Stan Lee Media Inc · 10KSB · For 12/31/99

Filed On 3/20/00   ·   SEC File 0-28530   ·   Accession Number 950148-0-447

Annual Report — Small Business   —   Form 10-KSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB       Annual Report -- Small Business                       69    350K 
 2: EX-2.1      Plan of Reorganization                                 8     55K 
 3: EX-3.1      Articles of Incorporation                              4     31K 
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 5: EX-3.3      Articles of Incorporation                             16     74K 
 6: EX-3.4      By-Laws                                               18     84K 
 7: EX-10.1     Material Contracts                                    58    243K 
16: EX-10.10    Material Contracts                                    18     74K 
17: EX-10.11    Material Contracts                                     4     28K 
18: EX-10.12    Material Contracts                                     4     29K 
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53: EX-10.47    Material Contracts                                    30    108K 
54: EX-10.48    Material Contracts                                    17     73K 
55: EX-10.49    Material Contracts                                    17     80K 
11: EX-10.5     Material Contracts                                    10     38K 
56: EX-10.50    Material Contracts                                     3     21K 
57: EX-10.51    Material Contracts                                     6     32K 
58: EX-10.52    Material Contracts                                     3     28K 
59: EX-10.53    Material Contracts                                    80±   298K 
60: EX-10.54    Material Contracts                                     9     49K 
12: EX-10.6     Material Contracts                                    10     39K 
13: EX-10.7     Material Contracts                                     8     44K 
14: EX-10.8     Material Contracts                                     7     34K 
15: EX-10.9     Material Contracts                                    12     58K 
61: EX-21.1     Subsidiaries                                           1     13K 
62: EX-27       Financial Data Schedule                                1     15K 

10KSB   —   Annual Report — Small Business
Document Table of Contents

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 FORM 10-KSB

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

 For the fiscal year ended December 31, 1999

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

For the transition period from ___________________ to __________________

Commission file number 0-28530

STAN LEE MEDIA, INC.
(Name of small business issuer in its charter)

   COLORADO                                                 84-1341980
(State or other jurisdiction of                               (I.R.S. Employer  
incorporation or organization)                               Identification No.)

 15821 VENTURA BOULEVARD, SUITE 675, ENCINO, CALIFORNIA, 91436
 (Address of principal executive offices) (Zip Code)

 Issuer's telephone number: (818) 461-1757

Securities registered under Section 12(b) of the Exchange Act:
NONE

Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK, NO PAR VALUE
(Title of Class)

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

   Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained 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 amendment to this Form 10-KSB. [ ]                                       

   The issuer's revenues for its most recent fiscal year were $30,605.

     The aggregate market value of the voting and non-voting common equity
held by non-affiliates, based upon the average bid and asked prices of the      
issuer's common stock on March 6, 2000 was $88,404,941. Shares of common stock  
held by each officer and director and by each person who owns 5% or more of the 
outstanding common stock have been excluded in that such persons may be deemed  
to be affiliates. This determination of affiliate status is not necessarily a   
conclusive determination for other purposes.                                    

    The number of shares outstanding of the issuer's common stock, as of
March 6, 2000, was 11,856,362.                                                  

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STAN LEE MEDIA, INC.

 FORM 10-KSB

 TABLE OF CONTENTS

                                                                [Download Table]

ITEM NO.                                                                    PAGE
--------                                                                    ----
                                                                                
                                     PART I                                     

ITEM 1.   DESCRIPTION OF BUSINESS                                            1  

ITEM 2.   DESCRIPTION OF PROPERTY                                            11 

ITEM 3.   LEGAL PROCEEDINGS                                                  11 

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                11 

                                     PART II                                    

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS           12 

ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION          15 

ITEM 7.   FINANCIAL STATEMENTS                                               18 

ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON                      
          ACCOUNTING AND FINANCIAL DISCLOSURE                                18 

                                    PART III                                    

ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;         
          COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT                  19 

ITEM 10.  EXECUTIVE COMPENSATION                                             25 

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT     31 

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                     32 

                                     PART IV                                    

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K                                   33 

