<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

(Mark one)

[X]     ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT OF 1934
        For the fiscal year ended June 30, 2001
                                  -------------

                                       OR

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

        For the transition period from ____________ to

                         Commission File No. 2-78335-NY

                            DIVA ENTERTAINMENT, INC.
                            ------------------------
                 (Name of small business issuer in its charter)

<TABLE>
<S>                                                                                     <C>
       Delaware                                                                             33-0601498
-----------------------------------------------------------------------------------------------------------
(State or other jurisdiction of                                                           (I.R.S. Employer
incorporation or organization)                                                          Identification No.)

6100 Wilshire Boulevard, Suite 710, Los Angeles, California                                          90048
-----------------------------------------------------------------------------------------------------------
(Address of principal executive offices)                                                         (Zip Code)
</TABLE>

Issuer's telephone number: (323) 692-1730

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

Securities registered under Section 12(g) of the Exchange Act:  None

Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the Company was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.

                                    YES ______   NO     X
                                                     -------

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

State the issuer's revenues for its most recent fiscal year:  $2,031,917

The aggregate market value of the voting and non-voting equity held by
non-affiliates is not determinable since the Company's common stock is not
traded.

State the number of shares outstanding of the issuer's classes of common equity,
as of the latest practicable date: 5,498,800 shares of Common Stock, $0.001 par
value per share, as of June 30, 2002.

Transitional Small Business Disclosure Format (check one):  YES _____  NO    X
                                                                           -----

<PAGE>

                                     PART I

Item 1.   Description of Business

Introduction

        Diva Entertainment, Inc., a Delaware corporation (the "Company"), was
incorporated in December 1992 in the State of Delaware under the name Quasar
Projects Company. The Company was formed for the purpose of merging with or
acquiring an operating company with operating history and assets. The primary
activity was seeking companies with which to merge or to acquire. From its
inception through April 28, 1999, the Company generated nominal revenues and,
prior to April 28, 1999, the Company did not actively engage in business for at
least one fiscal year.

        Since April 28, 1999, the Company has been engaged in the business of
owning, operating and managing talent agencies through its subsidiary Diva
Entertainment, Inc., a Florida corporation ("Diva-Florida"), and its
subsidiaries - Prima Eastwest Model Management, Inc., a California corporation
("Prima"), and Que Management Inc., a New York corporation ("Que").

Recent Developments

        Effective January 14, 2000, JR Consulting, Inc., the Company's former
parent ("JRCI") consummated a corporate combination agreement (the "Agreement")
with Providential Securities, Inc. ("Providential"), whereby JRCI acquired
20,000,000 shares of the issued and outstanding capital stock of Providential in
exchange for 30,000,000 shares of JRCI's common stock (the "JRCI Shares"). Under
the Agreement, JRCI effected a 1-for-2 reverse stock split. The transaction was
consummated on January 14, 2000.

        In addition, as a covenant under the Agreement, JRCI sold to Havilland
Limited, a related entity, all of the shares of the Company owned by JRCI as
well as assigned all of its rights, title and interest in an Option Agreement
(see Note A-2 and Note H-4 to the Financial Statements) to Havilland Limited. On
June 30, 2000, Havilland Limited entered into an agreement with JRCI, now known
as Providential Holdings, Inc., whereby the 4,225,000 shares of common stock,
3,000 shares of Series B Redeemable Convertible Preferred Stock and the rights,
title and interest in the Option Agreement (see Note H to the Financial
Statements) owned by JRCI were exchanged for (i) the assignment to and
assumption by Havilland of (A) the amounts due by JRCI to officers of the
Company and (B) the amounts due to JRCI from the Company amounting to $94,843,
and (ii) the return of 135,000 shares of common stock of JRCI owned by
Havilland.

The Business

        The Company is in the business of representing talent including
professional fashion models, commercial actors and theatrical actors. The talent
management business, including model management, is based upon obtaining talent
and matching talent to clientele. Traditional modeling clientele include print
and television advertising, and runway. Both male and female fashion models have
a limited career span. Most professional models are aged between 18 and 25
years, although there is a limited market for child and mature models. As a
result, the talent management business is characterized by continuous talent
turnover, the need to discover new talent and the need to anticipate and adapt
to changing consumer tastes.

                                        1

<PAGE>

        Talent management fees are based on a percentage of the model's fee,
plus additional fees paid by the clientele. The Company's over 500 clients
include magazine publishing houses, designers, national retailers and catalogs
including Elle Magazine, Talbot's, Nordstroms, Banana Republic and Macy's.

Services

        Prima is divided into two principal divisions, which are designated
"Print" and "Profile." Historically, Prima has retained an experienced manager
in the particular field to run each division. Que is managed by two experienced
managers in the field of print. The Print divisions of Prima and Que operate in
the competitive modeling agency field acting as agents for models and are
subdivided into male and female subdivisions. Prima also provides hair, make up
and styling services for models, actors, actresses and celebrities through its
Profile division. This division not only offers an important service to the
Print division, but it also provides Prima with an entry into the
celebrity/entertainment field.

        In June, 2001, Prima commenced operation of a Talent and Commercial
division. This division seeks to introduce models who may have a career in the
print modeling industry into both the audio and visual entertainment industry
and conversely to expand the exposure and portfolio of artists currently in
audio and visual entertainment in the print modeling industry. While management
believes that this will be a valuable addition to its existing services, no
assurance can be given that this will be successful.

        For the year ended June 30, 2001, the Print division generated
$1,857,000 in management fees, net. During this same period, the Profile
division generated $160,000 in management fees, net. The Talent and Commercial
division generated $15,000 in management fees.

        In September, the manager of the Profile division left Prima taking with
her the entire division, including talent, bookers and related employees. As a
result, this division was shut down from October 2000 through January 2001.
Prima subsequently reopened the Profile division after hiring an experienced
manager in this particular field. Management expects that over the next 12
months this division will grow to its former size, however, no assurance can be
given that will be the case.

Marketing

        The traditional markets for Prima and Que are in the field of print.
This includes not only magazines such as Vanity Fair, Glamour, GQ, Mirabella,
Cosmopolitan, Allure and Vogue; but also advertising agencies, catalogues; movie
production companies such as Universal, Paramount and Warner Brothers; and
general industry such as Calvin Klein, Levi's, ABC Television, and the Gianni
Versace organization.

        Prima and Que advertise in trade journals used extensively by
professionals seeking print modeling services. Furthermore, industry magazines
and television have viewed Prima and Que as being high-profile, fast-growing
boutique agencies. Prima and Que's models have been widely seen on magazine
covers. This creates a flow of new clients and new models. Prima and Que also
rely on their reputations to attract clients and model talent.

                                        2

<PAGE>

Competition

        The Print division of Prima and Que both compete with the major
world-wide model agencies, several of which are headquartered in New York. Each
of Prima and Que also competes with many smaller regional firms. Management
believes that because each of Prima and Que frequently works with a network of
independent agencies when placing its models in other markets and conversely
helps place other agencies' models in the New York and Los Angeles markets,
Prima and Que can compete with the major agencies on a world-wide basis.

        While the New York market with the larger firms tends to attract the
super models with its major European markets and larger fee income, Los Angeles
on the other hand attracts models who are also seeking an entry into the
entertainment industry. The entertainment industry dominates the Los Angeles
market and Prima is thus able to provide agency services for models to both
print and entertainment industry work. The Company's Profile division, with its
service of both the modeling and celebrity market, combined with the
introduction of the Talent and Commercial division at Prima, should enable Prima
to compete very effectively in the entertainment and modeling industry. However,
there can be no assurance that any such competitive advantage will materialize
or be reflected in greater revenues.

        Working as a team and having the expertise of the other in its
particular region, Que and Prima are each able to operate more effectively and
efficiently by coordinating many of the jobs between the two companies. This
enhances their ability to compete with the major world-wide model agencies.
Notwithstanding this, there can be no assurance that the Company can compete
effectively in the future.

