SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                AMENDMENT NO. 1

                                       TO

                                   FORM 10-KSB

                                   (Mark One)
           [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                      For the year ended December 31,1999.

                                       OR

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


                        Commission File Number 000-28173

                        THE ENTERTAINMENT INTERNET, INC.
                             -----------------------
             (Exact name of registrant as specified in its charter)

        Nevada                                            95-4730315
    ----------------------                          -------------------
    (State of organization)                         (I.R.S. Employer
                                                    Identification No.)

              5757 Wilshire Blvd., Suite 124, Los Angeles, CA 90036
          -----------------------------------------------------------
                    (Address of principal executive offices)

       Registrant's telephone number, including area code (323) 904-4940


       Securities registered pursuant to Section 12(b) of the Act,
                                      None

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

                               TITLE OF EACH CLASS
                    Common Stock, $0.001 par value per share



<PAGE>

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,  and (2) has been subject to such filing  requirements
for the past 90 days. Yes [ ] No [ X ]

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. [X]

Issuer's revenues for its most recent fiscal year.               $779,528

The  aggregate  market value of the Common Stock held by  non-affiliates  of the
registrant,  based on the average of the high and low prices of the Common Stock
on the OTC Bulletin  Board on March 1, 2000,  was  $12,551,085.  For purposes of
this  computation,  all officers,  directors,  and 5%  beneficial  owners of the
registrant  (as  indicated  in  Item  12)  are  deemed  to be  affiliates.  Such
determination  should not be deemed an admission that such directors,  officers,
or 5% beneficial owners are, in fact, affiliates of the registrant.

Number of shares of Common  Stock,  $0.001  Par Value,  outstanding  at March 1,
2000, was 48,212,567.

                     Documents incorporated by reference:     None



                                       2

<PAGE>


                   TABLE OF CONTENTS - 1999 FORM 10-KSB REPORT

                                                                       Page
                                                                      Numbers
                                                                     -----------
                                     PART I

Item   1.      Business                                                    4

Item   2.      Properties                                                  8

Item   3.      Legal Proceedings                                           8

Item   4.      Submission of Matters to a Vote of Security Holders        11

                                     PART II

Item   5.      Market for Registrant's Common Equity and Related
               Stockholder Matters                                        11

Item   6       Management's Discussion and Analysis of Financial
               Condition and Results of Operations                        14

Item   7.      Financial Statements                                       29

Item   8.      Changes in and Disagreements with Accountants on
               Accounting and Financial Disclosure                        29

                                    PART III

Item  9.       Directors, Executive Officers, Promoters and
               Control Persons; Compliance with Section 16(a)
               of the Exchange Act                                        29

Item  10.      Executive Compensation

Item  11.      Security Ownership of Certain Beneficial Owners
               and Management                                             40

Item  12.      Certain Relationships and Related Transactions             42

Item  13.      Exhibits and Reports on Form 8-K                           43

Signatures                                                                44


                                       3


<PAGE>
                                     PART I


Item   1.      Business

BACKGROUND

The Entertainment  Internet, Inc. (The "Company") is a Nevada corporation formed
on January  20,  1992 as West Tech  Services,  Inc.  The name was changed by the
Board of Directors on August 3, 1998. The Company's  principal place of business
is located at 5757 Wilshire Blvd.,  Los Angeles,  California  90036. The Company
was organized to engage in any lawful corporate business purpose.

The Company  formed a  wholly-owned  subsidiary  in  California  as a California
corporation,  The  Entertainment  Internet,  Inc.  (TEI-CAL) to be the operating
Company.  On March 23, 1999,  TEI-CAL was merged with Only  Multimedia  Network,
Inc.,  a  California   corporation   (OMNI),   with  OMNI  being  the  surviving
corporation.

The Company was in the  developmental  stage until shortly after its merger with
OMNI;  in  approximately  April 1999,  new  management  began  implementing  the
business plan of the Company and the Company moved out of the development stage.

The Company  currently  operates as the parent company for OMNI,  which has done
business  under the  Castnet.com(TM)  fictitious  name since  February  9, 1999.
Recently,  the  Company  became  aware  that a third  party  was  using the name
"Castnet Communications, Inc." It is the Company's contention that the described
use may infringe upon its trademark Castnet.com(TM). The Company has taken steps
to secure an agreement from Castnet Communications, Inc. to refrain from the use
of the name "Castnet", or to clearly identify that it is not associated with the
Castnet.com  services  provided  by the  Company;  the  Company  does not expect
litigation  regarding this matter, as the potentially  infringing party does not
appear to compete  with the  business of the Company and does not appear to be a
significant concern.

When  incorporated,  the Company had  authority to issue 25,000 shares of no-par
value stock. On April 3, 1998, the Articles of Incorporation of the Company were
amended to  establish  60  million  shares of stock,  50  million  common and 10
million preferred. (See Amendment to Articles of Incorporation).

The Board of Directors has elected to begin implementing the Company's principal
business  purpose,  described below under "Item 2, Plan of Operation".  As such,
the Company has become fully operational,  expanding its basic Internet business
and seeking  combinations with other businesses which will enhance the Company's
competitive  ability and expand its  operations  into broader  areas in both the
Internet and entertainment casting industries.

The Company is filing this registration statement on a voluntary basis, pursuant
to section 12(g) of the Securities Exchange Act of 1934 (the "Exchange Act"), in
order  to  ensure  that  public   information  is  readily   accessible  to  all
shareholders  and potential  investors,  and to increase the Company's access to
financial  markets.  In the  event the  Company's  obligation  to file  periodic
reports is suspended pursuant to the Exchange Act, the Company  anticipates that
it will continue to voluntarily file such reports.


                                       4
<PAGE>

                                  RISK FACTORS

The  Company's  business  is subject to numerous  risk  factors,  including  the
following

SHORT OPERATING HISTORY.  The Company has only a short operating history and has
actively pursued and gained a market share of the  Internet/casting  market. The
Company will, in all likelihood, sustain higher operating expenses compared with
corresponding  revenues, at least until current plans are implemented fully (see
Plan of  Operation).  There is no assurance  that the Company will  successfully
expand into the business opportunity described herein.

SPECULATIVE  NATURE  OF  COMPANY'S  PROPOSED  OPERATIONS.  The  success  of  the
Company's  proposed  plan of  operation  will  depend  to a great  extent on the
operations,  financial  condition,  and  management  of both the Company and any
subsidiaries.  While management also intends to seek business  combinations with
entities  having  established  operating  histories,  it cannot  assure that the
Company will successfully locate candidates meeting such criteria.  In the event
the Company  completes  a business  combination,  the  success of the  Company's
operations  may be dependent  upon  management of the successor  firm or venture
partner firm together with numerous other factors beyond the Company's control.

POSSIBLE   SCARCITY  OF  AND   COMPETITION   FOR  BUSINESS   OPPORTUNITIES   AND
COMBINATIONS.  The Company is, and will  continue  to be, a  participant  in the
business of providing  Internet casting  resources and peripheral  services.  In
addition,  it  will be  seeking,  by way of  expansion  of its  business,  joint
ventures with, and  acquisitions  of small private  entities.  A large number of
established and  well-financed  entities,  including  venture capital firms, are
active in mergers and  acquisitions  of  companies  which may also be  desirable
target acquisition  candidates for the Company.  Many such entities have greater
financial resources and technical management  capabilities than the Company. The
Company could be,  consequently,  at a competitive  disadvantage  in identifying
possible business opportunities and successfully expanding its operations.

CONFLICTS  OF  INTEREST  -  GENERAL.   The  Company's   officers  and  directors
participate  in other  business  ventures  which may compete  directly  with the
Company. Additional conflicts of interest and non "arms-length" transactions may
also arise in the event the Company's  officers or directors are involved in the
management of any firm with which the Company transacts business.  See also Item
5,  below,  entitled  "Directors,  Executive  Officers,  Promoters,  and Control
Persons"  for further  details of  management  business  activities  outside the
Company.

REPORTING  REQUIREMENTS MAY DELAY OR PRECLUDE ACQUISITION.  Companies subject to
Section 13 of the  Securities  Exchange  Act of 1934 (the  "Exchange  Act") must
provide certain information about significant acquisitions,  including certified
financial  statements  for the  company  acquired,  covering  one or two  years,
depending on the relative size of the acquisition. The time and additional costs
that may be incurred by some target  entities  to prepare  such  statements  may
significantly  delay or even  preclude the Company from  completing an otherwise
desirable  acquisition.  Acquisition prospects that do not have or are unable to
obtain the required audited statements may not be appropriate for acquisition so
long as the reporting requirements of the 1934 Act are applicable.


                                       5
<PAGE>

LACK OF DIVERSIFICATION.  In all likelihood,  the Company's proposed operations,
even if successful,  will result in a business combination with only one entity.
Consequently, the resulting activities will be limited to the entity's business.
The Company's  inability to diversify its activities  into a number of areas may
subject the Company to economic  fluctuations  within a  particular  business or
industry, thereby increasing the risks associated with the Company's operations.

REGULATION.  Although  the  Company  will be  subject  to  regulation  under the
Securities  Exchange  Act of 1934,  management  believes the Company will not be
subject to regulation under the Investment  Company Act of 1940,  insofar as the
Company  will  not be  engaged  in the  business  of  investing  or  trading  in
securities.  In the event the  Company  engages in business  combinations  which
result  in the  Company  holding  passive  investment  interests  in a number of
entities,  the  Company  could be subject  to  regulation  under the  Investment
Company Act of 1940. In such event, the Company would be required to register as
an investment  company and could be expected to incur  significant  registration
and compliance costs. The Company has obtained no formal  determination from the
Securities  and Exchange  Commission  as to the status of the Company  under the
Investment  company Act of 1940 and,  consequently,  any  violation  of such Act
would subject the Company to material adverse consequences.

Proposals  to regulate the  Internet.  The Company is aware that there have been
proposals  for  either  regulation  or  taxation  of the  Internet  or  business
activities  on the Internet.  There is the risk of  uncertainty  regarding  such
proposed future Internet regulation,  which could adversely affect the Company's
business.  Proposals to tax or otherwise  charge  out-of-state or foreign access
users may have a negative  impact upon the Company's  subscriber base and future
subscriptions,  including the ability of the Company to compete or to maintain a
saleable  service.  Any risks  associated  with  regulation  or  taxation of the
Internet  would,  in the Company's  opinion,  be passed along to the  subscriber
through increased costs to offset such costs to the Company.

POSSIBLE CHANGE IN CONTROL AND MANAGEMENT.  A business combination involving the
issuance of the Company's  common stock could result in shareholders of a public
or private  company  obtaining a controlling  interest in the Company.  Any such
business  combination may require  management of the Company to sell or transfer
all or a  portion  of the  Company's  common  stock  held by them,  or resign as
members  of the Board of  Directors  of the  Company.  The  resulting  change in
control of the Company  could result in removal of one or more present  officers
and directors of the Company and a corresponding  reduction in or elimination of
their participation in the future affairs of the Company.

TAXATION.  Federal and state tax consequences will, in all likelihood,  be major
considerations  in any  business  combination  or  operations  the  Company  may
undertake.  Typically, a combination  transaction may be structured to result in
tax-free treatment to both companies,  pursuant to various federal and state tax
provisions. If one is undertaken,  the Company intends to structure any business
combination so as to minimize the federal and state tax consequences to both the
Company  and  the  target  entity.  Management  cannot  assure  that a  business
combination will meet the statutory requirements for a tax-free  reorganization,
or that the parties will obtain the intended tax-free  treatment upon a transfer
of  stock  or  assets.  A  non-qualifying  reorganization  could  result  in the
imposition of both federal and state taxes,  which may have an adverse effect on
both parties to the transaction.


                                       6
<PAGE>

REQUIREMENT   OF  AUDITED   FINANCIAL   STATEMENTS   MAY   DISQUALIFY   BUSINESS
OPPORTUNITIES.  Management  believes  that any  potential  target  company  must
provide audited financial  statements for review,  and for the protection of all
parties  to  the  business   combination.   One  or  more  attractive   business
opportunities  may forego a business  combination with the Company,  rather than
incur the expenses associated with preparing audited financial statements.

BLUE SKY  CONSIDERATIONS.  Because the securities  registered in any combination
may not have been  registered  for resale  under the blue sky laws of any state,
and the  Company  has no current  plans to register or qualify its shares in any
state,  holders of these  shares and persons who desire to purchase  them in any
trading market that might develop in the future,  should be aware that there may
be significant  state blue sky restrictions upon the ability of new investors to
purchase  the  securities.  These  restrictions  could  reduce  the  size of any
potential market. Accordingly, investors should consider any potential secondary
market for the Company's securities to be a limited one.

DEPENDENCE UPON KEY PERSONNEL.  The business of the Company is greatly dependent
upon its present  management  and will for some time be dependent on the general
business  acumen  and  experience  of all its  officers  and  directors  and the
application  of such  skills to the  business  decisions  required to be made on
behalf of the Company.

LACK  OF  MANAGEMENT  EXPERIENCE.  While  the  present  executive  officers  and
directors have experience in the film industry, and Mr. Schuster has represented
other Internet  companies as their legal  counsel,  none of the officers has any
direct experience with the Internet business.

EMERGING  INDUSTRY.  Although  the  Internet  and  the  casting  industries  are
expanding  rapidly,  the Internet industry is still an emerging industry without
clear and certain  areas of  exploitation.  Many  Companies  are  entering  this
business area, some with greater financial resources than the Company.

COMPETITION.  In  addition,  the  Company  shall  be  competing  in this new and
expanding industry with some more established and better financed companies. Due
to the competitive nature of the Company's business, it may be difficult for the
Company to meets its goals in the  particular  area of the Internet  industry in
which it has chosen to compete.

WORKING CAPITAL  CONSIDERATIONS AND NEED FOR ADDITIONAL CAPITAL. The Company has
a minimum of working  capital.  Management of the Company have attempted to make
their best estimates of the Company's capital needs for the foreseeable  future.
But despite these estimates,  funds available to the Company may not be adequate
for the  Company to  achieve  all of its  business  objectives.  Its  ability to
continue its proposed operations and operate as a going concern is significantly
contingent  upon its being  successful  at both  financing its  operations  from
current sales and raising  additional capital on terms favorable to the Company.
The Company may be unable to do either of the  foregoing.  There is no assurance
that funds will be available to the Company from any source,  and if  available,
that the costs or rate of interest for such funds,  or the terms and  conditions
of obtaining  such funds will be prudent or acceptable  for the Company.  If not
available,  it will be  necessary  for the  Company  to  restrict  its  scope of
business operations accordingly.


                                       7
<PAGE>

EMPLOYEES

The  Company's  employees at the present time are its officers and directors who
will devote as much time as the Board of  Directors  determine  is  necessary to
carry out the affairs of the Company. (See "Management" under Item 5, below.)
Daily operations are undertaken by employees previously hired by OMNI.


Item   2.      Properties

The Company owns no real property at this time.  The Company leases office space
at the address of 5757 Wilshire Boulevard,  Suite 124, Los Angeles, CA 90036 and
5820  Wilshire  Boulevard,  Los Angeles,  CA 90036.  The Company  believes it is
paying the  customary  rate for such space in that rental  market.  Terms of the
leases are: a twelve (12) month lease at $9,992.87 per month  (including  tenant
improvements),  beginning March, 1999, and a twelve (12) month lease for $600.00
per month, expiring 12/31/99.  The Company believes its rented space is adequate
for the immediately foreseeable future. No officer,  director, or control person
related  to the  Company  is a lessor,  directly  or  indirectly,  of the leased
premises.  Copies of the lease  agreements  are  attached  and filed as exhibits
hereto.


Item   3.      Legal Proceedings

The  following is a summary,  as of the date of this report,  of material  legal
proceedings  involving the Company,  which the Company believes were incurred in
the normal course of business:

Breakdown Services, Ltd., v. Only Multimedia Network, Inc./ Castnet.com
-----------------------------------------------------------------------
Federal District Court for the Central District of California
Filed: May 6, 1998, No. CV 98-3500-GHK (BQRx)

The Company is presently engaged in one action involving a third-party claim for
copyright  infringement  and violation of an earlier  settlement  agreement that
included a stipulated injunction. The Company is vigorously defending the action
and earlier prevailed through house counsel's  opposition to claimant's  request
for an Order to Show  Cause.  The court  ruled in EINI's  favor  that  Breakdown
Services  improperly  applied for ex parte relief  without  satisfying the Local
Rule mandates for a prior meeting of counsel.  Breakdown Services thereafter met


                                       8
<PAGE>

with house counsel and outside  counsel  (engaged for the continued  litigation)
and re-filed its motion,  which is currently  pending  review by the court.  The
Company  believes the claimant is not entitled to relief,  and asserts misuse of
copyright  as a defense in the action.  While the  company  doubts the merits of
claimant's action, the outcome of the action is uncertain and may materially and
adversely  affect the  financial  condition and viability of the Company if such
outcome proves unfavorable to the Company.

Since the date of the Company's initial filing,  the Company has been ordered to
show  cause as to why it should  not be found in  contempt  of  court;  the next
hearing on this matter is scheduled for May 8, 2000.

Wendy Pachter v. Only Multimedia Network, Inc.
----------------------------------------------
Los Angeles Superior Court, Central District
Filed July 21, 1999, No. BC 213855


The Company is  presently  engaged in one action  involving  a creditor  for two
promissory notes, one for $175,000,  and one for $100,000.00 which were not paid
when  claimed to be due.  Relief  sought by the  plaintiff  includes  principal,
interest,  and costs and attorney fees, to be determined by the court. Discovery
is continuing on this matter, along with other aspects of the claim. The Company
takes a contrary position to that of claimant,  asserting that payments were not
and are not presently due. In an effort to resolve this claim,  the Company made
a settlement  offer  contingent upon the successful close of the proposed merger
with First Miracle Group;  claimant failed to respond to this offer. The Company
subsequently  and in March,  2000,  offered  to  commence  monthly  payments  of
principal and interest to the claimant without any admission of liability;  that
offer was rejected. At present,  litigation is continuing. The Company has asked
opposing  counsel to  schedule a  settlement  conference  with the Court;  these
conferences  are available on any Friday.  At the time of this filing,  opposing
counsel had not yet responded to the Company's request. While the Company doubts
the merits of claimant's  action, the outcome of the action is uncertain and may
materially  and adversely  affect the  financial  condition and viability of the
Company if such outcome proves unfavorable to the Company.


