U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   Form 10-QSB

[X] QUARTERLY REPORT UNDER SECTION 13 OF 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934

    For quarterly period ended February 26, 2000

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

    For the transition period from__________  to__________

                         Commission file number 0-21634

                            Metro Global Media, Inc.
                            ------------------------
        (Exact name of small business issuer as specified in its charter)

              Delaware                                   65-0025871
--------------------------------------------------------------------------------
    (State or other jurisdiction of                  (IRS Employer
     incorporation or organization)                   Identification No.)

                 1060 Park Avenue, Cranston, Rhode Island 02910
                 ----------------------------------------------
                    (Address of principal executive offices)

                                 (401) 942-7876
                                 --------------
                           (Issuer's telephone number)


--------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last year)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes X No

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the  registrant  filed all  documents  and reports  required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by court. Yes__ No__

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 8,608,944 at April 10, 2000.



<PAGE>


PART I - FINANCIAL INFORMATION
------------------------------


Item 1. Consolidated Financial Statements
-----------------------------------------

        Balance Sheet                                                 F-1
        Statements of Income                                          F-3
        Statements of Cash Flows                                      F-5
        Notes to Financial Statements                          F-8 to F-15


Item 2. Management's Discussion and Analysis or Plan of Operation
-----------------------------------------------------------------

Results of Continuing  Operations  for the three and nine months ended  February
26, 2000 versus the three and nine months ended February 27, 1999.

     Metro Global  Media,  Inc.'s  ("Metro  Global")  revenues  from  continuing
operations  were  $7,315,565  for the three months ended  February 26, 2000,  as
compared to  $6,025,835  for the three  months  ended  February  27, 1999, a 21%
increase.  This increase in revenue is primarily due to an increase in DVD sales
of  approximately  $800,000  and an increase in novelty  sales of  approximately
$400,000.   Metro  Global's  revenues  from  continuing   operations   increased
$3,274,231  to  $20,377,538  for the nine months  ended  February  26, 2000 from
$17,103,307  for the nine months ended February 27, 1999.  This represents a 19%
increase  from  revenues for the nine months ended  February 27, 1999.  Revenues
consist   principally  of  sales  of  prerecorded   videocassettes,   magazines,
electronic  software  products and related items. The increase in revenue during
the nine-month  period is primarily  attributable to the increased sales of DVDs
of  approximately  $2,200,000,  an increase in magazine  sales of  approximately
$700,000, an increase in novelty sales of approximately $600,000, an increase in
sales by Metro International of approximately  $261,000 and an increase in cable
and foreign film rights revenues of approximately  $400,000 over the same period
of the prior year.  These increases were partially offset by a decrease in video
and CD-ROM sales of approximately $900,000.

     Costs of revenues  as a  percentage  of  revenues  in the third  quarter of
fiscal 2000 were 64%, as  compared to 67% in the third  quarter of fiscal  1999.
Costs of revenues as a percentage of revenues in the first nine months of fiscal
2000 were 66%, as compared to 68% for the first nine months of fiscal 1999.  The
primary  reason for this  decrease in  percentage  is the  increase in cable and
foreign film rights revenue, which have nominal associated costs.

     Selling,  general, and administrative expenses, as a percentage of revenue,
increased to 42% for the period ended  February 26, 2000, as compared to 38% for
the period  ended  February  27,  1999.  The  increase in  selling,  general and
administrative  expenses for the quarter ended February 26, 2000, as compared to
February  27,  1999,  is due to an increase of payroll  and  consulting  fees of
approximately  $350,000,  Internet development costs of $150,000 and advertising
and  promotional  expenses  of  $75,000.  Selling,  general  and  administrative
expenses,  as a  percentage  of revenue,  increased to 40% during the nine month
period ended  February 26, 2000, as compared to 37% during the nine month period
ended  February  27,  1999.  The primary  reasons  for the  increase in selling,
general and administrative expenses during the nine-month period are an increase
in payroll  and  consulting  fees of  approximately  $835,000,  an  increase  in
advertising and promotional expenses of approximately  $100,000,  an increase in
Internet   development   costs  of  approximately   $300,000,   an  increase  in
professional  fees of  approximately  $200,000,  and an increase in depreciation
expense of approximately $170,000.

     Loss from  continuing  operations for the three month period ended February
26,  2000 was  $720,465,  as compared to a loss from  continuing  operations  of
$1,015,440  for the  corresponding  period in the prior  year.  Net loss for the
quarter  ended  February  26,  2000 was  $264,623,  as compared to a net loss of
$963,425 for the quarter ended February 27, 1999,  resulting in a loss per share
of $0.04 for the quarter  ended  February  26,  2000,  as compared to a loss per


                                       2
<PAGE>

share of $0.16 for the quarter  ended  February 27, 1999.  Loss from  continuing
operations for the nine month period ended February 26, 2000 was $2,283,794,  as
compared to loss from continuing  operations of $1,888,367 for the corresponding
period in the prior year.  Net loss for the nine months ended  February 26, 2000
was  $1,358,912,  as  compared to a net loss of  $1,672,492  for the nine months
ended  February  27,  1999,  resulting in a loss per share of $0.20 for the nine
months ended February 26, 2000, as compared to a loss per share of $0.32 for the
nine months ended  February 27, 1999. The primary reason for the decrease in the
loss is due to the  extraordinary  gain on the debt  restructuring  of $455,842.
These  factors are  partially  offset by the  relocation  of Metro's  west coast
facility,  which  involved a shutdown  of  approximately  four weeks  during the
quarter ended November 27, 1999.

Liquidity and Capital Resources at February 26, 2000

     Cash  amounted to $647,634 at  quarter-end.  Net cash provided by operating
activities  amounted to $3,777,804  for the nine months ended February 26, 2000,
as compared  to  $438,744  for the same  period in the prior  fiscal  year.  The
primary sources of cash were cash provided by operating activities of $3,777,804
and net proceeds from a line of credit of  $1,797,894.  The primary uses of cash
for the nine months ended  February 26, 2000  consisted  of: (1) net payments on
notes payable of $2,175,000,  (2) investments in motion pictures and other films
of $1,938,716,  (3) payments on capital leases of $316,307, and (4) purchases of
property and equipment of $388,257.

     Accounts payable and accrued expenses increased $2,224,003 due to increased
purchasing,  an increase in video and DVD duplication and authoring  expense and
an increase in Internet development costs.

     On March 23, 1998, Metro Global entered into two 12% convertible debentures
totaling  $500,000 with related parties.  Both notes were due on March 23, 1999,
in either  cash or  Common  Stock,  at a  conversion  rate of $2.25  per  share.
Proceeds from the debentures were used for working  capital.  In March 1999, the
debentures' due dates, including accrued interest of $60,000 (which was added to
the note  principal),  were extended until March 23, 2000. On December 31, 1999,
one of the debentures,  including the accrued interest due under such debenture,
was converted into 847,778 restricted shares of Metro Global's Common Stock. The
second  debenture and accrued interest was assumed by CVC and the receivable due
from CVC was reduced accordingly.