Customer and Talent Base

        Prima has been in business for over ten years. Over that period, it has
maintained a wide base of both customers and models. The client base is very
diverse, ranging from department stores to record companies and movie production
firms and is not linked solely to the geographic Los Angeles market. Que,
although opened more recently on January 5, 1998, also has a similarly diverse
client base.

        Any modeling agency must expand by increasing the talent that it has as
part of its portfolio. Que and Prima have had and continue to have a foundation
of existing talent, both male and female. The talent base is very diverse
including models with different ethnic backgrounds and looks. Furthermore, Que
and Prima operate a year-round scouting program with individual scouts traveling
around the United States, Europe (both central and eastern) and South America in
search of new talent.

        The wide base in both customers and talent enables Prima and Que to meet
the demands of its industry. This wide base in customers and talent will also
enable Diva to expand its operations.

Employees

        At June 30, 2001, the Company had 20 employees. None of the employees is
subject to any collective bargaining agreement. Prima and Que consider their
relationships with their employees to be good.

                                        3

<PAGE>

Seasonality

        The Company's business is not affected by seasonality to any significant
degree.

Item 2.   Description of Property

        The Company's current address is 180 Varick Street, 13th Floor, New
York, New York 10014. Que leases 3,650 square feet of office space at 180 Varick
Street, 13th Floor, New York, New York 10014, pursuant to a lease that expires
on December 31, 2002. The rent for this space is approximately $6,000 per month
for the calendar year 2001 with rent increasing annually to $6,333.33 per month
for the calendar year 2002.

        Prima leases offices at 6100 Wilshire Boulevard, Suite 710, Los Angeles,
California 90048, consisting of 2,476 square feet. Prima leases the offices
pursuant to a lease that expires on December 31, 2003 at a rent of $4,580.60 per
month.

Item 3.   Legal Proceedings

        The Company is a defendant in the matter of Barry Seidman, Richard S.
Beatty, Brad Blumenthal, Alex Halpern, Steven Louth, Dale Steen, Frederick A.
Lenz and Jesse Reggio v. Diva Entertainment, Inc. and Peter Zachariou, Case No.
GIC767838, in the Superior Court of California, County of San Diego. In their
complaint, the Plaintiffs alleged securities fraud in connection with the sale
by the Company and purchase by the Plaintiffs of certain shares of Series A
Preferred Stock. The case was settled on June 18, 2002 and, pursuant to the
settlement agreement, the case has been dismissed with prejudice and the parties
have entered into mutual general releases.

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

        None.

                                     PART II

Item 5.   Market for Common Equity and Related Stockholder Matters

        As of this date, the Company's common stock is not trading or listed on
any exchange. Management intends to list the Company's common stock on the OTC
Bulletin Board. However, prior to applying for listing of its securities, the
Company must ensure that the Company's filings with the U.S. Securities and
Exchange Commission are current. The Company is currently not current with these
filings. Management intends to complete the filings necessary to bring the
Company current with its filing obligations, however, no assurance can be made
that this will be done or, if done, that the Company will be successful with its
application to have the Company's common stock traded or listed on an exchange.

        As of June 30, 2001, the Company had 284 holders of record of its Common
Stock.

Recent Sales of Unregistered Securities

        In May 1998, Diva-Florida sold 221,000 shares of its Series A
Convertible Preferred Stock at a price of $2.00 per share. Commissions of
$30,000 were paid in connection with such

                                        4

<PAGE>

sales. The proceeds were applied to working capital. Pursuant to the
reorganization, which became effective in April 1999, 200,000 of these shares
were exchanged for 200 shares of Series A Convertible Preferred Stock of the
Company. The balance of 21,000 shares was redeemed by Diva-Florida.

        In January through March 1999, the Company conducted a private offering
of 750 shares of Series A Convertible Preferred Stock at a price of $2,000 per
share. Diva sold 375 shares and received $750,000 of the offering proceeds in
cash. These proceeds were used to finance capital expenditures and applied to
working capital.

        In February 2000, the Company sold 100 shares of Series C Convertible
Preferred Stock in consideration for $100,000. The investor was an accredited
investor and the shares were sold pursuant to Rule 506 of Regulation D
promulgated under the Securities Act of 1933, as amended.

Dividends

        The Company has not declared any cash dividends with respect to its
Common Stock during the prior two years and does not anticipate paying cash
dividends on its Common Stock in the foreseeable future. However, holders of the
Company's Series A and Series B Preferred Stock are entitled to receive
cumulative preferential dividends which may be paid in cash or shares of the
Company's Common Stock. As described in the Company's financial statements, if
and when the Company's Series A and Series B Preferred Stock are converted into
Common Stock, there will be reflected a certain amount as deemed preferred
dividends on the Company's statement of operations.

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

        Except for the historical information contained herein, the matters
discussed in this item are forward looking statements involving risks and
uncertainties that may cause actual results to materially differ. Those risks
and uncertainties include but are not limited to economic, competitive, industry
and market factors affecting the Company's operations, markets, products, prices
and other factors discussed in the Company's filings with the SEC.

Results of Operations for Fiscal Years ended June 30, 2000 and June 30, 2001

        The Company incurred a loss from operations of $124,000 for the year
ended June 30, 2001 ("Fiscal 2001") compared with a loss from operations of
$218,000 for the year ended June 30, 2000 ("Fiscal 2000"). The reduction in
losses results from continued efforts by management to increase sales and
decrease operating costs. The Company's revenues decreased and were $2,032,000
in Fiscal 2001 as compared to $2,249,000 in Fiscal 2000. Selling, general and
administrative expenses decreased to $1,999,000 in Fiscal 2001 as compared to
$2,315,000 in Fiscal 2000. The Company's ability to recognize income
attributable to common stockholders during Fiscal 2000 is in large part because
of the Company's recognition of other income of $503,000 from the settlement of
a litigation matter. Without this other income, the Company's income (loss)
attributable to common stockholders in Fiscal 2001 and Fiscal 2000 would be
consistent.

        Prima experienced a difficult year with the loss of its entire Profile
division in September 2000 and its two most senior managers in the Print
division for men in December 2000. Both of these events caused Prima to lose
significant revenue. Furthermore, when the

                                        5

<PAGE>

Profile division was restarted and the Talent and Commercial division was
opened, additional expenses were incurred. As a result, in Fiscal 2001, Prima
sales declined to $446,000 compared to $1,170,000 for Fiscal 2000. Selling,
general and administrative expenses did not decline proportionately, primarily
due to the start up cost of the new divisions. In Fiscal 2001, Prima selling,
general and administrative expenses declined to $606,000 compared to $1,030,000
for Fiscal 2000. Thus the operating loss increased to $245,000 in Fiscal 2001
from a loss of $35,000 in Fiscal 2000. Management expects an improvement in
sales during the forthcoming years, although there can be no assurance that this
will happen.

         Que experienced a successful year. In Fiscal 2001 sales increased to
$1,586,000 compared to $1,078,000 in Fiscal 2000. Furthermore, the selling,
general and administrative expenses did not increase proportionately, instead
rising to $1,306,000 in Fiscal 2001 from $1,113,000 in Fiscal 2000. Thus, the
operating loss in Fiscal 2000 of $107,000 changed to an operating profit of
$208,000 in Fiscal 2001. Management continues to expect improvement in sales
during the forthcoming years, although there can be no assurance that this will
happen.

Trends and Uncertainties

         Prima and Que each continue to seek to expand and increase their
customer bases and operating revenues. In doing so it is probable that the
Company's administrative expenses and overhead are likely to increase in future
periods. The continuation of obtaining additional types of business and markets
is uncertain and the continued success of any of the Company's new marketing
strategies for generating revenue is uncertain.

         The events of September 11, 2001 at the World Trade Center will have a
detrimental impact on the operations of both Prima and Que. The extent and
duration of this impact is not yet known.

