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 August 28, 1999

[ ] 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: 6,894,529 at September 30, 1999







<PAGE>


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


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

      Balance Sheet                                                  F-1
      Statements of Income                                           F-3
      Statements of Cash Flows                                       F-4
      Notes to Financial Statements                          F-7 to F-13


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

Results of  Continuing  Operations  for the three  months  ended August 28, 1999
versus three months ended August 29, 1998.

     Metro Global  Media,  Inc.'s  ("Metro  Global")  revenues  from  continuing
operations  increased $1,980,838 to $7,064,170 for the three months ended August
28, 1999.  This  represents a 39% increase from  revenues of $5,083,332  for the
three months ended August 29, 1998.  Revenues  consist  principally  of sales of
prerecorded videocassettes,  magazines, electronic software products and related
items. The increase in revenue is primarily  attributable to the increased sales
of videos and DVDs of approximately $1,000,000, an increase in magazine sales of
approximately   $500,000,  an  increase  in  sales  by  Metro  International  of
approximately  $100,000  and an  increase  in cable  revenues  of  approximately
$210,000 over the same period of the prior year.

     Costs  of  revenues  (including  amortization  of film  costs)  related  to
continuing operations for the three month period ended August 28, 1999 increased
to $4,678,546  from $3,531,130 for the  corresponding  period in the prior year.
Costs of revenues  as a  percentage  of revenues in the first  quarter of fiscal
1999 were 66% as  compared  to 69% in the first  quarter  of  fiscal  1998.  The
improvement  in the gross margin  related to continuing  operations is primarily
due to the  increase  in the  revenues  from  the  sale of  cable  rights,  with
relatively smaller associated costs.

     Selling,   general  and  administrative   expenses  related  to  continuing
operations  for  the  three  months  ended  August  28,  1999  increased  37% to
$2,560,825 from $1,867,936 for the three months ended August 29, 1998.  Selling,
general,  and  administrative  expenses,  as a percentage of revenues,  remained
constant  for the two periods at 36%.  The primary  reasons for the  increase in
selling,  general  and  administrative  expenses  are an  increase  in  payroll,
increase in consulting expenses, and an increase in Internet development costs.

     Loss from continuing operations for the three month period ended August 28,
1999 was $784,400 as compared to a loss from  continuing  operations of $381,823
for the  corresponding  period in the prior  year.  The  primary  reason for the
increase in the loss is due to the increase in interest expense of approximately
$481,000 due to increased borrowings.  Net loss for the quarter ended August 28,
1999 was  $716,965 as compared to a net loss of $177,459  for the quarter  ended
August 29, 1998,  resulting  in a loss per share of $0.11 for the quarter  ended
August 28, 1999,  as compared to a loss per share of $0.07 for the quarter ended
August 29, 1998.

Liquidity and Capital Resources at August 28, 1999

     Cash  amounted to $761,634 at  quarter-end.  Net cash provided by operating
activities  amounted to  $1,557,503  for the three months ended August 28, 1999,
whereas net cash of $125,940 was used by  operations  for the same period in the
prior  fiscal year.  The primary  uses of cash for the quarter  ended August 28,
1999  consisted  of:  (1) net  payments  on  line of  credit  of  $142,254,  (2)
investments  in motion  pictures  and other films of  $643,364,  (3)payments  on
capital  leases of $88,007,  and (4)  purchases  of property  and  equipment  of
$96,532.


                                        2
<PAGE>


     The net increase in accounts  receivable of $1,393,039 was primarily due to
the increase of sales for the quarter.  Inventory  increased $263,672 due to the
increase in DVD  production.  Accounts  payable and accrued  expenses  increased
$2,652,421  due to  increased  purchasing  and an increase  in accrued  interest
expense.

     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 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  in the
quarter ended August 28, 1999.

     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  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 in the quarter ended August 28, 1999.

