**UNITED STATESSECURITIES AND EXCHANGE
COMMISSIONWashington, D.C. 20549**

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**FORM 10-KSB/A**

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(MARK ONE)
**[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**
**For the fiscal year ended
December 31, 2000**
>**OR**

**[   ] TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**
**FOR THE TRANSITION PERIOD FROM ___________
TO _____________**
**Commission file number 333-18967**
**AMERICAN CHAMPION
ENTERTAINMENT, INC.**(Name of small
business issuer in its charter)
**Delaware**
    **94-3261987**(State or Other Jurisdiction of Incorporation or
      Organization)
    (I.R.S. Employer Identification
  Number)**22320 Foothill Boulevard, Suite 260Hayward, California    94541**(Address of Principal Executive Offices including Zip Code)

**510) 728-0200**(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of
the Act: None
Securities registered pursuant to Section 12(g) of
the Act:**Title of the class**
    **Name of each exchange on which
      registered**Common Stock, $ .0001 par value
    OTC Bulletin Board


Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes [X]
    No [     ]Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of Registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-KSB, or any amendment to this Form 10-KSB.    [X]Revenues for its most recent fiscal year:
$567,711Aggregate market value of common stock held by
nonaffiliated at March 31, 2001: $3,693,080.Number of shares of common stock outstanding
at March 31, 2001: 25,181,663.DOCUMENTS INCORPORATED BY REFERENCE
None.Transitional Small Business Disclosure Format (check one):    Yes
[     ]    No     [X]

**AMERICAN CHAMPION ENTERTAINMENT, INC.2000 ANNUAL
REPORT ON FORM 10-KSB

INDEX**
Part I.
    
    PageItem 1.
Descriptions of Business
    **Item 2.
    Descriptions of Property
    **Item 3.
    Legal Proceedings
    **Item 4.
    Submission of Matters to a Vote of Security Holders
    **Part II.Item 5.
    Market for the Registrant's Common Equity and Related Stockholder
      Matters
    **Item 6.
    Management's Discussion and Analysis of Financial Condition and Results
      of Operations
    **Item 7.
    Financial Statements
    **Item 8.
    Changes in and Disagreements with Accountants on Accounting and
      Financial Disclosures
    **Part III.Item 9.
    Directors and Executive Officers of the Registrant
    **Item 10.
    Executive Compensation
    **Item 11.
    Security Ownership of Certain Beneficial Owners and Management
    **Item 12.
    Certain Relationships and Related Transactions
    **Part IV.Item 13.
    Exhibits and Reports on Form 8-K
    **Signatures
    
    **Exhibits Index
    
    ****PART I**Item 1.				Description of Business
General
American Champion Entertainment, Inc. is a Delaware corporation
headquartered in San Jose, California and incorporated on February 5, 1997. The
Company was formed as a holding company for its wholly-owned subsidiary,
American's Best Karate, a California corporation ("ABK"), formed in June 1991.
ABK wholly owns American Media, Inc., a Delaware Corporation ("AC Media"),
formed in February 1997. AC Media wholly owns American Champion Marketing Group,
a Delaware corporation ("AC Marketing") formed in July 1999. Unless indicated otherwise, references the "Company"
herein shall include ABK, AC Media and AC Marketing.
AC Media is a media production company and AC Marketing is a
marketing company. Through AC Media and AC Marketing, the Company is involved in
(i) the development, production and marketing of "ADVENTURES WITH KANGA
RODDY", a television program aimed at pre-school and primary school children
(the "Kanga Roddy Series"), (ii) the licensing of merchandising rights related
to Kanga Roddy Series, (iii) the development, production and marketing of
various audio tapes, video tapes and workbooks that specialize in fitness
information, and (iv) acquire the licensing rights to other intellectual
properties. ABK owned and operated a karate school for the month of January
2000, which was subsequently closed on January 31, 2000, when its lease
expired.
"Adventures with Kanga Roddy"
The Company has developed and produced twenty-nine (29) one
half-hour episodes of the Kanga Roddy Series. The Kanga Roddy Series features a
six-foot tall kangaroo character named Kanga Roddy who is a martial arts expert.
Unlike other martial arts programs with feature violence, Kanga Roddy never
fights because he understands that conflict can always resolved through
traditional martial arts values such as knowledge, compassion, humility,
discipline, respect and open mind. The show merges these values, with
contemporary music, dance, vibrant colors and exciting movements designed to
capture the attention of its target audience consisting primarily of pre-school
and primary school children.
Each episode of the Kanga Roddy Series focuses on a group of
children at a community center and their teachers (played by Jennifer Montana
and Karen Lott, wives of former San Francisco 49ers football players, Joe
Montana and Ronnie Lott) working on activities such as reading, physical fitness
and arts and crafts. During these activities, the children encounter an ethical
or social problem, which cause uneasiness or unhappiness among some of the
children. The teachers sense the problem and suggest that the children seek help
from their friend, Uncle Pat, the proprietor of a rare bookstore played by actor
Pat Morita, who was previously featured in "The Karate Kid" movies. Uncle Pat,
with the assistant of his pet bookworm, Shakespeare, magically transports the
children to the land of Hi-Yah where Kanga Roddy lives.
Once in the land of Hi-Yah, Kanga Roddy and his friends Bantu -
a female African snake, Tackle Bear - his workout partner, Cimbop and Kimbop - a
pair of feline sisters, and Zatochi - a wise old snow monkey, help the children
solve their problem by giving examples presented through songs. Kanga Roddy gets
inspiration for proper solution to the problem through flashbacks to lessons
learned from his martial arts teacher Zatochi or parallels drawn from encounters
with his buddy Tackle Bear. The children and the costumed cast present the
answers in song and dance routines. When the children return to the community
center, they review what they have learned with their teachers.
In May 1997, the Company and KTEH, the public broadcasting
station serving the San Jose, California area, entered into a Distribution
Agreement (the "Distribution Agreement") which granted KTEH the exclusive right
to distribute, advertise, market or otherwise exploit the Kanga Roddy Series on
public broadcast affiliated stations throughout the United States for a two-year
period ending May 1999. KTEH cleared the broadcast of Kanga Roddy Series with 40
other public broadcast stations, which broadcast, to approximately 50% of the
households in the United States (approximately 40 million households). The
Company delivered 13 half-hour episodes to KTEH for broadcast and received $430,
000 from KTEH for exclusive broadcast rights for the series for a period of two
years. Under the Distribution Agreement, the Company has also committed to
sharing with KTEH (I) 8% of revenues from the sale (less fees and commissions)
and licensing of non-broadcast ancillary rights of educational products such as
video tapes, books and music tapes and (ii) 5% of gross profits (less fees and
commissions) of the Company from the sale and licensing of toys and clothing.
The Company has also granted KTEH a right of first refusal with respect to
broadcast rights to the Kanga Roddy Series not granted to KTEH in the
Distribution Agreement.
On April 20, 1998, the Company entered into a Continuing
Distribution Agreement with KTEH for the distribution of 26 more half-hour Kanga
Roddy shows and two one-hour specials. Under the Continuing Distribution
Agreement, KTEH receives the exclusive domestic broadcast rights to the new
episodes for two years and agrees to pay the Company $30,000 for each half-hour
program and $60,000 for each of the two one-hour shows. As of December 31, 2000,
the Company has completed and delivered 29 half-hour episodes to KTEH. The
distribution agreements with KTEH had ended on April 1, 2001, two years after
the delivery of the second season of shows to KTEH.
In August 1998, the Company signed an exclusive contract with
Portfolio Entertainment of Toronto, Ontario, for the international TV
distribution of the Kanga Roddy Series. This contract was terminated by mutual
consent in February 2001.
In January 1999, American Public Television ("APT"), a major
national distributor for PBS programming, agreed to distribute 26 new episodes
of the Kanga Roddy Series. The distribution by APT was ended on April 4,
2001.
In September 1999, the Company signed a licensing agreement
with Brighter Child of Westerville, Ohio, for the licensing of the Kanga Roddy
story and all related characters for use in interactive CD-Rom games.
In October 1999, the Company signed a licensing agreement with
Prestige Toys of New York, New York, for the licensing of the Kanga Roddy and
all related characters for use and manufacturing of plush toy items in all
sizes.
In December 2000, the Company signed a licensing agreement with
World Channel, Inc of South San Francisco, California for a five-year worldwide
licensing of the Kanga Roddy program and its related products.
The Company strategy includes pursuing licensing agreement and
merchandising opportunities related to the Kanga Roddy Series. Characters
developed in a popular series, and often the series itself, achieve a high level
of recognition and popularity, making them valuable licensing and merchandising
assets. Among the most popular licensed items are toys, clothing, food,
dinnerware/lunch boxes, watches, and soft vinyl goods such as boots, backpacks,
and raincoats. The Company plans to retain worldwide rights to the characters
and images developed in the Kanga Roddy Series, to protect its rights to such
characters and images through appropriate registration, and to license their use
to manufactures for specific products. There is no assurance that the Company
will be able to do so. If the Kanga Roddy Series does not attain and maintain
widespread television distribution, or widespread popularity, it is unlikely
that any significant licensing or merchandising opportunities or revenue will
arise or be maintained.
Competition
Each of the industries in which the Company competes is highly
competitive and most of the companies with which the Company competes have
greater financial and other resources than the Company. With respect to the
Company's media activities, the Company competes with major production
companies, and competition for access to a limited supply of facilities and
talented creative personnel to produce its programs is often based on
relationships and pricing. The Company's programs compete for time slots,
ratings, distribution channels and financing, and related advertising revenues
with other programming products. The Company's competitors include motion
picture studios, television networks, and independent television production
companies, which have become increasingly active in children's programming, and
many of which have substantially greater financial and other resources than the
Company. The Company competes for broadcast commitments and production funding
for public television projects with Children's Television Workshop, other
independent production companies, and projects produced by local public
television stations.
If the Company attempts to expand into other areas, including
commercial television, it will face more intense competition from other, larger
entities, which have substantially greater financial and other resources than
the Company, such as The Walt Disney Company, Fox, Nickelodeon, Jim Henson
Productions, Scholastic Productions, Cinar, Lancit Media Entertainment, and
certain television syndicators, production companies, and networks which also
seek to attract the children's/family audiences segment with their programming.
In addition, there is a strong trend toward vertical integration in the
business, with more networks owning productions, making it more difficult for
smaller, independent companies such as the Company to obtain favorable
production financing and distribution terms.
In the licensing industry, there is strong competition from
other independent licensing agencies and from the in-house licensing divisions
of other production companies and television studios.
Acquisition
In March 2000, the Company signed a Stock Exchange Agreement
with BA Networks for the acquisition of 80% of the common stock of BA Networks.
The Company's shareholders approved of the acquisition at the Company's Annual
Meeting of Shareholders held on September 27, 2000. The owners of BA Networks
have agreed to sell an 80% interest in BA Networks to ACEI. According to
commerce regulation of China, such exchange of ownership needs to be
incorporated into a co-operative joint venture ("CJV"). On October 28, 2000 BA
Network signed a letter of intent with ACEI to set up a "CJV" in China into
which all of BA Networks' assets will be transferred. The CJV will be owned 80%
by ACEI and 20% by BA Networks. The establishment of CJV was approved by the
Beijing Municipal Government on December 1, 2000 and the business license was
granted on December 20, 2000. As of March 31, 2001, the transfer of assets from
BA Networks has not yet been made. The Company and BA Networks will complete all
appropriate steps to fulfill the Chinese commerce regulations for the necessary
transfer of ownership into the CJV upon the filing of the Company's year-end
report. Since the Company does not have control of BA Networks until the transfer of assets occurs, the investment in BA Networks is being accounted for as a deposit under the cost method of accounting as of December 31, 2000 at the original purchase
price of $450,000.  Upon completion of the transfer of assets the acquisition will be accounted for under the purchase method of accounting. The operations of BA Networks are conducted exclusively in the People's Republic of China ("PRC").  It is at least
reasonably possible that the activities of BA Networks, which are conducted in the People's Republic of China, may be disrupted in the near term from factors outside the control of the Company such as from negative effects of economic and political
forces. Please see Note 1 following the financial statements for a proforma presentation if control over this subsidiary was established on December 31, 2000.
Repurchase and Conversion of Debt
On December 27, 2000, the Company signed an Agreement for
Purchase of Convertible Debt with Holley Holding (U.S.A.) Ltd., pursuant to
which Holley purchased the Company's existing $2 million in convertible debt.
The transaction was completed on January 4, 2001 and Holley elected to convert
all of such debt into 13,717,045 shares of the Company's common stock. This
transaction resulted in significant improvement in the Company's balance sheet
due to the fact that a large amount of debt is removed and the respective amount
is added into Additional Paid-in Capital. In addition, according to the terms of
the agreement, as of December 31, 2000 the Company is obligated to issue shares
of stock, warrants and options to various parties in connection with this
transaction. An accrual has been made in the Company's financial statements as
of December 31, 2000 for the estimated fair value of these securities in the
amount of $2,078,391. On January 4, 2001 these securities were issued and the
liability as of December 31, 2000 was converted to common stock and Additional
Paid-in Capital. We have presented a proforma balance sheet in our financial
statements to show how this transaction effects the Company's financial position
as if all securities were issued as of December 31, 2000.