Liquidity and Capital Resources

         On June 30, 2001, the Company had a working capital deficit of $787,000
as compared to a working capital deficit of $455,000 on June 30, 2000. The
increase in working capital deficit is primarily due to the increased dividend
due and payable to preferred stockholders and the repayment of approximately
$80,000 due to officers. The Company requires capital resources as the operating
companies must pay their modeling talent soon after services are rendered. While
the accounts receivable for these operating companies are generally due in 30
days, they are usually collected within 60 to 120 days.

         In January through March 1999, the Company conducted a private offering
of 750 shares of Series A Convertible Preferred Stock. In addition, in February
2000, the Company received $100,000 from the sale of Series C Convertible
Preferred Stock. These proceeds have been applied to working capital.

         The Company expects that the working capital cash requirements over the
next 12 months will be generated from operations. To the extent that this is not
possible or there is a shortfall, Mr. Zachariou has agreed to personally support
the Company's cash requirements to enable it to meet its current obligations
through June 30, 2002. The Company has no other commitments for additional
funding and no assurance can be given that it will obtain additional funding.

                                        6

<PAGE>

Item 7.  Financial Statements

     The Financial Statements are attached to this Report.

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

     Effective July 31, 2000, the Company changed its independent auditor from
Marcum & Kliegman, LLP to Grant Thornton LLP. The Company's financial statements
prepared by Marcum & Kliegman for either of the past two years contained no
adverse opinion or disclaimer of opinion, and were not qualified as to
uncertainty, scope or accounting principle. The decision to change the
accountants was recommended by the Company's Board of Directors. There were no
disagreements with Marcum & Kliegman on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure which,
if not resolved to Marcum & Kliegman's satisfaction, would have caused Marcum &
Kliegman to make reference to the subject matter of the disagreement in
connection with Marcum & Kliegman's report.

     Effective January 28, 2002, the Company changed its independent auditor
from Grant Thornton LLP to Paritz & Company, P.A. The Company's financial
statements prepared by Grant Thornton for the last year contained no adverse
opinion or disclaimer of opinion, and were not qualified as to uncertainty,
scope or accounting principle. The decision to change the accountants was
recommended by the Company's Board of Directors and was the driven by the
Board's desire to decrease the Company's expenses. There were no disagreements
with Grant Thornton on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure which, if not
resolved to Grant Thornton's satisfaction, would have caused Grant Thornton to
make reference to the subject matter of the disagreement in connection with
Grant Thornton's report.

                                    PART III

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


     The following table sets forth certain information with respect to the
Directors and Executive Officers of the Company.

Name                   Age    Position

Peter Zachariou        40     President, Chairman of the Board and Treasurer

David Lean             55     Principal Accounting Officer, Acting Secretary
                              and Director

     Directors are elected at the annual meeting of stockholders and hold office
until the following annual meeting and until their successors are elected and
qualified. All Executive Officers serve at the discretion of the Board of
Directors.

     Peter Zachariou has been President and Chairman of the Board of Diva since
April 1999. In addition, since June 1998, Mr. Zachariou has been President and a
Director of ASD Group, Inc., a public company which filed for protection from
its creditors under Chapter 11 of the United States Bankruptcy Code in the
United States Bankruptcy Court. Since October 2001,

                                        7

<PAGE>

Mr. Zachariou has also been a manager and member of Technology Outsource
Solutions LLC, a New York limited liability company which purchased the assets
of ASD and provides contract manufacturing and engineering services to original
equipment manufacturers. From June 1995 through January 2000, Mr. Zachariou held
various positions with J R Consulting, Inc. ("JRCI"), a public company now known
as Providential Holdings, Inc. For at least the preceding five years, Mr.
Zachariou has been a private investor.

     David Lean has been the Principal Accounting Officer, Acting Secretary and
a Director of the Company since April 1999. From August 1995 through January
2000 Mr. Lean also held various positions with JRCI. For at least the preceding
five years, Mr. Lean has also been a managing Director of a United Kingdom
subsidiary of a Canadian mining company. Mr. Lean is also a director of a
publicly listed mining company in the UK.

     The Company's securities are not registered under Section 12(g) of the
Exchange Act. Accordingly, the Directors and Executive Officers of the Company
are not required to file reports under Section 16(a) of that Act.

Item 10. Executive Compensation

     No Director or Executive Officer of the Company received any cash
compensation during the fiscal year ended June 30, 2001. Peter Zachariou and
David Lean spend part time on the business of the Company.

     All members of the Company's Board of Directors, whether officers of the
Company or not, may receive an amount yet to be determined annually for their
participation in meetings of the Board and will be required to attend a minimum
of four meetings per fiscal year. The Company reimburses all expenses for
meeting attendance or out of pocket expenses connected directly with their Board
participation.

                                        8

<PAGE>

Item 11. Security Ownership of Certain Beneficial Owners and Management

         The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of June 30, 2002, by each
Director, Executive Officer and any person known to the Company to own
beneficially more than 5% of the Company's Common Stock and by all Directors and
Executive Officers of the Company as a group.

Name and Address                  Shares of Common Stock        Percent
of Beneficial Owner               Beneficially Owned            Owned (1)

Havilland Limited/(1)/                 4,225,000                   76.8%
180 Varick Street, 13th Floor
New York, New York 10014

Peter Zachariou/(1)//(2)/              4,225,000                   76.8%
180 Varick Street, 13th Floor
New York, New York 10014

_________________

     (1) Does not include the shares of common stock issuable upon conversion of
         the Series B Redeemable Convertible Preferred Stock or the effect of
         the Option Agreement between Havilland Limited and Diva Entertainment,
         Inc. See "Certain Transactions".

     (2) Represents the shares held by Havilland Ltd. for which Peter Zachariou
         is deemed to the beneficial owner.

Item 12. Certain Relationships and Related Transactions

     Peter Zachariou, Chairman of the Board, President and Treasurer of the
Company, and Havilland Limited, principal stockholder, have from time to time
made cash advances to the Company. The advances are secured by liens on all of
the Company's assets and evidenced by a series of promissory notes which are
payable on July 3, 2003 and accrue interest at the rate of 8% per annum. The
outstanding amounts of such advances as at June 30, 2001 were $383,000 and
$95,000, respectively.

     On June 30, 2000, Havilland Limited entered into an agreement with JRCI,
now known as Providential Holdings, Inc., whereby the 4,225,000 shares of common
stock, 3,000 shares of Series B Redeemable Convertible Preferred Stock and the
rights, title and interest in the Option Agreement (see Note H to the Financial
Statements) owned by JRCI were exchanged for (i) the assignment to and
assumption by Havilland of (A) the amounts due by JRCI to officers of the
Company and (B) the amounts due to JRCI from the Company amounting to $94,843
and (ii) the return of 135,000 shares of common stock of JRCI owned by
Havilland.

                                        9

<PAGE>

Item 13. Exhibits and Reports on Form 8-K

(a) Exhibits

    2.1  Agreement and Plan of Reorganization, dated December 30, 1999 between
         Registrant, Diva Entertainment, Inc., Diva Acquisition Corp. and J R
         Consulting, Inc. (1)
    3.1  Certificate of Incorporation. (2)
    3.2  By-laws. (2)
    3.3  Amendment to Certificate of Incorporation changing name to Diva
         Entertainment, Inc. (1)
    3.4  Certificate of Designation - Series A Convertible Preferred Stock. (3)
    3.5  Certificate of Designation - Series B Redeemable Convertible Preferred
         Stock. (3)
    3.6  Certificate of Designation - Series C Convertible Preferred Stock. (3)
    21.1 List of subsidiaries. (3)

__________________

(1) Incorporated by reference to the exhibit of same number filed with the
    Company's Form 8-K dated April 28, 2000 and filed August 9, 2000.
(2) Incorporated by reference to the exhibit of same number filed with the
    Company's Registration Statement on Form 10-SB, File No. 0-23506.
(3) Incorporated by reference to the exhibit of the same number filed with the
    Company's Form 10-KSB for the year ended June 30, 2000 filed July 3, 2001.