     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  $19,713 and $6,571 of the discount to interest expense during
the three months ended August 28, 1999 and August 29, 1998, 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,  after  120 days of the  agreement,  the  principal  value  into  Metro
Global's  Common  Stock  at a  discounted  market  price  as is  defined  in the
agreement. Metro Global has recorded $35,461 of interest expense relating to the
embedded  beneficial  conversion  feature in the quarter  ended August 29, 1998.
Metro Global is in technical default under the terms of the debenture due to the
suspension  of trading of its Common  Stock on September  14,  1999.  During the
quarter ended August 28, 1999,  $60,000 of convertible  debentures  plus accrued
interest and penalties  were converted  into 43,962  restricted  shares of Metro
Global's Common Stock.

     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 agreement were used to
fund working capital.

     The Series A Shares were  convertible  at a rate of 100 shares plus accrued
dividends per week at 80% of the 15 day average closing bid price.  These shares
were 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.  During the quarter  ended August 29, 1998,  700 shares of the Series A
shares  and  accrued  dividends  were  converted  into  280,059  shares of Metro
Global's Common Stock.





                                        3
<PAGE>


     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,  is 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 Kenneth  Guarino.
For the year ended May 29, 1999,  Metro Global made one payment of $275,000.  In
September  1999,  Metro  Global and lender  agreed to an  extension of the note.
Under  the  terms  of the  extension,  payments  totaling  $550,000  are  due by
September  30, 1999 and the final  payment of  $275,000  is due on December  31,
1999.  If all payments are not made by January 1, 2000,  Metro Global must issue
the lender  100,000  shares of restricted  stock as a penalty.  In October 1999,
Metro Global made a $275,000 payment.

     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 lender agreed to an extension,  under
which Metro Global must pay $1.3 million  upon  closing  financing  with another
financing  company.  The  balance  of the  note of  $1,800,000,  which  includes
$100,000  penalty,  will  be  exchanged  for an 8%  convertible  debenture.  The
debenture is convertible  at a rate of not more than 10% of the total  debenture
per  week,  at a price of 80% of the  average  closing  bids  for the five  days
preceding the conversion.  In consideration of the extension,  Metro Global will
issue  warrants to purchase up to 100,000  shares of Common  Stock at a price of
$1.75 per share with a two-year expiration.

     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.

     During  June 1997,  Metro,  Inc.  ("Metro")  entered  into a line of credit
agreement with Finova Capital.  Under the agreement,  Metro may 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 bears interest at the prime
rate plus 5% per annum plus a collateral management fee. The outstanding balance
under the line is secured by  accounts  receivable  of Metro and  guaranties  of
Metro  Global  and  certain  officers/shareholders.  The line of credit  expired
during June 1999,  but includes an option for an  additional  year. As of August
28,  1999,  the balance on the line of credit was  $800,044.  On June 30,  1999,
Finova did not renew the agreement.

     In  October  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,
Inc. can borrow 40% of inventory, up to a maximum of $1,000,000.


                                        4
<PAGE>


     Borrowings under this loan bear interest at prime rate plus 3.5% per annum.
Additionally,  Metro,  Inc.  must pay a  service  fee of .35%  per  month on the
average  daily loan balance.  Metro,  Inc. must pay an unused fee of .25% on the
amount of the  borrowings  under  $2,000,000.  The loan will be  secured  by the
assets of Metro,  Inc. The CVC accounts  receivables  will be  guaranteed by the
sole shareholder of CVC.  Additionally,  CVC will execute a put on the inventory
of Metro in case of default

     Of Metro's total accounts receivable at August 28, 1999, $2,723,875 is owed
by CVC, a chain of retail stores,  which is wholly owned by Kenneth  Guarino,  a
principal  shareholder and the interim Chief  Executive  Officer of Metro Global
and for which Daniel  Geribo,  Metro's  director,  serves as President  and sole
director.  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 predominantly maintained within 60 to 90 day terms. 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 quarter  ended  August 28,  1999,  Metro  invested  $643,364 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 first quarter ended August 28, 1999 amounted to
$96,532 as compared to $179,106 for the quarter  ended  August 29,  1998.  Metro
Global  incurred  capital  lease  obligations  of $411,799 for the quarter ended
August 28,  1999  primarily  for  computer  equipment,  duplicating  and editing
equipment.  Metro  Global  currently  has  $400,000  remaining  on a lease  line
available for its use, which management believes is sufficient.

