SECURITIES AND EXCHANGE COMMISSION
                         Washington, DC 20549
                             Form 10-KSB/A

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

                For the Fiscal Year Ended: December 31, 1998

[  ] TRANSACTION 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 (IRS Employer
             incorporation or organization)  Identification No.)

           1694 The Alameda, Suite 100, San Jose, California  95126
          (Address of principal executive offices)        (Zip code)

Registrant's telephone number, including area code: (408) 288-8199
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:

    Title of each class            Name of each exchange on which registered
Common Stock, $.0001 par value           The Nasdaq SmallCap Market

Warrants to Purchase Common Stock

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

   The Registrant hereby amends and restates in their entirety the following
items, financial statements, exhibits or other portions of its Annual Report on
Form 10-KSB for the fiscal year ended December 31, 1998 as set forth in the
pages attached hereto:

             Part II, Item 6 and 7
             Exhibit 23.1 and 27.1

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

   American Champion Entertainment, Inc. (the "Company"), by this Form
10-KSB/A, Amendment No.1 to Form 10-KSB, hereby: (1) amends and restates in its
entirety Item 6 of Part II of the 1998 Annual Report; (2) amends and restates
in its entirety Item 7 of the 1998 Annual Report; (3) amends and restates in
their entirety Exhibit 23.1; and (4) amends and restates in their entirety
Exhibit 27.1.  Each such amended Item of, and Exhibit to, the 1998 Annual
Report is attached to this Amendment No.1.

EXPLANATORY NOTE TO AMENDMENT NO. 1 TO 1998 ANNUAL REPORT ON FORM 10-KSB

This Form 10-KSB/A, Amendment No. 1 to Form 10-KSB (the "Amendment"), which
amends the 1998 Annual Report, includes the following changes: (i) Item 6,
"Management's Disscussion and Analysis or Plan of Operation" of Part II has
been amended with respect to the analysis of interest expense and results of
operations to discuss the effects of the non-cash charge to interest expense and
corresponding increase to paid in capital related to the beneficial conversion
feature of the convertible debentures, (ii) Item 7, "Financial Statements", of
Part II have been restated to reflect the non-cash charge to interest expense
and corresponding increase to paid in capital to account for the beneficial
conversion feature of the convertible debentures, (iii) a new Exhibit 23.1,
"Consent of Independent Accounts,"; and (iv) a new Exhibit 27.1, "Financial
Data Schedule".

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:  $736,701

Aggregate market value of common stock held by nonaffiliates at March 18, 1999:
 $8,856,880 Number of shares of common stock outstanding at March 18, 1999:
7,269,050

Documents Incorporated by Reference:                 Location in Form 10-K
Portions of the Proxy Statement for                         Part III
1999 Annual Meeting of Shareholders


Transitional Small Business Disclosure Format (check one):
Yes _____       No ___x___

<PAGE>

                               TABLE OF CONTENTS

Part I

Item 1   Description of Business
Item 2   Description of Property
Item 3   Legal Proceedings
Item 4   Submission of Matters to a Vote of Security Holders


Part II

Item 5   Market for Common Equity and Related Stockholder Matters
Item 6   Management's Discussion and Analysis or Plan of Operation
Item 7   Financial Statements
Item 8   Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure


Part III

Item 9   Directors and Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act.
Item 10  Executive Compensation
Item 11  Security Ownership of Certain Beneficial Owners and Management
Item 12  Certain Relationships and Related Transactions
Item 13  Exhibits and Reports on Form 8-K

<PAGE>

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, America's Best
Karate, a California corporation ("ABK"), formed in June 1991. ABK wholly
owns American Champion Media, Inc., a Delaware corporation ("AC  Media"),
formed in February 1997.  Unless indicated otherwise, references to the
"Company" herein shall include ABK and AC Media.

AC Media is a media production and marketing company.  Through AC Media, 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 the Kanga Roddy Series, and (iii) the
development, production and marketing of various audio tapes, video tapes and
workbooks that  specialize in fitness information.  ABK owns, manages and
operates a karate school located in the  San Francisco Bay Area which provides
karate instruction to students of all ages and skill  levels.

"Adventures With Kanga Roddy"

The Company has developed and produced twenty (20) 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 which feature violence,  Kanga Roddy never fights
because he understands that conflict can always be resolved through
traditional martial arts values such as knowledge, compassion, humility,
discipline, respect and  an 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 causes 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 assistance of his pet bookworm, Shakespeare,  magically
transport 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 the 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  grants 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 the 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 the 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 February 1999, the Company has completed
and delivered 7 half-hour episodes to KTEH.

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.  As a result,  the Kanga Roddy Series will now be available
for airing on over 300 PBS stations nationwide  commencing April 4, 1999.

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.

The Company's strategy includes pursuing licensing 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 manufacturers for specific products.  There is no  assurance, however,
that the Company will be able to successfully retain or protect its rights
through registration, or to license its properties.  The Company also hopes to
realize revenues  through the distribution of the Kanga Roddy Series in the
home video market, although 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.

In July 1997, the Company and SEGA of America, Inc. ("SEGA") entered into a
Licensing  Agent Agreement appointing SEGA as the Company's non-exclusive agent
for purposes of licensing  and merchandising the "Kanga Roddy" trademark brand
name characters and logo and home video  distribution of the Kanga Roddy
Series.  The agreement was subsequently canceled by the Company  in November
1998.  The Company exercised its rights under a clause in the agreement which
allowed  the Company to terminate the agreement in the event that key SEGA
licensing personnel left the  employ of SEGA.  Subsequently, the Company
engaged Joy Tashjian of Trademark Management as the  licensing consultant on a
monthly retainer of $4,000 plus 10% commission basis.  To date, the  Company
has signed one licensing contract with Timeless Toys for the manufacturing and
marketing  of premium plush toys based on the characters from the Company's
Kanga Roddy Series. Fitness Products

The Company develops, produces and markets various video tapes, audio tapes and
workbooks  that specialize in fitness information and education ("Fitness
Products").  The Company's Fitness  Product, entitled the "MONTANA EXERCISE
VIDEO," is a cardio kick-boxing video starring former  superstar quarterback
Joe Montana and his wife Jennifer, both of whom have trained at the  Company's
karate schools.

In August 1998, the Company signed non-exclusive contracts with Kreative Video
Products,  Inc. of Chatsworth, California, for the domestic distribution of the
Kanga Roddy series and the  Montana Exercise Video.  The Kanga Roddy Series was
released in the fourth quarter of 1998 while  the Montana Exercise Video is
slated for release in Spring 1999.

Karate Studio

The Company used to manage and operate a chain of company-owned karate studios
in the San  Francisco Bay Area under the name "America's Best Karate" which, as
of December 31, 1998, has  been reduced from as many as ten locations to only
one remaining location.  The Company plans to  cease the operation of the
remaining location once the lease for the location expires in January  2000.

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 audience segments 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.

The Company's Fitness Products compete with many other products aimed at the
fitness and  weight loss markets, including other video tapes, audio tapes and
workbooks, and various types of  exercise machinery.  Many of these competing
products are sponsored or endorsed by celebrities  and sports figures, and many
are marketed by companies having significantly greater resources  than the
Company.

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.

