UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   Form 10-KSB

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

                           For the Fiscal Year ended:

                                December 31, 2000

                                       OR
              [ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                                [NO FEE REQUIRED]
                           Commission File No. 0-15435

                           F2 BROADCAST NETWORK, INC.
                        ------------------------------
           (Name of Small Business Issuer as Specified in its Charter)

              Nevada                             84-0974303
        --------------------                 -------------------
(State or Other Jurisdiction of
 Incorporation or Organization)  (I.R.S. Employer Identification Number)


            6245 NW 9th Ave, Suite 102, Ft. Lauderdale, Florida 33309
           ----------------------------------------------------------
          (Address of Principal Executive Offices, Including Zip Code)

Registrant's telephone number, including area code:  (954) 736-1800

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

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

Common Stock, $.008 Par Value
(Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

Yes   X       No

Check if there are no disclosure  of delinquent  filers in response to Items 405
of Regulation S-B in this form, and no disclosure will be contained, to the best
of  registrant's  knowledge,  in  definitive  proxy  or  information  statements
incorporated  by reference in Part III of this Form 10-KSB or any  amendments to
this Form 10-KSB. [X ]

State issuer's  revenues for its most recent fiscal year. $ 97,238. As of May 1,
2001, there were 186,396,954 shares of common stock (the Registrant's only class
of voting  stock)  outstanding.  The aggregate  market value of the  162,034,271
shares of common stock of the Registrant held by  nonaffiliates*  on May 1, 2001
was  approximately  $518,509.67  (based on the mean of the closing bid and asked
prices).

Documents incorporated by reference:  None

                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)
        The number of shares outstanding of the issuer's Common Stock as
                         of May 1, 2001 was 186,396,954.

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

 *Without asserting that any of the issuer's directors or executive officers, or
any beneficial owner of five percent or more of the issuer's common stock, is an
affiliate, the shares of which they are beneficial owners have been deemed to be
owned by affiliates solely for this calculation.



<PAGE>



INDEX TO FORM 10-KSB


PART I

Item 1            Description of Business

Item 2            Description of Property

Item 3            Legal Proceedings

Item 4            Submission of Matters to a Vote of
                  Security Holders

PART II

Item 5            Market for Common Equity and Related
                  Stockholder Matters

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

Item 7            Financial Statements

Item 8            Changes in and Disagreements with Accountants
                  On Accounting and Financial Disclosure

PART III

Item 9            Directors, Executive Officers, Promoters and
                  Control Persons

Item 10           Executive Compensation

Item 11           Security Ownership of Certain Beneficial Owners
                  And Management

Item 12           Certain Relationships and Related Transactions

PART IV

Item 13          Exhibits, Lists and Reports on Form 8K
A)       Exhibits
B)       Reports on Form 8-K


<PAGE>



PART I

Item 1.           Description of Business

     On December 15, 1997, we changed our state of  incorporation  from Colorado
to Nevada and  changed our name to First  Entertainment  Holding  Corp.  We were
originally  incorporated  under the laws of  Colorado on January  17,  1985.  On
December  27,  2000,  our  stockholders  approved  a  name  change  from  "First
Entertainment  Holding  Corp." to "F2  Broadcast  Network Inc." On that date the
stockholders also approved increasing our authorized common stock to 250,000,000
shares. The name change and increased capitalization became effective January 4,
2001,  when  we  filed  Articles  Of  Amendment  to the  Company's  Articles  Of
Incorporation with the Nevada Secretary Of State.

     The name change was  undertaken  so that the new name matched the new focus
for our Company. Beginning in late 2000, we have focused on attempting to create
a new Internet video production package that may enable businesses to affordably
showcase products,  services, sports and entertainment events over the Internet.
It is intended that this video production package,  which is the current primary
focus of the Company,  will utilize high-speed  broadband  streaming  technology
including, potentially, satellite bandwidth transmission technologies to deliver
company-created  video  products  over the  Internet.  Our website is located at
www.F2Network.com.

     In December 2000, we entered into a letter of intent to sell all the assets
related  to our  radio  business  to  Legend  Communications  of  Wyoming,  LLC.
("Legend"). These assets include the Gillette, Wyoming radio station and all the
tangible and intangible assets related to that station. Subject to entering into
a  definitive  agreement  and  other  conditions,   Legend  has  agreed  to  pay
approximately  $1,300,000  in cash and a 5-year note  receivable  for  $557,000,
payable in quarterly  installments  of $25,000,  for these assets.  The purchase
price will be reduced by the amount of liens,  mortgages and other  encumbrances
against the radio  station.  On April 6, 2001, an Asset  Purchase  Agreement was
executed by Legend and Quality  Communications,  Inc. and filed with the Federal
Communications Commission for their review.

     In December  2000, we entered into a letter of intent to sell all the stock
and assets related to our live entertainment operations to an entity to be owned
by the manager of the comedy club and one of the Company's contract consultants.
These assets include the 80% of the outstanding stock of First Films, Inc. owned
by the Company and all the  tangible  and  intangible  assets  related to Comedy
Works,  Inc. and Comedy Core, Inc. Comedy Works,  Inc. and Comedy Core, Inc. are
wholly-owned  by  First  Films,  Inc.  Subject  to  entering  into a  definitive
agreement and other conditions,  the purchasers have agreed to pay approximately
$300,000 in cash for these  assets and will assume all of the  outstanding  debt
and  obligations  related to these  assets.  Although  we are  working  with the
purchasers  to  reach a  definitive  agreement,  there  is no  assurance  that a
definitive agreement will be reached or that the transaction will be completed.

     We are  selling  these  assets to obtain  working  capital to pay  existing
obligations  and  to  concentrate  on  our  core   competency:   Internet  video
production,  hosting and  delivery.  It is our intention to use the net proceeds
from the  sale of the  Company's  Radio  and Live  Entertainment  assets  to pay
outstanding  debt  obligations,  to satisfy liens filed by the Internal  Revenue
Service in the amount of $291,893 and additional  amounts due the IRS of $76,977
(for a total of $368,870),and to pay  substantially all of the Company's current
and past due accounts payable.  Any remaining  proceeds will be used to fund the
Company's new Internet video production, hosting and delivery model.

     Initially,  our business consisted of the production of pre-recorded travel
guides and special interest videos.  In 1987, we entered the radio  broadcasting
business  by  acquiring  Quality  Communications,  Inc.,  a Wyoming  corporation
pursuant  to which we operate the radio  segment of our  business.  In 1992,  we
acquired a controlling interest in First Films, Inc. ("First Films"), a Colorado
corporation,  under  which  our  live  entertainment  operations  currently  are
undertaken  and  under  which our film  production  activities  previously  were
undertaken.  Beginning  in 1999,  we  attempted  to develop  relationships  with
Internet  content  providers,  advertisers and gaming companies in an attempt to
create an Internet site with links to  entertainment  and gaming  content and to
provide Internet site  development to other parties.  Beginning in January 2001,
we have focused on attempting to create a new internet video production  package
that may enable businesses to affordably showcase products, services, sports and
entertainment  events  over  the  internet.  It  is  intended  that  this  video
production  package,  which is the current  primary  focus of the Company,  will
utilize  high-speed  broadband  streaming  technology  including,   potentially,
satellite bandwidth transmission  technologies to deliver  company-created video
products over the internet. Our website is located at www.F2Network.com.

Internet Activities

     Since 1997,  we have  attempted to engage in Internet  related  businesses.
Through internal resources and relationships  with other entities,  we developed
an Internet portal focusing on entertainment and Internet video production.  The
site,  www.FirstEntertainment.com,  included  original  static and video content
developed and produced  internally.  We were also developing  relationships with
electronic  commerce  partners and offering  web site  development  services and
plans to add web site  hosting  capabilities.  Many of the  letters of intent we
entered into prior to June 1999 with potential Internet partners have not led to
definitive agreements and have been terminated.

     Our Internet related  businesses were conducted through our First 2 Market,
Inc.  subsidiary.  All That Media,  Inc.,  which was acquired in June 1999,  was
merged into First 2 Market,  Inc. in June 1999.  At the time we acquired it, All
That Media was a newly formed company that specialized in intellectual  property
development,  Internet portal development and Internet advertising. We issued an
option to purchase a total of 500,000  shares of common stock for $.75 per share
until  October  10,  2001 to the  stockholders  of All  That  Media  for all the
outstanding  stock..  Michael  Marsowicz,  President and 50 percent owner of All
That Media,  received  250,000 of these options.  Mr. Marsowicz was subsequently
elected to our Board of  Directors  in August 1999 and also served as an officer
of the Corporation.  Mr. Marsowicz  resigned in late 2000, and has become a very
important consultant to the company.

     Also in June 1999, we acquired a start-up  company named EDRON  Associates,
Inc. (EDRON) by issuing options to its former stockholders (including Mr. Ronald
Ratner)  to  purchase  300,000  shares of common  stock at $1.03 per share for a
period of three years.  EDRON was a start up company with little  revenue and no
proprietary  or  intangible  assets at the time of its  acquisition  by us.  Mr.
Ratner, a principal of EDRON  Associates  remains with the company as a valuable
consultant.

     In establishing an Internet portal at "www.FirstEntertainment.com", we were
attempting to develop this site into a stand-alone Internet site focusing on the
streaming of original audio and video content, live and archived, in addition to
other forms of multimedia entertainment.  We had attempted to provide content on
the site  internally,  as we  believed  the  public  would be drawn to, and more
interested  in,  original  content.  Thereby  avoiding  the expense of obtaining
content  from  outside  sources.  At its  height  the  traffic  on  the  website
approached  30,000,000  page views monthly with over 2,000,000  unique users. We
believed that the comedy club and radio station businesses provided a source for
content that we could  leverage.  We believed  that we could  generate  revenues
through  advertising  and  sponsorships  on our web  site  as  well  as  through
commission  arrangements  with  operators of other web sites that were accessing
additional traffic through our web site.

     In June of 2000,  we entered into an agreement  with  PGATOUR.com  to host,
produce and serve a feature for them to be known as "Inside the Pressroom". This
was and is an exclusive  relationship that provides live and on demand video and
audio interviews  bringing  Internet viewers right inside the media tent at each
and every  PGATOUR  site.  The revenue to be  generated  from this source  comes
through shared  advertising  and  sponsorships.  The sale of the advertising and
sponsorships  is  a  joint  effort  between  PGATOUR,  CBS  Sportsline,  and  F2
Broadcast.  Under the terms of the  agreement  F2  Broadcast  recovers all costs
first and then shares all revenue  generated on a 50/50 basis.  F2 Broadcast and
PGATOUR have renewed this  relationship  for the next 18 months with expanded F2
production  responsibilities;  the  advertising  and  sponsorship  model remains
substantially the same. The model has been expanded to include the production of
video highlights, and an online made for Internet television show.

     In November of 2000,  F2Broadcast  made the decision to severely reduce the
workforce,  close down the First Entertainment  website,  and sell the radio and
live  entertainment  businesses.  This will permit us to concentrate on what has
become the core competency of the company:  Internet video  production,  hosting
and delivery.  We added two seasoned advertising  consultants to guide us in the
sale of advertising and  sponsorships.  The fulltime  workforce has been reduced
from a high of 40 in mid 1999 to a few contract employees in 2001. We anticipate
that the steps taken within the last 12-18 months including downsizing, focusing
on our core competency,  and utilizing  satellite and fiber optic technology and
the extension of the PGATOUR  agreements,  will reduce losses in fiscal 2001. We
have also made significant  progress  expanding this model by providing the same
Internet video  production  services to  manufacturers  of golf products such as
Titleist,  Taylormade,  Spalding, and media partners such as The Weather Channel
and CBS Sportsline.

Radio

     In October 1987,  we entered the radio  broadcasting  business  through the
acquisition of Quality Communications,  Inc. "Quality Communications", a Wyoming
corporation.  Through  Quality  Communications,  we operate a FM radio  station,
100.7, The Fox, located in Gillette, Wyoming.

     In November  1993, the music format of the radio station was changed from a
Top-40  station to a format known as the "Heart of Rock." In February  1995, the
format  was  changed  again to  contemporary  country.  The  changes  have had a
positive  effect on its  market  share and gross  revenues.  In 1996,  the radio
station  started  promoting  concerts  using up and coming  country  and western
singers.  The  radio  station  was a venue to  promote  the  concerts  to add an
additional source of revenue for the radio station.

     In  September  1999,  we entered  into an  agreement  with  Brian  Encke to
purchase an FM radio station to be built in Lead, South Dakota,  and the Federal
Communications  Commission ("FCC") permits necessary to operate the station. The
$300,000 purchase price was paid by delivery of $20,000 in cash and a promissory
note for $280,000,  with no interest,  payable over a 15-year  period in monthly
installments  of  $1,555.56.  The purchase of the new station was to close after
the FCC granted its consent to the  assignment of the permits to the Company and
all public comment periods  expired.  The FCC granted its consent on December 9,
1999 and the public comment period expired in January 2000. No negative comments
were received and we closed the purchase of the radio station, with the purchase
price being paid in the manner described above.  However,  the Company could not
obtain the  necessary  funding to build this new  station  and the  construction
permit issued by the FCC expired with no option for renewal.

     In December 2000, we entered into a letter of intent to sell all the assets
related  to our  radio  business  to  Legend  Communications  of  Wyoming,  LLC
("Legend"). These assets include the Gillette, Wyoming radio station and all the
tangible and intangible assets related to that station. Subject to entering into
a  definitive  agreement  and  other  conditions,   Legend  has  agreed  to  pay
approximately  $1,300,000  in cash and a  5-year  note for  $500,000  for  these
assets. The purchase price will be reduced by the amount of liens, mortgages and
other  encumbrances  against  the  radio  station.  The net  cash  proceeds  are
estimated to be in the range of $750,000 to $800,000. These amounts will largely
be used to pay existing debt obligations,  accounts  payable,  the IRS liens and
other company  obligations.  On April 6, 2001, an Asset  Purchase  Agreement was
executed by Legend and Quality  Communications,  Inc. and filed with the Federal
Communications Commission for their review.

Live Entertainment

     First Films acquired 100 percent of the outstanding  stock of Comedy Works,
Inc., a Colorado corporation,  on September 13, 1990 in exchange for 200,000,000
shares of common stock. Comedy Works was incorporated in 1982 and has operated a
comedy club from its Larimer Square, Denver,  Colorado location since that time.
Comedy Works Larimer  Square  typically has nine shows per week and has averaged
over 1,500 customers per week for the past twenty years.

     The  goal of  Comedy  Works is to  produce  first-rate  shows in a  theater
environment.  Revenues are  generated  through both ticket sales at the door and
beverage  and food  sales at  tables.  The club is open to the  public  only for
shows, which last from 1 to 2 hours each, and number as many as three per night.
Non-show  times are  devoted to  preparing  and  producing  a show that  changes
completely each week, and to promoting and marketing the nightclub.

     In December  2000, we entered into a letter of intent to sell all the stock
and assets related to our live  entertainment  to an entity owned by the manager
of the comedy club and one of the Company's contract  consultants.  These assets
include the stock of First  Films,  Inc.  and all the  tangible  and  intangible
assets related to Comedy Works,  Inc. and Comedy Core, Inc.  Comedy Works,  Inc.
and Comedy Core, Inc. are wholly-owned by First Films,  Inc. Subject to entering
into a definitive agreement and other conditions,  the purchasers have agreed to
pay  approximately  $300,000 in cash for these assets and will assume all of the
outstanding  debt and  obligations  related  to these  assets.  Although  we are
working  with  the  purchasers  to  reach a  definitive  agreement,  there is no
assurance that a definitive  agreement  will be reached or that the  transaction
will be completed.
Competition

Internet

     Internet related businesses are subject to intense  competition.  Companies
with  greater  financial  resources  than ours  have not been  able to  generate
positive cash flow or profits from operating  Internet  related  businesses.  In
addition,  because of the large number of competitors,  there is competition for
Internet  content  and  qualified  computer  personnel.  We  compete  with other
companies for incoming advertising to our Internet websites.  The relatively low
cost  of  entering   Internet  related   businesses  may  result  in  additional
competition in the future, despite the well-publicized failures of many Internet
and "dotcom" companies in 2001 and 2000.

Radio

     Our radio station competes with seven other signals  available in the area.
Two of these radio signals  originate  from  Gillette,  Wyoming.  We compete for
listeners  with these  stations  through  our music  format,  on-air  talent and
promotional  activities.  The  ability  to charge  higher  advertising  rates is
dependent upon attracting larger listener audiences.

Live Entertainment

     Competition  is intense in the  comedy  and music  nightclub  entertainment
industries.  On a national  level, we compete for  entertainers  with many other
comedy  related  companies  that are better  capitalized,  and may have  greater
visibility.  None of the national comedy clubs have yet established locations in
Denver, although one has announced intentions of doing so. Comedy Works has been
in business in Denver,  Colorado for 20 years, longer than any other comedy club
in the Denver area. We believe that Comedy Works  provides  higher-quality  acts
than its local  competitors,  reflected  in the fact that it is able to charge a
greater admission price than any of its local competitors.

     The main competitor of Comedy Works is individually  owned and located in a
shopping  center in the  suburbs,  while Comedy Works is located in the downtown
Denver area.

Licenses

     The FCC  issues  radio  broadcasters  a license  to  operate  within  their
assigned  frequency  for seven years.  These  licenses,  upon  application,  are
renewable for additional  seven-year  periods.  The FCC issued our radio station
its original license on October 1, 1983, to operate at a frequency of 100.7 MHz,
24 hours a day, at 100,000 watts of effective radiated power. It was reissued in
October  of 1990 and  1997.  During  the  renewal  process,  the  public  has an
opportunity  to  express  its  opinion  of how well the  particular  station  is
servicing its broadcast area.  Extreme public  negativity during this period can
delay the  reissuance  process  or result in a denial of the  reissuance  of the
license.  In addition,  frequent  violations of FCC rules and regulations can be
cause for the denial of the station's license renewal.

     The FCC allots a certain  number of frequencies  for each  broadcast  area,
based upon  community  need,  population  factors and the  determination  of the
economic viability of another station in the designated region.  Currently there
are no other licenses  available in the Gillette area. It is possible to request
that the FCC reconsider opening up further  frequencies  through its rule making
body,  but this can be a time  consuming  process.  All  sales of  stations  and
subsequent transfers of licenses must be approved by the FCC.

Seasonality

Internet

     We have  noted no  particular  seasonality  with  respect  to our  Internet
segment.  However,  with our new business model, we are heavily  concentrated in
golf  and  the  PGATOUR.   Accordingly,  our  Internet  segment  may  experience
seasonality that tracks with the PGATOUR schedule.

Radio

     Although  revenues  are spread  over the entire  calendar  year,  the first
quarter generally  reflects the lowest and the fourth quarter generally reflects
the highest revenues for each year. The increase in retail advertising each fall
in preparation  for the holiday  season,  combined with  political  advertising,
tends to increase fourth quarter revenues.

Live Entertainment

     We have found that our  highest-revenue  months are from July 15 to October
15 of each year. From approximately May 15 to July 15 of each year,  business is
typically 30 percent below average,  primarily  because customers prefer outdoor
activities at that time of year. During the holiday season, management has found
a slight  increase due to once-a-year  customers on vacation and local residents
hosting visiting friends or relatives.

Employees

F2 Broadcast Network, Inc. (formerly known as First Entertainment Holding Corp.)