     Management  believes that funds  provided by  operations,  existing and 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.

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.

Year 2000 Compliance

     As the year 2000  approaches,  an issue has emerged  regarding how existing
application  software  programs and operating  systems can accommodate this date
value.  Failure to adequately address this issue could have potentially  serious
repercussions.  Metro  Global  has begun to  identify,  evaluate  and  implement
changes to its existing computerized business systems. In addition, Metro Global
is  communicating  with its vendors and other  service  providers to ensure that
their  products  and  business   systems  will  be  Year  2000   compliant.   If




                                        5
<PAGE>



modifications  and  conversions  by Metro Global and those it conducts  business
with  were not made in a timely  manner,  the Year  2000  problem  could  have a
material  adverse affect on Metro  Global's  business,  financial  condition and
results of  operations.  Most of the systems of Metro  Global have  already been
identified  as Year  2000  compliant,  including  most  financial  applications.
Although  Metro Global is still  quantifying  the impact,  Metro Global does not
expect to expend more than $50,000 to $100,000.  These costs are being  expensed
as incurred.

     As a contingency  plan for the most reasonably  likely worst case scenario,
Metro  Global has  addressed  all major  elements  related to this issue.  Metro
Global  believes its  technology  systems  will be ready for the Year 2000,  but
Metro Global may experience isolated incidences of non-compliance.  Metro Global
plans  to  allocate  internal   resources  and  retain  consultants  and  vendor
representatives to be ready to take action if these events occur. Although Metro
Global values its established  relationships  with key vendors and other service
providers,  if certain  vendors  are unable to perform on a timely  basis due to
their own Year 2000 issues,  Metro Global believes that  substitute  products or
services are  obtainable  from other vendors.  Metro Global also  recognizes the
risks if other  key  suppliers  in  utilities,  communications,  transportation,
banking and government are not ready for the Year 2000, and is approaching  this
issue in the same manner.

Restatement

     Metro  Global has restated the  financial  statements  for the three months
ended  August  29,  1998.  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 $577,508 to a net loss of $177,459
and a decrease in earnings of $0.12 per share to a loss of $0.07 per share.

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 Frontiers 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  $56,994  of  income  from the  relationship  with New
Frontier during the three months ended August 28, 1999.

     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.

Subsequent Events

     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



                                        6
<PAGE>


secured by the personal  guarantees of the former  Fanzine  shareholders.  Metro
Global will receive  payments of $1,000,000  by October 31, 1999,  $1,000,000 by
November 30, 1999, $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.

     On October 5, 1999,  Metro Global  signed a working  capital line of credit
agreement with Reservoir  Capital under  essentially the same terms as is in the
commitment letter described in note 6 of the accompanying  financial statements.
Actual funding is expected to take place  shortly.  Proceeds of the loan will be
utilized for a partial pay down of debt currently in default.  In the event that
proceeds  are not received  from this loan,  Metro Global will remain in default
under its debt obligations.