     On July 1, 1998,  Metro  Global  entered into a 12%  convertible  debenture
totaling  $200,000  with a related  party.  The note was due on July 1, 1999, in
either cash or Common  Stock,  at a  conversion  rate of $2.25 per share.  Metro
Global recorded $60,248 of interest expense relating to the embedded  beneficial
conversion  feature.  Proceeds from the debenture were used for working capital.
On July 1, 1999,  the  debenture's  due date was extended until July 1, 2001. In
conjunction with the extension,  warrants were granted to purchase 50,000 shares
of Metro  Global's  Common  Stock for $2.58 per  share.  Metro  Global  recorded
interest expense of $52,000 in connection with the issuance of the warrants.  On
December 31, 1999,  the debenture  and accrued  interest were assumed by CVC and
the receivable due from CVC was reduced accordingly.

     On August 1,  1998,  Metro  Global  entered  into  notes  payable  totaling
$1,000,000 with related parties.  The notes, which bear interest at 8%, were due
August 1, 1999.  Proceeds from the notes were used in the acquisition of Fanzine
International,  Inc.  ("Fanzine").  In October  1998,  the notes were reduced by
$600,000 for the exercise of warrants.  On August 1, 1999,  the notes' due dates
were extended for one year. In consideration of the extension, the interest rate
increased  from 8% to 10% and  warrants  were  issued to  purchase up to 115,000
shares  of  Common  Stock at a price of  $2.58,  exercisable  for a term of five
years.  Metro Global recognized  interest expense of $100,050 in connection with
the issuance of the warrants. On December 31, 1999, one of the notes and accrued
interest of $281,250 was converted into 781,250 shares of Metro Global's  Common
Stock.  On  December  31,  1999,  the other note and accrued  interest  totaling
$183,250  was  assumed  by CVC and  the  receivable  due  from  CVC was  reduced
accordingly.


                                       3
<PAGE>

    On July 31, 1998,  Metro Global  entered into an 8%  convertible  debenture
with an  unrelated  party in the  amount  of  $1,000,000,  which was used in the
purchase of Fanzine. In connection with this transaction,  Metro Global issued a
warrant for 75,000 shares at a price of $4.11 and a warrant for 25,000 shares at
a price of $3.29,  both  exercisable  over two years.  Metro  Global  recorded a
discount on the  debenture  of  $157,700  for the value of the  warrants.  Metro
Global amortized  $59,137 and $52,566 of the discount to interest expense during
the nine months ended February 26, 2000 and February 27, 1999, respectively.

     The  $1,000,000  debenture  was to mature  on July 31,  2000.  Interest  is
payable on a quarterly basis. The holder of the debenture is entitled to convert
the  principal  value into Metro  Global's  Common Stock at a discounted  market
price as is defined in the  debenture  agreement.  During the nine months  ended
February 26, 2000, $105,000 of convertible  debentures plus accrued interest and
penalties were converted into 83,888  restricted shares of Metro Global's Common
Stock.  On February  25,  2000,  Metro Global  entered  into a  Forbearance  and
Modification Agreement with the lender. Under the terms of the agreement,  Metro
Global made a payment of $150,000 upon execution of the agreement. The remaining
balance of $850,000 is due in two  installments of $450,000 each, due on July 1,
2000 and October 1, 2000.  The  debenture is secured by 200,000  shares of stock
owned by Metro Global.

     Beginning in April 1998,  Metro  offered 5%  convertible  Preferred  Shares
pursuant  to  regulation  S of the U.S.  Securities  Act of 1933.  Metro  Global
received approximately $846,500 and $1,317,000 in net proceeds from the offering
in fiscal 1998 and 1999, respectively.  Proceeds from such offering were used to
fund working capital.

     The Series A Shares are  convertible  at a rate of 100 shares plus  accrued
dividends per week at 80% of the 15 day average closing bid price.  These shares
are subject to a twenty-four month mandatory  conversion feature.  Dividends are
payable in Common Stock and Metro Global recognized dividends of $146,513 during
the  quarter  ended  August  29,  1998 for the  embedded  beneficial  conversion
feature.  For the nine months ended February 27, 1999, 2175 shares of the Series
A shares and accrued  dividends  were  converted  into  982,120  shares of Metro
Global's Common Stock.  In addition to the Series A Shares,  Metro Global issued
400,000  warrants  to  purchase  Metro  Global  Common  Stock at $1.50 per share
commencing April 20, 1998 exercisable  over 5 years.  Metro Global  recognized a
dividend  of  $1,212,000  for the year  ended  May 30,  1998 for the  beneficial
conversion feature. In October 1998, all 400,000 warrants were exercised.

     On October 28, 1998,  Metro Global entered into a note payable with a third
party for $1,100,000.  The note,  which bears no interest,  was due in quarterly
installments of $275,000  commencing  December 31, 1998. In consideration of the
loan and part of an investment banking consultant agreement, Metro Global issued
the lender  150,000  restricted  shares of Metro  Global's  Common Stock.  Metro
Global  used  $507,500  of the  proceeds  to  repurchase  198,242  shares of its
outstanding  Common  Stock  from  Metro  Plus,  a  company  owned by a  majority
stockholder.  For the year ended May 29, 1999,  Metro Global made one payment of
$275,000.  In September  1999,  Metro Global and lender  agreed to a preliminary


                                       4
<PAGE>

extension of the note.  Under the terms of the extension,  a payment of $550,000
was due by  September  30,  1999 and the final  payment of  $275,000  was due on
December 31, 1999. In October 1999, Metro Global made a $275,000 payment.  Metro
Global is currently renegotiating the payments for the final $550,000 due on the
note payable.

     On December  9, 1998,  Metro  Global  entered  into a  six-month  term loan
agreement  with a third party.  Under the terms of the  agreement,  Metro Global
borrowed  $3,000,000 at an interest rate of 10% per year. The proceeds were used
toward the  acquisition  of Fanzine and to fund working  capital.  In connection
with this  transaction,  Metro Global issued  warrants to purchase up to 350,000
shares of Common Stock at a price of $3.00, expiring on December 31, 2001. Metro
Global recorded  interest expense of $577,000 for the valuation of the warrants.
Additionally,  Metro Global issued  100,000  shares of Common Stock and recorded
$187,500 of interest  expense.  In September 1999,  Metro Global and this lender
agreed to an extension,  under which Metro Global paid $1.3 million upon closing
financing with Reservoir  Capital  Corporation.  In November 1999,  Metro Global
paid the lender an additional $600,000 from the proceeds of the sale of Fanzine.
As of February 26, 2000,  the balance of the note payable is  $1,200,000.  Metro
Global is currently renegotiating the terms of the note.