In addition, Holley and its affiliate also signed Stock
Purchase Agreements on December 27, 2000 for a $2 million purchase of the
Company's common stock at the price of $0.16 per share. Such purchases have not
been completed as of the date hereof.
Employees
As of March 31, 2001, the Company employed 6 employees on a
full-time basis, 3 of which are management and 3 of which are clerical. In
addition, BA Networks employed 12 people.
Item 2. Description of Property
The Company leases approximately 2,000 square feet of space for
its Hayward, California, headquarters pursuant to a four-year lease expiring
August 2004 at approximately $6,000 per month.
Item 3. Legal Proceedings
On April 24, 1998, the Company filed a Complaint for
Declaratory Relief in the U.S, District Court, Northern District of California,
against William Charles Jeffreys, requesting judicial determination of the
Company's rights in certain intellectual property associated with the Adventures
with Kanga Roddy show, and that Mr. Jeffreys has no such rights. Mr Jeffreys
filed an answer to the Company's complaint on June 15, 1998 along with a
counterclaim. The Company disputes all claims of Mr. Jeffreys to an interest in
certain of the Company's intellectual property and intends to vigorously protect
its ownership and right to such intellectual property. In February 1999, Mr
Jeffreys and the Company have agreed to settle the lawsuit and counterclaim for
$36,000 each beginning in March of 1999, and the last payment was made in
February 2000.
On February 9, 2001, a complaint was filed by Chuck Nelson in
Court of Common Pleas, Mahoning County in Youngstown, Ohio against the Company
for a percentage of the total purse amounts paid to boxers in the Company
produced boxing event in China in April 2000, and for a percentage of the
television revenue generated thereof. The Company denies all of the rights
claimed by Chuck Nelson and will vigorously defend against all of Mr. Nelson's
claims.
With the exception of the foregoing, no lawsuits or proceedings
are currently pending against the Company.
Item 4. Submission of Matters to Vote of Security
Holders
Not applicable.

**PART II**Item 5. Market for Common Equity and Related Stockholder Matters
Market for Securities
Our Common Stock and Common Stock Purchase Warrants commenced
quotation on the NASDAQ Small Cap Market System under the symbols "ACEI" and
"ACEIW" respectively, on August 1, 1997. The Company's securities were delisted
from the NASDAQ Small Cap Market effective April 3, 2001. The Company's Common
Stock began trading on the OTC Bulletin Board on April 3, 2001. The range of
high and low reported closing sales prices for the Common Stock as reported by
NASDAQ SmallCap Market since the Commencing of trading up to April 2, 2001, and
as reported by the OTC Bulletin Board since April 3, 2001 were as follows
(adjusted for 1:4 reverse split on January 4, 2000):
Common Stock:
    High
    Low1997
Third Quarter
    $22.000
    $16.500Fourth Quarter
    $32.000
    $19.0001998

|First Quarter  | $38.500 | $31.000
|-------------- | ------- | -------
|Second Quarter | $38.250 | $26.250
|Third Quarter  | $28.000 | $14.000
|Fourth Quarter | $14.500 | $ 3.876

1999

|First Quarter  | $12.000 | $ 4.252
|-------------- | ------- | -------
|Second Quarter | $ 9.752 | $ 3.124
|Third Quarter  | $ 7.250 | $ 2.062
|Fourth Quarter | $ 6.250 | $ 1.250

2000

|First Quarter  | $ 6.031 | $ 2.125
|-------------- | ------- | -------
|Second Quarter | $ 3.313 | $ 0.875
|Third Quarter  | $ 1.438 | $ 0.594
|Fourth Quarter | $ 0.750 | $ 0.156

2001

|First Quarter                        | $ 0.875 | $ 0.219
|------------------------------------ | ------- | -------
|Second Quarter (up to April 4, 2001) | $ 0.313 | $ 0.188







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

The following section discusses the significant operating
changes, business trends, financial condition, earnings and liquidity that have
occurred in the one-year period ended December 31, 2000. This discussion should
be reads in conjunction with the Company's consolidated financial statements and
notes appearing elsewhere in this report.

The following discussion may contain forward-looking statements
that are subject to risks and uncertainties. Such risks and uncertainties could
cause actual results to differ materially from those indicated. For a discussion
of factors that could cause actual results to differ, please see the discussion
contained herein. Readers should not place undue reliance on the forward-looking
statements, which reflect management's view only as of the date hereof. The
Company undertakes no obligation to publicly revise these forward-looking
statements to reflect subsequence events or circumstances. Readers are also
encouraged to review the Company's publicly available filings with the
Securities and Exchange Commission.

Results of Operation

The Company was formed in February 1997 and has a wholly owned
subsidiary, ABK, which owned and operated one karate studio that was closed as
of January 31, 2000. ABK wholly owns AC Media, a media production company, which
owns AC Marketing, a licensing and marketing company. In March 2000, the Company signed a Stock Exchange Agreement with BA Networks for the acquisition of 80% of the common stock of BA Networks. The Company's shareholders approved of the acquisition at
the Company's Annual Meeting of Shareholders held on September 27, 2000. The owners of BA Networks have agreed to sell an 80% interest in BA Networks to ACEI. According to commerce regulation of China, such exchange of ownership needs to be incorporated
into a co-operative joint venture ("CJV"). On October 28, 2000 BA Network signed a letter of intent with ACEI to set up a "CJV" in China into which all of BA Networks' assets will be transferred. The CJV will be owned 80% by ACEI and 20% by BA Networks.
The establishment of CJV was approved by the Beijing Municipal Government on December 1, 2000 and the business license was granted on December 20, 2000. As of March 31, 2001, the transfer of assets from BA Networks has not yet been made. The Company and
BA Networks will complete all appropriate steps to fulfill the Chinese commerce regulations for the necessary transfer of ownership into the CJV upon the filing of the Company's year-end report. Since the Company does not have control of BA Networks until
the transfer of assets occurs, the investment in BA Networks is being accounted for as a deposit under the cost method of accounting as of December 31, 2000 at the original purchase price of $450,000.  Upon completion of the transfer of assets the
acquisition will be accounted for under the purchase method of accounting. The operations of BA Networks are conducted exclusively in the People's Republic of China ("PRC").  It is at least reasonably possible that the activities of BA Networks, which are
conducted in the People's Republic of China, may be disrupted in the near term from factors outside the control of the Company such as from negative effects of economic and political forces. Please see Note 1 following the financial statements for a
proforma presentation if control over this subsidiary was established on December 31, 2000.

Revenues

During the year ended December 31, 2000, the Company's total
revenue was $ 567,711 as compared to total revenue for the year ended December 31, 1999 of $582,652.   For the year ended December 31, 2000, the Company recognized $154,520 in film income and sponsorship fees as compared to $517,995 for the year ended
December 31, 1999. The Company also received a one-time sporting events promotion revenue of $400,000.

Revenues from sale of accessories was $13,417 for the year
ended December 31, 2000 as compared to $64,657 the year ended December 31, 1999.



Costs and Expenses

The Company recognized $3,697,224 in amortization of film cost,
which was capitalized production costs for the television show "Adventures With
Kanga Roddy", for the year ended December 31, 2000 as compared to none of such
amortization for 1999. During the year-ended December 31, 2000 management
reviewed the net realizable value of the capitalized film costs. The licensing
and sponsorship fees to date have been less than the original estimates of the
Company. During the third quarter of 2000 a reserve of $1,000,000 was taken
against the related capitalized costs. As of December 31, 2000 the net amount of
capitalized film costs was reserved to $3,950,000, which is based on current
licensing agreements and planned and probable future distribution of the
television show.

The Company's expenses for salaries and payroll taxes were
$2,361,393 for 2000, an increase of $1,933,918 from $427,475 in 1999. Total
selling, general and administrative expenses was $3,492,773 for 2000, an
increase of $356,756 from $3,136,017 in 1999.

Interest expense was $313,939 for 2000, an increase of $116,755
from $197,184 in 1999. Interest expense for 2000 was primarily attributed to
interest bearing convertible debentures the Company sold within the year. The
Beneficial Conversion Feature of Debentures is a non-cash charge of $712,896
related to the beneficial conversion feature of the convertible debentures
issued within 2000. The debentures are convertible to common stock of the
Company with the shares to be issued upon conversion based on discount from the
fair market value of the stock and can be converted any time, the value of the
discount as of the issuance date has been recorded as an expense with a
corresponding increase to additional paid in capital. Rent expenses was $120,281
for 2000, which was comparable to $122,500 in 1999. Additional expense of
$2,078,391 was accrued during 2000 as a result of the agreement to convert the
outstanding debentures to common stock entered into by the Company on December
27, 2000. This expense relates to securities that were issued by the Company on
January 4, 2000 as a result of modifications to the conversion terms of the
outstanding debentures on December 27, 2000 and other fees associated with this
agreement.