                                        7
<PAGE>


METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AUGUST 28, 1999 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>


                                     Assets
                                     ------


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

<S>                                                                <C>
  Cash                                                             $   761,634
  Accounts receivable, less allowance for doubtful
    accounts of $153,674                                             6,480,204
  Accounts receivable, related party                                 2,723,875
  Inventory                                                          4,367,752
  Recoverable income tax                                               339,000
  Prepaid expenses and other current assets                            938,594
                                                                       -------


Total Current Assets                                                15,611,059
--------------------                                                ----------




  Motion pictures and other films at cost, less accumulated
    amortization of $9,269,985                                       4,961,539

  Property and equipment at cost, less accumulated
    depreciation of $2,355,752                                       2,374,764

  Goodwill, net of accumulated
    amortization of $473,293                                         3,695,567

  Investment in securities                                           4,787,474

  Other assets                                                         334,195
                                                                       -------


Total Assets                                                       $31,764,598
------------                                                       ===========

</TABLE>



                 See Notes to Consolidated Financial Statements
                                       F-1
<PAGE>


METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AUGUST 28, 1999 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

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


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


<S>                                                                <C>
  Current portion of capital lease obligations                     $   264,628
  Short-term borrowings                                              4,625,044
  Related party convertible debentures                                 784,000
  Notes payable to related parties                                     474,000
  Convertible debentures                                               867,720
  Accounts payable and accrued expenses                             10,343,036
  Income taxes payable                                                 513,943
                                                                       -------

Total current liabilities                                           17,872,371
-------------------------                                           ----------

  Deferred Revenue                                                   4,730,480
  Capital lease obligations, less current portion                      648,536
                                                                       -------

Total liabilities                                                   23,251,387
-----------------                                                   ----------

  Minority interest                                                     61,600
  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 6,842,771 shares and outstanding,
    6,644,529 shares                                                       684
  Additional paid in capital                                        15,723,336
  Accumulated deficit                                               (6,476,474)
  Accumulated other comprehensive loss - foreign exchange               (5,730)
                                                                    ----------
                                                                     9,241,816

  Unearned compensation                                               (282,705)
  Less cost of Treasury Stock (198,242 common shares)                 (507,500)
                                                                      --------

Total shareholders' equity                                           8,451,611
--------------------------                                           ---------


Total liabilities and shareholders' equity                         $31,764,598
------------------------------------------                         ===========
</TABLE>



                 See Notes to Consolidated Financial Statements
                                       F-2

<PAGE>


METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED AUGUST 28, 1999 AND AUGUST 29, 1998 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                       1998
                                                        1999       as restated
                                                        ----       -----------


<S>                                                  <C>            <C>
  Revenues                                           $7,064,170     $5,083,332
  Cost of revenues, including amortization of
    motion pictures and other films of
    $535,352 and $368,478, respectively               4,678,546      3,531,130
                                                      ---------      ---------
                                                      2,385,624      1,552,202

  Selling, general and administrative expenses        2,560,825      1,867,936
                                                      ---------      ---------

                                                       (175,201)      (315,734)
                                                       --------       --------

Other income and (expenses)
---------------------------

  Interest expense                                     (633,602)      (182,683)
  Royalty income                                         32,536         32,536
  Miscellaneous income(expense)                           -0-            2,501
  Minority interest                                      (8,133)       (12,365)
                                                         ------        -------

                                                       (609,199)      (160,011)
                                                       --------       --------

Loss from continuing operations                        (784,400)      (475,745)

  Provision (benefit) for income taxes                   (-0-)         (93,922)
                                                         ----          -------

Loss from continuing operations                        (784,400)      (381,823)

Income from discontinued operations (net of tax)         67,435        204,364
                                                         ------        -------

Net loss                                             $ (716,965)    $ (177,459)
                                                     ==========     ==========

Loss Per Share:

  Loss from continuing operations:
    Basic and Diluted                                   $ (0.12)       $ (0.11)
  Income from discontinued operations:
    Basic and Diluted                                     $0.01          $0.04
  Net loss:
    Basic and Diluted                                   $ (0.11)       $ (0.07)
  Weighted average number of shares:
    Basic and Diluted                                 6,448,889      4,911,904

</TABLE>





                 See Notes to Consolidated Financial Statements
                                       F-3

<PAGE>


METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED AUGUST 28, 1999 AND AUGUST 29, 1998 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>


                                                                      1998
                                                      1999         as restated
                                                      ----         -----------