Employees

As of February 18, 1999, the Company employed a total of 20 employees on a
full-time  basis, 10 of which are management and 10 of which are clerical, and
4 employees on a part-time  basis.  The Company also contracts with additional
employees for the production of the Kanga  Roddy Series through the American
Federation of Television and Radio Artists.



Item 2.         Description of Property

The Company leases approximately 3,000 square feet of space for its San Jose
headquarters  pursuant to a two year lease expiring July 2000 at approximately
$10,000 per month.  The Company  also leases approximately 3,000 square feet of
space for its one karate studio in San Leandro  pursuant to a lease expiring in
January 2000 at approximately $5,000 per month.  The Company  believes that its
facilities are adequate for its present purposes.


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 a 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 rights to such intellectual  property.  In February 1999, Mr.
Jeffreys and the Company have agreed to settle the lawsuit and  counterclaim
for $36,000 which the Company will pay Mr. Jeffreys in twelve monthly payments
of  $3,000 each beginning in March of 1999.

With the exception of the foregoing, no lawsuits or proceedings are currently
pending  against the Company.




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

A Special Meeting of Stockholders was held on September 23, 1998.  The purpose
of the meeting was to ratify the Securities Purchase Agreement dated as of July
2, 1998 by and among the Company, The Endeavour Capital fund S.A. and Amro
International S.A. and the transactions contemplated thereby, including but not
limited to, the possible issuance of shares of the Company's Common Stock equal
to 20% or more of the total outstanding shares of the Company's Common Stock.
The result of voting was as follows:

       For         %          Against       Abstain        Not Voted
    2,057,668    53.69         9,500         10,600        1,754,577


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  SmallCap Market System under the symbols "ACEI" and "ACEIW,"
respectively, on August 1, 1997.   The range of high and low reported closing
sales prices for the Common Stock as reported by  Nasdaq SmallCap Market since
the commencement of trading were as follows:

Common Stock:


                                                       High         Low

       1997

   Third Quarter                                      $5.50        $4.13

   Fourth Quarter                                     $8.00        $4.81


       1998

   First Quarter                                      $9.63        $7.75

   Second Quarter                                     $9.56        $6.56

   Third Quarter                                      $7.00        $3.50

   Fourth Quarter                                     $3.63        $0.97


       1999

   First Quarter (through March 18,  1999)            $3.00        $1.06


The prices set forth above reflect inter dealer prices, without retail mark-up,
mark-down  or commission and may not necessarily represent actual transactions.

As of March 25, 1999, shares of Common Stock were held by approximately 1400
stockholders of record, as reported by ADP Proxy Services.

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
two-year period ended  December 31, 1998.  This discussion should be read 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  subsequent events or circumstances.
Readers are also encouraged to review the Company's publicly  available filings
with the Securities and Exchange Commission.

Results of Operations

The Company was formed in February 1997 and has a wholly owned subsidiary, ABK
which owns  and operates karate studios.  ABK wholly owns AC Media which is a
media production and marketing  company.

     Revenues.  During the year ended December 31, 1998, the Company's total
revenue decreased  to $736,701, a decrease of $442,852 or 37.5% as compared to
total revenue for the year ended  December 31, 1997 of $1,179,553.

The Company's revenues from the operation of its karate studios for the year
ended  December 31, 1998 was $324,730, a decrease of 61.9% from revenues of
$853,335 for the year ended  December 31, 1997.  The decrease is attributable
to the reduction in the number of karate studios  from five to one at the end
of 1998.  The Company plans to either close or sell the remaining  studio when
the lease for that location expires in January 2000.

For the year ended December 31, 1998 the Company recognized $343,877 in film
income, an  increase of $128,877 or 59.9% from film income of $215,000 for the
year ended December 31, 1997.  Film income was derived from the delivery of the
six episodes of the television show "Adventures  with Kanga Roddy" to KTEH
pursuant to its Distribution Agreement with KTEH, and also from the  Sara Lee
Corporation which was a sponsor of the show.  See "Business."

Revenues from sale of accessories was $37,956 for the year ended December 31,
1998 as  compared to $67,823 for the year ended December 31, 1997.  The
decrease was due to the reduction  of karate studios from five to one by the
end of 1998.


The Company's interest income of $30,138 was earned from investment activities.


Costs and Expenses.

The Company recognized $177,732 in amortization of film cost, which  was
capitalized production costs for the television show "Adventures With Kanga
Roddy", for the  year ended December 31, 1998 as compared to $58,000 for 1997.

The Company's expenses for salaries and payroll taxes were $847,147 for 1998,
an increase  of $53,661 or 6.8% from $793,486 in 1997. Total selling, general
and administrative expenses was  $924,740 for 1998, an increase of $551,967 or
148% from $372,773 in 1997.  This increase was  primarily due to marketing and
promotion expenses related to the Company and its television show.

Interest expense was $679,402 for 1998, a increase of $568,718 or 513.8% from
$110,684 in  1997.  Included in intrest expense for 1998 is a non-cash charge
of $599,955 related to the beneficial conversion feature of the convertible
debentures issued within 1998.  The debentures are convertible to common stock
of the Company with the shares to be issued upon conversion based on 75% of the
fair value of the stock at the time of conversion.  Since the debt can be
converted at any time, the value of the discount as of the issuance date has
been charged to interest expense with a corresponding increase to additional
paid in capital.  The balance of interest expense for 1998 was primarily
attributed to interest bearing convertible  debentures the Company sold within
1998.  Rent expense was $308,007 for 1998, a decrease of  $74,921 or 19.6% from
$382,928 in 1997.  The decrease in rent expense was primarily attributable  to
the closure of karate studios within 1998 but partially offset by increased
rental expense for  the Company's administrative headquarters.

As a result of foregoing factors, the Company's net loss increased by $1,122,100
or 140.0%  from ($801,416) for the year ended December 31, 1997 to ($1,923,516)
for the year ended  December 31, 1998.  Net loss per share increased from
($0.25) in 1997 to ($0.48) in 1998, while  weighted average number of shares
outstanding increased from 3,155,257 shares in 1997 to  4,033,619 shares in
1998.

Liquidity and Capital Resources

Stockholders' equity decreased slightly to $3,905,203 at the end of 1998,
representing a  4.6% decrease from  1997. Cash decreased for the twelve months
ended December 31, 1998 by $1,792,894. Cash utilized  for operations for the
twelve months ended December 31, 1998 was ($413,956). Cash used for  investing
activities for the twelve months ended December 31, 1998 was ($3,345,060) and
was  primarily attributable to the cost of producing thirteen episodes of the
Kanga Roddy Series.   Cash from financing activities for the twelve months
ended December 31, 1998 was an increase of  $1,966,122 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.

Total long-term debt as of December 31, 1998 was $831,266 as compared to
$64,199 at  December 31, 1997.  The increase in long-term debt was attributable
to outstanding unconverted  convertible debentures at the end of 1998.  Loans
payable to related parties as of December 31,  1998 was $137,037 as compared to
$37,255 as of December 31, 1997.  In addition, deferred revenues  decreased
$465,500 or 85.6% from $543,520 at December 31, 1997 to $78,020 at December 31,
1998.   Deferred revenues are primarily pre-paid tuition for the karate studios
which cannot be  immediately recognized and the decrease is the result of the
conversion of such deferred revenues into recognized revenues from elimination
of deferred revenues on studios sold and the refund of pre-paid tuition for
students who terminate their  karate instruction prior to completing their
subscribed program.