     Currently, we employ one executive. We outsource most of our operations and
administrative   functions  to  independent   consultants  and  have  consulting
agreements with the two Directors who do not serve as executive officers.

Internet

     This division has one full-time  employee and several  contract,  part-time
personnel.

Radio Station

     The radio station employs  approximately eight full-time employees and five
part-time  employees.   The  full-time  employees  are  engaged  mainly  in  the
administrative  radio operations and sales. The part-time  employees are engaged
in the on-air activities as on-air personalities.

Live Entertainment

     This division has five full-time  employees and  approximately 26 part-time
employees.  Full-time employees are management staff and part-time employees are
waitresses, bartenders, and door personnel.

Item 2.   Description of Property

F2 Broadcast Network, Inc. (formerly known as First Entertainment Holding Corp.)

     Effective May 1, 2001, our executive offices will be located at 6245 NW 9th
Ave., Suite 102, Ft. Lauderdale,  Florida 33309. We have signed a lease for this
space which requires monthly payments of $1,645 plus any charges for common area
maintenance. The lease term is for two years and expires April 30, 2003.

     The executive offices were temporarily  located at 6421 Congress Ave, Suite
155, Boca Raton, FL 33487; telephone (561) 241-9711.  This space was provided to
us  by   clickthemouse,   Inc.  as  part  of  an  arrangement   between  us  and
clickthemouse,  Inc. Clickthemouse is owned by Mr. Ron Ratner, one of the owners
of EDRON, which was acquired by us in 1999.

Internet

     Our Internet  related  businesses  are conducted out of executive  offices.
These new  offices,  located  at 6245 NW 9th Ave.,  Suite 102,  Ft.  Lauderdale,
Florida  33309 and  consist of  approximately  3,000  square  feet and house our
satellite and Video Internet Production equipment.

     Prior to relocation of our corporate offices,  the Internet operations were
located at 2500 East  Hallandale  Beach Blvd.,  Suite 605,  Hallandale,  Florida
33009.  These  offices  consisted  of  approximately  3,000 square feet and were
leased  pursuant to the terms of a 36-month  lease which  terminates in July 31,
2002. Monthly rent is approximately $3,600. In November 2000, the Company sublet
the space to another  tenant.  However,  the  Company  was not  relieved  of its
obligation under the original lease.

Radio Station

     We have facilities in Gillette, Wyoming that house our radio station, 100.7
FM, The Fox. In April 1996, we purchased the land and building  which houses the
radio  station  for  $300,000  and the land  under  which the FM tower  sits for
$125,000.

Live Entertainment

     The Comedy Works is located at Larimer Square in Denver, CO, and leases its
premises under the terms of a 10-year lease, which expires January 31, 2008.

     Lease  payments  in the first  year of the lease  term,  January 1, 1998 to
December  31,  1998,  were  the  total of (1) 8% of  gross  sales  of  alcoholic
beverages,  (2) 6% of gross sales of food  related  products and (3) 4% of gross
sales relating to door admission.

     Lease  payments  for the period  January 1, 1999 to  December  31, 2003 are
based on percentage rent as computed above but shall not be less than 75% of the
average  percentage  rent paid during the three year  period  January 1, 1996 to
December 31, 1998.  Lease payments for the period January 1, 2004 to January 31,
2008 shall not be less than 75% of the  average on  percentage  rent paid during
the three year  period  January 1, 2001 to December  31,  2003.  Average  annual
percentage  rent paid during the period January 1, 1997 to December 31, 2000 was
approximately $108,000.


Item 3. Legal Proceedings

     We  know  of  no  litigation  pending,  threatened,  or  contemplated,   or
unsatisfied  judgments  against us, or any proceedings of which we or any of our
subsidiaries is a party,  except as specified below. We know of no legal actions
pending or  threatened,  or  judgment  entered  against  any of our  officers or
directors or any of our  subsidiaries  in their  capacities  as such,  except as
specified below.

     During 1997 and 1998,  we, some of our  officers and  directors,  and other
unrelated parties received requests for information from the U.S. Securities and
Exchange  Commission ("SEC") related to an investigation begun by the SEC during
1997 into various  matters.  On August 2, 1999, the SEC filed a civil  complaint
against A.B. Goldberg and us in the U.S. District Court in Denver, Colorado. The
SEC alleges in its complaint that we failed to disclose compensation paid to Mr.
Goldberg in our 1995 and 1996 annual reports and in a registration statement and
our proxy  statement  filed in 1997.  In  response to this  allegation,  we have
disclosed these amounts in the "Executive  Compensation"  section below. The SEC
also alleges that we failed to timely file some of our periodic reports. The SEC
sought a permanent  injunction  against future  violations of securities laws by
us. On October 22, 1999, we entered into a consent decree with the SEC.  Without
admitting or denying the allegations made by the SEC, we agreed not to engage in
violations of the  securities  laws in the future.  As a result of entering into
the consent decree,  the civil complaint against us was dismissed.  The SEC also
made the following allegations concerning Mr. Goldberg:

o    That Mr. Goldberg received compensation of approximately  $350,000 that was
     not disclosed in our public filings.

o    That Mr.  Goldberg  attempted to conceal the  compensation by directing the
     payment of money and stock  through  his wife,  including  the  issuance of
     stock that allegedly was not approved by our Board Of Directors.

o    That Mr.  Goldberg failed to properly  disclose his securities  holdings in
     the  Company  and  changes  in those  holdings.  The SEC seeks a  permanent
     injunction,  disgorgement,  civil  money  penalties,  and  an  officer  and
     director  bar against Mr.  Goldberg.  Mr.  Goldberg has informed us that he
     intends to vigorously defend the claims made against him.

     Pursuant to an  agreement  entered  into with  Balzac,  Inc. in April 1997,
Balzac Inc. was indebted to us in the amount of $985,000,  together with accrued
interest.  Beginning  in April  1997,  this  amount  (which  at that time was $1
million)  was to be  repaid  over 40 months  at 8% per  annum by  liquidating  a
minimum of 25,000  shares of common  stock of the  Company  per  quarter up to a
maximum  of one  million  shares  held by  Balzac,  Inc.  We were to be paid any
portion  of the sales  price per share up to $1.00 and  Balzac was to retain any
portion of the sales price over $1.00 per share.  Any of the one million  shares
not sold after 40 months were to become our property.

     In February  1999,  an  involuntary  bankruptcy  petition was filed against
Balzac, Inc. by some of its creditors.  The bankruptcy petition was filed in the
United States  Bankruptcy Court for the Southern  District of New York, Case No.
99 B 40646,  under  Chapter 11 of the  Bankruptcy  Code.  Between March and July
1999,  Balzac sold  approximately  885,000  shares.  The entire $2.06 million of
proceeds  from  those  sales  are being  held by the  Bankruptcy  Court  pending
resolution of the various claims for those proceeds.

     In August 1999,  Balzac filed an adversary  proceeding  with the bankruptcy
court,  Adversary  No.  99-2237,  claiming  that we  caused  damage to Balzac by
failing to register the resale of shares of common stock underlying  warrants to
be issued to Balzac pursuant to agreements between us and Balzac entered into in
April 1997.  Balzac sought damages of at least $3,268,356 plus interest thereon.
In addition,  we filed a counterclaim  against Balzac and third party complaints
against  two of  Balzac's  executive  officers  and  directors  and Alex  Brown,
Incorporated. In the counterclaim and third party claims, we sought damages from
Balzac, Mr. Deutsch and Mr. Spector for tortious  interference with contract and
bad faith, and for impairing our security  interest in the shares held by Balzac
that were to be  liquidated  to pay amounts  owed to us. We also sought  damages
against  Alex  Brown  based on our  allegations  that Alex  Brown,  Incorporated
interfered with this security  interest,  as well as breached a trust owed to us
in failing to liquidate the shares of the Company owned by Balzac.

     We reached an agreement with Balzac to settle these  disputes.  Pursuant to
this agreement,  which has been approved by the Bankruptcy Court, Balzac paid us
$358,000 in cash and we issued Balzac options to purchase  200,000 shares of our
common  stock at $2.00 per share,  310,000  shares of common  stock at $1.00 per
share,  and  65,000  shares of common  stock at $1.40 per share.  These  options
expire three years after issuance.

     On March 27, 2000, we filed a complaint in the District  Court for Arapahoe
County,  Colorado  against Mr.  Goldberg,  the  Securities  Investor  Protection
Corporation  (SIPC),  and  the  U.S.  Internal  Revenue  Service  (IRS).  In the
Complaint,  we alleged  that,  during Mr.  Goldberg's  tenure as an officer  and
director, Mr. Goldberg engaged in fraudulent activities,  breached his fiduciary
duties, and acted  negligently,  all of which resulted in our suffering damages.
In the  Complaint,  we are seeking  compensatory  and punitive  damages from Mr.
Goldberg,  the return of Company property,  and a declaration that stock options
granted to Mr.  Goldberg were  fraudulently  obtained,  were void,  and that Mr.
Goldberg must repay us for the options that he exercised  before we became aware
of the true facts after  granting  the  options in March 1999.  The SIPC and IRS
were  included as  Defendants  in this matter  because the SIPC holds a judgment
against  Mr.  Goldberg  that it is  attempting  to  collect  and has  claimed an
interest  in the stock  options  that we are  seeking  to void,  and the IRS has
assessed a tax lien against Mr.  Goldberg  that it is seeking to collect.  As of
April 25, 2001, no answer had been filed in this matter.

     In August 2000, Rock Creek Holdings,  Inc. ("Rock Creek") filed a complaint
in the State of New York alleging breach of contract,  breach of warranty, fraud
and misrepresentation, and conversion with respect to a contract alleged to have
been signed by Mr. Goldberg. According to Rock Creek, payment was in the form of
options to purchase  300,000 shares of the Company's common stock at an exercise
price of $0.38 per share.  The complaint  alleges damages of more than $876,000.
The Company  filed a response  denying all charges and noting that the Company's
Board of Directors  did not approve the  contract,  nor the issuance of options.
The  Company  fully  intends  to defend  its  position  and has not  recorded  a
contingent liability relating to this matter.

     In October  2000,  the Company  received  notices from the IRS for past due
payroll  taxes,  penalties  and interest.  Subsequently,  the IRS filed liens in
amounts totaling approximately $291,893.  Additionally,  the Company has accrued
liabilities to the IRS for $76,977 of taxes  withheld but not  yet  paid,  for a
total due the IRS of $368,870.  The outstanding  balance will continue to accrue
interest  until paid.  Payment is  anticipated to be made from the proceeds from
the announced sale of Radio and Live Entertainment assets.

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

     At a special  meeting of  Registrant's  stockholders  held on December  27,
2000,  the  stockholders  approved (1) the election of Howard Stern,  Douglas R.
Olson and William Rubin as directors of Registrant,  (2) Registrant's 2000 Stock
Option Plan, (3) increasing  Registrant's authorized common stock to 250,000,000
shares,  (4) changing the name of Registrant to "F2 Broadcast Network Inc.", (5)
authorizing  Registrant's  Board of  Directors  to determine to effect a reverse
stock split at the time and at the ratio that the Board deems  appropriate,  and
(6) ratification of the selection of Gordon, Hughes & Banks, LLP as Registrant's
independent auditors.

<TABLE>
----------------------------------------------- --------------------- -------------------- -------------------------
              Matter Voted Upon                      Votes For           Votes Against          Votes Withheld
<S>                                             <C>                   <C>                  <C>
----------------------------------------------- --------------------- -------------------- -------------------------
Elect Howard Stern, Director                              30,103,339                                      1,220,836
----------------------------------------------- --------------------- -------------------- -------------------------
Elect Douglas R. Olson, Director                          30,147,236                                      1,176,939
----------------------------------------------- --------------------- -------------------- -------------------------
Elect William Rubin, Director                             30,118,336                                      1,205,839
----------------------------------------------- --------------------- -------------------- -------------------------
Approve 2000 Stock Option Plan                            29,248,309            1,944,057                   131,809
----------------------------------------------- --------------------- -------------------- -------------------------
Increase Authorized Shares                                29,138,493            2,103,119                    82,563
----------------------------------------------- --------------------- -------------------- -------------------------
Approve Name Change                                       30,471,621              761,757                    90,797
----------------------------------------------- --------------------- -------------------- -------------------------
Approve Reverse Stock Split                               28,889,838            2,321,732                   112,605
----------------------------------------------- --------------------- -------------------- -------------------------
Ratify Selection of Auditors                              30,394,292              827,520                   182,363
----------------------------------------------- --------------------- -------------------- -------------------------
</TABLE>


Item 5. Market for our Common Equity and Related Stockholder Matters

     Our common  stock was traded on NASDAQ in the  over-the-counter  market and
since  October 1988,  had been included in NASDAQ.  On February 5, 1998, we were
notified  that as of the close of business that day, our stock would be delisted
from NASDAQ for failure to meet the minimum bid requirement.  Effective February
6, 1998, our stock began trading on the OTC Bulletin Board.  The following table
sets  forth  the  high  and low bid  quotation  for our  common  stock  for each
quarterly   period  in  2000  and  1999.  As  of  April  30,  2001,  there  were
approximately  1,184  shareholders  of record of our  common  stock.  Holders of
common stock are  entitled to receive such  dividends as they may be declared by
our  Board  of  Directors.  No  dividends  are  anticipated  to be  paid  in the
foreseeable future.

Bid Price

-------------------------- ---------------- ----------------
2001                       High             Low
-------------------------- ---------------- ----------------
First Quarter              $0.023           $0.003
-------------------------- ---------------- ----------------
2000                       High             Low
-------------------------- ---------------- ----------------
First Quarter              $2.000            $0.610
-------------------------- ---------------- ----------------
Second Quarter               0.969            0.210
-------------------------- ---------------- ----------------
Third Quarter                0.245            0.055
-------------------------- ---------------- ----------------
Fourth Quarter               0.575            0.010
-------------------------- ---------------- ----------------



1999                       High             Low
-------------------------- ---------------- ----------------
First Quarter              $  1.310          $0.156
-------------------------- ---------------- ----------------
Second Quarter                 2.015          0.640
-------------------------- ---------------- ----------------
Third Quarter                  4.125          1.219
-------------------------- ---------------- ----------------
Fourth Quarter                 1.340          0.969
-------------------------- ---------------- ----------------


Item 6. Management's Discussion and Analysis

     The  accompanying  consolidated  financial  statements  have been  prepared
assuming  that  we  will  continue  as a  going  concern.  The  opinion  of  our
independent  auditor  delivered in connection with our Financial  Statements for
fiscal 2000 and 1999  contains an  explanatory  paragraph  relative to the going
concern  uncertainty.  As  discussed  in  Note A to the  consolidated  financial
statements,  we have suffered  recurring losses from operations,  have a working
capital  deficiency  of  approximately  $2,500,000,  have  negative net worth of
approximately $2,106,000,  and are in default on certain of our notes payable as
of December 31, 2000.

     Initially,  our business consisted of the production of pre-recorded travel
guides and special interest videos.  In 1987, we entered the radio  broadcasting
business  by  acquiring  Quality  Communications,  Inc.,  a Wyoming  corporation
pursuant  to which we operate the radio  segment of our  business.  In 1992,  we
acquired a controlling interest in First Films, Inc. ("First Films"), a Colorado
corporation,  under  which  our  live  entertainment  operations  currently  are
undertaken  and  under  which our film  production  activities  previously  were
undertaken.  Beginning  in 1999,  we  attempted  to develop  relationships  with
Internet  content  providers,  advertisers and gaming companies in an attempt to
create an Internet site with links to  entertainment  and gaming  content and to
provide Internet site development to other parties.  Beginning in November 2000,
we have focused on attempting to create a new Internet video production  package
that may enable businesses to affordably showcase products, services, sports and
entertainment  events  over  the  Internet.  It  is  intended  that  this  video
production  package,  which is the current  primary  focus of the Company,  will
utilize  high-speed  broadband  streaming  technology  including,   potentially,
satellite bandwidth transmission  technologies to deliver  company-created video
products over the Internet.

     We intend to sell the radio  and live  entertainment  operations  to obtain
working  capital to pay  existing  obligations  and to  concentrate  on our core
competency: Internet video production, hosting and delivery. It is our intention
to use  the  net  proceeds  from  the  sale  of the  Company's  Radio  and  Live
Entertainment  assets to pay outstanding debt  obligations,  to satisfy liens in
the  amount  of  $293,000  filed by the  Internal  Revenue  Service,  and to pay
substantially all of the Company's  current and past due accounts  payable.  Any
remaining  proceeds  will be  used to fund  the  Company's  new  Internet  video
production, hosting and delivery model.

Fiscal 2000 as Compared to Fiscal 1999

Our net loss,  including income from  discontinued  operations of $337,000,  was
$6,763,000 in 2000. Our net loss, including income from discontinued  operations
of $207,000,  was $2,525,000 in 1999.  This represents an increase of $4,238,000
compared  to the  loss  reported  in  1999.  General  and  administrative  costs
increased by $1,038,000  reflecting  higher  compensation,  and professional and
consulting  fees.  Our  Internet  business  reported  a net  loss of  $4,211,000
representing extensive costs incurred in building the site, creating content and
paying content  providers,  advertising the site,  attempting  acquisitions  and
joint ventures, developing relationships,  and fulfilling its contracts with the
PGATOUR. Of the discontinued operations, our Live Entertainment segment reported
a $199,000 net profit in 2000, $97,000 more than the $102,000 in 1999. Our Radio
segment  reported a $138,000 net profit,  a $38,000  increase  from  $100,000 in
1999.

NET REVENUES: Revenues for the Internet division, the only continuing operations
reported in the  Consolidated  Statement of  Operations,  were $97,000 in fiscal
2000, a $74,000  increase over the $23,000 reported in fiscal 1999. The Internet
operations started in the fourth quarter of 1999.

For our net  assets  of  discontinued  operations,  Live  Entertainment  revenue
improved by $254,000 (+13%),  and the Radio  segment's  revenue grew by $28,000
(+3%). Live  Entertainment  revenue grew due to an increase in attendance and an
increase in liquor and food pricing.  The Radio segment's  increase is primarily
the combination of an increase in the quantity of advertisers and an increase in
ad rates.  The  overall  increase  was  offset by a  decrease  in the  number of
concerts presented from 1999 to 2000.

COST OF SALES:  Cost of sales for the continuing  operation's  Internet  segment
were  $4,308,000  in fiscal  2000,  a $3,579,000  increase  over 1999.  Internet
business  costs in 2000 were  primarily  comprised of content  providers for the
website  ($1,111,000),  wages and payroll taxes  ($1,130,000),  professional and
consulting fees ($745,000),  advertising  expense  ($655,000),  Internet website
hosting and telephone  ($276,000),  legal fees ($120,000),  telephone ($80,000),
travel and entertainment ($55,000) and recruiting fees ($40,000).  Each of these
categories  were  significantly  higher over the prior year as we  attempted  to
build  the site,  create  and buy  content  for the site,  attempt  mergers  and
acquisitions,  fulfill our commitment to the PGATOUR, and attract viewer traffic
to the site.