Cash flows from operating activities:
<S>                                                  <C>             <C>
  Net loss                                            $(716,965)      $(177,459)
                                                      ---------       ---------

Adjustments to reconcile net loss to net cash
 provided by operating activities:
  Depreciation Expense                                  160,841         106,804
  Amortization of motion pictures and other films       535,352         368,478
  Amortization of deferred rent                          (3,503)         (3,503)
  Amortization of unearned compensation                  77,512          31,250
  Amortization of goodwill                              109,222          33,333
  Amortization of deferred revenue                      (56,944)          -0-
  Amortization of deferred expense                       11,946           -0-
  Amortization of discount on debenture                  19,712           6,571
  Accrued interest added to note payable principal       68,000           -0-
  Discount on issuance of convertible debenture           -0-          (157,700)
  Allowance for doubtful accounts                       113,426          30,000
  Embedded interest on convertible debentures             -0-            95,709
  Common Stock issued for consulting services            12,815         449,833
  Common Stock issued for compensation                    -0-             6,850
  Issuance of warrants                                  175,844           -0-
  Minority interest                                       8,133          12,365
  Foreign exchange                                        1,035             669
(Increase) decrease in assets:
  Accounts receivable                                (1,393,039)     (1,237,665)
  Inventory                                            (263,672)       (404,113)
  Prepaid expenses and other current assets              56,832        (233,264)
  Other assets                                          (66,639)         21,880
Increase in liabilities:
  Accounts payable and accrued expenses               2,652,421         770,096
  Income taxes payable                                   55,174         153,926
                                                         ------         -------

Total adjustments                                     2,274,468          51,519
-----------------                                     ---------          ------

Net cash provided by (used in) operating activities  $1,557,503       $(125,940)
---------------------------------------------------  ==========       =========


</TABLE>



                 See Notes to Consolidated Financial Statements
                                       F-4

<PAGE>


METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE THREE MONTHS ENDED AUGUST 28, 1999 AND AUGUST 29, 1998 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                      1998
                                                       1999        as restated
                                                       ----        -----------

Cash flows from investing activities:

<S>                                                 <C>            <C>
  Acquisition of Fanzine                            $  (-0-)       $(2,000,000)
  Acquisition costs                                    (-0-)           (99,634)
  Investments in motion pictures and other films     (643,364)        (856,627)
  Purchase of property and equipment                  (96,532)        (179,106)
                                                      -------         --------

Net cash used in investing activities                (739,896)      (3,135,367)
-------------------------------------                --------       ----------


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
  Net proceeds from (payments on) line of credit     (142,254)          18,166
  Proceeds on notes payable                            30,000        1,200,000
  Principal payments on capital lease obligations     (88,007)         (73,600)
  Contribution from joint venture partner               -0-             30,000
                                                        ---             ------

Net cash provided by (used in) financing activities  (200,261)       3,500,300
---------------------------------------------------  ---------       ---------

Net increase in cash                                  617,346          238,993

Cash, beginning of period                             144,288          184,995

Cash, end of period                                 $ 761,634        $ 423,988
                                                    =========        =========


Supplemental disclosures of cash flow information:

    Cash paid during the period for:

        Interest                                     $ 66,401         $ 49,111
                                                     ========         ========

        Income taxes                                 $  -0-           $  -0-
                                                     ========         ========

</TABLE>


                 See Notes to Consolidated Financial Statements
                                       F-5

<PAGE>


METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE THREE MONTHS ENDED AUGUST 28, 1999 AND AUGUST 29, 1998 (UNAUDITED)
--------------------------------------------------------------------------------

Supplemental schedule of non-cash investing and financing activities:

     During the  quarter  ended  August 29,  1998,  a payable  of  $300,000  was
converted into 250,000  restricted  shares of Metro  Global's  Common Stock by a
related party.