(b) Form 8-K

    None.

                                       10

<PAGE>

                                   SIGNATURES

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

                                           DIVA ENTERTAINMENTI INC.


Date:  July 15, 2002                     By: /s/ Peter C. Zachariou
                                             -----------------------------------
                                                 Peter C. Zachariou, President


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

SIGNATURE                                 TITLE                       DATE

   /s/ Peter C. Zachariou
----------------------------
     PETER C. ZACHARIOU            President/Principal           July 15, 2002
                                   Executive and Director


   /s/ David Lean
----------------------------
     DAVID LEAN                    Principal Accounting          July 15, 2002
                                   Officer and Director


     Supplemental Information to be Furnished with Reports Filed Pursuant to
           Section 15(d) of the Exchange Act by Non-Reporting Issuers.

         No annual report or proxy material has been sent to security holders
nor are such materials anticipated to be sent, with the exception of this Annual
Report on Form 10-KSB.

                                       11

<PAGE>

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                  Page

Independent Auditors' Report                                      F-2

Report of Independent Certified Public Accountants                F-3

Financial Statements

      Consolidated Balance Sheet                                  F-4

      Consolidated Statements of Operations                       F-6

      Consolidated Statement of Stockholders' Deficiency          F-7

      Consolidated Statements of Cash Flows                       F-8

      Notes to Consolidated Financial Statements                  F-9 - F-21

                                       F-1

<PAGE>

                          INDEPENDENT AUDITORS' REPORT

Stockholders
Diva Entertainment, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheet of Diva
Entertainment, Inc. and Subsidiaries (the "Company") as of June 30, 2001, and
the related consolidated statements of operations, stockholders' deficiency and
cash flows for the year then ended. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated 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 consolidated financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Diva
Entertainment, Inc. and Subsidiaries as of June 30, 2001, and the results of
their operations and their cash flows for the year ended June 30, 2001 in
conformity with generally accepted accounting principles.

PARITZ & COMPANY, P.A.
Hackensack, New Jersey
May 24, 2002

                                       F-2

<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Stockholders
Diva Entertainment, Inc. and Subsidiaries

We have audited the accompanying consolidated statements of operations,
stockholders' deficiency and cash flows of Diva Entertainment, Inc. and
Subsidiaries (the "Company") for the year ended June 30, 2000. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

In our opinion, the statements of operations, stockholders' deficiency and cash
flows referred to above present fairly, in all material respects, the results of
operations of Diva Entertainment, Inc. and Subsidiaries for the year ended June
30, 2000, in conformity with accounting principles generally accepted in the
United States of America.

GRANT THORNTON LLP


New York, New York
October 12, 2000

                                       F-3

<PAGE>


                    Diva Entertainment, Inc. and Subsidiaries

                           CONSOLIDATED BALANCE SHEET
                                  JUNE 30, 2001

                                     ASSETS

CURRENT ASSETS
    Cash                                                      $          --
    Accounts receivable - net of allowance for doubtful
        accounts of $ 314,312                                       674,229
    Prepaid expenses and other current assets                        46,163
    Employee advances                                                 1,191
                                                               ------------

                  Total current assets                              721,583

PROPERTY AND EQUIPMENT, net of accumulated
    depreciation and amortization                                   172,197

OTHER ASSETS
    Goodwill, net of accumulated amortization                            --
    Security deposits                                                41,338
                                                                -----------

                  Total other assets                                 41,338
                                                                -----------

                  Total assets                                  $   935,118
                                                                ===========


The accompanying notes are an integral part of this statement.

                                       F-4

<PAGE>

                    Diva Entertainment, Inc. and Subsidiaries

                           CONSOLIDATED BALANCE SHEETS
                                  JUNE 30, 2001


                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY

<TABLE>
<S>                                                                            <C>
CURRENT LIABILITIES
    Cash overdraft                                                             $    109,540
    Accounts payable - talents                                                      479,632
    Accounts payable - other                                                        121,704
    Dividends payable                                                               303,684
    Accrued expenses and other current liabilities                                  398,889
    Due to parent                                                                    94,843
                                                                               -----------

                  Total current liabilities                                       1,508,292


OTHER LIABILITIES
    Due to officer                                                                  382,774
                                                                               ------------

                  Total liabilities                                               1,891,066


COMMITMENTS AND CONTINGENCIES


STOCKHOLDERS' DEFICIENCY
    Series A convertible preferred stock, $.001 par value, 575
        shares issued and outstanding                                             1,025,000
    Series B redeemable convertible preferred stock, $.001 par
        value; 3,000 shares issued and outstanding                                3,000,000
    Series C convertible preferred stock, $1,000 par value; 100
        shares issued and outstanding                                               100,000
    Common stock, $.001 par value; 20,000,000 shares
        authorized; 5,498,800 shares issued and
        outstanding                                                                   5,498
    Additional paid-in capital                                                       50,425
    Accumulated deficit                                                          (5,136,871)
                                                                               ------------

                  Total stockholders' deficiency                                   (955,948)

                  Total liabilities and stockholders' deficiency               $    935,118
                                                                               ============
</TABLE>



The accompanying notes are an integral part of this statement.

                                       F-5

<PAGE>

                    Diva Entertainment, Inc. and Subsidiaries

                      CONSOLIDATED STATEMENTS OF OPERATIONS



<TABLE>
<CAPTION>
                                                                       Year ended           Year ended
                                                                      June 30,2001        June 30, 2000
                                                                      -------------       -------------
<S>                                                                   <C>                 <C>
Revenue
    Management fees, net                                               $  2,031,917       $   2,248,745

Operating expenses
    Selling, general and administrative expenses                          1,999,323           2,315,313
    Depreciation and amortization                                           156,299             151,421
                                                                       ------------       -------------

              Total operating expenses                                    2,155,622           2,466,734
                                                                       ------------       -------------

              Loss from operations                                         (123,705)           (217,989)
                                                                       ------------       -------------
Other income (expense)
    Write off of goodwill                                                  (463,073)                 --
    Litigation settlement                                                        --             502,988
    Interest expense                                                        (36,220)            (30,300)
    Miscellaneous                                                                --                  68
                                                                       ------------       -------------

              Total other income (expense)                                 (499,293)            472,756
                                                                       ------------       -------------

              Net income (loss)                                        $   (622,998)      $     254,767
              Preferred stock dividends                                    (120,750)           (160,437)
                                                                       ------------       -------------

              Income  (loss) attributable to common
              stockholders                                             $   (743,748)      $      94,330
                                                                       ============       =============


Basic and diluted income (loss) per share                              $       (.14)      $         .02
                                                                       ============       =============

Weighted-average common stock outstanding                                 5,498,800           5,498,800
                                                                       ============       =============
</TABLE>

The accompanying notes are an integral part of these statements.

                                       F-6

<PAGE>

                    Diva Entertainment, Inc. and Subsidiaries

               CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY

<TABLE>
<CAPTION>
                                       Series A              Series B             Series C                Common Stock
                                    Preferred Stock      Preferred Stock        Preferred Stock
                               -----------------------  ------------------    --------------------
                                  Shares      Amount     Shares    Amount       Shares     Amount        Shares      Amount
<S>                            <C>          <C>          <C>      <C>         <C>          <C>         <C>           <C>
Balance - June 30, 1999              575.0   1,150,000    3,000    3,000,000        --            --    5,498,800     5,498
                               --------------------------------------------------------------------------------------------
Stock Issuances                                                                    100      $100,000

Accrued Dividends on
Preferred Stock
Net income July 1, 1999
to June 30, 2000

Balance - June 30, 2000              575.0   1,150,000    3,000    3,000,000       100       100,000    5,498,800     5,498
                               -----------  ----------  --------  ----------    -------    ---------   ----------  --------
Redeemed                              62.5     125,000

