   -----------   ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES ...........    1,614,253     1,447,434     9,449,500     12,511,187
                                                       -----------   -----------   -----------   ------------

NET (DECREASE) INCREASE IN CASH .....................      (32,082)      (52,902)      103,364         18,380
CASH, beginning of the period .......................       50,462       103,364             -              -
                                                       -----------   -----------   -----------   ------------
CASH, end of the period .............................  $    18,380   $    50,462   $   103,364   $     18,380
                                                       ===========   ===========   ===========   ============

Supplemental disclosures of cash flow information:
Interest paid .......................................  $         -   $         -   $         -   $          -
Taxes paid ..........................................        4,889         4,600             -              -

Non cash financing activities:
Common stock and options issued for services ........  $ 2,369,900   $ 1,489,625   $ 2,424,246

                                See notes to consolidated financial statements
                                                      F-5
</TABLE>

<PAGE>
                       MEDIUM4.COM, INC. AND SUBSIDIARIES
                        (A DEVELOPMENT STAGE ENTERPRISE)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       THREE YEARS ENDED DECEMBER 31, 2001


Note 1.    Business

Medium4.com, Inc. and Subsidiaries (the "Company) formerly known as
foreignTV.com, Inc. is a Delaware corporation formed on November 12, 1998. The
Company was organized to develop opportunities as an Internet broadcaster of
international and niche content. In 2000, the Company relocated its corporate
offices to Miami, Florida.


Note 2.    Summary of Significant Accounting Principles

Going Concern

These financial statements have been prepared assuming the Company will continue
as going concern. The Company has suffered recurring losses in the years ending
December 31, 2001, 2000, and 1999 amounting to $6.2 million, $9.5 million, and
$3.8 million for each of the last three years, respectively. The Company has
borrowed funds shareholders to meet its daily cash flow requirements during
2001, additional loans from affiliates are not guaranteed but may occur. The
Company will need to obtain additional financings through debt or equity raises
in order to continue its operations for another twelve months and in order for
the Company to develop a reliable revenue stream to fund its operations.

Principles of consolidation

The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. Intercompany items and transactions have been
eliminated in consolidation.

Development Stage Enterprise

Due to the start-up nature of the business, the financial statements are being
presented as a development stage enterprise pursuant to Statement of Financial
Accounting Standards No. 7. The Company is developing niche content to be used
for Internet broadcasting throughout the world.

Cash

The Company classifies highly liquid temporary investments with an original
maturity of three months or less when purchased as cash equivalents.

                                       F-6
<PAGE>

Leasehold Improvements and Equipment

Leasehold improvements and equipment are stated at cost. Maintenance and repairs
are charged to expenses as incurred. Depreciation is provided for over the
estimated useful lives of the individual assets using straight-line methods.

Software Development Costs

The Company capitalized software development costs in accordance with SFAS 86
and EITF 00-2 and SOP 98-1. At December 31, 2000, the Company capitalized
$833,649 of such software development costs, net of accumulated amortization.
The costs are amortized over 30 months period on a straight-line basis. At
December 31, 2001, such costs were written off.

Revenue recognition

The Company records revenues from its license agreements on a straight line
basis over the term of the license agreements. If a license agreement is
terminated then the remaining unearned balance of the deferred revenues are
recorded as earned if applicable. The Company has also sold an encoding machine
in 2001, which such revenues have been recorded upon delivery and set up of the
machine.

Advertising costs

Advertising costs are expensed as incurred. Total advertising costs charged to
operations at December 31, 2000 amounted to $155,740. There were no advertising
costs incurred for the year ending December 31, 2001.

Fair value of financial instruments

The carrying amounts reported in the balance sheet for cash, receivables, and
accrued expenses approximate fair value based on the short-term maturity of
these instruments.

Stock based compensation

The Company accounts for employee stock options in accordance with APB Opinion
No. 25, "Accounting For Stock Issued To Employees" and has adopted the
disclosure-only option under SFAS No. 123, as of December 31, 1998. The Company
accounts for non-employee stock transactions in accordance with SFAS No. 123 and
EITF 96-18.