     On June 30, 1999,  Metro Global  entered into a one-year note payable at an
interest  rate of 10% with a related  party for $30,000.  Proceeds from the note
were used for  working  capital.  On December  31,  1999,  the note  payable and
accrued interest was converted into 87,847  restricted  shares of Metro Global's
Common Stock.

     During  June 1997,  Metro,  Inc.  ("Metro")  entered  into a line of credit
agreement with Finova Capital. Under the agreement,  Metro was able to borrow up
to 75% of assigned accounts receivable less than 90 days old, up to a maximum of
$1,000,000.  The balance due under the line of credit  incurred  interest at the
prime rate plus 5% per annum plus a collateral  management  fee. The outstanding
balance  under  the  line was  secured  by  accounts  receivable  of  Metro  and
guaranties of Metro Global and certain officers/shareholders. The line of credit
expired during June 1999. On November 11, 1999, the  outstanding  balance on the
line of credit was repaid with proceeds  from the line of credit with  Reservoir
Capital Corporation described below.

     In  September  1999,  Metro Global  signed a  $4,000,000  Loan and Security
Agreement with Reservoir Capital  Corporation.  Pursuant to the terms, Metro may
borrow up to 70% of  accounts  receivable  less  than  ninety  day old,  up to a
maximum of $3,000,000.  The accounts receivable  borrowing base excludes foreign
receivables  and  receivables  where more than 50% of the balance is over ninety
days old. The borrowings on Capital Video Corporation ("CVC") are limited to the
lesser of 30% of total accounts  receivable or $1,600,000.  Additionally,  Metro
can borrow 40% of inventory,  up to a maximum of  $1,000,000.  Borrowings  under
this loan bear interest at prime rate plus 3.5% per annum.  Additionally,  Metro
must pay a service  fee of .35% per month on the  average  daily  loan  balance.
Metro  must pay an  unused  fee of .25% on the  amount of the  borrowings  under
$2,000,000.  The loan is  secured  by the  assets  of  Metro.  The CVC  accounts
receivable  are  guaranteed by the sole  shareholder  of CVC, who is a principal
shareholder  of  Metro  Global.  Additionally,  CVC  has  executed  a put on the
inventory of Metro in case of default. As of February 26, 2000, borrowings under
the line of credit totaled $2,740,192.

     Of Metro's total accounts receivable at February 26, 2000,  $2,151,584,  as
compared to $2,719,361  for the nine months ended  February 27, 1999, is owed by
CVC, a chain of retail stores, which is wholly owned by a principal  shareholder
of Metro Global.  Because of the amount of this receivable and the concentration
of business with CVC, this receivable is monitored very closely. All amounts due
from CVC are within  terms given by Metro,  and are  maintained  within 60 to 90
days.  Accordingly,  no allowance for related party  receivables  and no related
party bad debt expense has been recorded in Metro Global's financial statements.

     For the nine months ended February 26, 2000,  Metro invested  $1,938,716 in
new feature films and video.  Financing for these  activities  has been and will
continue to be generated  through operating cash flows as well as funds received
from its line of credit.

Capital Expenditures

     Capital expenditures in the nine months ended February 26, 2000 amounted to
$388,257 as compared to $444,278  for the nine months  ended  February 27, 1999.
Metro Global incurred capital lease  obligations of $411,799 for the nine months
ended  February 26, 2000  primarily  for  computer  equipment,  duplicating  and
editing equipment.

     Management  believes that funds  provided by operations and the new line of
credit are adequate to meet the  anticipated  short-term  and long-term  capital
needs.  Management  believes that inflation has not had a material effect on its
operations.


                                       5
<PAGE>

Forward Looking Statements

     This Form 10-QSB Report contains  "forward-looking  statements,"  including
statements in "Management's  Discussion and Analysis of Financial  Condition and
Results of  Operations,"  as to  expectations,  beliefs,  plans,  objectives and
future  financial  performance,  and  assumptions  underlying or concerning  the
foregoing.  Such  forward-looking  statements  involve risks and  uncertainties,
which could cause  actual  results or outcomes to differ  materially  from those
expressed in the  forward-looking  statements.  One such factor that could cause
actual  results or outcomes to differ  materially  from those  discussed  in the
forward-looking  statements would be government actions or initiatives,  such as
attempts to limit or otherwise  regulate the sale of  adult-oriented  materials,
including print, video and online materials.

Restatement

     Metro Global has restated the financial  statements  for the three and nine
months ended February 27, 1999. The financial statements were restated to record
dividends  on  the  embedded  beneficial  conversion  feature  of the  Series  A
Preferred  Stock,  interest on the  embedded  beneficial  conversion  feature on
convertible  debentures,   and  changes  in  estimates.   The  effect  of  these
adjustments  was a decrease  in net income of $279,204 to a net loss of $963,425
and a decrease  in  earnings of $0.05 per share to a loss of $0.16 per share for
the three months ended February 27, 1999; and a decrease in earnings of $585,162
to a net loss of  $1,672,492  and a decrease in earnings of $0.11 per share to a
loss of $0.32 per share for the nine months ended February 27, 1999.

Licensing Agreement

     On July 21,  1999,  Metro Global  entered  into an  agreement  with certain
subsidiaries of New Frontier  Media,  Inc. ("New  Frontier"),  a publicly traded
company involved in distribution of adult entertainment via cable television and
the internet.  New Frontier  will receive  access to Metro  Global's  3,200-plus
library of videos and pictures for Internet and cable television  exhibition for
a period  of seven  years.  In  consideration,  Metro  Global  received  500,000
restricted  shares of New  Frontier's  Common  Stock plus  warrants  to purchase
100,000 additional shares of New Frontier's Common Stock per year for five years
at market price, as defined in the agreement. Metro Global recorded the value of
the Common  Stock and  warrants as an  investment  and  deferred  revenue in the
amount of $4,787,474.  The deferred revenue is being amortized over seven years.
Metro  Global  recognized  $398,956  of income  from the  relationship  with New
Frontier during the nine months ended February 26, 2000.

     As part of the  agreement,  a subsidiary of New Frontier will provide Metro
Global with advertising on its websites,  as well as technical support for Metro
Global's  websites,  including credit card processing.  In consideration,  Metro
Global  issued New Frontier  250,000  restricted  shares of its Common Stock and
warrants to purchase  50,000  shares of Common  Stock per year for five years at
market price,  as defined in the agreement.  Metro Global  recorded the value of
the  Common  Stock and  warrants  at  $716,752.  The  deferred  expense is being
amortized over five years.  The unamortized  portion of the deferred  expense is
recorded  as a  reduction  of  additional  paid-in-capital  in the  accompanying
financial statements.