                                       9
<PAGE>

Bragman, Nyman & Cafarelli v. The Entertainment Internet, Inc.
--------------------------------------------------------------
Los Angeles Municipal Court, West Los Angeles District
Filed June 11, 1999, Case No. 99T01400

The Company is presently engaged in one action involving a creditor for services
allegedly  rendered and unpaid for an amount less than  $20,000.  The Company is
investigating the history behind the alleged obligation,  and presently believes
there was a failure of consideration,  more specifically,  that the claimant did
not  provide  services  or  perform in  accordance  with the  alleged  contract.
Discovery is continuing  on this matter,  along with other aspects of the claim.
The  Company  takes a contrary  position  to that of  claimant,  asserting  that
payments  were  not  and  are not  presently  due.  At  present,  litigation  is
continuing.  The claimant  has been ordered to show cause on May 5, 2000,  as to
why its claims should not be dismissed.  While the Company  doubts the merits of
claimant's action, the outcome of the action is uncertain and may materially and
adversely  affect the  financial  condition and viability of the Company if such
outcome proves unfavorable to the Company.

Capital York, Inc. v. The Entertainment Internet,  Inc., Scott MacCaughern,  and
--------------------------------------------------------------------------------
MacCaughern Trade Development
-----------------------------
Superior Court of New Jersey, Monmouth County
Filed August 15, 1999, No. L406199

The Company is presently engaged in one action involving a creditor for services
allegedly  rendered  and  unpaid in  connection  with  management  and  advisory
services.   The  Company  is  investigating   the  history  behind  the  alleged
obligation,  and presently  believes there was no contract  between the parties.
Discovery is continuing  on this matter,  along with other aspects of the claim.
On October 6, 1999, the Company received written confirmation that plaintiff and
defendant  MacCaughern  were in the process of resolving  their  differences and
that  plaintiff  would take no further  action against EINI during this process;
the  litigation is "on hold" pending a settlement of the entire matter by one of
the named  Defendants.  The written  confirmation  also  contained a stipulation
extending  the time for EINI to answer the  complaint,  and a  stipulation  that
there  would be no  forthcoming  action on the grounds of any failure to file an
answer during the time of  negotiations.  While the Company doubts the merits of
claimant's action, the outcome of the action is uncertain and may materially and
adversely  affect the  financial  condition and viability of the Company if such
outcome proves unfavorable to the Company.

The Company  received  notice of a claim by a stock promoter (Chris Scoggin) for
one million shares of its common stock. The Company is investigating the history
of the alleged transaction. Prior management asserts that the promoter failed to
attend  meetings,  did not perform  services  and is not  entitled to the shares
claimed.  While the Company  doubts the merits and  legality  of the claim,  the
outcome of the action is uncertain and may materially  and adversely  affect the
financial  condition  and  viability  of the  Company  if such  outcomes  proves
unfavorable to the Company.  As of the date of this filing,  no lawsuit has been
filed regarding this claim.


                                       10
<PAGE>

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

No items were submitted to a vote of the security  holders by the Company during
the fourth quarter of 1999.



                                     PART II

Item   5.      Market for Registrant's Common Equity and Related
               Stockholder Matters

From March 22, 1999 (the date of the  Merger),  the  Company's  common stock had
been  quoted on the NASDAQ  over-the  counter  bulletin  board  ("OTC BB") until
November 19, 1999.  On that date it was  temporarily  de-listed  from the OTC BB
quotation  system  pending  becoming a  reporting  company  that has cleared all
Securities and Exchange  Commission  ("SEC") comments.  As of November 19, 1999,
the stock is quoted on the NASDAQ  over-the-counter  Electronic Quotation System
("pink  sheets")  market in the United States under the symbol EINI. The Company
registered its common stock on a Form 10-SB Registration  Statement which became
effective on January 15, 2000. As of the date of this report,  the Company is in
the  process  of  responding  to  comments  from the SEC and  expects  to resume
quotation on the OTC BB market in the near future.


The high and low  interdealer  prices for the calendar  quarters  since  trading
began on March 22, 1999 (without  retail markup,  markdown or commission) are as
follows:

       Quarter Ended                       High             Low
       -------------                       ----             ---
     June 30, 1999                        $  4.06          $  0.937
     September 30, 1999                   $  1.437         $  0.375
     December 31, 1999                    $  0.531         $  0.062
     March 31, 2000                       $  1.85          $  0.08


Effective August 11, 1993, the Securities and Exchange  Commission  adopted Rule
15g-9,  which  established  the  definition  of a "penny  stock",  for  purposes
relevant to the Company,  as any equity security that has a market price of less
than  $5.00 per share or with an  exercise  price of less than  $5.00 per share,
subject to certain  exceptions.  For any  transaction  involving a penny  stock,
unless exempt, the rules require: (i) that a broker or dealer approve a person's
account for transactions in penny stocks;  and (ii) the broker or dealer receive
from the  investor a written  agreement  to the  transaction  setting  forth the
identity and quantity of the penny stock to be purchased.  In order to approve a
person's account for transactions in penny stocks, the broker or dealer must (i)
obtain  financial  information  and investment  experience and objectives of the


                                       11
<PAGE>

person; and (ii) make a reasonable  determination that the transactions in penny
stocks are suitable for that person and that person has sufficient knowledge and
experience  in  financial  matters  to be  capable  of  evaluating  the risks of
transactions in penny stocks.  The broker or dealer must also deliver,  prior to
any  transaction  in a  penny  stock,  a  disclosure  schedule  prepared  by the
Commission relating to the penny stock market, which in highlight form, (i) sets
forth  the  basis  on  which  the   broker  or  dealer   made  the   suitability
determination;  and (ii) that the broker or dealer  received  a signed,  written
agreement from the investor prior to the transaction.  Disclosure also has to be
made about the risks of investing in penny stocks in both public  offerings  and
in secondary  trading,  and about commissions  payable to both the broker/dealer
and the registered representative, current quotations for the securities and the
rights and  remedies  available  to an investor in cases of fraud in penny stock
transactions.  Finally,  monthly  statements have to be sent  disclosing  recent
price information for the penny stock held in the account and information on the
limited market in penny stocks.

The National  Association  of  Securities  Dealers,  Inc.  (the  "NASD"),  which
administers  NASDAQ,  has  recently  made  changes in the  criteria  for initial
listing on the NASDAQ Small Cap market and for  continued  listing.  For initial
listing,  a  company  must  have  net  tangible  assets  of $4  million,  market
capitalization  of $50 million or net income of  $750,000  in the most  recently
completed  fiscal  year or in two of the last three  fiscal  years.  For initial
listing, the common stock must also have a minimum bid price of $4 per share. In
order to continue to be included on NASDAQ,  company must maintain $1,000,000 in
net  tangible  assets  and a  $1,000,000  market  value  of its  publicly-traded
securities.  In addition,  continued  inclusion requires two market-makers and a
minimum bid price of $1.00 per share.

Therefore,  for the  foreseeable  future,  any of the Company's  stock quoted or
traded must be considered "penny stock" under current rules, as discussed above.

HOLDERS OF EQUITY AND OTHER RIGHTS

         As of March 1, 2000,  based on the  Company's  records and reports from
the Company's  stock transfer agent,  Alpha Tech Stock Transfer,  there were 162
shareholders holding a total of 48,212,567 shares of the Company's common stock.
There  were 40  shareholders  holding a total of 5,400  shares of the  Company's
preferred  stock.  There were 67 persons or  entities in the  aggregate  holding
warrants or options to purchase  shares of the  Company's  common  stock;  and 4
persons  or  entities  holding  promissory  notes  convertible  to shares of the
Company's common stock.

DIVIDENDS AND DIVIDEND POLICIES

The Registrant has not paid or allocated any dividends to date, and has no plans
to do so in the immediate  future.  Future  dividends  will be dependent on such
factors as economic  conditions  and the  profitability  of the  Company.  It is
anticipated  that for the  foreseeable  future,  until the  Company  reaches its
economic goals,  most, if not all of any earnings of the Company will need to be
retained as working capital.


                                       12
<PAGE>

RECENT SALES OF UNREGISTERED SECURITIES

Between  approximately  September of 1998 and December of 1999, the Company made
the  following  issuance,  sales,  or exchanges of  securities  in reliance upon
certain  exemptions  from  registration  under the  Securities  Act of 1933 (the
"Act"):

Regulation  D, Rule 504:  The  Company  obtained  a portion of its  capital  and
operating funds during the period extending third quarter 1998 through the close
of the second  quarter  1999 by means of a limited  offer and sale of its common
stock  without  registration  under SEC  Regulation D, Rule 504 of the 1933 Act.
Less than a total of $1,000,000 was subscribed  through the offering for which a
total of 3,597,645  common shares were issued to  subscribers  at prices ranging
from $0.175 to $0.55 per share.


Regulation D, Rule 506: Pursuant to an agreement and plan of exchange and merger
with OMNI, the Company issued securities during the period  approximately  April
1, 1999 through  October 31, 1999 by means of a Regulation  D, Rule 506 exchange
to a total of 119 shareholders:

     Common stock: a total of $1,549,149 representing shares of common stock was
     issued.

     Preferred  stock:  a total of $2,700,000  representing  shares of preferred
     stock was issued.

     Convertible securities:
          Options: a total of $3,682,100 in options to convert to common stock

          Warrants: a total of $8,459,915 in warrants to purchase common stock.

          Promissory  notes: a total of $149,220 in promissory notes convertible
          to common stock

Section 4(2) of the 1933 Act: The Company  obtained a portion of its capital and
operating funds by means of the following  transactions pursuant to section 4(2)
of the  Securities Act of 1933,  upon which the Company has relied:  In February
1999 the Company entered into a financing arrangement for the following entities
to  provide  capital  to  the  Company:  Windsor  Capital  Fund  VI,  a  Bermuda
corporation,  and Packard Capital Limited, a British Virgin Islands corporation.
The Company issued  long-term  convertible  promissory notes to these lenders in
the amount of US$500,000 each, for a total  consideration  of US$1,000,000.  The
instruments  accrue  interest at the rate of 6% per annum until paid,  or at the
option of the  payee of the  note,  it may be  converted  to  common  stock at a
discounted  rate of 40% of the  "bid"  price.  The  Company  has the right for a
period of one year from the time any such  stock is  issued,  to redeem any such
stock so issued  through  payment of an amount equal to the principal  amount of
the note plus any accrued interest up to the time of conversion.


                                       13
<PAGE>

On August 16, 1999,  Mr. Mark  Dilullo was issued  25,000  restricted  shares in
consideration of consulting services and on December 30, 1999, was issued 75,000
restricted shares in consideration of further consulting services.

On December 30, 1999 Mr. Paul Marciano was issued 1,000,000 restricted shares of
common stock for $50,000  cash;  this  issuance  represented  the exercise of an
option to  purchase  such shares that was  included  in a  consulting  agreement
accepted  by  Mr.  Marciano;   the  consulting   agreement  provides  no  direct
compensation  to Mr.  Marciano,  other than the grant of the options  previously
discussed.


Item   6       Management's Discussion and Analysis of Financial
               Condition and Results of Operations


NOTE REGARDING PROJECTIONS AND FORWARD LOOKING STATEMENTS

This  statement  includes  projections  of future  results and  "forward-looking
statements".  All statements that are included in this  Registration  Statement,
other than  statements  of  historical  fact,  are  forward-looking  statements.
Although   Management   believes  that  the  expectations   reflected  in  these
forward-looking  statements are  reasonable,  it can give no assurance that such
expectations will prove to have been correct. Important factors that could cause
actual results to differ  materially from the expectations are disclosed in this
Statement,   including,   without   limitation,   in   conjunction   with  those
forward-looking statements contained in this Statement.

Although  these  statements  reflect  management's  current  view of the Company
concerning future events,  they are subject to certain risks,  uncertainties and
assumptions,  including,  among many  others:  a general  economic  downturn,  a
downturn in the securities  markets, a general lack of public interest in either
the  Company's  products  or  securities,  federal or state laws or  regulations
having  adverse  effects  on small  business  enterprises,  and other  risks and
uncertainties.

Should any of these risks or  uncertainties  materialize,  or should  underlying
assumptions  prove  incorrect,  actual  results may vary  materially  from those
described in this report as anticipated, estimated or expected.

PLAN OF OPERATION - GENERAL

The Entertainment  Internet,  Incorporated ("EINI" or "The Company") is a Nevada
corporation  which acts as the holding  company and parent  corporation for Only
Multimedia Network, Inc. ("OMNI"), a California corporation.

Through Only Multimedia Network, Incorporated,  EINI intends to establish itself
as the  leading  service  provider  of  resources  for the global  entertainment
industry. The Entertainment  Internet,  Inc. operates a series of Internet-based
services using the Castnet.com(TM) service mark and trade name.


                                       14
<PAGE>

For  ease of  further  reference,  The  Entertainment  Internet,  Inc.  and Only
Multimedia Network,  Incorporated are interchangeably referred to herein as "the
Company" and/or "the Corporation."

HISTORICAL OVERVIEW

The Company,  then operating as OMNI,  initially  focused its efforts on hosting
web-sites as an Internet service  provider (ISP) and providing  related services
to third  parties in 1994 . The  Castnet.com  idea took shape  sometime in early
1996, and by October,  1998, management determined it favorable to eliminate all
ISP activity and concentrate efforts on further development and marketing of its
Castnet.com(TM)  web-site,  which  integrates  motion  picture,  television  and
theatrical  talent casting and agent submission  services for the  entertainment
industry.

The reason for  eliminating  all ISP activity was an increased cost in advancing
internet technology;  specifically, there would be a substantial cost to upgrade
the Company's  hardware and software in order to be competitive,  and this was a
cost the Company was  unwilling to incur.  When  management  eliminated  all ISP
activity,  it also abandoned the Company's then-most significant revenue stream,
leaving  it unable to  function  without  repeated  infusions  of  capital.  The
Company,  at present,  has  significant  debt from debt  instruments,  expenses,
leases, and salaries paid, all of which were incurred under prior management.

In May, 1998,  significant  capital was obtained through the efforts of Mr. Paul
Kessler and Bristol Asset  Management,  LLC,  which funded  critical  operations
through use of a convertible debt instrument; the Board of Directors and certain
key officers were permitted to fund the  Corporation on the same (or pari passu)
basis as Bristol Asset  Management.  Mr. Kessler  sought  alliances with several
entertainment industry representatives and successfully elected Marion Dougherty
and Roland Joffe to the Company's  Board of Directors.  Mr. Kessler  allowed the
Company's  management to continue  operations for some time after  conversion of
the  Bristol  debt,  but  learned,  after the first  quarter  of 1999,  that key
employees did not meet objectives and were not operating the Company in a manner
which  would allow it to  prosper.  Shortly  thereafter,  Mr.  Kessler  sought a
management team capable of analyzing the Corporation's  difficulties,  resolving
the  morass  of  claims  threatened  or  levied  against  it  and  restructuring
operations.

During June,  1999,  Mr.  Kessler  engaged Mr.  Mohamed  Hadid as the  Company's
Interim Chairman of the Board of Directors. During the second and third quarters
of 1999,  Mr.  Hadid and Mr.  Kessler  worked  together  on a plan to manage the
Company's  immediate  financial  and business  needs,  including the infusion of
additional  capital.  Mr.  Hadid sought  strategic  alliances  with Mr.  Anthony
Cataldo and Mr.  Jean Claude Van Damme and was  successful  in  obtaining  their
commitments to assist the Corporation with further  development and expansion of
its Castnet.com(TM)  services. Mr. Hadid has since resigned from the Company. On
July 1, 1999,  the Company  entered into an  employment  agreement  with Anthony
Cataldo providing for Mr. Cataldo to be hired as president of the Company.


                                       15
<PAGE>

The  Company and Mr.  Cataldo  agreed on December  7, 1999,  to  terminate  that
agreement. Mr. Cataldo left the Company, and the Board of Directors accepted Mr.
Cataldo's resignation.

On July 12,  1999,  the  Company  and Mr. Van Damme  entered  into a  consulting
agreement  for Mr. Van  Damme's  services  as a  consultant.  The  contract  was
executed  by an entity  owned and  controlled  by Mr. Van  Damme,  known as JCVD
Productions, Inc., a California corporation. JCVD also agreed to provide Mr. Van
Damme's services as a director.  Mr. Jean Claude Van Damme has recently resigned
as a director and discontinued his association with the Company.

The Company  obtained a renewal of the  commitment of Thom Mount to serve on the
Company's  Board of Directors  and as the  Company's  liaison with the Producers
Guild of America. The Company also internalized the Corporation's legal affairs,
which were formerly administered by a number of outside counsel at great expense
to the company.

Third  quarter  efforts  focused on  restoration  of financial  integrity of the
corporation,  apparently  lost during the first  quarter of 1999;  these efforts
included forensic investigation of past financial transactions,  installation of
a bookkeeper and CPA to take the place of the earlier terminated Chief Financial
Officer and to recreate the Company's 1999 general ledger and accounts  payable,
communications  and  accommodations  with creditors,  investigation  of creditor
claims,  satisfaction  of  certain  shareholder  claims  (see also Item 3, Legal
Proceedings),  and  re-negotiation  of debt  instruments  that  were due but not
payable  by  the  Company  due  to  its  financial  condition.  Management  also
scrutinized  and took action in the areas of the  corporation's  legal  affairs,
implementation  of  financial  and human  resource  controls,  restructuring  of
Castnet.com(TM)  services,  expansion of service areas, design,  implementation,
and rollout of new services,  formation of strategic  alliances,  review of year
2000 compliance issues,  design,  evaluation,  and programming of new relational
databases,  and general programs calculated to increase sales revenue and market
share.  During the period  extending from July through  October,  1999,  several
employees were dismissed.

As  the  company  entered  the  fourth  quarter  of  1999,  efforts  focused  on
introduction  of three new services:  CastnetBabies.com,  CastnetRealPeople.com,
and  CastnetExtras.com,  which the Company believes will significantly  increase
its  market  share and allow for  growth of its  current  subscriber  base.  The
company  redesigned  and  reprogrammed  its  Castnet.com(TM)  "front  page"  and
continued  to  develop  a series  of  relational  databases  with  technological
advances  intended  to  increase  efficiency  and  ease  of use of the  services
provided through  Castnet.com.  (TM) The company  continues to develop strategic
alliances in domestic and foreign  markets  upon which it can  capitalize  as it
moves into the new millennium.


                                       16
<PAGE>

OPERATING PLAN FOR NEXT 12 MONTHS:

During the next twelve months the Company's  first area of business  efforts and
emphasis will focus on the upgrading of its technology to tie together  existing
Internet  capabilities,  the websites  used by the Company and to integrate  new
technologies.  The  Company  will  also  focus on the  integration  of its three
newly-developed   services:   CastnetBabies.com,    CastnetRealPeople.com,   and
CastnetExtras.com,  along with its core services  already being  provided to the
entertainment community.

