<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, 2000
                              -------------------

                                      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)

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

180 Varick Street, 13th Floor, New York, New York                     10014
--------------------------------------------------------------------------------
(Address of principal executive offices)                            (Zip Code)

Issuer's telephone number:  (212) 807-6994
                            --------------

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:  $2,248,745

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: 5,508,800 shares of Common Stock, $.01 par
value per share, as of May 4, 2001.

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 modeling 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 April 1, 1999, the Company issued 4,225,000 shares of common
stock to JR Consulting Inc., a Nevada corporation ("JRCI"), in consideration for
all of the issued and outstanding shares of Diva-Florida which owns all of the
issued and outstanding shares of Prima and Que. In addition, as part of this
transaction, the Company issued 200 shares of Series A Convertible Preferred
Stock to subscribers to a private offering conducted by Diva-Florida. As a
result of this transaction, Diva-Florida became a wholly owned subsidiary of the
Company and JRCI acquired shares representing 76.8% of the Company's issued and
outstanding common stock.

     Also in connection with the merger, JRCI agreed to convert $3,000,000 of
debt, owed to it by Diva-Florida, into 3,000 shares of Series B Redeemable
Convertible Stock of the Company.  In addition, the Company entered into an
Option Agreement with JRCI, so that JRCI would maintain its ownership percentage
of the outstanding common stock in a range between 65% and 92%, exclusive of any
conversions of the Series B Redeemable Convertible Preferred Stock into shares
of common stock.

     The merger was contingent upon the Company selling 350 shares of Series A
Convertible Preferred Stock at $2,000 per share to private investors.  As of the
effective date of the merger, 375 shares of Series A Convertible Stock were sold
to investors, resulting in $750,000 of gross proceeds to the Company.

     On October 28, 1999, JRCI entered into a corporate combination agreement
(the "Agreement") with Providential Securities, Inc. ("Providential"), whereby
JRCI will acquire 20,000,000 shares of the issued and outstanding capital stock
of Providential in exchange for 30,000,000 shares of the Parent's common stock
(the "JRCI Shares").  Under the Agreement, JRCI will effect a 1-for-2 reverse
stock split, prior to the consummation of this transaction.  It is intended that
this transaction shall qualify as a transaction in securities exempt from
registration or qualification under the Securities Act of 1933, as amended.  The
JRCI Shares will be restricted
<PAGE>

against resale pursuant to the provisions of Federal and state securities laws.
The transaction was consummated on January 14, 2000.

     In addition, as a covenant under the Agreement, JRCI has reached an
agreement to sell to Havilland Limited, a related entity, all of the shares of
the Company owned by JRCI as well as to assign all of its rights, title and
interest in an Option Agreement (see Note A-2 and I 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 I to the Financial
Statements) owned by JRCI were exchanged for assignment to and assumption by
Havilland of (i) the amounts due by JRCI to officers of the Company and(ii) the
amounts due to JRCI from the Company amounting to $94,843 and 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.

     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.

     The Company anticipates opening model agencies in additional areas in the
future. Management is evaluating opportunities in Florida and London. However,
management is only at the evaluation stages. The Company has not signed any
letters of intent or agreements to open any additional agencies and can make no
assurances that any additional agencies will be opened.

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.

                                       2
<PAGE>

     Prima intends to commence operation of a Talent and Commercial division,
although there is no assurance that this will occur.  This division will seek 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.

     For the year ended June 20, 2000, the Print division generated $1,641,000
in management fees, net.  During this same period, the Profile division
generated $607,000 in management fees, net.

     In September 2000, 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.

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.

Competition

     Prima's Print division 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. 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 Los
Angeles market, 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 success to date of the Company's Profile
division, with its service of both the modeling and celebrity market, combined
with the proposed 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.

                                       3
<PAGE>

     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 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, 2000, the Company had 21 employees. None of the employees is
subject to any collective bargaining agreement. Prima and Que consider their
relationships with their employees to be good.