                                       6
<PAGE>


METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
FEBRUARY 26, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>


                                      Assets
                                      ------


Current Assets
--------------

<S>                                                          <C>
  Cash                                                       $    647,634
  Accounts receivable, less allowance
    for doubtful accounts of $201,299                           3,572,378
  Accounts receivable, related party                            2,151,584
  Inventory                                                     4,285,729
  Recoverable income tax                                          339,000
  Prepaid expenses and other current assets                       370,081
  Notes Receivable                                              2,407,860
                                                             ------------


Total Current Assets                                           13,774,266
--------------------                                         ------------




  Motion pictures and other films at cost, less accumulated
    amortization of $10,289,821                                 5,469,999

  Property and equipment at cost, less accumulated
    depreciation of $2,701,995                                  2,277,152


  Investment in securities                                      4,787,474

  Other assets                                                    177,238
                                                             ------------


Total Assets                                                 $ 26,486,129
------------                                                 ------------

</TABLE>


















                 See Notes to Consolidated Financial Statements
                                      F-1


<PAGE>


METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
FEBRUARY 26, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                      Liabilities and Shareholders' Equity
                      ------------------------------------


Current liabilities
-------------------


<S>                                                          <C>
  Current portion of capital lease obligations               $    301,563
  Short-term borrowings                                         4,490,192
  Convertible debentures                                          817,145
  Accounts payable and accrued expenses                         7,115,218
  Income taxes payable                                             84,269
                                                             ------------

Total current liabilities                                      12,808,387
-------------------------                                    ------------

  Deferred Revenue                                              4,388,518
  Capital lease obligations, less current portion                 383,301
                                                             ------------

Total liabilities                                              17,580,206
-----------------                                            ------------


  Minority interest                                                26,121
  Commitments and Contingencies


Shareholders' equity
--------------------


  Preferred Stock, no par value; authorized 2,000,000 shares;
    issued and outstanding, none
  Common stock, $.0001 par value; authorized 10,000,000
    shares; issued 8,807,186 shares and outstanding,
    8,608,944 shares                                                  881
  Additional paid in capital                                   16,564,305
  Accumulated deficit                                          (7,118,421)
  Accumulated other comprehensive loss - foreign exchange         (13,771)
                                                             ------------
                                                                9,432,994

  Unearned compensation                                           (45,692)
  Less cost of Treasury Stock (198,242 common shares)            (507,500)
                                                             ------------

Total shareholders' equity                                      8,879,802
--------------------------                                   ------------


Total liabilities and shareholders' equity                   $ 26,486,129
------------------------------------------                   ============
</TABLE>










                 See Notes to Consolidated Financial Statements
                                       F-2


<PAGE>


METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS  ENDED  FEBRUARY  26, 2000 AND  FEBRUARY  27, 1999
(UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                            Three Months   Nine Months
                                             Three Months    Nine Months    Feb 27, 1999   Feb 27, 1999
                                             Feb 26, 2000    Feb 26, 2000   As restated    As restated
                                             (Unaudited)     (Unaudited)    (Unaudited)    (Unaudited)
                                             ----------------------------------------------------------

<S>                                           <C>             <C>            <C>            <C>
  Revenues                                    $7,315,565      $20,377,538    $6,025,835     $17,103,307
  Cost of revenues, including
    amortization of motion pictures
    and other films                            4,672,005       13,524,283     4,041,820      11,617,397
                                              ----------      -----------    ----------     -----------

                                               2,643,560        6,853,255     1,984,015       5,485,910
  Selling, general and
    administrative expenses                    3,047,817        8,117,966     2,262,635       6,353,703
                                              ----------      -----------    ----------     -----------

                                                (404,257)      (1,264,711)     (278,620)       (867,793)
                                              ----------      -----------    ----------      -----------
Other income and (expenses)
---------------------------

  Interest expense, net                         (435,302)      (1,296,579)     (842,476)     (1,323,920)
  Royalty income                                  53,897          118,969        21,215         108,930
  Miscellaneous income(expense)                   65,197          131,181            94             787
  Minority interest                                -0-             27,346        (6,998)        (10,926)
                                              ----------      -----------    ----------     -----------

                                                (316,208)      (1,019,083)     (828,165)     (1,225,129)
                                              ----------      -----------    ----------     -----------

Loss from continuing operations                 (720,465)      (2,283,794)   (1,106,785)     (2,092,922)

  Benefit for income taxes                         -0-              -0-          91,345         204,555
                                              ----------      -----------    ----------     -----------

Loss from continuing operations                 (720,465)      (2,283,794)   (1,015,440)     (1,888,367)

Extraordinary gain on debt
  restructuring                                  455,842          455,842         -0-             -0-

Gain on sale of discontinued
  operations (net of tax)                          -0-            372,324         -0-             -0-

Income (Loss) from discontinued
operations (net of tax)                            -0-             96,716        52,015         215,875
                                              ----------      -----------    ----------     -----------

Net Loss                                      $ (264,623)     $(1,358,912)   $ (963,425)    $(1,672,492)
                                              ==========      ===========    ==========     ===========

</TABLE>












                 See Notes to Consolidated Financial Statements
                                       F-3


<PAGE>


METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE THREE AND NINE MONTHS  ENDED  FEBRUARY  26, 2000 AND  FEBRUARY  27, 1999
(UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                            Three Months   Nine Months
                                             Three Months    Nine Months    Feb 27, 1999   Feb 27, 1999
                                             Feb 26, 2000    Feb 26, 2000   As restated    As restated
                                             (Unaudited)     (Unaudited)    (Unaudited)    (Unaudited)
                                             ----------------------------------------------------------

Loss Per Share:

<S>                                            <C>              <C>           <C>             <C>
Loss from continuing
  operations:                                    $ (0.11)         $ (0.34)      $ (0.17)        $ (0.36)
    Basic and Diluted
Extraordinary gain on debt
  restructuring:                                 $  0.07          $  0.07       $  0.00         $  0.00
    Basic and Diluted
Gain on sale of discontinued
  operations:                                    $  0.00          $  0.06       $  0.00         $  0.00
    Basic and Diluted
Income (Loss) from discontinued
  operations:                                    $  0.00          $  0.02       $  0.01         $  0.04
    Basic and Diluted
Net loss:                                        $ (0.04)         $ (0.20)      $ (0.16)        $ (0.32)
    Basic and Diluted
Weighted average number of shares:
    Basic and Diluted                          6,798,562        6,717,502     5,958,390       5,165,186

</TABLE>
























                 See Notes to Consolidated Financial Statements
                                       F-4