Comprehensive income

The Company adopted SFAS No. 130 Reporting Comprehensive Income. This statement
establishes rules for the reporting of comprehensive income and its components.
Comprehensive income consists of net income and foreign currency translation
adjustments and is presented in the Statements of Operations.

                                       F-7
<PAGE>

Income Taxes

The Company utilizes the liability method of accounting for income taxes as set
forth in SFAS 109, "Accounting for Income Taxes." Under the liability method,
deferred taxes are determined based on the difference between the financial
statement and tax bases of assets and liabilities using enacted tax rates in
effect in the years in which the differences are expected to reverse. The
Company has a net operating loss carryforward of approximately $12 million,
which expire at various times through the year 2021.

                                                        2001             2000
                                                        ----             ----
Deferred tax assets:
Net operating loss carryforward                   $  4,400,000      $ 3,700,000
Less valuation allowance                            (4,400,000)      (3,700,000)
Net deferred tax asset                            $          -      $         -

The reconciliation of the Company's effective tax rate differs from the Federal
income tax rate of 34% for the years ended December 31, 2001, 2000 and 1999 as a
result of the following:

                                                Years ended December 31,
                                           2001            2000         1999
                                           ----            ----         ----
Tax benefit at statutory rate          $(2,433,000)   $(3,717,000)  $(1,461,000)
Non deductible expenses - equity comp.   1,375,000      1,002,000       168,000
Software development costs                 208,000       (209,000)     (138,000)
Recognition of license fees                      -        306,000             -
Depreciation                               168,000         50,000             -
State tax, net of federal benefit          (28,000)       (98,000)     (138,000)
Change in valuation allowance              710,000      2,666,000     1,569,000
                                       -----------    -----------   -----------
                                       $         -    $         -   $         -
                                       ===========    ===========   ===========

Net Loss Per Share

The Company has adopted SFAS 128, "Earnings per Share." Loss per common share is
computed by dividing income available to common shareholders by the weighted
average number of common shares outstanding during the period.

Accounting for Long-Lived Assets

The Company reviews long-lived assets, certain identifiable assets and any
goodwill related to those assets for impairment whenever circumstances and
situations change such that there is an indication that the carrying amounts may
not be recoverable. At December 31, 2001 and 2000, respectively, the Company
believes that there has been no impairment of long-lived assets, after recording
the write down of equipment and the investment in foreignTVJapan.com during the
year ended December 31, 2001. See Note 4.

                                       F-8
<PAGE>

Investment in foreignTVJapan.com

Investment in foreignTVJapan.com represent a 10% ownership in foreignTV, Inc.,
which management has recorded utilizing the cost method. See Note 10(d).
Management does not exercise significant influence over the operating or
financial policies over the affiliate. A portion of such investment is believed
to be unrecoverable by management and is therefore was partially written down in
2001.

Accounting estimates and assumptions

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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.

Recent accounting pronouncements

In June 2001, the FASB issued SFAS No. 141, "Business Combination", SFAS No.
142, "Goodwill and Other Intangible Assets" and SFAS No. 143, "Accounting for
Asset Retirement Obligations",. SFAS No. 141 requires the use of the purchase
method of accounting and prohibits the use of the pooling-of-interest method of
accounting for business combinations initiated after June 30, 2001. It also
requires that the Company recognize acquired intangible assets apart from
goodwill. SFAS No. 142 requires, among other things, that companies no longer
amortize goodwill, but instead test goodwill for impairment at least annually.
In addition, SFAS No. 142 requires that the Company identify reporting units for
the purposes of assessing potential future impairments of goodwill, reassess the
useful lives of other existing recognized intangible assets, and cease
amortization of intangible assets with an indefinite useful life. SFAS No. 143
establishes accounting standards for recognition and measurement of a liability
for an asset retirement obligation and the associated asset retirement cost,
which will be effective for financial statements issued for fiscal years
beginning after June 15, 2002.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" which basically further clarifies SFAS No. 121
and methods of quantifying potential impairments or disposal of assets as well
as the related reporting of such impairments or disposals.