Seasonality

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


Item 2.   Description of Property
---------------------------------

     The Company's current address is 180 Varick Street, 13/th/ Floor, New York,
New York 10014. Que leases 3,650 square feet of office space at 180 Varick
Street, 13/th/ 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 January 15, 2004 at a rent of $4,580.60 per
month.

                                       4
<PAGE>

Item 3.   Legal Proceedings
---------------------------

     None.

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

     None.

                                       5
<PAGE>

                                    PART II
                                    -------

Item 5.   Market for Common Equity and Related Stockholder Matters
------------------------------------------------------------------

     Management intends to list the Company's common stock on the OTC Bulletin
Board. As of this date, the Company's common stock is not trading or listed on
any exchange.

     As of June 30, 2000, 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 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 were 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 received $750,000 of the offering proceeds in cash and a
subscription for the balance.  Commissions of $30,000 were paid in connection
with such sales.  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.


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.

                                       6
<PAGE>

Results of Operations for Fiscal Years ended June 30, 1999 and June 30, 2000

     The fiscal year ended June 30, 1999 ("Fiscal 1999") was one of
consolidation at Prima and continued development of the newly formed Que. This
had a measure of success as shown by the results of the Company, with Prima
making a small operating profit and revenues of Que achieving management
targets. Management believes that the full potential of these subsidiaries had
not yet been realized. This could only be expected over the forthcoming years,
and there is no assurance that the full potential will be realized. The fiscal
year ended June 30, 2000 ("Fiscal 2000") was one of continued consolidation with
an emphasis on expansion at Que.

     The Company incurred a loss from operations of $218,000 for Fiscal 2000
compared with a loss from operations of $641,000 for Fiscal 1999. The reduction
in losses results from continued efforts by management to increase sales and
decrease operating costs. The Company's revenues continue to increase and were
$2,249,000 in Fiscal 2000 as compared to $1,857,000 in Fiscal 1999. Selling,
general and administrative expenses decreased to $2,315,000 in Fiscal 2000 as
compared to $2,370,000 in Fiscal 1999. 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.

     Prima continued to be successful in reducing its costs thereby decreasing
the operating loss from prior periods. During Fiscal 1999, Prima moved its
office and during this disruptive period all divisions experienced some loss in
sales. Management has recovered those sales in Fiscal 2000. By working very
closely with Que in New York, management expects further improvement in sales
during the forthcoming years, although there is no assurance that this will
happen.

     Que began operations on January 5, 1998 and the Company forecast losses for
the first few years. However, the results of Que are encouraging as sales are
significantly better than was forecasted and many of the initial expenses will
not be repeated. Furthermore Que has already begun working and co-operating
closely with Prima to the benefit of both companies.

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.

Liquidity and Capital Resources

     On June 30, 2000, the Company had a working capital deficit of $455,000 as
compared to a working capital deficit of $1,017,553 on June 30, 1999. 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.

     The Company expects that the working capital cash requirements over the
next 12 months will be generated from operations and the balance of the private
offering. However, the Company

                                       7
<PAGE>

anticipates opening model agencies in additional areas in the future. Assuming
the Company does not open additional model agencies in the next 12 months, there
are no plans for any significant capital expenditure.

     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 has no commitments for additional funding and no assurance can be given
that it will obtain additional funding.

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 and 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 and Kliegman on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure which,
if not resolved to Marcum and Kliegman's satisfaction, would have caused Marcum
and Kliegman to make reference to the subject matter of the disagreement in
connection with Marcum and Kliegman's report.

                                       8
<PAGE>

                                   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.

<TABLE>
<CAPTION>

Name               Age  Position
----               ---  --------
<S>                <C>  <C>

Peter Zachariou     39  President, Chairman of the Board and Treasurer

David Lean          54  Principal Accounting Officer, Acting Secretary
                          and Director
</TABLE>

     Directors are elected at the annual meeting of shareholders 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 providing 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.

     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, 2000. 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.

                                       9
<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 March 16, 2001, 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.