As a result of foregoing factors, the Company's net loss was
($14,018,659) for the year ended December 31, 2000 as compared to ($6,398,328)
for the year ended December 31, 1999. Net loss per share decreased to ($1.91) in
2000 from ($2.68) in 1999, while weighted average number of shares outstanding
increased to 7,323,154 shares in 2000 from 2,385,622 shares in 1999.

Liquidity and Capital Resources

Stockholders' equity decreased to $540,349 at the end of 2000,
from $7,688,425 from 1999. On December 27, 2000, the Company signed an Agreement
for Purchase on Convertible Debt with Holley Holding (U.S.A.) Ltd. for Holley to
redeem the Company's existing $2 million in convertible debt. The transaction
was completed on January 4, 2001 and Holley elected to convert all of such debt
into 13,717,045 shares of the Company's common stock. This transaction resulted
in a conversion of debt (net of original issue discount) of $1,470,816 and other
accrued charges related to the conversion of $2,078,391 to $3,549,207 of
Additional Paid-in Capital and thereby significantly improving the Company's
balance sheet, and as of January 4, 2001, Total Stockholders' Equity effective
January 4, 2001 was $4,089,556.

Cash decreased for the twelve months ended December 31, 2000 by
$27,205. Cash utilized for operations for the twelve months ended December 31,
2000 was ($3,459,588). Cash used for investing activities for the twelve months
ended December 31, 2000 was ($417,327) and cash from financing activities for
the twelve months ended December 31, 2000 was an increase of $3,849,710 which
resulted primarily from sales of convertible debentures.

The Company has historically financed its operating and capital
outlays primarily through sales of common stock, loans from stockholders and
other third parties and bank financing.

Accounts payable and accrued expenses as of December 31, 2000
was $630,790 as compared to $1,042,577 at December 31, 2000. Loans payable to related parties as of December 31, 2000 was $36,000 as compared to $84,100 as of
December 31, 1999.

The Company maintains a credit line with Wells Fargo Bank
pursuant to which the Company has borrowed approximately $36,000 as of December
31, 2000 and repayment of this amount is made at the monthly rate of 2% of the
outstanding balance of the borrowing. Other than such loan, the Company does not
presently maintain any other borrowing facility or have any indebtedness to
financial institutions.

Within the year ended December 31, 2000, the Company sold
$3,250,000 in convertible debt, of which $1,250,000 was converted into common
stock.

Subsequent to the end of the year 2000, in January 2001, Holley
Holding (U.S.A.) redeemed all of the outstanding convertible debt and converted
into 13,717,045 shares of common stock.



Item 7. Financial Statements

The consolidated financial statements of the Company and
subsidiaries and independent auditors' report are filed herewith on pages 16
through 39 of this report.



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

Not applicable.





**PART III**

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

As of December 31, 2000 the directors, executive officers and
controlling persons of the Company are:



|Name             | Age | Position with the Company                       | Director Since
|---------------- | --- | ----------------------------------------------- | --------------
|Anthony K. Chan  | 46  | President, Chief Executive Officer and Director | 1997          
|George Chung     | 39  | Chairman and Director                           | 1997          
|William T. Duffy | 45  | Director                                        | 1997          
|Jan D. Hutchins  | 52  | Director                                        | 1997          



Anthony K. Chan

George Chung. Mr. Chung has served as Chairman of the
Board and a Director of the Company since February 1997, and as President of
America's Best Karate since 1991. From 1981 to 1991, Mr. Chung owned and
operated a karate studio in Los Gatos, California. Mr. Chung was inducted into
the Black Belt Hall of Fame in 1983. He is regarded in the martial arts industry
as a pioneer in the modernization of what is known as contemporary martial arts
training, which includes the use of music in both training and performance. He
has been featured in magazines, books, television and motion pictures. He is a
published author and wrote "Defend Yourself," a worldwide published self-defense
system for Sybervision Systems. In 1995, he was awarded a "Superbowl Ring" from
the San Francisco 49ers in recognition for his outstanding martial arts work
with their championship football team.

William T. Duffy. Mr. Duffy served as the Executive
Vice President for the Buffalo Bills in 1999, and had served as Vice- President
of Business Operations and Chief Financial Officer for the San Francisco 49ers
from 1996 to 1998. He was responsible for all non-football related business and
provides financial guidance and support for all the team's football related
activities. Mr. Duffy's previous experience has included serving as Director of
Compliance for the National Football League from October 1993 to May 1996,
Treasurer of Robbie Stadium Corporation from June 1990 to September 1993 and
Director of Finance of the Miami Dolphins from March 1988 to May 1990. Mr.
Duffy, a CPA, is a graduate of Princeton University and received his Masters of
Accounting from New York University.

Jan D. Hutchins. Mr. Hutchins has served as President
of AC Media, since February 1997. From July 1994 to November 1995, Mr. Hutchins
was one of a four person management team for GolfPro International, an emerging
company designing and marketing a terrain- based, personal service robot. From
1993 to 1994, Mr. Hutchins was community services director for the San Francisco
Giants professional baseball team. From 1991 to 1993, Mr. Hutchins developed,
produced and hosted the HOOKED ON GOLF radio program for KNBR 68 in San
Francisco. From 1972 to 1991, Mr. Hutchins served in various capacities in the
television field, including news anchor, sports director, sports anchor/reporter
and television host.





Item 10. Executive Compensation

The following table sets forth certain summary information with
respect to the compensation paid to the Company's Chief Executive Officer and
President, and the Company's Chairman of the Board, for services rendered in all
capacities to the Company for the period through December 31, 2000. Other than
as listed below, the Company had no executive officers whose total annual salary
and bonus exceeded $100,000 for that fiscal year:



|Name         | Position                           | Year                                  | Salary                                                | Other Compensation                    | Bonus                                 | Long-Term Compensation                  
|------------ | ---------------------------------- | ------------------------------------- | ----------------------------------------------------- | ------------------------------------- | ------------------------------------- | ----------------------------------------
|             |                                    |                                       |                                                       |                                       |                                       | Awards                                  
|             |                                    |                                       |                                                       |                                       |                                       | Restricted Stock Award(s) ($)           
|Anthony Chan | President& Chief Executive Officer | 2000
      1999
      1998
      1997 | $135,000
      $127,262
      $130,828
      $101,704 | ----
      ----
      ----
      ---- | ----
      ----
      ----
      ---- | 250,000
      ----
      ----
      ----
|George Chung | Chairman of the Board              | 2000
      1999
      1998
      1997 | $135,000
      $127,262
      $138,739
      $107,284 | ----
      ----
      ----
      ---- | ----
      ----
      ----
      ---- | 250,000
      ----
      ----
      ----



(1) Options were granted under the Company's 1997 Stock Plan,
and adjusted for the 1:4 reverse split of the company's common stock on January
4, 2000.

STOCK OPTIONS GRANTS AND EXERCISES

Option/SAR Grants within 2000

Option/SAR Grants in Last Fiscal Year

|Individual
  Grants
|-------------------
|Name               
|Anthony Chan       
|George Chung       





The following table shows the value at March 31, 2001 of
unexercised options held by the named executive officers:

Aggregated Option Exercises in Last Fiscal Year and Fiscal
Year-end Option Values (Adjusted for 1:4 reverse split of the company's common
stock on January 4, 2000).



|                                                    |                                 |                    | Number of securities underlying unexercised options
      at fiscal year-end (#) | Value of unexercised in-the-money options at fiscal
      year-end ($)
|--------------------------------------------------- | ------------------------------- | ------------------ | -------------------------------------------------------------------------------- | ----------------------------------------------------------------------
|Name                                                | Shares acquired on exercise (#) | Value Realized ($) | Exercisable/ unexercisable                                                       | Exercisable/ unexercisable*                                           
|Anthony Chan, President and Chief Executive Officer | 0                               | 0                  | 601,875 / 50,000                                                                 | $3,750.00 / $0                                                        
|George Chung, Chairman of the Board                 | 0                               | 0                  | 601,875 / 50,000                                                                 | $3,750.00 / $0                                                        



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

* Assumes a fair market value of $0.3125 per share at the close
of March 31, 2001.

The compensation for the Company's key management will be
evaluated from time to time by the Board. The Board may, in its discretion,
award these individuals cash bonuses, options to purchase shares of the Common
Stock under the Company's Equity Incentive Plan and such other compensation,
including equity-based compensation, as the Board, or a committee thereof, shall
approve from time to time.



Item 11. Security Ownership of Certain Beneficial Owners and
Management

The following table sets forth, as of the date of March 31,
2001, certain information with respect to stock ownership of (i) all
persons known by the Company to be beneficial owners of 5% or more of its
outstanding shares of Common Stock; (ii) each director; and (iii) all
directors and officers as a group.



|Name and Address of Beneficial Owner
      (1)                                | Number of Shares of Common Stock | Percentage of Common Stock
  Ownership*
|----------------------------------------------------------------------------- | -------------------------------- | ---------------------------------------
|Anthony Chan                                                                  | 978,360 (2)                      | 3.85%                                  
|George Chung                                                                  | 970,460 (3)                      | 3.82%                                  
|William T. Duffy                                                              | 45,125 (4)                       | ***                                    
|Jan D. Hutchins                                                               | 162,500 (5)                      | ***                                    
|All officers and directors as a group (4 persons)Holley Holding (U.S.A.) Ltd. | 2,156,445 (6)12,610,837          | 8.48%49.61%                            

_______________________

*** Represents less than one percent.

(1) The addresses for the directors and executive officers is
c/o American Champion Entertainment, Inc., 22320 Foothill Blvd., Suite 260,
Hayward, California 94541.

(2) Includes 601,875 shares subject to presently exercisable
options granted under our 1997 stock option plan. Does not include 50,000
subject to options which are not presently exercisable or exercisable within 60
days.

(3) Includes (i) 601,875 shares subject to presently
exercisable options granted under our 1997 stock option plan and (ii) 1,100
shares owned by Mr. Chung's wife. Does not include 50,000 subject to options
which are not presently exercisable or exercisable within 60 days.

(4) Includes 33,125 shares subject to presently exercisable
options granted under our 1997 stock option plan.

(5) Includes 132,500 shares subject to presently exercisable
options granted under our 1997 stock option plan.

(6) Includes an aggregate of 1,369,375 shares subject to
presently exercisable options granted under our 1997 stock option plan. Does not
include 100,000 shares subject to options which are not presently exercisable or
exercisable within 60 days.





Item 12. Certain Relationships and Related Transactions

As of March 31, 2001, the company received personal loans in
the total of $100,000 from relatives of the Chairman, Mr. George Chung, and such
loans bear a 12% annual interest rate. As of March 31, 2001, the company also
received a personal non-interest bearing loan in the amount of $54,000 from the
President & CEO, Mr. Anthony Chan.



Item 13. Exhibits and Reports on Form 8-K

(a) Exhibits

See Index to Exhibits at pages 38 to 39 of this Form
10-KSB.

(b) Reports on Form 8-K

The Company filed a Form 8-K on December 29, 2000 pursuant to
Company's acquisition of 80% of BA Network. The Company also filed a Form 8-K on
January 18, 2001 pursuant to the purchase of the Company's convertible debt by
Holley Holding (U.S.A.) Ltd.