FORWARD LOOKING STATEMENTS                                                      

 When used in this Form 10-KSB or future filings by the Company with the
Securities and Exchange Commission, in the Company's press releases or other    
public or shareholder communications, or in oral statements made with the       
approval of an authorized executive officer, the words or phrases "would be",   
"will be", "will allow", "intends to", "will likely result", "are expected to", 
"will continue", "is anticipated", "estimate", "project", or similar expressions
are intended to identify "forward looking statements" within the meaning of the 
Private Securities Litigation Reform Act of 1995. The Company wishes to caution 
readers not to place undue reliance on any such forward-looking statements,     
which speak only as of the date made, and to advise readers that these          
statements involve known and unknown risks, uncertainties and other factors that
may cause our actual results, levels of activity, performance or achievements to
be materially different from those anticipated. Such factors include the        
availability of sufficient financing to implement the Company's plan of         
operation, acceptance in the marketplace of the Company's new characters and    
story franchises and distribution via the Internet, ability to generate revenues
through Internet distribution, increased levels of competition, new products and
technological                                                                   

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changes, and regulatory factors. The Company does not undertake, and            
specifically disclaims any obligation, to update any forward-looking statements 
to reflect occurrences or unanticipated events or circumstances after the date  
of such statements.                                                             

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STAN LEE MEDIA, INC.

PART I

ITEM 1. DESCRIPTION OF BUSINESS                                                 

OUR BUSINESS                                                                    

     We are an Internet-based, global branded content creation, production
and marketing company founded by comic book icon Stan Lee to conceive, create,  
co-create and produce marketable characters and story franchises for            
entertainment, merchandising and promotional exploitation worldwide. Built on   
Stan Lee's signature style, our "hub" website, stanlee.net, will be a leading   
online entertainment destination targeting a global community of 6 to 20 year   
olds. Our website also is designed to attract the three generations of fans in  
100 countries and 27 languages assembled by Stan Lee during his 60-year career  
as founder and creative head of Marvel Comics and co-creator of the Spider-Man, 
X-Men, and The Incredible Hulk franchises. Through our no cost, percentage of   
gross relationships entered into with a leading e-commerce retail comic book    
company, NPO Online (NextPlanetOver.com), a leading online storefront,          
WhatsHotNow.com, our digital production studio strategic partner, IBM, and our  
entertainment community hosting company, Warner/Acme City, we have achieved the 
requisites of content, commerce and community defining a robust Internet        
company. Our relationship with Macromedia, Inc., pursuant to which it invested  
$5 million in our company, and our distribution relationship with Macromedia's  
subsidiary, shockwave.com (the largest online animation portal for original     
content), offers the aggregation and delivery of 11 million registered          
shockwave.com subscribers to our original, high concept episodic animation and  
to our "sticky content" stanlee.net website. We will demonstrate that the       
Internet is now a viable, independent entertainment medium with the delivery of 
a uniquely compelling entertainment experience for a global audience of more    
than 230,000,000 Flash enabled Internet users with 28.8Kbs or faster modems.    
Flash is the industry standard for high-impact, vector-based websites that      
deliver motion, sound, interactivity and graphics.                              

        Our strategy of co-creating Super Hero franchises as brand extensions of
globally recognized leaders in niche markets along with harnessing offline      
strategic publishing/media partners worldwide will diversify our product and    
audience demographics and provide continued visibility and support for building 
the Stan Lee brand and community. By executing this strategy, we intend to      
significantly mitigate the traditional huge resource commitments made by        
Internet companies to build their brand and generate traffic. For example, we   
have entered into an agreement with The Backstreet Boys, the most popular boys  
music group in the world, having generated more than $1 billion in sales during 
the last four years, to produce and co-own, under Stan Lee's direction, a Super 
Hero franchise based on their personae having Internet-based Super Hero         
alter-egos. This co-owned franchise, The Backstreet Project, extends our reach  
over the Internet to the international young female audience which has          
historically been uninvolved with the Super Hero genre. In addition to providing
our company with a licensing franchise based on fantasy animated Super Hero     
extensions of popular musicians, this relationship provides us with access to   
the sought after youth market and a dedicated international fan base of girls   
and women aged 8 to 25. We also have entered into an agreement with Viacom      
Productions to reinvent and produce Internet-based animated webisodes reviving  
Viacom's world famous Mighty Mouse franchise, while retaining an equity interest
in the exploitation of the Stan Lee revised character. Through licensed         
distribution with Macromedia's shockwave.com animation portal, our content will 
be exposed to a global audience of millions of registered users who will be     
encouraged to visit the stanlee.net hub site for community chat, games and      
related "sticky" experiences. Using this model, we plan to leverage on the      
audiences of our distribution partners to deliver a dedicated global audience to
stanlee.net expeditiously. Our site also will                                   