CastnetBabies.com will emphasize casting opportunities to parents who want their
children to appear in commercials as child actors.

CastnetRealPeople.com  will provide services and market to people who desire the
opportunity to serve in bit parts or as extras,  such as in crowd scenes in film
or television.  This area will not necessarily require any prior acting training
or experience for a person to qualify.

CastnetExtras.com  will extend the internet wih real-time  communication concept
for the  entertainment  industry to actors with  credits or aspiring  actors who
want to make their services available as extras. This area will require at least
some acting training or experience.

In the  second  area of  emphasis,  the  Company  will also  strive  to  develop
strategic  relationships  with  trade and other  organizations  important  to or
having  influence  in  the  entertainment  industry,  with  those  relationships
designed to drive  subscribership  and hopefully  improve the Company's  revenue
stream.

The third  area of  emphasis  and  concern  will be the need for the  Company to
restructure outstanding debt and eliminate as many litigation claims as possible
which presently cause a serious threat to its existence.

The fourth area of emphasis will be on development of an integrated and scalable
marketing  campaign.  Initial  steps  have  been  taken  to  source  and  form a
relationship with an agency capable of meeting the Company's needs while working
with its limited capital resources.  The agency or firm undertaking  development
of the marketing  campaign is expected to address all of the Company's image and
branding concerns and liaison with its website  developers to define and achieve
common objectives.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

The  following  discussion  should  be read in  conjunction  with our  financial
statements and the accompanying  notes that appear elsewhere in this filing. The
following discussion contains forward-looking statements that reflect our plans,
estimates and beliefs.  Our actual  results could differ  materially  from those
discussed  in the  forward-looking  statements.  Factors  that  could  cause  or
contribute to such differences  include, but are not limited to, those discussed
below and elsewhere in this filing, particularly in "Risk Factors".



                                       17
<PAGE>


RESULTS OF OPERATIONS-YEAR ENDED DECEMBER 31, 1999 vs. 1998

THE ENTERTAINMENT INTERNET, INC.

Revenues

Revenues  consist of subscriber  fees for  Castnet.com  services and the minimal
income derived from advertising revenue (e.g., banner  advertisements  appearing
on the Castnet.com websites for cash revenue, where the advertising plan has not
been fully framed or  implemented).  Subscribers pay a fee in advance for access
to the  Castnet.com  websites for an extended period of time,  generally  twelve
months.  The fees are  pro-rated and recorded as revenue over the period of time
of the  subscription.  Revenue for Internet access and web page  development has
been reallocated to Loss from Discontinued Operations.

For the year  ended  December  31,  1999,  revenues  of  $779,528  increased  by
$197,973, or 34%, as compared to revenues of $51,555 for the year ended December
31, 1998.  This was primarily the result of renewal of prior year  subscriptions
and new  management  policies  begun in the second quarter of 1999. The price of
membership was gradually  reduced in 1999. This stimulated  subscriptions  in an
amount  which  more than  compensated  for the  price  reduction  and  therefore
increased revenue. Also,  establishment of new markets in Chicago, Las Vegas and
San Francisco  additionally  increased revenue.  With new management in 1999 and
implementation  of  management's  plans in 2000, the Company expects to increase
revenue in the future.

Gross profit

Gross profit is calculated as revenues  less the cost of sales,  which  consists
primarily  of the cost of  maintaining  the  Castnet.com  Internet  services and
technological  infrastructure.  These costs are telephone  access,  software and
hardware maintenance and depreciation of equipment.  For the year ended December
31, 1999, gross profit of $87,155 decreased by $119,246,  or 58%, as compared to
gross profit of $206,401 for the year ended December 31, 1998.

Gross margin  decreased  by  approximately  24% for the year ended  December 31,
1999,  as compared to the year ended  December  31,  1998.  The  decrease can be
attributed  to  replacement  of the  Company's  telephone  system,  the  charges
associated with expanded  telephone  access provided to subscribers in different
areas,  increase  usage of the Company's  toll-free  (WATS)  lines,  significant
upgrades to software and equipment (including Year 2000 upgrades),  servicing of
equipment,  and the replacement of computer equipment used support sales and the
Castnet.com  websites.  Management  expects the gross margin to remain stable or
increase in the future.  Any forecast increase in gross margin is expected to be
derived  from  consolidation  efforts  and  application  of the  efforts  of new
management.


                                       18
<PAGE>


Selling, General and Administrative

Selling,  General and  Administrative  ("SG&A")  expenses consist of payroll and
related   expenses  for  executive,   finance  and   administrative   personnel,
professional  fees,  commissions and other general corporate  expenses.  For the
year ended December 31, 1999,  SG&A of $3,089,479  increased by  $1,285,552,  or
71%, as compared to SG&A expenses of $1,803,927  for the year ended December 31,
1998.  Much of the increase in SG&A  expenses for 1999 can be  attributed to the
costs and fees associated with a merger transaction, the legal expenses incurred
for and resulting from that  transaction,  executive  compensation  and Board of
Director fees. SG&A expenses  attributable solely to TEI were $1,579,144,  while
SG&A expenses for OMNI were $1,454,153  (this represents a favorable change from
OMNI's 1998 SG&A expenses of  $2,072,702,  or a decrease of  approximately  29%,
primarily  attributable to efficiency and  consolidation  efforts  undertaken by
management  during the third and fourth quarters of 1999). The Company views the
merger-related  expenses  as "one  time  expenses,"  and  does not  expect  such
expenditures in the future; as a result, the Company expects SG&A expenses to be
reduced during Year 2000.


RESULTS OF OPERATIONS-YEARS ENDED DECEMBER 31, 1998 vs 1997

ONLY MULTIMEDIA NETWORK, INC.

Revenues

Revenues consist of subscriber fees for Castnet.com services.  Subscribers pay a
fee in advance for an extended period of time, generally twelve months. The fees
are  prorated  and  recorded as revenue  over that period of time.  For the nine
months ended December 31, 1998,  revenues of $581,555 increased by $489,623,  or
533%, as compared to revenues of $91,932 for the year ended December 31, 1997. A
new marketing  strategy,  including seminars for Casting Directors and Actors in
addition to expansion of the data base,  brought in more paid  subscriptions for
membership.  This had the desired effect,  causing more Casting Directors to use
the service and more actors to purchase memberships.

Gross profit

Gross profit is calculated as revenues less the cost of sales, which consists of
the cost of providing  telephone access,  maintaining the software and hardware,
depreciation  of  equipment,  promotion  and  commissions.  For the  year  ended
December 31, 1998, gross profit of $206,401  increased by $223,273,  or 222%, as
compared  to gross loss of $16,872 for the year ended  December  31,  1997.  The
period from October of 1996 through the summer of 1997 was the development stage
of Castnet.com,  where free usage was provided to Casting Directors to stimulate
interest on the part of actors,  therefore  incurring a negative  gross  profit.
Gross margin  increased by 53% as the development  phase came to an end and paid
sales increased.


                                       19
<PAGE>


Selling, General and Administrative

Selling,  General and  administrative  ("SG&A")  expenses consist of payroll and
related   expenses  for  executive,   finance  and   administrative   personnel,
professional  fees and other  general  corporate  expenses.  For the year  ended
December 31, 1998, SG&A expenses of $1,807,668 increased by $155,522,  or 9%, as
compared to SG&A  expenses of $1,652,146  for the year ended  December 31, 1997.
Retirement  of  obsolete  fixed  assets of  approximately  fifty-three  thousand
dollars  ($53,000)  contributed  to  the  increase  in  expenses.  In  addition,
marketing  expense  increased  by  approximately   sixty-five  thousand  dollars
($65,000).


LIQUIDITY AND CAPITAL RESOURCES

The Company  presently  does not have  enough  operating  capital and  projected
income to sustain its operations. In this regard, the fourth area of concern for
the next twelve months  operations,  is to secure commitments for capital in the
minimum  amount of $4 Million,  which  should be  sufficient  for the  remaining
portion of twelve months of operations.


EINI financed its  operations  primarily  through the sale of its securities and
issuance  of debt  instruments.  In  this  regard,  the  Company  finalized  two
significant  financing  agreements (ongoing debt transactions) in July, 1999, as
follows:

The Company  entered into  promissory  note and finance  agreements with Windsor
Capital Fund VI and Packard Capital,  Ltd. which provide for receipt of funds by
The Entertainment  Internet,  Inc. in exchange for interest bearing  obligations
(at 6%) interest,  convertible to stock at a rate  equivalent to a forty percent
(40%) discount from the lowest trading rate of the company's openly traded stock
(redeemable by the Company at any time during a one-year  period upon payment of
principal and  interest);  the discount  rate is applied to  compensate  for the
restricted nature of the stock, issued pursuant to Rule 144.

The Company also obtained a line of credit for future  expansion and growth (see
press  release);  the  line of  credit  is  restricted  and may not be used  for
liquidation of prior-incurred debt or resolution of creditor claims.

A full discussion of capital raised or securities issued by the Company pursuant
to  offerings  deemed to be exempt  from  registration  is set forth in Item 10,
below.


                                       20
<PAGE>

Sources of Opportunities

The Company does not currently have any material  commitments for the funding of
its capital  expenditures  other than a line of credit  restricted for expansion
and future growth. The Company anticipates,  however,  that it will experience a
substantial  increase in capital  expenditures and lease commitments  consistent
with its anticipated growth in operations and infrastructure,  including various
capital  expenditures  associated  with the expansion of operations into foreign
markets. The Entertainment  Internet,  Inc. anticipates that it will continue to
experience  significant  growth in its  operating  expenses for the  foreseeable
future and that these  expenses  will be a material use of cash  resources.  The
Company  believes  that its  existing  cash will not be  sufficient  to meet its
anticipated  cash needs for working  capital and  capital  expenditures  for the
coming months.

The Company  contemplates  the need to enter into a lease  agreement  for an ATM
Internet system from Pacific Bell with costs approximately the same as presently
incurred for dial-up  services  provided by the same carrier.  The intent of the
ATM  agreement  is to provide  greater  bandwidth  for Internet  services  while
eliminating  costly  dial-up and  measured-rate  services  currently  used.  The
Company  believes this service will not constitute a material  expenditure it is
not already experiencing.

Further,  assuming the Company does experience its anticipated growth, and there
is no  assurance  it will,  the  Company  will need to seek and rent  additional
executive office and  administrative/operations  space. There are no commitments
for such additional rented space.

Foreign  markets.  The Company  anticipates use of the  Castnet.com  services in
foreign countries over an extended period of time. It is currently analyzing the
methods and means by which it can expand into foreign  markets,  the sequence or
priority  of which  foreign  markets to exploit  to its  benefit,  and costs and
capital  needs  associated  with  such  expansion  plans.  The  Company  has not
formalized any plan to begin operations in any foreign country.

Revenue  sources.   The  Company  derives  revenue  in  two  ways:  Through  its
Castnet.com(TM)  web-sites,  the  company  charges  actors  for  access  to  the
electronic  community  created by it. The company also derives  minimal  revenue
from advertisements placed on the Castnet.com(TM)  websites. The Company has not
fully  implemented  its plans to develop a revenue  stream  from  advertisements
included on its websites.  The company is currently  evaluating plans to isolate
several  services  offered,  such as print  communications  routing and computer
technical support, and to transform them into profit centers for the company.

By using the term "profit  center," the Company  means,  that in order to ensure
that any service or product  provided by the Company would be, when isolated,  a
profitable  venture.  By way of example,  if the Company  were to provide  print
communications routing as referenced above, the "profit center" evaluation would
be employed and analyzed by management and any third party experts needed, which
would allow  management  to determine  whether the proposed  service  would,  if
standing alone as a business, serve as a profitable venture.


                                       21
<PAGE>

The  successful   execution  of  the  Company's  initial   interactive   system,
Castnet.com(TM),  brought the Company a strong cash flow system which charges an
all-inclusive   annual  fee  for  access  to  the  system  created  by  it.  The
Castnet.com(TM)  portal is currently being used by casting  directors and talent
agents in Hollywood to submit  actors and  actresses for a wide variety of roles
in movies and television. The Castnet.com(TM) portal is set up so that it may be
tailored  for the  actor/actress,  through  inclusion  of a variety of  elements
including,  but not limited to,  audio  tracks and video  segments.  The Company
feels its real-time  communication  services represent the future of casting and
believes the results of its actions are rapidly  being  recognized  as useful to
the industry.

The Castnet.com(TM)  portal allows aspiring actors,  actors,  agents and casting
directors to communicate  with each other on a confidential  basis on a moment's
notice. An enormously  important part of the Castnet.com(TM)  environment is the
efficient facilitation of unrecognized talent. The Company intends to vigorously
promote these services in the entertainment  industry.  Two industry unions have
praised the Company for its efforts in expanding the visibility of the personnel
portion of the industry.  The Castnet.com(TM) system has further refinements and
offerings  planned,  including,  but not limited to, integrated  Castnet.com(TM)
sites and services for managers,  producers,  production crew,  location scouts,
property owners,  and voice talent.  By expanding  services to all strata of the
industry,  the  Company  feels it will  impact the  industry  in ways which will
greatly  expand  revenues.   The  Company  feels  that  the  design,  depth  and
sophistication  of its products  provides it with the ability to expand into all
areas of the entertainment industry.

In  addition  to this  market  penetration,  the  Company  will seek a potential
business  opportunity  from all  known  sources,  but will rely  principally  on
personal contacts of its officers and directors as well as indirect associations
between them and other  business and  professional  people.  It is not presently
anticipated  that the Company will engage  professional  firms  specializing  in
business acquisitions or reorganizations.

Management,  while not  especially  experienced  in matters  relating to the new
business of the Company,  will rely upon their own efforts and, to a much lesser
extent,  the  efforts  of the  Company's  directors  or major  shareholders,  in
accomplishing  the  business  purposes  of the  Company.  Such  efforts by these
persons may include:  joining  industry  guilds or  associations  to promote the
visibility  of  the  Company;   scouting  and  recruiting   possible  directors,
management or key personnel as the Company expands; locating and introducing key
financing or banking sources or contacts for the Company. Such services would be
voluntary,  unless the Board of  Directors  or  management  approves  and agrees
otherwise on a  case-by-case  basis.  The Company  generally  does not intend to
compensate  directors or major shareholders for such activities on behalf of the
Company.  Since  the time of this  initial  filing,  the  Company  developed  an
association with the Producers Guild of America (see Exhibit __, press release);
this  association  did not and is not expected to result in a material change to
results of operations,  although the Company feels the  association  will aid in
identifying  it as a qualified,  reputable  service  provider  recognized by the
entertainment industry.


                                       22
<PAGE>

The Company may use outside  consultants  or advisors,  other than the Company's
legal counsel and  accountants,  to effectuate its business  purposes  described
herein.  If the Company does retain such outside  consultants  or advisors,  any
cash  fee  earned  by such  parties  will  need  to be  paid by the  prospective
merger/acquisition  candidate,  as the  Company has no cash assets with which to
pay such obligation.  Outside legal counsel was consulted regarding the proposed
merger with First Miracle, as well as the prior acquisition of OMNI.

As is customary in the industry, the Company may pay a finder's fee for locating
an  acquisition  prospect.  If any such fee is paid,  it will be approved by the
Company's  Board of  Directors  and  will be in  accordance  with  the  industry
standards.  Such  fees  are  customarily  between  1% and 5% of the  size of the
transaction,  based upon a sliding scale of the amount  involved.  Such fees are
typically in the range of 5% on a $1,000,000 transaction ratably down to 1% in a
$4,000,000  or more  transaction.  Management  has  adopted a policy that such a
finder's fee could, in certain circumstances,  be paid to any employee, officer,
director or 5% shareholder of the Company,  if such person plays a material role
in bringing a transaction to the Company.

The  Company  will  not  have  sufficient  funds to  undertake  any  significant
development,  marketing, and manufacturing of any product which may be acquired.
Accordingly, if it acquires the rights to a product, rather than entering into a
merger  or  acquisition,  it most  likely  would  need to  seek  debt or  equity
financing  or obtain  funding  from third  parties,  in  exchange  for which the
Company  would  probably  be required  to give up a  substantial  portion of its
interest in any acquired product. There is no assurance that the Company will be
able  either to obtain  additional  financing  or to interest  third  parties in
providing  funding for the further  development,  marketing and manufacturing of
any products acquired.

EVALUATION OF OPPORTUNITIES

The analysis of new business  opportunities  in the  Company's  industry will be
undertaken  by or under the  supervision  of the officers  and  directors of the
Company (see  "Management").  Management  intends to  concentrate on identifying
prospective business opportunities which may be brought to its attention through
present  associations  with  management.   In  analyzing   prospective  business
opportunities, management will consider, among other factors, such matters as:

     1.   the available technical, financial and managerial resources

     2.   working capital and other financial requirements

     3.   history of operation, if any

     4.   prospects for the future

     5.   present and expected competition

     6.   the  quality  and  experience  of  management  services  which  may be
          available and the depth of that management

                                       23
<PAGE>

     7.   the potential for further research, development or exploration

     8.   specific  risk  factors  not now  foreseeable  but  which  then may be
          anticipated to impact the proposed activities of the Company

     9.   the potential for growth of expansion

     10.  the potential for profit

     11.  the perceived public  recognition or acceptance of products,  services
          or trades

     12.  name recognition

Company management will meet personally with management and key personnel of the
firm sponsoring the business opportunity as part of their investigation.  To the
extent  possible,  the Company  intends to utilize  written reports and personal
investigation  to evaluate  the above  factors.  The Company will not acquire or
merge  with any  company  for  which  audited  financial  statements  cannot  be
obtained.

Opportunities in which the Company participates will present certain risks, many
of  which  cannot  be  identified  adequately  prior  to  selecting  a  specific
opportunity. The Company's shareholders must, therefore, depend on management to
identify and evaluate such risks.  Promoters of some opportunities may have been
unable to develop a going  concern or may present a business in its  development
stage (in that it has not  generated  significant  revenues  from its  principal
business  activities  prior to the  Company's  participation).  Even  after  the
Company's  participation,  there is a risk that the combined  enterprise may not
become  a  going  concern  or  advance  beyond  the  development   stage.  Other
opportunities  may  involve  new and  untested  products,  processes,  or market
strategies which may not succeed. Such risks will be assumed by the Company and,
therefore, its shareholders.

The process of combining or  associating  with other business  opportunities  is
controlled  by  the  board  of  directors,   which  will  evaluate  a  potential
combination following presentation by directors or employees of the Company. The
process will follow a defined  course,  which is:  identification  of the entity
with which a combination may be sought;  research of the entity's current market
position and  financial  health;  review of  additional  available due diligence
information;  discussion among board members;  and, assuming a favorable review,
further action to open negotiations.

