SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549


                                    FORM 10-K


                  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: 1-15863


                                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.)


         1220 Collins Avenue
         Suite 100
         Miami Beach, Florida                                 33139
(Address of principal executive offices)                    (Zip Code)


Registrant's telephone number, including area code:    (305) 538-0955


Securities registered pursuant to Section 12(b) of the Act:

                                                     Name of each exchange
          Title of each class                         on which registered
          -------------------                         -------------------
  Common Stock, par value $0.01 per share           American Stock Exchange
  Redeemable Common Stock Purchase Warrants         American Stock Exchange


Securities registered pursuant to Section 12(g) of the Act:

                                      None
                                (Title of Class)

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

      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 [ ]

<PAGE>

      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 number of shares outstanding of the Registrant's common stock is
29,672,556 (as of April 12, 2002).

      The aggregate market value of the voting stock held by non-affiliates of
the Registrant is approximately $5,207,628 (as of April 12, 2002).


                       DOCUMENTS INCORPORATED BY REFERENCE

                                                 Location in Form 10-K
               Document                          in which incorporated
               --------                          ---------------------

      Portions of the Proxy Statement                  Part III
      with respect to Registrant's 2002
      Annual Meeting of stockholders to
      be filed with the SEC not later
      than 120 days after the close of
      Registrant's fiscal year











                                        2
<PAGE>

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 commenced our operations in 1999 as a single TV network that created,
produced and distributed location-specific programming on the Internet using
streaming video technology, which 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 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 from and view.
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, we were 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.

      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.

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<PAGE>

      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, 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 the date of this Report, those shares would have represented an
approximately 40.3% equity interest in our company. This sale represents an
event which may lead to a future change of control of our company.

(b)   FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

      Not applicable

(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 channel 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, are 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.

                                       4
<PAGE>

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.

      Using licensed, customized, and proprietary software, the vToob is
designed 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. 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.

      As for StreamingUSA's revenue model, current banner advertisements are
free and simply used to generate interest and demonstrate viability and
potential. 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-

                                       5
<PAGE>

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.

      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. For the approximately 135 domain names that we license pursuant to
exclusive 25-year arrangements with certain of our executive officers and their
affiliates, we are required to pay annual license fees beginning at $600 per
domain name, escalating to $2,500 per domain name 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. As
of December 31, 2001, we were delinquent in these payments to the extent of
approximately $80,000. 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.

                                       6
<PAGE>

ANTICIPATED REVENUE SOURCES

      -     Subscription fees

      -     vToob applications

      -     Sponsorships sold for part or all of a channel.

      -     Sale of PLS encoding mechanisms

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

      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. Any competition for advertisers among present and future
Websites, as well as competition with other traditional media for advertising
placements, could result 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
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. To compete successfully, 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.

                                       7
<PAGE>

      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 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 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 nature of this and future legislation and the manner in
which they may be interpreted and enforced cannot be fully determined and could
subject us to potential liability, which in turn could harm our business.

      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.

                                       8
<PAGE>

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
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.

                                       9
<PAGE>

      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. In addition, 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.

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<PAGE>

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.

      We also issued an aggregate of 1,515,000 shares of our common stock during
the three month period ended December 31, 2001 to eight persons in payment for
services which they rendered on our behalf. No underwriters were involved in any
of these transactions.

      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.

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<PAGE>

Item 6.     SELECTED FINANCIAL DATA

      Our consolidated balance sheet and statement of operations are set forth
in this Report in the Financial Statements and Notes thereto, and are
incorporated herein by reference.


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

INTRODUCTION

      In view of the evolving nature of our business and our limited operating
history, we believe that a description of our revenues and operating results is
not necessarily meaningful and should not be relied upon as indications of
future performance. 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 operations through the end of the second quarter of the year 2002.
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.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000; YEAR
ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

      We sustained a net loss of approximately $6.2 million for the year ended
December 31, 2001 on revenues of $708,803, derived from licensing and
advertising fees and from our sale of PLS encoding mechanisms. Our net loss for
the year ended December 31, 2000 was approximately $9.5 million upon revenues of
$390,354, derived from licensing and advertising fees. Our net loss for the year
ended December 31, 1999 was approximately $3.8 million on revenues of $45,800,
derived from advertising and the production of infomercials.

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<PAGE>

      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 and $1.1 million for the two preceding years, respectively,
reflecting the cessation of our own content production efforts in 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
production and delivery of our content.

