SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)

[ ]  Annual report under Section 13 or 15(d) of the Securities Exchange Act of
     1934 for the fiscal year ended September 30, 2000 or

[X]  Transition report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934 for the transition period from January 1, 2000 to
     September 30, 2000.

Commission File No. 001-13217


                    THE ORLANDO PREDATORS ENTERTAINMENT, INC.
                    -----------------------------------------
                 (Name of small business issuer in its charter)


           Florida                                      91-1796903
           -------                                      ----------
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
incorporation or organization)


741 Front Street, Suite 140
Celebration, Florida                                       34747
--------------------                                       -----
(Address of principal executive offices)                 (Zip Code)



Issuer's telephone number: (407) 566-2493

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

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


                        No Par Value Class A Common Stock
                Redeemable Class A Common Stock Purchase Warrants
                -------------------------------------------------
                                (Title of Class)

<PAGE>


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

                                  Yes X    No
                                     ---     ---

     Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this report, and no disclosure will be
contained, to the best of the 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. X

     As of December 31, 2000, 5,192,999 shares of the Registrant's no par value
Class A Common Stock were outstanding. As of December 31, 2000, the market value
of the Registrant's no par value Class A Common Stock, excluding shares held by
affiliates, was $6,972,612 based upon the closing price of $1.625 per share of
Class A Common Stock on the Nasdaq SmallCap Market.


     The Registrant's revenues for its most recent fiscal year were $3,869,866.

     The following documents are incorporated by reference into Part III, Items
9 through 12 hereof: None.




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<PAGE>


                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS
-------------------------------

     The following is a summary of certain information contained in this Report
and is qualified in its entirety by the detailed information and financial
statements that appear elsewhere herein. Except for the historical information
contained herein, the matters set forth in this Report include forward-looking
statements within the meaning of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements are
subject to risks and uncertainties that may cause actual results to differ
materially. These risks and uncertainties are detailed throughout this Report
and will be further discussed from time to time in the Company's periodic
reports filed with the Commission. The forward-looking statements included in
this Report speak only as of the date hereof.

Introduction

     The Company is in the sports and entertainment business and (i) owns and
operates the Orlando Predators (the "Predators" or the "team"), a professional
arena football team of the Arena Football League (the "AFL" or the "League"),
(ii) owns an additional 8% net revenue interest in the League (in addition to
its 4% League ownership through the Predators) and (iii) owns rights to the
operation of three af2 teams. See "arenafootball2 League." Arena football is
played in an indoor arena on a padded 50 yard long football field using eight
players on the field for each team. Most of the game rules are similar to
college or other professional football game rules with certain exceptions
intended to make the game faster and more exciting.

Strategy

     The Company's strategy at the League level is to participate through the
operation of the Predators and through its League ownership in what the Company
believes will be the continued significant growth of the AFL which in turn is
expected to result in increased revenue to the Company generated from (i)
national (League) and regional (team) broadcast contracts, (ii) national League
sponsorship contracts, (iii) the sale of additional League Memberships, and (iv)
increased fan attendance at AFL games including Predators' games, together with
appreciation in the value of the Predators as an AFL team. The trend toward
ongoing League growth is evidenced by the February 1999 announcement by the
National Football League ("NFL") that it had obtained an option to purchase up
to 49.9% of the League and by the addition of seven new AFL teams (Los Angeles,
Carolina, Detroit, New Orleans, Chicago, Dallas and Washington, D.C.) between
2000 and 2002, four of which (Detroit, New Orleans, Dallas and Washington) are
owned by NFL owners.

     In a broader sense, the Company's strategy is to acquire and consolidate
the operations of minor league professional sports teams in order to realize the
significant economies of scale available through the operations of these sports
franchises. Consistent with this strategy, in October 2000, the Company entered
into an agreement with af2 Enterprises LLC ("af2"), which operates the
arenafootball2 League to assist af2 in acquiring substantially all of the assets
of the Indoor Football League ("IFL") through IFL Acquisition Company (IFL
Acq."), a wholly-owned subsidiary of af2.

                                       3
<PAGE>


     Under the terms of the Company's agreement with af2, the Company
contributed (i) $1.1 million in cash, (ii) a $1.75 million promissory note and
(iii) 214,286 shares of its common stock (which it agreed to repurchase from the
holders at their election for $3.50 per share). In exchange af2 granted the
Company (i) three af2 memberships in IFL markets, (ii) the first $1 million in
expansion fees earned by the af2 in IFL markets and (iii) all of the tangible
personal property assets of the IFL such as turf fields, football equipment and
the like.

     At the team level, the Company's strategy is to increase fan attendance at
Predators' home games, expand the Predators' advertising and sponsorship base,
and contract with additional local and regional broadcasters to broadcast
Predators' games.

     The Company believes that fan attendance will increase based upon the game
winning success (if any) of the Predators in the AFL and by increasing media
exposure of the team in the central Florida area. Game winning success requires
the ongoing recruitment of superior players. In order to recruit players, the
Company employs a recruiting team which includes the Company's head coach and
Director of Player Personnel. In order to increase media exposure to the team in
central Florida, and expand the Company's sponsorship base, the Company calls
upon the media, corporate sponsors and other central Florida organizations. The
Company also calls upon central Florida businesses to solicit advertising and
sponsorship funds on behalf of the team. The Predators participate in a number
of charitable events during the year as a part of a community relations and
recognition program and maintain an Internet website at
www.orlandopredators.com. The Company also employs five to ten part-time
telemarketing personnel prior to commencement of the AFL season to assist in
ticket sales.

     The Company's strategy also includes maintaining and building community
support for, and recognition of, the team as an ongoing valuable entertainment
institution in central Florida and throughout the state. The Company believes
that the value of the Predators as a sports team will increase if community
support and recognition are maintained. In this regard, the Predators completed
their tenth AFL season in 2000, have played in the Arena Bowl for the AFL
championship on six occasions and won Arena Bowl XII championship in 1998 and
Arena Bowl XIV in 2000. The Predators hold one of the best all-time win-loss
records among current and former AFL teams and have recorded the highest
announced average AFL per game attendance in a number of prior seasons.

History

     The AFL governs the arena football teams that comprise the League and sell
team memberships ("Memberships"). The AFL's first season commenced in 1987.
Between 1987 and 2000, the League grew from four teams to 17 teams with teams in
New Orleans, Chicago and Detroit expected to begin play in 2001. The membership
fees for the next team joining the AFL has increased from $125,000 in 1995 to $7
million currently. Since 1992, announced League attendance has grown from

                                       4
<PAGE>


736,000 to over 1.1 million (including play-off games). Game broadcasts during
this period have included local, regional, ESPN, ESPN 2, TNN and ABC coverage.
In the 2000 season, 25 games were broadcast on national cable television
stations, including ABC's live broadcast of Arena Bowl XIV. From 11 million
television households in 1994, the AFL reached over 27.5 million households in
2000.

     The Company has derived its revenue and operating funds from the arena
football operations of the Predators and its aggregate 12% net revenue interest
in the AFL in 2001. Revenue from football operations results from the sale of
tickets to the Predators' home games, the sale of advertising and promotions to
Predator sponsors, the sale of local and regional broadcast rights to Predators'
games, the sale of merchandise carrying the Predators' logos, and concession
sales at Predators' home games. Revenue from the Company's League ownership
results from the Company's share of all League revenue, primarily consisting of
League contracts with national media organizations, expansion team Membership
fees, national corporate sponsorships and League merchandising sales.

     In April, 1998, the NFL amended its by-laws to allow its owners to purchase
additional professional football teams. To date, the owners of ten NFL teams
have purchased or applied to purchase AFL teams.

     As indicated above, in February 1999 the NFL was granted a three year
option to purchase up to 49.9% of the League. Should the NFL exercise its
option, this shared ownership is expected to improve the AFL's ability to
negotiate national media contracts, to develop new league corporate sponsorships
and to sell AFL merchandise.

Arena Football and the Arena Football League

     In 1985, Jim Foster, a professional football marketing executive,
formulated a plan for an indoor professional football game that included a
50-yard playing field, an eight player single platoon system and the use of drop
kicks and rebound nets. The first Arena Football game was played in Rockford,
Illinois on April 26, 1986 with a second game played on February 26, 1987 in
Chicago, Illinois.

     In March 1987 the U.S. Patent Office issued a U.S. Patent ("Patent") to
Gridiron Enterprises, Inc. an Illinois corporation ("Gridiron") for the Arena
Football Game System and rules of play as well as trademarks for the logo and
names associated with Arena Football. In December 1991, the AFL was incorporated
as a non-profit membership corporation in the state of Delaware. Also in 1991,
Gridiron entered into an exclusive licensing agreement with the AFL to organize,
operate and market Arena Football throughout the United States by selling team
memberships in major markets across the United States. Pursuant to the licensing
agreement, the AFL granted to Gridiron a per team royalty of $20,000 per year in
return for using the game system and rules of play of Arena Football. In August
1998 the AFL purchased all patent and other rights to the Arena Football Game
System from Gridiron for $4,000,000, and the teams were no longer required to
pay the $20,000 per year royalty.

                                       5
<PAGE>


     Four teams were fielded for the League's inaugural 1987 season. By 1991,
the League had eight teams and had played exhibition games in London and Paris.
In 1992 and 1993, the League fielded 12 teams and 10 teams, respectively, with
some games televised on the ESPN cable network. For 2001, 19 teams will play in
the League.

     AFL games are generally played in an indoor basketball/hockey sports arena
which offers fans climate-controlled conditions and a more intimate view of the
game. As a result of the smaller playing field, the rebound nets and a general
emphasis on offensive play, Arena Football games are generally high scoring,
fast-paced action contests.

     AFL game attendance has risen consistently with over 1.1 million in total
fan attendance announced for the 2000 season. Per game announced attendance
averaged approximately 10,000 during the 2000 season. "Announced" game
attendance represents attendance figures provided by League teams to the League
and the media and cannot be independently verified. Approximately 66% of AFL
viewers are male and 34% are female with 60% of such viewers under the age of
35. In terms of education, 47% have college or graduate degrees, 28% have some
college attendance and 87% hold at least high school diplomas.

     The membership fee for new teams joining the AFL has grown from $125,000
for the 1990 season to $7 million currently. In 2000 there were over 27.5
million households with AFL teams in their metropolitan areas, up from 11
million households in 1994. During the 2000 season, TNN, ESPN, ESPN 2 and ABC
broadcast a total of 25 games including ten playoff games and the Arena Bowl.

     AFL player salaries are subject to a collective bargaining agreement
between the League, its member teams and the Arena Football League Players'
Organizing Committee. See "Collective Bargaining Agreement." For the 2000
season, the Predators' players' compensation was approximately $1.2 million in
the aggregate. There are no player drafts, although expansion teams are allowed
to draw from a pool of players designated by existing AFL teams.

     The Predators provide a $250,000 occupational health, accidental death and
disability insurance policy. Each team is required to pay the first $35,000 of
claims for an injured player up to an aggregate of $356,000 for the three
Florida based AFL teams.

Rules of Arena Football

     Arena Football is played in an indoor arena on a field which consists of a
padded surface 85 feet wide and 50 yards long with eight-yard end zones. The
endzone goalposts are nine feet wide with a cross-bar height of 15 feet compared
to NFL goalposts which are 18 1/2 feet wide with a cross-bar height of 10 feet.
Eight feet above each endzone are goal-side rebound nets which are 30 feet wide
by 32 feet high.

                                       6
<PAGE>


     There are eight players on the field for each team as part of a 24-man
active roster. Players play both offense and defense with the exception of the
kicker, quarterback, an offensive specialist, two defensive specialists and a
kick returner.

     The game is played using an NFL-size football in four 15-minute quarters
with a 15-minute halftime. The game clock stops for out of bounds plays or
incomplete passes only in the last minute of each half, when necessary for
penalties, injuries and time-outs or following points after touchdowns, field
goals and safeties. Accordingly, the average AFL football game is played in
approximately two hours and 25 minutes compared to approximately three hours and
five minutes for an NFL game.

     Four downs are allowed to advance the ball ten yards for a first down or to
score. Scoring consists of six points for a touchdown, one point for a
conversion by placekicking after a touchdown, two points for a conversion by
dropkick and two points for a successful run or pass after a touchdown. Three
points are awarded for a field goal by placement or four points for a field goal
by dropkick, with two points for a safety. Punting is illegal. On fourth down a
team may attempt a first down, touchdown or field goal. The receiving team may
field any kickoff or missed field goal that rebounds off the rebound nets.

     Although passing rules for the AFL are similar as to outdoor NCAA football,
a unique exception involves the rebound nets. A forward pass that rebounds off a
rebound net is a live ball and is in play until it touches the playing surface.

     Overtime periods are 15 minutes during the regular season and the playoffs.
Each team has one possession to score. If, after each team has had one
possession and one team is ahead, that team wins. If the teams are tied after
each has had a possession, the next team to score wins.

AFL Teams

     For the 2001 season, the AFL will consist of the following 19 teams,
aligned into two conferences, with two divisions in each conference:

                               American Conference
                               -------------------

     Western Division                                     Central Division
     ----------------                                     ----------------
     Arizona Rattlers                                     Chicago Rush
     Oklahoma City Wranglers                              Milwaukee Mustangs
     San Jose SaberCats                                   Detroit Fury
     Los Angeles Avengers                                 Grand Rapids Rampage
     Houston ThunderBears                                 Indiana Firebirds


                                       7
<PAGE>


                               National Conference
                               -------------------

     Eastern Division                                      Southern Division
     ----------------                                      -----------------
     Toronto Phantoms                                      Nashville Kats
     New Jersey Red Dogs                                   Orlando Predators
     Buffalo Destroyers                                    Tampa Bay Storm
     New York Dragons                                      Florida Bobcats
     Carolina Cobras

Regular Season and Playoffs

     Following two pre-season games, the regular AFL season extends from April
to August, with each team playing a total of 14 games against teams from both
conferences. Half of the games are played at home, and half are played away. At
the end of the regular season, the four division champions along with the eight
teams with the best winning records, qualify for the AFL playoffs to determine
the AFL's Arena Bowl champion for that season. Each playoff round is played in
the home arena of the team with the best winning record.

Gate Receipts, AFL Assessments and Distributions

     AFL teams are entitled to keep all gate receipts from pre-season home
games, regular season home games and playoff home games. Teams do not receive
any gate receipts from away games except that visiting teams are reimbursed for
hotel expenses by the home team. Each team is required to pay an annual
assessment to the AFL which is generally equal to the team's share of the
League's annual operating costs and each team is contingently liable for other
team membership purchases, team repurchases by the League and League litigation.
Each team's assessment is generally funded by its share of revenue derived from
the League's national television contracts, from the sale of AFL licensed
merchandise and from revenues generated by the League's sale of expansion team
memberships. Each visiting team participating in the playoffs is reimbursed for
hotel expenses and receives a fixed payment of $45,000 for each playoff game and
$50,000 for the Arena Bowl.