The  investigation  of  specific  business  opportunities  and the  negotiation,
drafting, and execution of relevant agreements,  disclosure documents, and other
instruments  will require  substantial  management time and attention as well as
substantial costs for accountants,  attorneys, and others. If a decision is made
not to participate in a specific business  opportunity the costs incurred in the
related  investigation  would  not  be  recoverable.  Furthermore,  even  if  an
agreement is reached for the participation in a specific  business  opportunity,
the failure to consummate that transaction may result in the loss by the Company
of the related costs incurred.


                                       24
<PAGE>


ACQUISITION OF OPPORTUNITIES

In expanding the Company's strategic position, the Company may become a party to
a merger, consolidation,  reorganization, joint venture, franchise, or licensing
agreement  with another  corporation  or entity.  It may also purchase  stock or
assets of an existing business.  Once a transaction is complete,  it is possible
that the present  management  and  shareholders  of the  Company  will not be in
control of the Company. In addition, a majority or all of the Company's officers
and  directors  may,  as part of the  terms of the  transaction,  resign  and be
replaced  by  new  officers  and  directors  without  a vote  of  the  Company's
shareholders.

It is anticipated  that securities  issued in any such  reorganization  would be
issued in reliance on exemptions from registration  under applicable Federal and
state securities laws. In some  circumstances,  however, as a negotiated element
of this transaction, the Company may agree to register such securities either at
the time the  transaction  is  consummated,  under certain  conditions,  or at a
specified time thereafter. The issuance of substantial additional securities and
their  potential sale into any trading market which may develop in the Company's
Common Stock may have a depressive effect on such market.

While the actual  terms of a  transaction  to which the  Company  may be a party
cannot  be  predicted,  it may be  expected  that the  parties  to the  business
transaction  will find it desirable to avoid the creation of a taxable event and
thereby structure the acquisition in a so called "tax free" reorganization under
applicable  Sections  of the  Internal  Revenue  Code of 1986,  as amended  (the
"Code").  In order to  obtain  tax free  treatment  under  the  Code,  it may be
necessary  for the  owners of the  acquired  business  to own 80% or more of the
voting stock of the surviving  entity.  In such event,  the  shareholders of the
Company, including investors in this offering, would retain less than 20% of the
issued and  outstanding  shares of the surviving  entity,  which could result in
significant dilution in the equity of such shareholders.

As part of the  Company's  investigation,  officers and directors of the Company
will meet personally  with  management and key personnel,  may visit and inspect
material  facilities,  obtain  independent  analysis or  verification of certain
information provided, check references of management and key personnel, and take
other reasonable  investigative measures, to the extent of the Company's limited
financial resources and management expertise.

The manner in which the  Company  would  participate  in an  opportunity  with a
target  company  will depend on the nature of the  opportunity,  the  respective
needs and  desires of the  Company  and other  parties,  the  management  of the
opportunity, and the relative negotiating strength of the Company and such other
management.


                                       25
<PAGE>


With respect to any mergers or  acquisitions,  negotiations  with target company
management  will be expected to focus on the percentage of the Company which the
target company's  shareholders would acquire in exchange for their shareholdings
in the target company.  Depending upon, among other things, the target company's
assets and liabilities, the Company's shareholders will, in all likelihood, hold
a lesser  percentage  ownership  interest in the Company following any merger or
acquisition. The percentage ownership may be subject to significant reduction in
the event the Company  acquires a target company with  substantial  assets.  Any
merger  or  acquisition  effected  by the  Company  can be  expected  to  have a
significant  dilutive  effect on the  percentage of shares held by the Company's
then shareholders.

Management has advanced, and will continue to advance, funds which shall be used
by the Company in identifying  and pursuing  agreements  with target  companies.
Management  anticipates that these funds will be repaid from the proceeds of any
agreement with the target company,  and that any such agreement may, in fact, be
contingent upon the repayment of those funds.

The  Company  has  not,  so  far,   realized  any   opportunities  for  business
combinations.  This aspect of the Company's  business  operations is informal at
this  stage of the  Company's  development,  and has not been  organized  in any
systematic way or formally stated as a part of the Company's policy.

COMPETITION

The Company will be in direct  competition  with many entities in its efforts to
manage,  market  and  expand its  present  CastNet.com  system and in efforts to
locate  suitable  business  opportunities  in the  industry.  Included  in  this
competition  will be other casting  companies,  Internet  companies,  as well as
business  development  companies,  venture  capital  companies,  venture capital
affiliates and investment  bankers.  Many of these entities will possess greater
financial  resources  and may be able to assume  greater  risks  than  those the
Company, with its limited capital, could consider.

YEAR 2000 COMPLIANCE

The year 2000 risk is the result of computer  programs  being  written using two
digits rather than four digits to define the applicable year.  Computer programs
that have  sensitive  software may  recognize a date using "00" as the year 1900
rather than the year 2000. As a result, computer systems and/or software used by
many companies and governmental  agencies may need to be upgraded to comply with
year  2000  requirements  or risk  system  failure  or  miscalculations  causing
disruptions of normal business activities.

Since the time of this initial  filing,  the  critical  date for year 2000 risks
passed without incident;  it does not appear that the Company will be materially
affected by year 2000 risks.


                                       26
<PAGE>


Based upon an internal assessment, The Entertainment Internet, Inc believes that
its software  programs,  both those  developed  internally  and  purchased  from
material outside vendors, are year 2000 compliant.  The Entertainment  Internet,
Inc.  began  assessing its state of year 2000  readiness  during or before July,
1999; this included reviewing the year 2000 compliance of the following:

     o    The  Entertainment  Internet Inc.'s internally  developed  proprietary
          software incorporated into CastNet.com services

     o    Third party software vendors

     o    Third party hardware vendors

The  Entertainment  Internet.  Inc.  will  continue  to require  its  vendors of
material  hardware  and  software  to  provide  assurances  of their  year  2000
compliance.

To date, The Entertainment  Internet,  Inc. has incurred significant expenses in
identifying and evaluating year 2000  compliance  issues.  Most of the Company's
expenses  have  related  to,  and are  expected  to  continue  to relate to, the
operating  costs  associated  with time spent by employees in  evaluation of the
year 2000  compliance  matters.  At this time,  the Company does not possess the
information  necessary to estimate the  potential  costs of future  revisions to
software  relating  to the  CastNet.com  network  and  web-site  should  further
revisions  be  required.   Neither  does  the  Company   possess  the  necessary
information  to  evaluate  whether  the  replacement  of  third-party  software,
hardware,  or services  (if any) are mandated  because  they are  non-year  2000
compliant.  Although  EINI  believes  that its  software  programs,  both  those
developed  internally  and those  purchased  from  outside  vendors,  are either
already  year 2000  compliant or will be within a  reasonable  time,  failure to
identify  non year 2000  compliant  software  could have a material  and adverse
effect  on  the  company's  business,   results  of  operations,  and  financial
condition.

The  Company is not  currently  aware of any  significant  year 2000  compliance
problems  relating to the  CastNet.com  service or other  software  systems that
would have a material and adverse effect on business, results of operations, and
financial  condition.  However,  there can be no assurance that the company will
not discover year 2000  compliance  problems in its  proprietary  software or in
other  third-party  software  that might  require a  substantial  investment  to
correct. The Company's potential inability to fix such hardware or software on a
timely basis could result in lost revenues, increased operating costs, and other
business interruptions, any of which could have a material and adverse effect on
the company's business, results of operations, and financial condition.


                                       27
<PAGE>

Failure to  adequately  address  year 2000  compliance  issues in the  Company's
proprietary   software  or  third-party  software  could  result  in  claims  of
mismanagement,  misrepresentation  or breach of contract and related litigation,
which could be costly and time-consuming to defend. In addition, there can be no
assurance that utility companies,  Internet network  companies,  Internet access
companies,  third-party  service  providers  and others  outside  the  Company's
control will be year 2000  compliant.  The failure by these  entities to be year
2000  compliant  could  result  in a  systemic  failure  beyond  EINI's  control
including,  for example, a prolonged Internet,  telecommunications or electrical
failure,  which could also prevent the Company from providing subscribers access
to the  CastNet.com  services.  Such  failure  would have a material and adverse
effect on the company's business, results of operation, and financial condition.

Contingency Plan

Although the Company  continues to evaluate its software for possible  year 2000
compliance  issues,  the company believes that its software programs (both those
developed  internally and purchased from material outside vendors),  are already
year 2000 or will be within a reasonable time.  Therefore,  the Company does not
have a formal  contingency  plan for a major Year 2000  problem.  The  Company's
inability to locate or correct a significant  year 2000 problem,  if one exists,
could  result in an  interruption  in or a failure  of certain  normal  business
activities or operations. Additionally, Year 2000 problems may affect subsystems
of the Company's network and such failure could cause CastNet.com subscribers to
seek alternate providers for casting submissions service. This could require the
Company to incur significant  unanticipated  expenses to remedy and could divert
the  Company  management's  time and  attention,  either of which  could  have a
material and adverse  effect on business,  results of  operations  and financial
condition.

To date the Company has not  experienced  any problems  resulting from Year 2000
computer issues; any such issues were resolved prior to January 1, 2000.



REGULATION AND TAXATION

The Investment Company Act of 1940 defines an "investment  company" as an issuer
which is or holds  itself out as being  engaged  primarily  in the  business  of
investing,  reinvesting or trading securities. While the Company does not intend
to engage  in such  activities,  the  Company  may  obtain  and hold a  minority
interest  in a number  of  other  industry  enterprises.  The  Company  could be
expected to incur  significant  registration and compliance costs if required to
register under the Investment Company Act of 1940. Accordingly,  management will
continue to review the Company's activities from time to time with a view toward
reducing  the  likelihood  the Company  could be  classified  as an  "investment
company".


                                       28
<PAGE>


Item   7.      Financial Statements

The financial  statements and  supplemental  data required by this Item 7 follow
the index of financial statements appearing at Item 13 of this Form 10-KSB.



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

The Registrant has not changed  accountants since its formation,  and Management
has had no disagreements with the findings of its accountants.


Item  9.       Directors, Executive Officers, Promoters and
               Control Persons; Compliance with Section 16(a)
               of the Exchange Act

The members of the Board of Directors of the Company serve until the next annual
meeting of the  stockholders,  or until their successors have been elected.  The
officers serve at the pleasure of the Board of Directors,  but may be removed by
a vote of the shareholders holding a majority of shares outstanding and entitled
to vote.

There are no agreements  for any officer or director to resign at the request of
any other person,  and none of the officers or directors  named below are acting
on behalf of, or at the direction of, any other person.

The  directors  and  executive  officers  of the  Company as of the date of this
report are:


    Name/Address                              Age      Position
    ------------                              ---      --------
    Michael Jay Solomon                        62      Chairman/Director, CEO,
    130 S. El Camino Drive                             President, Treasurer
    Beverly Hills, CA 90218

    Jeremy Schuster                            36      Chief Operating Officer/
    5757 Wilshire Blvd. Suite 124                      Director
    Los Angeles, CA 90036

    Roland Joffe                               54      Director
    2854 Roscomare Road
    Los Angeles, CA 90077

    Marion Dougherty                           76      Director
    c/o Gary S. Kleinman Acctg. Corp.
    10340 Santa Monica Blvd.
    Los Angeles, CA 90025

                                       29
<PAGE>


    Name/Address                              Age      Position
    ------------                              ---      --------
    James Zelloe                               40      Director
    7601 Lewinsville Road, #250
    McLean, VA 22102

    Thom Mount                                 51      Director
    6363 Sunset Blvd.
    Los Angeles, CA 90028

    Marilyn Foster Staubitz                    34      Director
    5757 Wilshire Blvd., Suite 124
    Los Angeles, CA 90036


MICHAEL JAY SOLOMON - Chairman, CEO, President, Treasurer & Director

Michael Jay Solomon was elected  Chairman,  CEO and,  President  on December 27,
1999,  effective  January 1, 2000. His term as director is one year or until the
next election of directors.  Mr. Solomon has over forty years  experience in the
motion  picture/television  production and  distribution/marketing  business. He
began his career in 1956 with United  Artists and  eventually  became one of the
most  knowledgeable  film and  television  marketers  in the  world.  He founded
Telepictures  Corporation  in 1978,  which  merged  with  Lorimar in 1985;  this
company  produced such television hit programs as Dallas,  Falcon Crest,  Knot's
Landing,  and many more. When Lorimar  Telepictures was acquired by Warner Bros.
In 1989, Mr. Solomon became President of Warner Bros. International  Television.
Mr. Solomon founded  Telepictures  Corporation in 1978 where he was Chairman and
CEO,  which  merged  with  Lorimar  in 1985 of  which  he  became  President  of
Lorimar-Telepictures.

Mr.  Solomon is an owner of Channel 11 in Peru,  and Iguana  Productions,  which
produces 520 hours of telenovelas (soaps). He is chairman of MAXX International,
Inc., a multimedia entertainment company that is publicly traded. Mr. Solomon is
a native of New York. He was educated at Boston's Emerson College,  and New York
University's  Evening  School of Commerce  (Stern  School of  Business);  he was
awarded an honorary Doctor of Law degree from Emerson College.

Mr.  Solomon is required to devote an estimated  51% of his time to the Company.
His current term as a member of the board of  directors  will expire at the next
annual shareholders meeting anticipated to be held on August 5, 2000, or as soon
thereafter  as practical.  It is Mr.  Solomon's  belief that his positions  with
other  companies does not offer a conflict of interest,  in that those companies
do not compete with the Company's business.


                                       30
<PAGE>


JEREMY SCHUSTER - Chief Operating Officer/Director

Jeremy  Schuster  was  elected  Director  on  August  5,  1999 and  executed  an
employment  agreement  providing  for his services as Chief  Operating  Officer,
effective  November 25, 1999 through  December 31, 2003. His term as director is
for one year or until the next election of directors by  shareholders  following
the expiration of the one year term.  Mr.  Schuster is an attorney who pioneered
the concept of the "mobile law office,"  bringing  computers onsite and onto the
set for film  productions  in the early  1990's.  He has a strong  background in
business and the entertainment  industry,  and has represented a wide variety of
talent in film and television as legal counsel.

Mr. Schuster's client list includes the multimedia  personalities  that recently
formed Dragon's Lair, LLC - Don Bluth, Rick Dyer, and David Foster. Mr. Schuster
has also  served as  production  counsel  for  independent  film  companies  and
currently  maintains an active  bi-coastal  state and Federal  court  litigation
practice,  while representing  corporations including Virtual Image Productions,
Inc., TVNext.com,  Inc., and Texas.com,  LLC. Mr. Schuster also currently serves
on the Board of Directors of Virtual Image Productions, Inc.

Mr.  Schuster  graduated  from  Rochester  Institute of  Technology in 1986 with
Associate of Applied  Science and  Bachelor of Science  degrees.  He  thereafter
received a Juris Doctor from Suffolk University School of Law. Mr. Schuster is a
member of the Orange  County Peace  Officers  Association,  the National  Notary
Association, and the National Association of Flight Instructors.

For the past five years he has been  employed  as an  attorney  at law under the
firm name of  Schuster &  Associates.  He was elected as a director on August 5,
1999; his current term expires at the annual shareholders meeting anticipated to
be held on August 5, 2000, or as soon thereafter as practical.

Mr. Schuster was recently  appointed a director of Sector  Communications,  Inc.
("Sector"), a holding company that holds telecommunications  concerns; Sector is
publicly traded (OTCBB symbol: SECT). Sector does not compete with the Company's
business.  Mr.  Schuster is also counsel and provides legal services to a number
of "dot com"  companies  (specifically  including  TVNext.com,  a New Jersey and
Delaware  company,  which is currently  developing  interactive  television  and
broadcast programs, and Texas.com,  which serves as a central resource or portal
for vendors servicing Texas visitors,  conventions, etc.), none of which compete
with the Company.

ROLAND JOFFE - Director

Roland  Joffe was  elected as a director  as of the  effective  date of the OMNI
merger,  which was March 22, 1999; his current term expires on March 22, 2000 or
at the next meeting of shareholders at which directors are elected. Mr. Joffe is
a noted filmmaker whose Academy Award winning films include "The Killing Fields"
(1984),  which won a total of three  Academy  Awards and seven  British  awards,
including "Best Picture," and "The Mission" (1986).


                                       31
<PAGE>


Mr.  Joffe  currently  is the  executive  producer of a  groundbreaking  new MTV
series,  "MTV's  Undressed," while his most recent feature film directing credit
was the 1999 thriller  "Goodbye Lover,"  starring Don Johnson,  Ellen DeGeneres,
and  Dermot  Mulroney.  Mr.  Joffe  entered  television  at the BBC as a trainee
director,  working his way up to directing  Britain's  most  successful  TV soap
opera,  "Coronation  Street," as well as segments of the current affairs program
"On the Line,"  and the  documentary  feature  "ANA."  Mr.  Joffe also  helmed a
13-part TV series, "The Stars Look Down," which received great acclaim.

In 1987,  Mr.  Joffe  formed  the Los  Angeles-based  film  production  company,
Lightmotive.  Lightmotive produced a number of feature films, as well as a broad
range of  television,  and  introduced  Harrods  of London to the Home  Shopping
Network.

Mr. Joffe graduated with a Bachelor of Arts in English and Drama from Manchester
University.  For the past five years he has been  employed as chairman and chief
executive  officer of Lightmotive,  Inc. Mr. Joffe does not have any involvement
with any company competing with the Company, and therefore believes there are no
conflicts of interest.

MARION DOUGHERTY - Director

Marion  Dougherty  was  elected  Director as of the  effective  date of the OMNI
merger,  which was March 22, 1999; her current term expires on March 22, 2000 or
at the  next  meeting  of  shareholders  at which  directors  are  elected.  Ms.
Dougherty,  senior vice president of talent at Warner Brothers, is considered to
be the "grand dame" of casting.  Her first generation of young female assistants
in the 1950's, Juliet Taylor and Wally Nicit, went on to become the next rank of
top movie casting  directors as well as tutors who passed on their techniques to
their own  assistants.  In the process,  Ms.  Dougherty  virtually  invented the
modern casting process and made it a female-dominated field.

Ms.  Dougherty  gave James Dean and Warren  Beatty  their first  speaking  parts
during this time,  and has been  instrumental  in helping  launch the careers of
other actors such as Robert Redford, Al Pacino,  Robert Duvall,  Dustin Hoffman,
and  Martin  Sheen.  In 1964,  Dougherty  launched  one of the  country's  first
independent casting offices.

Ms.  Dougherty has cast over 50 motion  pictures,  including  "Lethal Weapon 4,"
"Midnight  Cowboy," "Taxi Driver," "Batman  Returns,"  "Conspiracy  Theory," and
"Bananas."