<TABLE>
<CAPTION>
Name and Address                 Shares of Common Stock          Percent
of Beneficial Owner              Beneficially Owned              Owned (1)
-------------------              ----------------------          ---------
<S>                              <C>                             <C>
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
</TABLE>
________________________

     (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 has from time to time made cash advances to the Company. The advances
are unsecured, payable on demand and interest free. The largest aggregate amount
of the advances made by Mr. Zachariou during Fiscal 2000, was $700,000. The
outstanding amount of such advances as at June 30, 2000 was $462,000.

     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 I to the Financial
Statements) owned by JRCI were exchanged for assignment to and assumption by
Havilland of (i) the amounts due by JRCI to officers of the Company and (ii) the
amounts due to JRCI from the Company amounting to $94,843 and the return of
135,000 shares of common stock of  JRCI owned by Havilland.

                                       10
<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.
     3.5  Certificate of Designation - Series B Redeemable Convertible Preferred
          Stock.
     3.6  Certificate of Designation - Series C Convertible Preferred Stock.
     21.1 List of subsidiaries.
  _______________________________

(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.

(b) Form 8-K

     On August 9, 1999, the Company filed a Current Report on Form 8-K regarding
     its acquisition, through reverse subsidiary merger, of Diva Entertainment,
     Inc., a Florida corporation that owns Prima and Que. The Current Report was
     dated April 28, 1999, the date the Agreement was executed. The acquisition
     was effective April 1, 1999.

     On September 28, 1999, the Company filed a Current Report on Form 8-K
     regarding the appointment of its accountants effective June 1, 1999.

     On March 2, 2000, the Company filed a Current Report on Form 8-K supplying
     the financial statements required in connection with the Current Report
     filed August 9, 1999 dated April 28, 1999 effective April 1, 1999.

     On August 15, 2000, the Company filed a Current Report on Form 8-K dated
     July 31, 2000 regarding a change in accountants.

     On March 9, 2001, the Company filed a Form 8-K/A dated July 31, 2000,
     amending the original Form 8-K regarding a change in the accountants.

                                       11
<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: June 5, 2001                      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 Zachariou
--------------------------
PETER C. ZACHARIOU            President/Principal           June 3, 2001
                              Executive and Director


    /s/ David Lean
--------------------------
DAVID LEAN                    Principal Accounting          June 3, 2001
                              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.

                                       12
<PAGE>

                  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                            Page
                                                            ----
<S>                                                         <C>

Report of Independent Certified Public Accountants          F-2

Independent Auditors' Report                                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

</TABLE>
<PAGE>

              REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



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, 2000, and
the related consolidated statements of operations, stockholders' deficiency and
cash flows 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 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, 2000, and the consolidated
results of their operations and their consolidated cash flows 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-2
<PAGE>

                          INDEPENDENT AUDITORS' REPORT


To the Stockholders of
Diva Entertainment, Inc. and Subsidiaries


We have audited the accompanying consolidated statement of operations, changes
in stockholders' deficiency and cash flows of Diva Entertainment, Inc. and
Subsidiaries for the year ended June 30, 1999.  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 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 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 results of operations and cash flows of
Diva Entertainment, Inc. and Subsidiaries for the year ended June 30, 1999, in
conformity with generally accepted accounting principles.

As disclosed in Note A to the financial statements, the Company restated its
1999 financial statements to reflect the issuance of $3,000,000 of Series B
Preferred Stock as permanent equity instead of temporary equity.


MARCUM & KLIEGMAN, LLP


Woodbury, New York
December 15, 1999, except for Note A-15
  which is dated April 24, 2001

                                      F-3
<PAGE>

                   Diva Entertainment, Inc. and Subsidiaries

                          CONSOLIDATED BALANCE SHEET

                                 June 30, 2000


                                    ASSETS

<TABLE>
<S>                                                                      <C>
CURRENT ASSETS
 Cash                                                                    $   22,675
 Accounts receivable - net of allowance for doubtful accounts
   of $105,153                                                            1,014,724
 Prepaid expenses and other current assets                                   28,635
 Employee advances                                                           16,736
                                                                         ----------

          Total current assets                                            1,082,770


PROPERTY AND EQUIPMENT, net of accumulated
 depreciation and amortization                                              279,597


OTHER ASSETS
 Goodwill, net of accumulated amortization                                  510,973
 Security deposits                                                           39,293
                                                                         ----------

          Total other assets                                                550,266
                                                                         ----------

          Total assets                                                   $1,912,633
                                                                         ==========
</TABLE>


The accompanying notes are an integral part of this statement.