<PAGE>


METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED FEBRUARY 26, 2000 AND FEBRUARY 27, 1999 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>



                                                                               1999
                                                            2000            as restated
                                                            ----            -----------

Cash flows from operating activities:
<S>                                                     <C>                <C>
  Net loss                                              $ (1,358,912)      $ (1,672,492)
                                                        ------------       ------------

Adjustments to reconcile net loss to
 net cash provided by operating activities:
  Depreciation Expense                                       507,084            354,467
  Amortization of motion pictures and other films          1,555,188          1,389,055
  Amortization of deferred rent                              (10,508)           (10,508)
  Amortization of unearned compensation                      314,525             62,500
  Amortization of goodwill                                   200,000            233,333
  Amortization of deferred revenue                          (398,956)             -0-
  Amortization of deferred expense                            83,621              -0-
  Amortization of discount on debenture                       59,137             52,566
  Accrued interest added to note payable principal            68,000              -0-
  Gain on sale of Fanzine                                    372,324              -0-
  Discount on issuance of convertible debenture                -0-             (157,700)
  Allowance for doubtful accounts                            206,498             90,000
  Embedded interest on convertible debentures                  -0-              218,093
  Common Stock issued for consulting services                 62,815            499,716
  Common Stock issued for compensation                        43,000              6,850
  Common Stock issued for interest expense                     -0-              570,000
  Issuance of warrants                                       175,844            388,429
  Minority interest                                          (27,346)            (7,294)
  Foreign exchange                                            (7,006)            (1,890)
(Increase) decrease in assets:
  Accounts receivable                                         99,282         (3,400,451)
  Inventory                                                 (181,649)          (257,350)
  Prepaid expenses and other current assets                   65,208           (511,285)
  Other assets                                               (34,348)          (182,397)
  Increase (decrease) in liabilities:
  Accounts payable and accrued expenses                    2,224,003          3,164,860
  Income taxes payable                                      (240,000)          (389,758)
                                                        ------------       ------------

Total adjustments                                          5,136,716          2,111,236
-----------------                                       ------------       ------------

Net cash provided by operating activities               $  3,777,804       $    438,744
-----------------------------------------               -------------      ------------


</TABLE>












                 See Notes to Consolidated Financial Statements
                                       F-5


<PAGE>


METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE NINE MONTHS ENDED FEBRUARY 26, 2000 AND FEBRUARY 27, 1999 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                               1999
                                                            2000            as restated
                                                            ----            -----------



Cash flows from investing activities:

<S>                                                     <C>                <C>
  Acquisition of Fanzine                                $      -0-         $ (2,000,000)
  Acquisition costs                                            -0-             (160,418)
  Investments in motion pictures and other films          (1,938,716)        (2,358,315)
  Purchase of property and equipment                        (388,257)          (444,278)
  Purchase of treasury stock                                   -0-             (507,500)
                                                        ------------       ------------

Net cash used in investing activities                     (2,326,973)        (5,470,511)
-------------------------------------                   ------------       ------------


Cash flows from financing activities:

  Proceeds from the issuance of Series A convertible
    Preferred Stock                                            -0-           $1,317,000
  Proceeds from issuance of common stock                       -0-                8,734
  Proceeds from issuance of convertible debentures             -0-            1,000,000
  Proceeds from exercise of warrants                           -0-              600,000
  Net proceeds from line of credit                         1,797,894            297,314
  Proceeds on notes payable                                   30,000          3,450,000
  Payments on notes payable                               (2,175,000)          (275,000)
  Payments on convertible debentures                        (150,000)             -0-
  Principal payments on capital lease obligations           (316,307)          (246,599)
  Payments on note payable - selling shareholders              -0-           (1,000,000)
  Contribution from joint venture partner                      -0-               30,000
                                                        ------------       ------------

Net cash provided by (used in) financing activities         (813,413)         5,181,449
---------------------------------------------------     ------------       ------------

Net increase in cash                                         637,418            149,682

Cash, beginning of period                                     10,216            184,995

Cash, end of period                                     $    647,634       $    334,677
                                                        ============       ============


Supplemental disclosures of cash flow information:

    Cash paid during the period for:

        Interest                                        $    303,892       $    382,054
                                                        ============       ============

        Income taxes                                    $    240,000       $     18,973
                                                        ============       ============

</TABLE>



                 See Notes to Consolidated Financial Statements
                                       F-6


<PAGE>


METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE NINE MONTHS ENDED FEBRUARY 26, 2000 AND FEBRUARY 27, 1999 (UNAUDITED)
--------------------------------------------------------------------------------

Supplemental schedule of non-cash investing and financing activities:

     During the nine months  ended  February 27, 1999, a payable of $300,000 was
converted into 250,000  restricted  shares of Metro  Global's  Common Stock by a
related party.

     During the nine months ended  February  27,  1999,  2175 shares of Series A
Preferred  Stock plus accrued  dividends of $35,427 were  converted into 982,120
shares of Metro Global's Common Stock.  Metro Global  recognized total dividends
of $309,248 relating to the beneficial  conversion  feature of this stock during
the nine months ended February 27, 1999.

     Capital lease obligations of $411,799 and $240,468 were incurred during the
nine months ended  February 26, 2000 and February 27, 1999,  respectively,  when
Metro Global entered into capitalized  leases for office equipment and machinery
and equipment.

     On  July  21,  1999,  Metro  Global  entered  into a seven  year  Licensing
Agreement with New Frontier Media, Inc. Metro Global received 500,000 restricted
shares of New  Frontier  Common  Stock plus  warrants to purchase an  additional
100,000  shares of New  Frontier  Common  Stock per year for five  years.  Metro
Global valued the Common Stock and warrants at $4,787,474.  The deferred revenue
is being amortized over seven years.

     As part of the Licensing  Agreement,  in consideration of certain services,
Metro Global issued New Frontier 250,000  restricted  shares of its Common Stock
and warrants to purchase  50,000 shares of Common Stock per year for five years.
Metro Global  valued the Common  Stock and  warrants at  $716,752.  The deferred
expense is being amortized over five years.

     During the nine months ended  February 26,  2000,  $105,000 of  convertible
debentures  and accrued  interest and penalties of $38,075 were  converted  into
83,888 restricted shares of Common Stock.

     During the nine months  ended  February  26, 2000,  various  notes  payable
totaling $580,000 plus accrued interest of $38,075 were converted into 1,716,875
restricted shares of Common Stock.

     During the nine months ended  February 26,  2000,  various  payables due to
related  parties  totaling  $966,231  were  assumed by Capital  Video Corp.  The
accounts receivable was reduced accordingly.