For our discontinued  operations,  cost of sales in Live Entertainment increased
by $161,000 (+11%). This increase is composed of an increase in headliner's fees
of $77,000, an increase in liquor and food costs (related to increased sales) of
$21,000  and in  percentage  rent of  $10,000,  increased  health  insurance  of
$11,000,  and higher credit card fees of $6,000.  These increases were partially
offset by a  decrease  in wages of  $7,000.  The Radio  segment's  cost of sales
decreased by $35,000 (-6%).  Maintenance and repairs  decreased due to a $10,000
transmitter  repair  in 1999 as a result  of a  lightning  strike,  and a $7,000
decrease in ad agency fees in 2000  compared to 1999.  There was also a decrease
of  almost  $30,000  due to a  decrease  concert  and  related  expenses.  These
decreases were offset by an increase in wages of approximately $15,000.

IMPAIRMENT WRITEDOWNS:  The Company's year 2000 impairment writedown was related
to the write off of the Company's  acquisition of a $180,000 construction permit
to build a new radio station. The Company could not obtain the necessary funding
to build this new station and the construction permit issued by the FCC expired.
The Company cannot renew the permit.  There was a $15,000  impairment  writedown
recorded  in 1999  related to  remaining  assets on the  Company's  discontinued
operations.

DEPRRECIATION  AND  AMORTIZATION:  Depreciation and amortization from continuing
operations  increased  from  $17,000  in 1999 to $73,000  in 2000.  The  $56,000
increase  is  primarily  due  to  the  depreciation   expense  recorded  on  the
significant amount of computer and other equipment added in our Internet segment
during 2000 and 1999.

MANAGEMENT AND ADMINISTRATIVE FEES PAID TO AFFILIATE:  Commencing April 1995, we
contracted out substantially all our  administrative,  management and accounting
functions  to Creative  Business  Services,  Inc.  ("CBS") CBS was  wholly-owned
through June 2000 by Douglas R. Olson,  the  Company's  former  President  and a
director.  The amount  shown in this  caption on the  accompanying  Statement of
Operations include only amounts paid to CBS while Olson was an owner of CBS.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE: Selling, general and administrative
expenses  from  continuing  operations  increased  from  $1,744,000  in  1999 to
$2,782,000 in 2000, a $1,038,000  (+59%)  increase.  Professional and consulting
fees  increased by $550,000  over last year,  due  especially  to an increase in
legal fees for defense of litigation, securities issues, and the preparation and
review of merger and other agreements. Compensation expense recorded as a result
of the  issuance of stock  options  increased  from  $797,000 to  $1,193,000,  a
$396,000 (+50%) increase.  The remaining $92,000 increase is due primarily to an
increase in compensation expense for officers, employees and consultants.

INTEREST  EXPENSE:  Net interest  expense  from  continuing  operations  in 2000
totaled $81,000,  an increase of $37,000 over the $44,000 in 1999. This increase
is  primarily  attributable  to interest  on the IRS  payroll  tax  obligations.
Interest expense for discontinued operations did not change significantly.
Liquidity and Capital Resources

The accompanying  consolidated  financial statements have been prepared assuming
that we will  continue  as a  going  concern.  The  opinion  of our  independent
auditors  delivered in connection with our Financial  Statements for fiscal 2000
and 1999  contains  an  explanatory  paragraph  relative  to the  going  concern
uncertainty. As discussed in Note A to the consolidated financial statements, we
have  suffered  recurring  losses  from  operations,   have  a  working  capital
deficiency of approximately $2,501,000, have negative net worth of approximately
$2,109,000, and are in default on approximately $346,000 of our notes payable as
of December 31, 2000. In February 1998, we were delisted from NASDAQ for failure
to meet the minimum  bid price.  The  delisting  from  NASDAQ has  impaired  our
ability to raise equity  financing.  These  conditions raise  substantial  doubt
about our ability to continue as a going  concern.  The  consolidated  financial
statements do not include any adjustments  that might result from the outcome of
these uncertainties.

Management's  plans with regard to our  ability to  continue as a going  concern
includes the intended sale of our Radio and Live Entertainment assets, increased
focus  and  attention  on the  Internet  section,  attempted  raising  of equity
financing,  restructuring  of  our  debt  obligations,  evaluating  mergers  and
acquisitions  to improve  market share or  operational  synergies  and improving
efficiency  of  operations.  For  several  years,  losses from  operations  have
resulted in  significant  cash  deficiencies  and have  hindered  our ability to
properly fund certain  business  segments,  to make them profitable or to expand
current  business  segments.  We must  generate  additional  revenues  from  our
Internet   business.   We  will   continue  to  evaluate   additional   business
opportunities that do not require immediate working capital infusion.

As discussed earlier,  it is our intention to use the net proceeds from the sale
of the Company's Radio and Live  Entertainment  assets to pay  outstanding  debt
obligations,  the IRS  lien  amounts,  and  substantially  all of the  Company's
current and past due  accounts  payable.  While not  providing  any  substantial
working capital after payment of existing debt and accounts payable obligations,
we believe this will improve the  Company's  ability to operate going forward in
its new Internet and production  model.  Further,  we have received no notice of
collection  proceedings or similar  notices with respect to our notes payable in
default.

We have  been  successful  in 2000  and  1999 in  financing  operations  through
issuance of common stock in settlement  of accounts  payable and in exchange for
services. This form of payment has reduced the cash requirements of the Company.
In 2000,  we issued  34,697,564  shares of common stock for  services  valued at
$3,537,430 or an average of $.10 per share. In 1999, we issued 986,016 shares of
common stock for services valued at $360,743 or an average of $0.37 per share.

Net cash used in operations was approximately $195,000 and $439,000 in 2000 and
1999, respectively.

During 2000 and 1999, we were successful in raising  approximately  $351,000 and
$222,000, respectively, in equity financing through private placement offerings.

A  valuation  allowance  offsetting  our total net  deferred  tax asset has been
established to reflect  management's  evaluation that it is more likely than not
that all of the deferred tax assets will not be realized.

<PAGE>


Item 7.  Financial Statements


FIRST ENTERTAINMENT HOLDING CORP. AND SUBSIDIARIES
Index to Consolidated Financial Statements


Report of Independent Certified Public Accountants

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Changes in Stockholders' Equity (Deficit)

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements




<PAGE>


Report of Independent Certified Public Accountants

Board of Directors and Stockholders
F2 Broadcast Network Inc.
Denver, Colorado


We have audited the  accompanying  consolidated  balance  sheets of F2 Broadcast
Network  Inc.  (formerly  known  as  First  Entertainment   Holding  Corp.)  and
Subsidiaries  as of  December  31,  2000 and 1999 and the  related  consolidated
statements of operations,  stockholders' equity (deficit) and cash flows for the
years then ended. These consolidated financial statements are the responsibility
of the  Company's  management.  Our  responsibility  is to express an opinion on
these consolidated financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the financial position of F2 Broadcast Network
Inc.  and  Subsidiaries  as of  December  31,  2000 and 1999 and the  results of
operations and cash flows for the years then ended, in conformity with generally
accepted accounting principles.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Notes A and E
to the consolidated  financial  statements,  the Company has suffered  recurring
losses from operations,  has a working capital deficiency of approximately $2.50
million and is in default on a portion of its debt. The Company has limited cash
to pay for  operations.  In  addition,  the company  intends to sell  profitable
operations  to  liquidate  debt,  which may not leave  adequate  cash flows from
operations to satisfy remaining debt obligations, and there is no assurance that
the  Company  will  have the cash to pay the  debts  when they  become  due,  or
alternatively, to raise additional equity funding or to successfully restructure
the debts,  both of which have  happened  in the past.  These  conditions  raise
substantial  doubt about the Company's  ability to continue as a going  concern.
Management's  plans in regards to these  matters  are  discussed  in Note A. The
consolidated  financial  statements  do not include any  adjustments  that might
result from the outcome of these uncertainties.


Gordon, Hughes & Banks, LLP

April 25, 2001
Englewood, Colorado



<PAGE>



F2 BROADCAST NETWORK INC. AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2000 and 1999

<TABLE>
                                                              2000                    1999
                                                              -----                   ----

ASSETS
CURRENT
<S>                                                       <C>                         <C>
   Cash                                                $        16,256                $   63,977
   Trade accounts receivable, net of allowance
     for doubtful accounts of $8,740 in 2000 and 1999          112,652                   108,815
   Officer and employee receivables
     net of allowance of $38,075 in 2000                             -                    66,131
   Other current assets                                         22,159                    28,056
------------------------------------------------------------------------------------------------
                                                               151,067                   266,979
------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT
   Equipment and furniture                                     245,697                   224,715
------------------------------------------------------------------------------------------------
                                                               245,697                   224,715
------------------------------------------------------------------------------------------------
   Less accumulated depreciation and
      amortization                                              69,474                   180,321
------------------------------------------------------------------------------------------------
                                                               176,223                    44,394
------------------------------------------------------------------------------------------------
OTHER ASSETS
Net assets of discontinued operations                          362,620                   356,487
------------------------------------------------------------------------------------------------
TOTAL ASSETS                                                 $ 689,910                 $ 667,860
================================================================================================
</TABLE>

 "See accompanying report of independent certified public accountants and notes
                     to consolidated financial statements."


<PAGE>


F2 BROADCAST NETWORK INC. AND SUBSIDIARIES
Consolidated Balance Sheets, continued
December 31, 2000 and 1999

<TABLE>
                                                                            2000           1999
                                                                           ------         ------
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
CURRENT LIABILITIES
<S>                                                                  <C>            <C>
   Accounts payable                                                   $1,649,919     $  220,860
   Accrued liabilities                                                   166,253        146,760
   Accrued interest                                                      443,891        413,286
   Deferred revenues                                                           -         13,000
   Notes payable and current portion of
     long-term debt                                                      358,610        334,099
   Notes payable, related parties                                         33,887          7,080
   --------------------------------------------------------------------------------------------
                                                                       2,652,560      1,135,085
LONG-TERM DEBT,
NET OF CURRENT PORTION                                                   145,977         10,115
-----------------------------------------------------------------------------------------------

COMMITMENTS AND CONTINGENCIES

REDEEMABLE PREFERRED STOCK
    Class A preferred stock 1,500,000 shares
   authorized,10,689 shares issued and outstanding,
   liquidation value $15,000                                                  10             10
   --------------------------------------------------------------------------------------------
STOCKHOLDERS' (DEFICIT)
  Preferred stock, $.001 par value;
   authorized 5,000,000 shares;
   Class B preferred stock, 1,000,000 shares
    authorized, no shares issued and outstanding                               -              -
   Class C preferred stock, 1,000,000 shares
     authorized no shares issued and outstanding                               -              -
   Common stock, $.008 par value; authorized
     250,000,000 shares; 48,040,449 and 12,480,835
      shares issued and outstanding                                      384,353         99,847
  Capital in excess of par value                                      23,559,402     18,751,618
  Stock held in escrow                                                  (280,000)             -
  Deferred compensation                                                       -       (319,402)
  Accumulated (deficit)                                             (25,772,392)   (19,009,413)
  ---------------------------------------------------------------------------------------------
                                                                     (2,108,637)      (477,350)
TOTAL LIABILITIES AND STOCKHOLDERS'
(DEFICIT)                                                               $689,910      $ 667,860
===============================================================================================

</TABLE>
 "See accompanying report of independent certified public accountants and notes
                     to consolidated financial statements."



<PAGE>


FIRST ENTERTAINMENT HOLDING CORP. AND SUBSIDIARIES
Consolidated Statements of Operations
For the Years Ended December 31, 2000 and 1999

<TABLE>
                                                                       2000                      1999
                                                                       ----                      ----
REVENUE
<S>                                                                <C>                        <C>
   Internet                                                               97,238                      23,112
------------------------------------------------------------------------------------------------------------
                                                                          97,238                      23,112
------------------------------------------------------------------------------------------------------------
COSTS AND EXPENSES
   Cost of sales, Internet                                             4,307,602                     728,945
   Impairment writedowns                                                 180,000                      14,999
   Depreciation and amortization                                          72,703                      17,086
   Management and administrative fees, affiliate                         138,500                     224,565
   Selling, general and administrative                                 2,782,448                   1,744,187
------------------------------------------------------------------------------------------------------------
                                                                      (7,481,253)                  2,729,782
------------------------------------------------------------------------------------------------------------
OPERATING (LOSS) FROM CONTINUING
OPERATIONS                                                            (7,384,015)                 (2,706,670)
------------------------------------------------------------------------------------------------------------
OTHER INCOME (EXPENSE)
   Interest expense                                                      (81,130)                    (43,999)
   Balzac settlement income                                              358,000                           -
   Other, net                                                              6,696                      17,925
------------------------------------------------------------------------------------------------------------
                                                                         283,566                     (26,074)
------------------------------------------------------------------------------------------------------------
(LOSS) FROM CONTINUING OPERATIONS                                     (7,100,449)                 (2,732,744)
------------------------------------------------------------------------------------------------------------

DISCONTINUED OPERATIONS
   Income        from discontinued operations                            337,470                     207,345
------------------------------------------------------------------------------------------------------------

NET (LOSS)                                                           $(6,762,979)                $(2,525,399)
============================================================================================================

NET (LOSS) PER COMMON SHARE,
CONTINUING OPERATIONS BASIC
AND DILUTED                                                        $       (0.29)                $    (0.25)

NET INCOME PER COMMON SHARE,
DISCONTINUED OPERATIONS                                                    $0.01                 $     0.02
-----------------------------------------------------------------------------------------------------------

NET (LOSS) PER COMMON SHARE,
Basic and Diluted                                                  $       (0.28)                $    (0.23)
============================================================================================================

WEIGHTED-AVERAGE NUMBER OF
SHARES OUTSTANDING BASIC AND DILUTED                                  24,333,687                 11,072,403
============================================================================================================
</TABLE>
"See accompanying report of independent certified public accountants and notes
                     to consolidated financial statements."




<PAGE>


F2 BROADCAST NETWORK INC. AND SUBSIDIARIES
Consolidated Statements of Changes In Stockholders' Equity (Deficit)
For the Years Ended December 31, 2000 and 1999

<TABLE>
                              Class B              Class C                                 Capital In                       Stock
                            Preferred Stock     Preferred Stock        Common Stock        Excess of       Accumulated      Held In
                        ----------------------------------------------------------------
                         Shares     Amount     Shares     Amount     Shares     Amount     Par Value       (Deficit)        Escrow
                         ------     ------     ------     ------     ------     ------     ---------        --------        ------
<S>                     <C>         <C>       <C>         <C>       <C>        <C>        <C>              <C>            <C>
BALANCES,
JANUARY 1, 1999           13,040       $ 13          -       $  -  9,610,170    $76,882     $15,924,086  $(16,484,014)     $      -
-----------------------------------------------------------------------------------------------------------------------------------

Common stock issued for
   Cash, net of offering
    costs                                                            280,000      2,240         217,760
   Cash, option and
    warrant exercises                                              1,145,000      9,160         460,840
   Consulting services
    and compensation                                               1,298,665     10,389       1,033,645
Preferred stock conversion(13,040)      (13)         -          -    147,000      1,176          (1,163)
Common stock options and
      warrants issued                                                                         1,116,450
Net (loss)                                                                                   (2,525,399)
-----------------------------------------------------------------------------------------------------------------------------------
BALANCES
DECEMBER 31, 1999            -            -          -          - 12,480,835     99,847      18,751,618   (19,009,413)            -

Common stock issued for
   Cash, net of offering
    costs                                                            609,232      4,873         346,127
   Consulting services
    and compensation                                              34,697,564    277,610       3,309,820
   As security for note
    payable                                                          252,818      2,023         277,977                    (280,000)
Common stock options and
      warrants issued                                                                           873,860
Net (loss)                                                                                   (6,762,979)
-----------------------------------------------------------------------------------------------------------------------------------
BALANCES
DECEMBER 31, 2000            -          $-          -         $-  48,040,449   $384,353     $23,559,402  $(25,772,392)    $(280,000)
===================================================================================================================================

</TABLE>

<TABLE>
                                                Deferred
                                             Compensation               Total
<S>                                          <C>                        <C>
BALANCES,
JANUARY 1, 1999                                     -                   $(483,023)
---------------------------------------------------------------------------------
Common stock issued for
   Cash, net of offering costs                                            220,000
   Cash, option and warrant exercises                                     470,000
   Consulting services and compensation                                 1,044,034
Preferred stock conversion                                                      -
Common stock options and
      warrants issued                          (319,402)                  797,048
Net (loss)                                                             (2,525,399)
---------------------------------------------------------------------------------
BALANCES
DECEMBER 31, 1999                              (319,402)                $(477,350)

Common stock issued for
   Cash, net of offering costs                                            351,001
   Consulting services and compensation                                 3,587,430
   As security for note payable                                                 -
Common stock options and
      warrants issued                           319,402                 1,193,262
Net (loss)                                                             (6,762,979)
---------------------------------------------------------------------------------
BALANCES
DECEMBER 31, 2000                                    $-               $(2,108,627)
=================================================================================
</TABLE>
"See accompanying report of independent certified public accountants and notes
                     to consolidated financial statements."

<PAGE>



F2 BROADCAST NETWORK INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2000 and 1999
<TABLE>

                                                                          2000                      1999
                                                                       ---------                 -------
OPERATING ACTIVITIES
<S>                                                               <C>                   <C>
Net (loss)                                                           $  (6,762,979)        $  (2,525,399)
Adjustments to reconcile net (loss) to net cash
  used in operations
   Depreciation and amortization                                            72,703                17,086
   Impairment and other write downs                                        180,000                14,999
   Issuance of stock, common stock options
     and warrants for services                                           4,780,692             1,841,082
   Trade accounts receivable                                                (3,837)               (7,247)
   Officer receivables                                                      66,131               (51,121)
   Inventories                                                                   -               (14,732)
   Accounts payable                                                      1,429,058                31,939
   Accrued liabilities                                                      50,098               (12,519)
   Deferred revenue                                                        (13,000)               13,000
   Other                                                                    (5,897)                4,535
   -----------------------------------------------------------------------------------------------------
   NET CASH, (USED IN) OPERATING ACTIVITIES                               (195,236)             (658,913)
   -----------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
  Capital expenditures                                                    (204,533)             (218,400)
  Net assets of discontinued operations                                   (156,133)             (369,526)
--------------------------------------------------------------------------------------------------------
NET CASH (USED IN) PROVIDED BY
INVESTING ACTIVITIES                                                      (390,666)             (151,126)
--------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES
  Principal payments on notes payable and
   long-term debt                                                           (3,999)             (233,240)
  Proceeds from notes payable and long-term debt                           191,179                 5,544
  Proceeds from exercise of options                                              -               470,000
  Proceeds from issuance of common stock                                   351,001               220,000
--------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES                                                                 538,181               462,314
--------------------------------------------------------------------------------------------------------
NET (DECREASE) IN CASH                                                     (47,721)              (45,473)

CASH,
BEGINNING OF YEAR                                                           63,977               109,450
--------------------------------------------------------------------------------------------------------
CASH,
END OF YEAR                                                           $     16,256             $  63,977
========================================================================================================

SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION

  Interest paid                                                       $     72,904             $  82,493
========================================================================================================

  Income taxes paid                                                   $          -             $       -
========================================================================================================

Common stock and options and warrants
issued for services                                                   $  4,780,692            $1,841,082
========================================================================================================

Common stock issued for preferred stock
Conversion                                                            $          -            $       13
========================================================================================================

Fully Depreciated Assets Written Off                                  $    183,551            $  167,095
========================================================================================================
</TABLE>

"See accompanying report of independent certified public accountants and notes
                     to consolidated financial statements."