                                      F-4
<PAGE>

                   Diva Entertainment, Inc. and Subsidiaries

                          CONSOLIDATED BALANCE SHEET

                                 June 30, 2000


                   LIABILITIES AND STOCKHOLDERS' DEFICIENCY

<TABLE>
CURRENT LIABILITIES
<S>                                                                             <C>
 Cash overdraft                                                                 $   242,412
 Accounts payable - talents                                                         575,727
 Accounts payable - other                                                           254,907
 Dividends payable                                                                  182,934
 Accrued expenses and other current liabilities                                     187,079
 Due to parent                                                                       94,843
                                                                                -----------

          Total current liabilities                                               1,537,902

OTHER LIABILITIES
 Due to officers                                                                    461,939
                                                                                -----------

          Total liabilities                                                       1,999,841

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIENCY
 Series A convertible preferred stock, $.001 par value, 575
   shares issued and outstanding                                                  1,150,000
 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, $0.001 par value; 20,000,000 shares
   authorized; 5,498,800 shares issued and
   outstanding in 2000 and 1999                                                       5,498
 Additional paid-in capital                                                          50,425
 Accumulated deficit                                                             (4,393,131)
                                                                                -----------

          Total stockholders' deficiency                                            (87,208)
                                                                                -----------

          Total liabilities and stockholders' deficiency                        $ 1,912,633
                                                                                ===========
</TABLE>

The accompanying notes are an integral part of this statement.

                                      F-5
<PAGE>

                   Diva Entertainment, Inc. and Subsidiaries

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                              Year ended June 30,

                                                     2000            1999
                                                   ----------     ----------
                                                                  (restated)
Revenue
  Management fees, net                             $2,248,745     $1,856,633

Operating expenses
  Selling, general and administrative expenses      2,315,313      2,369,583
  Depreciation and amortization                       151,421        127,635
                                                   ----------     ----------
         Total operating expenses                   2,466,734      2,497,218
                                                   ----------     ----------
         Loss from operations                        (217,989)      (640,585)
                                                   ----------     ----------

Other income (expense)
  Litigation settlement                               502,988              -
  Interest expense                                    (30,300)        (1,020)
  Loss on sale of studio                                    -        (47,819)
  Miscellaneous income (expense)                           68       (140,512)
                                                   ----------     ----------

         Total other income (expense)                 472,756       (189,351)
                                                   ----------     ----------

         Net income (loss)                         $  254,767     $ (829,936)
                                                   ==========     ==========

         Dividends                                    160,437         22,500

         Income (loss) attributable to common
          stockholders                             $   94,330     $ (852,436)
                                                   ==========     ==========

Basic income (loss) per share                      $      .02     $     (.16)
                                                   ==========     ==========

Weighted-average common stock outstanding           5,498,800      5,498,800
                                                   ==========     ==========

Diluted income (loss) per share                    $      .02     $     (.16)
                                                   ==========     ==========

Weighted-average common stock outstanding           5,498,800      5,498,800
                                                   ==========     ==========





The accompanying notes are an integral part of these statements.

                                      F-6
<PAGE>

                   Diva Entertainment, Inc. and Subsidiaries
    Consolidated Statement of Changes in Stockholders' Equity (Deficiency)
                      Years ended June 30, 1999 and 2000

<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, 1998
(Restated)                              200  $   400,000                                                    $5,498,800  $     5,498
Private placement offering of
   375 shares of Series A
   Convertible Preferred
   Stock                                375  $   750,000
Conversion of debt into Series
   B Redeemable Convertible
   Preferred Stock                                             3,000  $  3,000,000
Realized loss on marketable
   securities