The Company maintains a credit line with Wells Fargo Bank pursuant to which the
Company  has borrowed approximately $32,000 as of December 31, 1998 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.

On January 19, 1999 the Company sold another $950,000 of convertible
debentures, and on  March 5, 1999 the Company reset the exercise price of
certain warrants for the purchase of common  stock granted to consultants of
the Company in January 1999 and received $540,000 from the  exercise of such
warrants.  This total of $1,490,000 is for funding of working capital and
further production of episodes of the Kanga Roddy series.

On February 19, 1999, the Company entered into a letter of intent with
JWGenesis Capital Markets LLC ("JWGenesis") pursuant to which JWGenesis  will
act as the Company's exclusive placement agent in connection with a  proposed
private offering (the "Proposed Offering") of a minimum of  $700,000 and a
maximum of $4,500,000 of Units of the Company's securities,  each Unit
consisting of 50 Shares of Series C Redeemable Convertible  Preferred Stock,
$.0001 Par Value, 25,000 Class A Common Stock Warrants,  and 25,000 Class B
Common Stock Warrants.  In consideration for its  services, JWGenesis will
receive a placement fee equal to 10% of the gross  proceeds of the Proposed
Offering, plus a non-accountable expense  allowance equal to 3% percent of the
aggregate purchase price of the  securities sold, and a five (5) year warrant
to purchase at the Proposed  Offering price additional Units equal to 10% of
the aggregate number of  Units sold in the Proposed Offering. Additionally,
upon the first closing  of the Proposed Offering, the Company is to enter into
an agreement  whereby JWGenesis shall have the right to (i) purchase for its
account or  to sell for the account of the Company or any of its stockholders
owning  at least five percent (5%) of the Company's securities (the "Principal
Stockholders"), any securities with respect to which the Company or any of  its
Principal Stockholders may seek a private or public offering pursuant  to a
registration statement or otherwise, and (ii) nominate a designee to  the
Company's Board of Directors. Further, upon completion of the Proposed
Offering, the Company is to enter into an agreement whereby JW Genesis  shall
(i) have a two (2) year right of first refusal to act as the  managing
underwriter, or as a member of the underwriting syndicate and/or  selling group
with respect to any offering of the Company's securities,  (ii) have a two (2)
year right to act as the Company's exclusive  investment banker for a fee of
150,000 shares of Common Stock which shall  be payable at the Closing, and
(iii) have a five (5) year right to receive  a fee based upon a percentage of
the value of any business combination or  financing arrangement, including but
not limited to mergers, acquisitions,  sales, joint ventures, and any other
business or business combinations  involving the Company, where such
arrangement is introduced to the Company  by the JWGenesis or contacted by
JWGenesis or the Company from the signing  date of the engagement letter or
within 24 months after the final closing  of the Proposed Offering; and that
any such transaction fee due to  JWGenesis will be paid in cash at the closing
of the particular  transaction for which the finder's fee is due.

We now estimate that the average cost of developing and producing each  episode
of the Kanga Roddy Series is $240,000 and that we will require  approximately
$2.88 million of additional financing to complete the  remaining 12 episodes of
the Kanga Roddy Series.  Except for the Proposed  Offering described above, we
have no other current arrangements with  respect to additional financing and
there can be no assurances that  additional financing will be available on
acceptable terms, if at all. The  net proceeds from the Proposed Offering may
not be sufficient to fund  production of all of the remaining 12 episodes of
the Kanga Roddy series.   To the extent that the Company's available working
capital is  insufficient to finance the Company's working capital requirements,
the  Company will be required to raise additional funds through public or
private equity or debt financing or by exercising its rights to redeem the
outstanding warrants to purchase common stock.  There can be no assurance  that
such additional financing will be available, or, if available, will  be on
terms satisfactory to the Company or not dilutive of existing  shareholders.


Item 7.         Financial Statements

The consolidated financial statements of the Company and subsidiaries and
independent  auditors' report are filed herewith on pages 14 through 37 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

See information under the caption "Election of Directors" and "Compliance with
Section  16(a) of the Exchange Act" of the Company's proxy statement for the
1999 Annual Meeting of  Shareholders (the "1999 Proxy Statement") which
information is incorporated by reference herein.

Item 10.        Executive Compensation

See information under the caption "Executive Compensation" of the 1999 Proxy
Statement  which information is incorporated by reference herein.


Item 11.        Security Ownership of Certain Beneficial Owners and Management

See information under the caption "Principal Shareholders" and "Stock ownership
of  Management" of the 1999 Proxy Statement which information is incorporated
by reference herein.




Item 12.        Certain Relationships and Related Transactions.

See information under the caption "Certain Relationships and Related
Transactions" of  the 1999 Proxy Statement which information is incorporated by
reference herein.




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.

None.

                                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.


 Date:  March 31, 1999
                                AMERICAN CHAMPION ENTERTAINMENT, INC.

                                By:   /s/ ANTHONY K. CHAN
                                     -----------------------------------
                                          Anthony K. Chan, President
                                         (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.
<TABLE>
<CAPTION>
        Signature                        Title                     Date
--------------------------  -------------------------------  ----------------
<S>                         <C>                              <C>
/s/ ANTHONY K. CHAN         President, Chief Executive       March 31, 1999
-------------------------   Officer, and Director
    Anthony K. Chan         (Principal Executive Officer)




/s/ GEORGE CHUNG            Chairman of the Board and        March 31, 1999
-------------------------   Director
    George Chung


/s/ DON BERRYESSA           Senior Vice President, Chief     March 31, 1999
-------------------------   Operations Officer and Director
    Don Berryessa


/s/ MAE LYN WOO             Vice President and Chief         March 31, 1999
-------------------------   Financial Officer (Principal
    Mae Lyn Woo             Financial Officer)


/s/ JAN D. HUTCHINS         Director                         March 31, 1999
-------------------------
    Jan D. Hutchins


/s/ WILLIAM T. DUFFY        Director                         March 31, 1999
-------------------------
    Willian T. Duffy


/s/ ALAN ELKES              Director                         March 31, 1999
-------------------------
    Alan Elkes


/s/ RONALD M. LOTT          Director                         March 31, 1999
-------------------------
    Ronald M. Lott
</TABLE>


                   AMERICAN CHAMPION ENTERTAINMENT, INC.
                                 AND
                             SUBSIDIARIES

                       INDEPENDENT AUDITOR'S REPORT
                                  AND
                     CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 1998 AND 1997



CONTENTS

                                                                     PAGE


INDEPENDENT AUDITOR'S REPORT


CONSOLIDATED FINANCIAL STATEMENTS
        Balance sheet
        Statement of operations and accumulated deficit
        Statement of cash flows
        Notes to financial statements



INDEPENDENT AUDITOR'S REPORT


To the Board of Directors
American 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, 1998 and 1997, and the related consolidated statements of
operations, stockholders equity and cash flows for the years then ended.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the accompanying financial statements present fairly, in
all material respects, the financial position of the Company as of
December 31, 1998 and 1997, and the results of its operations and its cash
flows for the years then ended, in conformity with generally accepted
accounting principles.