<PAGE>



F2 BROADCAST NETWORK INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

NOTE A  NATURE OF BUSINESS AND GOING CONCERN

     On December 27, 2000, our  stockholders  approved  changing the name of the
Company from "First Entertainment  Holding Corp." to "F2 Broadcast Network Inc."
The stockholders  also approved an increase in the Company's  authorized  common
stock. The name change and increased  capitalization became effective January 4,
2001, when the Company filed Articles Of Amendment to the Company's  Articles Of
Incorporation with the Nevada Secretary Of State.

     On  December  15,  1998,  First  Entertainment,  Inc.  changed its state of
incorporation   from   Colorado   to  Nevada  and  changed  its  name  to  First
Entertainment  Holding Corp. (the "Company" or "FEHC").  The change was effected
by a merger of First Entertainment,  Inc. into First Entertainment Holding Corp,
a newly formed Nevada  Corporation.  Upon completion of the merger, the Colorado
Corporation  ceased to  exist.  The  transaction  was  accounted  for on a basis
similar to a pooling of  interests  with no change in the  historical  financial
statements of the Company.  The newly formed Corporation had no operations prior
to the merger.

     The  Company  was  originally  incorporated  as a Colorado  corporation  on
January  17,  1985.  The  Company  and its  subsidiaries  have been  involved in
entertainment through several segments.  Its live entertainment segment owns and
operates a comedy club in Denver,  Colorado. Its radio station, 100.7 "The Fox",
operates in Gillette, Wyoming.

     During the period from  inception  (January 17, 1985) to December 31, 2000,
the  Company  incurred  cumulative  net  losses  of  approximately  $25,770,000.
Additionally,  as of  December  31,  2000,  the Company had an excess of current
liabilities over current assets of approximately $2,501,000 and is in default on
certain  notes  payable.  These  conditions  raise  substantial  doubt about the
Company's ability to continue as a going concern.  The Company is dependent upon
obtaining additional financing,  and/or extending its existing debt obligations,
and/or obtaining  additional equity capital and ultimately  achieving profitable
operations.

     The Company has no  arrangements in place for such equity or debt financing
and no assurance can be given that such financing will be available at all or on
terms  acceptable to the Company.  Any  additional  equity or debt financing may
involve substantial  dilution to the interests of the Company's  shareholders as
well as warrants and options  holders.  The Company  received  proceeds from the
sale of common and preferred  stock,  and the exercise of common stock  warrants
and  options,  of  approximately  $351,000  and  $690,000  during the year ended
December 31, 2000 and 1999, respectively. While these sales provided much needed
some  capital,  additional  sales of equity  capital  cannot be  assured  due to
overall  economic and market  conditions,  the price of the Company's  stock and
other unpredictable factors.

     Management's  plans with regard to the  Company's  ability to continue as a
going  concern  include  selling  certain of its assets,  continued  attempts at
equity financing in the U.S. and/or international markets,  restructuring of its
debt obligations,  and/or undertaking  mergers or acquisitions to improve market
share or operational synergies and improving efficiency of operations.  On April
7, 2001,  the Company  signed a  definitive  agreement  to sell all of its radio
station assets that will net in cash receipts (after payment of related debt) of
approximately  $800,000, and a note receivable of $557,000. The Company has also
signed a letter  of  intent to sell all of its live  entertainment  net  assets,
which should result in cash proceeds to the Company of  approximately  $300,000.
It is the  Company's  intention  to use the net  proceeds  from  the sale of the
Company's radio station and live  entertainment  assets to pay outstanding  debt
obligations,  the IRS  lien  amounts,  and  substantially  all of the  Company's
current and past due accounts  payable.  Any remaining  proceeds will be used to
fund the Company's new Internet video production, hosting and delivery model.

     Currently,  the  Company  does not have  sufficient  revenues  to  generate
operating or net income from  operations;  therefore,  it is  necessary  for the
Company  to  increase   revenues  either  by  expansion  or  by  acquisition  or
significantly  reduce its  operating  costs.  The Company has been able to issue
stock  for  management  and  accounting  and  administrative  services,  thereby
reducing the need for cash to pay for operating expenses.  The value of services
paid by  issuance  of stock  was  approximately  $3,587,000  for the year  ended
December 31, 2000.  Net cash used in operations was  approximately  $195,000 for
the year ended December 31, 2000. The Company may not have  sufficient  cash for
use in operations  through December 31, 2001. If the Company is unable to obtain
sufficient funds to satisfy its cash  requirements,  it may be forced to curtail
operations,  dispose of assets or seek extended  payment terms from its vendors.
The  accompanying   consolidated   financial   statements  do  not  include  any
adjustments that might result from the outcome of these uncertainties.



<PAGE>


NOTE B  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation

     The accompanying  consolidated financial statements include the accounts of
the Company and its subsidiaries. The Company owns the following subsidiaries:

Name of Subsidiary                        Percentage Owned       Status
---------------------------------------------------------------------------
Quality Communications, Inc.              100%                  Held for Sale
First 2 Market, Inc                       100%                  Active
First Films, Inc.                         80%                   Held for Sale
Global Internet Corp.                     50.3%                 Inactive
The Best of As Seen on TV, Inc.           58%                   Inactive
W3, Inc.                                  100%                  Inactive
Redunidos                                 100%                  Active
Cyber Audio Network                       100%                  Inactive

     The minority interest in First Films,  Inc., Global Internet Corp., and The
Best of As Seen on TV,  Inc.  has  been  reduced  to zero due to  losses  in the
respective  subsidiaries.  First Films, Inc. owns 100% of Comedy Works, Inc. and
Comedy Core, Inc. Cumulative losses applicable to the minority interest in these
subsidiaries  exceed  the  minority  interest  in the  equity  capital  of these
subsidiaries.  Such cumulative  excess (and any further losses applicable to the
minority interests) are charged against the Company's  interest,  as there is no
obligation  of the  minority  interest to make good on such  cumulative  losses.
Current and future earnings in those  subsidiaries are credited to the extent of
such losses previously absorbed by the Company.

     All  significant   intercompany   accounts  and   transactions   have  been
eliminated.

Cash Equivalents
     The Company considers all highly liquid debt instruments  purchased with an
original maturity of three months or less to be cash equivalents.

Inventories
     Inventories  are  stated at the lower of cost or  market  value  (first-in,
first-out basis).  Inventories are comprised of liquor and related supplies.  As
of December 31, 2000 and 1999, the inventories  are in included in net assets of
discontinued operations.

Property and Equipment
     Production  equipment,  furniture and other  equipment are recorded at cost
and  depreciated  using  straight-line  and declining  balance  methods over the
estimated useful lives of the assets, ranging from three to fifteen years. These
methods approximate the economic service life of the assets.

     Leasehold  improvements  are  recorded  at  cost  and  are  amortized  on a
straight-line  basis over their estimated useful lives, but not in excess of the
lease term.

     The cost and related  accumulated  depreciation  and amortization of assets
sold  or  retired  are  removed  from  the  appropriate  asset  and  accumulated
depreciation  and  amortization  accounts  and  the  resulting  gain  or loss is
reflected in operations.

     Maintenance   and  repairs  are  charged  to  operations  as  incurred  and
expenditures for major improvements are capitalized.

License, Goodwill and Intangibles
     Broadcast  licenses,  goodwill  and  intangibles,  recorded  at  cost,  are
amortized on a straight-line basis over periods of 10 to 20 years.

     Periodically  the Company  reviews  the  recoverability  of its  intangible
assets  based  on  estimated  undiscounted  future  cash  flows  from  operating
activities compared with the carrying value of the intangible assets. Should the
aggregate  future cash flows be less than the carrying value, a write-down would
be required  measured by the difference  between the discounted future cash flow
and the carrying  value of the  intangible  assets under  Statement of Financial
Accounting Standards 121 (SFAS 121).

     As of December 31, 2000 and 1999,  the  unamortized  intangibles  have been
included in net assets of discontinued operations.

Software Costs
     The Company utilizes  American  Institute of Certified  Public  Accountants
Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer Software
Developed  or Obtained  for  internal  Use" to account for  software  costs.  In
accordance with SOP 98-1, the Company expenses costs incurred in the preliminary
project  stage and,  thereafter,  capitalizes  costs  incurred in  developing or
obtaining internal use software.  Certain related costs, such as maintenance and
training,  are expensed as incurred. The Company will capitalize direct costs of
developing  the portion of its website that will be used for internal  corporate
communications.  Capitalized  software  costs will be amortized over a period of
not more than 3 years after the software is placed into  operation.  Capitalized
software costs are subject to impairment evaluation in accordance with SFAS 121.

Long Lived Assets
     Long-lived assets and identifiable  intangibles are reviewed for impairment
whenever  events or changes in  circumstances  indicate that the carrying amount
may not be recoverable.  If the expected  undiscounted future cash flow from the
use of the  assets  and their  eventual  disposition  is less than the  carrying
amount of the assets,  an impairment  loss is recognized  and measured using the
asset's fair value or discounted cash flows.

Income Taxes
     The  Company  accounts  for  income  taxes  under  Statement  of  Financial
Accounting  Standards  No.  109,  "Accounting  for  Income  Taxes"  (SFAS  109).
Temporary  differences  are  differences  between  the tax basis of  assets  and
liabilities  and their reported  amounts in the financial  statements  that will
result in taxable or deductible amounts in future years.

Deferred Compensation
     Deferred  compensation results from granting stock options under agreements
with vesting terms extending beyond one year. Deferred compensation is initially
offset  against  stockholders'  equity and amortized to expense over the term of
the related agreement.

Stock Award and Stock Option Plans
     The  Company  grants  common  stock  and stock  options  to  employees  and
non-employees. The Company applies Accounting Principles Board (APB) Opinion No.
25  (APB  25),   "Accounting  for  Stock  Issued  to  Employees",   and  related
Interpretations  in  accounting  for all stock award and stock  option plans for
employees and directors.

     Following the guidance of APB 25, compensation cost has been recognized for
stock  options  issued to  employees  and  directors as the excess of the market
price of the underlying  common stock on the date of the grant over the exercise
price of the Company's stock options on the date of the grant.

     Statement  of  Financial  Accounting  Standards  No. 123,  "Accounting  for
Stock-Based  Compensation" (SFAS 123), requires the Company to provide pro forma
information regarding net income as if compensation cost for the Company's stock
option plans had been  determined in accordance with the fair value based method
prescribed  in SFAS 123.  To provide the  required  pro forma  information,  the
Company estimates the fair value of each stock option at the grant date by using
the Black-Scholes option-pricing model.

     In certain  circumstances,  the Company  issues  common  stock for invoiced
services,  to pay creditors and in other similar situations.  In accordance with
SFAS No.  123  payments  in equity  instruments  to  non-employees  for goods or
services  are  accounted  for by the fair  value  method,  which  relies  on the
valuation of the service at the date of the  transaction,  or public stock sales
price, whichever is more reliable as a measurement.

Financial Instruments
     The following  methods and assumptions were used to estimate the fair value
of each class of financial  instruments  for which it is practicable to estimate
that value;

Accounts Receivable, Accounts Payable and Accrued Liabilities
     Fair  values  of  accounts   receivable,   accounts  payable,  and  accrued
liabilities  are  assumed to  approximate  carrying  values for these  financial
instruments  since  they are short  term in nature  and their  carrying  amounts
approximate fair value or they are receivable or payable on demand.

Notes Payable
     These notes  substantially  bear  interest  at a floating  rate of interest
based upon the lending institutions' prime lending rates. Accordingly,  the fair
value  approximates  their  reported  carrying  amounts at December 31, 2000 and
1999.

Mortgage Notes
     Estimates  are based upon  current  market  borrowing  rates for loans with
similar terms and maturities.

The estimated fair values of the Company's financial instruments for continuing
operations are as follows:

                              December 31, 2000              December 31,1999
                              -----------------              ----------------
                             Carrying     Fair           Carrying          Fair
Financial Liabilities          Amount     Value           Amount           Value
Notes Payable and
  Mortgage Notes             $538,474    $538,474        $351,294       $351,294


Revenue Recognition
     Radio  broadcast  and ad fees,  included in  discontinued  operations,  are
recorded  as  revenue  when the  broadcast  or ad is aired.  Live  entertainment
revenues, included in discontinued operations, are recognized at the time of the
performance,  generally  nightly.  Retail sales are  recognized  at the time the
merchandise is sold, net of returns.

     The Company  recognizes  revenue on website design projects based on hourly
billing and/or on a percentage of completion method for fixed bid projects.  The
Company's customers may elect to update and/or expand their websites and clients
are billed monthly on a time and materials basis for these services.  Additional
sources of ongoing  revenue may include  revenue from sale of  merchandise  over
customers'  websites  and revenue  from the hosting  and  maintenance  of client
websites.  The Company  receives and records a percentage  of gross revenue from
merchandise and service sales immediately upon completion of these sales.

     Deferred revenues from internet operations  primarily represent billings on
projects that are deferred  initially,  and recognized  ratably over the term of
the  contracts  earned.  Revenues  on   percentage-of-completion   projects  are
recognized  in the ratio that costs  incurred bear to total  estimated  contract
costs.  Changes in job performance,  estimated  profitability and final contract
settlements  may result in revisions to costs and income and are  recognized  in
the period in which the revisions are determined.

     In determining  percentage-of-completion,  contract costs include all labor
costs and those  indirect  costs  related to contract  performance.  General and
administrative costs are charged to expense as incurred.

     Profits on short-term contracts are recorded upon substantial completion of
each contract.  Revenues from time and material  contracts are recognized as the
work is performed.

     At the time a loss on a contact  becomes  known,  the entire  amount of the
estimated loss on both short and long-term contracts is accrued.

     An  asset,   "costs  and  estimated  earnings  in  excess  of  billings  on
uncompleted contracts," would represent revenues recognized in excess of amounts
billed.  The liability,  "billings in excess of costs and estimated  earnings on
uncompleted   contracts,"  would  represent   billings  in  excess  of  revenues
recognized.  No amounts have been  recorded at December 31, 2000 and 1999 due to
their nominal value.

Net Loss Per Share
     As of  December  31,  1998,  the Company  adopted  Statement  of  Financial
Accounting Standards No. 128, "Earnings per Share" (SFAS 128). SFAS 128 provides
for the calculation of "Basic" and "Dilutive" earnings per share. Basic earnings
per share includes no dilution and is computed by dividing  income  available to
common  stockholders by the weighted average number of common shares outstanding
for the period.  Diluted  earnings per share reflects the potential  dilution of
securities  that could share in the earnings of the entity.  For the years ended
December 31, 2000 and 1999,  the Company  incurred net losses and stock  options
and stock  warrants  were not  included in the  computation  of diluted loss per
share because their effect was anti-dilutive; therefore, basic and fully diluted
loss per share are the same for those years.

Use of Estimates
     The preparation of these  consolidated  financial  statements in conformity
with generally accepted accounting principles necessarily requires management to
make estimates and  assumptions  that affect the reported  amounts of assets and
liabilities,  the disclosure of contingent assets and liabilities at the date of
the financial statements and reported amounts of revenues and expense during the
reporting periods. Actual results could differ from those estimates.

Concentration of Risk
     Financial  instruments that potentially expose the Company to concentration
of credit risk consist  primarily of cash  equivalents  and accounts  receivable
with the Company's various customers.  The Company  establishes an allowance for
doubtful  accounts  based on factors  surrounding  the credit  risk of  specific
customers, historical trends and other information.

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

Reclassifications
     Certain balances in the prior year consolidated  financial  statements have
been  reclassified  in order to conform to the current  year  presentation.  The
reclassifications had no effect on financial condition or results of operations.

Recent Accounting Pronouncements

     The Financial  Accounting  Standards Board has recently issued Statement of
Financial  Accounting  Standards  ("SFAS") No. 133,  "Accounting  for Derivative
Instruments and Hedging  Activities"  ("SFAS No. 133"). SFAS No. 133 established
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and hedging activities. This
Statement was effective for all fiscal  quarters of fiscal years beginning after
June 15, 1999.  The adoption of this  statement  had no impact on the  Company's
consolidated financial statements.

NOTE C DISCONTINUED OPERATIONS

     In April  2000,  we entered  into a letter of intent to sell all the assets
related to our radio  business  to  American  Communications  Enterprises,  Inc.
("ACE"). The letter of intent expired with no definitive agreement being signed.
In  December  2000,  we  entered  into a letter of intent to sell all the assets
related  to our  radio  business  to  Legend  Communications  of  Wyoming,  LLC.
("Legend"). These assets include the Gillette, Wyoming radio station and all the
tangible and intangible assets related to that station. Subject to entering into
a  definitive  agreement  and  other  conditions,   Legend  has  agreed  to  pay
approximately  $1,300,000  in cash and a  5-year  note for  $557,000  for  these
assets. The purchase price will be reduced by the amount of liens, mortgages and
other encumbrances against the radio station.  On April 6, 2001,  subsequent to
year  end an Asset  Purchase  Agreement  was  executed  by  Legend  and  Quality
Communications,  Inc. and filed with the Federal  Communications  Commission for
their review.

     Additionally,  in November 2000, we entered into a letter of intent to sell
all the stock and assets  related  to our live  entertainment  operations  to an
entity owned by the manager of the comedy club and one of the Company's contract
accountants.  These assets  include the stock of First  Films,  Inc. and all the
tangible and intangible  assets  related to Comedy Works,  Inc. and Comedy Core,
Inc. that are  wholly-owned  by First  Films,  Inc.  Subject to entering  into a
definitive  agreement and other  conditions,  the purchasers  have agreed to pay
approximately  $300,000  in cash for these  assets  and will  assume  all of the
outstanding debt and obligations  related to these assets.  Although the COmpany
is working  with the  purchasers  to reach a definitive  agreement,  there is no
assurance that a definitive  agreement  will be reached or that the  transaction
will be completed.

     If these  sales  are not  completed,  the  Company  intends  to seek  other
opportunities  to sell the radio and live  entertainment  operations in order to
liquidate debts. Accordingly, the net assets of the radio and live entertainment
operations have been reflected on the accompanying consolidated balance sheet as
net  assets of  discontinued  operations.  The  components  of the net assets of
discontinued operations as of December 31, 2000 and 1999 are as follows:

<TABLE>
                                                   2000                  1999
                                                   ----                  ----
Radio segment:
<S>                                         <C>                    <C>
Current assets                                 $    157                $      -
Property and equipment, net                     381,752                 393,380
Other assets, net                               582,694                 672,710
Current liabilities                             (61,758)                (54,860)
Long-term liabilities                          (518,982)               (589,880)
                                            ------------------------------------
                                            $   385,864               $ 421,350
                                            ------------------------------------

Live entertainment segment:
--------------------------
Current assets                               $   53,495                $ 48,286
Property and equipment, net                     212,674                 229,957
Other assets, net                                (2,049)                 (2,049)
Current liabilities                             (75,274)               (106,884)
Long-term liabilities                          (212,090)               (225,174)
                                             -----------------------------------
                                             $(  23,244)              $( 55,864)
                                             -----------------------------------

Net assets held of discontinued operations   $  362,620                 $356,487
                                             ===================================
</TABLE>

Summary operating results of discontinued operations for the years ended
December 31, 2000 and 1999 are as follows:

<TABLE>
                                               2000                1999
                                            ---------         ------------
 Radio segment:
 -------------
<S>                                        <C>               <C>
 Revenues                                    $  864,217         $ 835,719
 Costs and expenses                          (  725,839)       (  734,975)
                                            -------------      ----------
 Net income                                 $   138,378        $  100,744
                                            -------------      ----------

 Live entertainment segment:
 --------------------------
 Revenues                                   $ 1,923,171        $1,668,926
 Costs and expenses                          (1,723,879)     (  1,571,339)
                                            ------------     ------------
 Net income                                 $   199,292      $     97,589
                                            ------------     ------------

 Income from discontinued operations       $    337,670       $   207,345
                                           =============     ============
</TABLE>

NOTE D  OTHER BUSINESS DEVELOPMENTS

Choice Sports Network, Inc.
     The Company signed a letter of intent on June 20, 2000 to merge with Choice
Sports  Network,  Inc.  (CHSP)  with the  intent  to create a major  sports  and
entertainment  Internet company.  Upon consummation of the merger, the agreement
called for each  shareholder of First  Entertainment  Holding Corp. to receive a
number of shares of common stock in CHSP having a weighted average trading price
for the 20 days preceding the closing date equal to $1.00 U.S. for each share of
the Company's  stock held.  After  additional due diligence,  and due to lack of
funding  required to be provided  to the  Company by CHSP,  Company  allowed the
letter of intent to expire.