The adoption of SFAS No. 141, SFAS No. 142, SFAS No. 143 and SFAS No. 144 is not
expected to have a material effect on the Company's financial position, results
of operations and cash flows.

                                       F-9
<PAGE>

NOTE 3.    RESTATEMENT OF 2001, 2000 AND 1999 CONSOLIDATED FINANCIAL STATEMENTS

We made certain the following adjustment and reclassifications to the prior
year's financial statements detailed as follows:

   a. Loans payable - related party of $243,478 and $50,000, as of December 31,
      2001 and 2000, respectively was previously recorded as long-term
      liabilities has been reclassified as current liabilities.

   b. The $1,000,000 valuation of the beneficial conversion feature of the sale
      of the Series A Preferred Stock in 2001 for $1,000,000 was not previously
      recorded. The $1,000,000 non-cash deemed dividend has now been recorded
      and shown as increasing the net loss to common shareholders with no net
      change to the equity accounts.

   c. The "Write down of fixed assets" of $250,000 and $334,922 for the years
      ended December 31, 2001 and 2000, respectively, and $584,922 cumulative
      through December 31, 2001 were reclassed from "Other Income (Expense)" to
      "Expenses" as an increase to the sub-title "LOSS FROM OPERATIONS".

   d. The "Write down of capitalized development costs" of $534,498 for the year
      ended December 31, 2001 and cumulatively were reclassed from "Other Income
      (Expense)" to "Expenses" as an increase to the sub-title "LOSS FROM
      OPERATIONS".

   e. An allocation of depreciation of computer and other electronic equipment
      and amortization of capitalization software costs of $561,666, $603,202
      and $131,280 for the years ended December 31, 2001, 2000 and 1999,
      respectively, have been reclassed to "Cost of Sales" based on managements
      estimate of such costs attributed to the product lines developed from
      "Selling, general and administrative expenses". Production costs
      previously reported as a separate line under "Expenses" of $81,328,
      $1,529,040 and $1,101,059 for the years ended December 31, 2001, 2000 and
      1999, respectively, was also reclassed to "Cost of Sales". A total reclass
      from"Expenses" was made of $3,710,313 cumulative through December 31, 2001
      to Cost of Sales.

   f. Amortization costs recorded as "Other assets" under investing activities
      in the consolidated statement of cash flows of $303,090 for the year ended
      December 31, 2001 and cumulatively were reclassed to Amortization as an
      "Adjustment to reconcile net loss to net cash used in operating
      activities".

   g. The write down of the $59,000 Investment in foreignTVJapan.com was
      reclassed from investing activities to "Impairment of fixed assets /
      investment in foreignTVJapan.com as an "Adjustment to reconcile net loss
      to net cash used in operating activities" for the year ended December 31,
      2001.

                                      F-9A

<PAGE>

Note 4.    Leasehold Improvements and Equipment

As of December 31, 2001 and 2000, leasehold improvements and equipment consist
of the following:

                                                    2001              2000
                                                -------------    ---------------
    Leasehold improvements                      $     25,053     $       24,723
    Furniture & fixtures                             262,558            262,558
    Computer equipment                               421,946            421,946
    Camera equipment                                 178,424            178,424
    Other equipment                                  315,760            317,760
                                                -------------    ---------------
                                                   1,203,741          1,205,411
    Less:  accumulated depreciation                 (860,230)          (518,829)
    Less:  impairment of fixed assets               (250,000)                 -

                                                -------------    ---------------
                                                $     93,511     $      686,582
                                                =============    ===============

Leasehold improvements are depreciated over 7 years. Furniture, fixtures and
equipment are depreciated over 3 to 7 years. In 2000, $334,922 of assets has
been written off due to the abandonment of leasehold improvements in the New
York office and the estimated loss on disposal of certain equipment located in
the France office.