Accrued dividends on Preferred
   Stock
Net loss
                                -----------  ----------- -----------  ------------ -----------  ----------- ----------  -----------
Other comprehensive income
Balance - June 30, 1999
(Restated)                              575    1,150,000       3,000     3,000,000           -            -  5,498,800        5,498
                                -----------  ----------- -----------  ------------ -----------  ----------- ----------  -----------

Issuance of 100 shares of Series
   C Convertible Preferred
   Stock                                                                                   100  $   100,000
Accrued dividends on Preferred
   Stock

Net income
                                -----------  ----------- -----------  ------------ -----------  ----------- ----------  -----------
and other comprehensive income
Balance - June 30, 2000                 575  $ 1,150,000       3,000  $  3,000,000         100  $   100,000  5,498,800  $     5,498
                                ===========  =========== ===========  ============ ===========  =========== ==========  ===========

<CAPTION>
                                                        Accumulated
                                      Additional           Other                               Total
                                        Paid-in        Comprehensive      Accumulated      Stockholders'       Comprehensive

                                        Capital            Income           Deficit          Deficiency           Income
                                     -------------   ----------------   ---------------   -----------------   ----------------
<S>                                  <C>             <C>                <C>               <C>                 <C>
Balance - June 30, 1998
(Restated)                           $      50,425   $        (42,947)  $    (3,635,025)  $      (3,222,049)
Private placement offering of
   375 shares of Series A
   Convertible Preferred
   Stock                                                                                            750,000
Conversion of debt into Series
   B Redeemable Convertible
   Preferred Stock                                                                                3,000,000
Realized loss on marketable
   securities                                        $         42,947                                42,947             42,947

Accrued Dividends on
   Preferred Stock                                                              (22,500)            (22,500)
Net loss
                                                                               (829,936)           (829,936)          (829,936)
                                     -------------   ----------------   ---------------   -----------------   ----------------
Other comprehensive income                                                                                            (786,989)
Balance - June 30, 1999
(Restated)                                  50,425                  -        (4,487,461)           (281,538)                 -
                                     -------------   ----------------   ---------------   -----------------   ----------------
Issuance of 100 shares of Series
   C Convertible Preferred
   Stock                                                                                            100,000
Accrued dividends on Preferred
   Stock                                                                       (160,437)           (160,437)

Net income and other comprehensive
    income                                                                      254,767             254,767   $        254,767
                                     -------------   ----------------   ---------------   -----------------   ================

Balance - June 30, 2000              $      50,425   $              -   $    (4,393,131)  $         (87,208)
                                     =============   ================   ===============   =================
</TABLE>

The accompanying notes are an integral part of this statement.

                                      F-7
<PAGE>

                   Diva Entertainment, Inc. and Subsidiaries
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                              Year ended June 30,
<TABLE>
<CAPTION>
                                                                                             2000                  1999
                                                                                          ----------            ----------
<S>                                                                                       <C>                   <C>
Cash flows from operating activities
    Net income (loss)                                                                      $ 254,767             $(829,936)
                                                                                           ---------             ---------
Adjustments to reconcile net income (loss) to net cash
    provided by (used in) operating activities
      Depreciation and amortization                                                          151,421               127,635
      Loss on sale of marketable securities                                                        -                42,947
      Loss on sale of studio                                                                       -                47,819
      Disposal of equipment                                                                        -                13,076
      (Increase) decrease in assets
         Accounts receivable                                                                 187,136              (631,176)
         Prepaid expenses and other current assets                                             3,059               (26,603)
         Security deposits                                                                    39,500                (4,681)
      Increase (decrease) in liabilities
      Accounts payable - talent                                                                6,016               325,516
      Accounts payable - other                                                                22,816                38,291
      Accrued expenses and other current liabilities                                          25,837               (84,198)
      Litigation reserves                                                                   (502,988)               89,837
                                                                                           ---------             ---------
              Total adjustments                                                              (67,203)              (61,537)
                                                                                           ---------             ---------
              Net cash provided by (used in) operating activities                            187,564              (891,473)
                                                                                           ---------              --------
Cash flows from investing activities
    Purchases of property and equipment                                                      (63,468)             (160,656)
    Advances to employees                                                                     (2,107)              (14,629)
    Collections on note receivable                                                                 -                39,821
    Proceeds from sale of marketable securities                                                    -                32,171
                                                                                           ---------             ---------
              Net cash used in investing activities                                          (65,575)             (103,293)
                                                                                           ---------             ---------
Cash flows from financing activities
    Cash overdraft                                                                            59,367               131,702
    (Repayment of) proceeds from officers' loans, net                                       (237,706)              (90,614)
    Advances to parent, net                                                                  (20,975)             (289,354)
    Proceeds from private placement offering, net                                            100,000               708,000
    Advances from related parties                                                                  -               511,172
                                                                                           ---------             ---------
              Net cash (used in) provided by financing activities                            (99,314)              970,905
                                                                                           ---------             ---------
              Net increase (decrease) in cash                                                 22,675               (23,681)