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feature content generated by our users, thereby creating a platform for users to
interact and tools that allow our members to personalize their user experience. 
We have designed stanlee.net to facilitate communication among our users, to    
empower them to express their opinions, creativity and ideas as a community, and
to shop online. We believe that we will be able to grow our business in a rapid 
and cost efficient manner based on global demographics and the desire for users 
to actively participate in creating user-generated content.                     

CORPORATE HISTORY AND REORGANIZATION                                            

      Stan Lee Entertainment, Inc. ("Entertainment") was incorporated in the
State of Delaware on October 13, 1998. Stan Lee Media, Inc. ("SLM Delaware") was
originally incorporated in the State of Delaware on January 14, 1999.           
Entertainment was merged with SLM Delaware on April 14, 1999 with SLM Delaware  
being the surviving corporation. Effective July 23, 1999, the surviving Delaware
corporation engaged in a share exchange with Boulder Capital Opportunities,     
Inc., a public company, incorporated in the State of Colorado, which previously 
had no operating history. This share exchange was accounted for as a reverse    
acquisition in which SLM Delaware is considered our predecessor because it had  
operations at the time of the share exchange. The new name of our company after 
the share exchange is Stan Lee Media, Inc. ("SLM" or the "Company").            

INDUSTRY BACKGROUND                                                             

       Growth of the Internet, E-Commerce and Online Advertising. The Internet
has emerged as a significant global communications medium, enabling millions of 
people to share information, communicate and conduct business electronically.   
Both the number of Internet users and the amount of time they spend online are  
growing. This growth is the result of a number of factors, including: increase  
in the number of computers in the home, schools and workplace; improvements in  
computer network infrastructure; more convenient, faster and less expensive     
Internet access; advances in computer and modem technology; an increase in      
public awareness of the benefits of using the Internet; and the development of  
easy-to-use interfaces. The rapid adoption of the Internet represents a         
significant opportunity for businesses to market and sell products and services 
online and for advertisers and businesses to capitalize on the Internet's       
interactive nature by marketing their products to highly targeted audiences. The
success of Internet advertising can be attributed to the following factors:     
Internet advertising offers advertisers a flexible way to target their messages 
and measure their results; Internet advertisers can tailor their messages to    
specific groups of consumers; Internet advertisers can change advertising       
content frequently in response to market factors, current events and consumer   
feedback; and advertisers can more accurately track the effectiveness of their  
advertising messages based on the rate at which consumers directly respond to   
their advertisements through "click-throughs" that their advertisements receive.

      Growth of Targeted Online Content and Community Sites. As the Internet
has grown, users and advertisers have started seeking more targeted and         
compelling content, information, expression and interaction. Just as cable      
television channels, such as MTV and ESPN, have become more popular by          
aggregating content targeted towards a specific audience, online content and    
community sites that provide a demographically targeted environment have        
emerged. Like the major television networks that provide programming across many
demographic segments, the major online portals typically provide a broad range  
of content and services without a specific demographic focus. Targeted online   
communities provide users with the ability to access relevant content and to    
interact directly with other people with similar interests. Registered users, or
members, are often eligible for additional services from a site, such as        
customization options or access to premium content. As a site learns more about 
its members as they register and spend more time online, it can tailor its      
features to meet the needs and preferences of                                   

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its users and members. This information also provides advertisers and merchants 
with more focused demographic and psychographic information that can be used to 
maximize direct marketing opportunities.                                        

     Children and Teens are Becoming an Increasingly Important Audience to
Online Advertisers and Merchants. Significant advertising opportunities exist on
a child and teen-focused website. Children and teens are more difficult than    
adults to reach with targeted advertising because they generally do not         
subscribe to magazines in large numbers, and they tend to watch less television 
and lead more active lifestyles than adults. While children and teens are       
flooded with literally thousands of broad-based marketing messages every day    
from other traditional sources, such as billboard and radio advertising, we     
believe they are largely unreceptive to advertising messages that are not       
personally relevant. We believe that marketing products and services to children
and teens online through a site with contextual information focused on them is  
more effective than using traditional marketing methods.                        