      Our selling, general and administrative expenses were approximately $6.0
million for the year ended December 31, 2001, consisting primarily of
approximately $4.1 million in personnel costs, $339,705 in professional and
consulting fees, $847,048 in equipment and depreciation, $248,164 in sales and
marketing costs, and $363,338 in other general and administrative costs. By way
of comparison, expenditures for each of these categories were $4.2 million,
$917,832, $774,017, $487,669 and approximately $1.3 million, respectively, for
the year ended December 31, 2000. Internet domain and Web service costs,
together with miscellaneous expenses, accounted for the balance in each of the
two years ended December 31, 2001. Our selling, general and administrative
expenses were approximately $2.8 million for the year ended December 31, 1999,
consisting primarily of $663,476 in personnel costs, $381,034 in professional
and consulting fees, $335,926 in rent, overhead, equipment and depreciation,
$124,823 in sales and marketing costs, and $821,169 in other general and
administrative costs. Internet domain and Web service costs, together with
miscellaneous expenses, accounted for the balance.

      We incurred depreciation and amortization expense of $624,074, $670,225
and $145,868 for the years ended, respectively, December 31, 2001, 2000 and
1999. This was derived primarily from depreciation relating to our leasehold
improvements and furniture, computer and camera equipment purchases.

      Our net loss for the year ended December 31, 2001 included writedowns of
$250,000 in fixed assets and $50,000, representing a portion of our 10% equity
investment in an unconsolidated subsidiary, as well as a $534,498 writeoff of
capitalized software development costs. Our net loss for the year ended December
31, 2000 includes a fixed asset write down of $334,922, primarily attributable
to the closure of our Paris, France facility and the relocation of our
operations from New York City to Miami Beach, Florida, offset in part by
interest income of $86,809.

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 $(2.1) 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 $440,000 and $1.6 million was provided by
investing activities and financing activities, respectively.

                                       13
<PAGE>

      We believe that continuation and growth of our operations will depend
largely on our ability to become a leading source for continuously streaming
media entertainment niche programming on the Internet. During the year ended
December 31, 2001, we continued to invest in and incur significant expenditures
and costs to achieve this goal. Accordingly, we intend to continue to make
significant investments to acquire content, to increase the number of viewers of
our SLS channels, to attract advertisers for our SLS channels, to ensure that
the technology needed to provide our content stays current and to sell our PLS
technology

      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. 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.

FORWARD-LOOKING STATEMENTS

      Management's Discussion and Analysis above contains certain
forward-looking statements and information relating to us and to our present and
future business operations within the meaning of Federal securities law. We have
identified these statements by using forward-looking terminology such as "may,"
"will," "expect," "anticipate," "estimate," "predict", "contemplate",
"continue," "believe," "intend," the negative of the foregoing words, or other
similar words. These words, however, are not the exclusive means by which you
can identify these statements. You can also identify forward-looking statements
because they discuss future expectations, contain projections of results of
operations or of financial conditions, characterize future events or
circumstances or state other forward-looking information.

      The forward-looking statements included in Management's Discussion and
Analysis are based on our beliefs as well as assumptions made using information
currently available to us, and we assume no obligation to update any such
forward-looking statements. We believe that the expectations reflected in such
forward-looking statements are based on reasonable assumptions. However, because
these statements reflect our current views concerning future events, these
statements involve certain risks, uncertainties and assumptions. Actual future
results may differ materially and significantly from the results projected and
discussed in the forward-looking statements.

      We caution you that our business and financial performance are subject to
substantial risks and uncertainties. Potential risks and uncertainties include,
among others, the risk factors set forth herein.

                                       14
<PAGE>

RISK FACTORS

      - 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

            -     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 second 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.

                                       15
<PAGE>

      - 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.

      - 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.

                                       16
<PAGE>

      - 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.

      - 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.

                                       17
<PAGE>

      - 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.


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.

                                       18
<PAGE>

Part III


Item 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      Item 10 is hereby incorporated by reference from our definitive Proxy
Statement to be filed within 120 days of December 31, 2001.


Item 11.    EXECUTIVE COMPENSATION

      Item 11 is hereby incorporated by reference form our definitive Proxy
Statement to be filed within 120 days of December 31, 2001.


Item 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      Item 12 is hereby incorporated by reference from our definitive Proxy
Statement to be filed within 120 days of December 31, 2001.