As disclosed in note 21, the accompanying financial statements have been
restated to account for the effect of EITF D-60, "Accounting for Convertible
Securities with Beneficial Conversion Features or Contingently Adjustable
Conversion" on the debentures issued during 1998.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 20 to the
financial statements, the Company had limited cash reserves at December
31, 1998 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 20. The financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.

/s/ Moss Adams LLP

San Francisco, California
March 11, 1999
Except for note 21, as to
which the date is November 11, 1999


                      AMERICAN CHAMPION ENTERTAINMENT, INC.
                           CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
                                                            December 31,
                                                    -------------------------
                                                       1998          1997
                                                    -----------   -----------
<S>                                                 <C>           <C>
                     Assets
  Cash.......................................           $2,763    $1,795,657
  Account receivable.........................           37,675       220,817
  Loans receivable, related parties..........          114,937       114,773
  Prepaid expenses...........................           56,267        96,556
  Property and equipment.....................          395,330       255,423
  Film costs, net............................        5,381,329     2,445,417
  Note receivable............................           80,424        --
  Other Assets...............................           11,673        35,152
                                                    -----------   -----------
  Total assets...............................        6,080,398     4,963,795
                                                    ===========   ===========


                   Liabilities

  Accounts payable and accrued expenses......       $1,122,307      $199,344
  Note payable, related parties..............          137,037        37,255
  Other......................................           --             8,432
  Deferred revenues..........................           78,020       543,520
  Notes payable..............................          831,266         64199
  Obligations under capital leases...........            6,565        16,722
                                                    -----------   -----------
  Total liabilities..................                2,175,195       869,472
                                                    -----------   -----------

               Stockholders' Equity
  Preferred stock, $.0001 per share,
    3,000,000 shares authorized, none
    issued or outstanding....................           --            --
  Common stock, $0.0001 par value;
    20,000,000 shares authorized;
    paid-in capital..........................        7,122,414     5,529,419
  Common stock warrants......................          290,901       149,500
  Accumulated deficit........................       (3,508,112)   (1,584,596)
                                                    -----------   -----------
  Total stockholders' equity.................        3,905,203     4,094,323

                                                    $6,080,398    $4,963,795
                                                    ===========   ===========

</TABLE>

<PAGE>

                      AMERICAN CHAMPION ENTERTAINMENT, INC.
                      CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
                                               Year Ended December 31,
                                            ---------------------------
                                                1998           1997
                                            ------------   ------------
<S>                                         <C>            <C>
REVENUE:
  Film income...........................       $343,877       $215,000
  Tuition and related fees..............        324,730        853,335
  Accessories...........................         37,956         67,823
  Interest income.......................         30,138         43,395
                                            ------------   ------------
  Total revenue.........................        736,701      1,179,553
                                            ------------   ------------
COSTS AND EXPENSES:
  Cost of sales.........................         26,152         36,098
  Amortization of film costs............        177,732         58,000
  Salaries and payroll taxes............        847,147        793,486
  Rent..................................        308,007        382,928
  Selling, general and administrative...        924,740        372,773
  Interest..............................        679,402        110,684
  Write off of film costs...............         --            105,000
  Write off of loan fees................         --             65,000
  Facilities closure costs..............         --             57,000
                                            ------------   ------------
  Total costs and expenses..............      2,960,180      1,980,969
                                            ------------   ------------
Loss from operations ...................    ($2,223,479)     ($801,416)
                                            ============   ============

Gain on sale of karate studio...........        307,429         --
                                            ------------   ------------

Loss before provision for income taxes..     (1,916,050)      (801,416)

Provision for income taxes..............          7,466         --
                                            ------------   ------------
Net Loss................................     (1,923,516)      (801,416)
                                            ============   ============

Weighted average number of shares
  outstanding...........................      4,033,619      3,155,257
                                            ============   ============

Basic loss per share....................         ($0.48)        ($0.25)
                                            ============   ============
</TABLE>
                           See accompanying notes.
<PAGE>



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

<TABLE>
<CAPTION>
                                              Common Stock
                                          -----------------------                                  Total
                                            Number      Paid-in       Common                    Stockholders
                                              of        Capital       Stock       Accumulated      Equity
                                            Shares     (Deficit)     Warrants       Deficit      (Deficit)
                                          ----------  -----------  ------------  -------------  ------------
<S>                                       <C>         <C>          <C>           <C>            <C>
Balance, December 31, 1996.............     $92,030  ($1,155,318)          --       ($783,180)  ($1,938,498)

  Conversion of ABK shares
    to ACE shares......................   2,494,018          --            --            --             --
  Issuance of common stock, net of
    offering costs of $1,474,508.......   1,437,519    5,463,737           --            --       5,463,737
  Issuance of warrants.................        --            --        149,500           --         149,500
  Debt converted to equity.............      53,400      133,500           --            --         133,500
  Cancellation of founders' shares.....    (228,622)         --            --            --             --
  Common stock subject to rescission...        --       (248,020)          --            --        (248,020)
  Rescission of common stock...........     (16,000)     (40,000)          --            --         (40,000)
  Expiration of rescission agreement...        --      1,175,520           --            --       1,175,520
  Stock options issued in connection
    with film costs....................        --        200,000           --            --         200,000
  Net loss.............................        --            --            --        (801,416)     (801,416)
                                          ----------  -----------  ------------  -------------  ------------
Balance, December 31, 1997.............   3,832,345   $5,529,419      $149,500    ($1,584,596)   $4,094,323

  Common stock warrants issued in
    connection with debentures.........        --          --          124,501        --            124,501
  Conversion of debentures
    to common stock....................   1,421,901    1,176,442        --            --          1,176,442
  Exercise warrants to purchase
    common stock warrants..............        --          --           16,900        --             16,900
                                                                                                        --
  Beneficial conversion
    feature of debentures                      --        599,955        --            --            599,955

  Net loss                                     --          --           --         (1,923,516)   (1,923,516)
                                          ----------  -----------  ------------  -------------  ------------
Balance, December 31, 1998.............   5,254,246   $7,122,414      $290,901    ($3,508,112)   $3,905,203
                                          ==========  ===========  ============  =============  ============
</TABLE>
                           See accompanying notes.