W3, Inc.
     The Company formed W3, Inc., as a wholly-owned  subsidiary,  to acquire and
operate a radio station in Lead,  South Dakota.  After receiving FCC approval in
February 2000,  the Company issued 252,818 shares of restricted  common stock to
be held in escrow as security for a $280,000 face value note  payable.  The note
payable was part of the  $300,000  of  consideration  given in exchange  for the
construction  permit,  licenses,  rights and certain other assets.  However, the
Company could not obtain the necessary funding to build this new station and the
construction  permit  issued by the FCC  expired.  The Company  cannot renew the
permit. Consequently,  all the capitalized costs of the projects have been fully
impaired in the accompanying financial statements.

All That Media
     In June 1999,  the  Company  acquired a newly  formed  development  company
called "All That Media".  The  consideration  for the  acquisition  consisted of
options  given  to All That  Media's  shareholders  for  500,000  shares  of the
Company's  common  stock at $0.75 per share.  The options  expire on October 10,
2001. The value of the options pursuant to SFAS 123 was $355,000, which has been
recorded as compensation in the accompanying statement of operations as All That
Media was a start-up  company with no revenue,  proprietary  rights or any other
assets for which the acquisition  costs could be attributable to pursuant to APB
16.

     All That Media was a company that  specialized  in rich media  development,
Internet portal development and Internet advertising.  Prior to acquisition, the
Company had contracted  with All That Media for web site  development,  Internet
portal  development  and  Internet  advertising  for the  various  new  Internet
businesses the Company intended to commence.

EDRON Associates
     In June 1999, the Company  acquired a start-up  retail website  development
company called EDRON Associates ("EDRON") by issuing options to its shareholders
to purchase  300,000  shares of common  stock of the Company at $1.03 per share.
The  options  are  exercisable  for a period  of two  years.  While  EDRON was a
start-up  company with little  revenue,  it had significant  relationships  with
local Internet service providers for hosting and site development.  The value of
the  options  pursuant  to SFAS 123 was  $102,000,  which has been  recorded  as
compensation  in the  accompanying  statement of  operations as EDRON was also a
start-up  company  with no revenue,  proprietary  rights or any other assets for
which the acquisition costs could be attributable to pursuant to APB 16.

     Concurrent with the  acquisition of EDRON,  the Company formed a new entity
called First 2 Market,  Inc. (F2M) and both EDRON and All That Media were merged
into F2M. The value of the options to acquire EDRON pursuant to SFAS No. 123 was
$152,400 of which $114,300 has been recorded as compensation in the accompanying
statement of operations  and $38,100 had been recorded as deferred  compensation
and expensed in 2000.  EDRON was a start-up  company with little  revenue and no
proprietary  or  intangible  assets  for which the  acquisition  costs  could be
attributable to pursuant to APB 16.

Balzac, Inc.
     In April 1996,  the Company  acquired  certain  assets from  Balzac,  Inc.,
("Balzac") a private company, which manufactures and distributes toys, including
a product  line of toy balls.  The assets and rights  acquired  consisted  of an
exclusive  license for  Australia,  inventory  of Balzac toys and various  other
rights.  During 1996, a dispute  arose between the Company and Balzac and Balzac
asserted a violation of the Purchase  Agreement  obligation  under the Licensing
Agreement.

     In April 1998,  Balzac and the Company  entered into an  agreement  whereby
Balzac would buy back the Australian  Licensing Agreement for $800,000 and would
repay the Company  $200,000  which was the  difference  between the value of the
seized  inventory  and  the  obligation  under  the  licensing  agreement.   The
$1,000,000  was to be repaid over forty months at 8% per annum.  The  $1,000,000
was to be repaid to the Company through the sale, by Balzac, of 1,000,000 of the
Company's shares of common stock owned by Balzac.

     The  ability  of Balzac to sell all  1,000,000  shares  held by Balzac at a
price of $1.00 to repay  its  obligation  was  determined  by  management  to be
unlikely. As of December 31, 1997 the note receivable from Balzac was determined
to be  impaired  and was  written  down to its net  realizable  value of $81,344
resulting in an impairment  loss of $902,018.  As of December 31, 1998, the note
receivable was determined to be further impaired and was written down to its net
realizable  value of $42,000  resulting in an  impairment  of $39,340.  In early
1999,  Balzac  informed  the  Company  that it had filed  Chapter 11  Bankruptcy
proceedings.  Management  determined  the note  receivable  was  unlikely  to be
collected  and the  remaining  $42,000 was written off as of December  31, 1998.
Pursuant to a Bankruptcy  Court Order dated April 13, 1999,  Balzac sold 885,000
shares of the Company's  common stock  between May 1999 and July 1999  receiving
proceeds of approximately $2,056,000.

     In February  2000,  management  of the Company  reached an  agreement  with
Balzac to settle these disputes.  Pursuant to this agreement, which was approved
by the  Bankruptcy  Court,  Balzac  paid the  Company  $358,000  in cash and the
Company issued Balzac options to purchase 200,000 shares of the Company's common
stock at $2.00 per share, 310,000 shares of common stock at $1.00 per share, and
65,000 shares at $1.40 per share. These options expire three years after
issuance.

Uproar Entertainment
     In  May  1999,   the  Company   entered  into  an  agreement   with  Uproar
Entertainment  (Uproar) for the production and maintenance of a web site and the
sale of Uproar products on the web site. The Company shall design and construct,
at its own expense,  a web site and provide  hosting and  marketing for the site
and will offer  Uproars'  products  for sale.  Uproar  will be  responsible  for
fulfilling  and shipping all sales orders  generated  through the web site.  The
Company  will pay $8.00 per CD and $6.00 per  cassette  ordered to  Uproar.  The
Company will receive all proceeds  from the sale of products on the web site and
remit to Uproar on a monthly basis the cost of products  sold.  The agreement is
for a period of five years and is renewable by mutual  consent of both  parties.
While the  agreement  remains in effect,  the Company has not yet  completed any
transactions with Uproar.

NOTE E   NOTES PAYABLE AND LONG-TERM DEBT

     The Company is in default under the terms of approximately $346,000 of debt
obligations for  non-payment.  None of these creditors have notified the Company
officially   of  default  and  have  not   initiated   collection   proceedings.
Substantially  all of the  Company's  assets are pledged as collateral to one or
more debt  obligations.  Notes that are in  default  are  classified  as current
liabilities. Notes payable and long-term debt is summarized as follows:
<TABLE>
   December 31,                                   2000                 1999
   ------------                                   ----                 ----

   Continuing operations:
   ---------------------
  <S>                                            <C>                 <C>
   Note payable to the State of Wyoming (1)       $    300,000         $300,000
   Note payable, other (8)                             158,426                -
   Note payable, vendor (7)                              9,479            9,479
   Notes payable to related parties (6, 9)              33,887            5,315
   Notes payable to individuals and companies (9)       36,682           41,179
   ----------------------------------------------------------------------------
                                                       538,474          351,294
   Less current portion                                392,497          341,179
   ----------------------------------------------------------------------------
                                                   $   145,977        $  10,115
   ============================================================================
 </TABLE>
         Future maturities of debt related to continuing operations as of
December 31, 2000 are as follows:

                  2001                        $392,497
                  2002                           6,733
                  2003                           7,292
                  2004                           7,897
                  2005                           8,553
                  Thereafter                   115,412
                                               -------
                  Total                       $538,474
                                              ========
<TABLE>
   December 31,                                          2000                         1999
   ------------                                          ----                         ----

   Discontinued operations:
   -----------------------
<S>                                                     <C>                           <C>
   Notes payable, First National Bank Gillette  (2)      $    389,916                  $ 455,165
   Notes payable, lessor (3)                                  130,038                    141,607
   Mortgage note payable (4)                                  126,067                    134,716
   Mortgage note payable (5)                                   51,753                     52,646
   Note payable, vendor (7)                                     9,746                      9,746
   Notes payable, individuals and companies (9)                20,554                     21,992
   ---------------------------------------------------------------------------------------------
                                                              728,074                    815,872
   Less current portion                                       129,163                   (485,727)
   ----------------------------------------------------------------------------------------------
                                                        $     598,911                  $ 330,145
   =============================================================================================


<FN>
(1)  In February 1989, the Company  borrowed  $300,000 from the State of Wyoming
     for the  purpose  of  purchasing  equipment  and  inventory  and to provide
     working capital necessary to establish a video duplicating  facility. As of
     December  31,  1999,  the  Company  had not yet  established  an  operating
     duplicating  facility  and was in  violation  of several of the  compliance
     requirements of this note.  Although the note, by its original  terms,  was
     not due until  March 1, 1999,  the State of  Wyoming  deemed the note to be
     currently due as a result of the violations of the compliance requirements.
     The  note,  with  default  interest  at  16.5  percent,  is  due  in  daily
     installments of $150, and is  collateralized  by the Company's  master tape
     library.  No  principal  and interest  payments  have been made nor has the
     State of Wyoming demanded payment on the note.

(2)  Three notes payable to First  National Bank of Gillette bear interest at 9%
     per annum and require  monthly  principal and interest  payments of $8,857.
     The notes are  collateralized  by substantially all the assets of the radio
     station in Gillette, Wyoming, except for the real estate.

(3)  Note payable, lessor of the comedy club facility. The $150,000 note payable
     bears  interest  at 12% and is due in 108  monthly  installments  of $2,278
     commencing February 1, 1999.

(4)  Note payable,  trust;  interest at 9.5%;  monthly principal and interest of
     $1,500; final payment due October 2012; collateralized by real property.

(5)  Note  payable to mortgage  company;  variable  interest at 9.62% per annum;
     monthly   principal   and   interest   payments  of  $683  for  60  months;
     collateralized by real estate.

(6)  Note  payable to a  director;  interest at 9.00% per annum;  principal  and
     interest due on demand; not collateralized.

(7)  Note payable to a trade  creditor  dated  October 21, 1993;  interest at 10
     percent;  due on May 1, 1996;  collateralized  by the Company's master tape
     inventory and subordinated to previously filed liens.

(8)  Notes  payable  due  to  an  individual   related  to  the  purchase  of  a
     construction permit for a radio station.  Face amount of note was $280,000,
     non-interest bearing, payable over a 15-year period in monthly installments
     of $1,555. Interest has been imputed at 8%.

(9)  Various notes payable in default; due to various individuals, companies and
     related parties, with interest rates ranging from 10 to 21 % per annum.

</FN>
</TABLE>

The weighted  average  interest  rate on  short-term  borrowings  was 12.40% and
12.40% for 2000 and 1999, respectively.

Subsequent to year-end, the Company acquired an additional $10,716 in borrowings
from another  director and $5,775 from a consultant.  Additionally,  the Company
agreed to grant a security  interest in the proceeds  from the sale of assets to
the  Company's  former  corporate  counsel for the amount of their  unpaid fees,
estimated to be approximately $320,000.

NOTE F  STOCKHOLDERS' EQUITY DEFICIT

Common Stock
     In December  2000, the Company's  stockholders  approved an increase in the
Company's  authorized capital stock to 250,000,000 shares of common stock, $.008
par value and 5,000,000 shares of preferred stock, $.001 par value. The Board of
Directors has the authority to issue preferred shares in series and to determine
the rights and preferences of each series.

     During 2000 and 1999, the Company issued 34,567,394 and 1,116,016 shares of
common  stock  for  consulting  and other  services  valued  at  $3,587,540  and
$1,044,034  (including  $591,316 and $268,000 in services from related  parties,
respectively).  The average  price per share was $0.11 and $0.80,  respectively.
Through April 25, 2001, the Company issued an additional  124,548,783  shares of
common stock for  compensation  and consulting  services valued at approximately
$868,000 (unaudited).

     During 2000 and 1999,  the  Company  sold  609,232  and  280,000  shares of
restricted  common stock and options to purchase  437,694 and 0 shares of common
stock,  respectively,  in a private placement offering resulting in net proceeds
of $351,000 and $220,000, respectively.

     In February 2000,  the Company  issued 252,818 shares of restricted  common
stock to be held in escrow as security for a $280,000  face value note  payable.
This  amount  has been  recorded  as stock  held in escrow  in the  accompanying
balance sheet.

     During 1999, the Company also received $470,000 from the exercise of common
stock option and warrants.

Redeemable Preferred Stock
     A total of 1,500,000  shares of  preferred  stock have been  designated  as
Class A, 7% cumulative, non-participating convertible preferred stock, and had a
mandatory  redemption on November 18, 1996. As of December 31, 1999, the holders
of the Class A Preferred  Stock have not demanded  redemption.  The  liquidation
preference is  approximately  $15,000.  Each Class A share may be converted into
two shares of common stock. The Class A Preferred Stock has not been redeemed as
of December 31, 2000. At December 31, 2000,  there were 10,689 shares of Class A
preferred still outstanding.

Preferred Stock
     A total of 1,000,000 shares of preferred stock has been designated as Class
B, 6% cumulative dividend, paid quarterly,  if and when declared,  redeemable by
the Corporation at face value and each share of class B is convertible into 12.5
shares of common stock.  The rights of the Class B shares were  subordinated  to
Class A shares.  At December 31, 2000, there were no shares of Class B preferred
outstanding.

     A total of 1,000,000 shares of preferred stock has been designated as Class
C,  non-dividend and each share is convertible into common stock at a conversion
price equal to the  average 30 day bid price of the common  stock on the date of
conversion. The rights of the Class C shares shall be subordinate to Class A and
Class B shares.  At December 31, 2000, there were no shares of Class C preferred
outstanding.

Common Stock Options
     In June 1994, the Company adopted a Non-Qualified  Stock Option Plan, under
which the  Company's  Board of  Directors  are  authorized  to issue  options to
purchase  up to  62,500  shares  of the  Company's  common  stock  to  qualified
employees,  officers  and  directors  of the  Company.  The option  price may be
changed at the discretion of the Board of Directors. No options have been issued
under this plan.  During  1999,  the Company  issued other  non-qualified  stock
options to  non-employees  under terms and at prices deemed  appropriate  by the
Board of Directors.

     In March 1999, the Board of Directors authorized the issuance of options to
the  president,  each  member  of the Board of  Directors  and a  consultant  to
purchase up to 3,050,000  shares of common stock at prices ranging from $.21 per
share to $.53 per share.  The exercise  price was equal to the closing bid price
for the Company's common stock on the date of the grant. The exercise of options
for  1,200,000  shares was  contingent on the closing bid price of the Company's
common stock of at least $1.00 on the last trading day for 1999 and the exercise
of options for 950,000 shares was contingent  upon the execution of two separate
definitive  agreements  by December 31, 1999.  In September  1999,  the Board of
Directors   decided  to  cancel  2,075,000  options  issued  in  March  1999  as
anticipated  agreements were not completed and the number of options granted was
too high. There is no effect on the Company's consolidated financial statements,
as the  related  amounts  are only  required  to be  disclosed  in the pro forma
information provided below. Mr. Goldberg, a director, opposed this resolution by
the Board. Mr. Goldberg's counsel has stated that it is Mr. Goldberg's  position
that the Company does not have the right to cancel options  previously issued to
Mr. Goldberg and that Mr. Goldberg does not intend to relinquish  those options.
Of the total 2,075,000 options cancelled,  1,000,000 were issued to Mr. Goldberg
(see Note J).

     Also in March 1999,  the  Company  issued  options to purchase  100,000 and
300,000  shares of common stock at $0.21 and $0.51 per share,  respectively,  to
third party  individuals.  The exercise price was equal to the closing bid price
for the Company's common stock on the date of grant.

     In May 1999,  the  Board of  Directors  authorized  the  issuance  of stock
options to each member of the Board of Directors as compensation.  Each Director
received  options to purchase 250,000 shares of common stock at $1.34 on January
1, 2000, January 1, 2001 and January 1, 2002 (a total of 3,000,000 options). For
the options to vest, each current Director must be a Director on the anniversary
dates noted  above.  In August  1999, a new director was elected to the Board of
Directors and he was granted options to purchase  250,000 shares of common stock
at $1.94 per share on January 1, 2000,  2001 and 2002.  On January 4, 2000,  the
Directors  cancelled  these  options and issued new  options to purchase  50,000
shares until January 4, 2003.  These options are exercisable at $0.61 per share,
which was the closing price on the date of grant.  Two Directors  agreed to this
request;  Mr.  Goldberg did not.  There is no effect on the Company's  financial
statements as a result of the issuance and  cancellation of these options as the
related amounts are disclosed in the pro forma information provided below.

     Also in May 1999,  the  Company  issued  options to  purchase  100,000  and
500,000  shares of common  stock at $1.50 and $0.75 per share,  respectively  in
exchange for consulting  services.  The services  related to the 500,000 options
were never provided and the options cancelled.

     As disclosed earlier, in June 1999, the Company granted options to purchase
500,000 and 300,000 shares of common stock at $0.75 and $1.03 in the acquisition
of All That Media and EDRON, respectively.

     Also in June 1999, the Company granted  options to purchase  500,000 shares
at $0.83 per  share  through  December  31,  2000 to a  consulting  entity.  The
services  related to the 500,000  options  were never  provided  and the options
cancelled.

     In July 1999,  the Company  granted  options to purchase  200,000 shares at
$1.59 per share  through  July 1, 2004 to the  Company's  Secretary  and another
employee.  These  options were canceled on January 4, 2000 and replaced with new
options to purchase 50,000 shares at $0.61 per share for three years.

     On July 7, 1999,  the Company  signed an agreement with Coleman and Company
Securities, Inc. (Coleman) to act as the Company's exclusive investment advisor,
exclusive  private  placement  agent and  investment  banker for a period of one
year. As compensation  for these services  Coleman  received options to purchase
500,000  shares of the  Company's  common  stock at  $0.875  per share and would
receive a commission of 13% for any public or private placement  financing.  The
options  are  exercisable  for a period of five  years and  would  have  certain
registration rights for a period of two years. In addition, Coleman would earn a
fee in  connection  with a  merger,  acquisition  or sale of the  Company.  This
agreement was later cancelled and the options were rescinded.

     In July 1999,  the Company  issued  options to purchase  100,000  shares of
common stock at $1.63 to an unrelated entity as compensation. The exercise price
was equal to the closing bid price for the Company's common stock on the date of
grant.