---

**SIGNATURES**

In accordance with Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.

Dated: April 26, 2001



| |                                      
| | -------------------------------------
| | American Champion Entertainment, Inc.



| |     |                    
| | --- | -------------------
| | By: | /s/ Anthony K. Chan

| |                                                           
| | ----------------------------------------------------------
| |                                                           
| | Anthony K. Chan                                           
| | Chief Executive Officer(Principal
      Executive Officer)

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



|Signature                                    | Title                                                                    | Date          
|-------------------------------------------- | ------------------------------------------------------------------------ | --------------
|By: /s/ Anthony K.
      ChanAnthony K. Chan | Chief Executive Officer
      (Principal Executive Officer) and Director | April 26, 2001
|By: /s/ Licheng WangLicheng Wang             | Chairman of the Board
      and Director                                 | April 26, 2001
|By: /s/ Yuanhao LiYuanhao Li                 | Vice Chairman of the
      Board and Director                            | April 26, 2001
|By: /s/ George ChungGeorge Chung             | Vice Chairman of the
      Board and Director                            | April 26, 2001
|By: /s/ Alan MokAlan Mok                     | Vice Chairman of the
      Board and Director                            | April 26, 2001
|By: /s/ William T. Duffy William T. Duffy    | Director                                                                 | April 26, 2001
|By: /s/ Jan D.
      HutchinsJan D. Hutchins | Director                                                                 | April 26, 2001

---

AMERICAN CHAMPION ENTERTAINMENT, INC.

AND

SUBSIDIARIES



INDEPENDENT AUDITOR'S REPORT

AND

CONSOLIDATED FINANCIAL STATEMENTS



DECEMBER 31, 2000 AND 1999



INDEPENDENT AUDITOR'S REPORT





To the Board of DirectorsAmerican Champion Entertainment,
Inc.and Subsidiaries



We have audited the accompanying consolidated balance sheet of American Champion Entertainment, Inc., and Subsidiaries (the "Company") as of December 31, 2000 and 1999, and the related consolidated statements of operations, stockholders'
equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.



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



In our opinion, based on our audits, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2000 and 1999, and the results of its
consolidated operations and its consolidated cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.



The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 19 to the financial statements, the Company had limited cash reserves at December 31, 2000 and
based on management's current cash flow estimates, will not have sufficient cash to meet obligations over the next twelve months without additional sources of capital. These factors raise substantial doubt about the Company's ability to continue as a
going concern. Management's plan in this regard is discussed in Note 19. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.





/s/ Moss Adams LLP

Moss Adams LLP

San Francisco, CaliforniaFebruary 15, 2001, except Note 18, as to which
the date is April 3, 2001

---

**AMERICAN CHAMPION ENTERTAINMENT, INC. CONSOLIDATED
BALANCE SHEETS**

`DECEMBER 31,        Proforma
                                               --------------------------  December 31,
                                                   2000          1999         2000 *
                                               ------------  ------------  ------------
ASSETS                                                                     (Unaudited)
  Cash....................................... $      5,309  $     32,514  $     5,309
  Accounts receivable........................       87,726       481,449      187,726
  Loans receivable, related parties..........       91,197       114,937       91,197
  Prepaid expenses...........................       15,667         7,460       15,667
  Property and equipment, net................      226,547       312,949      226,547
  Investments................................      487,647       203,110      487,647
  Film costs, net............................    3,950,000     7,553,133    3,950,000
  Note receivable............................       81,224       354,814       81,244
  Other assets...............................          -         226,084           -
                                               ------------  ------------  ------------
    Total Assets............................. $  5,045,319  $  9,286,450  $  5,045,319
                                               ============  ============  ============

LIABILITIES
  Accounts payable and accrued expenses...... $    630,790  $  1,042,577  $   630,790
  Notes payable, related parties.............       36,000        84,100       36,000
  Other......................................        3,746         4,245        3,746
  Securities to be issued....................    2,228,391           -        150,000
  Deferred revenues..........................          -          16,920           -
  Notes payable..............................    1,606,043       450,183      135,227
                                               ------------  ------------  ------------
    Total Liabilities........................    4,504,970     1,598,025      955,763
                                               ------------  ------------  ------------
COMMITMENTS AND
  CONTINGENCIES, Note 9                               -             -             -

STOCKHOLDERS' EQUITY
  Preferred stock, $.0001 per share,
    6,000,000 shares authorized,
    none issued or outstanding...............          -             -             -
  Common stock, $.0001 par value;
    40,000,000 shares authorized.............          941           494         2,539
  Additional paid-in capital.................   24,464,507    17,594,371    28,012,116
  Accumulated deficit........................  (23,925,099)   (9,906,440)  (23,925,099)
                                               ------------  ------------  ------------
    Total Stockholders' Equity...............      540,349     7,688,425     4,089,556
                                               ------------  ------------  ------------
                                              $  5,045,319  $  9,286,450  $  5,045,319
                                               ============  ============  ============`

*   - The unaudited proforma balances are presented as if
the transactiondescribed in Note 17 had taken place on December 31, 2000.

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

---

**AMERICAN CHAMPION ENTERTAINMENT, INC. CONSOLIDATED
STATEMENT OF OPERATIONS**

`YEAR ENDED DECEMBER 31,
                                                            --------------------------
                                                                2000             1999
                                                            ------------  ------------
REVENUE
  Film income and sponsorship fees........................ $    154,520  $    517,995
  Sporting events promotion...............................      400,000            -
  Other...................................................       13,191        64,657
                                                            ------------  ------------
    Total revenue.........................................      567,711       582,652
                                                            ------------  ------------
COSTS AND EXPENSES
  Cost of sales - Film income.............................       33,177       458,274
  Film cost reserve.......................................    3,697,224            -
  Selling.................................................    1,419,034       481,686
  Salaries and payroll taxes..............................    2,361,393       427,475
  Rent....................................................      120,281       122,500
  General and administrative..............................    3,492,773     3,136,017
                                                            ------------  ------------
    Total costs and expenses..............................   11,123,882     4,625,952
                                                            ------------  ------------
                                                            (10,556,171)   (4,043,300)
                                                            ------------  ------------
OTHER INCOME (EXPENSE)
  Interest expense........................................     (313,939)     (197,184)
  Interest - Beneficial conversion feature of debentures..     (712,896)   (1,233,684)
  Interest - Debenture conversion expense.................   (2,078,391)     (741,210)
  Loss on investments.....................................     (246,404)           -
                                                            ------------  ------------
                                                             (3,351,630)   (2,172,078)
                                                            ------------  ------------
LOSS FROM OPERATIONS BEFORE
   PROVISION FOR INCOME TAXES.............................  (13,907,801)   (6,215,378)

PROVISION FOR INCOME TAXES................................          100         1,246
                                                            ------------  ------------
NET LOSS FROM CONTINUING OPERATIONS.......................  (13,907,901)   (6,216,624)

LOSS FROM DISCONTINUED OPERATIONS.........................     (110,758)     (181,704)
                                                            ------------  ------------
NET LOSS.................................................. $(14,018,659) $ (6,398,328)
                                                            ============  ============

Weighted average number of shares outstanding.............    7,323,154     2,385,622
                                                            ============  ============

Basic and diluted loss per share, continuing operations... $      (1.90) $      (2.61)

Basic and diluted loss per share, discontinued operations.        (0.02)        (0.08)
                                                            ------------  ------------
Basic and diluted loss per share, net income.............. $      (1.91) $      (2.68)
                                                            ============  ============`

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

---

**AMERICAN CHAMPION ENTERTAINMENT, INC. CONSOLIDATED
STATEMENT OF STOCKHOLDERS' EQUITY**

`Common
                                        Stock                                                   Total
                                        Number      Common       Paid-in      Accumulated   Stockholders'
                                      of Shares      Stock       Capital        Deficit        Equity
                                     ------------  ---------  -------------  -------------  -------------
Balance, December 31, 1998..........   1,313,562  $     131  $   7,413,184  $  (3,508,112) $   3,905,203

Common stock and warrants issued
  in connection with debentures.....      37,500          4        349,676            -          349,680
Conversion of debentures
  to common stock...................   2,557,665        256      3,730,854            -        3,731,110
Exercise warrants to purchase
  common stock......................     346,250         35      1,092,104            -        1,092,139
Exercise options to purchase
  common stock......................     221,500         22        365,603            -          365,625
Common stock issued for services....     393,860         39      1,216,664            -        1,216,703
Warrants issued for services........         -          -        1,329,593            -        1,329,593
Options to purchase common
  stock issued for services.........         -          -          393,520            -          393,520
Common stock and warrants issued
  for redemption of debentures......      66,983          7        469,489            -          469,496
Beneficial conversion feature
  of debentures.....................         -          -        1,233,684            -        1,233,684
Net loss for year ended
  December 31, 1999.................         -          -              -       (6,398,328)    (6,398,328)
                                     ------------  ---------  -------------  -------------  -------------
Balance, December 31, 1999..........   4,937,320        494     17,594,371     (9,906,440)     7,688,425

Warrants issued in connection
  with debentures...................         -          -        1,067,602            -        1,067,602
Warrants issued for services........         -          -          380,943            -          380,943
Conversion of debentures
  to common stock...................   1,581,891        159      1,538,275            -        1,538,434
Exercise warrants to purchase
  common stock......................     293,542         29        459,721            -          459,750
Exercise options to purchase
  common stock......................     559,875         56        603,634            -          603,690
Redemption of common stock..........     (31,250)        (3)       (62,679)           -          (62,682)
Common stock issued for services....   1,341,488        134        720,876            -          721,010
Options to purchase common
  stock issued for services.........         -          -          489,495            -          489,495
Common stock issued to
  employees.........................     723,000         72      1,323,668            -        1,323,740
Beneficial conversion feature
  of debentures.....................         -          -          712,996            -          712,996
Original issue discount written off
  upon redemption of debentures.....         -          -         (364,395)           -         (364,395)
Net loss for year ended
  December 31, 2000.................         -          -              -      (14,018,659)   (14,018,659)
                                     ------------  ---------  -------------  -------------  -------------
Balance, December 31, 2000..........   9,405,866  $     941  $  24,464,507  $ (23,925,099) $     540,349
                                     ============  =========  =============  =============  =============`