For the past five years she has been  employed  as a senior  vice  president  at
Warner  Brothers..  Ms. Dougherty has no involvement with any company  competing
with the Company, and therefore believes she has no conflicts of interest.


                                       32
<PAGE>


JAMES T. ZELLOE - Director

Mr. James  Zelloe was elected as a director on August 5, 1999;  his current term
expires at the annual  shareholders  meeting  anticipated to be held on or about
August 5, 2000, or as soon  thereafter  as practical.  Mr. Zelloe is an attorney
licensed in Virginia and  Washington,  D.C. He received a Bachelor of Science in
Business  Administration  and  Economics  in 1981  and was  enrolled  in a joint
Masters of Arts/Juris Doctor degree program at Catholic  University  thereafter.
Mr. Zelloe  received his Juris Doctor degree from Catholic  University  Columbus
School of Law in 1984. He has lectured and been a teaching assistant at Catholic
University's Economics Department from 1982-1984.  Mr. Zelloe is a member of the
Virginia Bar Association,  the Fairfax Bar Association,  and the D.C. Bar. He is
also a member of the  Association of Trial Lawyers of America,  of Phi Kappa Phi
Honor Society,  and of Omicron Delta Epsilon,  an Economics Honors Society.  Mr.
Zelloe has been practicing law since graduating from law school in 1984.

For the past five years he has been  employed  as an attorney at law by the firm
of Kunnirickal & Zelloe.

Mr.   Zelloe  has  been   appointed   a  director   of  Sector   Communications,
Inc.("Sector"),  a holding company that holds  telecommunications  concerns, and
which is publicly traded (OTC BB symbol: SECT). Sector does not compete with the
Company; he believes he has no conflicts of interest.

THOM MOUNT - Director

Thom Mount was elected as a director on August 1, 1998; his current term expires
on August 1, 1999 or at the next meeting of  shareholders at which directors are
elected.  In 1974, at age 26, Mr. Mount became President of Universal  Pictures.
At that time, Time Magazine and New York Magazine dubbed him a "baby mogul."

Mr.  Mount holds a Bachelor of Arts degree from Bard  College,  and he graduated
with a Master of Fine Arts degree from the California  Institute for the Arts in
1972.  During his tenure at  Universal,  he launched  such talents as Sean Penn,
Steve Martin,  John Landis,  Bill Murray,  John Candy, Dan Akroyd,  and Jonathan
Demme. He was responsible for such films as "Car Wash," "Coal Miner's Daughter,"
"The Jerk," "Animal House," "Smokey and the Bandit," "The Deer Hunter," and "The
Blues Brothers," among others.

Since leaving  Universal,  Mr. Mount founded the Mount Company.  He has produced
fifteen films, including "Bull Durham," "Tequila Sunrise," "Frantic," "Can't Buy
Me Love,"  and Roman  Polanski's  "Death  and the  Maiden."  Most  recently,  he
produced Sidney Lumet's "Night Falls on Manhattan."  Mr. Mount currently  serves
as the president of the Producers Guild of America.

For the past five years he has been employed as president of The Mount  Company.
Mr.  Mount is not  involved  with any company  competing  with the  Company;  he
believes he has no conflicts of interest.


                                       33
<PAGE>


MARILYN FOSTER STAUBITZ - Director.

Ms.  Marilyn  Staubitz was elected as a director on August 5, 1999;  her current
term expires at the annual shareholders meeting anticipated to be held on August
5, 2000, or as soon  thereafter as practical.  Ms. Marilyn  Staubitz  received a
Bachelor  of Science  and a Bachelor  of Arts  degree  from  Western New England
College in 1987. She has worked for Packard  Capital Ltd. for the past six years
in the capacity of an executive assistant;  previous to that she was employed by
Citicorp in Boston, Massachusetts and by Sekisui America in California. She does
not  participate  in any other  business  ventures  in which  other  officers or
directors   participate,   other  than  acting  as  a   shareholder   of  Sector
Communications,  Inc., which does not compete with the Company's  business;  she
believes she has no conflicts of interest.

The Company  knows of no family  relationship  between any of the  officers  and
directors of the Company.  The Company's  Board of Directors  has  established a
Compensation Committee.

CONFLICTS OF INTEREST

The Company  does not  currently  have a right of first  refusal  pertaining  to
opportunities that come to management's  attention insofar as such opportunities
may relate to the Company's proposed business operations.

The officers and directors are, so long as they are officers or directors of the
Company,  subject to the restriction that all opportunities  contemplated by the
Company's  plan of  operation  which  come to  their  attention,  either  in the
performance  of  their  duties  or in  any  other  manner,  will  be  considered
opportunities  of, and be made  available to the Company and the companies  that
they are affiliated with on an equal basis. A breach of this requirement will be
a breach of the fiduciary duties of the officer or director. Except as set forth
above,  the Company has not adopted any other  conflict of interest  policy with
respect to such transactions.

Mr.  Schuster  renders legal services to Mr. Hadid, a former member of the board
of directors of the Company,  as well as to the Company,  from time to time. Mr.
Schuster  also renders  services to Mark  Dilullo,  a consultant to the Company,
from time to time.

Any other matters  relating to potential  conflicts of interest  respecting  the
officers or directors, are set forth above, in Item 9.


                                       34
<PAGE>


INVESTMENT COMPANY ACT OF 1940

Although the Company will be subject to regulation  under the  Securities Act of
1934 and the Securities  Exchange Act of 1934,  management  believes the Company
will not be subject  to  regulation  under the  Investment  Company  Act of 1940
insofar as the  Company  will not be engaged in the  business  of  investing  or
trading in securities. In the event the Company engages in business combinations
which result in the Company holding passive investment  interests in a number of
entities,  the  Company  could be subject  to  regulation  under the  Investment
Company Act of 1940. In such event, the Company would be required to register as
an investment  company and could be expected to incur  significant  registration
and compliance costs. The Company has obtained no formal  determination from the
Securities  and Exchange  Commission  as to the status of the Company  under the
Investment  Company Act of 1940 and,  consequently,  any  violation  of such Act
would subject the Company to material adverse consequences.


COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Section 16(a) of the Securities Exchange Act of 1934 requires that the Company's
officers  and  directors,  and  persons  who own  more  than  ten  percent  of a
registered class of the Company's equity  securities,  file reports of ownership
and changes in  ownership  with the  Securities  and  Exchange  Commission.  The
Company was not subject to the  reporting  requirements  of Section 16(a) during
fiscal 1999.


                                       35
<PAGE>
Item  10.      Executive Compensation


<TABLE>
<CAPTION>
                                Annual Compensation                                   Long Term Compensation
                      ----------------------------------------------     ------------------------------------------------
(a)                   (b)       (c)           (d)           (e)            (f)            g)       (h)         (i)
                                                             Other        Restricted
                                                             Annual         Stock      Options     LTIP        All Other
Position              Year      Salary ($)    Bonuses($)   Compensation     Awards       SARs    Payouts ($)  Compensation
--------              ----      ----------    ----------   ------------  ----------    -------   -----------  ------------
<S>                  <C>        <C>           <C>          <C>           <C>           <C>       <C>          <C>
Harvey Kibel,         1997       19,615
CEO                   1998        3,000

John Sloatman,        1997       78,000                                   220,000
COO, Chairman         1998        8,584

Gene Davis, CFO       1997       78,125                                    20,000(5)
                      1998       48,000
                      1999       61,979

Phil Gustlin, CEO     1999          -                                     639,120

Tony Cataldo,         1999          -         500,000 sh
CEO/President

Kathryn Thyne,        1997       78,000
President             1998       39,450(1)

Paul Kessler,         1998       50,000(2)    500,000 sh   3,600,000(4)
President             1999      100,000(3)

Thom Mount,           1998       50,000(6)    500,000 sh
COO, Co-Chairman                              signing bonus
</TABLE>
------------------
(1)  Mr. Kessler assumed the presidency in 1998.

(2)  Mr.  Kessler  received  options in lieu of salary for 1998;  these  options
     expired  under the ESOP plan because they were not  exercised  within three
     months of cessation of employment.

(3)  Mr. Kessler's salary for 1998 was for a partial year; the salary amount for
     1999 was set at $100,000, which was taken in options; these options expired
     under the ESOP plan because they were not exercised  within three months of
     cessation of employment.

(4)  Mr. Kessler received  3,600,000  shares as  consideration  for the OMNI-TEI
     introduction and plan.

(5)  Mr. Davis claims additional options should have been issued; the Company is
     currently  researching  this matter with Mr. Davis and prior management but
     does not expect any material  impact.

(6)  Mr. Mount took the title of Chief Operating Officer and later  transitioned
     to co-chairman of the Board of Directors.

                                       36
<PAGE>


For fiscal 2000,  the Company has entered into  employment  agreements  with key
executives on the terms described below:

MICHAEL  SOLOMON.   The  Company  entered  into  an  employment  agreement  "CEO
Agreement") with Mr. Solomon providing for his services as Chairman of the Board
of  Directors  and Chief  Executive  Officer  effective  January 1, 2000 through
December 31, 2003.  Pursuant to the CEO Agreement,  Mr. Solomon is to receive an
annual salary of $250,000.  As consideration for execution of the CEO Agreement,
Mr.  Solomon is to receive  850,000  shares plus 850,000  warrants or options to
purchase shares, which have not, as of the date of this report, been issued.

The CEO Agreement also includes  performance-based  incentives which grant up to
1,400,000  shares in "one-time"  bonuses (tied to achievement of specified stock
prices),  and up to 300,000  shares as part of a recurrent  bonus plan.  The CEO
agreement  provides for reimbursement of 50% of the salary paid to Mr. Solomon's
assistant,  benefits for his assistant, and reimbursement of expenses, including
medical and dental insurance.  Mr. Solomon may be granted  additional bonuses or
shares at the discretion of the Board of Directors.  The agreement  provides for
conversion  of any  whole or  portion  of the  Corporation's  debt  from the CEO
Agreement  to be  converted to stock or options.  The CEO  Agreement  includes a
favored  nations  clause that  applies to  compensation  and  benefits.  The CEO
Agreement  includes   provisions  for  mandatory  use  of  alternative   dispute
resolution  procedures.  The CEO Agreement  may be terminated by Mr.  Solomon by
written notice to the Company, effective 10 days from the date of deposit in the
U.S.  mail;  the Company may also terminate the agreement with or without cause,
subject to specific contractual provisions.

Mr.  Solomon has not received  any salary or stock from the CEO  Agreement as of
the date of this report.

JEREMY  SCHUSTER.  The  Company  entered  into  an  employment  agreement  ("COO
Agreement")  with Mr.  Schuster  providing  for his services as Chief  Operating
Officer effective  November 25, 1999 through December 31, 2003.  Pursuant to the
COO  Agreement,  Mr.  Schuster  is to receive an annual  salary of  200,000.  As
consideration  for execution of the COO  Agreement,  Mr.  Schuster is to receive
warrants or options to purchase 100,000 shares on a favored nations basis, which
have not, as of the date of this filing, been issued. The COO Agreement provides
for a salaried assistant, a vehicle allowance (or for the Corporation to provide
a  vehicle),  and  reimbursement  of  expenses,  including  medical  and  dental
insurance.  The COO Agreement contains a change in control clause which allows a
majority  of the Board of  Directors  or Mr.  Schuster  to sever  the  agreement
following  a change in control  or the  composition  of the Board of  Directors;
exercise of such provision  requires the Corporation to pay an amount equivalent
to the  compensation and benefits that would otherwise be due Mr. Schuster under
this Agreement for the period  extending  from the date of election  through the
expiration of one year thereafter.  The agreement provides for conversion of any
whole  or  portion  of the  Corporation's  debt  from  the COO  Agreement  to be
converted to stock in the same manner  provided to other directors or promissory
note holders.  The COO Agreement  includes a favored nations clause that applies
to  compensation  and benefits,  as well as other aspects of the Agreement.  The
Agreement  includes   provisions  for  mandatory  use  of  alternative   dispute
resolution  procedures.  The COO Agreement is separate from any  attorney-client
agreement;  no attorney  services  are  required  to be  provided  under the COO
Agreement.


                                       37
<PAGE>

Mr.  Schuster has not received any salary or stock from the COO  Agreement as of
the date of this report.


COMPENSATION TO DIRECTORS

The following  grants of common stock and stock options to purchase common stock
were made to directors of the Company during fiscal 1999.


                       Common Stock                  Stock Options Granted
                       -------------   -----------------------------------------
                                             No of Shares
Director               No. of     Date of      Underlying  Exercise  Expiration
                       Shares      Grant        Options     Price        Date
                     ---------    --------   ------------  --------  ----------

Mohamed Hadid (1)    1,000,000     8/16/99     1,000,000*   $1.00      8/16/09

Marion Dougherty       100,000     7/31/99       100,000*   $1.00      7/31/09

Marilyn Foster         25,000      7/31/99        25,000*   $1.00      7/31/09

Roland Joffe           100,000     7/31/99       100,000*   $1.00      7/31/09

Jean Claude Van        500,000     7/31/99       500,000*   $1.00      7/31/09
Damme(2)

Jeremy Schuster(3)     75,000      7/31/99       75,000*    $1.00      7/31/09

James Zelloe           50,000      7/31/99       50,000*    $1.00      7/31/09

----------------------
* The paperwork for the option  agreements has not been completed as of the date
of this report.

(1)  Following his resignation as interim  Chairman during  December,  1999, the
     stock and options  granted by the Company have been returned to the Company
     by Mr. Hadid, but have not been canceled as of the date of this report.

(2)  Shares  are  held in the  name of  JCVD  Productions,  Inc.  On  March  21,
     1999,_Mr.  Van Damme resigned as a director.  The Company has requested the
     return of the stock and options granted in 1999.

(3)  Mr. Schuster has also received  compensation for legal services provided to
     the Company  during 1999 (see Item 12  "Certain  Relationships  and Related
     Transactions").


                                       38
<PAGE>


EMPLOYEE STOCK OPTION PLAN

The Company adopted an employee stock option plan (the "Stock Option Plan") with
an effective date of March 1, 1999 and an expiration  date of February 28, 2009,
which is administered by the Stock Option Committee,  which recorded the results
of three meetings held during 1999:

In the June 1999 meeting, the employment  agreements of key personnel Thom Mount
and Paul Kessler were  approved;  under these  agreements,  these key  employees
would each receive  1,000,000 share options,  vesting in 1/3 increments during a
three year period.  Mr.  Kessler left the Company's  employ after the first year
and failed to exercise  his options  within  three  months  after  cessation  of
employment,  as required by the Stock Option Plan. As a result, his options were
canceled.

In the July 1999  meeting,  five key  personnel  were granted a total of 180,000
share  options  at $1.25  each.  These  options  were  principally  intended  to
compensate  personnel for prior services  rendered;  the agreements  provide for
vesting  over a number  of  years,  however,  in what is often  termed a "golden
handcuff" for key employees.

In the November 1999 meeting of the Company's  Stock Option  Committee,  fifteen
personnel  were  granted a total of  102,500  share  options,  subject  to final
approval by the Compensation  Committee Chairman.  20,000 of these share options
were granted at $1.00 each, and the remaining  82,500 share options were granted
at $1.25 each.  These  options  were also  principally  intended  to  compensate
personnel for prior services rendered, with the agreements providing for vesting
of the options over a number of years in a "golden handcuff" for key employees.

The  Company  expects to offer  options to several  additional  employees  in an
effort to retain their special skills,  abilities,  and services.  In any event,
additional  share  options  must be granted  as a result of  certain  employment
agreements.

The Company's  Stock Option Plan provides for  reservation  of 3,000,000  common
shares for use in the Stock Option Plan.  Approximately  1,505,325 share options
may be converted from OMNI to EINI options or may be  administered  through EINI
pursuant to the pre-existing Only Multimedia Incorporated Stock Option Plan.


                                       39
<PAGE>

The foregoing transactions were not arms-length.


No retirement,  pension,  profit  sharing,  or other similar  programs have been
adopted by the Company for the benefit of its employees.


Item  11.      Security Ownership of Certain Beneficial Owners
               and Management

The following table sets forth each person known to the Company,  as of March 1,
2000,  to be a beneficial  owner of five  percent (5%) or more of the  Company's
common  stock,  by  the  Company's  directors  individually,  and  by all of the
Company's directors and executive officers as a group.

Except as noted,  each person has sole voting and investment  power with respect
to the shares shown.

                                                       Shares
  Title of                                           Beneficially   Percentage
   Class       Name/Address of Owner                   Owned        Ownership(1)
   -----       ---------------------                   -----        ------------

  Common       CEDE & Co.                             9,300,380      19.29%
               P.O. Box 222 Bowling Green
                Station
               New York, NY 10274

  Common       Packard Capital Limited                8,671,053      17.98%
               1350 Beverly Road #115-339
               McLean, VA 22101

  Common       Windsor Capital Fund VI                6,597,222      13.68%
               129 Front Street
               PH Suite
               Hamilton HM 12 Bermuda

  Common       Bristol Asset Management, LLC          5,623,870      11.67%
               1801 Century Park East
               Suite 1131
               Los Angeles, CA 90067


  Common       Paul Kessler                           4,686,261       9.72%
               1801 Century Park East
               Suite 1131
               Los Angeles, CA 90067

  Common       Marion Dougherty                        100,000          *
               c/o Gary S. Kleinman Acctg. Corp.
               10340 Santa Monica Blvd.
               Los Angeles, CA 90025

  Common       Marilyn Foster Staubitz                  25,000          *
               5757 Wilshire Blvd., Suite 124
               Los Angeles, CA 90036

                                       40
<PAGE>

                                                       Shares
  Title of                                           Beneficially   Percentage
   Class       Name/Address of Owner                   Owned        Ownership(1)
   -----       ---------------------                   -----        ------------

  Common       Michael Jay Solomon                        0             *
               130 S. El Camino Drive
               Beverly Hills, CA 90218

  Common       Roland Joffe                            100,000          *
               2854 Roscomare Road
               Los Angeles, CA 90077

  Common       Thomas Mount                            500,000          *
               6363 Sunset Blvd., 4th Floor
               Los Angeles, CA 90028

  Common       Jeremy Schuster                        718,129(2)        *
               5757 Wilshire Blvd., Suite 1800
               Los Angeles, CA 90036

  Common       James Zelloe                             50,000          *
               7601 Lewinsville Road, #250
               McLean, VA 22102

  Common       All officers and directors as a        1,493,129       3.10%
               group
               (7 individuals)

---------------------
* less than one percent.

(1)  Percentage  Ownership is based on 48,212,567  shares issued and outstanding
     as of March 1, 2000.