Cash at beginning of year                                                                          -                23,861
                                                                                           ---------             ---------
Cash at end of year                                                                        $  22,675             $       -
                                                                                           =========             =========
Supplemental disclosures of cash flow information:
    Cash paid during the year for interest                                                 $  30,300             $   1,020
                                                                                           =========             =========
</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, 2000 and 1999

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 above 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, 2000 and 1999

     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 (Note F) and proceeds from the issuance of
Series C Preferred Stock (see Note I) to assist in the payment of trade
payables. 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 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. It is intended that this
transaction shall qualify as a transaction in securities exempt from
registration or qualification under the Securities Act of 1933, as amended. The
JRCI Shares will be restricted against resale pursuant to the provisions of
Federal and state securities laws. The transaction was consummated on January
14, 2000.

     In addition, as a covenant under the Agreement, JRCI was required an
agreement to sell to Havilland Limited, a related entity, all of the shares of
Diva-Delaware owned by JRCI as well as to assign all of its rights, title and
interest in an Option Agreement (see Note J) 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 I) owned by JRCI
were exchanged for assignment to and assumption by Havilland of the amounts due
by JRCI to officers of the Company, the amounts due to JRCI from the Company
amounting to $94,843 and 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.

                                      F-10
<PAGE>

                   Diva Entertainment, Inc. and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                            June 30, 2000 and 1999

     4.  Revenue Recognition

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

     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 2000, 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 officer 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-

                                      F-11
<PAGE>

                   Diva Entertainment, Inc. and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                            June 30, 2000 and 1999

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.
The Company believes no material impairment to goodwill exists at June 30, 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, 2000 there are
no options issued and outstanding.

     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, 1999 is detailed in the Company's accompanying consolidated statement
of shareholders' equity. The assets relating to the balance in other
comprehensive income were sold during the year ended June 30, 1999.

     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, 1999,
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, 2000, 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, 2000, there is no
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, 2000 and 1999

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

<TABLE>
<CAPTION>
                                                                             Year ended June 30,
                                                                   ------------------------------------

                                                                        2000                 1999
                                                                     ----------           ----------
     <S>                                                             <C>                  <C>
     Basic Earnings Per Share
     Income (loss) attributable to common stockholders               $   94,330           $ (852,436)
     Basic common shares                                              5,498,800            5,498,800
     Basic earnings (loss) per share                                 $     0.02           $    (0.16)

     Diluted Earnings Per Share
     Income (loss) attributable to common stockholders               $   94,330           $ (852,436)
     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 (loss) per share                               $      .02           $    (0.16)
</TABLE>

     13. New Accounting Pronouncement

     In June 1998, Statement of Financial Accounting Standards No. 133 ("SFAS
No. 133"), "Accounting for Derivative Instruments and Hedging Activities," was
issued.  This standard establishes new accounting and reporting standards
requiring that every derivative financial instrument be recorded in the balance
sheet as either assets or liabilities and measured at fair value.  SFAS No. 133
requires that changes in the derivative's fair value should be recognized
currently in earnings unless specific hedge accounting criteria are met.
Special accounting for qualifying hedges allows a derivative's gains and losses
to offset related results on the hedge item in the income statement and requires
that a company must formally document, designate and assess the effectiveness of
transactions that receive hedge accurately.