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

---

**AMERICAN CHAMPION ENTERTAINMENT, INC. CONSOLIDATED
STATEMENT OF CASH FLOWS**

`YEAR ENDED DECEMBER 31,
                                                        --------------------------
                                                            2000             1999
                                                        ------------  ------------
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss............................................ $(14,018,659) $ (6,398,328)
  Adjustments to reconcile net loss to net cash
    used for operating activities:
      Securities issued for services..................    2,915,202     2,939,816
      Non-cash charge for beneficial conversion
        feature of debentures.........................      712,996     1,233,684
      Conversion of debenture interest to
        common stock..................................       38,421        88,828
      Depreciation and amortization...................      125,588       540,724
      Redemption of debentures........................    2,078,391       638,202
      Amortization of original issue discount
        on long-term debt.............................      194,148        52,530
      Bad debts.......................................      905,807        15,075
      Amortization of loan fees & consulting fees.....      495,957            -
      Film cost reserve...............................    3,697,224            -
      Loss on investments.............................      246,403            -
(Increase) decrease in
    Accounts receivable...............................     (411,647)     (443,774)
    Prepaid expenses and other........................           -       (165,604)
    Inventory.........................................       (8,207)           -
  Increase (decrease) in
    Accounts payable and accrued expenses.............      412,285       (75,482)
    Deferred revenues.................................      (16,920)      (61,100)
                                                         ------------  ------------
      Net cash used for operating activities..........   (3,459,588)   (1,635,429)
                                                        ------------  ------------
CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of property and equipment..................       (8,129)       (8,243)
  Payments for film costs.............................     (125,148)   (2,621,904)
  Deposit related to acquisition......................           -       (203,110)
  Advances to stockholders............................      (33,617)           -
  Increase in notes receivable........................      (71,408)     (300,000)
  Payments received on notes receivable...............           -         10,534
  Investment in BA Networks...........................     (300,000)           -
  Sale of investments.................................       15,950            -
                                                        ------------  ------------
      Net cash used for investing activities..........     (417,327)   (3,122,723)
                                                        ------------  ------------
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from exercise of common stock options......      603,690       365,625
  Proceeds from exercise of warrants..................      459,750     1,092,139
  Redemption of common stock..........................      (62,683)           -
  Proceeds on loans from related parties..............       36,000       120,400
  Payments on loans from related parties..............      (84,100)     (173,337)
  Proceeds on notes payable...........................    3,085,750     5,114,089
  Payments on notes payable...........................     (188,697)   (1,724,448)
  Principal payments on capital leases................           -         (6,565)
                                                        ------------  ------------
      Net cash provided by financing activities.......    3,849,710     4,787,903
                                                        ------------  ------------
NET INCREASE IN CASH..................................      (27,205)        29,751

CASH, beginning of year...............................       32,514         2,763
                                                        ------------  ------------
CASH, end of year..................................... $      5,309  $     32,514
                                                        ============  ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
  Cash paid during the period for
    Interest.......................................... $     81,270  $     66,711
                                                        ============  ============

    Foreign and state income taxes.................... $        100  $      1,543
                                                        ============  ============
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
  AND FINANCING ACTIVITIES
    Long-term debt converted to equity................ $  1,135,605  $  3,731,110
                                                        ============  ============
    Beneficial conversion feature of debentures....... $    712,896  $  1,233,684
                                                        ============  ============
    Common stock warrants issued with debt............ $    799,736  $    349,680
                                                        ============  ============
    Common stock and warrants issued related
      to services..................................... $  2,425,707  $  2,939,816
                                                        ============  ============
    Options granted related to services............... $    489,495  $         -
                                                        ============  ============
    Common stock and warrants issued related
      to redemption of debentures..................... $  2,078,391  $    469,496
                                                        ============  ============`

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

---

**AMERICAN CHAMPION ENTERTAINMENT, INC. CONSOLIDATED
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000 AND 1999**

Note 1 - Nature of Operations and Summary of Significant Accounting Policies



Basis of Presentation and Consolidation - The consolidated financial statements include the accounts of American Champion Entertainment, Inc. (the "Company") and its wholly owned subsidiary, America's Best Karate ("ABK"), which owns
100% of American Champion Media, Inc. ("AC Media"), and American Champion Marketing ("AC Marketing"), which is a wholly owned subsidiary of AC Media. There was no activity in AC Marketing during 2000. All significant intercompany accounts and transactions
have been eliminated in consolidation.



Nature of Operations - AC Media focuses on operating and managing all media-related programs for the Company. These programs consist of production of educational television programs for children, which emphasize martial arts values
and fun.  ABK was involved in the operations of the Company's karate studios, which have been discontinued.



Acquisition - In September 2000, the Company entered into an agreement to acquire an 80% interest of Beijing Wisdom Net Technology, Co., Ltd. ("BA Networks"), located in Beijing, People's Republic of China.  BA Network is in the
business of computer and communication network deployment, apartment and office building security automation deployment and related consulting services.  The total purchase price paid to BA Networks, including 800,000 shares of the Company's common stock
was $450,000.  At December 31, 2000, BA Networks had not commenced the necessary procedures to change the legal status of BA Networks to a foreign invested enterprise or applied for the necessary PRC governmental approvals for the transfer of ownership.
On October 28, 2000, BA Networks signed a letter of intent with the Company to set up a Co-operative Joint Venture ("CJV") in China into which all BA Network's assets will be transferred.  The CJV will be owned 80% by the Company and 20% by BA Networks.
The establishment the CJV was approved by the Beijing Municipal Government on December 1, 2000 and the business license was granted on December 20, 2000.  Since the Company does not have control of BA Networks until the transfer of assets occurs, the
investment in BA Networks is being accounted for as a deposit under the cost method of accounting as of December 31, 2000 at the original purchase price of $450,000.  Upon completion of the transfer of assets the acquisition will be accounted for under
the purchase method of accounting. The operations of BA Networks are conducted exclusively in the People's Republic of China ("PRC").  It is at least reasonably possible that the activities of BA Networks, which are conducted in the People's Republic of
China, may be disrupted in the near term from factors outside the control of the Company such as from negative effects of economic and political forces.

The schedule below reflects unaudited proforma results of the Company and BA Networks as if the acquisition had take place at the beginning of 2000 and control was established at December 31, 2000.  In management's opinion, these
unaudited proforma amounts are not necessarily indicative of what results of operations might have been.



`YEAR ENDED DECEMBER 31, 2000
                                           ----------------------------
                                               (Unaudited)

Net sales..............................        $  6,018,000
                                               ============
Net loss...............................        $(13,552,000)
                                               ============
Net loss per diluted share.............        $     (1.85)
                                               ============`



Revenue Recognition - Revenue from films is recognized on delivery of each master. Film costs are amortized using the individual-film-forecast-computation method, which amortizes costs in the ratio that current gross revenues bear to
anticipated total gross revenues from all sources. The management of AC Media periodically reviews its estimates of future revenues for each master and if necessary a revision is made to amortization rates and a write down to net realizable value may
occur.  During the year ended December 31, 2000, management determined that based on the current licensing agreements in place with respect to films released, a reserve of $3,697,224 should be established.



Concentrations of Risk - Financial instruments which potentially subject the Company to concentrations of credit risk are cash and accounts receivable arising from its normal business activities. The Company places its cash with
financial institutions deemed by management to be of high credit quality. The amount on deposit in any one institution that exceeds federally insured limits is subject to credit risk.



Cash and Cash Equivalents - The Company considers certain
highly liquid instruments purchased with original maturities of three months or
less to be cash equivalents.



Property and Equipment - Property and equipment is stated
at cost. Depreciation for furniture and fixtures and certain equipment is
computed using the straight-line method over an estimated useful life of five
years. Leasehold improvements are amortized using the straight-line method over
the term of the respective leases.



Film Costs - Film costs consist of the capitalized costs
related to the production of original film masters for videos and television
programs. The net film costs are presented on the balance sheet at the net
realizable value for each master. During 2000 the Company established a reserve
against the capitalized film costs to reduce the carrying amount to the
estimated net realizable value.



Other Assets - Other assets for 1999 consists of a deposit
for the acquisition of Great Wall. The acquisition did not go through and the
deposit was reclassified to note receivable. At December 31, 2000, the total
amount of $203,110 was written down to $81,244.



Fair Values of Financial Instruments - The carrying value
of cash, receivables, accounts payable and short-term borrowings approximate
fair value due to the short maturity of these instruments. The carrying values of long-term obligations approximate fair value since the interest rates either
fluctuate with the lending banks' prime rates or approximate market rate. None
of the financial instruments are held for trading purposes.



Basic Loss Per Share - Basic loss per share is based on the
weighted average outstanding shares issued. Because the Company has a net loss,
the common stock equivalents would have an anti-dilutive effect on earnings per
share. Accordingly, basic earnings per share and diluted earnings per share are
the same.



Income Taxes - Income taxes are accounted for using an
asset and liability approach, which requires the recognition of deferred tax
assets and liabilities for the expected future tax consequences of temporary
differences between financial statement and tax basis of assets and liabilities
at the applicable enacted tax rates. Generally accepted accounting principles
require a valuation allowance against deferred tax assets if, based on the
weight of available evidence, it is more likely than not that some or all of the
deferred tax assets will not be realized. The Company and its Subsidiaries file a consolidated tax return.



Securities to be Issued - Securities to be issued
represents the securities to be issued in connection with the induced conversion
of the debentures discussed in Note 17. The securities related to additional
shares to be issued as a result of modification of the conversion terms and
other shares and securities issued to others in connection with this
transaction. The related conversion expense is included in the accompanying
statement of operations as "Interest - Debenture conversion expense". The
balance sheet account also includes shares of common stock to be issued in
connection with the acquisition of BA Networks.

Beneficial Conversion Feature of Debentures - The
beneficial conversion feature of debentures relates to the accounting under
Emerging Issues Task Force Consensus 98-5. Under this standard the Company is
required to record a charge as interest expense when the conversion terms of
convertible debentures provide for a discount from the fair market value of the
stock when computing shares to be received by the debenture holders when the
debentures are converted to common stock.



Reclassifications - Certain reclassifications have been
made to the 1999 amounts to conform to the current presentation.



Presentation - Management believes utilizing a classified
balance sheet presentation is not appropriate, as the operating cycle of the
media-related segment of the Company is expected to exceed 12 months.
Accordingly, an unclassified presentation is utilized for the accompanying
balance sheet, which is an acceptable method under SFAS No. 53, "Financial
Reporting by Producers and Distributors of Motion Picture Films."



Use of Estimates, Risks and Uncertainties - The preparation
of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
amounts reported in the financial statements and accompanying notes. Actual
results could differ from those estimates. Significant estimates used in these
financial statements include the recovery of film costs, which has a direct
relationship to the net realizable value of the related asset. It is at least
reasonably possible that management's estimate of revenue from films could
change in the near term, which could have a material adverse effect on the
Company's financial condition and results of operations.



Note 2 - Discontinued Operations



During 2000 the Company closed its last karate studio.
Accordingly, the operations related to the Company's karate studio operations
have been presented as discontinued operations in the accompanying financial
statements.

Note 3 - Property and Equipment



`2000          1999
                                                   ------------  ------------
Furniture and fixtures........................... $     62,206  $     60,448
Equipment........................................       70,429        70,429
Vehicles.........................................          -            -
Production equipment.............................      404,387       404,387
Leasehold improvement............................          -            -
                                                   ------------  ------------
                                                       537,022       535,264

Less accumulated depreciation and amortization...      310,475       222,315
                                                   ------------  ------------
                                                  $    226,547  $    312,949
                                                   ============  ============`

Depreciation expense was $94,531 and $75,673 for the years
ended December 31, 2000 and 1999, respectively.