     On January 4, 2000,  options to purchase  250,000 shares of common stock at
$0.61 were granted to the three officers who are also  directors.  These options
expire on January 4, 2005. Of this total, 50,000 options become exercisable when
the  average  closing  price of the stock is at least  $2.25 for 10  consecutive
days.  Another  75,000  become  exercisable  when the  Company  achieves  annual
revenues of  $4,250,000.  The  remaining  125,000  options vest when the Company
achieves earnings per share of $0.05 per share.

     Also on January 4, 2000,  3,375,000  options were granted to officers  that
become  exercisable  only in the event of a change in  control  of the  company.
These options are exercisable for $0.61 per share.

     On January 25, 2000, the Directors approved the grant of options for 75,000
shares  each to three  Directors  and 56,250  shares each to two  officers.  The
exercise  price of these  options is $1.33,  the closing  price of the Company's
common stock on the date of grant. These options are exercisable through January
25, 2005 and vest only if the common  stock trades at a price of $4.50 or higher
for 10 consecutive days between January 25, 2000 and July 1, 2001.

     Also on January 25, 2000,  options to purchase  100,000 shares were granted
to an outside  director.  These  options  vest at the rate of 25,000  shares per
quarter during 2000. The exercise price is $1.33 per share.

     In March 1999, the Board of Directors authorized the issuance of options to
the then  president,  each member of the Board of Directors  and a consultant to
purchase up to a total of  3,050,000  shares of common  stock at prices  ranging
from $0.21 per share to $0.53 per  share.  The  exercise  price was equal to the
closing bid price for the Company's  common stock on the date of the grant.  The
exercise of options for 1,200,000 shares was contingent on the closing bid price
of the Company's common stock of at least $1.00 on the last trading day for 1999
and the exercise of options for 950,000 shares was contingent upon the execution
of two separate  definitive  agreements by December 31, 1999. In September 1999,
the Board of Directors  determined to cancel  2,075,000  options issued in March
1999.  Mr.  Goldberg,  a director at that time,  opposed this  resolution by the
Board. Mr. Goldberg's counsel has stated that it is Mr. Goldberg's position that
the Company does not have the right to cancel options  previously  issued to Mr.
Goldberg and that Mr. Goldberg does not intend to relinquish  those options.  Of
the total 2,075,000 options cancelled, 1,000,000 were issued to Mr. Goldberg.

     In May 1999,  the  Board of  Directors  authorized  the  issuance  of stock
options to each member of the Board of Directors as director compensation.  Each
Director has options to purchase  250,000 shares of common stock at $1.34 become
exercisable on each of January 1, 2000, January 1, 2001 and January 1, 2002. For
the options to vest, each current Director must be a Director on the anniversary
dates noted  above.  In August  1999, a new director was elected to the Board of
Directors and he was granted options to purchase  250,000 shares of common stock
at $1.89 per share become exercisable on each of January 1, 2000, 2001 and 2002.
These options have been  rescinded.  The Board's  decision to cancel options and
issue other  options as described  above was based on a  determination,  for the
reasons  described above,  that the Company did not receive  sufficient value to
justify  the  original  grant of the  options  that were  cancelled  or that the
options  no longer  provided  incentive  to the option  holders  due to the high
exercise price of the options  relative to the trading price of the common stock
at that time.  The new options  were granted  subject to vesting  terms that the
Board believed  provided more incentive for the performance of the recipients of
those options and more closely  aligned the interests of the recipients with our
shareholders.

     All the  options  described  which were held on  September  15, 2000 by the
directors,   officers,   and  certain  employees  and  consultants,   have  been
relinquished by those persons so that each may participate in the Company's 2000
Management Compensation Plan described below.

     On  September  15,  2000,  the  Board  of  Directors  determined  that  the
outstanding  options held by officers and directors no longer provided incentive
due to the high exercise  price of the options  relative to the trading price of
the  common  stock at that  time.  The Board then  enacted  the 2000  Management
Compensation  Plan to  compensate  directors,  officers and  consultants  and to
provide  incentives for those persons acting on behalf of the Company.  In order
to participate in the Management  Compensation  Plan,  officers and  consultants
were required to relinquish any options  previously  granted to them. Options to
purchase common stock have been issued  pursuant to the Management  Compensation
Plan, and 5,000,000  shares of common stock and  additional  options to purchase
common stock were authorized to be issued.

     All recipients of shares and options under the Management Compensation Plan
were  officers  and  employees  at the time of  grant  except  for a  consultant
providing accounting and administrative services. The options are exercisable at
a price of $.08 per share until  September 15, 2005. The closing sales price for
the common stock on September 15, 2000 was $.08. The options are exercisable 25%
immediately  and 25% on each of the  first  three  anniversaries  of the date of
grant provided that the recipient continues to be a director,  officer, employee
or consultant at that  respective  time. In addition,  the options  provide that
when the sales  price for the common  stock is at least $.16 per share for three
consecutive  trading  days,  the option holder may elect to exchange each option
exercisable  at $.08 per share for two  options  exercisable  at $.16 per share.
Similarly, the option holder may exchange each of his options for two options to
purchase  one share of common  stock  each at $.32 per share at such time as the
last  sales  price  for the  common  stock is at least  $.32 per share for three
consecutive  trading  days.  If these price  levels are  attained and if all the
recipients of the initial options to purchase  5,000,000  shares of common stock
elect to exchange  them for options  exercisable  at each of the higher  prices,
options to purchase a total of  20,000,000  shares  would be  outstanding  at an
exercise price of $.32 per share.

     During 2000, employees were granted options to purchase 2,081,250 shares of
the Company's stock at $0.63 per share for various two-year periods. The Company
released most of its employees prior to vesting and only 325,000 of the employee
options are outstanding at December 31, 2000.

         The following is a summary of the number of shares under option:
<TABLE>
                                                                                    Weighted
                                                                                    Average
                                                           Non-Qualifying           Exercise         Expiration
                                                            Stock Options           Price            Dates
                                                        ------------------------------------------------------
<S>                                                     <C>                       <C>               <C>
     Balance, January 1, 1999                                    400,000            $0.52            1999-2002
     ---------------------------------------------------------------------------------------------------------
     Granted                                                  10,112,000             0.83                 2005
     Exercised                                                (1,145,000)            0.41                 1999
     Expired/Rescinded                                        (2,694,500)            0.83                 1999
     Balance December 31, 1999                                 6,762,500             0.96            1999-2005
     ---------------------------------------------------------------------------------------------------------
     Granted                                                  12,045,194             0.21            2002-2005
     Exercised                                                         -                -
     Expired/Rescinded                                       (12,120,000)            0.63                 2000
     ---------------------------------------------------------------------------------------------------------
     Balance December 31, 2000                                 6,687,694            $0.98           2001- 2005
     =========================================================================================================

</TABLE>
The following table summarized information about stock options outstanding and
exercisable as of December 31, 2000:

<TABLE>
                                                                               Weighted
                                                                               Average                   Weighted
                    Range of                           Number                  Remaining                 Average
                  Exercise Prices                    Outstanding &            Contractual                Exercise
              From                To                 Exercisable              Life in Years              Price
     ----------------------------------------------------------------------------------------------------------------
             <S>           <C>                       <C>                      <C>                     <C>
                 $0.08     $        0.08                 5,000,000                 3.75                $         0.08
                 $0.21     $        0.21                   900,000                 1.25                $         0.21
                 $0.50     $        0.50                   175,000                 4.25                $         0.50
                 $0.63     $        0.65                   362,694                 4.25                $         0.64
                 $1.00     $        1.00                   250,000                 5.00                $         1.00
     ----------------------------------------------------------------------------------------------------------------
                                                         6,687,694                 4.00                $         0.17
     ================================================================================================================
</TABLE>

     Options issued to  non-employees  in 2000 and 1999 resulted in compensation
expense of $1,193,262 and $797,048, respectively.

Common Stock Purchase Warrants
     In connection with a settlement  agreement  between the Company and Balzac,
Inc, a warrant was issued to Balzac to purchase  500,000 shares of the Company's
common stock at $1.00 per share.  The warrant,  issued at fair market value,  is
exercisable  for a period of five years and expires April 2002.  The issuance of
these warrants to Balzac  resulted in  compensation  expense of $315,453 in 1998
under SFAS 123. In 1999, Balzac exercised their option to purchase 100 shares of
common stock.

     In  connection  with the  acquisition  of Global  Internet  on May 1, 1997,
Global Casino was issued warrants to purchase  1,500,000  shares of common stock
of the Company for $1.00 per share. The warrants expire on May 1, 2002.

     In addition,  the two officers of Global  Internet  have the option,  for a
period of five years,  to exchange any or all of their 600,000  shares of common
stock of Global Internet into the Company's  common stock at a rate of one share
of the Company's for four shares of Global Internet. In addition, for each share
exchanged,  the officers of Global Internet will receive one warrant to purchase
one share of the Company's common stock at $1.25 a share.

     The Company has elected to continue with the accounting treatment for stock
options and  warrants  issued to  employees  under APB 25, which is an intrinsic
value-based method, and has adopted SFAS 123, which is a fair-value based method
of accounting for stock options,  for stock options issued to non-employees  and
for  disclosure  purposes.  The Company  estimates  the fair value of each stock
award at the grant date by using the Black-Scholes option-pricing model with the
following  weighted  average   assumptions,   dividend  yield  of  0%,  expected
volatility of  approximately  110%,  risk free interest rate of 6%, and expected
lives of 5 years for the stock award. If compensation  costs had been determined
based on the fair  value at the grant date for stock  option  and stock  warrant
grants to employees,  consistent  with the method in SFAS 123, the Company's net
loss  from  continuing  operations  and  net  loss  per  share  from  continuing
operations  would have increased as indicated below for the years ended December
31, 2000 and 1999:
<TABLE>
                                                                                     2000          1999
                                                                                     ----          ----
<S>                                                                            <C>              <C>
      Net (loss) from continuing operations, as reported                        ($ 7,100,449)    ($2,732,744)
      Net (loss) from continuing operations, pro-forma                          ($10,293,455)    ($5,104,639)
      Net (loss) per share, continuing operations,
         basic and diluted, as reported                                               ($0.29)         ($0.25)
      Net (loss) per share, continuing operations,
         basic and diluted, pro-forma                                                 ($0.42)         ($0.46)
</TABLE>

NOTE G   INCOME TAXES

     The tax effects of temporary differences and carryforward amounts that give
rise to  significant  portions  of the  deferred  tax  assets and  deferred  tax
liabilities as of December 31, 2000 and 1999 are:

<TABLE>
                                                           2000                         1999
Deferred tax assets:
<S>                                                  <C>                                <C>
 Net operating loss carryforwards                     $  7,845,000                       $ 4,831,000
 Property, equipment, other assets, net                    (12,000)                          (12,000)
 Other                                                      10,000                            10,000
----------------------------------------------------------------------------------------------------
Total gross deferred tax assets                          7,843,000                         4,829,000
Less valuation allowance                                (7,843,000)                       (4,829,000)
-----------------------------------------------------------------------------------------------------
Net deferred tax assets                               $          -                       $         -
====================================================================================================
</TABLE>

     A valuation  allowance  has been  recorded  equal to the net  deferred  tax
asset,  as  management  was not able to  determine if it is more likely than not
that the deferred tax assets will be realized. The valuation allowance increased
$3,014,000 and $669,000 in 2000 and 1999.

The following  summary  reconciles the income taxes at the statutory rate of 37%
in 2000 and 1999 with the actual taxes:
<TABLE>
                                                                                 2000              1999
                                                                                 ----              ----
<S>                                                                             <C>               <C>
     Benefit computed at the statutory rate-continuing operations                $  (2,595,000)    $   (669,000)
     Discontinued operations                                                           124,000                -
     Valuation allowance                                                             2,471,000          669,000
     ----------------------------------------------------------------------------------------------------------
     Provision for income taxes                                                  $           -     $          -
     ==========================================================================================================
</TABLE>

As of December 31, 2000, net operating  loss  carryforwards  were  approximately
$20,900,000.  Utilization  of  certain  portions  of this  amount is  subject to
limitations  under the Internal  Revenue Code.  Carryforward  amounts  expire at
various dates through 2020.

NOTE H   RELATED PARTY TRANSACTIONS

     The Company  outsourced  substantially all  administrative,  management and
accounting functions to a company that was previously wholly-owned by a director
of the  Company.  Total  annual fees paid by cash and by the  issuance of common
stock for 2000 and 1999 were approximately $138,500 and $225,000, respectively.

     Another entity, 43% of which is owned by the same director,  performs other
administrative  functions  for the Company on an as-needed,  hourly  basis.  The
Company also leases  computer  equipment from the related entity and has amounts
due to this  entity  of $1,771  and  $3,571 as of  December  31,  2000 and 1999,
respectively.  Fees paid to this entity  totaled $7,034 and $14,134 for 2000 and
1999, respectively.

     In 1998, Mr. Goldberg, former president, was advanced approximately $25,000
of which of $10,710 is outstanding as of December 31, 2000.  Also as of December
31, 2000,  Mr.  Goldberg is in possession of certain of the Company's  equipment
with no material book value.  Additionally,  the Company has recorded a separate
receivable of $7,178 due from Mr.  Goldberg.  See also the  discussion in Note F
related to options  issued to Mr.  Goldberg  and later  canceled by the Board of
Directors.  Mr. Goldberg's counsel has stated that it is Mr. Goldberg's position
that the Company does not have the right to cancel options  previously issued to
Mr. Goldberg and that Mr. Goldberg does not intend to relinquish those options.

NOTE I   COMMITMENTS

Lease Commitments
     The Company has  long-term  operating  lease  agreements  for office space,
building and certain  equipment.  Future minimum lease  payments  required under
long-term leases in effect at December 31, 2000 are as follows:
<TABLE>
                         Minimum Rent                Sublease              Net
                         ------------                --------              ---
       <S>              <C>                        <C>                  <C>
        2001              $ 176,979                 $ 81,888             $ 95,091
        2002                134,104                   54,592               79,512
        2003                 68,220                        -               68,220
        2004                 68,220                        -               68,220
        2005                 68,220                        -               68,220
        Thereafter          136,440                        -              136,440
        -------------------------------------------------------------------------
        Total             $ 652,183                 $136,480             $515,703
        =========================================================================
</TABLE>

     Rent expense for continuing  operations was $37,130 and $10,718 in 2000 and
1999.  Sublease  rentals were $80,398 in 2000 and $91,920 in 1999.  Rent expense
for  discontinued   operations  was  $108,111and   $97,982  in  2000  and  1999,
respectively.

     Effective  May 1, 2001 the Company  signed a lease for space that  requires
monthly  payments of $1,645 plus any charges  for common  area  maintenance. The
lease term is for two years and expires April 30, 2003.

     Offices for the Internet's segment consisted of approximately  3,000 square
feet and were leased pursuant to the terms of a 36-month lease, which terminates
in July 31, 2002.  Monthly rent is approximately  $3,600.  In November 2000, the
Company  sublet  the space to  another  tenant.  However,  the  Company  was not
relieved of its obligation under the original lease.

     Commencing September 1998, the Company subleased its former executive space
under the terms of a four-year  sublease.  The Company has not been  relieved of
its primary  obligation  due under the original  lease with the lessor.  Monthly
payments  due under the lease are  $6,394.  The  sublease  requires  payments of
$6,824 per month for 48 months  commencing  September 1, 1999.  Both the primary
lease and the sublease expire August 2002.

NOTE J   LITIGATION

     The Company knows of no litigation pending, threatened, or contemplated, or
unsatisfied judgments against it, or any proceedings of which the Company or any
of its subsidiaries is a party,  except as specified below. The Company knows of
no legal actions pending or threatened,  or judgment  entered against any of its
officers or directors or any of its  subsidiaries  in their  capacities as such,
except as specified below.

     On March 27, 2000,  the Company filed a complaint in the District Court for
Arapahoe  County,   Colorado  against  Mr.  Goldberg,  the  Securities  Investor
Protection  Corporation  (SIPC), and the U.S. Internal Revenue Service (IRS). In
the Complaint,  the Company  alleged that,  during Mr.  Goldberg's  tenure as an
officer and director,  Mr. Goldberg engaged in fraudulent  activities,  breached
his  fiduciary  duties,  and acted  negligently,  all of which  resulted  in our
suffering  damages.  In the Complaint,  the Company is seeking  compensatory and
punitive  damages  from Mr.  Goldberg,  the  return of Company  property,  and a
declaration  that  stock  options  granted  to Mr.  Goldberg  were  fraudulently
obtained,  were  void,  and that Mr.  Goldberg  must repay the  Company  for the
options  that he  exercised  before the Company  became  aware of the true facts
after  granting  the  options in March 1999.  The SIPC and IRS were  included as
Defendants in this matter because the SIPC holds a judgment against Mr. Goldberg
that it is  attempting  to  collect  and has  claimed an  interest  in the stock
options that we are seeking to void, and the IRS has assessed a tax lien against
Mr. Goldberg that it is seeking to collect.  As of April 25, 2001, no answer had
been filed in this matter.

     In August 2000, Rock Creek Holdings,  Inc. ("Rock Creek") filed a complaint
in the State of New York alleging breach of contract,  breach of warranty, fraud
and misrepresentation, and conversion with respect to a contract alleged to have
been signed by Mr. Goldberg. According to Rock Creek, payment was in the form of
options to purchase  300,000 shares of the Company's common stock at an exercise
price of $0.38 per share.  The complaint  alleges damages of more than $876,000.
The Company  filed a response  denying all charges and noting that the Company's
Board of Directors  did not approve the  contract,  nor the issuance of options.
The  Company  fully  intends  to defend  its  position  and has not  recorded  a
contingent liability relating to this matter.

     In October  2000,  the Company  received  notices from the IRS for past due
payroll  taxes,  penalties  and interest.  Subsequently,  the IRS filed liens in
amounts totaling  approximately  $368,870. The outstanding balance will continue
to accrue  interest  until  paid.  Payment  is  anticipated  to be made from the
proceeds from the anticipated sale of Radio and Live Entertainment assets.

     During 1997 and 1998,  we, some of our  officers and  directors,  and other
unrelated parties received requests for information from the U.S. Securities and
Exchange  Commission ("SEC") related to an investigation begun by the SEC during
1997 into various  matters.  On August 2, 1999, the SEC filed a civil  complaint
against A.B. Goldberg and us in the U.S. District Court in Denver, Colorado. The
SEC alleges in its complaint that we failed to disclose compensation paid to Mr.
Goldberg in our 1995 and 1996 annual reports and in a registration statement and
our proxy  statement  filed in 1997.  In  response to this  allegation,  we have
disclosed these amounts in the "Executive  Compensation"  section below. The SEC
also alleges that we failed to timely file some of our periodic reports. The SEC
sought a permanent  injunction  against future  violations of securities laws by
us. On October 22, 1999, we entered into a consent decree with the SEC.  Without
admitting or denying the allegations made by the SEC, we agreed not to engage in
violations of the  securities  laws in the future.  As a result of entering into
the consent decree,  the civil complaint against us was dismissed.  The SEC also
made the following allegations concerning Mr. Goldberg:

o    That Mr. Goldberg received compensation of approximately  $350,000 that was
     not disclosed in our public filings.

o    That Mr.  Goldberg  attempted to conceal the  compensation by directing the
     payment of money and stock  through  his wife,  including  the  issuance of
     stock that allegedly was not approved by our Board Of Directors.

o    That Mr.  Goldberg failed to properly  disclose his securities  holdings in
     the  Company  and  changes  in those  holdings.  The SEC seeks a  permanent
     injunction,  disgorgement,  civil  money  penalties,  and  an  officer  and
     director  bar against Mr.  Goldberg.  Mr.  Goldberg has informed us that he
     intends to vigorously defend the claims made against him.