     During the quarter ended August 29, 1998,  700 shares of Series A Preferred
Stock plus accrued  dividends of $5,958 were  converted  into 280,059  shares of
Metro Global's Common Stock. Metro Global recognized total dividends of $146,513
relating to the  beneficial  conversion  feature of this stock  during the three
months ended August 28, 1998.

     Capital lease  obligations of $411,799 and $61,740 were incurred during the
three months ended August 28, 1999 and August 29, 1998, 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  100,000 shares of
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 three  months  ended  August 28,  1999,  $60,000 of  convertible
debentures  and accrued  interest and penalties of $17,630 were  converted  into
43,962 restricted shares of Common Stock.







                 See notes to consolidated financial statements.
                                       F-6

<PAGE>


METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED AUGUST 28, 1999 AND AUGUST 29, 1998 (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,  except  for note 8) 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.

Plan of Operation

     As described in the following  footnotes,  Metro Global is in default under
certain debt  agreements.  Metro Global has arranged for alternative  financing,
however, funding has not yet occurred.  Proceeds of the loan will be utilized to
cure the  defaulted  debt. In the event that proceeds are not received from this
loan, Metro Global will remain in default under its debt obligations.

     As  described  in Note 3, Metro  Global has sold  Fanzine,  its  publishing
segment,  and expects to utilize a substantial portion of the proceeds to retire
debt.

     In addition,  on September  14,  1999,  the NASDAQ Stock Market  halted the
trading of Metro Global's  Common Stock due to Metro Global's late filing of its
fiscal 1999 Annual Report on Form 10-KSB.

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 quarter ended August 29,
1998 have been reclassified to conform with the current presentation.




                                       F-7

<PAGE>


METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED AUGUST 28, 1999 AND AUGUST 29, 1998 (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

     In September 1999,  Metro Global adopted a plan of disposition for Fanzine,
which was sold on  September  29,  1999 for  approximately  $4,500,000  in notes
payable and the return of 1,000,000  shares of Metro Global's Common Stock.  The
following table is a summary of the results of  discontinued  operations for the
three  months  ended  August  28,  1999 and one month  ended  August  29,  1998,
respectively:

<TABLE>
<CAPTION>

                                                  1999            1998
                                                  ----            ----

      <S>                                     <C>             <C>
      Revenues                                $ 4,621,504     $ 1,437,237
      Cost of revenues                          4,030,434         843,428
                                                ---------         -------
                                                  591,070         593,809

      Other expenses                              468,461         301,960
                                                  -------         -------

      Income before income taxes                  122,609         291,849

      Income taxes                                (55,174)        (87,485)
                                                  -------         -------

      Income from discontinued operations        $ 67,435        $204,364
                                                 ========        ========

</TABLE>

     Income from discontinued operations before income taxes does not include an
allocation of corporate interest expense or amortization of goodwill.  At August
28, 1999, Fanzine has current assets of $3,660,072, other assets of $167,067 and
current liabilities of $3,609,503.




                                       F-8

<PAGE>


METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED AUGUST 28, 1999 AND AUGUST 29, 1998 (UNAUDITED)
--------------------------------------------------------------------------------


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 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 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 Kenneth  Guarino,  Acting
Chief Executive Officer of Metro Global and 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 an extension of the note. Under the
terms of the  extension,  payments  totaling  $550,000 were due by September 30,
1999 and the  final  payment  of  $275,000  is 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. If all payments are not made by January 1,
2000, Metro Global must issue the lender 100,000 shares of restricted stock as a
penalty.

     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 must pay $1.3 million upon the
closing of the  prospective  financing  with  Reservoir  Capital a new unrelated
third party  lender.  The balance of the note of  $1,800,000,  which  includes a
$100,000  penalty,  will  be  exchanged  for an 8%  convertible  debenture.  The
debenture is convertible  at a rate of not more than 10% of the total  debenture
per  week,  at a price of 80% of the  average  closing  bids  for the five  days
preceding the conversion.  In consideration of the extension,  Metro Global will
issue  warrants to purchase up to 100,000  shares of Common  Stock at a price of
$1.75 per share with a  two-year  expiration.  In the event that  funding is not
received on the prospective financing with Reservoir Capital,  Metro Global will
remain in default under the debt obligation.