Note 4 - Film Costs



Film costs consist of the capitalized costs related to the
production of videos and programs for television as follows:



`2000          1999
                                                  ------------  ------------
Television program
  The Adventures With Kanga Roddy, net of
    reserve of $3,537,259 at December 31, 2000.. $  4,665,557  $  8,077,669
Videos
  Montana Exercise Video, net of reserve of
    $148,253 at December 31, 2000...............           -        148,253
  Strong Mind Fit Body, net of reserve of
    $18,042 at December 31, 2000................           -         18,042
                                                  ------------  ------------
                                                    4,665,557     8,243,964

Less accumulated amortization                         715,557       690,831
                                                  ------------  ------------
                                                 $  3,950,000  $  7,553,133
                                                  ============  ============`

A reserve was established to reduce the capitalized film costs
ofThe Adventures With Kanga Roddyto its net realizable value at
December 31, 2000. Other investments in both Montana Exercise Video and the
videos of the Strong Mind Fit Body were fully reserved as management
believes these videos would not generate future revenues for the Company.



Note 5 - Notes Payable, Related Parties



The notes payable to related parties bear interest at 0% to 12%
and are unsecured. Substantially all amounts due have been repaid subsequent to
year-end.



Note 6 - Notes Payable



`2000          1999
                                                          -------       -------
  Debentures, interest at 7% due quarterly,
    unsecured and due September 30, 2002, net of
    original issue discount of $23,741.  Converted
    during 2000..................................... $         -   $    226,259

  Debentures, interest at 8% due quarterly,
    unsecured and due December 20, 2000, net of
    original issue discount of $154,897.
    Convertible to common stock at $1.75 per
    share...........................................      845,103            -

  Debentures, interest at 6% due quarterly,
    unsecured and due September 12, 2003, net
    of original issue discount of $374,287.
    Convertible to common stock at the lesser
    of 85% of the market price of the common
    stock on the date of conversion or $0.8766......      625,713            -

  Notes payable to individuals, interest at 0%
    to 12%, unsecured and due at various dates
    during 2000.....................................      113,500       170,000

  Drawings from a $40,000 bank business credit
    card line with interest at the banks prime
    rate plus 6.5%..................................       21,727        36,253

  Other.............................................           -         17,671
                                                      ------------  ------------
                                                     $  1,606,043  $    450,183
                                                      ============  ============`

Subsequent to year-end, the debentures of $845,103 and
$625,713, together with accrued interest, were converted to 13,717,045 shares of
common stock. The original terms of the debentures were modified. See Note 17
related to debenture conversion expense. The remaining notes payable are
substantially all due in 2001.





Note 7 - Income Taxes



Reconciliation of the federal statutory tax rate of 34% and
state tax rate of 8.8% to the recorded amounts are as follows:



`2000          1999
                                                     ------------  ------------
Federal tax benefit at statutory rates............. $ (4,400,000) $ (2,150,000)
State tax benefit at statutory rates...............   (1,200,000)     (550,000)
Non-deductible securities issued for services
   and beneficial conversion feature of debentures.    2,025,100     1,301,543
Increase in valuation allowance....................    3,595,000     1,400,000
                                                     ------------  ------------
                                                    $        100  $      1,246
                                                     ============  ============`

The Company has net operating loss (NOL) carry forwards for
federal and state income tax purposes of approximately $15,000,000, the benefits
of which expire in 2012 through 2020 for federal purposes and through 2005 for
state purposes. The NOL's created by the Company's subsidiaries prior to being
consolidated with the Company and the NOL's subsequently created as a
consolidated group, may have limitations related to the amount of usage by each
subsidiary or the consolidated group as described in the Internal Revenue Code.
In addition, because of changes in ownership of the Company, the utilization of
NOL's in any one-year will be limited by Section 382 of the Internal Revenue
Code. Significant components of the Company's deferred tax assets and
liabilities are as follows:



`2000          1999
                                                      ------------  ------------
DEFERRED TAX ASSETS
  NOL carryforward                                   $  4,500,000  $  2,600,000
  Deferred revenue                                             -          5,000
  Amortization of film costs                            1,700,000            -
  Valuation allowance                                  (6,170,000)   (2,575,000)
                                                      ------------  ------------
                                                           30,000        30,000
                                                      ------------  ------------
DEFERRED TAX LIABILITIES
  Depreciation                                             30,000        30,000
                                                      ------------  ------------
                                                           30,000        30,000
                                                      ------------  ------------
                                                     $         -   $         -
                                                      ============  ============`

Management believes that some of the excess NOL carry forwards
over temporary differences may be utilized in future periods. However, due to
the uncertainty of future taxable income and limitations related to Section 382
of the Internal Revenue Code, a valuation allowance for the net amount of the
deferred tax assets and liabilities has been recorded at December 31, 2000 and
1999.





Note 8 - Lease Commitments



The Company leases an office facility under operating lease
that expires in August. Future minimum lease payments under this operating lease
are as follows.

`2001...................................... $   71,500
2002......................................     73,700
2003......................................     75,900
2004......................................     51,600
Thereafter................................         -
                                            ----------
Total minimum lease payments.............. $  272,700
                                            ==========`

Note 9 - Commitments and Contingencies



In September 1996, the Company entered into an agreement with
the director of The Adventures With Kanga Roddy television program,
whereby the director would receive 2% in the distribution of net profits from
the TV broadcasting, syndication, and video sales of the first 13 episodes of
that program.



The Company has entered into a distribution agreement with
KTEH, the public broadcasting system ("PBS") station serving the San Jose,
California area, for the exclusive right to distribute the "The Adventures
with Kanga Roddy" series throughout the United States. Under the terms of
the Distribution Agreement, the Company will receive $430,000, which is based on
delivery of 13 episodes to KTEH. This amount was recognized in revenue in prior
years. KTEH agreed to purchase an additional 26 episodes and 2 one-hour specials
for approximately $900,000. The Company recognized revenue of $433,000 during
1999 under this agreement. No revenue pursuant to these agreements was
recognized during 2000. The agreement expires April 2001.



During 1998, the Company entered into a non-exclusive toy
licensing agreement with Timeless Toys with respect to the "The Adventures
with Kanga Roddy"television program. Under the agreement, the Company is
entitled to an 8% royalty. The agreement expires in January 2001.



On December 27, 2000, the Company entered into a worldwide
distribution agreement with respect to "The Adventures with Kanga Roddy"television program with World Channel, Inc.. Under the agreement, World
Channel will have the exclusive rights for exhibition, distribution, process and
reproduction and all commercial exploitation of the program for a period of five
years. The agreement requires World Channel to make five annual installments of
$600,000 on or before the end of each of the years 2001 through 2005.



Note 10 - Related Party Transactions



During 2000 and 1999, the Company paid $5,000 and $2,500,
respectively, to two stockholders for story lines and scripts for the production
of the television series "The Adventures with Kanga Roddy."



Loan receivable from related parties are unsecured and due on
demand.



Note 11 - New Authoritative Pronouncements



During 2000 Statement of Position ("SOP") 00-2, Accounting by
Producers or Distributors of Films, was issued. This new standard replaces
Statement of Financial Accounting Standards No. 53, Financial Reporting by
Producers and Distributors of Motion Picture Films. SOP 00-2 is effective for
years beginning after December 15, 2000. Management does not expect the adoption
of this new standard to have a material effect on the Company's financial
statements.



Note 12 - Industry Segments

Television and videos reflect the activities related to the development and production of educational television programs and fitness videos. The corporate segment includes $400,000 of sporting events sponsorship fees for 2000.  The
balance of corporate revenues consists primarily of interest income.



The relative contributions to net sales, income from operations
and identifiable assets of the Company's industry segments for the years ended
December 31, 2000 and 1999 are as follows:



`2000          1999
                                                            ------------  ------------
Net Sales [1]:
  Videos and Television................................... $    154,520  $    517,995
  Corporate...............................................      413,417        64,657
                                                            ------------  ------------
                                                           $    567,711  $    582,652
                                                            ============  ============
Depreciation and Amortization:
  Videos and Television................................... $    121,894  $    539,172
                                                            ============  ============
Capital Expenditures
  Videos and Television................................... $      5,519  $      8,243
                                                            ============  ============
Operating income (loss)
  Videos and Television................................... $ (5,597,010) $ (1,367,878)
  Corporate...............................................   (8,310,791)   (4,848,745)
                                                            ------------  ------------
                                                           $(13,907,801) $ (6,215,378)
                                                            ============  ============`

[1] There were no sales between industry segments.



`2000          1999
                                                            ------------  ------------
Identifiable Assets:
  Videos and Television................................... $  4,341,082  $  8,329,256
  Corporate...............................................      704,237       957,194
                                                            ------------  ------------
                                                           $  5,045,319  $  9,286,450
Geographic Areas                                            ============  ============
  Net Sales
     United States........................................ $    567,711  $    582,652
     Foreign Countries....................................          -            -
                                                            ------------  ------------
                                                           $    567,711  $    582,652
                                                            ============  ============
  Property
     United States........................................ $  5,045,319  $  9,286,450
     Foreign Countries....................................          -            -
                                                            ------------  ------------
                                                           $  5,045,319  $  9,286,450
                                                            ============  ============`

Note 13 - Employment Agreements



During 1997, the Company entered into employment agreements
with each of Mr. Chung, Mr. Chan, Mr. Berryessa, and Mr. Hutchins. Each
agreement has a term of five years except Mr. Hutchins, which is two years.
Pursuant to the agreements, the Company will pay to these individuals a base
salary of $150,000, $150,000, $105,000 and $75,000 per year, respectively. Each
agreement also provides for the following bonuses: (i) options to purchase
87,500, 87,500, 25,000 and 20,000 shares of Common Stock of the Company,
respectively, exercisable at 120% of the public Offering price of the Common
Stock of the Company upon consummation of the Offering ($6 per share) and (ii)
$200,000, $200,000, $100,000 and $100,000, respectively, if all of the Warrants
issued to the public in the Offering are exercised by the holders thereof within
the five-year (two-year for Mr. Hutchins) exercise period of such Warrants.
Additional options to purchase 20,000, 20,000, 15,000 and 10,000 shares of the
Company's Common Stock will be granted at the end of each twelve-month period
beginning July 1, 1998 at $6.5625 per share. The
executives are also entitled to certain fringe benefits. If any of these
individuals is terminated other than for cause, death or disability, the Company
is obligated to pay such executive an amount equal to his base salary then in
effect for the remaining term of the agreement. Mr. Berryessa and Mr. Hutchins
voluntarily left the Company in August 1999 and September 2000,
respectively.





Note 14 - Stock Plans



The Stock Plan was adopted by the Board of Directors and
stockholders of the Company during 1997. Subsequently, the shares available
under the plan were increased from 200,000 to 4,000,000. The Plan provides for
the grant of stock options, stock appreciation rights ("SARs") and other stock
awards to employees of the Company or any consultant or advisor engaged by the
Company who renders bona fide services to the Company; provided, that such
services are not in connection with the offer or sale of securities in a capital
raising transaction. The Plan is administered by the Compensation Committee of
the Board of Directors (the "Committee"). Stock options may be granted by the
Committee on such terms, including vesting and payment forms, as it deems
appropriate in its discretion; provided, that no option may be exercised later
than ten years after its grant, and the purchase price for incentive stock
options and non-qualified stock options shall not be less than 100% and 85% of
the fair market value of the Common Stock at the time of grant,
respectively.