                 See notes to consolidated financial statements.
                                       F-7



<PAGE>


METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED FEBRUARY 26, 2000 AND FEBRUARY 27, 1999 (UNAUDITED)
--------------------------------------------------------------------------------


1. Summary of Significant Accounting Policies and Plan of Operation

Consolidation

     The consolidated  financial statements include the accounts of Metro Global
and its majority owned and controlled  subsidiaries.  All intercompany  balances
and transactions have been eliminated in consolidation.

Financial Statements

     The interim financial  statements are prepared pursuant to the requirements
for reporting on Form 10-QSB. The interim financial  information included herein
is unaudited;  however,  such information  reflects all adjustments  (consisting
solely of normal recurring  adjustments) that are, in the opinion of management,
necessary  to  a  fair  presentation  of  the  financial  position,  results  of
operations,  and changes in  financial  position  for the interim  periods.  The
interim  financial  statements  and notes thereto  should be read in conjunction
with the financial statements and notes included in Metro Global's latest annual
report.  Certain  information  and  footnote  disclosures  normally  included in
financial  statements  prepared in accordance with generally accepted accounting
principles  have been  condensed  or  omitted.  The  current  period  results of
operations are not necessarily  indicative of results,  which ultimately will be
reported for the full year ending May 27, 2000.

Use of Estimates

     The  preparation  of financial  statements  in  conformity  with  generally
accepted   accounting   principles  requires  the  use  of  estimates  based  on
management's  knowledge and experience.  Due to their prospective  nature, it is
reasonable to expect actual results to differ from those estimates.

Reclassification

     Certain  items  in the  financial  statements  for the  nine  months  ended
February  27,  1999  have  been   reclassified   to  conform  with  the  current
presentation.
















                                       F-8


<PAGE>


METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED FEBRUARY 26, 2000 AND FEBRUARY 27, 1999 (UNAUDITED)
--------------------------------------------------------------------------------


2. Dispositions

Fanzine International, Inc.

     On August 3, 1998, Metro Global acquired 100% of the stock of Fanzine for a
cash purchase price of $4,000,000, plus contingent consideration. Fanzine, which
began operations on August 1, 1997, publishes event driven, mainstream magazines
translated  into seven  languages  and  distributed  worldwide.  The  contingent
consideration  consisted of 1,000,000 restricted shares of Metro Global's Common
Stock with put option  rights at $8.00 per share to be  exercised by the selling
shareholder's  during the second year on a quarterly  basis,  if certain minimum
earnings, as defined, are met. During Fanzine's first year of operations,  Metro
Global had the right to call the shares at the greater of $6.00 per share or 75%
of the market  price.  Metro  Global did not call the  shares.  The  acquisition
agreement also provided for a reduction in purchase  price if Fanzine's  results
of operations did not meet certain minimum earnings.

     The acquisition was accounted for as a purchase. The excess of the purchase
price over the fair market values of net assets acquired,  which included, among
others, licenses, trademarks, and distribution rights, was allocated to goodwill
and amortized  over ten years.  The cash portion of $4,000,000 was financed by a
long-term  convertible debenture and other short-term  borrowings.  On September
29, 1999,  Metro Global sold  Fanzine's  stock back to the selling  shareholders
(see note 3).

3. Discontinued Operations

     On September  29,  1999,  Metro  Global  signed a  Rescission  and Purchase
Agreement with the selling  shareholders of Fanzine and a company  controlled by
them.  In  consideration  of this sale of  Fanzine's  stock,  Metro  Global will
receive  payments  totaling  $4,500,000 and the 1,000,000  contingent  shares of
Common  Stock  originally  given to the  selling  shareholders.  Payment  of the
$4,500,000  is  secured  by the  assets of  Fanzine  and  partly  secured by the
personal  guarantees  of the  former  Fanzine  shareholders.  Metro  Global  has
received payment of $2,000,000 during the period ending February 26, 2000. Metro
Global will  receive  $1,000,000  by May 31, 2000 and  $1,500,000  by August 31,
2000. The operations of Fanzine have been classified as discontinued  operations
in the accompanying financial statements.

     The following table is a summary of the results of discontinued  operations
for the nine months ended  February 26, 2000 and seven months ended February 27,
1999, respectively:
<TABLE>
<CAPTION>

                                               Feb. 26, 2000      Feb. 27, 1999
                                               -------------      -------------

        <S>                                     <C>                <C>
        Revenues                                $ 6,111,545        $ 7,488,297
        Cost of revenues                          5,400,953          6,266,708
                                                -----------        -----------
                                                    710,592          1,221,589

        Other expenses                              535,524            861,798
                                                -----------        -----------

        Income before income taxes                  175,068            359,791

        Income taxes                                 78,352            143,916
                                                -----------        -----------

        Income from discontinued operations     $    96,716        $   215,875
                                                ===========        ===========
</TABLE>

                                       F-9


<PAGE>


METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED FEBRUARY 26, 2000 AND FEBRUARY 27, 1999 (UNAUDITED)
--------------------------------------------------------------------------------


3. Discontinued Operations (continued)

     Income from discontinued operations before income taxes does not include an
allocation of corporate interest expense or amortization of goodwill.

4.  Debt

     On August 1,  1998,  Metro  Global  entered  into  notes  payable  totaling
$1,000,000 with related parties.  The notes, which bear interest at 8%, were due
August 1, 1999. Proceeds from the notes were used in the acquisition of Fanzine.
In October  1998,  $600,000 of debt was converted  into 400,000  shares of Metro
Global's  Common Stock.  On August 1, 1999,  the balance of the notes' due dates
were extended for one year. In consideration of the extension, the interest rate
increased  from 8% to 10% and  warrants  were  issued to  purchase up to 115,000
shares  of  Common  Stock at a price of  $2.58,  exercisable  for a term of five
years. Metro Global recorded interest expense of $100,050 in connection with the
issuance of the  warrants.  On December 31,  1999,  one of the notes and accrued
interest of $281,250 was converted into 781,250 shares of Metro Global's  Common
Stock.  On  December  31,  1999,  the other note and accrued  interest  totaling
$183,250  was  assumed  by CVC and  the  receivable  due  from  CVC was  reduced
accordingly.

     On October 28,  1998,  Metro  Global  entered  into a note  payable with an
unrelated third party for $1,100,000. The note, which bears no interest, was due
in  quarterly   installments  of  $275,000  commencing  December  31,  1998.  In
consideration  of  the  loan  and  part  of  an  investment  banking  consultant
agreement,  Metro Global issued the lender  150,000  restricted  shares of Metro
Global's  Common Stock.  Metro Global recorded  interest  expense of $243,412 in
1999 in connection with the issuance of the restricted stock.  Metro Global used
$507,500 of the proceeds to repurchase  198,242 shares of its outstanding Common
Stock from Metro Plus, a company  partially owned by a significant  shareholder.
For the year ended May 29, 1999, Metro Global made one payment of $275,000. As a
result,  default  interest  at 11% per annum has been  accrued on this note.  In
September 1999, Metro Global and the lender agreed to a preliminary extension of
the note.  Under the terms of the  extension,  a payment of $550,000  was due by
September  30, 1999 and the final  payment of $275,000  was due on December  31,
1999.  The September  30, 1999  payments are currently in default.  Metro Global
made  a  payment  of  $275,000  in  October  1999.  Metro  Global  is  currently
renegotiating the payments for the final $550,000 due on the note payable.