Accrued dividends on

Preferred Stock
Net loss July 1, 2000
through June 30, 2001
                               -----------  ----------  --------  ----------  ---------   ----------  -----------  --------
Balance - June 30, 2001              512.5  $1,025,000    3,000   $3,000,000       100      $100,000    5,498,800     5,498
                               ===========  ==========  ========  ==========  =========   ==========  ===========  ========

<CAPTION>
                               Additional                  Total
                                Paid-in    Accumulated  Stockholders'

                                Capital      Deficit      Deficiency

<S>                        <C>             <C>          <C>
Balance - June 30, 1999         50,425     (4,487,461)     (281,538)
                           -------------------------------------------
Stock Issuances                                             100,000

Accrued Dividends on                        (160,437)      (160,437)
Preferred Stock
Net income July 1, 1999
to June 30, 2000                             254,767        254,767

Balance - June 30, 2000         50,425    (4,393,131)       (87,208)
                           -----------  --------------  --------------
Redeemed
                                                           (125,000)

Accrued dividends on

Preferred Stock                             (120,750)      (120,750)
Net loss July 1, 2000
through June 30, 2001                       (622,998)      (622,998)
                           -----------  --------------  --------------
Balance - June 30, 2001        $50,425   $ (5,136,871)   $ (955,948)
                           ===========  ==============  ==============

</TABLE>

The accompanying notes are an integral part of this statement.

                                       F-7

<PAGE>

                    Diva Entertainment, Inc. and Subsidiaries

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                         Year ended      Year ended
                                                                                       June 30, 2001   June 30, 2000
                                                                                       -------------   -------------
<S>                                                                                    <C>             <C>
Cash flows from operating activities
  Net income                                                                            $ (622,998)    $   254,767
                                                                                        ----------     -----------
Adjustments to reconcile net income (loss) to net cash
  provided by (used in) operating activities
    Depreciation and amortization                                                          156,300         151,421
    Write off of goodwill                                                                  463,073              --
    (Increase) decrease in assets
       Accounts receivable                                                                 340,495         187,136
       Prepaid expenses and other current assets                                           (17,528)          3,059
       Security deposits                                                                    (2,045)         39,500
    Increase (decrease) in liabilities
       Accounts payable - talent                                                           (96,095)          6,016
       Accounts payable - other                                                           (133,203)         22,816
       Accrued expenses and other current liabilities                                      211,818          25,837
       Litigation reserves                                                                      --        (502,988)
                                                                                       -----------     -----------
            Total adjustments                                                              922,815         (67,203)
                                                                                       -----------     -----------
            Net cash provided by operating activities                                      299,817         187,564
                                                                                       -----------     -----------
Cash flows from investing activities
  Purchases of property and equipment                                                       (1,000)        (63,468)
  Advances to employees                                                                     15,545          (2,107)
                                                                                       -----------     -----------
            Net cash provided by (used in) investing activities                             14,545         (65,575)
                                                                                       -----------     -----------
Cash flows from financing activities
  Cash overdraft                                                                          (132,872)         59,367
  Repayment of officers' loans, net                                                        (79,165)       (237,706)
  Advances to parent, net                                                                       --         (20,975)
  Proceeds from (redemption of) private placement offering, net                           (125,000)        100,000
                                                                                       -----------     -----------
            Net cash (used in) financing activities                                       (337,037)        (99,314)
                                                                                       -----------     -----------
            Net increase (decrease) in cash                                                (22,675)         22,675
Cash at beginning of period                                                                 22,675              --
                                                                                       -----------     -----------

Cash at end of period                                                                  $        --     $    22,675
                                                                                       ===========     ===========

Supplemental disclosures of cash flow information:
  Cash paid during the period for
       interest                                                                        $    36,220     $    30,300
                                                                                       ===========     ===========
</TABLE>

The accompanying notes are an integral part of these statements.

                                       F-8

<PAGE>

                    Diva Entertainment, Inc. and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             June 30, 2001 and 2000

NOTE A - COMPANY BACKGROUND AND SUMMARY OF SIGNIFICANT
           ACCOUNTING POLICIES

     1.  Company Background - Organization and Nature of Business and Liquidity

     Diva Entertainment, Inc. (formerly known as Quasar Projects Company)
("Diva-Delaware" or the "Company"), which is primarily a holding company, was
incorporated in the State of Delaware in December 1992.

     On April 3, 1998, JR Consulting, Inc. ("JRCI") formed Diva Entertainment,
Inc., a Florida corporation and holding company ("Diva-Florida"). On May 1,
1998, Diva-Florida issued 4,500,000 shares of common stock to JRCI in exchange
for 100% of the outstanding common stock of Prima Eastwest Model Management,
Inc. ("Prima") and Que Management Inc. ("Que"). The shares issued were valued at
the historical cost of JRCI's investment in Prima and Que.

     On April 28, 1999, but effective April 1, 1999, Diva-Delaware, a public
shell, acquired JRCI's 95% equity interest in Diva-Florida in exchange for
4,225,000 shares of Diva-Delaware's common stock (the "Acquisition"). This
Acquisition, which has been treated as a capital transaction in substance,
rather than a business combination, was deemed a "reverse acquisition" for
accounting purposes. Accordingly, Diva-Florida was the accounting acquirer and
the historical financial statements prior to April 1, 1999 were those of
Diva-Florida. In the accompanying financial statements, the capital structure
and earnings (losses) per share of Diva-Florida have been retroactively restated
to reflect the Acquisition as if it occurred at the beginning of the period. In
connection with the Acquisition, Diva-Delaware changed its name from Quasar
Projects Company to Diva Entertainment, Inc.

     Prima was incorporated in the State of California on January 29, 1996 and
Que was incorporated in the State of New York on December 29, 1997. Prima and
Que are in the business of providing management services to models and talents
in the entertainment industry, primarily in California and New York.

     Successful operations are subject to certain risks and uncertainties
including, among others, all the problems, expenses, delays and other risks
inherent in developing and expanding the Company's client base, actual and
potential competition by entities with greater financial resources, experience
and market presence than the Company. Further risks and uncertainties relate to
the ability of the Company to generate sufficient revenue and obtain financing
and additional equity.

                                       F-9

<PAGE>

                    Diva Entertainment, Inc. and Subsidiaries

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(continued)

                             June 30, 2001 and 2000

     The Company continues to sustain substantial losses from operations, which
has adversely affected the Company's liquidity. The Company has obtained
significant advances from an officer and a stockholder (Note E) and proceeds
from the issuance of Series C Preferred Stock (see Note H) to assist in the
payment of trade payables. The officer of the Company has agreed to continue to
support the Company's cash requirements to enable the Company to meet its
current obligations through June 30, 2002 and fund future operations. In
addition, the officer has agreed not to demand repayment of amounts due before
July 2, 2002 (see Note E). The Company also plans to continue to expand its
customer base and to reduce operating expenses. Although there can be no
assurance that these measures will be successful, the Company believes that
future operations and support from the officer will provide sufficient liquidity
to fund current operations.

     2. Corporate Combination Agreement

     On October 28, 1999, JRCI entered into a corporate combination agreement
(the "Agreement") with Providential Securities, Inc. ("Providential"), whereby
JRCI acquired 20,000,000 shares of the issued and outstanding capital stock of
Providential in exchange for 30,000,000 shares of JRCI's common stock (the "JRCI
Shares"). Under the Agreement, JRCI effected a 1-for-2 reverse stock split,
prior to the consummation of this transaction. The transaction was consummated
on January 14, 2000.

     In addition, as a covenant under the Agreement, JRCI sold to Havilland
Limited, a related entity, all of the shares of Diva-Delaware owned by JRCI as
well as assigned all of its rights, title and interest in an Option Agreement
(see Note H) to Havilland Limited. Thus, on June 30, 2000, Havilland Limited
entered into an agreement with JRCI, now known as Providential Holdings, Inc.,
whereby the 4,225,000 shares of common stock, 3,000 shares of Series B
Redeemable Convertible Preferred Stock and the rights, title and interest in the
Option Agreement (see Note H) owned by JRCI were exchanged for (i) the
assignment to and assumption by Havilland of (A) the amounts due by JRCI to
officers of the Company, and (B) the amounts due to JRCI from the Company
amounting to $94,843 and (ii) the return of 135,000 shares of common stock of
JRCI owned by Havilland.