     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.


                                       F-9

<PAGE>


METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED AUGUST 28, 1999 AND AUGUST 29, 1998 (UNAUDITED)
--------------------------------------------------------------------------------


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  $19,713 and $6,571 of the discount to interest expense during
the three months ended August 28, 1999 and August 29, 1998, 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,  after  120 days of the  agreement,  the  principal  value  into  Metro
Global's  Common  Stock  at a  discounted  market  price  as is  defined  in the
agreement. Metro Global has recorded $35,461 of interest expense relating to the
embedded  beneficial  conversion  feature in the quarter  ended August 29, 1998.
Metro Global is in technical default under the terms of the debenture due to the
suspension  of trading of its Common  Stock on September  14,  1999.  During the
quarter ended August 28, 1999,  $60,000 of convertible  debentures  plus accrued
interest and penalties  were converted  into 43,962  restricted  shares of Metro
Global's Common Stock.

     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,  including  accrued interest of $60,000 (which was added to the note
principal), were extended until March 23, 2000.

     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 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.

6. Short-Term Borrowings

     Pursuant to a line of credit agreement with Finova Capital,  Metro Global's
subsidiary,  Metro,  may 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 bears 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 is secured by the
accounts  receivable of Metro,  and the guarantee of Metro Global.  As of August
28, 1999,  short-term  borrowings under the line of credit totaled $800,044.  On
June 30, 1999,  Finova did not renew the  agreement  and is waiting to be repaid
from the Reservoir Capital financing.




                                      F-10

<PAGE>

METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED AUGUST 28, 1999 AND AUGUST 29, 1998 (UNAUDITED)
--------------------------------------------------------------------------------


6. Short-Term Borrowings (Continued)

     In  October  1999,  Metro  Global  signed a  $4,000,000  Loan and  Security
Agreement  letter 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 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 will be secured by the assets of Metro.
The CVC  accounts  receivables  will be  guaranteed  to the  lender  by the sole
shareholder  of CVC.  Additionally,  CVC will execute a put on the  inventory of
Metro in case of default.

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 were  convertible  at a rate of 100 shares plus accrued
dividends per week at 80% of the 15 day average closing bid price.  These Shares
were 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 three months ended August 28, 1998,  700 shares of
the Series A shares and accrued  dividends were converted into 280,059 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-11

<PAGE>

METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED AUGUST 28, 1999 AND AUGUST 29, 1998 (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  shares of Common Stock per year
for five years at market price,  as defined.  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  $56,994 of income during the three months ended August
28, 1999.

     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.  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. Subsequent Events

     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  will
receive  payments of $1,000,000 by October 31, 1999,  $1,000,000 by November 30,
1999,  $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 (see note 3).

     On October 5, 1999,  Metro Global  signed a working  capital line of credit
agreement with Reservoir  Capital under  essentially the same terms as is in the
commitment  letter described in note 6. Actual funding is expected to take place
shortly.  Proceeds of the loan will be  utilized  for a partial pay down of debt
currently in default (as described in notes 4 and 5). In the event that proceeds
are not received  from this loan,  Metro Global will remain in default under its
debt obligations.