Item 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      Item 13 is hereby incorporated by reference form our definitive Proxy
Statement to be filed within 120 days of December 31, 2001.


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

                  Consolidated Balance Sheet as of December 31, 2001 and 2000

                  Consolidated Statements of Operations for the Years Ended
                        December 31, 2001, 2000 and 1999

                  Consolidated Statements of Stockholders' Deficiency for the
                        Years Ended December 31, 2001, 2000 and 1999

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

                  Notes to Consolidated Financial Statements

            (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.

                                       19
<PAGE>

      (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)
---------------
*     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.

                                       20
<PAGE>
                                  SIGNATURES


      Pursuant to the requirements of Section 13 or 15(d) 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:   April 12, 2002             Medium4.com, Inc.

                                    By:   /S/ JONATHAN BRAUN
                                          ------------------------
                                          Jonathan Braun
                                          Chief Executive Officer


      Pursuant to the requirements of the Securities and Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.


    SIGNATURE                       TITLE                      DATE

/s/ Jonathan Braun          Chief Executive Officer,      April 12, 2002
-------------------         Principal Financial and
Jonathan Braun              Accounting Officer and
                            Director


/s/ I. William Lane         Chairman of the Board,        April 12, 2002
-------------------         Director
I. William Lane


/s/Junichi Watanabe         Director                      April 12, 2002
-------------------
Junichi Watanabe


/s/                         Director                      April   , 2002
-------------------
Satoru Hirai


<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.


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

                                      F-1
<PAGE>
                       MEDIUM4.COM, INC. AND SUBSIDIARIES
                        (A Development Stage Enterprise)

                           CONSOLIDATED BALANCE SHEET

                                                           December 31,
                                                   ----------------------------
                                                       2001            2000
                                                   ------------    ------------
                         ASSETS

CURRENT ASSETS:
  Cash .........................................   $     18,380    $     50,462
Marketable securities ..........................              -             220
  Other current assets .........................            376          14,137
                                                   ------------    ------------
    Total Current Assets .......................         18,756          64,818

INVESTMENT IN AFFILIATE ........................        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' DEFICIENCY

CURRENT LIABILITIES:
  Accounts payable .............................   $    343,960    $    514,639
  Accrued expenses .............................        211,843         353,498
                                                   ------------    ------------
    Total Current Liabilities ..................        555,802         868,136

LONG-TERM LIABILITIES:
  Loan payable - related party .................        243,479          50,000
  Deferred Revenue .............................        305,000         785,000
                                                   ------------    ------------
    Total Long-Term Liabilities ................        548,479         835,000

STOCKHOLDERS' DEFICIENCY
  Preferred stock $.01 par value 5,000
  shares authorized, 1,000 and -0-
  issued and outstanding .......................             10               -
Common stock, $.01 par value; 30,000,000
  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 ..................       (245,788)     (1,400,668)
Treasury stock .................................        (50,000)              -
                                                   ------------    ------------
    Total Stockholder's deficiency .............       (864,446)        428,890
                                                   ------------    ------------
                                                   $    239,836    $  2,132,026
                                                   ============    ============

                 See Notes to Consolidated Financial Statements

                                      F-2
<PAGE>
                       MEDIUM4.COM, INC. AND SUBSIDIARIES
                        (A Development Stage Enterprise)

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

COST OF SALES ............................          57,448          414,418               -          471,866
                                              ------------     ------------     -----------     ------------
GROSS PROFIT .............................         651,355          (24,064)         45,800          673,091

EXPENSES:
  Production .............................          81,328        1,529,040       1,101,059        2,711,427
  Selling, general and administrative
    expenses .............................       5,982,105        7,729,854       2,771,792       16,483,751
                                              ------------     ------------     -----------     ------------
    Total expenses .......................       6,063,433        9,258,894       3,872,851       19,195,177
                                              ------------     ------------     -----------     ------------
LOSS FROM OPERATIONS .....................      (5,412,077)      (9,282,958)     (3,827,051)     (18,522,086)

OTHER INCOME (EXPENSE):
  Interest income ........................           1,351           86,809         203,707          291,868
  Write down of fixed assets .............        (250,000)        (334,922)              -         (584,922)
  Write down of capitalized development
    costs ................................        (534,498)               -               -         (534,498)
  Write down of investments ..............         (59,000)               -               -          (59,000)
  Loss on marketable securities ..........               -                -        (125,445)        (125,445)
  Other income ...........................          15,332                -           2,613           17,945
                                              ------------     ------------     -----------     ------------
    Total other income (expense) .........        (826,814)        (248,113)         80,875         (994,052)
                                              ------------     ------------     -----------     ------------