         The United States Census Bureau projects that the number of individuals
between the ages of 10 and 24 will grow to 63.1 million in 2010. This growth    
rate is estimated to outpace growth of the general population by nearly 10%. In 
addition, children, but teenagers especially, possess substantial disposable    
income. eMarketer, a market research firm, estimates that over $109 billion is  
spent annually by teenagers in the United States alone.                         

Teenagers are often early adopters of new technologies and are  
significantly involved with the Internet. According to eMarketer, about 57% of  
13 to 17 year olds use the Internet regularly, as compared to about 36% of 18-34
year olds, 31% of 35-54 year olds and 17% of individuals over the age of 55.    
eMarketer also estimates that the number of 13 to 17 year olds who regularly    
access the Internet will rise to 12.4 million by 2000 from 9.1 million in 1998, 
an increase of over 36%. eMarketer estimates that 13 to 17 year olds currently  
spend an average of 8.5 hours online per week as compared to 6.7 hours for      
individuals over the age of 18. This creates a significant opportunity to both  
sell products and advertise to children and teens online. eMarketer also        
estimates that online commerce sales to 13 to 17 year olds will increase to $1.4
billion in 2002 from $161 million in 1999.                                      

UNIQUE COMPANY ASSETS                                                           

     Our primary assets consist of all the intellectual property currently
owned by our founder Stan Lee, including ownership in perpetuity to Stan's name,
likeness, brand and signature slogans, "Stan Lee Presents," "Excelsior!" and    
"Stan's Soap Box," along with rights to all intellectual property that will     
hereafter be created by Stan Lee. Known to millions as the man whose Super      
Heroes propelled Marvel Comics to its preeminent position in the comic book     
industry, Stan Lee's co-creations include Spider-Man, The Incredible Hulk,      
X-Men, The Fantastic Four, Iron Man, Daredevil, Silver Surfer and Dr. Strange.  
Now, in the 21st Century, Stan Lee is broadening his horizons once more, this   
time, into cyberspace. His Marvel creations have inspired thousands of Super    
Hero fan sites throughout the web, representing millions of web page references.
Now his fans and admirers may meet the newest cutting-edge Stan Lee characters  
in The 7th Portal, which has been launched on shockwave.com and will later be   
featured on our stanlee.net website. In addition, Stan's fans can visit         
stanlee.net to read a regularly updated Stanzine with games, goofs and features 
from Stan and his staff.                                                        

     We believe our competitive advantages include the following: (1) Stan
Lee having a proven historic ability to create internationally popular, engaging
content; (2) a talented, experienced creative and production team assembled from
leading Internet and entertainment companies, including Disney, 20th Century Fox
and NBC Interactive; and (3) goodwill with global media and creative            

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leaders around the world desirous of supporting and collaborating with          
pop-culture icon Stan Lee. These attributes will provide exponential resource   
strength and growth through association of the "best of breed" strategic        
partners providing financial, production, marketing and distribution            
capabilities utilizing all venues of media and product dissemination. Stan Lee  
now personifies the genre at large, and we believe our company has the ability  
and resources to consolidate his brand recognition in more than 100 countries   
around the world to firmly establish a lifestyle brand for "tweens" between ages
6 to 20 in addition to the three generation of fans already assembled.          

After the exclusive lifetime contract with founder Stan Lee, our
greatest assets are the creative power represented by our assembled team for    
original Internet content creation, production, research and development and    
marketing. This team integrates experience in online publishing and technical   
innovations and community building for a global youth audience with seasoned    
comic book writers and artists, digital artists and technicians, and senior     
producers all under the direction of award winning television writers and       
animation storyboard supervisors. This team currently is producing seven        
original Stan Lee Super Hero franchises while it prepares for production of     
additional co-owned global branded content which will harness the audiences of  
other recognized brands not currently being produced on the Internet. Under Stan
Lee's active stewardship, this team will focus on institutionalizing Stan Lee's 
signature style and developing a global lifestyle brand.                        