     3. Principles of Consolidation

     The consolidated financial statements include the accounts of
Diva-Delaware, Diva-Florida and Diva-Florida's wholly-owned subsidiaries, Prima
and Que, collectively referred to as the "Company". All significant intercompany
transactions have been eliminated in consolidation.

     4. Revenue Recognition

     The Company recognizes management revenue upon completion of the service by
the model and talents.

                                      F-10

<PAGE>

                    Diva Entertainment, Inc. and Subsidiaries

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(continued)

                             June 30, 2001 and 2000

     5. Property and Equipment

     Property and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation and amortization of property and equipment are
computed on the straight-line and accelerated methods, in amounts sufficient to
relate the cost of the depreciable assets to operations over their estimated
service lives, which range from 5 to 7 years. The cost of leasehold improvements
is amortized over the life of the lease or the estimated useful life of the
improvements, whichever is less.

     6. Use of Estimates in the Financial Statements

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

     The Company estimates an allowance for doubtful accounts based on the
creditworthiness of its customers as well as general economic conditions.
Consequently, an adverse change in those conditions could affect the Company's
estimate. In the fourth quarter of Fiscal 2001, the Company recorded an
adjustment to accounts receivable of approximately $283,000 relating to various
sales adjustments and the recording of an allowance for sales allowances.

     7. Fair Value of Financial Instruments

     The carrying amounts of cash, accounts receivable, accounts payable and
current debt and due to officer amounts approximate fair value, principally
because of the short-term maturity of these items. Due to officers included in
other liabilities is a stated amount based on the face amount borrowed from the
officer; it is not practical to estimate its fair market value because the
amount is due with a related party and to determine its fair value would require
incurring excessive costs.

     8. Intangible Assets

     Intangible assets (predominately goodwill which represents the cost in
excess of net assets of businesses acquired) are recorded and amortized over
fifteen years using the straight-line method. At each balance sheet date, the
Company evaluates the recoverability of goodwill based on expectations of
nondiscounted cash flows. If the sum of the nondiscounted cash flows is less
than the carrying amount of all assets, including intangible assets, the Company
recognizes an impairment loss. For the year ended June 30, 2001, the Company has
recorded an impairment loss of $463,073.

                                      F-11

<PAGE>

                   Diva Entertainment, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                             June 30, 2001 and 2000


       9.     Stock-Based Compensation

       The Company has adopted the disclosure-only provision of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," which permits the Company to account for stock option grants in
accordance with APB Opinion No. 25 ("APB No. 25"), "Accounting for Stock Issued
to Employees." Under APB No. 25, compensation expense is recorded when the
exercise price of the Company's employee stock option is less than the market
price of the underlying stock at the date of grant. At June 30, 2001, there are
no options issued and outstanding to employees.

       10.    Comprehensive Income

       The Company records comprehensive income in accordance with Statement of
Financial Accounting Standards No. 130 ("SFAS No. 130"), "Reporting
Comprehensive Income." SFAS No. 130 requires unrealised gains and losses in
investments available for sale to be included in other comprehensive income. The
components of comprehensive income and the effect on earnings for the year ended
June 30, 2001 is detailed in the Company's accompanying consolidated statement
of stockholders' equity. The assets relating to the balance in other
comprehensive income were sold during the year ended June 30, 2001.

       11.    Earnings Per Share

       Basic earnings per share amounts have been computed using the
weighted-average number of common and common equivalent shares outstanding
during each year. Diluted earnings per share amounts have been computed using
the weighted-average number of common and common equivalent shares and the
dilutive potential common outstanding during each year. For the year ended June
30, 2001, convertible preferred stock has been excluded from the calculation of
diluted income (loss) per share as its effect would have been antidilutive. For
the year ended June 30, 2001, convertible preferred stock has been excluded from
the calculation of diluted income per share since the number of common shares
the preferred stock is convertible into is not known, because the conversion is
dependent on the market value of the common stock. At June 30, 2001, there is no
determinable market value of the common stock, since it is not currently trading
on any stock exchange.

                                      F-12

<PAGE>

                   Diva Entertainment, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                             June 30, 2001 and 2000


       A reconciliation between basic and diluted earnings per share is as
follows:

<TABLE>
<CAPTION>
                                                                                Year ended June 30,
                                                                        --------------------------------
                                                                              2001               2000
                                                                          --------           --------
       <S>                                                              <C>                <C>
       Basic earnings per share

       Income (loss) applicable to common stockholders                  $  (743,748)       $     94,330
       Basic common shares                                                5,498,800           5,498,800
       Basic earnings (loss) per share                                  $      (.14)       $       0.02

       Diluted earnings per share

       Income (loss) applicable to common stockholders                  $  (743,748)       $     94,330
       Basic common shares                                                5,498,800           5,498,800
       Plus impact of convertible preferred stock                                --                  --
       Diluted common shares                                              5,498,800           5,498,800
       Diluted earnings per share                                       $      (.14)       $        .02
</TABLE>


NOTE B - MARKETABLE SECURITIES

       At June 30, 1998, management had classified all their equity securities
as available-for-sale securities, which were reported at fair market value, with
unrealized gains and losses excluded from earnings and reported as accumulated
other comprehensive income. Gains and losses on the sale of securities were
recognized on a specific identification basis. The Company also had realized
losses in Fiscal 2000 of $42,947, resulting from sales of securities during the
period that was adjusted against accumulated other comprehensive income.

NOTE C - PROPERTY AND EQUIPMENT

       Property and equipment consists of the following:

<TABLE>
<CAPTION>
                                                                                     Amount
                                                                                   ----------
            <S>                                                                    <C>
            Office equipment and fixtures                                          $  217,517
            Leasehold improvements                                                    263,395
                                                                                   ----------

                                                                                      480,912

            Less accumulated depreciation and amortization                            308,714
                                                                                   ----------
            Property and equipment, net                                            $  172,198
                                                                                   ==========
</TABLE>

         Depreciation and amortization expense for the years ended June 30, 2001
and 2000 was $156,300 and $31,522, respectively.

                                      F-13

<PAGE>

                    Diva Entertainment, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                             June 30, 2001 and 2000


NOTE D - GOODWILL

       Prima has recorded goodwill resulting from a business combination, which
is being amortized on the straight-line method over fifteen years. Accumulated
amortization at June 30, 2001 was $255,471. Amortization expense for the years
ended June 30, 2001 and 2000 amounted to approximately $48,000 for each year.
See note A-8.

NOTE E - RELATED PARTY TRANSACTIONS

       Due to Officer

       The amounts due to an officer of the Company amounted to $382,774 at June
30, 2001 represent advances made by the officer. The advances are secured by a
lien on all the assets of the Company and are evidenced by a series of
promissory notes which bear interest at the rate of 8% per annum. The loans are
due on July 3, 2003.

       Due to Parent

       The amount due to parent of $94,842 at June 30, 2001 represents net
advances made to the Company. The advances are secured by a lien on all the
assets of the Company and are evidenced by a series of promissory notes which
bear interest at the rate of 8% per annum. The loans are due on July 3, 2003.

NOTE F - INCOME TAXES

       In Fiscal 2001, no Federal, state and local tax expense was recorded as a
result of the net operating loss ("NOL") carryforwards. In Fiscal 2001, no
Federal, state or local income tax expense was recorded due to the net loss
incurred. Differences between the income tax expense (benefit) computed at the
Federal statutory rate (34%) and reported income taxes (benefit) for 2000 and
1999 are primarily attributable to the valuation allowance of the NOL
carryforwards.