Unless terminated by the Board of Directors, the Plan continues
until December 2007. The Plan provides for the automatic grant to each of the
Company's non-employee directors of (i) an option to purchase 1,250 shares of
Common Stock on the date of such director's initial election or appointment to
the Board of Directors (the "Initial Grant") and (ii) an option to purchase 500
shares of Common Stock on each anniversary thereof on which the director remains
on the Board of Directors (the "Annual Grant"). The options will have an
exercise price of 100% of the fair market value of the Common Stock on the date
of grant and have a 10-year term.





Note 15 - Common Stock



The Company also issued 1,035,000 and 652,985 warrants in
connection with the debentures issued during 2000 and 1999, respectively. The
Company received no proceeds related to these warrants. The value of these
warrants has been accounted for as original issue discount (OID). The OID is
being amortized against the related debt. The Company has also issued 210,000
and 2,374,167 warrants during 2000 and 1999, respectively, as consideration for
services provided to the Company. These warrants were valued at $380,943 and
$1,329,593, respectively, using the Black-Scholes option pricing model. At
December 31, 2000 and 1999, included in other assets is $0 and $215,000,
respectively, related to unamortized costs of consulting agreements. During
1999, the Company also issued 175,000 warrants to redeem debentures. The
Company, with the consent of the stockholders, affected a 1 for 4
reverse split of its common stock during 2000. All holders of the Company stock
received one share of stock for every four shares held on the effective date of
the reverse split. Shares for all years have been adjusted to reflect the
split.





Note 16 - Stock Options



The Company applies the intrinsic value based method prescribed
by Accounting Principals Board Opinion No. 25 "Accounting for Stock Issued to
Employees," in accounting for employee stock options and non-employee directors.
Accordingly, compensation expense is recognized only when options are granted
with a discounted exercise price. Any such compensation expense is recognized
ratably over the associated service period, which is generally the vesting
term.



Stock options granted to non-employees for services provided to
the Company are accounted for under Statement of Financial Accounting Standards
No. 123 (SFAS 123), "Accounting for Stock-Based Compensation." The Company
accounted for 597,000 and 1,109,834 options under this method with a value of
$489,495 and $393,050 during 2000 and 1999, respectively.



Pro forma net earnings and earnings per share information, as
required by SFAS 123, has been determined as if the Company had accounted for
employee stock options under SFAS 123's fair value method. The fair value of
these options was estimated at grant date using a Black-Scholes option pricing
model with the following weighted average assumptions for fiscal 2000 and 1999,
respectively: risk free interest rate of 5.50% and 5.00%; dividend yield of 0%
for both years; expected option life of 7.5 and 7 years; and volatility of 192%
and 140%.



For purposes of pro forma disclosures, the estimated fair value
of the options is amortized to expense over the one-year average vesting period
of the options. The Company's pro forma net loss for the year ended December 31,
2000 and 1999, respectively, was $(15,996,000) and $(8,000,000) and pro forma
net loss per share was $(2.18) and $(3.36).



`Shares of Common Stock
                                ----------------------------------------------
                                 Available For
                                   Grant of         Options
                                Option / Award     Under plan      Warrants
                                ---------------  --------------  -------------
Balance, December 31, 1998....              -          200,000        469,875
  Authorized..................       1,750,000              -              -
  Granted.....................      (1,224,583)      1,224,583        800,538
  Exercised or Lapsed.........              -         (241,916)      (346,250)
                                ---------------  --------------  -------------
Balance, December 31, 1999....         525,417       1,182,667        924,163
  Authorized..................       1,500,000              -              -
  Granted.....................      (1,610,500)      1,610,500      1,035,000
  Exercised or Lapsed.........              -         (677,750)      (293,542)
                                ---------------  --------------  -------------
Balance, December 31, 2000....         414,917       2,115,417      1,665,621
                                ===============  ==============  =============`

`Options and Warrants
              Options and Warrants Outstanding        Exercisable
            ------------------------------------ -----------------------
                          Weighted
                          Average      Weighted                Weighted
                         Remaining     Average                 Average
              Number    Contractual    Exercise    Number      Exercise
            Outstanding     Life        Price    Exercisable    Price
            ----------- ------------  ---------- -----------  ----------
1999
-----------
Options....  1,182,667          8.5  $     5.80     734,604  $     7.04
Warrants...    924,163          2.6       16.60     899,163       16.96

2000
-----------
Options....  2,115,417          7.0        2.95   1,562,292        3.31
Warrants...  1,665,621          2.5  $     9.96   1,665,621  $     9.96`

Note 17 -Debenture Conversion



On December 27, 2000, the Company entered into an agreement
with Holley Holding (U.S.A.) Ltd. (Holley), in which Holley agreed to acquire
all outstanding debentures of the Company from the debenture holders. They also
agreed that they would convert the debentures to common stock upon acquisition
from the debenture holders. The debentures were purchased from the debenture
holders and the debentures were converted to common stock on January 4, 2001. As
part of the agreement, the conversion terms of the debentures were changed and
the debentures were then converted to 13,717,045 shares of common stock. In
connection with the agreement, the Company is obligated to issue 2,404,960
shares of stock to the prior debenture holders and certain other individuals.
The Company has also agreed to issue 2,325,000 warrants to purchase common stock
of the Company at a price of $0.16 per share. The Company also issued warrants
and options to various parties related to the conversion. The value of the
additional shares issued as a result of the change in conversion terms and
securities issued in connection with the transaction was $2,078,391. This amount
has been accrued and charged to expense as of December 31, 2000, the period in
which the parties agreed to all terms of the transaction. The unaudited proforma
presentation on the balance sheet of the Company presents the financial position
of the Company as if this transaction was completed as of December 31, 2000.



Note 18 -Subsequent Events



In connection with the debenture conversion described in Note
17, Holley also agreed to contribute additional capital of $1,000,000 in
exchange for 6,250,000 shares of the Company's common stock. The Company also
entered into an agreement with an officer of Holley in which this person agreed
to contribute additional capital of $1,000,000 in exchange for 6,250,000 shares
of the Company's common stock.



Subsequent to year-end the Company entered into an agreement
with The Holley Group of China ("Holley") to form a new subsidiary called "Power
Automation Corporation". The terms of the agreement call for a joint investment
from both ACEI and the Holley Group of over $800,000 and will give the Company
62.5% ownership of the newly formed Power Automation Corp. The Company also
entered into an agreement for the development and delivery of up to 1,000,000
units of electronic, three-phase, multi function meters to Holley Science &
Technology of Zhejiang China (``Holley Science'') over the next five years. The
agreement calls for 100,000 units to be delivered within 2001 at an average sale
price of $255 per unit.



Subsequent to year-end the Company increased the authorized
shares of common stock from 40,000,000 to 100,000,000



Subsequent to year-end the Company was notified by NASDAQ that
the common stock of the Company failed to meet the eligibility requirements to
continue to be listed on the NASDAQ Small Cap Market. Effective April 3, 2001,
the Company's stock began trading on the Over The Counter ("OTC") Bulletin
Board.



Note 19 -Going Concern



Management's plans and the ongoing operations of the Company
are expected to require working capital during 2001. In addition the Company has
experienced continuing losses from operations. These factors cause substantial
doubt about the ability of the Company to continue as a going concern.
Management will be required to obtain additional capital to fund the ongoing
operations during the remainder of 2001. Management expects to raise additional
capital through the stock purchase agreements with Holley.

The accompanying financial statements have been prepared on a
going concern basis, which contemplates the realization of assets and
satisfaction of liabilities and commitments in the normal course of operations.
The continuation of the Company as a going concern is dependent upon the success
of obtaining additional capital and, thereafter, on attaining profitability.
There can be no assurance that management will be successful in the
implementation of its plan. The financial statements do not include any
adjustments in the event the Company is unable to continue as a going
concern.