AFL Licensing

     The AFL operates a League licensing program on behalf of its teams. Under
the program, product manufacturers sign agreements allowing them to use the
names and logos of all AFL teams, the AFL itself and AFL's special events
(including playoffs and the Arena Bowl) in exchange for royalty and guarantee
payments. For the period ended September 30, 2000, the Company's share of net
revenues from licensing was $80,000. The Company's share of net revenue from the
League (the "Team Share") was equal to 1/25 of the AFL's net revenue for the
2000 season and it anticipates will be 1/27 for the 2001 season. The Company's
Team Share is equal to the AFL's net revenue divided by the total number of
League teams (19 in 2001), two Gridiron Team Shares, two Team Shares owned by
the Company and four expansion teams. League assessments are also based upon the
Team Share. Each team is also permitted to license its club identified products
locally for sale at its arena, at team owned and operated stores and through
team catalogs. The Company purchased two non-voting equity interests in 1998,
and in 2000 the Company's Team Share was 1/25 together with an additional 2/25
for its two non-voting equity interests.

                                       8
<PAGE>


League Governance

     The AFL is generally responsible for regulating the conduct of its member
teams. The AFL establishes the regular season and playoff schedules of the
teams, and negotiates, on behalf of its members, the League's national and
network broadcast contracts. Each of the AFL's members is, in general, liable on
a pro rata basis for the AFL's liabilities and obligations and shares pro rata
in its profits. Under the Bylaws of the AFL, League approval is required to
complete a public offering of any team's securities and for the sale or
relocation of a team.

     The AFL is governed by a Board of Directors, which consists of one
representative from each team. The Board of Directors selects the AFL
Commissioner, who administers the daily affairs of the AFL including
interpretation of playing rules and arbitration of conflicts among member teams.
The Commissioner also has the power to impose sanctions, including fines and
suspensions, for violations of League rules. David Baker has been the
Commissioner of the AFL since 1996.

arenafootball2 League

     In August 1999 the AFL established the arenafootball2 League ("af2") to be
comprised of smaller market "farm" teams. To date, 28 teams have joined the new
league (40 are expected by 2002), which commenced play in April 2000 with an
18-week, 120-game schedule. The 28 teams are primarily located in the midwest
and southeast.

     In October 2000 af2 acquired substantially all of the assets of the Indoor
Football League, and the Company acquired rights to operate three af2 teams
without payment of membership fees to the af2. See "Strategy", above.

Restrictions on Ownership

     The AFL Charter and Bylaws contain provisions which may prohibit a person
from acquiring the Common Stock and affect the value of the Common Stock. In
general, any acquisition of shares of Common Stock which will result in a person
or a group of persons holding 5% or more of the Company's outstanding Common
Stock will require the prior approval of the AFL, which may be granted or
withheld in the sole discretion of the AFL. The prospective purchaser would be
required to submit an AFL application, in form prescribed by the AFL, providing
certain information relating to that person's background. Upon receipt of such
application, the AFL has the right to conduct an investigation of the
prospective purchaser. In addition, the AFL may condition its approval upon the
execution, delivery and performance by the prospective purchaser of such
documents as the Charter or Bylaws shall prescribe. If a prospective purchaser
obtains the AFL's consent to acquire a 5% or more interest in the Company, such
prospective purchaser will be required to acknowledge that the purchaser will be
bound by the applicable provisions of the AFL Charter and Bylaws.

                                       9
<PAGE>


     In addition, no person who directly or indirectly owns any interest in an
AFL team, may own, directly or indirectly, a 5% or more interest in any other
team, without the prior approval of the AFL. The AFL Bylaws also contain
provisions which prohibit team owners from engaging in certain activities, such
as wagering on any game in which an AFL team participates. AFL players and
referees and employees of the AFL and its member clubs (other than the Company)
are not eligible to purchase or hold Common Stock. The AFL could in the future
adopt different or additional restrictions which could adversely affect the
shareholders.

     The grant of a security interest in any of the assets of the Company or the
Predators or any direct or indirect ownership interest in the Company, of 5% or
more, requires the prior approval of the AFL, which may be withheld in the AFL's
sole discretion. AFL rules limit the amount of debt that may be secured by the
assets of, or ownership interests in, an AFL team and require that the parties
to any secured loan that is approved execute an agreement limiting the rights of
the lenders and the team (or stockholder) under certain circumstances, including
upon an event of default or foreclosure. These limitations may adversely affect
the rights of the team (or stockholder) under certain circumstances.

     Failure by a holder of a 5% or more interest in the Company to comply with
these restrictions may result in a forced sale of such holder's interest in the
Company or the repurchase of such interests by the Company. The Company's Bylaws
provide that the Company may redeem, at the lower of fair market value or cost,
shares held by any person or entity who becomes the owner of 5% or more of the
Company's Common Stock without the approval of the AFL. These restrictions are
and will continue to be contained in a legend on each certificate issued
evidencing shares of Class A Common Stock.

     Neither the AFL, any of its affiliates or members nor any of their
respective officers, employees or representatives, other than the Company,
assume any responsibility for the accuracy of any representations made by the
Company in this Report.

Current Operations of the Company

     The Company derives substantially all of its revenue from the Arena
Football operations of the Predators and its aggregate 11.1% net revenue
interest in the League. This revenue is primarily generated from (i) the sale of
tickets to the Predators' home games, (ii) the sale of advertising and
promotions to Predator sponsors, (iii) the sale of local and regional broadcast
rights to Predators' games, (iv) the Company's share of League media contracts,
Membership fees paid by expansion teams and League licensing sales, and (v) the
sale of merchandise carrying the Predators' logos.

     In March 1998, the Company entered into an agreement with the AFL pursuant
to which it agreed to purchase two additional Team Shares in the League (which
then represented 2/19 of the League's revenue) for $6,000,000. Under the terms

                                       10
<PAGE>


of the agreement (which was amended in April 2000), the Company receives a
minimum of $480,000 per year until the balance of approximately $3 million is
paid and the distributions from the additional Team Shares are accounted as a
reduction of debt until paid in full. When the debt is repaid in full, then the
Team Shares will be recognized as revenue.

     Ticket Sales. The Predators played seven home games and seven away games
during the 2000 AFL regular season together with one home and one away
pre-season exhibition game. Under the AFL Bylaws, the Company receives all
revenue from the sale of tickets to regular season and pre-season home games and
no revenue from the sale of tickets to regular season and pre-season away games.

     The Predators play all home games at the TD Waterhouse Center, which holds
approximately 16,000 spectators. Ticket prices for regular season home games
during the 2000 season at the TD Waterhouse Center ranged from $5 to $130 per
game. The following table sets forth certain information relating to the
Predators' pre-season and regular season revenue generated by the sale of
tickets for the 1999 and 2000 seasons:


 Season        Number of        Average       Average Paid        Average
            Season Tickets   Per Game Paid    Ticket Price   Ticket Revenue Per
                               Attendance                           Game
--------------------------------------------------------------------------------
  1999           7,612            9,509          $21.78           $207,103
  2000           5,941            8,676          $24.42           $211,853


     Advertising and Promotion. The Company generates revenue from the sale of
advertising displayed on signs located throughout the TD Waterhouse Center, and
through other promotions utilizing the team's name or logos. In addition, the
Company markets team "sponsorships" to local and regional businesses which
provide a combination of advertising rights, promotional rights and VIP ticket
privileges. Advertising rights include the use of corporate logos within the TD
Waterhouse Center, commercials on radio and television, advertisements in the
FanGuide magazine, display of the sponsor's name on the Jumbotron (a large, four
sided electronic sign located in the center of the TD Waterhouse Center, public
address announcements, the inclusion of customer names on team posters and the
like. Promotional rights include banners displayed in the team's VIP room at the
TD Waterhouse Center), availability of blocks of seats in the upper bowl endzone
for specific games, the use of the team's logos and autographed helmets. VIP
privileges include high priority seating selections, parking passes, VIP room
passes and travel packages, which include attendance at team away games.

     Local and Regional Television, Cable and Radio Broadcasts. In March 1998,
the Company entered into a three-year television contract with the Sunshine
Network for the 1998, 1999 and 2000 seasons providing for the Company to receive
approximately $70,000 per season. The Company enters into a annual radio

                                       11
<PAGE>


contract with Clear Channel Communications. The Company is currently negotiating
new agreements with Sunshine and Clear Channel. In the past, most of the
proceeds from the two media contracts are paid in the form of bartered
commercial television and radio time made available to the Company rather than
cash.

     National Television. For the 2000 season, the AFL granted TNN, ESPN, ESPN 2
and ABC broadcast rights to televise 25 AFL games, which were live rather than
tape delayed (including 14 games in prime time), ten playoff games and ABC's
telecast of the Arena Bowl.

     Sale of Merchandise. The Company generates a small amount of revenue from
the sale of merchandise carrying the Predator logos (primarily athletic clothing
such as sweatshirts, T-shirts, jackets and caps) at the TD Waterhouse Center and
at the Company's corporate offices in downtown Orlando.

     Telemarketing. In addition to using telemarketing techniques to improve the
Predators' ticket sales, the Company uses its telemarketing staff to market
tickets for other minor league teams. The Company intends to further develop its
telemarketing techniques in order to offer telemarketing ticket services for
sports teams.

Performance

     The following table describes the performance of the Predators during the
last three AFL seasons:

                    Season Record   Finish in Division    Playoff Results
                    -------------   ------------------    ---------------
      1998               9-5               2nd           Won the Arena Bowl
                                                           Championship
      1999               7-7               3rd           Lost the Arena Bowl
                                                           Championship
      2000              11-3               1st           Won the Arena Bowl
                                                           Championship

Coaches

     Jay Gruden, age 33, was retained by the Company as the Predators' head
coach in August 1997 and has led the team to two Arena Bowl Championships. Coach
Gruden replaced Perry Moss who had been the team's head coach for the previous
seven seasons. Coach Gruden quarterbacked the Tampa Bay Storm for six seasons
from 1991 to 1996. During his tenure, he set AFL records for career pass
completions (1,182), passing yards (15,514) and passing touchdowns (280). He led
Tampa Bay to Arena Bowl championships four times, including back-to-back titles
in 1995 and 1996. A two-time All-Arena selection, Coach Gruden also was the
League's Most Valuable Player in 1992.

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<PAGE>


     Coach Gruden was hired in 1996 to become offensive coordinator of the AFL
expansion Nashville Kats. Nashville won an expansion team record 10 games and
qualified for the AFL playoffs. Coach Gruden was credited with developing
Nashville's quarterback, Andy Kelly, into one of the League's top quarterbacks.
Kelly finished the season with an AFL-leading 82 touchdown passes and was the
League's fifth rated quarterback. Under Coach Gruden, the Nashville offense
finished third in the AFL in scoring at 52.9 points per game and was fourth in
total offense at 285.2 yards per game. Coach Gruden's offenses produced
victories in the 1997 season over eventual league champion Arizona, two wins
over the Predators and wins over two other playoff teams.

     A Tampa native, Coach Gruden began his professional career with the NFL
Arizona Cardinals in 1989. He moved to the World League of American Football in
1990, where he played for the Sacramento Surge and the Barcelona Dragons, before
signing with Tampa Bay in 1991.

     In his final season as quarterback for Tampa Bay in 1996, he completed 70
touchdown passes, while setting career highs for attempts (447), completions
(275) and yards (3,626). In six post-season campaigns as Tampa Bay's
quarterback, Coach Gruden delivered four championship titles and led Tampa Bay
to an overall record of 12-2. He completed 253 of 425 post-season passes (60%),
for 4,410 yards and 52 touchdowns. Coach Gruden was Arena Bowl Most Valuable
Player in 1993. As Tampa Bay's quarterback, he compiled an overall record of
68-17 (.800) - the best six-year winning percentage in AFL history.

     At the University of Louisville under Head Coach Howard Schnellenberger,
Coach Gruden set school passing marks in a number of categories and won Most
Valuable Player honors in both 1987 and 1988. Following his senior season, he
accepted invitations to both the East-West Shrine Game and the Blue-Gray
All-Star Games.

     Coach Gruden's staff includes one paid and three unpaid assistant coaches.

Players

     In general, the rules of the AFL permit each team to maintain an active
roster of 24 players during the regular season.

                                       13
<PAGE>


The Collective Bargaining Agreement

     The League and the Arena Football League Players' Organizing Committee
("AFLPOC") have entered into a term sheet ("Term Sheet"), which is expected to
be superceded by a Collective Bargaining Agreement ("CBA") in the first half of
2001. Under the terms of the Term Sheet, the League has agreed with the AFLPOC
that player salaries must be at least 53% of League revenue as defined in the
Term Sheet. Additionally, the League teams agreed to a salary cap equal to the
greater of $1,375,000 per team, or 59% of team revenue as defined in the Term
Sheet, increasing to 61% by 2006. Minimum per player salaries under the Term
Sheet are set at $900 per game plus a $200 per game win bonus increasing to
$1,450 per game plus a $400 per game win bonus in the third year of the CBA.

TD Waterhouse Center

     The Predators have played in the TD Waterhouse Center, which has a seating
capacity of approximately 16,000, since 1991. In March 1998, the Company signed
a new five-year lease (with an additional five-year option) with the TD
Waterhouse Center commencing in the 1998 season at approximately the same per
game rental as its previous lease, but which provides the Company with an
approximately 20% share of revenue generated from food and beverage concessions
in exchange for the Company reducing ticket prices by approximately 10% to 20%,
depending upon seat location. The Company will also receive a rebate against
rent of $3 per person (up to $10,000) for games in which attendance exceeds
9,000 persons.

Competition

     The Predators compete for sports entertainment dollars with other
professional sports teams and with college athletics and other sports-related
entertainment. During portions of the AFL season, the Predators compete with the
XFL, which has a franchise team in Orlando (the "Orlando Rage"), professional
basketball (NBA and WNBA) teams playing in Orlando and with professional hockey
in Orlando and professional baseball in other locations in Florida. In addition,
the colleges and universities in central Florida, as well as public and private
secondary schools, offer a full schedule of athletic events throughout the year.
The Predators also compete for attendance and advertising revenue with a wide
range of other entertainment and recreational activities available in central
Florida. On a broader scale, AFL teams compete with football teams fielded by
high schools and colleges, other Indoor Football League teams, the NFL, the
Canadian Football League and NFL Europe.

Employees

     In addition to its active football players, the Company employs three
football personnel and 20 non-football personnel. During the AFL season, the
Company also uses volunteer part-time employees from time to time.