     SFAS No. 133 is effective for fiscal years beginning after June 15, 2000.
The effect of adopting this standard is not expected to have a material effect
on the Company's financial position or results of operations, since the Company
did not have any derivative instruments at June 30, 2000.

     14. Reclassification

     Certain reclassifications have been made to prior year amounts to conform
to the June 30, 2000 presentation.

     15. Restatement

     The financial statements of the Company for the year ended June 30, 1999
were previously filed on Form 10-KSB on February 4, 2000. The financial
statements included herein are restated to reflect the reclassification of
$3,000,000 of Series B Preferred Stock as permanent equity. The Series B
Preferred Stock had previously been classified as temporary equity.

                                      F-13
<PAGE>

                   Diva Entertainment, Inc. and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                            June 30, 2000 and 1999

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 1999 of $42,947, resulting from sales of securities during the
period that was adjusted against accumulated other comprehensive income.

NOTE C - NOTE RECEIVABLE

     In December 1997, Prima entered into an asset purchase agreement (the
"Agreement") with an unrelated third party to sell certain assets and
liabilities of the studio for $329,203, resulting in a gain of $217,238.  The
selling price consists of cash payments and note receivable with interest at 8%
per annum.  At June 30, 1999, the Company forgave the outstanding balance of
$47,819 and recorded the amount as a loss on sale of the studio (see Note H).

NOTE D - PROPERTY AND EQUIPMENT

     Property and equipment consists of the following :

<TABLE>
<CAPTION>
                                                                                           Amount
                                                                                          --------
          <S>                                                                             <C>
          Office equipment and fixtures                                                   $216,516
          Leasehold improvements                                                           263,395
                                                                                          --------

                                                                                           479,911

          Less accumulated depreciation and amortization                                   200,313
                                                                                          --------

          Property and equipment, net                                                     $279,598
                                                                                          ========
</TABLE>

     Depreciation and amortization expense for the years ended June 30, 2000 and
1999 was $103,522 and $79,732, respectively.

NOTE E - 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,

                                      F-14
<PAGE>

                   Diva Entertainment, Inc. and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                            June 30, 2000 and 1999

2000 and 1999 was $207,572 and $159,673, respectively. Amortization expense for
both of the years ended June 30, 2000 and 1999 amounted to approximately
$48,000.

NOTE F - RELATED PARTY TRANSACTIONS

     Due to Officer

     The amounts due to an officer of the Company amounted to $461,939 at June
30, 2000 represent advances made which are noninterest-bearing.  The officer has
agreed not to demand payment prior to July 2, 2001.


     Due to Parent (JRCI)

     The amount due to JRCI of $94,843 at June 30, 2000 represents net advances
made to the Company by JRCI, which are noninterest-bearing and are due on
demand.  In connection with the Corporate Combination Agreement (see Note A-2)
such amounts are now due to Havilland.

NOTE G - INCOME TAXES

     In fiscal 2000, no Federal, state and local tax expense was recorded as a
result of the expected benefit of approximately $120,000, for the utilization of
a portion of the net operating loss ("NOL") carryforwards.  In fiscal 1999, 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,
                                                                     -----------------------------
                                                                            2000            1999
                                                                       ---------       ---------
     <S>                                                               <C>             <C>
     Provision (benefit) for Federal income taxes at the
            statutory rate                                             $  86,620       $(282,178)

     State and city income taxes, net of Federal income tax
             benefit                                                      16,815         (54,776)

     Valuation allowance for deferred taxes                                    0       $(336,952)
     Utilization of NOL carryforwards                                   (103,435)              0
                                                                       ---------       ---------
             Actual provision (benefit) for income taxes               $       0       $       0
                                                                       =========       =========
</TABLE>

                                      F-15
<PAGE>

                   Diva Entertainment, Inc. and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                            June 30, 2000 and 1999