In 2001, reserve for fixed assets has been recorded due to its impairment. The
fixed assets written down represented certain equipment noted above that is no
longer being utilized due to the Company reducing their efforts to develop
content. The impairment valuation was determined by management estimating the
resale value of the equipment not being utilized. Due to the rapid technological
changes in the computer industry most of the equipment not being used has been
rendered useless.


Note 5.    Other Assets

As of December 31, 2001 and 2000, other assets include security deposits of
$27,569 and $139,324, respectively. At December 31, 2000, included in other
assets were intangible assets comprised of domain names of $121,140 and a
prepaid commission of $141,750 relating to deferred revenues. The costs of
domain names are being amortized over 24 months. The unamortized portion at
December 31, 2000 was $49,585. At December 31, 2001, such costs have been fully
amortized.

                                      F-10
<PAGE>

Note 6.    Loan Payable - Related Party

As of December 31, 2000, an employee of the Company made an advance of $50,000,
bearing interest at 6% per annum and payable by March 21, 2002. The same
employee made additional advances to the Company during calendar 2001
aggregating to $281,000. Approximately $152,000 of such advances were repaid
during the year 2001. The remaining balance of such advances at December 31,
2001 was $178,758. In addition an officer of the Company advanced $64,720 to the
Company during 2001. These advances are due on demand and bear interest at 6%
per annum.


Note 7.    Equity Transactions

   a. In November 1998, the founders of the Company issued 8,300,000 shares of
      common stock to themselves for $83,000. Such monies were received in 1999.

   b. In April and May 1999 the Company sold 1,678,433 shares of common stock
      pursuant to an initial public offering registration at $6.00 per unit.
      Each unit consisted of one share of common stock and one warrant to
      purchase one share of common stock at an exercise price of $9.00. There
      are 1,678,433 of such warrants outstanding as of December 31, 2000 and
      1999. The warrants will be exercisable at any time, until they expire
      three years after the effective date of the Proposed Offering. The
      warrants may be redeemed by the Company, in whole or in part, at any time
      upon at least 30 days prior written notice to the registered holders, at a
      price of $.05 per warrant, provided that the closing bid price of the
      Common Stock was at least $12.00 for the 20 consecutive trading days
      ending on the third business day preceding the date of the Company's
      giving of notice of redemption to the warrant holders, and provided there
      is then a current registration statement in effect for the shares
      underlying the warrants. In connection with the initial public offering
      167,843 units were issued to the underwriter with an exercise price of
      $6.60 for one share of common stock and a warrant to purchase another
      share of common stock at $9.00, expiring in May 2004. There were costs of
      $1,278,046 applied as a reduction to such offering proceeds.

   c. During the fourth quarter of 1999, the Company sold 200,000 shares of
      common stock for $3.00 per share pursuant to a private placement for the
      sale of such unregistered securities. The Company received $459,000 of the
      sale of stock proceeds in 1999 and the remaining $141,000 by January 14,
      2000. The $141,000 stock subscription was recorded as a current asset.

   d. During the first and second quarter of 2000, the Company sold 77,500
      shares of common stock pursuant to a private placement at $3.00 per share.
      During the third quarter, the Company sold 45,000 shares of common stock
      pursuant to a private placement at $2.00 per share.

                                      F-11
<PAGE>

   e. In March 2000, the Company entered into an "Investment Agreement", whereby
      an unaffiliated entity has purchased 105,263 shares of common stock for
      $4.75 and warrants to purchase another 105,263 shares of common stock for
      $9.00 per share over a period of four years. In addition this entity was
      issued warrants to purchase 600,000 shares of common stock for $1.00 per
      share subject to certain performance criteria, hereafter referred to as
      the "Performance Warrants". These Performance Warrants vest based on
      certain future performance criteria, therefore will be valued at the time
      such warrants vest based on the then trading prices of the Company's
      common stock.

   f. In June 2000, the Company began offering the sale of equity units in the
      Company pursuant to a Confidential Private Placement Memorandum. The
      Company has raised $840,000 through the sale of these units. The modified
      terms of the sale of units resulted in the sale of 1,500,000 shares of
      common stock and 1,500,000 Series A redeemable common stock purchase
      warrants for $3.00 per share for three years and the issuance of units
      providing for the purchase 345,000 shares of common stock.