(2)  Excludes  2,401,255  common  restricted  shares the Company issued to Chief
     Operating  Officer  and  director,  Jeremy G.  Schuster.  The  Company  has
     requested that Mr. Schuster forego a favorable  provision for conversion of
     the Company's  unpaid  charges for legal  services to stock;  Mr.  Schuster
     agreed to refrain from use of the  conversion  feature of his fee agreement
     and  offered  the  Company  a  discounted  settlement  for  fees,  which is
     currently  pending.  Mr.  Schuster  presently  has  718,126  shares  in his
     possession,  which were issued as noted in Item 10, Executive Compensation;
     the  balance of  2,401,255  shares are being  held by the  Company  pending
     satisfaction  of a  discounted  settlement  for  fees  for  legal  services
     rendered. If the Company pays Mr. Schuster as agreed and as scheduled,  the
     2,401,255 shares will be canceled.


                                       41
<PAGE>


Item  12.      Certain Relationships and Related Transactions


CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Jeremy  Schuster,  an officer and director of the Company  since  August,  1999,
provided  services  as an  outside  counselor  to the  Corporation  during  1999
pursuant to a  reduced-rate  fee  agreement  which  provided  for services to be
billed at two hundred fifty dollars per hour,  with  provision for conversion of
any unpaid balance to stock on the same terms provided to convertible promissory
note holders.  Services included litigation in Federal and state court, response
to  administrative  proceedings,  and general  counsel to the  Corporation.  The
Corporation earlier paid outside counsel rates in excess of four hundred dollars
per hour and  deemed  the  discounted,  "no cash"  arrangement  beneficial.  Mr.
Schuster also was granted stock options as compensation for legal services.

On November 7, 1999, Mr. Schuster  elected to convert the unpaid balance for his
fees to stock. The  Corporation,  desiring to reserve the majority of the shares
which  would  otherwise  be  issued  to Mr.  Schuster  for the  unpaid  balance,
negotiated with Mr. Schuster for a further  reduction in the hourly billing rate
and forgiveness of a significant portion of its balance;  Mr. Schuster agreed to
accommodate  the  Corporation  and entered  into a  settlement  agreement  which
provided that the Corporation would issue the conversion shares and hold them in
trust,  pending  payment  of the  accrued  fees over a four  month  period.  The
settlement affected billings to occur through December 31, 1999. Mr. Schuster is
presently   completing   certain   litigation   assignments  and  requested  the
Corporation to assign any new litigation to outside counsel or third parties.


The Company's  policy is that the Company will seek an  acquisition or merger on
fair market  basis only.  In any  potential  merger  wherein  company  officers,
directors, or principal shareholders,  affiliates,  or associates have interest,
such interest shall be fully disclosed prior to merger.

                                       42
<PAGE>


Item  13.      Exhibits and Reports on Form 8-K

(a)(1)    The  following  financial  statements  are contained on Pages F-1
          through F-23:

          Report of  Independent  Auditors Merdinger,  Fruchter,  Rosen & Corso,
          Certified Public Accountants, dated April 9, 2000.

          Consolidated Balance Sheets

          Consolidated Statements of Operations

          Consolidated Statement of Shareholders' Deficiency

          Consolidated Statements of Cash Flows

          Notes to Consolidated Financial Statements


(a)(3)    The following exhibits are filed as part of this report:


Exhibit
Number                     Description
--------      -----------------------------
2.1       Plan of Merger by and among THE ENTERTAINMENT INTERNET, INC., and ONLY
          MULTIMEDIA NETWORK INCORPORATED effective as of March 22, 1999 (filed
          herewith)

3.1       Amended  and  Restated   Articles  of   Incorporation   of  Registrant
          (incorporated  herein  by  reference  to  the  Company's  Registration
          Statement on Form 10-SB 12(g), File No. 000-28173)

3.2       ByLaws  of  Registrant   (incorporated  herein  by  reference  to  the
          Company's  Registration  Statement  on  Form  10-SB  12(g),  File  No.
          000-28173)

4.1       The  Entertainment  Internet,  Inc.  Stock  Option Plan  (incorporated
          herein by reference to the  Company's  Registration  Statement on Form
          10-SB 12(g), File No. 000-28173)


10.2      Michael Solomon Employment Agreement (filed herewith)

27.1      Financial Data Schedule (Amended)(filed herewith)



(b)      Reports on Form 8-K

               An 8-K Report was filed in April 2000, to report that on December
          27,  1999,  the  Board  of  Directors  approved  an  increase  in  the
          authorized  common  stock of the  corporation  from 50 million  shares
          common to 75 million shares common.

                                       43
<PAGE>






                          INDEPENDENT AUDITORS' REPORT



TO THE BOARD OF DIRECTORS
THE ENTERTAINMENT INTERNET, INC.:

We  have  audited  the   accompanying   consolidated   balance   sheets  of  The
Entertainment  Internet,  Inc.  as of  December  31,  1999  and  1998,  and  the
statements of operations,  shareholders' deficiency and cash flows for the years
then ended.  These financial  statements are the responsibility of the Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide 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 The Entertainment
Internet,  Inc.  as of  December  31,  1999 and  1998,  and the  results  of its
operations  and its cash  flows  for the years  then  ended in  conformity  with
generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will continue as a going concern.  As discussed in Note 1, the Company's
recurring  losses  from  operations,  negative  cash flow from  operations,  its
negative working capital and its default on certain debt raise substantial doubt
about its ability to continue as a going concern.  Management's plans concerning
these  matters are also  discussed in Note 1. The  financial  statements  do not
include any adjustments that might result from the outcome of this uncertainty.




                                 MERDINGER, FRUCHTER, ROSEN & CORSO, P.C.
                                 Certified Public Accountants

New York, New York
April 9, 2000

                                      F-1
<PAGE>



                        THE ENTERTAINMENT INTERNET, INC.
                           CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
                                                                    December 31,
                                                               1999              1998
                                                            ------------    ------------
<S>                                                         <C>             <C>
     ASSETS
CURRENT ASSETS
    Cash and cash equivalents                               $     12,714    $      7,482
    Accounts receivable, net of allowance for
     doubtful accounts of $8,700 (1998)                              -            14,421
    Prepaid expenses                                             838,431             -
                                                            ------------    ------------
       Total Current Assets                                      851,145          21,903

FURNITURE AND EQUIPMENT, net                                     401,446         336,591

OTHER ASSETS                                                      11,228          14,247
                                                            ------------    ------------

       TOTAL ASSETS                                         $  1,263,819    $    372,741
                                                            ============    ============

     LIABILITIES AND SHAREHOLDERS' DEFICIENCY
CURRENT LIABILITIES
    Accounts payable and accrued expenses                   $  1,851,325    $  1,372,175
    Deferred revenue                                             256,103         387,782
    Advances from Affiliate                                          -           345,380
    Notes payable, current portion                                 4,000         546,362
    Debentures payable                                           437,000         484,500
    Notes payable shareholders - current portion                     -           200,000
    Convertible notes payable                                    334,000             -
    Obligations under capital lease - current portion             55,169          62,976
                                                            ------------    ------------
       Total Current Liabilities                               2,937,597       3,399,175

LONG-TERM LIABILITIES
    Notes payable shareholders, less current portion             500,453         325,453
    Convertible notes payable, less current portion                  -           152,500
    Obligations under capital lease, less current portion         38,680          84,062
                                                            ------------    ------------
       Total Liabilities                                       3,476,730       3,961,190
                                                            ------------    ------------

COMMITMENTS AND CONTINGENCIES (Note 8)                               -               -

SHAREHOLDERS' DEFICIENCY
    Preferred stock, no par value, 1,000,000 shares
     authorized; 5,400 shares issued and outstanding           2,032,300       2,032,300
    Common stock, $0.001, 75,000,000 shares
     authorized; 44,581,978 and
     8,842,279 issued and outstanding                             44,582           8,842
    Additional paid-in-capital                                 6,677,486       1,524,281
    Accumulated deficit                                      (10,967,279)     (7,153,872)
                                                            ------------    ------------
       Total Shareholders' Deficiency                        ( 2,212,911)     (3,588,449)
                                                            ------------    ------------

       TOTAL LIABILITIES AND SHAREHOLDERS'
        DEFICIENCY                                          $  1,263,819    $    372,741
                                                            ============    ============
</TABLE>


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                       F-2


<PAGE>


                        THE ENTERTAINMENT INTERNET, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                                        For the Year Ended
                                                           December 31,
                                                  ----------------------------
                                                       1999             1998
                                                  ------------    ------------
REVENUE                                           $    779,528    $    581,555

COST OF REVENUE                                        692,373         375,154
                                                  ------------    ------------

GROSS PROFIT                                            87,155         206,401

SELLING, GENERAL AND ADMINISTRATIVE
 EXPENSES                                            3,089,478       1,803,927
                                                  ------------    ------------

       LOSS FROM OPERATIONS                         (3,002,323)     (1,597,526)

INTEREST EXPENSE                                       613,066         174,916
                                                   ------------    ------------

       LOSS BEFORE INCOME TAXES                     (3,615,389)     (1,772,442)

PROVISION FOR INCOME TAXES                                 -               -
                                                    ------------    ------------

LOSS FROM CONTINUING OPERATIONS                     (3,615,389)     (1,772,442)

LOSS FROM DISCONTINUED OPERATIONS
    (net of applicable income tax effect of $0)            -        (  271,048)
                                                    ------------    ------------
NET LOSS                                            (3,615,389)     (2,043,490)

CUMULATIVE PREFERRED DIVIDENDS                      (  198,018)     (  198,018)
                                                   ------------    ------------

NET LOSS ATTRIBUTABLE TO COMMON
 SHAREHOLDERS'                                    $ (3,813,407)   $ (2,241,508)
                                                  ============    =============

LOSS PER SHARE - basic and diluted
    Loss from continuing operations               $      (0.18)   $      (0.40)
    Loss from discontinued operations             $        -      $      (0.06)
                                                  ------------    ------------
    Net loss                                      $      (0.18)   $      (0.46)
                                                  ============    ============

WEIGHTED AVERAGE COMMON SHARES
 OUTSTANDING - basic and diluted                    21,473,217       4,421,140
                                                  ============    ============


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                       F-3

<PAGE>




                        THE ENTERTAINMENT INTERNET, INC.
               CONSOLIDATED STATEMENT OF SHAREHOLDERS' DEFICIENCY
                  FOR THE YEAR ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
                                                                                         Additional                      Total
                                          Preferred Stock         Common Stock            Paid in     Accumulated     Shareholders'
                                      Shares     Amount         Shares       Amount       Capital       Deficit        Deficiency
                                   ---------   ----------     ----------   --------     ----------   ------------     -------------


<S>                                 <C>         <C>            <C>          <C>         <C>          <C>              <C>
Balance at December 31, 1997           5,400    2,032,300      2,400,521      2,401        986,464    ( 4,912,364)     ( 1,891,199)

Issuance of common stock for:
 Conversion of convertible note
   payable                                 -            -      6,441,758      6,441        586,059          -              592,500

Cost related to convertible note
   payable                                 -            -              -          -     (   53,642)         -            (  53,642)

Warrants issued for compensation           -            -              -          -          5,400          -                5,400

Net loss                                                -              -          -                   ( 2,241,508)     ( 2,241,508)
                                   ---------   ----------     ----------   --------     ----------   ------------     -------------

Balance at December 31, 1998           5,400    2,032,300      8,842,279      8,842      1,524,281    ( 7,153,872)     ( 3,588,449)


Issuance of common stock for:
    Merger with Only Multimedia            -            -     14,077,145     14,077        479,636           -             493,713
    Conversion of notes payable            -            -     17,231,619     17,232      2,806,091           -           2,823,323
    Compensation for services              -            -      3,062,514      3,063      1,453,588           -           1,456,651
    Cash                                   -            -      1,368,421      1,368        326,890           -             328,258

Offering costs                             -            -              -          -       ( 74,000)          -           ( 74,000)

Warrants issued for services               -            -              -          -        161,000           -            161,000

Net loss                                   -            -              -          -             -     ( 3,813,407)    ( 3,813,407)
                                   ---------   ----------     ----------   --------     ----------   ------------     -------------
Balance at December 31, 1999           5,400   $2,032,300     44,581,978  $  44,582   $  6,677,486   $(10,967,279)   $( 2,212,911)
                                   =========   ==========     ==========  =========   =============  ============    =============
</TABLE>



The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                       F-4
<PAGE>

                        THE ENTERTAINMENT INTERNET, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                              For the Year Ended
                                                                December 31,
                                                          1999             1998
                                                        -----------    -----------
<S>                                                     <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                             $(3,813,407)   $(2,241,508)
   Adjustments to reconcile net loss to net
    cash used in operating activities:
      Depreciation and amortization                         144,187        131,395
      Common stock issued for services                    1,456,651            -
      Stock warrants issued for services                     87,000          5,400
      (Gain) loss on disposal of assets                  (   14,125)        60,322
   Changes in assets and liabilities:
      (Increase) decrease
          Accounts receivable                                14,421         11,899
          Prepaid expenses                                   25,309          1,946
          Other assets                                        3,019         76,793
      Increase (decrease)
          Accounts payable and accrued expenses             664,953        648,198
          Deferred revenue                               (  131,679)       162,713
                                                        -----------    -----------
   NET CASH USED IN OPERATING ACTIVITIES                 (1,563,671)    (1,142,842)
                                                        -----------    -----------

CASH FLOWS USED IN INVESTING ACTIVITIES
    Purchase of furniture and equipment                 (   177,941)    (   64,962)
                                                        -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES
  Decrease in book overdraft                            (    19,295)           -
  Advances from affiliate                                   199,888        345,380
  Proceeds from issuance of notes payable                                  100,000
  Payments for notes payable                            (   541,100)     (  58,586)
  Payments for debentures payable                                        (   9,000)
  Offering cost for convertible note                                     (  29,449)
  Proceeds from issuance of convertible notes payable                      745,000
  Proceeds from issuance of notes payable shareholder     1,818,629            -
  Payments under capital lease obligations              (    39,536)     (  53,622)
  Net proceeds from issuance of common stock                328,258            -
                                                        -----------    -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES                 1,746,844      1,039,723
                                                        -----------    -----------

NET INCREASE (DECREASE) IN CASH                               5,232    (   168,081)

CASH AND CASH EQUIVALENTS AT BEGINNING
    OF YEAR                                                   7,482        175,563
                                                        -----------    -----------

CASH AND CASH EQUIVALENTS AT END OF YEAR                $    12,714    $     7,482
                                                        ===========    ===========
</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                       F-5

<PAGE>

                        THE ENTERTAINMENT INTERNET, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  FOR THE YEAR ENDED DECEMBER 31, 1999 AND 1998





SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

     For the years ended  December  31, 1999 and 1998,  the Company paid in cash
     approximately $109,000 and $43,000, respectively, for interest, and paid no
     income taxes.


NON-CASH INVESTING AND FINANCING TRANSACTION

     For the years  ended  December  31,  1999 and 1998,  the  Company  acquired
     equipment  of  $16,972  and  $12,855,  respectively,  under  capital  lease
     obligations.

     During the years  ended  December  31, 1999 and 1998,  the  Company  issued
     1,658,055 and 6,441,758  shares of its common stock for conversion of notes
     payable at a  conversion  rate of $0.09 (as  stipulated  in the  promissory
     notes).

     During the year ended  December 31,  1999,  the Company  issued  15,573,564
     shares of its common stock for the  conversion  of notes payable at various
     conversion  rates for an aggregate  amount of $1,404,785  and $1,241,888 in
     principal  and interest,  respectively.  See the  respective  notes payable
     notes for further details of these conversions.

     During the year ended  December  31,  1999,  the Company  issued  3,062,514
     shares of its common stock for services rendered. The shares were valued at
     an aggregate amount of $1,456,651. Also, during the year ended December 31,
     1999,  the  Company  issued  warrants  to  purchase  279,545  shares of the
     Company's  common stock. The warrants were valued at an aggregate amount of
     $161,000.  See Note 9 "Stock  Warrants  and  Options"  for further  details
     regarding the fair value of these securities.







The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                       F-6


<PAGE>

                        THE ENTERTAINMENT INTERNET, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 1 -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          Organization and Line of Business
          ---------------------------------
          The  Entertainment  Internet,  Inc. (the  "Company") was a development
          stage company until its acquisition of an operating subsidiary,  which
          is  a  provider  of  a  range  of  Internet-related  services  to  the
          entertainment  community. In 1997, the Company began the operations of
          CastNet.com,  a  state-of-the-art  application  which enables  casting
          directors  and  actors to  exchange  high-speed  information  within a
          closed  "Intranet" and secured  "Internet"  system,  providing instant
          electronic  access  to  text,  audio  and  video  profiles  of  actors
          throughout the world. Prior to the start of CastNet.com, the Company's
          main  focus  was being an  Internet  service  provider  (see Note 11 -
          Discontinued Operations).

          Subsidiary
          ----------
          In March 1999, the Company formed The Entertainment  Internet,  Inc, a
          California corporation ("TEI-CAL").  TEI-CAL was formed to acquire and
          be the parent for Company's  acquisition of Only  Multimedia  Network,
          Inc. ("OMNI"). See "Acquisition" for further details.

          Acquisition
          -----------
          In August 1998,  the Company  entered  into an  Agreement  and Plan of
          Merger (the "Merger")  with OMNI.  The merger,  which was effective on
          March 31, 1999,  was  structured so that TEI-CAL would be the acquirer
          of OMNI.  Since the Company and its subsidiary had no operations prior
          to the merger,  OMNI is the dominant  operating company and the merger
          was in substance a reverse acquisition.  Accordingly,  the transaction
          has been treated for  accounting  purposes as a  re-capitalization  of
          OMNI and, therefore, the historical and continuing financial statement
          presentation will be a continuation of the legal subsidiary,  TEI-CAL,
          not the Company, the legal parent.

          The exchange rate in the re-capitalization  merger was one unit of the
          Company's specified securities for one unit of like kind securities of
          OMNI. The Company issued to TEI-CAL  8,852,279 shares of the Company's
          Common  Stock,  5,400 shares of the  Company's  Preferred  Stock and a
          certain number of warrants and options and  convertible  notes,  which
          were  convertible into 5,854,721 shares of the Company's Common Stock.
          TEI-CAL simultaneously exchanged on a one-for-one basis the securities
          for OMNI's  Common  Stock,  Preferred  Stock,  warrants,  options  and
          convertible   notes.  Also,  a  certain  individual  is  the  majority
          shareholder of both the Parent and the Company.