<PAGE>

                      AMERICAN CHAMPION ENTERTAINMENT, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
                                                      Year Ended December 31,
                                                   ----------------------------
                                                       1998           1997
                                                   -------------  -------------
<S>                                                <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss........................................    ($1,323,561)     ($801,416)
Adjustments to reconcile net loss to
  net cash used for operating activities:
    Non-cash charge for beneficial
      conversion feature of debentures..........        599,955            --
    Gain on sale of karate studio...............       (307,429)           --
    Depreciation and amortization...............        253,405        101,407
    Write off of film costs.....................            --         105,000
    Rent concession amortization................         (4,216)        (4,216)
    Amortization of original issue discount
      on long term debt.........................         15,560            --
    Common stock issued related to salary.......            --          72,225
    Common stock issued related to loan fees....            --          65,000
Decrease in:
  Accounts receivable...........................        183,142       (215,000)
  Prepaid expenses and other....................         30,986        (66,289)
Increase in:
  Accounts payable and accrued expenses.........        928,198       (117,300)
  Deferred revenues.............................       (190,041)      (375,156)
                                                   -------------  -------------
     Net cash used for operating activities.....       (413,956)    (1,235,745)
                                                   -------------  -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment..............       (237,402)      (247,970)
Payments for film costs.........................     (3,113,644)    (1,722,413)
Advances to stockholders........................           (164)       (22,690)
Payments received                                         6,150            --
                                                   -------------  -------------
     Net cash used for investing activities.....     (3,345,060)    (1,993,073)
                                                   -------------  -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stocks.........            --       6,748,020
Proceeds from issuance of warrants..............         16,900        149,500
Offering costs..................................            --      (1,407,964)
Rescission of common stock......................            --         (40,000)
Proceeds on loans from related parties .........        137,000            --
Payments on loans from related parties..........        (37,218)      (314,920)
Proceeds on long-term debt......................      2,010,963            --
Payments on long-term debt......................       (151,366)      (108,546)
Principal payments on capital leases............        (10,157)       (30,378)
                                                   -------------  -------------
     Net cash provided by financing activities..      1,966,122      4,995,712
                                                   -------------  -------------
NET (DECREASE) INCREASE IN CASH.................     (1,792,894)     1,766,894

CASH, beginning of year.........................      1,795,657         28,763
                                                   -------------  -------------
CASH, end of year...............................         $2,763     $1,795,657
                                                   =============  =============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid during the year for:
    Interest....................................        $60,887       $116,132
                                                   =============  =============
    State income taxes..........................         $7,466         $  --
                                                   =============  =============
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
  AND FINANCING ACTIVITIES:
   Common stock issued for short-term debt......         $  --         $27,000
                                                   =============  =============

  Long-term debt converted to equity............       $993,040       $133,500
                                                   =============  =============
  Options and common stock issued
     related to film costs......................         $  --        $226,000
                                                   =============  =============

  Common stock warrants issued with debt               $124,501         $  --
                                                   =============  =============

  Beneficial conversion feature of
    debentures                                         $599,955         $  --
                                                   =============  =============
</TABLE>
                           See accompanying notes.

<PAGE>

CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997


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

Nature of Operations 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"). The Company and AC  Media were
formed during 1997. Pursuant to an Agreement and Plan  of Merger, dated as of
July 14, 1997, the Company entered into a  reorganization transaction pursuant
to which the Company acquired  all of the issued and outstanding shares of ABK
(the  "Reorganization"). The financial statements included herein give  effect
to the Reorganization in which the Company became the  successor to ABK. All
significant intercompany accounts and  transactions have been eliminated in
consolidation.

AC Media focuses on operating and managing all media-related  programs for the
Company. These programs consist of fitness  information video tapes, books and
audio tapes and production of  educational television programs for children
which emphasize  martial arts values and fun. ABK focuses solely on operating
and  managing the Company's karate studios, which are located in the  San
Francisco Bay Area.

Revenue Recognition - AC Media - Revenue from films is recognized  on the
accrual method. 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.

ABK - Substantially all ABK's students are required to sign a  student
enrollment agreement (the "Enrollment Agreement") covering  a period from 36 to
48 months to complete a black belt course or a  2nd degree black belt course,
respectively. The students have the  option to (a) make an initial fee payment
equal to 2-5 months of  instruction with the remaining amount payable monthly
over the  remaining term of the agreement, (starting with the month  following
enrollment), or (b) make one or more lump sum payments  for the entire course
at a significant discount. Revenues are  recognized over the term of the
Enrollment Agreement.


Note 1 - Nature of Operations and Summary of Significant Accounting Policies
(continued)

A student may cancel an Enrollment Agreement at any time. A  refund, if any, is
made if the student's advanced payments exceed  the elapsed portion of the
course, prorated at $75 per month  (additional family members prorated at $45
per person per month).  The elapsed portion of the course is the number of
months between  the course starting date and the cancellation date. Fee
payments  subject to refund are shown in the financial statements as  deferred
revenue, which will be recognized as revenue in the  future years if there is
no cancellation by the student. See Note  18 related to sales of studios.

Concentration of Credit 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
high credit quality  financial institutions. The amount on deposit in any one
institution that exceeds federally insured limits is subject to  credit risk.
To reduce credit risk, the Company requires advanced  payments from students
and thus, no student fees receivable is  recorded.

Cash and Cash Equivalents - The Company considers certain highly  liquid
instruments purchased with original maturities of year or  less to be cash
equivalents. The Company had cash equivalents of $  -0- and $1,496,000 at
December 31, 1998 and 1997, respectively.

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.  Leased assets under capital lease agreements
are amortized using  the straight-line method over the shorter of the estimated
useful  lives or the length of the lease terms, ranging from two to five  years.

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.

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 value 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.



Note 1 - Nature of Operations and Summary of Significant Accounting  Policies
(continued)

Basic Loss Per Share - Statement of Financial Accounting Standards  (SFAS) No.
128 was adopted by the Company during the year ended  December 31, 1997. 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 - Deferred tax assets and liabilities are recognized  for the
expected tax consequences of temporary differences between  the tax bases of
assets and liabilities and their reported  amounts. The Company and its
Subsidiaries file a consolidated tax  return.

Presentation - Because of the Company's reduced activity in its  karate
instruction segment, management believes utilizing a  classified balance sheet
presentation is no longer appropriate, as  the operating cycle of the
media-related segment of the Company is  expected 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".

Reclassifications - Certain reclassifications have been made to  the 1997
amounts to conform to the current presentation.


Note 2 - Uses 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 3 - Property and Equipment

                                                    1998          1997
                                                 -----------   -----------
  Furniture and fixtures......................      $53,705       $95,322
  Equipment...................................       70,429        51,251
  Leasehold improvements......................       --            11,938
  Leased assets...............................       --           119,899
  Production equipment........................      402,887       230,526
                                                 -----------   -----------
                                                    527,021       508,936
  Less accumulated depreciation and
     amortization.............................      131,691       253,513
                                                 -----------   -----------
                                                   $395,330      $255,423
                                                 ===========   ===========

Depreciation expense was $75,673 and $43,407 for the years ended  December 31,
1998 and 1997, respectively. The accumulated  depreciation related to the
leased assets at December 31, 1998 and  1997 was $-0- and $119,899,
respectively.

Note 4 - Film Costs

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

                                                    1998          1997
                                                 -----------   -----------
Television program
  The Adventures of Kanga Roddy...............   $5,455,764    $2,342,120

Videos
  Montana Exercise Video......................      148,253       148,253
  Strong Mind Fit Body........................       18,042        18,042
                                                 -----------   -----------
                                                  5,622,059     2,508,415
  Less accumulated amortization...............      240,730        62,998
                                                 -----------   -----------
                                                  5,381,329     2,445,417
                                                 ===========   ===========

Production of the first seven episodes of The Adventures of Kanga  Roddy was
completed during 1997. Thirteen additional episodes were  completed during the
year ended December 31, 1998. Both videos  were completed in 1996, but only the
Strong Mind Fit Body video  has been released. During 1997, management wrote
down the  capitalized costs for this video by $105,000.