                                       14
<PAGE>


ITEM 2. DESCRIPTION OF PROPERTY
-------------------------------

     The Company leases team offices at 400 West Church Street in Orlando,
Florida, pursuant to a two-year lease covering 4,800 square feet for $900 per
month. The Company paid approximately $40,000 for leasehold improvements in the
space. The Company leases corporate offices at 741 Front Street, Kissimmee,
Florida, under a two-year lease terminating January 2002 at a monthly rental of
$3,200. In March 2001, the Company expects to consolidate its offices at 4901
Vineland Road, Suite 150, Orlando, Florida 32811, where it has executed a
five-year lease expiring January 2006 based upon a monthly rent of $9,420
increasing to $10,603 in 2006.

     The Predators have played in the TD Waterhouse Center, which has a seating
capacity of approximately 16,000, since 1991. In March 1998, the Company signed
a five-year lease (with an additional five-year option) with the TD Waterhouse
Center commencing in the 1998 season at approximately the same per game rental
as its previous lease, but which provides the Company with an approximately 20%
share of revenue generated from food and beverage concessions in exchange for
the Company reducing ticket prices by approximately 10% to 20%, depending upon
seat location. The Company also receives a rebate against rent of $3 per person
(up to $10,000) for games in which attendance exceeds 9,000 persons.

ITEM 3. LEGAL PROCEEDINGS
-------------------------

     In July 1999, the Arena Football League ("AFL") and all of its member teams
were joined as defendants in a civil action brought by Charlotte Arena Football
League, Inc., a former AFL team operator (the case is captioned Charlotte Arena
Football, Ltd. et. al. vs. Arena Football League, Inc., et. al., United States
District Court for the Middle District of Florida) in which the Plaintiffs seek
damages for alleged violations of the Sherman Antitrust Act, for certain
tortuous conduct, for breach of fiduciary duties and for civil conspiracy. The
complaint seeks damages against the defendants in amounts exceeding $300
million. Costs of defense and payment of any damages by the defendants will be
advanced by the AFL to be shared equally by all of the AFL teams. The League
settled this lawsuit in September 2000 for $550,000, of which OPE is liable for
$25,000 to be taken out of future League distributions from the League.

     In February 2000, the Arena Football League ("AFL") and all of its member
teams, including the Company, were joined as defendants in a civil action
brought by several AFL players (the case is captioned James Guidry, et. al. vs.
Arena Football League L.L.C. et. al., United States District Court, District of
New Jersey, Case Number 00-533-HAA) in which plaintiffs seek damages for
violation of federal antitrust law, specifically Sections 1 and 2 of the Sherman
Antitrust Act. The complaint seeks damages against the defendants in an amount
to be determined and trebled, plaintiffs' cost of litigation and further relief,
as the court deems proper and equitable. Should the plaintiffs prevail, the
Company's operating expenses, results of operations and financial condition
could be materially and adversely affected.

     In March, 2000, the Arena Football League ("AFL") and all of its member
teams were joined as defendants in an administrative law action filed with the
National Labor Relations Board ("NLRB"), Region 12, Tampa, Florida (Case Number
NLRB 12-CA-20666). AFL players James Guidry and Mike Pawlawski, as agents for
the Arena Football League Players Association, the United Food and Commercial
Workers Union and the National Football League Players Association, alleged an
unfair labor practice in violation of the AFL players' Section 7 rights under
the National Labor Relations Act. Costs of defense and payment of any damages by
the defendants will be advanced by the AFL, to be shared equally by all of the
AFL teams. The Company has been advised that the AFL believes the administrative
law action is without merit and intends to vigorously defend against it.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
-----------------------------------------------------------

     Not applicable.

                                       15
<PAGE>


                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
----------------------------------------------------------------

     The Company's Class A Common Stock commenced trading on the NASDAQ SmallCap
Market under the symbol "PRED" in December 1997. The following table sets forth
for the quarters indicated the range of high and low closing prices of the
Company's Class A Common Stock as reported by NASDAQ but does not include retail
markup, markdown or commissions. On December 31, 2000, the closing price of the
Company's Common Stock was $ 2.31per share.

                                                            Common Stock
     By Quarter Ended:                                  High             Low
     -----------------                                  ----             ---

     Calendar 2000
     -------------
     December 31, 2000                                $   2.13        $   1.19
     September 30, 2000                               $   2.90        $   1.50
     June 30, 2000                                    $   2.25        $   1.25
     March 31, 2000                                   $   3.12        $   1.75

     Calendar 1999
     -------------
     December 31, 1999                                $   3.75        $   2.75
     September 30, 1999                               $   4.50        $   3.00
     June 30, 1999                                    $   5.00        $   4.12
     March 31, 1999                                   $   5.38        $   4.50


     The above quotations were reported by the Nasdaq SmallCap Market and
reflect inter-dealer prices, without retail mark-up, mark-down or commission and
may not necessarily represent actual transactions. As of December 31, 2000, the
Company had approximately 900 record and beneficial stockholders.

Class A and Class B Common Stock

     The Company is authorized to issue 15,000,000 shares of no par value Common
Stock ("Common Stock"), of which 5,192,999 shares of Class A Common Stock are
outstanding as of the date of this Report. In addition, the Company has issued
1,000 shares of no par value Class B Common Stock. The Class A Common Stock and
Class B Common Stock are identical in all respects except that each share of
Class A Common Stock is entitled to one vote and each share of Class B Common
Stock is entitled to 10,000 votes. The Class B Common Stock was issued to
satisfy certain control requirements of the AFL. See "Arena
Football-Restrictions on Ownership" and "Item 12." Upon issuance, shares of
Common Stock are not subject to further assessment or call. Subject to the prior
rights of any series of preferred stock which may be issued by the Company in
the future, holders of Common Stock are entitled to receive ratably such
dividends that may be declared by the Board of Directors out of funds legally
available therefor, and, in the event of the liquidation, dissolution or winding
up of the Company, are entitled to share ratably in all assets remaining after
payment of liabilities. Holders of Common Stock have no preemptive rights or
rights to convert their Common Stock into any other securities. The outstanding
Common Stock is validly issued, fully paid and nonassessable. The holders of the
Class B Common Stock are entitled to convert each share of Class B Common Stock
into one share of Class A Common Stock.

                                       16
<PAGE>


Redeemable Warrants

     Each Warrant represents the right to purchase one share of Class A Common
Stock at an initial exercise price of $7.50 per share until December 10, 2002.
The exercise price and the number of shares issuable upon exercise of the
Warrants are subject to adjustment in certain events, including the issuance of
Class A Common Stock as a dividend on shares of Class A Common Stock,
subdivisions or combinations of the Class A Common Stock or similar events. The
Warrants do not contain provisions protecting against dilution resulting from
the sale of additional shares of Class A Common Stock for less than the exercise
price of the Warrants or the current market price of the Company's securities.

     Warrants may be redeemed in whole or in part, at the option of the Company,
upon 30 days' notice, at a redemption price equal to $.01 per Warrant if the
closing price of the Company's Class A Common Stock on NASDAQ is at least $7.50
per share for 20 consecutive trading days, ending not earlier than five days
before the Warrants are called for redemption.

     Holders of Warrants may exercise their Warrants for the purchase of shares
of Class A Common Stock only if a current prospectus relating to such shares is
then in effect and only if such shares are qualified for sale, or deemed to be
exempt from qualification, under applicable state securities laws. The Company
will use its best efforts to maintain a current prospectus relating to such
shares of Class A Common Stock at all times when the market price of the Class A
Common Stock exceeds the exercise price of the Warrants until the expiration
date of the Warrants, although there can be no assurance that the Company will
be able to do so.

     The shares of Class A Common Stock issuable upon exercise of the Warrants
will be, when issued in accordance with the Warrants, fully paid and
non-assessable. The holders of the Warrants have no rights as stockholders until
they exercise their Warrants.

     For the life of the Warrants, the holders thereof are given the opportunity
to profit from a rise in the market for the Company's Class A Common Stock, with
a resulting dilution in the interest of all other stockholders. So long as the
Warrants are outstanding, the terms on which the Company could obtain additional
capital may be adversely affected. The holders of the Warrants might be expected
to exercise them at a time when the Company would, in all likelihood, be able to
obtain any needed capital by a new offering of securities on terms more
favorable than those provided by the Warrants.

     The Warrants are also listed on the NASDAQ SmallCap Market under the symbol
"PREDW."

                                       17
<PAGE>


Preferred Stock

     The Company is authorized to issue 1,500,000 shares of preferred stock, no
par value (the "Preferred Stock"). The Preferred Stock may, without action by
the stockholders of the Company, be issued by the Board of Directors from time
to time in one or more series for such consideration and with such relative
rights, privileges and preferences as the Board may determine. Accordingly, the
Board has the power to fix the dividend rate and to establish the provisions, if
any, relating to voting rights, redemption rate, sinking fund, liquidation
preferences and conversion rights for any series of Preferred Stock issued in
the future.

     It is not possible to state the actual effect of any other authorization of
Preferred Stock upon the rights of holders of Common Stock until the Board
determines the specific rights of the holders of any other series of Preferred
Stock. The Board's authority to issue Preferred Stock also provides a convenient
vehicle in connection with possible acquisitions and other corporate purposes,
but could have the effect of making it more difficult for a third party to
acquire a majority of the outstanding voting stock. Accordingly, the issuance of
Preferred Stock may be used as an "anti-takeover" device without further action
on the part of the stockholders of the Company, and may adversely affect the
holders of the common stock. The Company has not issued any Preferred Stock.

Transfer Agent and Warrant Agent

     The Company has appointed Corporate Stock Transfer, Inc., 3200 Cherry Creek
Drive, Suite 430, Denver, Colorado 80209, as its transfer agent and warrant
agent.

Dividends

     The Company has not paid dividends on its Class A and Class B Common Stock
since inception and does not plan to pay dividends in the foreseeable future.
Earnings, if any, will be retained to finance growth.

Limitation on Liability

     The Company's bylaws provide that a director shall not be personally liable
to the Company or its stockholders for any action taken or any failure to act to
the full extent permitted by the Florida Business Corporation Act. The effect of
this provision in the bylaws is to eliminate the rights of the Company and its
stockholders, through stockholders' derivative suits on behalf of the Company,
to recover monetary damages from a director for breach of the fiduciary duty of
care as a director including breaches resulting from negligent or grossly
negligent behavior. This provision does not limit or eliminate the rights of the
Company or any stockholder to seek non-monetary relief such as an injunction or
rescission in the event of a breach of a director's duty of care or to seek
monetary damages for (i) a violation of criminal law, (ii) unlawful payment of
dividends or other distribution under Florida law, (iii) a transaction in which
a director derived an improper personal benefit, (iv) willful misconduct, or (v)
reckless, malicious or wanton acts.

                                       18
<PAGE>


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
-----------------------------------------------------------------

Introduction

The Company is in the sports and entertainment business and (i) owns and
operates the Orlando Predators (the "Predators" or the "team"), a professional
arena football team of the Arena Football League (the "AFL" or the "League") and
(ii) owns an additional 8% revenue interest in the League (in addition to its 4%
League ownership through the Predators). Arena football is played in an indoor
arena on a padded 50-yard long football field using eight players on the field
for each team. Most of the game rules are similar to college or other
professional football game rules with certain exceptions intended to make the
game faster and more exciting.

The Company's strategy is to participate through the operation of the Predators
and through its league ownership in what the Company believes will be continued
significant growth of the AFL which in turn is expected to result in increased
revenue to the Company generated from (i) national (League) and regional (team)
broadcast contracts, (ii) national league sponsorship contracts, (iii) the sale
of additional League Membership fees, and (iv) increased fan attendance at AFL
games including Predators' games, together with appreciation in the value of the
Predators as an AFL team. The trend toward ongoing League growth was recently
evidenced by a February 1999 announcement by the National Football League
("NFL") that it had obtained an option to purchase up to 49.9% of the League.

At the team level, the Company's strategy is to increase fan attendance at
Predators' home games, expand the Predators' advertising and sponsorship base,
and contract with additional local and regional broadcasters to broadcast
Predators' games.

The Company currently derives substantially all of its revenue from the arena
football operations of the Predators. This revenue is primarily generated from
(i) the sale of tickets to the Predators' home games, (ii) the sale of
advertising and promotions to Predator sponsors, (iii) the sale of local and
regional broadcast rights to Predators' games, (iv) the Predators' share of
League contracts with national broadcast organizations and expansion team fees
paid through the AFL, (v) the sale of merchandise carrying the Predators' logos
and (vi) concession sales at Predators' home games. A large portion of the
Company's annual revenue is determinable at the commencement of each football
season based on season ticket sales and contracts with broadcast organizations
and team sponsors.

The operations of the team are year-round; however, the majority of revenues and
expenses are recognized during the AFL playing season, from March through August
of each year. The team begins to receive deposits in late August for season
tickets during the upcoming season. From August through April, the team sells
season tickets and collects revenue from all such sales. Selling, advertising
and promotions also take place from August through April, although these
revenues are not realized until after the season begins. Single game tickets and
partial advertising sponsorships are also sold during the season, primarily from
April to July. Additional revenues and expenses are recognized in August from
playoff games, if any.

                                       19
<PAGE>


In August 1998, the Company purchased an additional two equity interests in the
Arena Football League for $6,000,000 ("Nth Agreement"). The $6 million will be
repaid to the Company by distributions from the League related to these two
equity interests or "Nths." The League currently owes the Company $3.1 million
in total distributions.

In May 1999, the Company entered into a non-binding letter of intent to acquire
United Sports Ventures, Inc. ("USV"). USV wholly or partially owns and operates
the Quad City Mallards, the Rockford Ice Hogs and the Missouri River Otters of
the United Hockey League and the Mobile Bay Bears (AA) professional baseball
club. The Company terminated the letter of intent with USV in June 2000, but
retained the Company's senior management to oversee the operations of OPE in a
management agreement.

In mid-February 2000, the AFL announced it was going to cancel the 2000 season
due to its ongoing labor dispute with the players. In late February 2000, the
AFL was notified by the Arena Football League Players' Organizing Committee that
they received authorization cards from an overwhelming majority of AFL players
to act as the exclusive collective bargaining representative for all AFL
players. Subsequently, the 2000 season was re-opened and negotiations began on
an interim collective bargaining agreement.

In April 2000, the Company settled a dispute with the League regarding the
payment terms of the Nth Agreement. As a result the Company will receive a
guaranteed amount of $480,000 per year and all additional monies received from
the League will go to the repayment of the remaining approximate $1.5 million
owed to the Company. Subsequently, the Company will continue to receive their
pro rata share of League revenues. When the entire debt is repaid to the
Company, only then will the Company begin to recognize the additional 2 Nths'
revenues as revenue.

In October 2000, the Company entered into an agreement with IFL Acquisition Co.,
LLC (IFLA), a wholly owned subsidiary of af2 Enterprises, LLC (af2). The Company
acquired the rights to three af2 memberships, all of the tangible assets of the
Indoor Football League (which were acquired by IFLA under a separate agreement),
the first $1,000,000 in expansion revenues received by af2 for memberships in
former Indoor Football League markets. The Company filed af2 applications for
Peoria, IL, Bismarck, ND and Green Bay, WI. In 2001 the Company will play in
Peoria (Pirates), in 2002, Bismarck (Bandits) and in either 2002 or 2003, in
Green Bay. The Company expects all af2 operations to be profitable.