       The following is a reconciliation of the statutory Federal income tax
rate to the effective rate reported in the financial statements:

<TABLE>
<CAPTION>
                                                                         Year ended June 30,
                                                                   -------------------------
                                                                          2001                  2000
                                                                      --------              --------
  <S>                                                                 <C>               <C>
  Provision (benefit) for Federal income taxes at the
          statutory rate                                              $   (252,000)     $      86,620
  State and city income taxes, net of Federal income tax
          benefit                                                          (67,000)            16,815
  Valuation allowance for deferred taxes                                   319,000                  0
  Utilization of NOL carryforwards                                               0           (103,435)
                                                                      ------------      -------------
           Actual provision (benefit) for income taxes                $          0      $           0
                                                                      ============      =============
</TABLE>

                                      F-14

<PAGE>

                   Diva Entertainment, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                             June 30, 2001 and 2000

         Deferred income taxes reflect the impact of temporary differences
between amounts of assets and liabilities for financial reporting purposes and
such amounts as measured by tax laws, and relate primarily to the NOL carry
forward and the allowance for doubtful accounts and sales allowances. The
Company has established a full valuation allowance against the deferred tax
assets due to the uncertainty of the Company's ability to generate sufficient
future taxable income to ensure the realization of the tax benefits related
primarily to the NOL carryforwards.

         The following is a summary of the items giving rise to deferred tax
assets at June 30, 2001

           Current
              Allowance for doubtful accounts and sales
                  allowances                                       $   100,000
           Long-term
              Net operating loss carry forward                       4,500,000
                                                                   -----------
           Total deferred tax assets                                 4,600,000

           Less valuation allowance                                  4,600,000
                                                                   -----------

           Net deferred tax asset                                  $         0
                                                                   ===========


The Company has estimated NOL carryforwards of approximately $4,700,000
available for Federal, state and local income tax purposes expiring in various
years through June 2017. The Company has failed to file corporate tax returns
since the change in control (Notes A-1 and A-2) and therefore has estimated the
amount of the NOL carryforwards. The Company's ability to utilize these NOL
carryforwards to offset future taxable income is significantly limited due to
changes in control as defined in Section 382 of the Internal Revenue Code.

NOTE G - COMMITMENTS AND CONTINGENCIES

         1.       Leasing Arrangements

         The Company leases its New York office and Los Angeles office through
five-year noncancellable lease agreements expiring in December 2002 and December
2003, respectively.

                                      F-15

<PAGE>

                   Diva Entertainment, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                             June 30, 2001 and 2000

         Future minimum rental commitments under the above noncancellable
operating leases as of June 30, 2001 are as follows:

                           Year ending June 30,              Amount

                           2002                             129,860
                           2003                              92,967
                           2004                              27,484

         Rent expense for the years ended June 30, 2001 and 2000 was $141,225
and $136,960, respectively.

         2.       Contingency

         In December 1997, Prima entered into an Agreement with an unrelated
third party to sell certain assets and liabilities. Pursuant to this agreement,
Prima assigned the studio lease to the buyer. The future commitments under the
lease at June 30, 2001 of approximately $700,000 are payable by the third party
through October 2007. Prima is contingently liable for these commitments in case
the buyer is in default of such payments.

         3.       Litigation Settlement

         Prima was named as a defendant in an action filed by a bank in February
1997. The bank was seeking to enforce the terms of certain promissory notes
allegedly guaranteed by Prima and collateralised by substantially all assets of
Prima. At the time of the commencement of the action, the balance was $502,988
together with interest thereon from January 30, 1997. On May 6, 1999, a judgment
was entered against the defendants in this matter, including Prima. However, the
judgment provides that, to the extent Prima is required to pay any sums to the
bank, Prima is entitled to a judgment against Edward Stein, a co-defendant.
Since Prima could not determine whether the co-defendant has sufficient assets
to reimburse Prima for any potential loss, Prima established a reserve of
$502,988.

         On October 29, 1999, the Company entered into an amended and restated
settlement agreement with Edward Stein, whereby Edward Stein agreed to pay the
bank the amount necessary to settle the claim and obtain a Satisfaction of
Judgment. In December 1999, Edward Stein paid off the obligation to the bank.
Subsequent to the payment of the obligation, the bank released the Company from
any obligation in connection with the claim. For the year ended June 30, 2000,
the Company has recorded the reversal of the reserve establish in 1999 in "Other
income - litigation settlement" in the statement of operations.

         4.       Late Filings

         The Company is not current on its filings with the U.S. Securities and
Exchange Commission. The Company is in the process of preparing these filings
and intends to file the reports over the next six months. Unless and until the
Company is current on its filings with the SEC, the Company's securities cannot
be traded or listed on any exchange. Management

                                      F-16

<PAGE>

                   Diva Entertainment, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                             June 30, 2001 and 2000

believes that the late filing will not otherwise have a material adverse effect
on the financial position of the Company.

NOTE H - PREFERRED STOCK

         The Company has authorized 1,000,000 shares of $0.001 par value
preferred stock. At June 30, 2001, 575, 3,000 and 100 shares of Series A, B and
C preferred stock are issued and outstanding, respectively.

         1.       Series A Convertible Preferred Stock

         In May 1998, Diva-Florida commenced a private placement offering of its
common stock, wherein it proposed to sell up to 500,000 shares of common stock
at a price of $2.00 per share. As of June 30, 1998, 221,000 shares of common
stock were sold for $442,000. These shares were subscribed and not yet formally
issued at April 28, 1999. In connection with the Acquisition (see Note A), the
subscribers of the 200,000 Diva-Florida shares converted their subscribed shares
to 200 shares of Diva-Delaware's Series A Convertible Preferred Stock (the
"Series A Preferred"). Diva-Florida returned $42,000 to the subscriber who held
21,000 subscribed shares of Diva-Florida's common stock. In connection with the
conversion, Diva-Delaware authorized the designation of 1,721 shares of the
Series A Preferred.

         Diva-Delaware immediately commenced a private placement offering of its
Series A Preferred after the Acquisition (see Note A), wherein it proposed to
sell up to 750 shares of Series A Preferred at a price of $2,000 per share. At
June 30, 2000, 375 shares of the Series A Preferred were sold for $750,000,
which was received in cash.

         The Series A Preferred holders are entitled to receive cumulative
preferential dividends at $60 per share per annum, payable annually on each
anniversary date of issuance. At the option of Diva-Delaware, such dividend may
be paid in cash or in shares of Diva-Delaware's common stock valued at the
Conversion Rate, as defined. As of June 30, 2001, total cumulative dividends
amounted to $82,557. In addition, the Series A Preferred shall not be redeemed
without the consent of the holders of the preferred shares. In the event of any
liquidation, dissolution or winding up of the Company, the Series A Preferred
holders shall be entitled to receive, before any common stockholder, an amount
equal to $2,000 per share. In the event there are insufficient funds to pay the
series to holders, the holders shall share rateably with all other preferred
stockholders. Each share of Series A Preferred shall be converted, at the option
of the holders, at any time, and shall be mandatorily converted on the first
anniversary of its date of issuance into a number of shares of the Company's
common stock at a conversion rate equal to $2,000 divided by 65% at the average
market price of the common stock for the five trading days immediately prior to
the conversion date. At June 30, 2001, no shares of Series A Preferred stock
have been converted into common stock of the Company, since there is no current
market for the shares as they are not yet traded on any of the exchanges. Until
there is a market for the shares of common stock and the shares of preferred
stock become exercisable upon their terms, the shares of preferred stock cannot
be

                                      F-17

<PAGE>

                   Diva Entertainment, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                             June 30, 2001 and 2000

converted. Because the conversion price will be less than the fair market value
of the common stock, the preferred stock is deemed to have an embedded
beneficial conversion feature. This feature allows holders of the preferred
stock to acquire shares of the Company's common stock at a purchase price below
its deemed fair value. If and when the Company's common stock becomes
marketable, $619,231 will be reflected as deemed preferred dividends on the
statement of operations.

         In Fiscal 2001, the Company redeemed 62.5 shares of Series A Preferred
from two of its stockholders. The shares were redeemed for $125,000 the price
paid for such shares.