                                       F-7

<PAGE>

                        THE ENTERTAINMENT INTERNET, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 1 -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

          Basis of Consolidation
          ----------------------
          The  consolidated  financial  statements  include the  accounts of the
          Company  and  its  wholly-owned  subsidiary,  TEI-CAL,  and  TEI-CAL's
          subsidiary,  OMNI.  Accordingly,  all references herein to the Company
          include the consolidated results of its subsidiaries.  All significant
          inter-company  accounts  and  transactions  have  been  eliminated  in
          consolidation.

          Basis of Presentation
          ---------------------
          As reflected in the accompanying financial statements, the Company has
          had  recurring  losses  from  operations,  a  negative  cash flow from
          operations  and  a  negative  working  capital.  These  matters  raise
          substantial  doubt about the Company's  ability to continue as a going
          concern.

          In  view  of  the  matters  described  in  the  preceding   paragraph,
          recoverability  of a major portion of the recorded asset amounts shown
          in  the  accompanying   balance  sheet  is  dependent  upon  continued
          operations  of the  Company  which,  in turn,  is  dependent  upon the
          Company's  ability to continue to raise capital and generate  positive
          cash flows from  operations.  The financial  statements do not include
          any adjustments  relating to the  recoverability and classification of
          recorded asset amounts or amounts and  classifications  of liabilities
          that might be  necessary  should the Company be unable to continue its
          existence.

          Management  plans to take the following steps that it believes will be
          sufficient  to provide  the  Company  with the  ability to continue in
          existence:

          o    The Company is continuing to cut its operating  overhead in order
               to reduce the amount of cash needed to fund operations.

               o    Renegotiate  debt  instruments to reduce  immediate  payment
                    obligations  and extend  the  payment  date for  outstanding
                    principal balances.

               o    Structure  arrangements  for the  provision  of  services by
                    outside  consultants  and third party  providers in a manner
                    which reserves the cash flow of the Company, such as through
                    agreements  which  require  those   consultants  or  service
                    provider to take a portion of any  agreed-upon  fee in stock
                    or stock options.

               o    Acquire capital financing in the amount of 4 million dollars
                    or more  through a long-term  debt  instruments,  short-term
                    convertible notes,  private placements or other sales of the
                    Company's  securities,  as may be deemed  appropriate by the
                    Company's Board of Directors.

                                       F-8
<PAGE>


                        THE ENTERTAINMENT INTERNET, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998



NOTE 1 -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

          Reclassification
          ----------------
          Certain  prior  year  amounts  have been  reclassified  to  conform to
          current year presentation.

          Concentration of Credit Risk
          ----------------------------
          Financial  instruments,  which  potentially  subject  the  Company  to
          concentrations of credit risk, consist of cash. The Company places its
          cash with high quality financial  institutions and at times may exceed
          the FDIC $100,000 insurance limit.

          Cash and Cash Equivalents
          -------------------------
          Cash equivalents  generally include all highly liquid investments with
          original maturities of three months or less.

          Furniture and Equipment
          -----------------------
          Furniture  and  equipment  are  stated  at  cost.   Depreciation   and
          amortization  is  computed  using the  straight-line  method  over the
          useful  lives of the assets  ranging  from five to seven years and the
          life of the lease for leasehold improvements.

          Impairment of Long-Lived Assets
          -------------------------------
          In accordance  with  Financial  Accounting  Standards  Board  ("FASB")
          Statement  of   Financial   Accounting   Standards   (SFAS)  No.  121,
          "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
          Assets  to  be  Disposed  of",  long-lived  assets  are  reviewed  for
          impairment  whenever events or changes in circumstances  indicate that
          the carrying amounts of such assets may not be recoverable. Impairment
          losses  would be  recognized  if the  carrying  amounts  of the assets
          exceed the fair value of the assets.

          Stock Based Compensation
          ------------------------
          The Company  accounts for employee  stock options in  accordance  with
          Accounting Principles Board Opinion No. 25 ("APB 25"), "Accounting for
          Stock Issued to  Employees".  Under APB 25, the Company  recognizes no
          compensation  expense related to employee stock options, as no options
          are granted at a price below market price on the day of grant.

          In 1996,  FASB No.  123, "Accounting  for  Stock-Based  Compensation",
          became  effective  for the Company.  FASB 123,  which  prescribes  the
          recognition of compensation expense based on the fair value of options
          on the grant date,  allows  companies  to continue  applying APB 25 if
          certain pro forma  disclosures  are made  assuming  hypothetical  fair
          value   method,   for  which  the  Company   uses  the   Black-Scholes
          option-pricing model. See Note 9 for pro forma disclosures required by
          FASB 123 plus additional information on the Company's stock options.

                                       F-9
<PAGE>

                        THE ENTERTAINMENT INTERNET, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 1 -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

          Stock Based Compensation (Continued)
          ------------------------
          For non-employee  stock based  compensation the Company  recognizes an
          expense in accordance  with FASB 123 and values the equity  securities
          base on the fair  value of the  security  on the  date of  grant.  For
          stock-based  awards the  valued is based on the  market  value for the
          stock on the date of grant  and if the stock  has  restrictions  as to
          transferability a discount is provided for lack of tradability.  Stock
          option awards are valued using the Black-Scholes option-pricing model.

          Revenue Recognition
          -------------------
          The  Company   recognizes   revenue  from  the   subscriber   base  of
          CastNet.com.  The  subscribers pay  an upfront fee at the beginning of
          the contract  period,  generally one to two years, to be a part of the
          CastNet.com  database.  The full fee is recognized as revenue pro rata
          over the contract period.

          Advertising Costs
          -----------------
          Advertising  costs  are  expensed  as  incurred.  Advertising  expense
          amounted  to  approximately  $20,000  and  $39,000 for the years ended
          December 31, 1999 and 1998,  respectively, and is primarily  for print
          advertising.

          Research and Development
          ------------------------
          Research and development costs are expensed as incurred.  Research and
          development  costs amounted to approximately  $90,000 and $298,000 for
          the years ended December 31, 1999 and 1998,  respectively,  which have
          been included in selling, general and administrative expenses.

          Income Taxes
          ------------
          Deferred  income taxes result  primarily  from  temporary  differences
          between   financial  and  tax  reporting.   Deferred  tax  assets  and
          liabilities  are  determined  based  on  the  difference  between  the
          financial  statement  bases and tax bases of  assets  and  liabilities
          using enacted tax rates. A valuation allowance is recorded to reduce a
          deferred  tax asset to that  portion  that is  expected to more likely
          than not be realized.

          Use of Estimates
          ----------------
          Management has made a number of estimates and assumptions  relating to
          the reporting of assets and  liabilities  to prepare  these  financial
          statements   in  conformity   with   generally   accepted   accounting
          principles. Actual results could differ from the estimates made.

                                      F-10
<PAGE>

                        THE ENTERTAINMENT INTERNET, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 1 -   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

          Fair Value of Financial Instruments
          -----------------------------------
          The  Company   measures  its  financial   assets  and  liabilities  in
          accordance with generally accepted accounting principles.  For certain
          of the  Company's  financial  instruments,  including  cash  and  cash
          equivalents,  accounts  payable and  accrued  expenses,  the  carrying
          amounts  approximate  fair value due to their  short  maturities.  The
          amounts owed for notes payable,  debentures  payable and notes payable
          to stockholders  also  approximate fair value because current interest
          rates  and  terms  offered  to  the  Company  for  similar  notes  are
          substantially the same.

          Net Loss Per Common Share
          -------------------------
          The  Company  calculates  net loss per  share  based on SFAS No.  128,
          "Earnings Per Share". Basic loss per share is computed by dividing net
          loss  attributable  to common  stockholders  by the  weighted  average
          number  of  common  shares  outstanding.  Diluted  loss  per  share is
          computed  similar to basic loss per share except that the  denominator
          is increased to include the number of  additional  common  shares that
          would have been  outstanding  if the potential  common shares had been
          issued and if the additional common shares were dilutive.  At December
          31, 1999 and 1998, the weighted average shares  outstanding would have
          been  increased by 5,321,380  and  4,409,335  shares of the  Company's
          common  stock,  respectively,  if the  issued  and  exercisable  stock
          options and warrants would have been dilutive.

          Comprehensive Income
          --------------------
          In June 1998, the Financial Accounting Standards Board ("FASB") issued
          SFAS  No.  130,  "Reporting   Comprehensive   Income".  SFAS  No.  130
          establishes  standards for the reporting and display of  comprehensive
          income and its components in the financial statements.  As of December
          31,  1999  and  1998,   the  Company  has  no  items  that   represent
          comprehensive  income and,  therefore,  has not included a schedule of
          comprehensive income in the accompanying financial statements.

          Impact of Year 2000 Issue
          -------------------------
          As of January 1, 2000, the Company did not have any significant issues
          with the year 2000 and has not been  informed of any of its  customers
          and  suppliers  having any  significant  issue  that would  effect the
          Company's operations.

                                      F-11
<PAGE>

                        THE ENTERTAINMENT INTERNET, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 2 -   FURNITURE AND EQUIPMENT

          Furniture and equipment consisted of the following as of December 31,:

                                                                1999      1998
                                                             --------   --------
                   Computer equipment ...........            $477,685   $481,558
                   Computer software ............              97,085     33,148
                   Office furniture and equipment              17,657     16,360
                   Leasehold improvements .......              65,873      2,300
                                                             --------   --------
                                                              658,300    533,366
                   Less: accumulated depreciation             256,854    196,775
                                                             --------   --------
                     Total ......................            $401,446   $336,591
                                                             ========   ========

          Depreciation  expense was  $113,558  and  $131,395 for the years ended
          December 31, 1999 and 1998, respectively.

NOTE 3 -  ADVANCES FROM AFFILIATES

          As of December 31,  1998,  OMNI has  received  $345,380  from TEI. The
          advances were to fund operations.

NOTE 4 -  NOTES PAYABLE

   Notes payable consisted of the following as of December 31,:

                                                           1999         1998
                                                        -----------  -----------
   Note payable for legal settlement.  The note
   bears interest at 8.0% per year and  requires
   monthly  principal  and  interest payments of
   $3,370 with all accrued interest and principal
   due July 1999.                                       $         -  $    23,124

   Note payable for legal settlement.  The note bears
   interest at 8.0% per year and  requires  monthly
   principal  and  interest payments of $500 (1999),
   $2,000 (1998) with all accrued interest and principal
   due January 2000.                                          4,000      23,238

   Note  payable.  The note bears  interest at 10% per
   annum with all accrued  interest and  principal due
   on December 31, 1998. Also,  if the Company  closes
   one or more related or unrelated financing  transactions
   or closes one or more related or unrelated transactions
   pursuant to which it sells substantially all of
   its assets, or is merged or acquired, all accrued
   interest and principal  shall become due.  Also,
   the note is secured by substantially all assets of
   the Company.                                                   -      500,000
                                                        -----------      -------
                                                              4,000      546,362
   Less:  current portion                                     4,000      546,362
                                                        -----------      -------
   Long-term portion                                    $         -      $     -
                                                        ===========      =======

                                      F-12
<PAGE>


                        THE ENTERTAINMENT INTERNET, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998


NOTE 5 -   DEBENTURES PAYABLE

          In 1996,  the  Company  completed a debenture  private  placement  for
          aggregate  proceeds of  $1,950,000  for  $1,852,500  of notes  bearing
          interest at 10% per annum and $97,500 of Class AA stock warrants.  The
          principal  balance and all unpaid interest were due December 31, 1997.
          In 1997,  the Company and note holders agreed to convert the principal
          and interest  into the  Company's  Preferred  Stock Series B (see Note
          10). As of December 31, 1997,  the note holders for  $1,710,000 of the
          notes effectively  agreed to convert,  with the remaining note holders
          for  $142,500  electing  not to convert.  However,  in 1999,  a holder
          elected to convert  $47,500 of principal  and $11,517 of interest into
          common stock in the amount of 62,500  shares of the  Company's  common
          stock.  The stock was valued at the current  market value of the stock
          on the date of the  conversion,  with any excess of fair market  value
          over the principal and interest treated as additional interest.  As of
          December  31,  1999 and 1998,  the unpaid  principal  of  $95,000  and
          $142,500, respectively, and related interest is due and payable.

          In 1997,  the  Company  completed a debenture  private  placement  for
          aggregate  proceeds of $390,000 for $351,000 of notes bearing interest
          at 10% per annum and $39,000 of Class B stock warrants.  The principal
          balance and all unpaid  interest  were due on December 31, 1997. As of
          December 31,  1997,  the note holders for $207,000 of the notes agreed
          to extend the maturity  date to December 31, 1999,  and the  remaining
          note holders for  $144,000 did not elect to extend the maturity  date.
          In 1998,  the  Company  made a payment of $9,000 to  holder,  so as of
          December 31, 1999 and 1998,  the unpaid  principal  of $342,000  along
          with the related interest are due and payable.

          In total  debentures  payable  consist of $437,000 as of December  31,
          1999.

NOTE 6 -  NOTES PAYABLE - SHAREHOLDERS

          Notes payable  shareholders  consisted of the following as of December
          31,:

                                                                1999      1998
            10% note payable with all accrued interest
              and principal due January 15, 2001              $175,000  $200,000

            6% note payable with all accrued interest
               and principal due May 2006. (A)                 50,000     50,000

            6% note payable with all accrued interest
              and principal due May 2006. (A)                 275,453    275,453
                                                             --------   --------
                                                              500,453    525,453
            Less: current portion                                --      200,000
                                                             --------   --------
            Long-term portion                                $500,453   $325,453
                                                             ========   ========

                                      F-13
<PAGE>


                        THE ENTERTAINMENT INTERNET, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 6 -   NOTES PAYABLE - SHAREHOLDERS (Continued)

          (A) In the event  that the  Company  completes  (i) a firm  commitment
          initial public  offering for gross proceeds of at least  $7,500,000 or
          the sale of the Company (by merger, exchange, or sale of the assets or
          otherwise),  then the Company  shall be required to make equal monthly
          payments of interest  and  principal in an amount equal to the monthly
          payment necessary to fully amortize the outstanding  balance of unpaid
          principal  and interest as of the date of the event over the remaining
          term of the note.  The note holder for  $275,453  has asserted a claim
          that the  amortization  event  has  occurred  with the  merger  of the
          Company  and OMNI.  The holder has  requested  that the  Company  make
          payments of  principal  and  interest  as  required  by the note.  The
          Company  has not  complied  with the  note  holder's  request  because
          management  does not agree that an event occurred under the agreement.
          The Company has  initiated  negotiation  with the holder,  but has not
          been able to come to an agreement.  The Company  believes that if they
          are  unsuccessful,  the limit of its  exposure  is the  principal  and
          accrued  interest  and any  incidental  legal fees,  which  management
          estimates to be immaterial to the financial position of the Company.

NOTE 7 -   CONVERTIBLE NOTES PAYABLE

          In May 1998, the Company issued  convertible  promissory  notes in the
          aggregate  amount  of  $745,000  to  certain  shareholders,  officers,
          directors and  unrelated  parties.  At the request of the holder,  the
          principal and unpaid interest can be converted, at a rate of $0.09 per
          share,  into the  Company's  common stock.  Also,  these notes have an
          interest  rate  of  7.333%  and  interest  accrues  up to the  date of
          conversion.  The principal and all accrued and unpaid  interest is due
          in May 2003. In 1999 and 1998,  $152,500 and  $592,500,  respectively,
          have been converted into 1,658,055 and 6,441,758 shares, respectively,
          of the Company's common stock.

NOTE 8-  CONVERTIBLE NOTE PAYABLE - SHAREHOLDER

          In 1999,  the  Company  entered  into  financing  agreements  with two
          companies. The financing agreements provide for the lenders to provide
          funds,  as deemed  necessary,  by the  lenders.  The Company is to pay
          interest at a rate of 6% per annum, with principal due on demand.  The
          notes  also call for any  amount of the  outstanding  principal  to be
          converted into restricted  shares of the Company's common stock at the
          option of either the lenders or the Company. If the conversion feature
          is evoked,  the number of shares are to be calculated  as follows:  i)
          conversion  rate  shall  be  calculated  by  taking  60% of  the  most
          favorable closing price of shares of the Company's common stock during
          the period  extending from the first day of the calendar year prior to
          the date of issuance of the shares; ii) dividing the principal amount,
          being  converted,  by the  conversion  rate;  and iii) any accrued and
          unpaid  interest will be waived by the lender.  Also,  the Company has
          the  right,  within one year from the date of  issuance  of any shares
          issued,  to redeem the shares  for the amount of  principal,  original
          interest  and  interest  which  would  have  been due in the event the
          conversion had not taken place.

                                      F-14

<PAGE>

                        THE ENTERTAINMENT INTERNET, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 8-    CONVERTIBLE NOTE PAYABLE SHAREHOLDER (Continued)

          As of  December  31,  1999,  two  conversions  have  taken  place with
          principal  amounts of $460,000 and  $1,000,000  and interest of $5,000
          and $35,000,  respectively. The conversion rates used to calculate the
          number of restricted share to be issued were $0.281 and $0.197.  Since
          the  shareholder  received a 40% discount  from the fair market value,
          the first 20% was  attributed to the lack of tradability of the shares
          due to  restriction  on sale and the second 20% was  attributed to the
          interest  that  will  accrue  over the one year  period  from  date of
          conversion  to the  expiration  date of the buy back.  The  additional
          amount of interest was calculated to be $833,952, of which $76,096 has
          been expensed in 1999, and the remainder has been  capitalized  and is
          being expensed  proratably over the one-year  period.  At December 31,
          1999,  the Company has an  outstanding  balance of $334,000  due under
          this agreement.

NOTE 9 -   COMMITMENTS AND CONTINGENCIES

          Leases
          ------
          The Company's  future minimum  annual  aggregate  rental  payments for
          operating  and capital  leases that have initial or remaining terms in
          excess of one year are as follows:

             Year Ending December 31,:
                    2000                                $ 64,939     $ 69,000
                    2001                                  25,692       71,000
                    2002                                  11,427       78,000
                    2003                                   4,486       78,000
                    2004                                   3,738       81,000
                   Thereafter .......................       --        342,000
                                                        --------     --------
                   Total minimum lease payments .....    110,282     $191,000
                                                                     ========
                   Less: amount representing interest     16,433
                                                        --------
                   Present value of minimum lease
                    payments ........................     93,849
                   Less:  current portion ...........     55,169
                                                        --------
                   Long-term portion ................   $ 38,680
                                                        ========

          Rent  expense  for the  years  ended  December  31,  1999 and 1998 was
          approximately $81,000 and $48,000, respectively.