In June 2000, the Company changed its fiscal year end from December 31 to
September 30 for financial statement purposes only. Period ended September 30
represents a nine month year.

                                       20
<PAGE>


Except for the historical information contained herein, certain matters set
forth in this report are forward-looking statements within the meaning of the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. These forward-looking statements are subject to risks and uncertainties
that may cause actual results to differ materially. These risks are detailed
from time to time in the Company's periodic reports filed with the Securities
and Exchange Commission. These forward-looking statements speak only as of the
date hereof. The Company disclaims any intent or obligation to update these
forward-looking statements.

Results of Operations

Period Ended September 30, 2000 Compared To The Year Ended December 31, 1999

Revenues

The Company recognizes game revenues and expenses over the course of the season
(March through August).

Revenues for the period ended September 30, 2000 were $3,869,866, which
represented a decrease of $1,236,103 or 24% as compared to revenues for the
period ended December 31, 1999 of $5,105,969. The decrease for the period ended
September 30, 2000 was directly attributable to a decrease in League revenues of
$1,551,278. League revenues dropped significantly for two reasons. First, the
labor dispute early in the year greatly hindered AFL expansion revenues.
Secondly, the change in accounting due to the Nth dispute with the League
prohibited approximately $514,000 in not being recorded as revenue, but as a
reduction in League debt to the Company. Additionally, the Predators had reduced
advertising and promotions revenue due that the labor dispute was in the team's
prime sponsorship selling season. The team played the same number of home games
in the period as last year. Ticket sales are recognized when the games are
played. The lease agreement with the Orlando Arena generated $118,709 in
concession income for the eight home games played in this period, consistent
with the prior year.

The telemarketing division also generated revenue of $10,057 for the period
ended September 30, 2000 compared to $90,798 for the year ended December 31,
1999. The division produced revenue from selling season tickets for the Mobile
Bay Bears (AA) professional baseball club. The Company anticipates the expansion
of this division in the future to other teams in the AFL, arenafootball2 (the
AFL's minor league system began play in the 2000 season) and other minor league
hockey and baseball teams.

Operating Expenses

Operating expenses of $2,026,141 increased $52,727 or 3% for the period ended
September 30, 2000 as compared to $1,973,414 for the year ended December 31,
1999. These costs are associated with the operations of the Predators' football
team. Player costs were approximately $1,235,609 for the 2000 season.

                                       21
<PAGE>


Selling and Promotional Expenses

Selling and promotional expenses of $841,618 decreased $148,192 or 15% for the
period ended September 30, 2000 compared to $989,810 for the year ended December
31, 1999. This was due to a significant decrease in corporate sponsorship
commissions related to lower corporate sponsorship revenues as a result of the
player dispute that caused the 2000 season to be canceled.

League Assessments

League assessments of $282,416 decreased $301,393 or 52% for the period ended
September 30, 2000 as compared to $583,809 for the year ended December 31, 1999.
The League is comprised of numerous teams who share in all league revenue and
expenses. League assessments are based upon the team's share of league operating
expenses and other league expenses such as legal settlements.

General and Administrative Expenses

General and administrative expenses of $1,290,406 increased $128,874 or 11% for
the period ended September 30, 2000 compared to $1,161,532 for the year ended
December 31, 1999. This increase can be primarily attributed to management fees
to USV, increased management salaries, investor relations expenses, a bad debt
write-off and stock option compensation expenses. General and administrative
expenses would have been approximately another $200,000 higher if it were not
for a shortened fiscal year.

Loss from Disposal of Equipment

During the period ended September 30, 2000, the Company wrote off certain assets
no longer of value for approximately $137,000. The Company believes that it will
sell its old playing field for approximately $10,000.

Playoffs

The Orlando Predators played three home playoff games in 2000 and played three
road playoff games in 1999. Playoff revenues for the period ended September 30,
2000 were $653,902 as compared to $176,970 for the year ended December 31, 1999.
Home teams retain all revenues for playoff games. Road teams receive $45,000 for
rounds one and two, and $50,000 for the Arena Bowl.

Playoff expenses for the period ended September 30, 2000 were $786,862 as
compared to $259,485 for the year ended December 31, 1999.

Other Income/Expense

Interest income during the period ended September 30, 2000 was $333,552 as
compared to $458,774 for the year ended December 31, 1999. The interest income
related to the Arena Football League is due to the Nth Purchase Agreement.

Interest expense during the period ended September 30, 2000 was $14,419 as
compared to $12,172 for the year ended December 31, 1999.

In June 2000, the Company terminated its letter of intent to acquire United
Sports Ventures, Inc. The Company wrote off $180,367 related to this failed
acquisition.

                                       22
<PAGE>


Liquidity and Capital Resources

Historically, the Company has financed net operating losses primarily with loans
from the team's former managing general partners and the sale of its securities.

During April 1998, the Company completed an offering of 40 units, with each unit
consisting of one $50,000 promissory note bearing interest at 7% per annum and
4,000 warrants to purchase the Company's Class A Common Stock expiring December
31, 2001. The notes were due on the earlier of December 31, 2001 or the closing
date of a public offering in excess of $5,000,000. A commission of $95,000 was
paid in connection with the transaction. Of the $2,000,000 (40 units) promissory
notes, $1,050,000 (21 units) was sold to current stockholders or directors,
including $850,000 (17 units) to Monolith. Notes of $755,000 and accrued
interest of $5,573 were converted to 304,229 shares of the Company's Class A
Common Stock in the August 31, 1998 private placement. The remaining notes
payable and accrued interest of $1,295,774 were paid on September 1, 1998.

On August 11, 1998, the Company completed a private placement of 1,250,000
shares of its Class A Common Stock for $2,500,000 ($2.00 per share) with no
offering costs. These proceeds were used to complete the purchase of the equity
interests in the Arena Football League.

On August 31, 1998, the Company completed a private placement of 1,200,000
shares of its Class A Common Stock for $3,000,000 ($2.50 per share) and paid
offering costs of $749,557. Proceeds from this private placement were used to
pay off the outstanding bridge loans and interest. The remaining proceeds were
used for working capital needs.

In October 1998, the Company completed another private placement offering. It
consisted of one investor totaling $250,000 ($2.50 per share), with commissions
of 15% or $37,500 paid for 100,000 shares of Class A Common Stock. These
proceeds were used to fund current operations.

On November 5, 1998, the Company received a payment from the League in the
amount of $672,791. This payment represented expansion revenue related to the
Los Angeles Avengers expansion team that began play in 2000.

In January and February 1999, the Company completed another private placement
offering. It consisted of three investors totaling $145,000 ($2.50-$3.00 per
share), with commissions of 15% or $21,750 paid for 75,000 shares of Class A
common stock. These proceeds were used to fund current operations.

On September 26, 1999, the Company received a payment from the League in the
amount of $547,858. This represented expansion revenue related to the Chicago
Rush expansion team that will begin play in 2001.

                                       23
<PAGE>


In June 1999, the Monolith Limited Partnership, ("Monolith"), a major
stockholder of the Company, loaned the Company $350,000, due in September 2002
with interest at 8% annually. The note was repaid in July 1999.

In July 1999, the Company issued a convertible note payable to a stockholder of
the Company for $250,000, convertible at $4.50 per share, due in September 2001
with interest at 10% annually. The Company granted warrants to purchase 25,000
shares of the Company's Class A common stock at $4.50 per share, which expire in
July 2004 in conjunction with the issuance of the note payable. In October 1999,
the company repaid $125,000 of the convertible note and 12,500 of the warrants
were canceled. In June 2000, the company repaid the remaining $125,000 of the
convertible note and the remaining 12,500 of the warrants were canceled.

In October and November 1999, the Company received payments from the League in
the amount of $682,488. This represented expansion revenue related to the
Carolina Cobras membership that began play in 2000.

In November 1999, the Company completed another private placement offering. It
consisted of one investor totaling $100,000 ($2.00 per share), with commissions
of 10% or $10,000 paid for 50,000 shares of Class A common stock. These proceeds
were used to fund current operations.

From January through September 2000, the Company received net payments from the
League in the amount of $186,743. This represented expansion revenue related to
the Detroit Fury, Dallas, New Orleans and Washington, DC expansion teams that
will begin play in 2001, 2002, 2002 and 2003, respectively. The Company also
received approximately $1.4 million for principle and interest payments related
to its note receivable from the League.

In October 2000, the Company entered into an agreement with IFL Acquisition Co.,
LLC (IFLA), a wholly owned subsidiary of af2 Enterprises, LLC (af2). The Company
acquired the rights to three af2 memberships, all of the tangible assets of the
Indoor Football League (which were acquired by IFLA under a separate agreement),
the first $1,000,000 in expansion revenues received by af2 for memberships in
former Indoor Football League markets. In addition, to the extent that af2
licenses intellectual property acquired from the Indoor Football League to third
parties within 24 months of the date of the agreement the Company will receive a
fee of $10,000. In exchange for the assets and rights acquired, the Company paid
$1,100,000 cash less a credit of $25,000 for a territory release payment and a
credit of $226,165 for cash received prior to the sale to IFLA, issued 214,286
shares of Class A Common Stock valued at $750,000 and a promissory note for
$1,750,000 bearing interest at 6% per year, payable in three annual installments
of $583,333 on October 18, 2000. The Company's two equity interests in the
League collateralize the note. The common stock is redeemable at $3.50 per share
at the option of the stockholder for a period of six months beginning on April
18, 2002. The Company also is required to pay $25,000 to the owner of the
Milwaukee AFL membership and a $50,000 fee for the first af2 team acquired
$5,000 for each additional af2 team to af2.

                                       24
<PAGE>


Currently, the Company is working on another private placement offering. It will
consist of five investors totaling $600,000 ($1.13 per share), with commissions
of 10% or $60,000 paid for 533,333 shares of Class A common stock. These
proceeds will be used to fund current operations.

The reduction of indebtedness using proceeds of the private placements improved
the Company's liquidity by reducing indebtedness required to be paid in the
future. The Company believes that cash flows from operations, along with
distributions related to the purchase of two equity interests in the AFL will
enhance the Company's future cash flows and satisfy the Company's anticipated
working capital requirements for at least the next 12 months. This will be
accomplished by the requirement that the AFL make a minimum principal and
interest payment to the Company in the amount of $480,000 annually.

Year 2000 Issue

Many computer systems and other equipment with embedded chips or microprocessors
may not be able to appropriately interpret dates after December 31, 1999 because
such systems use only two digits to indicate a year in the date field rather
than four digits. If not corrected, many computers and computer applications
could fail or create miscalculations, causing disruptions to the Company's
operations. In addition, the failure of customer and supplier computer systems
could result in interruption of sales and deliveries of key supplies or
utilities.

The Company has experienced no material Year 2000 problems in the period since
January 1, 2000.

                                       25
<PAGE>


ITEM 7. FINANCIAL STATEMENTS
----------------------------

                                      INDEX

                                                                          Page
                                                                          ----

THE ORLANDO PREDATORS ENTERTAINMENT, INC.
     Independent Auditors' Report                                          F-2
     Financial Statements:
         Balance Sheet                                                     F-3
         Statements of Operations                                          F-5
         Statement of Changes in Stockholders' Equity                      F-6
         Statements of Cash Flows                                          F-7
     Notes to Financial Statements                                         F-8










                                       F-1
<PAGE>

                                 AJ. ROBBINS, PC
                  CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS
                              3033 EAST 1ST AVENUE
                                    SUITE 201
                             DENVER, COLORADO 80206


                          INDEPENDENT AUDITORS' REPORT




To the Board of Directors
The Orlando Predators Entertainment, Inc.
Orlando, Florida


We have audited the accompanying balance sheet of The Orlando Predators
Entertainment, Inc. as of September 30, 2000, and the related statements of
operations, changes in stockholders' equity and cash flows for the nine months
then ended and for the year ended December 31, 1999. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above, present fairly, in
all material respects, the financial position of The Orlando Predators
Entertainment, Inc. as of September 30, 2000 and the results of its operations
and its cash flows for the nine months then ended and for the year ended
December 31, 1999, in conformity with generally accepted accounting principles.


                                              /s/ AJ. ROBBINS, P.C.
                                              ---------------------
                                              AJ. ROBBINS, P.C.
                                              CERTIFIED PUBLIC ACCOUNTANTS
                                                     AND CONSULTANTS

Denver, Colorado
November 18, 2000

                                      F-2
<PAGE>


                    THE ORLANDO PREDATORS ENTERTAINMENT, INC.
                                  BALANCE SHEET
                               SEPTEMBER 30, 2000


                                     ASSETS

CURRENT ASSETS:
     Cash                                                             $  290,708
     Accounts receivable, sponsorships                                   117,626
     Litigation reimbursement receivable                                 114,000
     AFL receivable, current portion                                      49,759
     Assets available for sale                                            10,000
     Inventory                                                            14,517
     Receivable from employees                                             6,348
     Prepaid expenses                                                    182,434
     Deferred acquisition costs                                            2,984
                                                                      ----------


                  Total Current Assets                                   788,376


PROPERTY AND EQUIPMENT, at cost, net                                     382,739


EQUITY INVESTMENT IN AFL                                               4,032,650


AFL RECEIVABLE, net of current portion                                 1,509,233


MEMBERSHIP COST, net                                                   1,807,455


RESTRICTED INVESTMENT                                                    100,000


OTHER ASSETS                                                               6,757
                                                                      ----------

                                                                      $8,627,210
                                                                      ==========


                 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS

                                      F-3
<PAGE>


                    THE ORLANDO PREDATORS ENTERTAINMENT, INC.
                            BALANCE SHEET (Continued)
                               SEPTEMBER 30, 2000


                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
     Accounts payable and accrued expenses                         $    601,463
     Accrued interest, related party                                     10,765
     Due to AFL                                                          25,000
     Deferred revenue                                                   552,016
     Accounts payable - related party                                    39,000
                                                                   ------------

                  Total Current Liabilities                           1,228,244
                                                                   ------------



COMMITMENTS AND CONTINGENCIES



STOCKHOLDERS' EQUITY:
     Preferred stock, 1,500,000 shares authorized;  none
         issued or outstanding                                             --
     Class A Common stock, 15,000,000 shares authorized;
         5,192,999 issued and outstanding                            10,136,400
     Class B Common Stock, 1,000 shares authorized,
         1,000 issued and outstanding                                     5,000
     Additional paid-in capital                                       3,096,653
     Accumulated (deficit)                                           (5,839,087)
                                                                   ------------

                  Total Stockholders' Equity                          7,398,966
                                                                   ------------