LOSS BEFORE TAXES ........................      (6,238,892)      (9,531,071)     (3,746,176)     (19,516,138)

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

NET LOSS .................................    $ (6,238,892)    $ (9,531,071)    $(3,760,176)    $(19,530,138)
                                              ============     ============     ===========     ============

Other comprehensive income, net of tax:
  Foreign currency translation adjustments               -                -         (17,052)         (17,052)

Comprehensive Income .....................    $ (6,238,892)    $ (9,531,071)    $(3,777,228)    $(19,547,190)
                                              ============     ============     ===========     ============


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

    Net loss per share ...................    $      (0.34)    $     (0.91)     $     (0.41)
                                              ============     ===========      ===========
</TABLE>
                 See Notes to Consolidated Financial Statements

                                      F-3
<PAGE>
                       MEDIUM4.COM, INC. AND SUBSIDIARIES
                        (A Development Stage Enterprise)

               CONSOLIDATED STATEMENT OF STOCKHOLDER'S DEFICIENCY
<TABLE>
<CAPTION>
                                     Preferred Stock         Common Stock          Additional
                                     ----------------    ----------------------      Paid in      Accumulated
                                     Shares    Amount      Shares       Amount       Capital        Deficit
                                     ------    ------    ----------    --------    -----------    ------------
Balance as of November 12, 1998
<S>                                  <C>       <C>        <C>          <C>         <C>             <C>
  (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 .     1,000        10             -           -        995,990               -
  stock
Proceed from sale of common .....         -         -     2,821,360      28,214        446,562               -
  stock
Stock issued for services .......         -         -    14,585,000     145,850      2,224,050               -
Treasury Stock ..................         -         -             -           -              -               -
Unearned Compensation
  expense .......................         -         -             -           -              -               -
Net loss ........................         -         -             -           -              -      (6,238,892)
                                     ------    ------    ----------    --------    -----------    ------------

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

                 See Notes to Consolidated Financial Statements

                                       F-4
<PAGE>
                       MEDIUM4.COM, INC. AND SUBSIDIARIES
                        (A Development Stage Enterprise)

               CONSOLIDATED STATEMENT OF STOCKHOLDER'S DEFICIENCY
                                   Continued
<TABLE>
<CAPTION>
                                                       Accumulated
                                                          Other                       Unearned          Total
                                     Subscription     Comprehensive     Treasury     Compensation    Stockholders
                                      Receivable         Income          Stock         Expense         Equity
                                     ------------     -------------     --------     -----------     -----------
Balance as of November 12, 1998
<S>                                  <C>              <C>               <C>          <C>             <C>
  (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 .               -                 -            -               -         996,000
  stock
Proceed from sale of common .....               -                 -            -               -         474,776
  stock
Stock issued for services .......               -                 -            -               -       2,369,900
Treasury Stock ..................               -                 -      (50,000)              -         (50,000)
Unearned Compensation
  expense .......................               -                 -            -               -               -
Net loss ........................               -                 -            -       1,154,880      (5,084,012)
                                     ------------     -------------     --------     -----------     -----------

Balance as of December 31, 2001 .    $          -     $           -     $(50,000)    $  (245,788)    $  (864,446)
                                     ============     =============     ========     ===========     ===========
</TABLE>
                 See Notes to Consolidated Financial Statements

                                       F-5
<PAGE>
                       MEDIUM4.COM, INC. AND SUBSIDIARIES
                        (A Development Stage Enterprise)