          The following is a summary of property  held under the capital  leases
          as of December 31,:

                                                      1999       1998
                                                    --------   --------
                   Computer equipment ...........   $267,721   $250,749
                   Computer software ............      7,381      7,381
                   Office furniture and equipment     27,122     27,122
                                                    --------   --------
                                                     302,224    285,252
                   Less: accumulated depreciation    158,578    149,673
                                                    --------   --------
                     Total ......................   $143,646   $135,579
                                                    ========   ========

                                      F-15

<PAGE>

                        THE ENTERTAINMENT INTERNET, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 9 -   COMMITMENTS AND CONTINGENCIES (Continued)

          Litigation
          ----------
          The Company is involved  with certain  legal  proceedings  and claims,
          which  arise due to alleged  non-performance  of  payment of  existing
          liabilities.  These  specific  liabilities  have been  recorded in the
          ordinary  course of  business.  Any such  claims  will be settled in a
          professional  manner,  and  management  does not  anticipate  that the
          outcome of these matters will have a materially  adverse effect on the
          Company's  financial  position or results of  operations,  see Note 13
          "Subsequent Events."

          Employment Agreement
          --------------------
          In November  1999, the Company  executed an employment  agreement with
          its COO. The  agreement is for a three-year  period with annual raises
          of 15% each year.  Also,  in 2000,  the Company  will  execute a stock
          option for the  purchase  of 100,000  shares of the  Company's  common
          stock with terms comparable to other employees of his status.

NOTE 9 -   STOCK, WARRANTS AND OPTIONS

          Preferred Stock
          ---------------
          The Company is authorized to issue  1,000,000  shares of its preferred
          stock in one or more series.

          In 1997,  the Company  agreed with certain note holders to issue 5,400
          shares of Preferred  Stock Series B for the  conversion  of $1,710,000
          and $232,300 of principal and interest, respectively, and cancellation
          of 1,775,000 Class AAA warrants.  Each share has the following rights:
          i)  liquidation  preference  of $500 per share,  ii) receive an annual
          dividend of $36.67,  payable in additional  shares of Preferred  Stock
          Series B, iii) convertible,  at the holders option, into 100 shares of
          the Company's common stock,  iv) automatic  conversion into 100 shares
          of the Company's  common stock upon the Company's common stock trading
          at or above  $5.50 per share for any five of ten  consecutive  trading
          days and v) is  redeemable  at $500 per  share  at the  option  of the
          Company.

          Common Stock
          ------------
          In May 1998,  the Company  issued a  convertible  promissory  note for
          $592,500,  which was converted into 6,441,758  shares of the Company's
          common stock as of December 31, 1998.  The note had a rate of interest
          at  7.333%  up to the date of  conversion.  The  Company  has  accrued
          interest of  approximately  $9,200,  which was not converted,  and has
          included it in accounts  payable and accrued  expenses at December 31,
          1998.

          For the year ended  December 31, 1999,  the Company had the  following
          significant  transactions  for its  common  stock:

          o    Issued  14,077,145  shares in the  merger  with  Only  Multimedia
               Network,  Inc.  for  $493,713 of its equity as of the date of the
               merger.

          o    Issued 17,231,619 shares for the conversion for notes payable and
               related  interest.  See the  notes  payable  notes  for  detailed
               descriptions of the issuances.

                                      F-16

<PAGE>


                        THE ENTERTAINMENT INTERNET, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 10 - STOCK, WARRANTS AND OPTIONS (Continued)

          Common Stock (Continued)
          ------------
          o    Issued   3,062,514  shares  as  $1,456,651  of  compensation  for
               services  rendered.  The shares  were  valued at the fair  market
               value of the shares as of the date of issuance,  as determined by
               the closing  trading price of the Company's  common stock.  Also,
               the closing  trading price was  discounted by 20% due to the lack
               of   tradability  of  the  shares  given  the   restrictions   on
               transferability.

          o    Issued 1,368,421 shares for cash proceeds of $328,258.  Also, the
               Company   incurred   $74,000  of  offering   cost  related  to  a
               commission, which was paid by the Company's issuance of a warrant
               to purchase  54,545  shares of the  Company's  common stock for a
               period of three years at $0.55 per share.  See Stock Warrants for
               the valuation of this warrant.

          Stock Warrants
          --------------
          The fair value for the  warrants  was  estimated  at the date of grant
          using a Black-Scholes option pricing model with the following weighted
          average  assumptions  for 1999 and 1998:  weighted  average  risk-free
          interest  rates  of  5.5;  dividend  yields  of  0%;  weighted-average
          volatility  factors  of the  expected  market  price of the  Company's
          common  stock of 256% (1999) and 277% (1998);  and a weighted  average
          expected life of the option of 3 to 5 years (1999) and 3 years (1998).
          The Company issued the following stock warrants, as follows:

          For the year ended December 31, 1998:

          o    Two warrants as commission  for finders fees relating the sale of
               TEI's common stock.  The warrants are for the purchase of 124,286
               and 33,333  shares of the  Company's  common  stock at $0.175 and
               $0.15,  respectively,  for three years each.  The warrants had an
               aggregate fair value at date of grant of $375,415.

          o    A warrant in connection with the Company's  employment  agreement
               with the majority  stockholder to purchase  200,000 shares of the
               Company's  common stock at $0.25 per share through December 2003.
               The warrant had a fair value at date of grant of $50,000.

          For the year ended December 31, 1999:

          o    Issued a warrant as  commission  for finder's fees related to the
               sale of common  stock.  The warrant is for the purchase of 54,545
               shares of the  Company's  common stock at $0.55 per share for two
               years. The warrant had a fair value at date of grant of $74,000.

          o    Issued a warrant  for  services rendered.  The warrant is for the
               purchase of 25,000 shares of the Company's  common stock at $1.00
               per share for a period of ten years. The warrant had a fair value
               at date of grant of $18,000.

                                      F-17

<PAGE>

                        THE ENTERTAINMENT INTERNET, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 10 -   STOCK, WARRANTS AND OPTIONS (Continued)

          o    Issued a warrant  for  service  rendered.  The warrant is for the
               purchase of 200,000 shares of the Company's common stock at $1.00
               per share for a period of ten years. The warrant had a fair value
               at date of grant of $69,000.

          The following table summarizes the stock warrants issued:

                                                                       Weighted
                                                                        Average
                                                                       Exercise
                                                      Warrants           Price
                                                      --------         ---------
       Options outstanding, December 31, 1997         2,671,716         $  3.25
       Granted                                          357,619         $  0.21
       Exercised                                              -         $  -
       Cancelled/expired                                      -         $  -
                                                     ----------

      Options outstanding and exercisable,
         December 31, 1998                            3,029,335         $  2.89
      Granted                                           329,545         $  0.93
      Exercised                                               -         $   -
      Cancelled/expired                               (  50,000)        $  2.46
                                                     ----------
      Options outstanding and exercisable,
         December 31, 1999                             3,308,880        $  2.70
                                                     ===========

          The  following  table   summarizes  the  outstanding  and  exercisable
          warrants grouped by range of exercise prices as of December 31, 1999:

                                                   Weighted          Weighted
                                                   Average           Average
                                                   Exercise          Remaining
            Range of Exercise Prices                Price              Life
            ------------------------                -------          ----------
            $0.01 to $0.25                           $0.12             2.19
            $1.00 to $2.60                           $1.89             4.13
            $6.00                                    $6.00             1.00

          Stock Options
          -------------
          Effective March 1, 1999, the Company adopted an employee stock option,
          which expires  February 28, 2009.  The exercise  price for the options
          shall be  determined by the Plan  administrator  at the date of grant,
          but shall not be less than the fair market value at the date of grant.
          The plan has  reserved a maximum  shares to be issued under the option
          plan not to exceed 3,000,000.

                                      F-18

<PAGE>

                        THE ENTERTAINMENT INTERNET, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 10 -   STOCK, WARRANTS AND OPTIONS (Continued)

          Stock Options (Continued)

          Pro forma  information  regarding net income and earnings per share is
          required by Statement  123, and has been  determined as if the Company
          had  accounted  for its employee  stock  options  under the fair value
          method  of that  Statement.  The fair  value  for  these  options  was
          estimated at the date of grant using a  Black-Scholes  option  pricing
          model  with  the  following  weighted-average  assumptions  for  1999:
          weighted- average risk-free interest rates of 5.5%; dividend yields of
          0%;  weighted-average  volatility factors of the expected market price
          of the  Company's  common  stock of  1,473%;  and a  weighted  average
          expected life of the option of 3 years.

          This  option  valuation  model  requires  input of  highly  subjective
          assumptions.   Because  the  Company's  employee  stock  options  have
          characteristics  significantly different from those of traded options,
          and because changes in the subjective input assumptions can materially
          affect the fair value estimate,  in management's opinion, the existing
          model does not  necessarily  provide a reliable  single measure of the
          fair value of its employee stock options.

          The Company has adopted  only the  disclosure  provisions  of SFAS No.
          123, "Accounting for Stock-Based Compensation".  It applies Accounting
          Principles  Bulletin  ("APB")  Opinion No. 25,  "Accounting  for Stock
          Issued to Employees",  and related  interpretations  in accounting for
          its  plans  and  does  not  recognize  compensation  expense  for  its
          stock-based  compensation  plans other than for  restricted  stock and
          options issued to outside third parties. If the Company had elected to
          recognize  compensation expense based upon the fair value at the grant
          date for awards  under these  plans  consistent  with the  methodology
          prescribed  by SFAS 123, the  Company's net loss would be increased by
          approximately  $333,400  and $54,000 for the years ended  December 31,
          1999 and 1998, respectively, to the pro forma amounts indicated below.

                                                    1999             1998
                                              ---------------  -------------
                  Net Loss:
                    As reported                $( 3,813,407)    $( 2,241,508)
                                               =============    ============
                    Pro forma                  $( 4,146,807)    $( 2,295,508)
                                               ============     ============


          The effects of applying Statement 123 in this pro forma disclosure may
          not be indicative of future amounts. Additional awards in future years
          are anticipated.
                                      F-19

<PAGE>

                        THE ENTERTAINMENT INTERNET, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998


NOTE 10 -   STOCK, WARRANTS AND OPTIONS (Continued)

          Stock Options (Continued)

          The following summarizes the Company's stock option transactions under
          the stock option plan:

                                                                       Weighted
                                                                        Average
                                                      Stock Options    Exercise
                                                       Outstanding       Price
                                                      -------------    --------
           Options outstanding, December 31, 1997        1,425,000     $  2.34
             Granted                                             -        -
             Expired                                   (    45,000)    $  1.89
                                                      ------------
           Options outstanding, December 31, 1998        1,380,000     $  2.28
             Granted                                       632,500     $  1.10
                                                       -----------
           Options outstanding, December 31, 1999        2,012,500     $  1.51
                                                        ==========

           Options exercisable, December 31, 1998        1,346,250     $  2.33
                                                        ==========

           Options exercisable, December 31, 1999        1,841,667     $  2.33
                                                        ==========

          The  weighted  average  remaining  contract  lives  of  stock  options
          outstanding are 2.5 years.

NOTE 11 -  INCOME TAXES

          The  reconciliation  of income taxes computed at the federal statutory
          tax rate to income tax expense at the effective  income tax rate is as
          follows at December 31,:

                                                       1999            1998
                                                  -------------    -----------
         Federal statutory income tax
             (benefit) rate                       (     34.0)%       (   34.0)%
           Effect of valuation allowance                34.0%            34.0%
                                                  ------------     ------------
         Effective income tax (benefit) rate               -%               -%
                                                  ============     ============

          The  component of the net deferred tax asset is as follows at December
          31,:

                                                          1999            1998
                                                     -----------    ------------
             Net operating loss carry-forwards       $ 3,667,000    $ 2,299,000
             Valuation allowance                      (3,667,000)    (2,299,000)
                                                     -----------    -----------
             Net deferred asset                      $       -      $       -
                                                     ===========    ===========

                                      F-20
<PAGE>

                        THE ENTERTAINMENT INTERNET, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 11 -  INCOME TAXES (Continued)

          In assessing  the  realizability  of deferred  tax assets,  management
          considers  whether it is more likely than not that some portion or all
          of the  deferred  tax  assets  will  not  be  realized.  The  ultimate
          realization of deferred tax assets is dependent upon the generation of
          future  taxable  income  during the periods in which  those  temporary
          differences become deductible.  Based on projections of future taxable
          income over the periods, which the deferred tax assets are deductible,
          as of December  31,  1998,  management  believes it is likely that the
          Company will not realize the benefits of these deductible differences,
          and therefore a full valuation  allowance is required.  The net change
          in the valuation  allowance for the years ended  December 31, 1999 and
          1998 increased by approximately $1,368,000 and $767,000, respectively.

          The  Company  has   available  at  December  31,  1999   approximately
          $10,786,000  of  unused  operating  loss  carry-forwards  that  may be
          applied against future taxable income and that expire in various years
          starting from 2010. However,  the merger, as described further in Note
          1, may place limitations as to the ability to use these operating loss
          carryforwards.

NOTE 12 -  DISCONTINUED OPERATIONS

          In July 1998, the Company's  management decided to discontinue the ISP
          operations  and focus the  Company's  resources on the  operations  of
          CastNet.  The plan to discontinue the ISP operations was to inform the
          customers  that as of  September  1, 1998,  they would not be provided
          service,  and as of October 1, 1998, the infrastructure was dismantled
          and  converted to other uses,  such as the CastNet  operations.  As of
          December 31, 1998,  the shut down of the ISP  operations  was complete
          and no additional costs were required.  Following is summary financial
          information for the Company's discontinued ISP operations:

                                                       For the Year Ended
                                                       ------------------
                                                      1999            1998
                                                   ---------      ------------
            Net sales                              $      -       $    402,841
                                                   =========      ============
            Loss from discontinued operations:
               Before taxes                                         (  402,841)
               Provision for income taxes                  -                 -
                                                   ---------      ------------
               Net                                 $(      -)      $(  402,841)
                                                   =========      ============


                                      F-21
<PAGE>

                        THE ENTERTAINMENT INTERNET, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 13 -  SUBSEQUENT EVENTS

          Pacific Bell Settlement
          -----------------------
          In March  2000,  the  Company  entered  into an  agreement  to  settle
          outstanding  amounts due to Pacific Bell  ("Pac").  Over the last four
          years, The Company had accrued fees that management  anticipated would
          be due to Pac  based on  contractual  agreements  entered  into by the
          Company.  As of December 31, 1999, the Company had accrued expenses of
          approximately  $418,000.  The settlement stipulates for the Company to
          pay  Pac  approximately  $8,500  over  a  six-month  period.  For  the
          consideration,  Pac  relieves  the  Company  of any past  due  amounts
          whether invoiced or not.

          1996 Subordinated Debt Settlement
          ---------------------------------
          In April 2000, the Company has entered into an agreement with the last
          note  holder of the 1996  debentures.  The parties  are  awaiting  the
          approval of the courts. The Company will be required to make a $10,000
          payment  upon the approval of the  agreement  with the balance due one
          year from the first  payment.  Also,  the Company would be required to
          make  monthly  interest  payments  at the rate of 10% per annum on the
          unpaid balance.

          Employment Agreement
          --------------------
          Effective  January 2000, The Company executed an employment  agreement
          with its CEO. The agreement is for a three-year  period with an annual
          salary for 2000 at $250,000 with annual raises to the extent necessary
          to ensure the CEO's  salary is equal to the salary  provided  to other
          comparable   employees  of  the  Company.  As  consideration  for  the
          execution of this  agreement the CEO shall receive  850,000  shares of
          the  Company's  common  stock and an option to purchase an  equivalent
          number of shares of common stock at a price of $0.50,  exercisable for
          5 years and vested in accordance  with  Employer's  Stock Option Plan.
          Also, the agreement  calls for bonus payments to be made to the CEO in
          the event the Company's  common stock reaches  certain  trading levels
          and sustains the same for a period of 30 days  thereafter;  such bonus
          structure  grants the CEO  additional  shares of the Company's  common
          stock ("shares") for exceptional  performance in the following manner:
          Sustained Stock Price CEO Receives

              One dollar ($1.00):    two hundred thousand (200,000) shares;
 Two dollars fifty cents ($2.50);    one hundred thousand (100,000) shares;
            Five dollars ($5.00):    three hundred thousand (300,000) shares;
Seven dollars fifty cents ($7.50):   two hundred thousand (200,000) shares;
            Ten dollars ($10.00):    three hundred thousand (300,000) shares;

                                      F-22
<PAGE>



                        THE ENTERTAINMENT INTERNET, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 13 -  SUBSEQUENT EVENTS

          Employment Agreement (continued
          --------------------
          In the event of sale,  acquisition,  merger, and or changes in control
          after which the services of the CEO are no longer desired, the Company
          shall have the right to  terminate  this  Agreement  in  exchange  for
          certain compensation to CEO

          Employment Agreement
          --------------------
          In November  1999, The Company  executed an employment  agreement with
          its COO.  The  agreement  is for a  three-year  period  with an annual
          salary for 2000 at $200,000 with annual raises of 15% each year. Also,
          in 2000,  the Company  will execute a stock option for the purchase of
          100,000 shares of the Company's  common stock with terns comparable to
          other employees of his status.


                                      F-23
<PAGE>





                                   SIGNATURES

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

                                   THE ENTERTAINMENT INTERNET, INC.


Amendment No. 1                         /s/ Michael Solomon
April 18, 2000                      By: -----------------------
                                         Michael Solomon
                                         Chief Executive Officer &
                                         Chief Financial Officer


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

     Signature                          Title               Date
     ---------                          -----               ----

/s/ Michael Solomon             Director, CEO, CFO         April 14, 2000


/s/ Jeremy Schuster             Director, COO              April 14, 2000


/s/ Marilyn Foster              Director                   April 14, 2000


/s/   Thom Mount                Director                   April 14, 2000


/s/   James T. Zelloe           Director                   April 14, 2000


                                       44
<PAGE>







                                  EXHIBIT INDEX


Exhibit
Number                     Description
--------      -----------------------------
22.1      Plan of Merger by and among THE ENTERTAINMENT INTERNET, INC., and ONLY
          MULTIMEDIA NETWORK INCORPORATED effective as of March 22, 1999 (filed
          herewith)

3.1       Amended  and  Restated   Articles  of   Incorporation   of  Registrant
          (incorporated  herein  by  reference  to  the  Company's  Registration
          Statement on Form 10-SB 12(g), File No. 000-28173)

3.2       ByLaws  of  Registrant   (incorporated  herein  by  reference  to  the
          Company's  Registration  Statement  on  Form  10-SB  12(g),  File  No.
          000-28173)

4.1       The  Entertainment  Internet,  Inc.  Stock  Option Plan  (incorporated
          herein by reference to the  Company's  Registration  Statement on Form
          10-SB 12(g), File No. 000-28173)

10.2      Michael Solomon Employment Agreement (filed herewith)

27.1      Financial Data Schedule (Amended) (filed herewith)



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