                                                                   $  8,627,210
                                                                   ============


                 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS

                                      F-4
<PAGE>
<TABLE>
<CAPTION>

                         THE ORLANDO PREDATORS ENTERTAINMENT, INC.
                                 STATEMENTS OF OPERATIONS

                                                               For the Nine    For the Year
                                                               Months Ended       Ended
                                                               September 30,   December 31,
                                                                   2000            1999
                                                                -----------    -----------
<S>                                                             <C>            <C>
REVENUES:
   Ticket                                                       $ 1,618,620    $ 1,553,872
   Concession                                                       118,709        118,521
   Play-off                                                         653,902        176,970
   Advertising and promotions                                     1,173,412      1,345,072
   League                                                           256,884      1,808,162
   Telemarketing                                                     10,057         90,798
   Other                                                             38,282         12,574
                                                                -----------    -----------

       Total Revenues                                             3,869,866      5,105,969
                                                                -----------    -----------

COSTS AND EXPENSES:
   Operations                                                     2,026,141      1,973,414
   Playoff expenses                                                 786,862        259,485
   Selling and promotional expenses                                 841,618        989,810
   League assessments                                               282,416        583,809
   General and administrative                                     1,290,406      1,161,532
   Telemarketing expenses                                             8,836        109,635
   Amortization                                                      51,099         70,432
   Depreciation                                                      77,596         73,595
   Loss from disposal of equipment                                  137,890          9,601
                                                                -----------    -----------

       Total Costs and Expenses                                   5,502,864      5,231,313
                                                                -----------    -----------

OPERATING (LOSS)                                                 (1,632,998)      (125,344)
                                                                -----------    -----------

OTHER INCOME (EXPENSE):
   Interest expense - related party                                 (14,419)       (12,075)
   Interest income                                                    4,098         12,172
   Interest income, AFL                                             329,454        446,602
   Loss on litigation settlement                                       --         (106,000)
   Loss on failed acquisition                                      (180,367)          --
   Gain on early retirement of debt                                  18,116           --
                                                                -----------    -----------

       Net Other Income (Expense)                                   156,882        340,699
                                                                -----------    -----------

NET INCOME (LOSS)                                               $(1,476,116)   $   215,355
                                                                ===========    ===========

NET INCOME (LOSS) PER SHARE, Basic                              $      (.28)   $       .04
                                                                ===========    ===========

Weighted Average Number of Common Shares Outstanding, Basic       5,198,999      5,132,535
                                                                ===========    ===========

NET INCOME PER SHARE, Diluted                                   $      (.28)   $       .04
                                                                ===========    ===========

Weighted Average Number of Common Shares Outstanding, Diluted     5,198,999      5,254,117
                                                                ===========    ===========


                      SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS

                                            F-5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                                             THE ORLANDO PREDATORS ENTERTAINMENT, INC.
                                           STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                                           FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
                                             AND FOR THE YEAR ENDED DECEMBER 31, 1999


                                     Class A Common Stock       Class B Common Stock       Additional
                                    -----------------------   -------------------------     Paid-In     Accumulated
                                     Shares       Amount        Shares        Amount        Capital      (Deficit)        Total
                                    ---------   -----------   -----------   -----------   -----------   -----------    -----------
<S>                                 <C>         <C>           <C>           <C>           <C>           <C>            <C>
Balances,
   December 31, 1998                5,050,000   $ 9,867,150         1,000   $     5,000   $ 2,879,940   $(4,578,326)   $ 8,173,764

Class A Common Stock issued in
   private placements, net of
   offering costs of $31,750          115,000       213,250          --            --            --            --          213,250

Class A  Common Stock issued for
   exercise of stock options           22,999        46,000          --            --            --            --           46,000

Warrants issued with convertible
   debt                                  --            --            --            --          34,463          --           34,463

Net income                               --            --            --            --            --         215,355        215,355
                                    ---------   -----------   -----------   -----------   -----------   -----------    -----------

Balances,
   December 31, 1999                5,187,999    10,126,400         1,000         5,000     2,914,403    (4,362,971)     8,682,832

Class A Common Stock issued for
   exercise of stock options            5,000        10,000          --            --            --            --           10,000

Sale of Class A Common Stock
   warrants                              --            --            --            --           6,250          --            6,250

Class A Common Stock options issued
   for services                          --            --            --            --         176,000          --          176,000

Net (loss)                               --            --            --            --            --      (1,476,116)    (1,476,116)
                                    ---------   -----------   -----------   -----------   -----------   -----------    -----------

Balances,
   September 30, 2000               5,192,999   $10,136,400         1,000   $     5,000   $ 3,096,653   $(5,839,087)   $ 7,398,966
                                    =========   ===========   ===========   ===========   ===========   ===========    ===========



                                          SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS

                                                               F-6
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                         THE ORLANDO PREDATORS ENTERTAINMENT, INC.
                                 STATEMENTS OF CASH FLOWS

                                                                For the Nine   For the Year
                                                                Months Ended       Ended
                                                                September 30,   December 31,
                                                                     2000           1999
                                                                 -----------    -----------
<S>                                                              <C>            <C>
CASH FLOWS FROM (TO) OPERATING ACTIVITIES:
   Net income (loss)                                             $(1,476,116)   $   215,355
   Adjustments to reconcile net income (loss) to net cash from
      operating activities:
     Loss from disposal of equipment                                 137,890          9,601
     Loss on failed acquisitions                                     180,367           --
     Depreciation and amortization                                   128,695        144,027
     Bad debt                                                         54,417           --
     Stock options issued to consultants                             176,000           --
     Warrants issued for loan fees                                      --           34,463
   Changes in assets and liabilities:
     Accounts receivable, sponsorships                               (75,217)       172,407
     Accrued interest receivable                                     597,056       (446,602)
     Employee receivables                                             20,083         18,704
     Inventory                                                        15,290         (9,222)
     Prepaid expenses                                                132,989        (58,862)
     Litigation reimbursement                                       (114,000)        52,317
     Other assets                                                     54,143        (58,356)
     Accounts payable                                                106,540        134,821
     Accrued expenses                                                 19,976         18,056
     Accounts payable, related party                                  39,000        (25,661)
     Accrued expenses, related party                                     429          3,665
     Due to AFL                                                      (36,000)        61,000
     Deferred revenue                                               (170,622)        78,966
                                                                 -----------    -----------

           Net Cash Provided (Used) by Operating Activities         (209,080)       344,679
                                                                 -----------    -----------

CASH FLOWS FROM (TO) INVESTING ACTIVITIES:
   Purchase of equipment                                            (162,883)      (298,324)
   Repayment of AFL receivable                                       406,979           --
   Payment of deferred acquisition costs                              (4,048)      (179,303)
                                                                 -----------    -----------

           Net Cash Provided (Used) by Investing Activities          240,048       (477,627)
                                                                 -----------    -----------

CASH FLOWS FROM (TO) FINANCING ACTIVITIES:
   Proceeds from loans from stockholders                                --          350,000
   Proceeds from issuance of notes payable to related parties        250,000           --
   Proceeds from issuance of convertible debt                           --          250,000
   Repayments of loans from stockholders                                --         (350,000)
   Repayment of convertible debt                                    (125,000)      (125,000)
   Proceeds from issuance of Class A Common Stock                     10,000        291,000
   Repayment of notes payable to related parties                    (250,000)          --
   Sale of warrants                                                    6,250        (31,750)
                                                                 -----------    -----------

           Net Cash Provided (Used) by Financing Activities         (108,750)       384,250
                                                                 -----------    -----------

INCREASE (DECREASE)  IN CASH                                         (77,782)       251,302

CASH, beginning of period                                            368,490        117,188
                                                                 -----------    -----------

CASH, end of period                                              $   290,708    $   368,490
                                                                 ===========    ===========

Supplementary information:
See Note 5

                      SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS

                                            F-7
</TABLE>
<PAGE>


                    THE ORLANDO PREDATORS ENTERTAINMENT, INC.
                          NOTES TO FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Activity
--------
The Orlando Predators Entertainment, Inc. (the "Company" or "Predators") was
formed on March 27, 1997, to acquire, own and operate the Orlando Predators, a
professional Arena Football team and a member of the Arena Football League (AFL
or League).

In October 2000, the Company entered into an agreement with af2 Enterprises, LLC
("af2"), the minor league football league owned 51% by the AFL, to acquire the
rights to three af2 teams in former Indoor Football League (IFL) markets, and
all of the assets of the former IFL teams, including fields and playing and
office equipment. As part of the acquisition, the Company obtained the right to
the first $1,000,000 collected by af2 in expansion revenue for teams sold in
former IFL markets and the right to license fees for teams operating in former
IFL markets, using certain intellectual property. (See note 13)

In October 2000 the Company formed separate subsidiary corporations to own and
operate each team in af2, the AFL, its telemarketing division and retains the
two equity interests in the AFL in the corporate parent.

Change in Year End
------------------
The Company has changed its fiscal year end from December 31 to September 30 for
financial statement purposes. The period ended September 30, 2000, represents a
nine month year. The Company will continue to report for income taxes on a
calendar year end.

Reclassification
----------------
Certain amounts reported in the Company's financial statements for the year
ended December 31, 1999 have been reclassified to conform to the current year
presentation.

Cash and Cash Equivalents
-------------------------
Cash and equivalents consists primarily of cash in banks and highly liquid
investments with original maturities of 90 days or less.

Inventory
---------
Inventory consists of team merchandise available for sale. Inventory is stated
at the lower of cost (first-in, first-out) or market.

Property and Equipment
----------------------
Property and equipment is recorded at cost. Depreciation expense is provided on
a straight-line basis using the estimated useful lives of 5-10 years.
Maintenance and repairs are charged to expense as incurred. When assets are
retired or otherwise disposed of, the property accounts are relieved of costs
and accumulated depreciation and any resulting gain or loss is credited or
charged to operations. Depreciation expense for the nine months ended September
30, 2000 and for the year ended December 31, 1999 was $77,596 and $73,595,
respectively.

                                      F-8
<PAGE>


                    THE ORLANDO PREDATORS ENTERTAINMENT, INC.
                          NOTES TO FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Restricted Investment
---------------------
Restricted investment consists of an interest bearing certificate of deposit
with a financial institution, which also provides a letter of credit to the
Company. The certificate of deposit was a condition of awarding the letter of
credit. (See Note 4)

Membership Cost
---------------
The AFL membership was recorded at its cost of $1,989,860 and is being amortized
on a straight-line basis over 40 years. Amortization expense for the for the
nine months ended September 30, 2000 and for the year ended December 31, 1999
was $37,310 and $49,747, respectively.

Acquisition Costs
-----------------
The Company had acquisition costs of $180,367. relating to the planned
acquisition of United Sports Ventures, Inc. During 2000, the Company terminated
the acquisition and charged the costs to operations. Acquisition costs are
allocated to the net assets acquired if the acquisition is successful, or are
charged to operations if not successful.

The Company has capitalized certain costs related to the af2 team acquisition.

Impairment of Long Lived Assets
-------------------------------
The Company evaluates its long lived assets by measuring the carrying amount of
the assets against the estimated undiscounted future cash flows associated with
them. At the time such evaluations indicate the future undiscounted cash flows
of certain long lived assets are not sufficient to cover the carrying value of
such assets, the assets are adjusted to their fair values.

Other Intangible Assets
-----------------------
The remainder of the head coach's contract and other costs from his former
employer were purchased for $62,054 and were amortized on a straight-line basis
over the term of his original contract with the Company, 3 years. The costs were
fully amortized at September 30, 2000. Amortization expense for the nine months
ended September 30, 2000 and for the year ended December 31, 1999 was $13,789
and $20,685, respectively.

Football Operations
-------------------
Revenues, principally ticket sales and television and radio broadcasting fees
are recorded as revenues at the time the related game is played. The Company is
entitled to keep all gate receipts from home games but does not share in the
gate receipts from away games. Team expenses (principally player and coaches
salaries, fringe benefits, insurance, game expenses, arena rentals and travel)
are recorded as expenses on the same basis. Accordingly, income and expenses not
earned or incurred are recorded as deferred revenues and prepaid expenses and
are amortized ratably as regular season games are played. General,
administrative, selling and promotional expenses are charged to operations as
incurred.

                                      F-9
<PAGE>


                    THE ORLANDO PREDATORS ENTERTAINMENT, INC.
                          NOTES TO FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Use of Estimates
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures 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 sells sponsorships for cash and services. In exchange, the sponsor
receives advertising and various benefits to Predator games. The value of the
services has been estimated in the accompanying financial statements. Management
believes these estimates reasonably disclose the value of services received.

Investment in AFL
-----------------
Prior to March 2000, the Company accounted for its two non-voting equity
interests in the AFL under the terms of the agreement, which called for the
Company to record as expansion revenues (based upon its ownership share in the
League) amounts received from the League for sales of expansion memberships. The
Company did not share in League expenses.

The League disputed the terms of the agreement and in March 2000, the Company
and the League agreed to amend the terms of the agreement. The amended terms of
the agreement state that the Company shall receive its two equity shares of
expansion revenue received by the League but shall record these payments to
reduce the balance of the note receivable due from the League.

Income Taxes
------------
The Company accounts for income taxes under the asset and liability method.
Under this method, deferred income taxes are recorded to reflect the tax
consequences in future years of temporary differences between the tax basis of
assets and liabilities and their financial statement amounts at the end of each
reporting period. Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized. Income tax expense
represents the tax payable for the current period and the change during the
period in deferred tax assets and liabilities. Deferred tax assets and
liabilities have been netted to reflect the tax impact of temporary differences.

Deferred tax assets arise primarily from the net operating loss carryforward and
amortization of the membership cost which is not deductible for tax purposes
until the membership is sold.

Deferred tax liabilities result when depreciation for tax purposes exceeds
depreciation for book purposes. A valuation allowance equal to the net deferred
tax asset has been recorded at September 30, 2000 since management of the
Company has determined that it is more likely than not that the tax asset will
not be realized. (See Note 10).

                                      F-10
<PAGE>


                    THE ORLANDO PREDATORS ENTERTAINMENT, INC.
                          NOTES TO FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Concentrations of Risk
----------------------
Concentrations of credit risk associated with accounts receivable is limited due
to accounts receivable transactions arising from sponsorship contracts which
have a history of performance. The supply of talented players is limited due to
the competitive nature with other professional football leagues.

The Company maintains all cash in deposit accounts, which at times may exceed
federally insured limits. The Company has not experienced a loss in such
accounts.

Fair Value of Financial Instruments
-----------------------------------
The carrying value of accounts receivable, AFL receivable, accounts payable and
accrued expenses approximate fair value because of the short maturity of these
items.