                      CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                                           Cumulative
                                                                                                           November 12,
                                                                                                              1998
                                                                                                           (inception)
                                                           Year ended      Year ended      Year ended          to
                                                           December 31,    December 31,    December 31,    December 31,
                                                              2001            2000            1999             2001
                                                           -----------     -----------     ------------    ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                        <C>             <C>             <C>             <C>
  Net loss ............................................    $(6,238,892)    $(9,531,071)    $(3,760,176)    $(19,530,138)
  Adjustments to reconcile net loss to net cash used in
  operating activites:
    Depreciation ......................................        267,605         372,961         125,001          765,567
    Amortization ......................................        356,469         297,264          20,867          674,600
    Impairment of fixed assets ........................        250,000               -               -          250,000
    Write down of fixed assets ........................              -         334,922               -          334,922
    Write down of sofware development costs ...........        534,498               -               -          534,498
    Unearned compensation expense .....................      1,154,880         720,547               -        1,875,427
    Common stock and options issued for services ......      2,369,900       1,849,625         303,031        4,522,556
    Accounts receivable ...............................              -          12,800         (12,800)               -
    Other current assets ..............................         13,761         364,686        (378,823)            (376)
    Accounts payable ..................................       (170,679)        258,245         256,394          343,960
    Accrued expenses ..................................       (141,655)        120,191         233,307          211,843
    Deferred revenue ..................................       (480,000)        785,000               -          305,000
    Due to related parties ............................              -               -          (6,670)               -
                                                           -----------     -----------     -----------     ------------

NET CASH PROVIDED BY (USED) IN OPERATIONS .............     (2,084,113)     (4,414,830)     (3,219,869)      (7,628,029)
                                                           -----------     -----------     -----------     ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Deferred offering costs ...........................              -               -               -                -
    Investment in affiliate ...........................         59,000               -        (159,000)        (100,000)
    Other assets ......................................        303,090        (147,201)       (176,788)         (20,899)
    Purchases of capital expenditures .................         75,466      (1,097,504)     (1,631,060)      (2,653,098)
    Marketable securities .............................            220       4,159,198      (4,159,418)               -
                                                           -----------     -----------     -----------     ------------

NET CASH PROVIDED BY (USED) IN INVESTING ACTIVITIES ...        437,777       2,914,494      (6,126,266)      (3,218,443)
                                                           -----------     -----------     -----------     ------------

CASH PROVIDED BY FINANCING ACTIVITIES:
    Sale of common stock ..............................        474,776       1,380,382       9,383,552       11,238,710
    Sale of preferred stock ...........................        996,000               -               -          996,000
    Purchase of treasury stock ........................        (50,000)              -               -          (50,000)
    Change in subscription receivable .................              -               -          83,000           83,000
    Loan payable - related party ......................        193,479       50,000.00               -          243,479
    Accumulated other comprehensive income ............              -          17,052         (17,052)               -
                                                           -----------     -----------     -----------     ------------

NET CASH PROVIDED BY FINANCING ACTIVITIES .............      1,614,255       1,447,434       9,449,500       10,896,934
                                                           -----------     -----------     -----------     ------------

NET (DECREASE) INCREASE IN CASH .......................        (32,081)        (52,903)        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
</TABLE>
                 See Notes to Consolidated Financial Statements

                                       F-6
<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.

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. There were no operations to report for 1998.

CASH

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

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.

                                      F-7
<PAGE>

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.

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.

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.

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 $15 million,
which expire at various times through the year 2021. The Company has recorded
approximately $5.1 million valuation allowance on the deferred tax asset.

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.

                                      F-8
<PAGE>

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 affiliate during the year
ended December 31, 2001.

INVESTMENT IN AFFILIATE

Investments in affiliate represent a 10% ownership in foreignTV, Inc., which
management has recorded utilizing the cost method. See Note 9. 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.

                                      F-9
<PAGE>

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.


Note 3.     MARKETABLE SECURITIES

Marketable securities consist of mutual fund shares, which invest in US
Government securities and are classified as available for sale securities. As of
December 31, 2001, there were no marketable securities outstanding.


Note 4.     LEASEHOLD IMPROVEMENTS AND EQUIPMENT

At December 31, 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 set up due to its
impairment.


Note 5.     OTHER ASSETS

As of December 31, 2001 and 2000, other assets include security deposits of
$27,569 and $133,324, respectively. At December 31, 2000, included in other
assets were intangible assets comprised of domain names of $121,140. 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 $178,759. 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 is recorded as an other 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 150,000 shares of common stock and 195,000
      Series A redeemable 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.

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.

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. Currently, the Company does not have
      sufficient authorized and unissued common shares to be able to allow for
      the Series A Convertible Preferred stock to be converted to common stock.
      A shareholder vote will be required to increase the authorized shares in
      order to allow for such a conversion.


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-12
<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
                                            =========           =====

Currently, the Company does not have sufficient authorized and unissued common
shares to be able to allow for the Series A Convertible Preferred stock to be
converted to common stock. A shareholder vote will be required to increase the
authorized shares in order to allow for such a conversion.

                                      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. 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 straght 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.

                                      F-16