THE STANLEE.NET SOLUTION                                                        

stanlee.net is positioned as a branded content gateway targeting
children and teens on the Internet to join with the three generations of fans   
assembled by Stan Lee during his 60-year career as founder and creative head of 
Marvel Comics and co-creator of the Spider-Man, X-Men and The Incredible Hulk   
franchises. We provide a site where children and teens can congregate in an     
environment that caters to their interests and promotes their participation and 
recognition. We plan to generate online revenues from advertising and           
sponsorship sales and e-commerce transactions, and offline revenues by          
exploiting such online branded content in television animation, features,       
location-based entertainment, theme park attractions, comic book publishing,    
merchandising and licensing.                                                    

      Visitors will congregate at stanlee.net because we empower our members
and provide a dynamic, interactive and fun Internet environment. In addition to 
viewing webisodes and playing games on our site, our members will create their  
own content for our site using personalized animation tools we create and       
provide for them. We enable our members to continually contribute "user created"
content, and which may extend itself to news reports, music and movie reviews,  
product reviews and survey questions and answers. Through our member program, we
will gather a significant amount of data concerning the preferences and dislikes
of our members, which should allow our site to be continually relevant to them. 
This data can be used to target content as well as advertising information      
toward particular members, while maintaining the confidentiality of our members 
(stanlee.net does not give out information about members without a member's     
consent). We believe our registered member base creates member loyalty and leads
to repeat site visits, referrals and higher quality member-generated content.   

THE STANLEE.NET STRATEGY                                                        

    Our objective is to be the leading Internet destination for content,
community and commerce relating to the Super Hero and comic book genre. We      
intend to develop consumer loyalty, attract new users/members, and promote      
commerce by implementing the following strategies:                              

       Continue to Build Brand Awareness. Stan Lee is a leader and a visionary
in the world of Super Hero characters. Millions of young people have transited  
adolescence to adulthood using his almost mythic - but also very human -        
characters as role models and moral compasses. His influence goes beyond        

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that of mere comics - before "community" became a buzz word associated with the 
Internet, Lee's creations were a common touchstone in the lives of boys all over
the world. Though separated by geography and language barriers, Lee's fans are  
bound together by their affinity for his powerful storytelling style and        
creative genius in making the Super Heroes come to life. We believe that        
continuing to build brand awareness for our site is critical to attracting and  
expanding our global member base and customer loyalty. Our strategy is to       
enhance the recognition of the Stan Lee brand through traditional and Internet  
advertising, and nontraditional events. We will continue to use traditional     
advertising, which may include print, television and radio, not only to continue
to reach more advertising customers but also to publicize our brand to potential
users. With respect to non-traditional events, we will continue to promote our  
brand at events such as The Backstreet Boys concerts and other venues where     
children and teens gather. We also have initiated a campaign through advertising
supported insert entertainment (via our majority-owned subsidiary Eat-Time      
Media, Inc.), including without limitation, the placement of card strips,       
promotional material and collectible items into suitable prepackaged pastry     
products and other snack foods throughout the country, which will cross-promote 
our brand.                                                                      

        Continue to Build Premier Content and Community. We will initially focus
on creating new proprietary Super Hero characters along with related content    
developed specifically for the Internet with subsequent distribution through    
traditional merchandising and licensing. Leveraging the global medium of the    
Internet to brand new Super Heroes and Super Villains, we intend to subsequently
partner with leading companies to extend these brands off-line -- through       
location based entertainment, 3-D animated features, television, film, comics   
and merchandise. This process will be applied to other niche audiences as well. 