   g. During the first quarter of 2001, the Company sold 297,600 shares of
      common stock to a related party at $.25 per share. The per share price was
      the market price on the day of the sale.

   h. The Company issued 14,585,000 shares of common stock for services rendered
      at $.15 - $.50 per share during year 2001. The Company recorded $2,369,900
      of compensation expense relating to such issuance. The per share price
      utilized for valuing such shares issued for services was the market price
      on the day such shares were determined to be earned for the services
      rendered. i. In the second, third and fourth quarters, the Company sold
      2,000,000 shares of common stock pursuant to a private placement at $.15
      per share, 400,000 shares at $.20 per share, 100,000 shares at $.20 per
      share and 23,760 at $.10 per share all expenses relating to the shares
      sold have been deducted as a cost of raising such capital.

   j. On October 30, 2001, the Company sold 1,000 shares of Series A Convertible
      Preferred Stock to an institutional investor for $1,000,000. Each share of
      Series A Convertible Preferred Stock is convertible at any time or from
      time to time into 20,000 shares of common stock, or an aggregate of
      20,000,000 shares of common stock if all of the Series A Convertible
      Preferred Stock is converted. The beneficial conversion feature was
      recorded as a non-cash deemed dividend during 2001, resulting in an
      increase in the loss applicable to common shareholders. The paid in
      capital accounts as a result of this adjustment was to record the value of
      the beneficial conversion feature to paid in capital by increasing such
      account by $1,000,000 and decreasing paid in capital for the deemed
      dividend of $1,000,000.

                                      F-12
<PAGE>

   k. At the annual meeting conducted on December 27, 2001, our stockholders
      approved the issuance of up to 20,000,000 shares of our common stock upon
      the conversion of our Series A convertible preferred stock. Each share of
      Series A convertible preferred stock is convertible at any time or from
      time to time into 20,000 shares of our common stock, or an aggregate of
      20,000,000 shares of our common stock if all of the Series A Convertible
      Preferred Stock is converted. No payment is due to us upon the conversion.
      The Series A convertible preferred stock carries no voting rights except
      as may be required by law, provides for the payment of dividends only when
      and if dividends are declared and paid on shares of our common stock and
      then in a like amount, provides for a liquidation preference of $1,000 per
      share and is not redeemable by us.

   l. At the annual meeting conducted on December 27, 2001, our stockholders
      approved an amendment to our certificate of incorporation to increase the
      authorized number of shares of our common stock from 30,000,000 to
      75,000,000.


Note 8.    Stock Option Plan

The Company has two incentive stock option plans, which are authorized to issue
up to 500,000 and 1,000,000 shares of common stock, respectively, subject to
approval by the stockholders.

The Company accounts for its stock option plan under APB Opinion No. 25,
"Accounting for Stock Issued to Employees", under which no compensation expense
is recognized. The Company adopted SFAS No. 123, "Accounting for Stock-Based
Compensation", for disclosure purposes; accordingly, no compensation expense is
recognized in the results of operations for options granted at fair market value
as required by APB Opinion No. 25.

                                      F-12A
<PAGE>

Stock option activity for the year ended December 31, 2001, 2000 and 1999 is
summarized as follows:

Employee Stock Option Plan:
                                                                Weighted Average
                                                   Shares        Exercise Price
                                                -------------   ----------------
        Outstanding at December 31, 1998               -        $        -
           Granted                                  499,500             6.30
           Exercised                                   -                 -
           Expired or cancelled                        -                 -
                                                -------------   ----------------
        Outstanding at December 31, 1999            499,500     $       6.30
           Granted                                1,735,000             6.28
           Exercised                                   -                 -
           Expired or cancelled                        -                 -
                                                -------------   ----------------
        Outstanding at December 31, 2000          2,234,500     $       6.29
           Granted                                     -                  -
           Exercised                                   -                  -
           Expired or cancelled                  (1,224,500)            5.55
                                                -------------   ----------------
        Outstanding at December 31, 2001          1,010,000     $       7.18
                                                =============   ================