     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, 2000

<TABLE>
          <S>                                                           <C>
          Current
            Allowance for doubtful accounts and sales
               allowances                                               $   165,000
          Long-term
            Net operating loss carry forward                              1,486,000
                                                                        -----------

          Total deferred tax assets                                       1,651,000

          Less valuation allowance                                       (1,651,000)
                                                                        -----------

          Net deferred tax asset                                        $         -
                                                                        ===========
</TABLE>

     The Company has estimated NOL carryforwards of approximately $3,700,000
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 H - COMMITMENTS AND CONTINGENCIES

     1.  Leasing Arrangements

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

                                      F-16
<PAGE>

                   Diva Entertainment, Inc. and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                            June 30, 2000 and 1999

     Future minimum rental commitments under the above noncancellable operating
leases as of June 30, 2000 are as follows:

<TABLE>
<CAPTION>
                    Year ending June 30,                                 Amount
                    --------------------                               ---------

<S>                                                                    <C>
                    2001                                               $127,679
                    2002                                                129,860
                    2003                                                 92,967
                    2004                                                 27,484
                                                                       --------

                                                                       $377,990
                                                                       ========
</TABLE>

     Rent expense for the years ended June 30, 2000 and 1999 was $136,960 and
$98,699, 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, 2000 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.

                                      F-17
<PAGE>

                   Diva Entertainment, Inc. and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                            June 30, 2000 and 1999

     4.  Late Filings

     The Company was required to file the Form 10-KSB timely.  The Company
intends to file its Form 10-KSB in the near future.  Management believes that
the late filing will not have a material adverse effect on the financial
position of the Company.

NOTE I - PREFERRED STOCK

     The Company has authorized 1,000,000 shares of $0.001 par value preferred
stock.  At June 30, 2000, 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
into 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.  The Company incurred $30,000 of placement agent fees in
connection with this offering.

     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, 1999, 375 shares of the Series A Preferred were sold for $750,000,
which was received in cash and 375 shares were subscribed for $750,000.  The
balance is payable when Diva-Delaware files an amendment to the registration
statement for the shares of its common stock underlying the Series A Preferred
which amendment incorporates the audited financial statements for the fiscal
year ended June 30, 1999.  The Company incurred $30,000 of placement agent fees
in connection with this offering.

     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, 2000 and 1999, total cumulative
dividends amounted to $48,057 and $8,625, respectively.  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 shareholder, an amount equal to $2,000 per share.  In

                                      F-18
<PAGE>

                   Diva Entertainment, Inc. and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                            June 30, 2000 and 1999

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, 2000, 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 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.

     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, 2000 and 1999, total cumulative
dividends amounted to $134,877 and $22,500, respectively.  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, 2000, 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
                                      F-19
<PAGE>

                   Diva Entertainment, Inc. and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                            June 30, 2000 and 1999

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.

     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, 2000, there have been no dividends declared. At the
option of the Company, such dividend 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 shareholder, 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, 2000, 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

                                      F-20
<PAGE>

                   Diva Entertainment, Inc. and Subsidiaries

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                            June 30, 2000 and 1999

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.

NOTE J - 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 less 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>
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       (36,406)     254,767
Segment assets                               978,672    1,085,187      (151,226)   1,912,633
Expenditure for segment assets                54,803        8,665                     63,468

1999
----
Revenue                                   $  934,651   $  921,982                 $1,856,633
Interest expense                               1,020                                   1,020
Depreciation and amortization                 66,864       60,771                    127,635
Segment profit (loss)                       (567,762)    (233,797)  $   (28,379)    (829,938)
Segment assets                             1,132,096    1,320,154      (147,828)   2,304,422
Expenditure for segment assets                67,192       93,464                    160,656
</TABLE>

                                      F-21
<PAGE>

                                 Exhibit Index


Ex#                           Exhibit Description


3.4       Certificate of Designation - Series A Convertible Preferred Stock.
3.5       Certificate of Designation - Series B Redeemable Convertible Preferred
          Stock.
3.6       Certificate of Designation - Series C Convertible Preferred Stock.
21.1      List of Subsidiaries.