      The Company's initial project is Stan Lee's first team of Super Heroes
for the 21st century -- The 7th Portal - the first global team ever created     
consisting of 14 original Super Heroes and Super Villains, which launched on    
February 29, 2000. Because of the technological advances offered by the         
Internet, the bonds between Super Hero enthusiasts and Super Hero characters    
will become even stronger. The term "connectivity" will have new meaning:       
stanlee.net will be their central meeting place - an online home where they can 
immediately interact with each other, and with Stan Lee himself. The Internet   
has revolutionized the way that The 7th Portal characters were introduced and   
presented - as fully realized animated figures with a comic book edge. In       
addition to The 7th Portal, we currently are producing six other original Stan  
Lee Super Hero franchises and producing additional co-owned global branded      
content which will harness the audiences of other recognized brands not         
currently being produced on the Internet, including The Backstreet Project and  
Mighty Mouse.                                                                   

       We will continue to develop our content and community product offerings
to drive children and teen traffic to our website. We are always looking for    
innovative and exciting interactive tools and new technologies to enhance our   
users' experience. For example, we have entered into agreements with Cyberworld 
International Corporation to enable our members to create their own 3-D         
environments, which can be populated with characters and objects, including the 
intelligent agent morphing software we have licensed from Haptek, Inc. Further, 
we are developing and integrating our own online music content strategy into    
these environments.                                                             

Develop and Grow Multiple Revenue Streams:                      

  Content Syndication. We intend to license elements of our original
content to third-parties for exploitation in publishing, television and feature 
motion picture productions, which opportunities will include licensing and      
merchandising fees. In December 1999, we and Stan Lee were engaged by DC Comics 
to reinvent DC's principal Super Heroes through the publishing of 12 issues of  
approximately 48 story pages each tentatively entitled "The Staniverse" or "If  
Stan Lee Had Created the DC Universe," to enrich the DC Comic book characters   
such as Superman, Batman and Wonder Woman with the                              

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sensibilities and style of Stan Lee. Also, in November 1999, Simon & Schuster,  
Inc. entered into an agreement with Stan Lee to publish a Stan Lee official     
biography entitled Stan Lee: Master of Imagination. We are pursuing publishing, 
television and feature productions to further broaden the reach of our branded  
content creations.                                                              

       Advertising Sales. In addition to the traditional online banner ads and
sponsorships, we have initiated a campaign through advertising supported insert 
entertainment (via our majority-owned subsidiary, Eat-Time Media, Inc.),        
including without limitation, the placement of card strips, promotional material
and collectible items into suitable prepackaged pastry products and other snack 
foods throughout the country, which will cross-promote our branded content.     

  E-Commerce Offerings. We have established strategic alliances with
leading companies engaging in Internet e-commerce (NextPlanetOver.com and       
WhatsHotNow.com). We intend to continue to make e-commerce an integrated and    
valuable part of our website. The Stan store, operated by WhatsHotNow.com,      
currently offers over 100 products, and we intend to significantly increase the 
number of products we offer over the next year. In addition, we plan to         
integrate global shopping opportunities into the store for our users outside of 
the United States who seek access to American products.                         

  Location-Based Entertainment. We intend to license elements of our
original content to third parties for exploitation as theme-park rides and      
simulation rides, and as wait-time entertainment at movie theaters and shopping 
malls. We have entered into a working relationship with Iwerks to further this  
initiative.                                                                     

        Utilize Technology to Improve the Experience. We have implemented a wide
range of secure, scalable services and systems for the stanleemedia.com         
corporate and stanlee.net "hub" websites. These services and systems include:   
website management, advanced searching tools, transaction processing, community 
message boards, payment services and a variety of marketing applications. We    
have developed proprietary technologies to augment those that we have licensed  
from vendors, such as Macromedia, Microsoft and IBM. Our software platform and  
architecture are integrated with relational database servers. The employment of 
multiple web servers, application servers and database servers, allows our      
systems to be resilient and redundant. Our systems utilize communication        
infrastructure from multiple providers and provide 24 hour monitoring and       
engineering support.                                                            

      Wireless and Telecommunications Applications. We intend to develop the
ability to access many of the features and functionality found on stanlee.net by
as many electronic means as possible, including wireless phones, personal       
digital assistants and pagers.                                                  

   Develop a Co-Branded Debit Card. We are planning to develop, with a
strategic partner, the stanlee card, a co-branded financial resource for        
children and teens that will not only provide them with a non-credit based means
of conducting transactions at the Stan store but will also allow them to make   
purchases throughout the Internet.                                              