<PAGE>


NOTE N SEGMENT INFORMATION

     Financial information by industry segments for the years ended December 31,
2000 and 1999 is summarized as follows:
<TABLE>
                                                               Other
                                            Internet           Segments (1)               Consolidated
                                   ----------------------------------------------------------------------------------------------
<S>                                        <C>                  <C>                       <C>
FOR THE YEAR ENDED DECEMBER 31, 2000

      Revenue                                 $    97,238         $          -              $    97,238
      Operating income (loss),
        continuing operations                  (4,210,364)          (2,890,085)              (7,100,449)
      Identifiable assest                         160,923              166,367                  327,290
      Depreciation and amortization                55,294               17,409                   72,703
      Capital expenditures                        167,614               36,939                  204,553
      Interest Expense                             38,608               45,522                   81,130

FOR THE YEAR ENDED DECEMBER 31, 1999

      Revenue                                 $    23,112          $         -               $   23,112
      Operating income (loss) from
        continuing operations                    (705,833)          (2,026,911)              (2,732,744)
      Identifiable assets                          47,677              620,183                  667,860
      Depreciation and amortization                 2,831               14,255                   17,086
      Capital expenditures                         30,010              188,390                  218,400
      Interest Expense                                119               43,880                   43,999

<FN>
(1)  Other  segments  represent the operations of the parent  company,  which is
     primarily  responsible for incurring general and  administrative  expenses.
     Identifiable assets are essentially investments in subsidiaries,  which are
     eliminated in consolidation.

</FN>
</TABLE>
<PAGE>


Item  8.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial  Disclosure
--------------------------------------------------------------------------------
         Not Applicable.

PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons


         Information concerning the Directors and Executive Officers of the
Company is as follows:
<TABLE>

                                Tenure as Officer
Name              Age            Position                or Director
----              ---            --------                -----------
<S>              <C>            <C>                    <C>
Howard Stern       46            Chief Executive        February 1999 to present
                                 Officer, Chairman of
                                 The Board, and
                                 Director

Doug Olson         52            Director, Former       February 1999 to present
                                 President

William Rubin      39            Director               November 1998 to present

</TABLE>
All of the Directors' terms expire at the next annual meeting of shareholders or
when their  successors  have been  elected and  qualified.  The  Officers of the
Company serve at the pleasure of the Board of Directors.

The following sets forth background information concerning the above Directors
and Executive Officers:

     Howard Stern has served as a Director  since  February 1999, as Chairman of
the Board since August 1999, and as our Chief  Executive  Officer since November
1999.  He has been in the life  insurance  business  since  his  junior  year in
college at the University of Pittsburgh in 1975.

In July  1993,  Mr.  Stern  joined  The New York  Life  Insurance  Company  as a
registered  representative  where he was  responsible  for a  variety  of sales,
training and administrative  duties and was active in product  development.  Mr.
Stern  achieved the position of Council Vice  President in 1996. He achieved the
position of Council President in 1998.

In  October  1998,  Mr.  Stern  ended  his  relationship  with the New York Life
Insurance Company.  He then started and was employed by H. Stern Consulting as a
consultant  providing  consulting,  training  and  seminars  for  the  insurance
industry.  He also  signed  a  Career  Agent's  contract  with  MassMutual  Life
Insurance  Company and was  involved in selling  registered  and  non-registered
products.

Mr. Stern has served as a consultant to several life insurance  companies,  both
domestically and abroad, on the development of Variable  Products  marketing and
training, and has been a featured speaker at industry functions.  He is a member
of the Advanced Association of Life Underwriters (AALU), National Association of
Life Underwriters (NALU), Broward County Life Underwriters,  and a member of the
American Society of CLUs, (BCLUA).

Mr. Stern is a panel member of the National  Association  of Securities  Dealers
(NASD)  Arbitration Board. He currently is licensed in 20 states for the sale of
Life Insurance and Variable  Products.  He is an approved  insurance  continuing
education  instructor in 48 states and in 1998 taught 8 classes  nationally  for
the American College.

     Douglas Olson served as our President from August  1999until  October 2000,
and as Chief  Operating  Officer from November 1999 until October 2000, and as a
director since February 1999. Mr. Olson previously served as our President and a
director  from March 1993 to February 1995 and as Chief  Executive  Officer from
August 1999 until November 1999.  From February 1995 to June 2000, Mr. Olson was
the President and owner of Creative  Business  Services,  Inc.,  which  provides
accounting  and  management  information  services.  We  outsource  some  of our
accounting functions to Creative Business.

     William  "Bill" Rubin has served as a director  since November 1998. He has
been a commercial  loan officer for  Enterprise  Social  Investment  Corporation
since  1992,  and  has  served  as  a  vice  president  with  various  financial
institutions. Mr. Rubin's responsibilities included underwriting and originating
construction and real estate current employment loans, workout and restructuring
of real  estate  loans,  and  management  of loan  portfolios  in excess of $150
million.  Mr.  Rubin  earned  a BBA in  Finance  and  Accounting  from  Southern
Methodist  University  in 1983.  Mr.  Rubin  serves  as a  director  for  Assets
Management.

     No family  relationship  exists  between or among any of the persons  named
above. None of our directors are directors of any other company that has a class
of equity securities  registered under, or required to file reports pursuant to,
Section  15(d) of the  Securities  Act of 1933 or Section  12 of the  Securities
Exchange Act of 1934, or any company  registered as an investment  company under
the Investment  Company Act of 1940. There are no arrangements or understandings
between any of the named directors or officers and any other persons pursuant to
which any  director  or officer  was  selected  or  nominated  as a director  or
officer.


Item 10. Executive Compensation


Summary Compensation Table

     The following  table sets forth in summary form the  compensation  received
during each of the last three  completed  years by our current and former  Chief
Executive Officers.  Our chief executive officer's salary exceed $100,000 during
the year ended December 31,2000.  No executive officer's  compensation  exceeded
$100,000  during the year ended  December 31, 1999 and 1998.  The figures in the
following table are for fiscal years ended December 31, 2000, 1999, and 1998.

Summary Compensation Table
<TABLE>
------------------------------- --------- ------------ ----------- --------------- ---------------------------------------------
                                                                                              Long Term Compensation
------------------------------- --------- ------------ ----------- --------------- -------------------------------- ------------
                                                                                               Awards                 Payouts
------------------------------- --------- ------------ ----------- --------------- -------------- ----------------- ------------
Name and                        Fiscal    Salary ($)   Bonus       Other Annual    Restricted     Securities        LTIP
Principal Position              Year                   ($)(1)      Compensation    Stock          Underlying        Payouts
                                                                   ($)(2)          Award(s) ($)   Options/SARs      ($)(4)
                                                                                                  (#)(3)
<S>                            <C>       <C>          <C>         <C>             <C>            <C>               <C>
------------------------------- --------- ------------ ----------- --------------- -------------- ----------------- ------------
Abraham B. Goldberg(6)            2000            -0-     -0-           -0-             -0-             -0-             -0-
Former Chairman of the Board,     1999            -0-     -0-         $97,500       $76,500(8)          -0-             -0-
former President, former          1998        $14,500     -0-        $47,500(7)         -0-             -0-             -0-
Chief Executive Officer, and
a director
------------------------------- --------- ------------ ----------- --------------- -------------- ----------------- ------------
Howard Stern, Chief Executive     2000       $151,250   $98,250       $12,000            -               -               -
Officer, President,               1999        $12,500      -             -               -               -               -
Secretary, Treasurer and a        1998              -      -             -               -               -               -
director
------------------------------- --------- ------------ ----------- --------------- -------------- ----------------- ------------
Douglas Olson, former             2000        $71,500    $2,589        $9,000            -               -               -
President, and a director         1999        $12,000      -             -               -               -               -
                                  1998              -      -             -               -               -               -
------------------------------- --------- ------------ ----------- --------------- -------------- ----------------- ------------

</TABLE>

<TABLE>
------------------------------- ---------  --------------------
Name and                        Fiscal     All Other
Principal Position              Year       Compensation ($)(5)
<S>                             <C>        <C>
------------------------------- --------- --------------------
Abraham B. Goldberg(6)            2000               -0-
Former Chairman of the Board,     1999           $47,550
former President, former          1998           $84,000
Chief Executive Officer, and
a director
------------------------------- ---------  --------------------
Howard Stern, Chief Executive     2000               $-
Officer, President,               1999          $75,000
Secretary, Treasurer and a        1998                -
director
------------------------------- ---------  --------------------
Douglas Olson, former             2000       $52,250(10)
President, and a director         1999       $84,000(10)
                                  1998       $85,250(10)
------------------------------- ---------  --------------------


<FN>
(1)  The  dollar  value  of bonus  (cash  and  non-cash)  paid  during  the year
     indicated.

(2)  Consists  of  compensation  not  properly  categorized  as salary or bonus,
     including perquisites and other personal benefits, securities or property.

(3)  The sum of the  number of shares of common  stock to be  received  upon the
     exercise of all stock options granted.

(4)  We do not have in effect any plan that is  intended  to serve as  incentive
     for performance to occur over a period longer than one fiscal year.

(5)  The amounts shown in this column represent  amounts that are alleged by the
     SEC to be  compensation  for Mr.  Goldberg in the lawsuit  described in the
     "Legal Proceedings" section of this prospectus.  The amounts alleged by the
     SEC to  constitute  compensation  include  the  following:  (a) a total  of
     $148,300 alleged to have been paid by Creative Business to Munchkintown,  a
     company  owned by Mr.  Goldberg's  wife,  including  approximately  $30,000
     alleged to have been paid in 1995,  approximately  $72,000  alleged to have
     been paid in 1996, and  approximately  $46,300 alleged to have been paid in
     1997,  and (b) payments  alleged to have been made by Michael  Payne to Mr.
     Goldberg  through  Munchkintown  of $42,300 in May 1995 and $21,671 made in
     July 1995.  Other amounts  alleged to have been paid to Mr. Goldberg in the
     SEC complaint are included under the headings  "Other Annual  Compensation"
     and  "Restricted  Stock Awards" and are described in footnotes (7) and (8),
     respectively,  below.  In addition to the amounts shown in the above table,
     the SEC alleged in its  complaint  that the  Company  failed to disclose as
     compensation  total  payments  of  $73,971.25  from  Michael  Payne  to Mr.
     Goldberg  through  Munchkintown  in 1995 and a  payment  of  $1,500  to Mr.
     Goldberg through Munchkintown by Foremont, Inc. in 1995.

(6)  Mr.  Goldberg  resigned from his positions as  President,  Chief  Executive
     Officer and Chairman Of The Board on August 9, 1999. At that time,  Douglas
     Olson was elected  President and Chief  Executive  Officer and Howard Stern
     was  elected as  Chairman  Of The  Board.  Mr.  Stern was  elected as Chief
     Executive Officer in November 1999.

(7)  Does not include a $20,000 loan made to Mr. Goldberg by another director in
     June 1999. (8) Includes payments to Mr. Goldberg's wife and an entity owned
     by Mr.  Goldberg's  wife in the amount of $5,500 for 1997 and  $12,000  for
     1996. See below, "Item 12. Certain Relationships and Related Transactions".

(9)  Consists of the value of common stock  transferred  to NMG,  LLC,  which is
     owned by Mr. Goldberg's wife. See below "Item 12. Certain Relationships and
     Related Transactions".

(10) Consists of salary  received  from  Creative  Business  Services,  Inc. See
     below, "Item 12. Certain Relationships and Related Transactions".
</FN>
</TABLE>

     As of December 31,  2000,  we had no group life,  health,  hospitalization,
medical  reimbursement  or  relocation  plans in effect which  discriminate,  in
scope,  terms, or operation,  in favor of our officers or directors and that are
not generally available to all salaried  employees.  Further, we have no pension
plans  or  plans  or  agreements  which  provide  compensation  in the  event of
termination of employment or change in control.

Employee Retirement Plans, Long-Term Incentive Plans, and Pension Plans

     Other than our stock option  plans,  we have no employee  retirement  plan,
pension plan, or long-term  incentive plan to serve as incentive for performance
to occur over a period longer than one fiscal year.

Compensation of Directors

     During the year ended  December 31, 2000, no  compensation  was paid to our
directors. We reimburse directors for out-of-pocket expenses incurred by them in
connection with our business.

Employment Contracts And Termination Of Employment And Change-In-
Control Arrangements

     We do not have any written employment contracts with any of our officers or
other  employees.  We have no compensatory  plan or arrangement  that results or
will result from the  resignation,  retirement,  or any other  termination of an
executive  officer's  employment or from a  change-in-control  or a change in an
executive officer's responsibilities following a change-in-control.

Option Grants

     On March 11, 1999, we issued options to our directors and some  consultants
to purchase  1,000,000  shares of common stock at $.21 per share until March 11,
2002, which vested immediately.  In addition,  contingent options for a total of
950,000  shares  were  issued  to  directors  if an  Internet  gaming  licensing
agreement was executed  with Starnet  Communications  and a definitive  software
licensing  agreement was executed with Global Games Holdings.  These  agreements
were subsequently executed.  Options earned from the March 11, 1999 issuance are
as follows:

o        A.B. Goldberg - 1,000,000
o        Doug Olson - 250,000
o        Howard Stern - 250,000
o        Bill Rubin - 250,000

     On September  14, 1999,  the Board of  Directors  determined  to reduce the
number of shares that may be purchased  pursuant to these options granted to our
directors by 875,000.  Mr. Goldberg  opposed this  resolution of the Board.  Mr.
Goldberg's counsel has stated that it is Mr. Goldberg's  position that we do not
have the right to cancel options  previously issued to Mr. Goldberg and that Mr.
Goldberg does not intend to relinquish those options.  On November 17, 1999, the
Board clarified its option  cancellation of September 14, 1999 based on the fact
that both of the  agreements  for which the  cancelled  options had been granted
either had been or would be cancelled  without  having  resulted in any business
for the  Company.  Mr.  Goldberg's  counsel  also  objected  to and  denied  the
effectiveness of this action.  In October 1999, a committee of the Board,  based
on  information  contained in the SEC's  complaint  described  above in "Item 3.
Legal Proceedings" that was not available to the Board in March 1999,  cancelled
the remainder of the options  granted to Mr.  Goldberg in March 1999.  See "Item
12. Certain Relationships And Related Transactions".

     At the meeting of the Board of Directors  held on March 18, 1999, the Board
approved  the  issuance  of options  to  purchase  common  stock for each of our
directors,  as well as a consultant to the Company.  The options are exercisable
at a price of $.53 per share  until  March 18,  2002.  Options  to  purchase  an
aggregate of 1,200,000  shares were issued.  The options are contingent upon our
common  stock  trading at a price of at least $1 per share on December 31, 1999.
In  September  1999,  the board of  directors  determined  to  cancel  all these
options.  Mr.  Goldberg  opposed this  resolution of the Board.  Mr.  Goldberg's
counsel has stated that it is Mr. Goldberg's  position that the Company does not
have the right to cancel options  previously issued to Mr. Goldberg and that Mr.
Goldberg does not intend to relinquish  those options.  Our common stock did not
trade at a price of at least $1 per share on  December  31,  1999 so that  these
options have terminated.

     In May 1999, we granted  options to purchase  750,000 shares to each of our
directors.  250,000 of these options  become  exercisable  on each of January 1,
2000,  2001  and  2002 if the  recipient  continues  to be a  director  on those
respective  dates.  These options are  exercisable at a price of $1.34 per share
until January 1, 2005. In July,  1999, the Board agreed that the 250,000 options
issued to Mr. Goldberg that were to become  exercisable on January 1, 2000 would
become exercisable immediately. In October 1999, a committee of the Board, based
on information contained in the SEC's complaint described above in "Item 3.Legal
Proceedings"  that was not available to the Board in July 1999,  determined that
the options to purchase  250,000  shares that were  allowed to vest in July 1999
should not have been  allowed to vest.  Because Mr.  Goldberg  was a director on
January 1, 2000,  these options  currently are treated by the Company as vested.
See "Item 12. Certain  Relationships  and Related  Transactions".  On January 4,
2000, we cancelled the options  granted to directors in May 1999 in exchange for
options to purchase  50,000  shares  until  January 4, 2003.  These  options are
exercisable  at $.61 per share,  which was the  closing bid price on the date of
grant.  Mr. Rubin and Mr. Puccio agreed to this exchange.  Mr.  Goldberg has not
agreed.

     Also on January 4, 2000, we approved grants of options to purchase  250,000
shares for $.61 per share to each officer who also is a director. The recipients
of these options were Howard Stern,  Douglas Olson and Michael Marsowicz.  These
options expire on January 4, 2005. These options become exercisable as follows:

<TABLE>
 ----------------------------------------- -----------------------------------------------------------------------------
 Shares Becoming Exercisable                                             Triggering Event
 ----------------------------------------- -----------------------------------------------------------------------------
 <S>                                      <C>
 50,000                                    When the average closing price of the common stock is at least
                                           $2.25 for 10 consecutive business days.
 ----------------------------------------- -----------------------------------------------------------------------------
 75,000                                    When the Company achieves annual revenues of $4.25 million.
 ----------------------------------------- -----------------------------------------------------------------------------
 125,000                                   When the Company achieves earnings per share of $.05.
 ----------------------------------------- -----------------------------------------------------------------------------
</TABLE>

     Also on January 4, 2000, we approved grants of options to purchase  187,500
shares  for $.61 per  share  to each of  Daniel  Stansky,  our  Chief  Financial
Officer,  and Robert Fuchs,  our  marketing  director.  These options  expire on
January 4, 2005. These options are exercisable as follows:

<TABLE>
  ---------------------------------- ----------------------------------------------------------------------------
     Shares Becoming Exercisable                                  Triggering Event
  ---------------------------------- ----------------------------------------------------------------------------
  <S>                               <C>
  37,500                             When the average closing price of the common stock is at least
                                     $2.25 for 10 consecutive business days.
  ---------------------------------- ----------------------------------------------------------------------------
  56,250                             When the Company achieves annual revenues of $4.25 million.
  ---------------------------------- ----------------------------------------------------------------------------
  93,750                             When the Company achieves earnings per share of $.05.
  ---------------------------------- ----------------------------------------------------------------------------
</TABLE>


     On January 4, 2000, we also rescinded option grants previously made in July
1999 to Wende Curtis, our Secretary, and another employee. The rescinded options
were each for 25,000 shares at $1.59 per share until July 1, 2004. These options
were replaced with new options to purchase 50,000 shares for $0.61 per share for
three years.

     All the options  terminated and replaced in January 2000 were made with the
acceptance  of the  option  holders,  except  that Mr.  Goldberg  objects to any
termination of his options.

     On January 4, 2000,  we  approved  options  for our  officers  that  become
exercisable  only in the  event of a  change-in-control  of the  Company.  These
options are exercisable for $0.61 per share, which was the closing bid price for
our common stock on January 4, 2000. These options were granted as follows:

o        Howard Stern - 750,000
o        Douglas Olson - 750,000
o        Michael Marsowicz - 750,000
o        Daniel Stansky - 562,500
o        Robert Fuchs - 562,500

On January 25, 2000, we approved grants of options as follows:

o        Howard Stern - 75,000
o        Douglas Olson - 75,000
o        Michael Marsowicz - 75,000
o        Daniel Stansky - 56,250
o        Robert Fuchs - 56,250

     These options are in effect until January 25, 2005.  The exercise price for
these options is $1.33 per share, which was the closing bid price for the common
stock on January 25, 2000.  These options become  exercisable only if our common
stock  trades at a price of $4.50 or higher  for 10  consecutive  business  days
between January 25, 2000 and July 1, 2001.