Earnings Per Common Share
-------------------------
The Company computes earnings per common share in accordance with Statement of
Financial Accounting Standards No. 128, Earnings Per Share (SFAS No. 128). This
Statement simplifies the standards for computing earnings per share (EPS)
previously found in Accounting Principles Board Opinion No. 15, Earnings Per
Share, and makes them more comparable to international EPS standards. SFAS No.
128 replaces the presentation of primary EPS with a presentation of basic EPS.
In addition, the Statement requires dual presentation of basic and diluted EPS
on the face of the income statement for all entities with complex capital
structures and requires a reconciliation of the numerator and denominator of the
basic EPS computation to the numerator and denominator of the diluted EPS
computation.

Stock-Based Compensation
------------------------
The Company accounts for stock based compensation in accordance with the
Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 123 "Accounting for Stock-Based Compensation" (SFAS No. 123). Under the
provisions of SFAS No. 123, companies can either measure the compensation cost
of equity instruments issued under employee compensation plans using a fair
value based method, or can continue to recognize compensation cost using the
intrinsic value method under the provisions of APB No. 25. However, if the
provisions of APB No. 25 are continued, proforma disclosures of net income or
loss and earnings or loss per share must be presented in the financial
statements as if the fair value method had been applied. The Company recognizes
compensation costs under the provisions of APB No. 25 and provides the expanded
disclosure required by SFAS No. 123. (See Note 6)

Recently Issued Accounting Pronouncements
-----------------------------------------
In 1999 the FASB issued Statement No. 133, Accounting for Derivative Instruments
and Hedging Activities. The adoption by the Company of Statement 133 did not
impact the Company's financial statements.

                                      F-11
<PAGE>


                    THE ORLANDO PREDATORS ENTERTAINMENT, INC.
                          NOTES TO FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Year 2000 Issues
----------------
Many computer systems and other equipment with embedded chips or microprocessors
may not be able to appropriately interpret dates after December 31, 1999 because
such systems use only two digits to indicate a year in the date field rather
than four digits. If not corrected, many computers and computer applications
could fail or create miscalculations, causing disruptions to the Company's
operations. In addition, the failure of customer and supplier computer systems
could result in interruption of sales and deliveries of key supplies or
utilities. Because of the complexity of the issues and the number of parties
involved, the Company cannot reasonably predict with certainty the nature or
likelihood of such impacts.

While the Company believes that its own internal assessment and planning efforts
with respect to its external service providers, suppliers, customers and
financial institutions are and will be adequate to address its Year 2000
concerns, there can be no assurance that these efforts will be successful or
will not have a material adverse effect on the Companies' operations. Costs in
connection with compliance were not significant.

To date, the Company has not experienced any interruptions with respect to the
Year 2000 issue, but cannot reasonably predict with certainty that they will not
experience any interruptions.

NOTE 2 - ARENA FOOTBALL LEAGUE

The AFL is a Limited Liability Company, which governs the rules and conduct of
each member team. Each member owns an equal percentage of the AFL and appoints
one board member. A budget for AFL expenses is approved annually by the board
and expenses are shared equally. Revenues from expansion membership fees are
divided equally between all members, the Company's two additional, non-voting
equity interests (see Note 11) and the two equity interests owned by the
inventor (Gridiron) of the Arena Football Game. Revenues are recognized when
received from the league. Special assessments for litigation and other costs are
recognized in the same periods as incurred. The Arena Football League's
strategic development plan calls for the formation of an AFL minor league system
("af2") beginning in the year 2001. The Company's share of the 2001 season
budget is as follows:

Revenue:
     "AFL" Expansion membership fees                                  $    --
     "af2" Expansion membership fees                                       --
                                                                      ---------
                                                                           --
Assessments:
     Operating assessment                                               120,000
     Other assessments                                                     --
                                                                      ---------

Net Assessment                                                        $(120,000)
                                                                      =========

                                      F-12
<PAGE>


                    THE ORLANDO PREDATORS ENTERTAINMENT, INC.
                          NOTES TO FINANCIAL STATEMENTS


NOTE 2 - ARENA FOOTBALL LEAGUE (Continued)

The Company continues to be contingently liable for its share of AFL expenses
which may exceed AFL revenues.

The AFL was a defendant to a claim for alleged damages which was settled and the
Company has recorded an estimated liability of $25,000 for its share of the
settlement. The AFL is also a party to a number of other lawsuits arising in the
course of business. In the opinion of the Company's management, the resolution
of those matters will not have a material adverse effect on the AFL's results of
operations, cash flows or financial position.

Outcomes and expenses of litigation will be divided equally between all members.
Management believes its share of the outcomes will not have a material adverse
effect on the Company's results of operations, cash flows or financial position.

NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

                                                                   September 30,
                                                                       2000
                                                                    ---------
Office equipment                                                    $ 151,875
Leasehold improvements                                                 53,555
Game equipment and system                                             327,340
                                                                    ---------
                                                                      532,770
Less accumulated depreciation                                        (150,031)
                                                                    ---------

                                                                    $ 382,739
                                                                    =========


The Company has written off certain assets with a net book value of
approximately $137,000, due to obsolescence and has one game system available
for sale for $10,000, its net realizable value.

NOTE 4 - COMMITMENTS AND CONTINGENCIES

A.) Local Media Contracts
-------------------------
In March 1998, the Company entered into a three-year television contract for the
1998, 1999 and 2000 seasons, which required the Company to provide certain
services, goods and game tickets in exchange for approximately $70,000 of
commercial time, promotional events and the right to broadcast the games. The
Company has also entered into renewable one-year radio contracts under similar
terms. The Company is currently negotiating new contracts.

                                      F-13
<PAGE>


                    THE ORLANDO PREDATORS ENTERTAINMENT, INC.
                          NOTES TO FINANCIAL STATEMENTS


NOTE 4 - COMMITMENTS AND CONTINGENCIES (Continued)

B.) Employment Agreements
-------------------------
The Company has employment agreements with players, the head coach and
executives of the Predators. Certain of these contracts provide for guaranteed
payments which must be paid even if the employee is injured or terminated.
Through the end of the 1999 season, player contracts were for a term of one year
with a one year renewal option. If the team did not re-sign the player at the
end of the contract, he was waived and free to sign with another team.

However, the team had the option of signing the player first. If the player
refused to re-sign, he was required to "sit out" for one year before playing for
another team.

On January 28, 2000, the Company's then President/Chief Executive Officer
resigned his position and resigned from the board of directors. He will now be
the Company's Arena Football League Liaison for a term of three years, with an
annual base salary of $50,000 per year.

On June 29, 2000, the Company entered into a new employment contract with its
head coach that superseded all previous agreements. The agreement is for the
period from June 29, 2000 to September 30, 2003 and may be extended at the
option of the Company for an additional two years if certain conditions are met.
Annual compensation ranges from $120,000 to $150,000 (for the three final years
of the agreement) and $157,500 and $165,000 if the agreement is extended at the
Company's option. The head coach is eligible for bonuses based upon the team's
performance, as well as use of a vehicle and specified life insurance.

Subsequent to year end on October 1, 2000, the Company entered into an
employment agreement with its new assistant head coach for a term of three years
with annual compensation ranging from $65,000 to $77,175 and is eligible for
bonuses based upon the team's performance, a vehicle allowance and specified
life insurance. He was also granted options to purchase 5,000 shares of the
Company's Class A Common Stock, which vest 1,667 shares per year beginning on
October 1, 2001 and expire on September 30, 2004. The options are exercisable at
$2.13 per share.

C.) Collective Bargaining Agreement
-----------------------------------
In February 2000, the League entered into an interim collective bargaining
agreement with the Arena Football League's Player Organizing Committee
("AFLPOC"). This interim agreement substantially increased benefits to the
League's players. Minimum salaries were $13,500 for a first year player, $18,750
for a second year player and $21,750 for a player with a minimum of three years
of service. The agreement also calls for year round health insurance for the
players and their families, full pay for inactive players, short and long term
disability insurance, a 401k pension plan and unrestricted free agency after
four years of service in the League.

In September 2000, AFL and AFLPOC, which represents the players of the AFL
entered into a collective bargaining agreement for the 2001-2006 AFL seasons.
The terms of the agreement are from September 1, 2000 to August 31, 2006.

                                      F-14
<PAGE>


                    THE ORLANDO PREDATORS ENTERTAINMENT, INC.
                          NOTES TO FINANCIAL STATEMENTS


NOTE 4 - COMMITMENTS AND CONTINGENCIES (Continued)

The agreement defines the maximum and minimum benefits and compensation that the
players may be paid during the term of the agreement. Player compensation will
be the greater of a maximum cash or barter dollar salary cap for players of
$1,375,000 for the 2001 season, increasing by the greater of 5% per year or 59%
of defined gross revenues (DGR) for the 2001, 2002, 2003 and 2004 seasons, 60%
for the 2005 season and 61% for the 2006 season.

Minimum salaries per game range from $900 with a win bonus of $200 to $1,450
with a win bonus of $400. In years that the DGR percentages are in effect, there
will be an increase in minimum salaries corresponding to the percentage increase
in DGR in the next season. Players are also eligible for certain compensation,
in excess of the minimum salaries under the collective bargaining agreement.
Player contracts may also include performance bonus pay, for exemplary play on
the field.

As of November 18, 2000, the Company had signed agreements with five players.
The following summarizes such player salary commitments for each of the upcoming
years:

September 30, 2001                                                      $159,000
September 30, 2002                                                        45,400
September 30, 2003                                                        57,000
                                                                        --------

                                                                        $261,400
                                                                        ========

D.) Lease Obligations
---------------------
In March 1998, the Company signed a five-year lease (with an additional
five-year option) with the Orlando Centroplex arena. The agreement provides the
Company with an approximately 20% share of revenue generated from food and
beverage concessions. The Company will also receive a credit to be applied to
the game rental of $3 per person (up to $10,000) for games in which attendance
exceeds 9,000 persons.

Until April 1999, corporate office space was received as trade for a sponsorship
from a financial institution. The total value of the office space was $50,000.
The Company entered into a two year lease agreement at a rate of $900 per month
which expires in March 2001.

The Company also leases additional offices under a two-year lease terminating
January 2002 at a monthly rental of $3,200.

                                      F-15
<PAGE>


                    THE ORLANDO PREDATORS ENTERTAINMENT, INC.
                          NOTES TO FINANCIAL STATEMENTS


NOTE 4 - COMMITMENTS AND CONTINGENCIES (Continued)

The minimum future lease payments under the lease agreements are as follows:

                                                                     Orlando
                                                  Offices          Centroplex
                                                  --------         ----------
 2001                                             $ 43,800          $ 60,000
 2002                                               12,800            60,000
                                                  --------          --------

                                                  $ 56,600          $120,000
                                                  ========          ========


Rent expense for the for the nine months ended September 30, 2000 and for the
year ended December 31, 1999 was $145,374 and $124,753, respectively.

E.) Self Insurance
------------------
The Predators provide a $250,000 occupational health, accidental death and
disability insurance policy to each player. Each team is required to pay the
first $35,000 of claims for an injured player up to an aggregate of $356,000 for
the three Florida based AFL teams.

F.) Letter of Credit
--------------------
The Company had entered into an agreement with a financial institution for an
irrevocable stand by letter of credit in the amount of $100,000. The letter of
credit was required by the AFL and was available to draw upon, if necessary, by
the AFL after the AFL Board of Directors has given approval. The letter of
credit was secured by a $100,000 certificate of deposit. Subsequent to December
31, 1999 the letter of credit was no longer required for the Company. The AFL
requires all teams to maintain a $100,000 balance as security for the AFL's
letter of credit.

G.) Litigation
--------------
On December 9, 1998, the Company's former President filed a lawsuit against the
Company for breach of employment and defamation in connection with a press
release.

In March 2000, the Company reached a settlement agreement with its former
President to pay the former President $300,000. The Company had previously
accrued approximately $54,000 for amounts it estimated would be payable to the
former President. In December 1999, the Company recorded an additional $106,000
in settlement costs, net of anticipated insurance reimbursements of $140,000.

                                      F-16
<PAGE>


                    THE ORLANDO PREDATORS ENTERTAINMENT, INC.
                          NOTES TO FINANCIAL STATEMENTS


NOTE 4 - COMMITMENTS AND CONTINGENCIES (Continued)

H.) Management Agreement with USV
---------------------------------
On January 28, 2000, the Company entered into an agreement, which was amended on
July 1, 2000, with United Sports Ventures, Inc. (USV) for management services in
connection with the Company's Orlando Predators sports team and for general
management services in the operation of the Company. The agreement is for a term
of one year from the date of the amendment, and automatically renews each year,
unless cancelled as provided for under the terms of agreement. Fees for the
management services were $10,000 per month under the original agreement,
reducing to $3,000, per month with the amendment.

In conjunction with the management agreement with USV, certain members of USV's
management have taken Vice-President positions with the Company and USV's
President has been appointed the Chief Executive Officer of the Company.

In conjunction with the amended agreement, the Company has granted USV an option
to purchase 150,000 shares of the Company's Class A Common Stock, which vests
37,500 shares per quarter, commencing on October 1, 2000 and expiring on
September 30, 2002. The options are exercisable at $2.50 per share and have been
valued at $63,000, which is being expensed ratably over the initial one year
life of the contract. At September 30, 2000, the Company has expensed $15,750
and has recorded $47,250 in prepaid expense.

I.) Financial Consulting Agreement
----------------------------------
On July 1, 2000, the Company entered into a two year financial consulting and
investment banking agreement for stockholder \ public relations matters. The
agreement provides for fees of $60,000, payable $10,000 at the signing of the
agreement and $2,174 per month thereafter, until the balance is paid. The
Company also granted the consultant an option to purchase 350,000 shares of the
Company's Class A Common Stock which was valued at $113,000, and is being
expensed over the term of the agreement . The options vest 87,500 on July 1,
2000 and 17,500 per month thereafter and are exercisable at fixed prices ranging
from $2.50 to $4.50 per share and expire in 2006. The Company has recorded
$63,000 in expense during the period ended September 30, 2000 and has recorded
$50,000 in prepaid expense.

NOTE 5 - SUPPLEMENTAL CASH FLOW INFORMATION

The Company paid $3,654 and $8,411 for interest expense during the nine months
ended September 30, 2000 and the year ended December 31, 1999, respectively.

                                      F-17
<PAGE>


                    THE ORLANDO PREDATORS ENTERTAINMENT, INC.
                          NOTES TO FINANCIAL STATEMENTS


NOTE 6 - COMMON STOCK

Stock Option Plan
-----------------
Effective April 1, 1997, the Company's board of directors adopted the Stock
Option Plan under which 150,000 shares of the Company's Class A Common Stock
were reserved for issuance at prices not less than fair market value on the date
of grant. During 1998, the Plan was amended to provide for 350,000 additional
option shares. During 1999, the Plan was amended to provide for 2,500,000
additional option shares. The board may grant options to key management
employees, officers, directors and consultants.