     On December  9, 1998,  Metro  Global  entered  into a  six-month  term loan
agreement with an unrelated third party. Under the terms of the agreement, Metro
Global  borrowed  $3,000,000 at an interest  rate of 10% per year.  The proceeds
were used toward the  acquisition  of Fanzine and to fund  working  capital.  In
connection with this transaction, Metro Global issued warrants to purchase up to
350,000  shares of Common  Stock at a price of $3.00,  expiring on December  31,
2001. Metro Global recorded  interest expense of $577,000 in connection with the
issuance of the warrants during 1999. Additionally,  Metro Global issued 100,000
shares of Common Stock and recorded $187,500 of interest expense relating to the
issuance of these shares  during 1999. In September  1999,  Metro Global and the
lender agreed to an extension.  Under the terms of the  extension,  Metro Global
paid $1.3  million  upon the closing of the  financing  with  Reservoir  Capital
Corporation,  a new unrelated third party lender. In November 1999, Metro Global
paid the lender an additional $600,000 from the proceeds of the sale of Fanzine.
As of February 26, 2000,  the balance of the note payable is  $1,200,000.  Metro
Global is currently renegotiating the terms of the note.



                                      F-10


<PAGE>


METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED FEBRUARY 26, 2000 AND FEBRUARY 27, 1999 (UNAUDITED)
--------------------------------------------------------------------------------


4. Debt (continued)

     On June 30, 1999,  Metro Global  entered into a one-year note payable at an
interest  rate of 10% with a related  party for $30,000.  Proceeds from the note
were used for  working  capital.  On December  31,  1999,  the note  payable and
accrued interest was converted into 87,847  restricted  shares of Metro Global's
Common Stock.

5. Convertible Debentures

     On July 31, 1998,  Metro Global  entered into an 8%  convertible  debenture
with an  unrelated  party in the  amount  of  $1,000,000,  which was used in the
purchase of Fanzine. In connection with this transaction,  Metro Global issued a
warrant for 75,000 shares at a price of $4.11 and a warrant for 25,000 shares at
a price of $3.29,  both  exercisable  over two years.  Metro  Global  recorded a
discount on the  debenture  of  $157,700  for the value of the  warrants.  Metro
Global amortized  $59,137 and $52,566 of the discount to interest expense during
the nine months ended February 26, 2000 and February 27, 1999, respectively.

     The  $1,000,000  debenture  was to mature  on July 31,  2000.  Interest  is
payable on a quarterly basis. The holder of the debenture is entitled to convert
the  principal  value into Metro  Global's  Common Stock at a discounted  market
price as is defined in the  debenture  agreement.  During the nine months  ended
February 26, 2000, $105,000 of convertible  debentures plus accrued interest and
penalties were converted into 83,888  restricted shares of Metro Global's Common
Stock.  On February  25,  2000,  Metro Global  entered  into a  Forbearance  and
Modification Agreement with the lender. Under the terms of the agreement,  Metro
Global made a payment of $150,000 upon execution of the agreement. The remaining
balance of $850,000 is due in two  installments of $450,000 each, due on July 1,
2000 and October 1, 2000.  The  debenture is secured by 200,000  shares of stock
owned by Metro Global.

     On March 23, 1998, Metro Global entered into two 12% convertible debentures
totaling  $500,000 with related parties.  Both notes were due on March 23, 1999,
in either  cash or  Common  Stock,  at a  conversion  rate of $2.25  per  share.
Proceeds from the debentures were used for working  capital.  In March 1999, the
debentures' due dates, including accrued interest of $60,000 (which was added to
the note  principal),  were extended until March 23, 2000. On December 31, 1999,
one of the debentures,  including the accrued interest due under such debenture,
was converted into 847,778 restricted shares of Metro Global's Common Stock. The
second  debenture and accrued interest was assumed by CVC and the receivable due
from CVC was reduced accordingly.

     On July 1, 1998,  Metro  Global  entered into a 12%  convertible  debenture
totaling  $200,000  with a related  party.  The note was due on July 1, 1999, in
either cash or Common  Stock,  at a  conversion  rate of $2.25 per share.  Metro
Global recorded $60,248 of interest expense relating to the embedded  beneficial
conversion  feature.  Proceeds from the debenture were used for working capital.
On July 1, 1999,  the  debenture's  due date was extended until July 1, 2001. In
conjunction with the extension,  warrants were granted to purchase 50,000 shares
of Metro  Global's  Common  Stock for $2.58 per  share.  Metro  Global  recorded
interest expense of $52,000 in connection with the issuance of the warrants.  On
December 31, 1999,  the debenture  and accrued  interest were assumed by CVC and
the receivable due from CVC was reduced accordingly.




                                      F-11


<PAGE>


METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED FEBRUARY 26, 2000 AND FEBRUARY 27, 1999 (UNAUDITED)
--------------------------------------------------------------------------------


6. Short-Term Borrowings

     Pursuant to a line of credit agreement with Finova Capital,  Metro Global's
subsidiary,  Metro, was able to borrow up to 75% of assigned accounts receivable
less than 90 days old, up to a maximum of $1,000,000.  The balance due under the
line of credit  incurred  interest  at the  prime  rate  plus 5% per  annum.  In
addition,  Metro pays the finance company a management fee equal to 3/4 of 1% of
sales  submitted  for  inclusion  in the  net  security  value  of the  accounts
receivable,  but not more than $7,500 per month.  The outstanding  balance under
the line was secured by the accounts  receivable of Metro,  and the guarantee of
Metro  Global.  On November 11,  1999,  the  outstanding  balance on the line of
credit was repaid with proceeds from the line of credit with  Reservoir  Capital
Corporation described below.