                                      F-12

<PAGE>


METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED AUGUST 28, 1999 AND AUGUST 29, 1998 (UNAUDITED)
--------------------------------------------------------------------------------


10. Earnings Per Share

     The  computation  of basic and diluted  earnings per share from  continuing
operations is as follows:
<TABLE>
<CAPTION>

                                             August 28, 1999   August 29, 1998
                                             ---------------   ---------------

<S>                                             <C>               <C>
 Loss from continuing operations                $(784,400)        $(381,823)
 Preferred Stock dividends                                         (146,513)
 Loss from continuing operations
 attributable   to common shareholders          $(784,400)        $(528,336)



 Basic and Diluted EPS:
   Basic and Diluted common shares              6,448,889         4,911,904
   Basic and Diluted EPS
     from continuing operations                 $   (0.12)        $   (0.11)
</TABLE>


     The weighted average shares attributable to the dilutive instruments listed
below were not included in the computation of diluted earnings per share because
to do so would have been antidilutive for the periods presented:
<TABLE>
<CAPTION>

                                                    1999        1998
                                                    ----        ----

       <S>                                         <C>         <C>
       Stock Options                               235,996     153,374
       Warrants                                       -        184,049
       12% convertible debentures                  346,632     281,481
       8% convertible debentures                   483,721        -
</TABLE>

     At August 28, 1999, warrants to purchase 765,000 shares of Common Stock are
not listed in the above  analysis  since the exercise  price is greater than the
average market price of the common shares.

11. Restatement

     Metro  Global has restated the  financial  statements  for the three months
ended  August  29,  1998.  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 $577,508 to a net loss of $177,459
and a decrease in earnings of $0.12 per share to a loss of $0.07 per share.



                                      F-13


<PAGE>


PART II - OTHER INFORMATION

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

          None


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

     10.1 License  Agreement  dated July 21,  1999  between  Colorado  Satellite
          Broadcasting,  Inc. and Metro Global  Media,  Inc. on behalf of itself
          and its  wholly  owned  subsidiary,  Metro  Inc.,  as  filed  with the
          commission on October 7, 1999 as Exhibit 10.21 to the Annual Report on
          Form 10-KSB and incorporated herein by reference.

     10.2 Loan and Security  Agreement  dated  September 30, 1999 by and between
          Metro  Global  Media,   Inc.,   Metro,   Inc.  and  Reservoir  Capital
          Corporation,  as filled  with the  Commission  on  October  7, 1999 as
          Exhibit  10.21 to the Annual  Report on Form  10-KSB and  incorporated
          herein by reference.

     27.1 Financial Data Schedule filed herewith

     (b)  Reports on Form 8-K

          Report on Form 8-K,  filed June 11,  1999,  which  amended a Report on
          Form 8-K filed on August 18, 1998 reporting the acquisition of Fanzine
          International,  Inc.,  reporting  Item  7.  Financial  Statements  and
          Exhibits, which included (i) the Unaudited Balance Sheet and Unaudited
          Statement of Income of Fanzine  International,  Inc. for the six month
          period  ended June 30, 1998 and (ii) the Pro Forma  Unaudited  Balance
          Sheet and  Unaudited  Statement  of Income  which  gave  effect to the
          acquisition of Fanzine International, Inc.

          Reports of Form 8-K, filed June 28, 1999, as amended on July 13, 1999,
          August  23,  1999 and  October  7, 1999  reporting  Item 4.  Change in
          Registrant's   Certifying   Accountants,   the  resignation  of  Grant
          Thornton, LLP as Metro Global's certifying accountants.

          Report of Form 8-K,  filed July 20, 1999,  reporting Item 4. Change in
          Registrant's  Certifying  Accountants,  the  appointment  of  Imowitz,
          Koenig & Co., LLP, as Metro Global's certifying accountants.

          Report on Form 8-K,  filed  September 15, 1999 reporting Item 5. Other
          Events,  that Metro Global did not timely file its 1999 Annual  Report
          on Form 10-KSB and that on September 14, 1999, the NASDAQ Stock Market
          halted the trading of Metro Global Media, Inc.'s Common Stock.

          Report on Form 8-K,  filed  October  4, 1999  reporting  under Item 2.
          Acquisition  and  Disposition  of Assets,  that on September 29, 1999,
          Metro Global Media, Inc. sold Fanzine back to its former  stockholders
          and a company controlled by them.




                                      8

<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.



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





                                      9