Non - Employee Stock Option Plan:
                                                                Weighted Average
                                                   Shares        Exercise Price
                                                -------------   ----------------
        Outstanding at December 31, 1998               -        $        -
           Granted                                  723,500             6.63
           Exercised                                   -                 -
           Expired or cancelled                        -                 -
                                                -------------   ----------------
        Outstanding at December 31, 1999            723,500     $       6.63
           Granted                                1,826,500             5.33
           Exercised                                   -                 -
           Expired or cancelled                        -                 -
                                                -------------   ----------------
        Outstanding at December 31, 2000          2,550,000     $       5.98
           Granted                                     -                 -
           Exercised                                   -                 -
           Expired or cancelled                        -                 -
                                                -------------   ----------------
        Outstanding at December 31, 2001          2,550,000     $       5.98
                                                =============   ================

                                      F-13
<PAGE>

Information, at date of issuance, regarding stock option grants for the year
ended December 31, 2001, 2000 and 1999:

                                                          Weighted     Weighted
                                                           Average      Average
                                                          Exercise       Fair
                                              Shares       Price        Value
                                             ---------    --------     --------
Year ended December 31, 1999:
   Exercise price exceeds market price         590,500     $ 6.39       $ 3.04
   Exercise price equals market price          632,500       6.59         3.15
   Exercise price is less that market price       -           -            -

Year ended December 31, 2000:
   Exercise price exceeds market price       3,441,500     $ 6.00       $ 1.36
   Exercise price equals market price           20,000       5.13         2.35
   Exercise price is less that market price    100,000       1.00         4.17

Year ended December 31, 2001:
   Exercise price exceeds market price            -        $  -         $  -
   Exercise price equals market price             -           -            -
   Exercise price is less that market price       -           -            -

For disclosure purposes in accordance with SFAS No. 123, the fair value of each
stock option grant is estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted-average assumptions used for
stock options granted during the year ended December 31, 2001, 2000 and 1999:
annual dividends of $0.00, expected volatility of 99%, risk-free interest rate
of 5.75% and expected life of five years for all grants.

If the Company recognized compensation cost for the vested portion of the
employee stock option plan in accordance with SFAS No. 123, the Company's
pro-forma net loss and loss per share for the years ended December 31, 2001,
2000 and 1999, would have been approximately, $7,726,394 and $(.41), $12,646,053
and $(1.20), $4,409,986 and $(.48), respectively.

The non-employee stock options outstanding are fully vested. The compensation
expense attributed to the issuance of these stock options will be amortized over
24 months, the term of service arrangement. These stock options are exercisable
for five years from the grant date.

The employee stock option plan stock options are exercisable for five years from
the grant date and vest over various terms from three to five years. As of
December 31, 2000 and 1999, 705,500 and 224,667, respectively, of these stock
options were vested. During 2001, most of the Company's employees have been
terminated which resulted in the cancellation of the stock options.

                                      F-14
<PAGE>

Note 9.    License Agreements

   a) The Company entered into two license agreements with related parties for
      the sole and absolute use of certain Internet domain names. One of the
      agreements is with an officer and director of the Company and the other is
      with a not-for-profit organization whose board of directors is
      substantially identical to that of the Company. The term of the agreements
      is twenty-five years through December 31, 2023 with an additional renewal
      period of twenty-five years thereafter. The agreements require the Company
      to pay license fees, which begin at $600 per domain name and escalate to
      $2,500 per domain name through the twenty fifth year of the agreement.
      Thereafter, the fee increase is based on the Consumer Price Index. The
      agreement with the not-for-profit organization also requires the Company
      to provide office space, on its premises, for up to four employees of the
      not-for-profit organization for up to three years. The director and the
      not-for-profit organization have waived all the rights to collection on
      past due amounts through December 31, 2001.

   b) In May 2000, the Company entered into a master affiliate agreement with
      Windfire International Corporation, Ltd."Windfire", a British Virgin
      Islands Corporation, pursuant to which the Company granted Windfire the
      exclusive right for an initial term of five years to grant licenses solely
      to persons and entities acceptable to the Company for the establishment
      and operation within the nations of Brunei, Indonesia, Kenya, Malaysia,
      the Philippines, Singapore, South Africa, Tanzania, Thailand and Uganda of
      Internet sites that will comprise discrete channels upon one or more of
      our network of web sites.