Note 5 - Notes Payable, Related Parties

The notes payable to related parties bear interest at -0- to 12%
and are unsecured. Amounts due after 1999 are not material.


Note 6 - Notes Payable

Debentures, interest at 7% due
quarterly, unsecured and due July 1,
2000, net of original issue discount
of $86,662. Convertible to common
stock at 75% of the then current
market price of the common stock or
117.5% of the market price of the
stock at the date of issue.            $  536,896       $     -

Notes payable to individuals, interest
at -0- to 12%, unsecured and due at
various dates during 1999.                230,000             -

Drawings from a $40,000 bank business
credit card line with interest at
the banks prime rate plus 6.5%.            40,000          34,001

Other                                      24,370          30,198
                                        ----------      ----------
                                       $  831,266      $   64,199
                                        ==========      ==========

The debentures are due in 2000. However, these debentures,  together with
accrued interest, were converted to 495,335 shares  of common stock subsequent
to year-end.  The remaining notes  payable are substantially all due in 1999.



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:

                                                    1998          1997
                                                 -----------   -----------
  Federal tax benefit at statutory rates......    ($450,000)    ($274,000)
  State tax benefit at statutory rates........     (117,000)      (75,000)
  Other.......................................        7,466       (13,000)
  Increase in valuation allowance.............      567,000       362,000
                                                 -----------   -----------
                                                     $7,466       $  --
                                                 ===========   ===========

The Company has net operating loss (NOL) carryforwards for federal income tax
purposes of approximately $3,000,000,  the benefits of which expire in 2011
through 2013 for federal purposes and through 2003 for state purposes. The NOLs
created by the Company's subsidiaries prior to the reorganization and the NOLs
created as a consolidated group subsequent to the reorganization described in
Note 1, 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:

                                                    1998          1997
                                                 -----------   -----------
DEFERRED TAX ASSETS
  NOL carryford...............................   $1,175,000      $500,000
  Deferred revenue............................       25,000       217,000
  Other.......................................       --            36,000
  Valuation allowance.........................   (1,175,000)     (608,000)
                                                 -----------   -----------
                                                     25,000       145,000
                                                 -----------   -----------

DEFERRED TAX LIABILITIES
  Accounts receivable.........................       --           127,000
  Depreciation................................       25,000        18,000
                                                 -----------   -----------
                                                     25,000       145,000
                                                 -----------   -----------
                                                    $  --         $  --
                                                 ===========   ===========



Note 7 - Income Taxes (continued)


SFAS No. 109 requires the Company to record a valuation allowance  when it is
"more likely than not that some portion of the deferred  tax asset will not be
realized." Management believes that some of  the excess NOL carryforwards over
temporary differences may be  utilized in future periods. However, due to the
uncertainty of  future taxable income, a valuation allowance for the net amount
of  the deferred tax assets and liabilities has been recorded at  December 31,
1998 and 1997.


Note 8 - Lease Commitments

The Company leases facilities under operating leases and gym  equipment under
capital leases that range from two to six years  and expire at various dates
through 2000. Some leases have options  to renew for additional terms and some
require additional  increases as defined.

Future minimum lease payments under these leases are:

                                                   Capital      Operating
                                                 -----------   -----------
  1999........................................       $6,565      $228,000
  2000........................................         --          85,000
                                                 -----------   -----------
  Total minimum lease payments................        6,565      $313,000
                                                 ===========   ===========

Management of the Company has developed a plan to close certain  studios
related to its karate studio segment. As of December 31,  1998 and 1997, the
Company has accrued $57,000 to account for the  estimated costs to be incurred
in future periods related to  studios which have been closed. The accrual is
included in  accounts payable and accrued expenses in the accompanying
consolidated balance sheet.


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.



Note 9 - Commitments and Contingencies (continued)

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 for a two-year period. Under the terms of the
Distribution  Agreement, the Company will receive $430,000, which is based on
delivery of 13 episodes to KTEH. For the periods ended  December 31, 1998 and
1997, the Company had recognized revenue of  $215,000 in each year. In
addition, the Company is entitled to 85%  of any distribution fees collected by
KTEH in excess of $505,000.  Under the Distribution Agreement, the Company has
also committed  to sharing with KTEH (i) 8% of all revenues from the sale and
licensing of products such as video tapes, books and music tapes  and (ii) 5%
of gross profits 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 rights to the Kanga Roddy  Series not granted to KTEH in the
Distribution Agreement.

In April 1998, KTEH agreed to purchase an additional 26 episodes  and 2
one-hour specials for approximately $900,000. No revenue has  been recognized
from this transaction as of December 31, 1998.

During 1998, the Company canceled the licensing agreements with  SEGA. The
Company exercised a "key man" clause to terminate the  contracts. Management of
the Company does not believe SEGA has any  remaining rights under the
agreements.

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.

The Company has entered into an agreement with the two  participants of the
Montana Exercise Video in which a royalty fee  of $1 will be paid for each tape
sold.

Note 10 - Related Party Transactions

Loans to stockholders were $114,937 and $114,773 at December 31,  1998 and
1997, respectively.

In November 1996, the Company agreed to pay to two participants of  the Montana
Exercise Video the sum of $50,000 from the proceeds of  the initial public
offering and another $50,000, which is included  in accounts payable at
December 31, 1998, will be paid 30 days  prior to the release date. These two
participants are stockholders  of the Company.



Note 10 - Related Party Transactions (Continued)

During 1998 and 1997, the Company paid $67,500 and $60,000,  respectively, to
two shareholders for story lines and scripts for  the production of the
television series "The Adventures with Kanga  Roddy".

Note 11 - New Authoritative Pronouncements

In February 1998 the Financial Accounting Standards Board (FASB)  issued
Statement of Financial Accounting Standards (SFAS) No. 132,  "Employers'
Disclosures about Pensions and Other Post-retirement  Benefits", in June 1998,
the FASB issued SFAS No. 133, "Accounting  for Derivative Instruments and
Hedging Activities", and in October  1998, SFAS No. 134, "Accounting for
Mortgage-Backed Securities  Retained after the Securitization of Mortgage Loans
Held for Sale  by a Mortgage Banking Enterprise". Management believes the
provisions of SFAS Nos. 132, 133 and 134 will not have a material  effect on
the financial condition or reported results of  operations and cash flows.


Note 12 - Industry Segments

The Company is involved in the development of educational  television programs
and fitness videos and operated one karate  studio at December 31, 1998, which
are segmented into two  categories for reporting purposes. Television and
videos reflect  the activities related to the development and production of
educational television programs and fitness videos. Tuition and  related fees
includes activities related to operations of karate  studios.