                                                           Outstanding Options
                                           Option       ------------------------
                                           Shares                     Price Per
                                          Available       Shares        Share
                                          ----------    ----------    ----------

Balance, December 31, 1998                    90,667       409,333    $2.00-4.75

Additional reserved shares                 2,500,000          --            --
Granted                                   (1,789,580)    1,789,580          2.50
Cancelled                                    290,000      (290,000)    3.19-4.75
Expired                                      120,667      (120,667)    2.00-3.19
Exercised                                       --         (22,999)         2.00
                                          ----------    ----------    ----------

Balance, December 31, 1999                 1,211,754     1,765,247     2.00-2.50

Granted                                      (82,000)       82,000          1.63
Cancelled                                     67,334       (67,334)    2.00-2.50
Expired                                       81,667       (81,667)    2.00-2.50
Exercised                                       --          (5,000)         2.00
                                          ----------    ----------    ----------

                                           1,278,755     1,693,246    $1.63-2.50
                                          ==========    ==========    ==========

Stock-Based Compensation
------------------------
The Company accounts for stock-based compensation under Statement of Financial
Accounting Standards No. 123, Accounting for Stock-Based Compensation (SFAS No.
123). The standard requires the Company to adopt the fair value method with
respect to stock-based compensation of consultants and other non-employees.

The Company did not change its method of accounting with respect to employee
stock options; the Company continues to account for these under the intrinsic
value method. Had the Company adopted the fair value method with respect to
options issued to employees as well, an additional charge to income of $15,000
would have been required in 2000; proforma net loss would have been ($1,491,116)
and loss per share would have been ($.29). An additional charge to income of
$202,503 would have been required in 1999; proforma net income would have been
$12,852 and income per share would have been less than $.01 per share on the
basic and diluted basis.

                                      F-18
<PAGE>


                    THE ORLANDO PREDATORS ENTERTAINMENT, INC.
                          NOTES TO FINANCIAL STATEMENTS


NOTE 6 - COMMON STOCK (Continued)

Issuance of Common Stock
------------------------
The Class A Common Stock and Class B Common Stock are identical in all respects
except that each share of Class A Common Stock is entitled to one vote while
each share of Class B Common Stock is entitled to 10,000 votes. The Class B
Common Stock was issued to satisfy certain control requirements of the AFL.

In connection with the Company's public offering of stock there are outstanding
(i) warrants to purchase 550,000 shares of Class A Common Stock at an exercise
price of $7.50 per share at any time until their expiration on December 10, 2002
(the "Unit Warrants"), (ii) warrants to purchase 110,000 shares of Class A
Common Stock and 55,000 Unit Warrants (the "1997 Underwriters' Unit Warrants')
at an exercise price of $12.00 per 1997 Underwriters' Unit Warrants. There are
also warrants to purchase 160,000 shares of Class A Common Stock at $4.50 per
share at any time until December 31, 2002 (the "1998 Warrants").

Warrants
--------
In January 2000, the Company sold a warrant for $6,250 to purchase 50,000 shares
of the Company's Class A common stock at an exercise price of $5.00 per share.
The warrant expires in January 2005.

NOTE 7 - CONVERTIBLE DEBT

The Company sold a $250,000 convertible debt in July 1999. The debt accrues
interest at 10% per annum and interest and principal are due in January 2001.
The debt was convertible at a rate of one share of the Company's Class A common
stock for $4.375 each. In 2000 the debt was repaid.

NOTE 8 - NOTE PAYABLE RELATED PARTY

During July 2000, the Company borrowed $250,000 in the form of a 12% note
payable to an employee/significant stockholder and former officer and director
of the Company, due on January 6, 2001. The Company's two equity interests in
the League collateralized the note. The note was repaid in September 2000.


                                      F-19
<PAGE>


                    THE ORLANDO PREDATORS ENTERTAINMENT, INC.
                          NOTES TO FINANCIAL STATEMENTS


NOTE 9 - EARNINGS PER SHARE

                                    For the Nine Months Ended September 30, 2000
                                    --------------------------------------------
                                                                         Per
                                        Income            Shares        Share
                                      (Numerator)      (Denominator)    Amount
                                      -----------      -------------    ------

Basic EPS
     (Loss) available to common
      stockholders                    $(1,476,116)       5,198,999     $  (.28)

Effect of Dilutive Securities
     Options and warrants                    --               --        --
                                      -----------      -----------     -------

Diluted EPS
     Income available to common
      stockholders including
      assumed conversions             $(1,476,116)       5,198,999     $  (.28)
                                      ===========      ===========     =======


                                          For the Year Ended December 31, 1999
                                         --------------------------------------
                                                                          Per
                                            Income        Shares         Share
                                         (Numerator)   (Denominator)     Amount
                                         -----------   -------------     ------

Basic EPS
     Income available to common
      stockholders                        $ 215,355      5,132,535      $   .04

Effect of Dilutive Securities
     Options and warrants                      --          121,582         (.00)
                                          ---------      ---------      -------

Diluted EPS
     Income available to common
      stockholders including
      assumed conversions                 $ 215,355      5,254,117      $   .04
                                          =========      =========      =======


NOTE 10 - INCOME TAXES

The components of deferred tax assets and (liabilities) were as follows:

Total deferred tax assets                                           $ 2,322,000
Less valuation allowance                                             (2,322,000)
                                                                    -----------

Net deferred tax asset                                              $      --
                                                                    ===========

                                      F-20
<PAGE>


                    THE ORLANDO PREDATORS ENTERTAINMENT, INC.
                          NOTES TO FINANCIAL STATEMENTS


NOTE 10 - INCOME TAXES (Continued)

The tax effects of temporary differences that give rise to deferred tax assets
and (liabilities) were as follows:

Temporary differences;
   Property and equipment                                           $    (5,000)
   Membership cost                                                       69,000
   Accrued interest-stockholders                                          4,000
   Net operating loss carryforward                                    2,254,000
Less valuation allowance                                             (2,322,000)
                                                                    -----------

                                                                    $      --
                                                                    ===========


The components of deferred income tax expense (benefit) were as follows:

                                                      2000              1999
                                                  -----------       -----------
Temporary differences:
   Depreciation expense                           $    (9,000)      $     2,000
   Amortization expense                               (14,000)          (19,000)
   Interest-stockholders                                 --              (1,000)
   Net operating loss carryforward                   (983,000)         (633,000)
Less valuation allowance                            1,006,000           651,000
                                                  -----------       -----------

                                                  $      --         $      --
                                                  ===========       ===========


The following is a reconciliation of the amount of income tax expense (benefit)
that would result from applying the statutory income tax rates to pre-tax loss
and the reported amount of income tax expense (benefit):

                                                          2000           1999
                                                       ---------      ---------
Tax expense (benefit) at statutory rates               $(502,000)     $  73,000
AFL activity                                            (103,000)      (667,000)
Other                                                     24,000         21,000
Increase in valuation allowance                          581,000        573,000
                                                       ---------      ---------

                                                       $    --        $    --
                                                       =========      =========


No provision for income taxes has been recorded for the periods ended September
30, 2000 and December 31, 1999, as the Company has incurred losses during these
periods. Net operating loss carryovers of approximately $6,000,000 as of
September 30, 2000 expire beginning in 2016. The Company is providing a full
valuation allowance in connection with the deferred tax assets because there is
no assurance that such amounts will be utilized in the future.

                                      F-21
<PAGE>


                    THE ORLANDO PREDATORS ENTERTAINMENT, INC.
                          NOTES TO FINANCIAL STATEMENTS


NOTE 11 - PURCHASE OF EQUITY INTERESTS IN THE AFL

In August 1998 the Company acquired two, non-voting, equity interests in the
Arena Football League, Inc. (AFL) for $6,000,000 plus acquisition costs. Each
similar equity interest entitles the Company to share equally with each other
member in AFL revenues. The AFL guarantees to pay the Company at least $480,000
per year until the Company receives an aggregate of $6,000,000 through League
distribution. Once the Company receives an aggregate of $6,000,000, the Company
will participate in all League revenues, expenses and liabilities with respect
to the two equity interests.

The purchase of the rights for the two, non-voting, equity interests in the
League has been allocated and recorded as 1) an equity interest in the League
and 2) an unsecured receivable due from the AFL. The investment accounted for
under the equity method of accounting was recorded at an original cost of
$4,071,437. The unsecured, receivable originally recorded for $1,965,971 from
the League, with a total remaining balance as of September 30, 2000, of
$1,558,992. The amounts were computed using an imputed interest rate of 23%. The
minimum payment of $480,000 is due annually on August 14.

NOTE 12 - OPERATING SEGMENTS

The Company organizes its business units into two reportable segments: football
operations and telemarketing services. The football operations segment operates
the AFL team and the telemarketing services segment provides telemarketing
services to a related party and other sports franchises.

The segments' accounting policies are the same as those described in the summary
of significant accounting policies included in Note 1.

The Company's reportable business segments are strategic business units that
offer different products and services. The segments are managed together because
they utilize similar resources within the Company. All assets of the Company
relate to the football operations segment.



                                      F-22
<PAGE>


                    THE ORLANDO PREDATORS ENTERTAINMENT, INC.
                          NOTES TO FINANCIAL STATEMENTS


NOTE 12 - OPERATING SEGMENTS (Continued)

<TABLE>
<CAPTION>
                                 Net          Operating                  Identifiable     Capital
                               Revenues      Income(Loss)  Depreciation      Assets     Expenditures
                              -----------    -----------   ------------   -----------   ------------
<S>                           <C>            <C>            <C>           <C>           <C>
September 30, 2000:
     Football operations      $ 3,859,809    $(1,634,219)   $    77,596   $ 8,627,210   $   162,883
     Telemarketing services        10,057          1,221           --            --            --
                              -----------    -----------    -----------   -----------   -----------

                              $ 3,869,866    $(1,632,998)   $    77,596   $ 8,627,210   $   162,883
                              ===========    ===========    ===========   ===========   ===========

December 31, 1999:
     Football operations      $ 5,015,171    $  (106,507)   $    73,595   $10,022,336   $   298,324
     Telemarketing services        90,798        (18,837)          --          54,417          --
                              -----------    -----------    -----------   -----------   -----------

                              $ 5,105,969    $  (125,344)   $    73,595   $10,076,753   $   298,324
                              ===========    ===========    ===========   ===========   ===========
</TABLE>


NOTE 13 - ACQUISITION OF AF2 TEAMS

On October 18, 2000, the Company entered into an agreement with IFL Acquisition
Co., LLC (IFLA), a wholly owned subsidiary of af2 Enterprises, LLC (af2). The
Company acquired the rights to three af2 memberships, all of the tangible assets
of the Indoor Football League (which were acquired by IFLA under a separate
agreement), and the first $1,000,000 in expansion revenues received by af2 for
memberships in former Indoor Football League markets. In addition, to the extent
that af2 licenses intellectual property acquired from the Indoor Football League
to third parties within 24 months of the date of the agreement the Company will
receive a fee of $10,000. In exchange for the assets and rights acquired, the
Company paid $1,100,000 cash less a credit of $25,000 for a territory release
payment and a credit of $226,165 for cash received prior to the sale to IFLA,
issued 214,286 shares of Class A Common Stock valued at $750,000 and a
promissory note for $1,750,000 bearing interest at 6% per year, payable in three
annual installments of $583,333 beginning on October 18, 2001. The Company's two
equity interests in the League collateralize the note. The common stock is
redeemable at $3.50 per share at the option of the stockholder for a period of
six months beginning on April 18, 2002. The Company also is required to pay
$25,000 to the owner of the Milwaukee AFL membership and a $50,000 fee for the
first af2 team acquired and $5,000 for each additional af2 team to af2.


                                      F-23
<PAGE>


                    THE ORLANDO PREDATORS ENTERTAINMENT, INC.
                          NOTES TO FINANCIAL STATEMENTS


NOTE 13 - ACQUISITION OF AF2 TEAMS (Continued)

The purchase price is allocated as follows:

Three af2 memberships                                               $ 1,500,000
Tangible property                                                       404,000
Purchase price in excess of assets acquired                           1,696,000
                                                                    -----------
                                                                      3,600,000
Less:
Class A Common Stock                                                   (750,000)
Note payable                                                         (1,750,000)
Credit to buyer for territory release payment                           (25,000)
Credit to buyer for season ticket prepayments                          (226,165)
                                                                    -----------

Cash paid at closing                                                $   848,835
                                                                    ===========


The Company obtained financing of $1,000,000 from a bank, which is payable on
February 28, 2001, bearing interest at 1.75% above the LIBOR rate or 8.47% per
year. The Company paid a facility fee of $20,000 to the bank for the note which
will be amortized over the life of the note. The note is secured by the
Company's rights to $1,000,000 of af2 expansion fees and pledge of $1,300,000 in
securities and cash of the Company's President, Chief Financial Officer and an
employee/significant stockholder who is a former officer and director of the
Company. The Company has granted to the collateral holders the option to receive
one of the following as compensation for securing its note with the bank; 1)
option to purchase 50,000 shares of the Company's Class A Common Stock with
registration rights, 2) option to purchase 100,000 shares of the Company's Class
A Common Stock without registration rights or 3) $60,000. The Company will
amortize the fee valued at $180,000 over the life of the note.






                                      F-24
<PAGE>


ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

     None.












                                       26
<PAGE>


                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(a) OF THE EXCHANGE ACT
--------------------------------------------------------------------------------

     Information concerning each of the Company's executive officers and
directors is set forth below:

                                                                Officer/Director
          Name                   Age          Position               Since
          ----                   ---          --------               -----

J. Richard Corley(1)(2). . .     62      Chairman of the Board        1999
                                         of Directors

Eric A. Margeneau  . . . . .     59      Chief Executive Officer,     2000
                                         President and Director

Jeffrey L. Bouchy  . . . . .     35      Secretary, Treasurer,        1998
                                         Chief Financial Officer,
                                         Vice President of Football
                                         Operations and Director

John W. Frasco (1)(2) . . . .    61      Director                     1999

Lyle Reigel (1)(2). . . . . .    61      Director                     2001

----------

(1)  Member of Compensation Committee.
(2)  Member of Audit Committee.

     Directors are elected at the Company's annual meeting of shareholders and
serve a term of one year or until their successors are elected and qualified.
Officers are appointed by the Board of Directors and serve at the discretion of
the Board of Directors, subject to the bylaws of the Company. Mr. Winters
resigned in May 2000.

     The Audit Committee reviews the engagement and independence of the
Company's independent accountants, the audit and non-audit fees of the
independent accountants and the adequacy of the Company's internal accounting
controls. The Compensation Committee considers the compensation and incentive
arrangements of the Company's executive officers.

                                       27
<PAGE>


     The principal occupation of each director and executive officer of the
Company, for at least the past five years, is as follows:

     J. Richard Corley has been the Chief Executive Officer and owner of Bowl
New England, an operator of 18 bowling centers in six northeastern states since
1968. A graduate of St. Michaels College, Mr. Corley served as a pilot and
navigator in the United States Air Force from 1959-1973. He served as a
commissioner for Burlington International Airport from 1982-1998, spending the
last eight years as that group's Chairman. Mr. Corley is currently on the Board
of Directors of Howard Bank and is a Trustee Emeritus for Champlain College.