         2.       Series B Redeemable Convertible Preferred Stock

         In connection with the Acquisition (see Note A), JRCI converted
$3,000,000 of debt, owed to it by Diva-Florida and Subsidiaries, into 3,000
shares of Series B Redeemable Convertible Preferred Stock (the "Series B
Preferred") of Diva-Delaware. In connection with the conversion, Diva-Delaware
authorized the designation of 3,000 shares of Series B Preferred.

         The Series B Preferred holders are entitled to receive cumulative
preferential dividends at $30 per share per annum, payable annually on each
anniversary date of issuance. At the option of the Diva-Delaware, such dividend
may be paid in cash or in shares of Diva-Delaware's common stock valued at the
Conversion Rate, as defined. As of June 30, 2001, total cumulative dividends
amounted to $224,877. In addition, the Series B Preferred may be redeemed, in
whole or in part, at the option of the Company at a redemption price of $1,000
per share plus any dividends accrued and unpaid. In the event of any
liquidation, dissolution or winding up of the Company, the Series B Preferred
holders shall be entitled to receive an amount equal to $1,000 per share. In the
event there are insufficient funds to pay the preferred stock holder, the holder
shall share rateably with all other preferred stockholders. Each share of Series
B Preferred stock shall be convertible at the option of the holder, at any time
after issuance, and shall be mandatorily converted at the tenth anniversary of
its date of issuance into a number of shares of the Company's common stock at a
conversion rate equal to $1,000 divided by 65% of the average market price of
the common stock for the five days immediately prior to the conversion date. At
June 30, 2001, no shares of Series B preferred stock have been converted into
common stock of the Company since there is no market price for the shares of
common stock, as they are not yet traded on any of the exchanges. Until there is
a market for the common stock and the shares of preferred stock become
exercisable upon their terms, the shares of preferred stock cannot be converted.
Because the conversion price will be less than the fair market value of the
common stock, the preferred stock is deemed to have an embedded beneficial
conversion feature. This feature allows holders of the preferred stock to
acquire shares of the Company's common stock at a purchase price below its
deemed fair value. If and when the Company's common stock becomes marketable,
$1,615,385 will be reflected as deemed preferred dividends on the statement of
operations.

                                      F-18

<PAGE>

                    Diva Entertainment, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                             June 30, 2001 and 2000

         3.       Series C Redeemable Convertible Preferred Stock

         In February 2000, the Company issued 100 shares of Series C Preferred
Stock at a price of $1,000 per share. The Series C Preferred holder is entitled
to receive 6% per annum upon declaration of dividends by the Company's Board of
Directors. At June 30, 2001, there have been no dividends declared. At the
option of the Company, such dividend when and if one is declared may be paid in
cash or in shares of The Company's common stock valued at the Conversion Rate,
as defined. In addition, the Series C Preferred Stock may be redeemed in whole
or in part at the option of the Company. Each share is redeemable at 125% of its
stated value, plus any amount equal to any dividends accrued but unpaid thereon.
In the event of any liquidation, dissolution or winding up of the Company, the
Series C Preferred holders shall be entitled to receive, before any common
stockholder, an amount equal to $1,000 per share plus any declared and unpaid
dividends. In the event, there are insufficient funds to pay the series to
holders, the holder shall share rateably with all other preferred stockholders.
Each share of Series C Preferred shall be converted, at the option of the
holders, at any time, and shall be mandatoraly converted on the first
anniversary of the date of the issuance into a number of shares of the Company's
common stock at a conversion rate equal to $1,000 divided by 65% at the average
market price of the common stock for the five trading days immediately prior to
the conversion date. At June 30, 2001, no shares of Series C preferred stock
have been converted into common stock of the Company since there is no market
price for the shares of common stock, as they are not yet traded on any of the
exchanges. Until there is a market for the shares of common stock and the shares
of preferred stock become exercisable on their terms, the shares of preferred
stock cannot be converted. Because the conversion price will be less than the
fair market value of the common stock, the preferred stock is deemed to have an
embedded beneficial conversion feature. This feature allows holders of the
preferred stock to acquire shares of the Company's common stock at a purchase
price below its deemed fair value. If and when the Company's common stock
becomes marketable, $55,846 will be reflected as deemed preferred dividends on
the statement of operations.

         4.       Option Agreement

         JRCI and Diva-Delaware also entered into an Option Agreement giving
JRCI the option to purchase additional shares of Diva-Delaware's common stock at
its par value of $.001 per share in order for JRCI to maintain JRCI's ownership
of the outstanding shares of Diva-Delaware's common stock at no less than 65%.
The option expires when all of the shares of Diva-Delaware's Series A Preferred
have been converted into shares of Diva-Delaware's common stock. In connection
with the Corporate Combination Agreement (See Note A-2), Havilland has the
rights to this Agreement.

                                      F-19

<PAGE>

                    Diva Entertainment, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                             June 30, 2001 and 2000

NOTE I - SEGMENT INFORMATION

         The Company operated in two geographic segments: New York ("NY") and
California ("CA") (see Note A). The accounting policies used to develop segment
information correspond to those described in the summary of significant
accounting policies (see Note A). Although both segments operate in similar
manners, the NY segment has outperformed LA because the NY segment has a
significantly higher number of female models than male models whereas in the CA
segment, there are more male models used. Male models generate lower revenues
per engagement than female models. In addition, the NY models rates are
significantly higher than those in CA. In addition, the Company does not
allocate certain corporate expenses, such as administrative salaries,
professional fees and occupancy costs, to its segments. Segment profit (loss) is
based on profit from operations before provision for income taxes. Sales and
transfers between segments are accounted for at cost. The reportable segments
are distinct business units operating in different geographic areas. They are
separately managed, with separate marketing systems.

         Reportable Segment Information

<TABLE>
<CAPTION>
                                                   NY                 CA           Corporation              Total
                                                   --                 --           -----------              -----
<S>                                             <C>                <C>            <C>                    <C>
2001
----

Revenue                                         $1,585,789         $  446,128     $          --          $2,031,917
Interest expense                                    36,220                 --                --              36,220
Depreciation and amortization                       71,700             84,600                --             156,300
Segment profit (loss)                              101,942           (707,741)          (17,199)            (71,374)
Segment assets                                     803,005            217,246           (85,133)            935,118
Expenditure for segment assets                       1,000                 --                --               1,000

2000
----

Revenue                                         $1,170,410         $1,078,335                --          $2,248,745
Interest expense                                     2,300             28,000                --              30,300
Depreciation and amortization                       72,322             79,099                --             151,421
Segment profit (loss)                             (158,212)           439,385           (26,406)            254,767
Segment  assets                                    978,672          1,085,187          (151,226)          1,912,633
Expenditure for segment assets                      54,803              8,665                --              63,468
</TABLE>

                                      F-20

<PAGE>

                    Diva Entertainment, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                             June 30, 2001 and 2000

NOTE J - SUBSEQUENT EVENT

         The Company was a defendant in a lawsuit entitled Barry Seidman,
Richard S. Beatty, Brad Blumenthal, Alex Halpern, Steven Louth, Dale Steen,
Frederick A. Lenz and Jesse Reggio v. Diva Entertainment, Inc. and Peter
Zachariou, Case No. GIC 767838, in the Superior Court of California, County of
San Diego. The Plaintiffs were stockholders of the Company who alleged
securities fraud in connection with the sale by the Company of certain shares of
Series A Preferred Stock. This lawsuit was settled on June 18, 2002. Pursuant to
the settlement, the Company agreed to forgive $70,000 in amounts due to the
Company from the Plaintiff shareholders as well as pay an additional $30,000 in
cash.

         In connection with this litigation matter, the Company asserted a claim
against Broad and Cassel, the law firm which represented the Company in the
original transaction. In settlement of this claim, Broad and Cassel paid the
Company $50,000 and agreed to forgive the indebtedness owed by the Company to
Broad and Cassel. A mutual general release was exchanged.

                                      F-21