     Also on January  25,  2000,  we  approved  the grant of options to purchase
100,000  shares to William  Rubin,  an outside  director.  These options  become
exercisable  at the rate of 25,000 shares per quarter  during 2000. The exercise
price is $1.33 per share.

     The Board's decision to cancel options and issue other options as described
above was based on a determination,  for the reasons  described above,  that the
Company did not receive  sufficient  value to justify the original  grant of the
options that were cancelled or that the options no longer provided  incentive to
the option holders due to the high exercise price of the options relative to the
trading  price of the common  stock at that time.  The new options  were granted
subject to vesting terms that the Board believed provided more incentive for the
performance  of the  recipients  of those  options and more closely  aligned the
interests of the recipients with our shareholders.

     All the options  described  in the  foregoing  section  entitled  "--Option
Grants  And  Cancellations"  which were held by each of  Messrs.  Stern,  Olson,
Marsowicz  and Fuchs on  September  15,  2000 have  been  relinquished  by those
persons  so  that  each  may   participate  in  the  Company's  2000  Management
Compensation Plan described below in  "--Cancellation  And Reissuance Of Options
In September 2000".

Cancellation And Reissuance Of Options In September 2000

     On  September  15,  2000,  the  Board  of  Directors  determined  that  the
outstanding  options held by officers and directors no longer provided incentive
due to the high exercise  price of the options  relative to the trading price of
the  common  stock at that  time.  The Board then  enacted  the 2000  Management
Compensation  Plan to  compensate  directors,  officers and  consultants  and to
provide  incentives  for those  persons in acting on behalf of the  Company.  In
order  to  participate  in  the  Management   Compensation  Plan,  officers  and
consultants were required to relinquish any options  previously  granted to them
except that Mr. Marsowicz was not required to relinquish  options he received as
consideration  for the sale to the  Company of his  interest  in All That Media,
Inc. See below "--Certain Relationships And Related Party Transactions". Options
to  purchase   common  stock  have  been  issued   pursuant  to  the  Management
Compensation  Plan, and shares of common stock were authorized to be issued,  to
the following persons in the respective amounts indicated:

Recipient             Shares To Be Issued   Initial Options Granted

Howard Stern                2,500,000                       1,250,000
Douglas Olson               2,500,000                       1,250,000
Michael Marsowicz           2,500,000                       1,250,000
Duane Knight                1,000,000                         500,000
Ronald Ratner               1,000,000                         500,000
Robert Fuchs                  500,000                         250,000
                   -----------------------------------------------------
TOTAL                      10,000,000                       5,000,000


     All recipients of shares and options under the Management Compensation Plan
were  officers  and  employees  at the time of grant  except for Mr.  Knight,  a
consultant  providing  accounting and administrative  services.  The options are
exercisable  at a price of $.08 per share until  September 15, 2005. The closing
sales price for the common stock on September 15, 2000 was $.08. The options are
exercisable 25% immediately and 25% on each of the first three  anniversaries of
the date of  grant  provided  that the  recipient  continues  to be a  director,
officer,  employee or  consultant  at that  respective  time.  In addition,  the
options  provide that when the last sales price for the common stock is at least
$.16 per share for three  consecutive  trading days, the option holder may elect
to  exchange  each  option  exercisable  at  $.08  per  share  for  two  options
exercisable at $.16 per share. Similarly, the option holder may exchange each of
his options for two options to purchase  one share of common  stock each at $.32
per share at such time as the last sales price for the common  stock is at least
$.32 per share for three  consecutive  trading  days.  If these price levels are
attained and if all the recipients of the initial options to purchase  5,000,000
shares of common stock elect to exchange them for options exercisable at each of
the higher  prices,  options to purchase a total of  20,000,000  shares would be
outstanding at an exercise price of $.32 per share.

Item 11. Security Ownership of Certain Beneficial Owners and Management

     The  following  table sets forth  information  regarding  ownership  of the
common  stock  as of May 1,  2001  by:  (1)  each  person  known by us to be the
beneficial  owner of more than 5 percent of the  outstanding  common stock;  (2)
each director; and (3) all executive officers and directors as a group.

<TABLE>
                                 Beneficial                         Percent
Name and Address                 Ownership(10)                      of Class
----------------------          ---------------                    -----------
<S>                             <C>                               <C>
Howard Stern
6421 Congress Ave #115,
Boca Raton, FL 33487              16,170,777                        8.3%
                                    (1)(2)(3)

Doug Olson
5495 Marion Street
Denver, CO 80216                   7,991,906                        4.1%
                                    (1)(2)(3)

William Rubin
24 Lambeth Bridge Court
Lutherville. MD 21093                200,000                        0.1%


Officers and Directors
   as a Group (3 persons)         24,362,683                        12.6%
                                    (1)(2)(3)

<FN>
*Less than one percent.

(1)  "Beneficial  Ownership" is defined in the  regulations  promulgated  by the
     U.S. Securities and Exchange  Commission as having or sharing,  directly or
     indirectly, (i) voting power, which includes the power to vote or to direct
     the voting, or (ii) investment  power,  which includes the power to dispose
     or to direct the  disposition,  of shares of the common stock of an issuer.
     The definition of beneficial  ownership  includes shares underlying options
     or warrants to purchase common stock, or other securities  convertible into
     common stock,  that  currently are  exercisable or convertible or that will
     become   exercisable  or  convertible  within  60  days.  Unless  otherwise
     indicated, the beneficial owner has sole voting and investment power.

(2)  Includes  2,500,000 shares that may be issued pursuant to the Stock Plan as
     payment of compensation.

(3)  Includes  2,500,000  shares  authorized to be issued to the named  security
     holder pursuant to the 2000 Management Compensation Plan described below in
     footnote (4),  "Cancellation  And Reissuance Of Options In September 2000."
     Assumes  that the named  security  holder  exchanges  all  options  granted
     pursuant to the 2000 Management  Compensation  Plan held by him on the date
     each  threshold  regarding  the last  sales  price of the  common  stock is
     reached  for twice as many  options  exercisable  at the higher  price.  As
     described below in footnote (4), "Cancellation And Reissuance Of Options In
     September  2000",  only 25  percent  of  options  granted  pursuant  to the
     Management  Compensation  Plan  are  exercisable  on  the  date  of  grant.
     Therefore, the figure in the table above includes 1,250,000 shares issuable
     upon the exercise of options to purchase up to  1,250,000  shares of common
     stock until  September  15,  2005,  which number of options  represents  25
     percent of the total number of options  which,  if required to be issued to
     the named security  holder within the next 60 days pursuant to the exchange
     provisions of the Management  Compensation Plan, will be exercisable on the
     date  of  grant.  See  footnote  (4),  below,  entitled  "Cancellation  And
     Reissuance Of Options In September 2000".

(4)  Cancellation And Reissuance Of Options In September 2000

     On September 15, 2000, our Board of Directors  enacted the 2000  Management
     Compensation Plan to compensate directors,  officers and consultants and to
     provide incentives for those persons in acting on behalf of the Company. In
     order to  participate  in the Management  Compensation  Plan,  officers and
     consultants were required to relinquish any options  previously  granted to
     them.  Options to purchase  common  stock have been issued  pursuant to the
     Management Compensation Plan, and shares of common stock were authorized to
     be issued,  to the following persons in the respective  amounts  indicated:


     Recipient              Shares To Be Issued         Initial Options Granted
     ---------------------------------------------------------------------------
     Howard Stern               2,500,000                       1,250,000
     Douglas Olson              2,500,000                       1,250,000
     Michael Marsowicz          2,500,000                       1,250,000
     Duane Knight               1,000,000                         500,000
     Ronald Ratner              1,000,000                         500,000
     Robert Fuchs                 500,000                         250,000
     ---------------------------------------------------------------------------
                               10,000,000                       5,000,000

     All recipients of shares and options under the Management Compensation Plan
     were officers and employees at the time of grant except for Mr.  Knight,  a
     consultant  providing accounting and administrative  services.  The options
     are  exercisable at a price of $.08 per share until September 15, 2005. The
     closing  sales price for the common stock on  September  15, 2000 was $.08.
     The options are  exercisable  25%  immediately and 25% on each of the first
     three  anniversaries  of the date of  grant  provided  that  the  recipient
     continues  to be a  director,  officer,  employee  or  consultant  at  that
     respective time. In addition,  the options provide that when the last sales
     price for the common stock is at least $.16 per share for three consecutive
     trading  days,  the  option  holder  may  elect  to  exchange  each  option
     exercisable  at $.08 per  share  for two  options  exercisable  at $.16 per
     share.  Similarly,  the option  holder may exchange each of his options for
     two options to purchase one share of common stock each at $.32 per share at
     such time as the last sales price for the common stock is at least $.32 per
     share for  three  consecutive  trading  days.  If these  price  levels  are
     attained  and if all the  recipients  of the  initial  options to  purchase
     5,000,000  shares  of  common  stock  elect to  exchange  them for  options
     exercisable  at each of the higher  prices,  options to purchase a total of
     20,000,000  shares would be  outstanding  at an exercise  price of $.32 per
     share.
</FN>
</TABLE>
Compliance with Section 16(a) Beneficial Ownership Reporting Compliance

     Section 16(a) of the Exchange Act of 1934 requires our directors, executive
officers  and holders of more than 10% of our commons stock to file with the SEC
initial reports of ownership and reports of changes of ownership of common stock
and other of our  equity  securities.  We  believe  that  during  the year ended
December 31, 2000, our officers,  directors, and holders of more than 10% of our
common stock  complied  with all Section  16(a) filing  requirements.  In making
these  statements,  we have relied upon our review of the monthly  statements of
changes filed with us by our officers and directors.
Item 12. Certain Relationships and Related Transactions

     Commencing   April  1995,  we   contracted   out   substantially   all  our
administrative,   management  and  accounting  functions  to  Creative  Business
Services,  Inc.  Creative  Business was  wholly-owned  by Douglas R. Olson,  the
Company's  President  through  June 2000 and a director.  Monthly  fees for such
services  were $21,000 for the period  January 1, 1997 through  August 31, 1998,
and  thereafter  the fees were  reduced to $14,000 per month  through July 1999.
Commencing  August 1999, the fees were increased to $21,000 per month due to our
increased activities.  These are paid in cash or shares of common stock based on
market  prices.  Total  annual  fees paid by cash and by the  issuance of common
stock for 2000 and 1999 were $117,500 and $225,000, respectively.

     Our Internet related  businesses are conducted  through our First 2 Market,
Inc.  subsidiary.  All That Media,  Inc., which was acquired by us in June 1999,
was merged into First 2 Market,  Inc. in June 1999.  At the time it was acquired
by  us,  All  That  Media  was  a  newly-formed   company  that  specialized  in
intellectual  property  development,  Internet  portal  development and Internet
advertising. We issued an option to purchase a total of 500,000 shares of common
stock for $.75 per share until October 10, 2001 to the  stockholders of All That
Media for all the outstanding stock of All That Media.  Michael  Marsowicz,  the
President  and 50 percent  owner of All That  Media,  received  250,000 of these
options. Mr. Marsowicz  subsequently was elected as our Chief Technology Officer
in July 1999 and as a director in August 1999 and served as the President of the
wholly owned subsidiary of the Company,  First 2 Market.  Mr. Marsowicz resigned
in December 2000.

     On July 7, 1999,  we entered  into an  agreement  with  Coleman and Company
Securities,  Inc.  pursuant  to which  Coleman  agreed  to act as our  exclusive
investment advisor,  exclusive private placement agent and exclusive  investment
banker.  This  agreement  has a term of 12 months.  As  compensation,  we issued
Coleman  options to purchase  500,000 shares of common stock at a purchase price
of $.875 per share at any time during the five-year period commencing on July 7,
1999. We granted  Coleman  registration  rights  concerning  the transfer of the
shares of common stock that may be issued upon the  exercise of these  warrants.
We also  agreed to pay  Coleman  an amount  equal to 10% of the funds  raised by
Coleman, a three percent non-accountable expense allowance with respect to those
funds,  and placement  agent  warrants with an exercise  price no more favorable
than that given to  investors  in any  private  placement  transaction  in which
Coleman  participates  equal to 10  percent  of the  amount of equity  raised by
Coleman. In addition,  if we enter into a merger acquisition or sale transaction
with the party  introduced  by Coleman,  we agree to pay Coleman five percent of
the first $2,000,000 of value of that transaction, four percent of the following
$2,000,000 of value,  three percent of the  following  $2,000,000 of value,  two
percent of the following  $2,000,000 of value, and one percent of the balance of
the value of the  transaction.  We also agreed to pay Coleman an amount equal to
10 percent of the  amount  raised by us from  financing  sources  introduced  by
Coleman  to  us  if  those  amounts  are  raised  within  24  months  after  the
introduction.  We  granted  Coleman a right of first  refusal to  undertake  any
financing  on  behalf  of the  Company  within  the  term of the  agreement.  In
September  1999,  subsequent  to entering into the  agreement  with Coleman,  we
elected  Philip C. Puccio as a director.  Mr.  Puccio is the President and Chief
Executive  Officer of Coleman and resigned as a director  August 16,  2000.  The
options granted to Coleman and Company Securities,  Inc. were rescinded upon Mr.
Puccio's resignation.

     The  Board  believes  that the  terms  of the  related  party  transactions
described above were as fair as those that we could have obtained from unrelated
third parties in arms-length transactions.

     On October 7, 1999,  the Board Of Directors  established a Related  Parties
Transactions Committee consisting of four directors primarily for the purpose of
dealing with issues between the Company and Mr. A.B.  Goldberg  concerning prior
grants of options as described  above under "Item 10.  Executive  Compensation -
Option Grants" and related to reimbursement of Mr. Goldberg's expenses to defend
against the SEC's complaint  described under "The Company - Legal  Proceedings."
Mr.  Goldberg was a director of the Company.  From February 1995 until August 9,
1999, Mr. Goldberg was our Chief Executive Officer.

     In July  1999,  Howard  Stern,  one of our  directors  who  had a  personal
relationship  with A.B. Goldberg prior to Mr. Stern's having joined the Board in
February 1999, made a personal loan to Mr. Goldberg of approximately $20,000. No
specific  maturity date or other terms were discussed at the time. Mr.  Goldberg
was the Chief Executive Officer as well as a director of the Company at the time
of the loan.

     The Related  Parties  Transactions  Committee  held a meeting on October 7,
1999 and determined,  among other matters,  that all  outstanding  stock options
previously  granted  to Mr.  Goldberg  are null and void  and/or  cancelled.  As
indicated under "Item 10. Executive  Compensation-Option  Grants", we previously
cancelled,  on a pro rata basis, certain stock options previously granted to Mr.
Goldberg and the other directors of the Company (the "Prior Cancellations").  At
that time, Mr. Goldberg's  counsel informed us that Mr. Goldberg does not intend
to relinquish  those stock options even though the other directors all indicated
their  intent to do so. We  anticipate  that Mr.  Goldberg may elect to litigate
with  us  concerning  the  Prior  Cancellations  as well  as the  stock  options
cancelled by the Related Parties  Transactions  Committee.  On March 27,2000, we
commenced a lawsuit against Mr. Goldberg.  This lawsuit is described above under
"Item 3. Legal Proceeding."

<PAGE>


PART IV

Item 13. Exhibits and Reports on Form 8-K

 (a) Exhibits. The following exhibits are filed herewith pursuant to Rule 601 of
Regulation S-K or are incorporated by reference to previous filings.

Number                  Description

3.1                     Articles Of Incorporation (A)

3.3                     Bylaws (A)

10.1                    Form of Agreement between the Company and
                        the stockholders of All That Media, Inc. (B)

10.2                    Agreement dated July 7, 1999 between the
                        Company and Coleman and Company Securities,
                        Inc. (B)

10.3(a)                 Form of Agreement Advertising Insertion
                        Order between the Company and Yahoo, Inc. (B)

103(b)                  Material Terms Of Advertising Insertion
                        Orders between the Company and Yahoo, Inc.

10.4                    Asset Purchase Agreement Inc. dated
                        September 21, 1999 between W3, Inc. (a
                        subsidiary of the Company) and Brian M.
                        Encke. (B)

21                      Subsidiaries of the Company


(A) A complete copy of the Company's  Articles of  Incorporation as currently in
effect and all amendments thereto was filed as Exhibit 89.3.1 to the Registrant'
Form 10-K for the fiscal year ended  December 31, 1989,  and a complete  copy of
the Company's  Bylaws as currently in effect was filed as Exhibit 86-3(c) to the
Company's  Registration  Statement on Form S-18 (Registration No. 33-9163-D) and
are incorporated herein by reference thereto.

(b) Reports on Form 8-K

          The Company  filed an 8-K on February  23,  2001  reporting  an Item 5
          Other  Event  disclosing  the filing of liens  against  the  Company's
          assets by the Internal  Revenue Service in the amount of $

          The Company filed an 8-K on February 1, 2001 reporting an Item 5 Other
          Event disclosing the Company's new business model.

          The Company filed an 8-K on January 22, 2001 reporting an Item 5 Other
          Event disclosing the number of shares of common stock outstanding.

          The Company filed an 8-K on January 8, 2001  reporting an Item 5 Other
          Event disclosing a Memorandum of Understanding  concerning the Sale of
          Radio Assets.

          The Company  filed an 8-K on December  28,  2000  reporting  an Item 5
          Other Event  disclosing  the signing of a letter of intent to sell the
          Company's Live Entertainment Assets.

          The Company  filed an 8-K on December  21,  2000  reporting  an Item 5
          Other Event  disclosing that the Company does not have sufficient cash
          funds  available to pay payroll,  operating,  consulting,  general and
          administrative, and other expenses.


<PAGE>


Exhibit 21

First Entertainment Holding Corp.

Name of Subsidiary               Percentage Owned        State of Incorporation
-------------------------------------------------------------------------------
Quality Communications, Inc.        100%                         Wyoming
First 2 Market, Inc                 100%                         Florida
First Films, Inc.                    80%                         Colorado
Global Internet Corp.              50.3%                         Colorado
The Best of As Seen on TV, Inc.      58%                         Colorado
W3, Inc.                            100%                         Wyoming
Redunidos                           100%                         Delaware
Cyber Audio Network                 100%                         Delaware


<PAGE>


SIGNATURES

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

                                                 F2 BROADCAST NETWORK INC.


Dated: May 2, 2001                              By:/s/ Howard B. Stern
                                                       Howard B. Stern, Chief
                                                       Executive Officer

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report has been signed below by the  following  persons on behalf of the Company
and in the capacities and on the dates indicated.


Dated: May 2, 2001                               By:/s/ Howard B. Stern
                                                        Howard B. Stern
                                                        Principal Executive,
                                                        Accounting and
                                                        Financial, Accounting,
                                                        Officer, Director

Dated: May 2, 2001                               By:/s/ Douglas Olson
                                                        Douglas Olson
                                                        Director

Dated: May 2, 2001                                By:/s/ William Rubin
                                                         William Rubin
                                                         Director