---

INDEX TO EXHIBITS

|Exhibit No. | Exhibit Description                                                                                                                                                                                                                                                          
|----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.1(1)      | Form of Underwriting Agreement                                                                                                                                                                                                                                               
|3.1(1)      | Amended and Restated Certificate of Incorporation dated April                                                                                                                                                                                                                
|3.11(5)     | Amended and Restated Certificate of Incorporation dated June
      4                                                                                                                                                                                                         
|3.2(1)      | Bylaws                                                                                                                                                                                                                                                                       
|4.1(1)      | Specimen stock certificate                                                                                                                                                                                                                                                   
|4.2(1)      | Warrant Agreement with form of Warrant                                                                                                                                                                                                                                       
|4.3(1)      | Form of Underwriters' Warrant                                                                                                                                                                                                                                                
|4.41(4)     | Securities Purchase Agreement dated July 2, 1998                                                                                                                                                                                                                             
|4.42(4)     | Form of Debenture dated July 2, 1998                                                                                                                                                                                                                                         
|4.43(4)     | Joint Escrow Instructions                                                                                                                                                                                                                                                    
|4.44(4)     | Registration Rights Agreement dated July 2, 1998                                                                                                                                                                                                                             
|4.45(4)     | Form of Warrant dated July 2, 1998                                                                                                                                                                                                                                           
|4.461(7)    | Securities Purchase Agreement dated January 19, 1999                                                                                                                                                                                                                         
|4.462(7)    | Form of Debenture dated January 19, 1999                                                                                                                                                                                                                                     
|4.463(7)    | Joint Escrow Instructions dated January 19, 1999                                                                                                                                                                                                                             
|4.464(7)    | Registration Rights Agreement dated January 19, 1999                                                                                                                                                                                                                         
|4.465(7)    | Form of Warrant dated January 19, 1999                                                                                                                                                                                                                                       
|4.471(9)    | Securities Purchase Agreement dated June 17, 1999                                                                                                                                                                                                                            
|4.472(9)    | Form of Debenture dated June 17, 1999                                                                                                                                                                                                                                        
|4.473(9)    | Joint Escrow Instructions dated June 17, 1999                                                                                                                                                                                                                                
|4.474(9)    | Registration Rights Agreement dated June 17, 1999                                                                                                                                                                                                                            
|4.475(9)    | Form of Warrants dated June 17, 1999                                                                                                                                                                                                                                         
|4.481(10)   | Securities Purchase Agreement dated September 24, 1999                                                                                                                                                                                                                       
|4.482(10)   | Form of Debenture dated September 24, 1999                                                                                                                                                                                                                                   
|4.483(10)   | Joint Escrow Instructions dated September 24, 1999                                                                                                                                                                                                                           
|4.484(10)   | Registration Rights Agreement dated September 24, 1999                                                                                                                                                                                                                       
|4.485(10)   | Form of Warrants dated September 24, 1999                                                                                                                                                                                                                                    
|4.491(16)   | Private Equity Line of Credit between Sibson Holdings, Ltd, and
      American Champion Entertainment, Inc.                                                                                                                                                                  
|4.492(16)   | Loan Agreement between American Champion Entertainment, Inc. the
      Lenders Signatory Hereto                                                                                                                                                                              
|5(1)        | Opinion of Sheppard, Mullin, Richter & Hampton LLP                                                                                                                                                                                                                           
|10.1(1)     | 1997 Stock Plan                                                                                                                                                                                                                                                              
|10.2(1)     | Form of Stock Option Agreement for 1997 Stock Plan                                                                                                                                                                                                                           
|10.3(1)     | 1997 Non-Employee Directors Stock Option Plan                                                                                                                                                                                                                                
|10.4(1)     | Form of Non-Employee Directors Stock Option Agreement                                                                                                                                                                                                                        
|10.8(1)     | Promissory Note dated December 15, 1994 made payable by Messrs. Chung
      and Chan and their wives in favor of Michael Triantos Inc. Money Purchase
      and Profit Sharing Pension Plans Trust                                                                           
|10.9(1)     | Employment Agreement between the Company and George Chung dated March
      4, 1997, effective upon the closing date of the Offering                                                                                                                                         
|10.10(1)    | Employment Agreement between the Company and Anthony Chan dated March
      4, 1997, effective upon the closing date of the Offering                                                                                                                                         
|10.11(1)    | Employment Agreement between the Company and Don Berryessa dated March
      4, 1997, effective upon the closing date of the Offering                                                                                                                                        
|10.12(1)    | Employment Agreement between the Company, AC Media and Jan Hutchins
      dated March 4, 1997, effective upon the closing date of the Offering                                                                                                                               
|10.13(1)    | Convertible Loan Agreement dated as of May 5, 1995, between ABK and
      David Y. Lei                                                                                                                                                                                       
|10.15(1)    | Amended Deal Memo between ABK and Rick Fichter dated February 23, 1997,
      with respect to payments related to the Kanga Roddy
Series                                                                                                                                     
|10.17(1)    | Form of Indemnification Agreement                                                                                                                                                                                                                                            
|10.19(1)    | Letter dated October 29, 1996 from the Company to Tim Pettitt regarding
      certain payments to the Montanas                                                                                                                                                               
|10.20(1)    | Distribution Agreement dated June 18, 1996 by and between America's
      Best Karate and InteliQuest                                                                                                                                                                        
|10.21(1)    | Distribution Agreement, dated May 6, 1997, by and between KTEH San Jose
      Public Television and American Champion Media, Inc.                                                                                                                                            
|10.22(1)    | Letter Agreement, dated June 1997, between AC Media, Inc. and Sega of
      America, Inc.                                                                                                                                                                                    
|10.23(1)    | Business Loan Agreement between America's Best Karate and Karen
      Shen                                                                                                                                                                                                   
|10.24(1)    | Business Loan Agreement between America's Best Karate and Thomas J.
      Woo                                                                                                                                                                                                
|10.25(2)    | Licensing Agent Agreement, dated July 25, 1997, between American
      Champion Media, Inc. and Sega of America, Inc.                                                                                                                                                        
|10.26(3)    | Continuous Distribution Agreement dated April 20, 1998 between KTEH,
      San Jose and American Champion Media, Inc.                                                                                                                                                        
|10.27(3)    | Sponsorship Agreement dated April 29, 1998 between Sara Lee Corporation
      and American Champion Media, Inc.                                                                                                                                                              
|10.28(3)    | Engagement Agreement dated April 24, 1998 between JW Charles and
      American Champion Entertainment, Inc.                                                                                                                                                                 
|10.29(5)    | Amendment to Employment Agreement with George Chung, dated July
      1998                                                                                                                                                                                                   
|10.30(5)    | Amendment to Employment Agreement with Anthony Chan, dated July
      1998                                                                                                                                                                                                   
|10.31(5)    | Amendment to Employment Agreement with Don Berryessa, dated July
      1998                                                                                                                                                                                                  
|10.32(5)    | Amendment to Employment Agreement with Jan Hutchins, dated July
      1998                                                                                                                                                                                                   
|10.33(5)    | Amendment to Employment Agreement with Mae Lyn Woo, dated July
      1998                                                                                                                                                                                                    
|10.34(5)    | Amendment to Employment Agreement with Kristen Simpson, dated
      1998                                                                                                                                                                                                     
|10.35(6)    | International Distribution Agreement with Portfolio Entertainment dated
      August 19, 1998                                                                                                                                                                                
|10.36(6)    | Video Distribution Agreement for the Kanga Roddy Series with Kreative
      Video Products dated August 19, 1998                                                                                                                                                             
|10.37(6)    | Video Distribution Agreement for the Montana Exercise Video with
      Kreative Video Products dated August 21, 1998                                                                                                                                                         
|10.38(8)    | Consultant Agreement between Olympia Partners, LLC, Dalton Kent
      Securities Group, Inc. and American Champion Entertainment,
    Inc                                                                                                                                    
|10.39(8)    | Merchant Licensing Agreement between Timeless Toys and American
      Champion Media, Inc.                                                                                                                                                                                   
|10.40(8)    | Loan Agreement between Olympia Partners and American Champion
      Entertainment, Inc.                                                                                                                                                                                      
|10.41(8)    | SEGA Agreement termination letter.                                                                                                                                                                                                                                           
|10.42(8)    | Consultant Agreement between American Champion Entertainment, and
      Trademark Management                                                                                                                                                                                 
|10.43(11)   | Termination of Kreative Video Products, Inc.                                                                                                                                                                                                                                 
|10.44(11)   | Video Products distribution agreement between Fast Forward Marketing,
      Inc. and American Champion Entertainment. Inc.                                                                                                                                                   
|10.45(11)   | Consultant Agreement between Chris Scoggin, LTD. And American Champion
      Entertainment, Inc.                                                                                                                                                                             
|10.46(12)   | Consulting Services Agreement between Consor, Inc., and American
      Champion Marketing Group, Inc.                                                                                                                                                                        
|10.47(12)   | Licensing Agreement between Brighter Child Interactive, LLC and
      American Champion Media, Inc.                                                                                                                                                                          
|10.48(13)   | Licensing Agreement between Prestige Toys and American Champion
      Marketing Group, Inc.                                                                                                                                                                                  
|10.49(13)   | Stock Exchange Agreement between Great Wall International Sports Media
      Company and American Champion Entertainment, Inc.                                                                                                                                               
|10.50(14)   | Licensing Agent Agreement between Funschool.com Corporation and
      American Champion Marketing Group, Inc. (portions deleted pursuant to
      request for confidential treatment                                                                                         
|10.51(14)   | Licensing Agent Agreement between Mainframe Entertainment, In American
      Champion Marketing Group, Inc. (portions deleted pursuant to request for
      confidential treatment                                                                                           
|10.52(14)   | Stock Exchange Agreement between Beijing Wisdom Network Technology
      Company, Ltd. and American Champion Entertainment, Inc.                                                                                                                                             
|10.521      | Amendment No.1 to Stock Exchange Agreement with Beijing Wisdom Network
      Technology Company, Ltd.                                                                                                                                                                        
|10.53(15)   | Sponsorship Agreement between Shun Li De Commerce and Trading American
      Champion Media, Inc. for sponsorship of boxing event                                                                                                                                            
|10.54(15)   | Deal Memorandum between Irwin Toy Limited and American Champion
      Marketing Group, Inc. for the licensing of characters from the program
      "ReBoot" produced by Mainframe Entertainment, Inc. (portions deleted
      pursuant to request for confidential treatment)
|10.55(17)   | Licensing Agreement between ES Originals and American Champion
      Marketing Group                                                                                                                                                                                         
|10.56(17)   | Licensing Agreement between Romar International and American Champion
      Marketing Group                                                                                                                                                                                  
|10.57(17)   | Licensing Agreement between Cutting Edge Industries and American
      Champion Marketing Group                                                                                                                                                                              
|10.58(18)   | Agreement for Purchase of Convertible Debt                                                                                                                                                                                                                                   
|10.59(18)   | Stock Purchase Agreement with Holley Holding (U.S.A.
  Ltd.)                                                                                                                                                                                                                 
|10.60(18)   | Licensing Agreement with World Channel, Inc.                                                                                                                                                                                                                                 
|10.601      | Amendment No.1 to Licensing Agreement with World Channel,
      Inc.                                                                                                                                                                                                         
|10.602      | Amendment No.2 to Licensing Agreement with World Channel,
      Inc.                                                                                                                                                                                                         
|10.61       | Stock Purchase Agreement with Mr. Yuanhao Li                                                                                                                                                                                                                                 
|10.611      | Promissory Note for Stock Purchase Agreement with Mr. Yuanhao
      Li                                                                                                                                                                                                       
|21.1(1)     | Subsidiaries of the Registrant                                                                                                                                                                                                                                               
|23.1        | Consent of Independent Auditors                                                                                                                                                                                                                                              



_____________

(1) Filed as an exhibit with the registrant's Form SB-2 filed with the SEC on
March 21, 1997 or Form SB-2/A filed March 3 and June 20, and incorporated by
reference herein.

(2) Filed as an exhibit with the registrant's Form 10-KSB filed with the SEC
on March 30, 1998 and incorporated by reference herein.

(3) Filed as an exhibit with the registrant's Form 10-QSB filed with the SEC
on May 15, 1998 and incorporated by reference herein.

(4) Filed as an exhibit with the registrant's Form S-3 filed with the SEC On
August 3, 1998 and incorporated by reference herein.

(5) Filed as an exhibit with the registrant's Form 10-QSB filed with the SEC
on August 7, 1998 and incorporated by reference herein.

(6) Filed as an exhibit with the registrant's Form 10-QSB filed with the SEC
on November 16, 1998 and incorporated by reference herein.

(7) Filed as an exhibit with the registrant's Form S-3 filed with the SEC On
Feburary 12, 1999 and incorporated by reference herein.

(8) Filed as an exhibit with the registrant's Form 10-KSB filed with the SEC
on March 31, 1999 and incorporated by reference herein.

(9) Filed as an exhibit with the registrant's Form S-3 filed with the SEC on
July 16, 1999 and incorporated by reference herein.

(10) Filed as an exhibit with the registrant's Form S-3 filed with the SEC on
November 5, 1999 and incorporated by reference herein

(11) Filed as an exhibit with the registrant's Form 10-QSB filed with the SEC
on August 16, 1999 and incorporated by reference herein.

(12) Filed as an exhibit with the registrant's Form 10-QSB filed with the SEC
on November 17, 1999 and incorporated by reference herein.

(13) Filed as an exhibit with the registrant's Form 10-KSB filed with the SEC
on March 30, 2000 and incorporated by reference herein.

(14) Filed as an exhibit with the registrant's Form 10-QSB filed with the SEC
on May 15, 2000 and incorporated by reference herein.

(15) Filed as an exhibit with the registrant's Form 10-QSB filed with the SEC
on August 14, 2000 and incorporated by reference herein.

(16) Filed as an exhibit with the registrant's Form SB-2A filed with the SEC
on October 20, 2000 and incorporated by reference herein.

(17) Filed as an exhibit with the registrant's Form 10-QSB filed with the SEC
on November 14, 2000 and incorporated by reference herein.

(18) Filed as an exhibit with the registrant's Form S-8 filed with the SEC on
January 22, 2001 and incorporated by reference
herein.

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