     In  September  1999,  Metro Global  signed a  $4,000,000  Loan and Security
Agreement with Reservoir Capital  Corporation.  Pursuant to the terms, Metro may
borrow up to 70% of  accounts  receivable  less than  ninety  days old,  up to a
maximum of $3,000,000.  The accounts receivable  borrowing base excludes foreign
receivables  and  receivables  where more than 50% of the balance is over ninety
days old. The borrowings on accounts  receivable from CVC, a related party,  are
limited  to the  lesser  of 30% of  total  accounts  receivable  or  $1,600,000.
Additionally,  Metro can borrow 40% of inventory, up to a maximum of $1,000,000.
Borrowings  under  this loan bear  interest  at prime  rate plus 3.5% per annum.
Additionally,  Metro  must pay a service  fee of .35% per  month on the  average
daily  loan  balance.  Metro must pay an unused fee of .25% on the amount of the
borrowings under $2,000,000. The loan is secured by the assets of Metro. The CVC
accounts receivable are guaranteed to the lender by the sole shareholder of CVC,
who is a principal shareholder of Metro Global. Additionally, CVC has executed a
put on the  inventory  of Metro in case of  default.  As of February  26,  2000,
borrowings under the line of credit totaled $2,740,192.

7. Shareholders' Equity

Series A Convertible Preferred Stock

     During  April  1998,  Metro  Global  entered  into an  Offshore  Securities
Subscription Agreement for convertible Preferred Shares pursuant to Regulation S
of the U.S.  Securities  Act of 1933.  Under the terms of the  agreement,  Metro
Global issued 2,175 shares of 1998 Series A Convertible Preferred Stock ('Series
A Shares') at a price of $1,000 per share with a 5% cumulative  dividend payable
in Common Stock at conversion.  At May 30, 1998, Metro Global received  proceeds
of $846,500, net of offering costs representing 855 shares. Substantially all of
the proceeds for the remaining 1320 shares were received in fiscal 1999.

     The Series A Shares are  convertible  at a rate of 100 shares plus  accrued
dividends per week at 80% of the 15 day average closing bid price.  These Shares
are subject to a twenty-four month mandatory  conversion  feature.  Metro Global
recognized  dividends of $146,513 at August 29, 1998 for the embedded beneficial
conversion feature.  For the nine months ended February 27, 1999, 2175 shares of
the Series A shares and accrued  dividends were converted into 982,120 shares of
Metro Global's  Common Stock.  In addition to the Series A Shares,  Metro Global
issued 400,000  detachable  warrants to purchase Metro Global's  Common Stock at
$1.50 per share  commencing  April 20, 1998 exercisable over 5 years. In October
1998, all 400,000  warrants were  transferred to a related party of Metro Global
and exercised.



                                      F-12


<PAGE>


METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED FEBRUARY 26, 2000 AND FEBRUARY 27, 1999 (UNAUDITED)
--------------------------------------------------------------------------------


8. Licensing Agreement

     On July 21,  1999,  Metro Global  entered  into an  agreement  with certain
subsidiaries of New Frontier, a publicly traded company involved in distribution
of adult entertainment via cable television and the internet.  New Frontier will
receive access to Metro Global's  3,200-plus  library of videos and pictures for
Internet  and  cable  television  exhibition  for a period  of seven  years.  In
consideration, Metro Global received 500,000 restricted shares of New Frontier's
Common Stock plus warrants to purchase 100,000 additional shares of New Frontier
Common  Stock  per year for  five  years at  market  price,  as  defined  in the
agreement.  Metro Global  recorded the value of the Common Stock and warrants as
an investment  and deferred  revenue in the amount of  $4,787,474.  The deferred
revenue is being amortized over seven years. Metro Global recognized $398,956 of
income from the  relationship  with New  Frontier  during the nine months  ended
February 26, 2000.

     As part of the  agreement,  a subsidiary of New Frontier will provide Metro
Global with advertising on its websites,  as well as technical support for Metro
Global's  websites,  including credit card processing.  In consideration,  Metro
Global  issued New Frontier  250,000  restricted  shares of its Common Stock and
warrants to purchase  50,000  shares of Common  Stock per year for five years at
market price,  as defined in the agreement.  Metro Global  recorded the value of
the  Common  Stock and  warrants  at  $716,752.  The  deferred  expense is being
amortized over five years.  The unamortized  portion of the deferred  expense is
recorded  as a  reduction  of  additional  paid-in-capital  in the  accompanying
financial statements.

9. Restatement

     Metro Global has restated the financial  statements  for the three and nine
months ended February 27, 1999. The financial statements were restated to record
dividends  on  the  embedded  beneficial  conversion  feature  of the  Series  A
Preferred  Stock,  interest on the  embedded  beneficial  conversion  feature on
convertible  debentures,   and  changes  in  estimates.   The  effect  of  these
adjustments  was a decrease  in net income of $279,204 to a net loss of $963,425
and a decrease  in  earnings of $0.05 per share to a loss of $0.16 per share for
the three months ended February 27, 1999; and a decrease in earnings of $585,162
to a net loss of  $1,672,492  and a decrease in earnings of $0.11 per share to a
loss of $0.32 per share for the nine months ended February 27, 1999.



















                                      F-13


<PAGE>


METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED FEBRUARY 26, 2000 AND FEBRUARY 27, 1999 (UNAUDITED)
--------------------------------------------------------------------------------


PART II - OTHER INFORMATION
---------------------------

Item 1. Legal Proceedings
        -----------------

        George Kinney v. Metro Global Media, Inc., et al.
        C.A. No. 99-579 (U.S.D.C.,D.R.I.)

     On November 22,  1999,  George  Kinney,  on behalf of himself and all other
     similarly situated,  commenced a putative class action in the United States
     District  Court for the District of Rhode Island  against  Metro Global and
     certain of its present or former officers and directors. Plaintiff seeks to
     represent a class of all person who  acquired  securities  of Metro  Global
     between  September 13, 1996 and September 13, 1999.  The Complaint  alleges
     claim  based on  alleged  violations  of  section  10(b) of the  Securities
     Exchange Act of 1934.  Plaintiff  alleges that the defendants made a series
     of false and  misleading  statements  concerning  Metro  Global's  reported
     financial results during the class period that violated  generally accepted
     accounting principles and ultimately caused Metro Global to restate certain
     financial  statements.   On  March  15,  2000,  Metro  Global  and  certain
     defendants filed a motion to dismiss the complaint. Plaintiff's response is
     due no later than  Friday,  April 14, 2000.  Metro  Global  believes it has
     meritorious defenses and intends to vigorously defend this action.


Item 2. Changes in Securities
        ---------------------

        None

Item 3. Defaults upon Senior Securities
        -------------------------------

        None

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

        None

Item 5. Other information
        -----------------

        None

Item 6. Exhibits and Reports on Form 8-K
        --------------------------------

   (a)  Exhibits

        None

   (b)  Reports on form 8-K

        None























                                      F-14


<PAGE>



                                    SIGNATURE



In accordance with the requirements of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.

                            METRO GLOBAL MEDIA, INC.

                            Date: April 11, 2000


                            By: /s/ Janet M. Hoey
                                -----------------
                                    Janet M. Hoey,
                                    Treasurer(principal financial
                                    and accounting officer), Secretary
                                    and Director


















                                      F-15