      The master affiliate agreement required Windfire to pay us a one time fee
      of $1,500,000, of which $500,000 has been received to date. Revenues are
      being recognized on a straight line basis over the term of this agreement.
      The Company is currently in litigation over payment of the remaining fees
      for this master affiliate agreement. Management believes litigation will
      be settled in 2002.

   c) In 2001, the Company has received $34,000 for the purchase of a foreignTV
      network. Such monies have been recorded as deferred revenue until a
      definite sales agreement is in place.


Note 10.   Commitments and Contingencies

a.    The Company leases office space pursuant to a lease agreement, which
      expires on May 30, 2006. The office space has been subleased since August
      31, 2000. The Company has terminated such lease subsequent to December 31,
      2000, and relinquished approximately half of their security deposit. In
      addition, the related leasehold improvements have been written off in
      calendar year 2000. The Company has ceased leasing space in certain
      countries abroad.

      Rent expense for the year ended December 31, 2001, 2000 and 1999 was
      $129,451, $157,688 and $180,161, respectively.

                                      F-15
<PAGE>

b.    In 2000, the Company relocated its corporate offices. The Company leases
      office space in Miami, pursuant to a lease agreement, which expires on
      July 31, 2003. The future minimum lease commitments are as follows:

                               2002              $ 79,362
                               2003                47,607

c.    The Company leases a corporate apartment in Miami, pursuant to a lease
      agreement, which expires March 15, 2002. The future minimum lease
      commitments are as follows:

                               2002              $  9,250

d.    In April 1999, the Company entered into a one year consulting and finders
      agreement with a foreign entity to render public and investor relations in
      Asia, promote the business of Company and locate a Japanese strategic
      partner among other services. The consultant will be compensated at a
      monthly rate plus a fixed rate of non-accountable out of pocket expenses
      and a finders fee of 7.5% of the value of a strategic partner
      relationship.

      The consultant was paid $500,000 during 1999, which represents a $159,000
      finders fee for the 10% equity ownership in foreignTV, Inc. (Japan),
      $218,750 of consulting fees and out of pocket expenses and $106,250 of
      prepaid consulting fees and out-of-pocket expenses for 2000.

e.    The Company also had employment agreements with several of their officers
      and employees with terms up to five years. The Company currently only has
      one officer. The terms of the agreements may include cash, compensation,
      stock options, car allowance and other traditional employee benefits.

f.    The Company is subject to litigation from time to time arising in the
      ordinary course of its business. Other than the Windfire dispute discussed
      in Noted 9 (b), the Company does not believe that any such litigation is
      likely, individually or in the aggregate, to have a material adverse
      effect on the financial condition of the Company.


NOTE 11. Investment In foreignTVJapan.com

      We acquired a 10% ownership interest on January 8, 2000 for $159,000 when
we signed a Local Affiliate Agreement ("Agreement") with foreignTVJapan.com.
This company was developed to form associations with foreign entities with such
foreign entities paying us for the use of one our domain names, a link to our
website and the use of some content on our website. The agreement had a ten year
term.In July 2000, we entered into an amended agreement with foreignTVJapan.com.
which addressed their needs for additional content for their channel. Under the
amended agreement, foreignTVJapan, Inc. agreed to double the affiliate license
fees payable under the original agreement, from $10,000 month to $20,000 per
month and to prepay $300,000 of this increased licensing fees in a single lump
sum. We received the $300,000 lump sum payment in September 2000. Junichi
Watanabe, one of our directors, has the right to attend the meetings of the
board of directors of foreignTVJapan, Inc. We do not exercise significant
influence over the operating or financial policies of this entity.

                                      F-16