The relative contributions to net sales, income from operations  and
identifiable assets of the Company's two industry segments for  the years ended
December 31, 1998 and 1997 are as follows:



Note 12 - Industry Segments (continued)

                                                    1998          1997
                                                 -----------   -----------
Net sales (1):
  Tuition and related fees....................     $362,686      $921,158
  Video and television........................      343,877       215,000
  Corporate...................................       30,138        43,395
                                                 -----------   -----------
  Net sales...................................     $736,701    $1,179,553
                                                 ===========   ===========

Depreciation and amortization:
  Tuition and related fees....................       $8,616       $32,810
  Video and television........................      244,789        68,597
                                                 -----------   -----------
  Depreciation and amortization...............     $253,405      $101,407
                                                 ===========   ===========

Capital expenditures:
  Tuition and related fees....................       $2,778       $12,080
  Video and television........................    3,348,268     2,184,303
                                                 -----------   -----------
  Capital expenditures .......................   $3,351,046    $2,196,383
                                                 ===========   ===========

Income (loss) from operations:
  Tuition and related fees....................    ($383,191)    ($643,345)
  Video and television........................     (592,376)       43,642
  Corporate...................................     (647,957)     (201,713)
                                                 -----------   -----------
  Net loss....................................  ($1,623,524)    ($801,416)
                                                 ===========   ===========

Identifiable assets (2):
  Tuition and related fees....................     $218,048      $216,241
  Video and television........................    5,800,159     2,884,565
                                                 -----------   -----------
  Totals......................................    6,018,207     3,100,806
  Add: Corporate...............................      62,191     1,862,989
                                                 -----------   -----------
  Assets......................................   $6,080,398    $4,963,795
                                                 ===========   ===========

[1] There were no sales between industry segments.
[2] Corporate and other assets are principally cash and prepaid
expenses.



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 years 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.

Note 14 - Stock Plans

The Stock Plan was adopted by the Board of Directors and  stockholders of the
Company during 1997. The total number of  shares of Common Stock subject to
issuance under the Stock Plan is  400,000, subject to adjustments as provided
in the Plan. During  1998, the shares available under the plan were increased
to  800,000. 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.



Note 14 - Stock Plans (Continued)

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 5,000 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  2,000
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

During the year ended December 31, 1997, the Company sold  1,300,000 shares of
its common stock at $5 per share and 1,495,000  warrants to purchase the
Company's common stock at $.10 per  warrant, in a public offering. In addition,
130,000 warrants were  issued to the underwriters for nominal consideration.
Each warrant  entitles the registered holder to purchase one share of common
stock at $6.50 per share at any time through August 2002.

During 1998, the Company issued 130,000 warrants upon exercise of
underwriter's warrants to purchase warrants to purchase the  Company's common
stock. The Company received proceeds of $16,900  related to these warrants. The
Company also issued 124,501  warrants in connection with the debentures issued
during 1998. The  Company received no proceeds related to these warrants. These
warrants entitle the registered holder to purchase one share of  common stock
at $7.56125 per share at any time through July 2003.  These warrants were
valued by the Company at $1 each and were  accounted as original issue discount
(OID). The OID is being  amortized against the related debt.

At the time of the public offering the Company offered to certain  stockholders
of the Company who previously purchased common stock  of ABK, the right to
rescind their previous purchase and receive  the return of their purchase price
paid plus interest. The total  number of shares subject to rescission was
684,619 (ACE shares).  One stockholder rescinded 16,000 shares at $40,000. The
rescission  offer expired October 1, 1997.

During 1997 certain "founding" stockholders of the Company  canceled 228,622
shares of common stock. These stockholders  received no proceeds related to
cancellation of these shares.



Note 16 - Stock Options

At December 31, 1997, there were 400,000 options authorized and  393,000
options outstanding under the Company's Stock Plan. At  December 31, 1998,
there were 800,000 options authorized and  800,000 options outstanding under
the Company's Stock Plan. No  options were exercised or canceled during the
year ended  December 31, 1998.

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.  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. At  December 31, 1998, the Company
accounted for 700,000 options under  this method.

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." At December 31, 1998
and 1997, the Company  accounted for 100,000 options, which were issued in
connection  with the production of "The Adventures With Kanga Roddy" under
this method. These options were valued at $200,000 and are  included in film
costs and additional paid in capital in the  accompanying balance sheet. The
value of options issued to non- employee directors were not material and have
been accounted for  under the intrinsic value method.

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 1998 and 1997,
respectively: risk free interest rate of 4.65 and 6.25 percent;  dividend yield
of 0 percent; expected option life of 7 years; and  volatility of 78 and 42
percent.

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, 1998
and 1997, respectively, was  $(1,881,000) and $(1,049,000) and pro forma net
loss per share was  $(.47) and $(.33).



Note 16 - Stock Options (Continued)

                                            Shares of Common Stock
                                    -----------------------------------
                                     Available
                                        for
                                    Exercise of   Options
                                     Options/      Under
                                       Award       Plan      Warrants
                                    ----------- ----------- -----------
Balance, December 31, 1996......          --          --          --
  Authorized....................       400,000        --          --
  Granted.......................      (393,000)    393,000   1,625,000
                                    ----------- ----------- -----------
Balance, December 31, 1997......         7,000     393,000   1,625,000
  Authorized....................       400,000        --          --
  Granted.......................      (407,000)    407,000     254,501
                                    ----------- ----------- -----------
Balance, December 31, 1998......          --       800,000   1,879,501
                                    =========== =========== ===========

No options were exercised or lapsed during the year ended December 31, 1998.

<TABLE>
<CAPTION>
                                                        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
               ------------ ----------- -----------  ------------ -----------
<S>            <C>          <C>         <C>          <C>          <C>
1997
Options....        393,000         7.6       $5.61       368,000       $5.61
Warrants...      1,495,000         4.6        6.50     1,495,000        6.50

1998
Options....        800,000         8.2        4.07       389,000        5.59
Warrants...      1,879,501         3.6        6.57     1,879,501        6.57

</TABLE>


Note 17 - Year 2000

In the opinion of management, no material adverse effect on either  results of
operations, cash flows or financial position is  anticipated due to the
modifications or replacement of existing  information systems in order to
accommodate year 2000  implications.



Note 18 - Sale of Karate Studios

During the year ended December 31, 1998, the Company sold four  karate studios
to the locations' general managers. The Company  received notes receivable
totaling $86,500 due in monthly payments  of $333 to $1,000 including interest
imputed at 10%. The Company has  guaranteed payments of a studio lease, which
are $4,673 per month  through March 2000. The Company retained all advance
payments of  enrollment fees, which were approximately $310,000 as of the
closing  dates; however, the Company is liable for any future refunds to
students enrolled prior to the closing dates. The Company reduced  the
liability for advance payments of enrollment fees related to  these studios to
$35,000, which is included in deferred revenue.  Management will evaluate this
liability quarterly in light of  cancellations to date and expected future
cancellations.

Note 19 -Subsequent Events

Common Stock Purchase Warrants - Subsequent to year-end the  Company issued
600,000 warrants to purchase the Company's common  stock. These warrants were
issued to consultants for services  provided to the Company. The Company
received no proceeds upon  issuance of the warrants. All holders exercised
their rights to  convert the warrants to common stock subsequent to year-end.
The  Company received total proceeds of $540,000 and issued one share  of
common stock for each warrant exercised.

Financing - Subsequent to year-end the Company issued convertible  debentures
totaling $950,000. The interest rate on the Debentures  is 7% per annum,
payable in cash or in shares of the Company's  Common Stock. The Debentures
mature January 1, 2002 and may be  converted to shares of Common Stock. The
Company also issued  61,125 warrants in connection with these debentures. The
Company  received no proceeds from these warrants. The warrants are
convertible to shares of the Company's common stock at $2.1406 per  share and
expire January 31, 2002. Holders of these debentures  converted principal of
$530,000 and interest of $5,017 to 871,719  shares of the Company's common
stock subsequent to year-end.