     Eric A. Margenau was appointed Chief Executive Officer and President of the
Company in January 2000. He has been President of United Sports Ventures ("USV")
since 1996. In January 2000 USV entered into a management agreement with the
Company (which was modified in July 2000) under which it provides the services
of Dr. Margenau and USV's staff management to manage the operations of the
Company for $3,000 per month. In connection with the agreement, the Company also
issued to USV options to purchase up to 150,000 shares of the Company in Class A
common stock for $2.50 per share. Dr. Margenau has been involved in the
ownership and operation of minor league sports teams since 1986. In that time he
has owned, operated and/or managed seven minor league baseball franchises and
four minor league hockey franchises. From 1983 to 1988, he was the executive
director of the Center for Sports Psychology. As a sports psychologist, he has
been a consultant to several Major League Baseball teams.

     Jeffrey L. Bouchy was appointed Chief Financial Officer of the Company in
1998. Bouchy was named General Manager of the Orlando Predators in April 2000.
He also was named Vice President of Football Operations in October 2000 to
oversee the development of the Company's three af2 franchises. He earned a
Bachelor of Science degree in Accounting from Arizona State University and a
Master's degree in Sports Management from West Virginia University. From 1995 to
1998 he was Chief Financial Officer of Gum Tech International, Inc., a Nasdaq
National Market company. From 1994 to 1995 he was employed by Fun Tees, Inc., a
t-shirt manufacturer. From 1992 to 1993 he was involved in arena management as
an employee of the Charlotte Coliseum, home of the NBA's Charlotte Hornets. From
1990 to 1991 Mr. Bouchy was employed by the Phoenix Roadrunners of the
International Hockey League, assisting in public relations and game operations.

     John W. Frasco has been the managing partner of Frasco & Caponigro, P.C., a
Bloomfield Hill, Michigan-based law firm for more than five years. He founded
Sports Management Network, Inc. in 1988 and was a principal stockholder of that
firm from 1988 to 1998. Sports Management Network, Inc. is involved in sports
sponsorships, endorsement and player contracts. Mr. Frasco is the founder and
was from 1980 to 1989 Chairman of Championship Auto Racing Teams, Inc. (now
known as IndyCar), which is the controlling body of IndyCar racing. Mr. Frasco
has owned and operated racing events in Atlanta, New York, Miami, Las Vegas and
Vancouver, British Columbia.

     Lyle Reigel has been the President of U.S. Paper Converters, Inc. (a paper
conversion company) since 1983, the President of Reigel Electric Corp. (a
provider of electric services for commercial construction projects) from 1978 to
2000, and the Vice President of Paget Equipment (a manufacturer of high pressure
vessels) since 1985. He has also owned and managed commercial real estate
properties since 1978.

                                       28
<PAGE>


ITEM 10. EXECUTIVE COMPENSATION
-------------------------------

     None of the Company's executive officers received compensation in excess of
$100,000 for the year ended December 31, 1999 or 2000. The following table
indicates all compensation received the by Company's Chief Executive Officer in
1999 and 2000.

                           Summary Compensation Table

                                               Annual Compensation (1)
                                               -----------------------
       (a)                (b)      (c)         (d)      (e)           (f)
Name and Principal                Stock                           Other Annual
    Position              Year   Salary($)   Bonus($)  Options   Compensation($)
    --------              ----   ---------   --------  -------   ---------------

Eric A. Margenau, Chief   2000    68,000        0      150,000          0
Executive Officer (1)

Brett L. Bouchy, Chief    1999    50,000        0      817,068          0
Executive Officer


(1)  Paid to United Sports Ventures, Inc., a company controlled by Dr. Margenau.

     The Company's directors do not receive compensation for attending Board
meetings but are reimbursed for out-of-pocket expenses incurred in connection
therewith.

1997 Employee Stock Option Plan

     In April 1997, the Company's stockholders adopted the Company's 1997
Employee Stock Option Plan (the "Plan"), which provides for the grant of stock
options intended to qualify as "incentive stock options" and "nonqualified stock
options" (collectively "stock options") within the meaning of Section 422 of the
United States Internal Revenue Code of 1986 (the "Code"). Stock options are
issuable to any officer, director, key employee or consultant of the Company.

     The Company's Board of Directors has reserved 3,000,000 shares of Class A
Common Stock for issuance under the Plan. The Plan is administered by the full
Board of Directors, which determines which individuals shall receive stock
options, the time period during which the stock options may be exercised, the
number of shares of Class A Common Stock that may be purchased under each stock
option and the stock option price.

                                       29
<PAGE>


     The per share exercise price of incentive stock options may not be less
than the fair market value of the Class A Common Stock on the date the option is
granted. The aggregate fair market value (determined as of the date the stock
option is granted) of the Class A Common Stock that any person may purchase
under an incentive stock option in any calendar year pursuant to the exercise of
incentive stock options may not exceed $100,000. No person who owns, directly or
indirectly, at the time of the granting of an incentive stock option, more than
10% of the total combined voting power of all classes of stock of the Company is
eligible to receive incentive stock options under the Plan unless the stock
option price is at least 110% of the fair market value of the Class A Common
Stock subject to the stock option on the date of grant.

     No incentive stock options may be transferred by an optionee other than by
will or the laws of descent and distribution, and during the lifetime of an
optionee, the stock option may only be exercisable by the optionee. Stock
options may be exercised only if the stock option holder remains continuously
associated with the Company from the date of grant to the date of exercise. The
exercise date of a stock option granted under the Plan cannot be later than ten
years from the date of grant. Any stock options that expire unexercised or that
terminate upon an optionee's ceasing to be employed by the Company become
available once again for issuance. Shares issued upon exercise of a stock option
will rank equally with other shares then outstanding.

     As of the date of this Report, 1,693,246 stock options have been granted
under the Plan, exercisable at prices ranging from $1.625 to $2.88 per share.






                                       30
<PAGE>


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-----------------------------------------------------------------------

     The following table sets forth certain information with respect to the
ownership of the Company's Class A and Class B Common Stock as of the date of
this Report, by (i) each person who is known by the Company to own of record or
beneficially more than 5% of the Company's Class A and Class B Common Stock,
(ii) each of the Company's directors and (iii) all directors and officers of the
Company as a group. Unless otherwise indicated, the stockholders listed in the
table have sole voting and investment powers with respect to the shares of Class
A and Class B Common Stock and their addresses are in care of the Company.
Shareholdings include shares issuable under stock options exercisable within 60
days from the date of this Report.

                                              Number of
                                         Shares Beneficially       Percentage
        Name                                    Owned               of Class
        ----                                    -----               --------

  J. Richard Corley                            213,496                 3.9%

  Eric A. Margenau (1)(2)                      967,068                15.7%

  Jeffrey L. Bouchy (3)                        100,000                 1.9%

  John W. Frasco                               418,496                 7.5%

  Riverlux Trust REG                           759,294                14.6%

  Lyle Reigel                                   92,867                 1.8%

  Brett L. Bouchy (1)(2)                       894,017                14.9%

  The Monolith Limited Partnership (4)             925                92.5%

  Alan Gagleard (5)                                 75                 7.5%

  All directors and officers as a group
  (five persons)                             1,791,927                30.5%

-----------

(1)  Does not include (i) 462.5 shares of Class B Common Stock under contract to
     be purchased by Brett L. Bouchy, which shares are subject to a voting trust
     in favor of Eric A. Margenau until January 2010 or (ii) 462.5 shares of
     Class B Common Stock under contract to be purchased by Dr. Margenau.

(2)  Includes stock options held by Mr. Bouchy to purchase 817,068 shares at
     $2.50 per share. Any shares purchased by Mr. Bouchy under these options
     will be subject to a voting trust in favor of Dr. Margenau until January
     2010.

(3)  Includes stock options to purchase 50,000 shares at an exercise price of
     $2.50 per share.

(4)  Represents Class B Common Stock under contract for sale to Mr. Bouchy and
     Dr. Margenau. See footnotes (1) and (2) above. Each share of Class B Common
     Stock votes the equivalent of 10,000 shares of Class A Common Stock.

(5)  Represents Class B Common Stock.

                                       31
<PAGE>


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------------------------------------------------------

     In August 1998, in connection with the sale of 1,000,000 shares of the
Company's Class A Common Stock to Riverlux Trust REG at $2.00 per share, The
Monolith Limited Partnership, a principal stockholder of the Company, agreed at
Riverlux's request to purchase from Riverlux 600,000 of the 1,000,000 shares
acquired by Riverlux from the Company for $6.67 per share on or before May 9,
1999. In turn, Riverlux granted Monolith an option to purchase up to 400,000
shares of Class A Common Stock of the Company held by Riverlux commencing
September 1999 at prices from $7.00 to $13.00 per share. In June 1999 Monolith
purchased 275,000 shares from Riverlux for $7.00 per share and paid Riverlux
$350,000 to settle all of its obligations under the agreement.

     In October 1998 the Company retained John W. Frasco, a director, to act as
its Vice President for Business Development for which the Company granted Mr.
Frasco options to purchase 250,000 shares of the Company's Class A Common Stock
at $2.50 per share and agreed to sell to Mr. Frasco 50,000 shares of Class A
Common Stock at $2.00 per share.

     In January, 1999, the Company issued to Brett L. Bouchy, its then Chief
Executive Officer, non-qualified options to purchase 950,000 shares of its Class
A Common Stock at $4.44 per share until December 2001. The options were issued
in connection with a three year employment agreement executed by the Company and
Mr. Bouchy and provide that 1/3 of the options vest yearly on the anniversary
date of the employment agreement. Mr. Bouchy terminated his employment agreement
with the Company in January 2000 and exchanged his 950,000 non-qualified options
for 817,068 stock options issued under the Company's 1997 Stock Option Plan
exercisable at $2.50 per share. Any shares issued under the options will be
subject to a voting trust in favor of Eric A. Margenau until January 2010.

     In January 1999 the Company borrowed $350,000 from Monolith at 8% per annum
interest. The loan was repaid in July 1999.

     In January 2000, Monolith agreed to assign its 925 shares of Class B Common
Stock to Brett L. Bouchy (462.5 shares) and Eric A. Margenau (462.5 shares). Dr.
Margenau has the right to vote Mr. Bouchy's shares until January 2010. The
agreement has not as yet been completed.

                                       32
<PAGE>


     In January 2001 the Company agreed to issue an aggregate of 100,000 shares
of its restricted stock to Jeffrey L. Bouchy and Eric A. Margenau, officers and
directors of the Company, and Brett L. Bouchy, a principal stockholder of the
Company. The shares were issued in consideration of Messrs. Bouchy, Margenau and
Bouchy providing collateral to assist the Company in borrowing $1 million to
satisfy its obligations under the IFL Acq. agreement. See "Strategy."

     The Company believes the terms of the above transactions were fair,
reasonable and consistent with terms that could be obtained from nonaffiliated
third parties. All future transactions with affiliates of the Company will be
approved by the disinterested members of the Company's Board of Directors. The
Company's securities (other than stock options under the Company's 1997 Employee
Stock Option Plan) may not be issued to management, promoters or their
respective associates or affiliates without obtaining (i) a fairness opinion
from a qualified brokerage firm or appraiser confirming the fairness of the
consideration to be received by the Company for the issuance of any such
securities and (ii) written approval of the securities issuance by a majority of
the Company's disinterested directors.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
-----------------------------------------

     a.   Exhibits:

Exhibit No.                Title
-----------                -----

3.01        Articles of Incorporation of the Registrant(1)
3.02        Bylaws of the Registrant(1)
10.01       1997 Employee Stock Option Plan(1)
10.02       Lease Agreement(1)
10.03       Arena Football League Licensing Program Update-November 4, 1996 (1)
10.04       Bylaws of the Arena Football League(1)
10.05       Membership Agreement with the Arena Football League(1)
10.06       Form of Standard Player Contract(1)
10.08       Purchase Agreement for Orlando Predators(1)
10.09       Exchange Agreement for Orlando Predators' Assets(1)
10.10       Employment Agreement with Mr. Youngblood (1)
10.11       Employment Agreement with Brett L. Bouchy (3)
10.12       Agreement between Arena Football League and the Registrant to
            acquire the Equity Interests (2)

                                       33
<PAGE>


10.13       Form of April 1998 Promissory Note (2)
10.14       Employment Agreement with Mr. Gruden (2)
10.15       Employment Agreement with Brett L. Bouchy (3)
10.16       Employment Agreement with Jeffrey L. Bouchy (3)
10.17       Employment Agreement with John W. Frasco (3)
10.18       Voting Trust Agreement between Messrs. Bouchy and Margenau
10.19       Merger Agreement between the Registrant and USV (3)
10.20       Civil Complaint: Guidry, et.al. vs. Arena Football League LLC et.
            Al.(3)
10.21       Management Agreement (USV)(3)
10.22       Amended Employment Agreement with Brett L. Bouchy (3)
10.23       Amended Margenau Agreement with USV (3)

(1)  Incorporated by reference to the Registrant's Registration Statement on
     Form SB-2, File Number 333-31671, declared effective on December 10, 1997.

(2)  Incorporated by reference to the Registrant's Registration Statement on
     Form SB-2, File No. 333-53217 , filed on May 21, 1998.

(3)  Incorporated by reference to the Registrant's previous filings on Forms
     10K-SB, 10Q-SB and 8-K.

     b.   Reports on Form 8-K: The Registrant filed two reports on Form 8-K in
          the quarters ended September 30, 2000 and December 31, 2000 reporting
          a change in the Registrant's fiscal year from December 31 to September
          30 and reporting its agreement with af2.


                                       34
<PAGE>


                                   SIGNATURES

     In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
has duly caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized, in Orlando, Florida, on January 16, 2001.

                                        THE ORLANDO PREDATORS
                                        ENTERTAINMENT, INC.

                                        By /s/ Eric A. Margenau
                                        -----------------------
                                        Eric A. Margenau, CEO and
                                        President

     Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report has been signed below by the following persons on the dates
indicated.

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

/s/J. Richard Corley           Chairman of the Board of         January 16, 2001
--------------------           Directors
J. Richard Corley


/s/Eric A. Margenau            Chief Executive Officer,         January 16, 2001
-------------------            President and Director
Eric A. Margenau


/s/Jeffrey L. Bouchy           Secretary, Treasurer,            January 16, 2001
--------------------           Chief Financial Officer,
Jeffrey L. Bouchy              Vice President of Football
                               Operations and Director


/s/John W. Frasco              Director                         January 16, 2001
-----------------
John W. Frasco

                               Director                         January 16, 2001
-----------------
Lyle Reigel


                                       35