Subsequent to year-end the Company's Board of Directors approved a  plan to
sell 100,000 shares of convertible preferred stock in  a private placement.
Management expects to receive proceeds of  approximately $4,050,000 (which is
net of approximately $450,000  of transaction fees) related to these
securities. Final settlement  of this transaction will require shareholder
approval. The  preferred shares are convertible to the Company's common stock
using a formula based on the five day average closing price of the  Company's
publicly traded common stock at the date the shares are  sold. Any shares
converted to common stock will be restricted  stock for a period of twelve
months from shareholder approval of  the transaction. There is no guarantee
that the Company will be  able to sell the planned amount of securities or that
the  shareholders of the Company will approve the transaction.



Note 19 -Subsequent Events (Continued)

Issuance of Common Stock - Subsequent to year-end the Company  issued 47,730
shares of common stock to consultants for no  consideration.

Note 20 -Going Concern

The Company is planning to complete the production of an  additional nineteen
episodes of the television series "The  Adventures of Kanga Roddy". Management
expects to deliver these episodes during 1999. Production of these  episodes
is expected to require working capital in excess of the  proceeds from the
debentures and warrants (Note 19), which were  closed subsequent to year-end.
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 is planning to use the proceeds from
the sale of the convertible preferred stock (Note 19) to fund  obligations
incurred during the production of these episodes as  well as the production of
additional episodes and other working  capital requirements during the
remainder of 1999.


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 business.  The
continuation of the Company as a going  concern is dependent upon the success
of the sale of preferred  stock to qualified investors, approval of the
transaction by the  Company's shareholders 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.

Note 21 -Beneficial Conversion Feature of Debentures

The Company has restated its financial statements for the year ended December
31, 1998 (along with the effect on each quarter) to account for the beneficial
conversion feature of its 7% convertible debentures in accordance with EITF
D-60, "Accounting for Convertible Securities with Beneficial Conversion
Features or Contingently Adjustable Conversion."  The application of EITF D-60
resulted in the recognition of a non-cash charge to interest expense of $599,955
($0.15 per share) for the year ended December 31, 1998 with a corresponding
increase to additional paid in capital.  There was no effect on the balance
sheet except for the reclassification of the interest expense from additional
paid in capital to retained earnings.  The impact of the application of EITF
D-60 on the quarterly reports for 1998 was as follows:

<TABLE>
<CAPTION>
                                               1998
                     --------------------------------------------------------------
                                 Quarterly information unaudited.)
                     --------------------------------------------------------------
                        Q1               Q2             Q3              Q4            Total
                     ------------    -----------    -----------     ------------    -----------
<S>                   <C>            <C>            <C>             <C>             <C>
Interest Expense

   As reported        $     8,901      $  8,761       $  46,575          $ 12,210      $  76,447
                      ============    ==========     ===========       ===========    ===========

   Restated           $     8,901      $  8,761       $ 463,196         $ 195,544      $ 676,402
                      ============    ==========     ===========       ===========    ===========

Net Loss

   As reported        $ (134,890)   $ (202,397)     $ (448,787)        $ (537,487)  $ (1,323,561)
                      ============    ==========     ===========       ===========    ===========

   Restated           $ (134,890)   $ (202,397)     $ (865,408)        $ (720,821)  $ (1,923,516)
                      ============    ==========     ===========       ===========    ===========

Loss Per Share

   As reported        $    (0.04)   $    (0.05)     $    (0.12)        $     (0.13)  $     (0.33)
                      ============    ==========     ===========       ===========    ===========

   Restated           $    (0.04)   $    (0.05)     $    (0.23)        $     (0.18)  $     (0.48)
                      ============    ==========     ===========       ===========    ===========

</TABLE>


                           INDEX TO EXHIBITS

Exhibit No.                 Exhibit


    1.1*     Form of Underwriting Agreement
    3.1*     Amended and Restated Certificate of Incorporation
    3.2*     Bylaws
    4.1*     Specimen stock certificate
    4.2*     Warrant Agreement with form of Warrant
    4.3*     Form of Underwriters' Warrant
    5*       Opinion of Sheppard, Mullin, Richter & Hampton LLP
   10.1*     1997 Stock Plan
   10.2*     Form of Stock Option Agreement for 1997 Stock Plan
   10.3*     1997 Non-Employee Directors Stock Option Plan
   10.4*     Form of Non-Employee Directors Stock Option Agreement
   10.8*     Promissory Note dated December 15, 1994 made payable by Messrs.
             Chung and Chan and their wives in favor of Michael Triantos M.D.
             Inc. Money Purchase and Profit Sharing Pension Plans Trust
   10.9*     Employment Agreement between the Company and George Chung dated
             March 4, 1997, effective upon the closing date of the Offering
   10.10*    Employment Agreement between the Company and Anthony Chan dated
             March 4, 1997, effective upon the closing date of the Offering
   10.11*    Employment Agreement between the Company and Don Berryessa dated
             March 4, 1997, effective upon the closing date of the Offering
   10.12*    Employment Agreement between the Company, AC Media and Jan
             Hutchins dated March 4, 1997, effective upon the closing date of
             the Offering
   10.13*    Convertible Loan Agreement dated as of May 5, 1995, between ABK
             and David Y. Lei
   10.15*    Amended Deal Memo between ABK and Rick Fichter dated February
             23, 1997, with respect to payments related to the Kanga Roddy
             Series
   10.17*    Form of Indemnification Agreement
   10.19*    Letter dated October 29, 1996 from the Company to Tim Pettitt
             regarding certain payments to the Montanas
   10.20*    Distribution Agreement dated June 18, 1996 by and between
             America's Best Karate and InteliQuest
   10.21*    Distribution Agreement, dated May 6, 1997, by and between KTEH,
             San Jose Public Television and American Champion Media, Inc.
   10.22*    Letter Agreement, dated June 1997, between AC Media, Inc. and
             Sega of America, Inc.
   10.23*    Business Loan Agreement between America's Best Karate and Karen
             Shen
   10.24*    Business Loan Agreement between America's Best Karate and Thomas
             J. Woo
   10.25**   Licensing Agent Agreement, dated July 25, 1997, between American
             Champion Media, Inc. and Sega of America, Inc.
   10.26     Consultant Agreement between Olympia Partners, LLC, Dalton Kent
             Securities Group, Inc. and American Champion Entertainment, Inc.
   10.27     Merchant Licensing Agreement between Timeless Toys and American
             Champion Media, Inc.
   10.28     Loan Agreement between Olympia Partners and American Champion
             Entertainment, Inc.
   10.29     SEGA Agreement termination letter.
   10.30     Consultant Agreement between American Champion Entertainment, Inc.
             and Trademark Managment
   21.1*     Subsidiaries of the Registrant
   23.1      Consent of Moss Adams, LLP
   27.1      Financial Data Schedule

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

**      Filed as an exhibit with the registrant's Form 10-KSB filed with SEC on
        March 24, 1998 and  incorporated by reference herein.

<PAGE>