       Expand our International Presence. We plan to launch localized versions
of our website in strategic locations throughout the world. The Super Heroes of 
The 7th Portal are situated in the following countries outside the United       
States: Japan, India, Germany, Brazil and South Africa. Accordingly, we have    
entered into a relationship in Japan and are pursuing the establishment of      
strategic partnerships with local operators who will contribute assets,         
operating infrastructure and capital to build, maintain, market and promote our 
Company's global branded content in their local market, and who will host and   
webcast local language versions of Super Hero series produced by us,            

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repurpose such webisodes for exploitation in the local language, and jointly    
develop original Super Hero and comic character properties. We intend to        
leverage our domestic production facility to maintain economies of scale as we  
focus on additional countries.                                                  

ADVERTISING SALES                                                               

   We intend to derive substantial revenues from advertising sales. We
intend to offer advertisers the following advertising options:                  

    Banner advertisements. An advertiser may purchase banners, which are
graphical advertisements with the advertiser's logo, for placement throughout   
our site or in a specific area within our site.                                 

        Integrated content sponsorships. Advertisers may also sponsor a specific
area or feature of our site.                                                    

    Pop-up advertisements. Advertisers may choose to have an advertising
window "pop-up" following certain actions by members on stanlee.net.            

Section sponsorships. Advertisers may also pay to own a premiere
position within a particular section or sections of stanlee.net.                

     A rotating "viewer window." Our front page contains a rotating viewer
window that displays advertisements and promotes new content on the site.       
Because this window is constantly changing and is always visible to members, it 
provides our advertisers with an excellent way to catch the attention of our    
members.                                                                        

        HTML-based and text-based advertisements in targeted email. We intend to
send targeted HTML-based emails every week. We provide advertisers the          
opportunity to place a graphic advertisement within these emails. In addition,  
we intend to send text-based targeted emails every week. Advertisers can choose 
to include a textual advertisement in these messages. Because of our ability to 
target these emails, the advertisements tend to be more relevant to the         
recipient.                                                                      

        Opt-in registration boxes. When new members register, they will have the
opportunity to "opt-in" or request information about products or services from  
certain advertisers. These advertisers will pay a fee for each new member that  
opts-in for information about their products or services during registration.   

E-COMMERCE AND THE STAN STORE                                                   

      In March 1999, we entered into an agreement with NextPlanetOver.com to
provide fulfillment and distribution in connection with online sales of retail  
comic books. NextPlanetOver.com manages all fulfillment and distribution        
requirements, including product ordering and return processing, thereby         
resulting in our having little, if any, inventory. In August 1999, we entered   
into an agreement with WhatsHotNow.com to design and host the Stan store, which 
houses one of the largest collections of comic genre-focused product offerings  
on the Internet. In creating the Stan store, we have utilized our relationships 
with our members by asking them, through surveys, polls and other interactive   
tools which products they would like to buy through our website. The Stan store 
contains over 100 products. WhatsHotNow manages all fulfillment and distribution
requirements, including product ordering and return processing. This results in 
our having little, if any, inventory. Our customers are given a                 

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number of shipping options, all of which are handled by standard shipping       
franchises such as UPS and Federal Express. We also intend to generate          
e-commerce revenues by charging transaction fees to retailers and e-commerce    
companies that wish to use our site to promote their products and services as   
well as to purchase premium positioning on our site.                            

CUSTOMER CARE                                                                   

        Users who are unfamiliar with our site can click on the "help" button on
stanlee.net. This feature describes all of our stanlee.net features and services
and explains to the user how to use them. In addition, our members can post     
messages on our help boards and our staff will respond. Finally, users can also 
send emails to support, and our staff generally responds within one day.        

COMPETITION                                                                     

The market for Internet traffic, registered users and Internet  
advertising is new and rapidly evolving, and competition is intense. With no    
substantial barriers to entry, we expect that competition will continue to      
intensify. We believe that the primary competitive factors in creating community
on the Internet and attracting advertisers are: user receptiveness to branded   
content; functionality; brand recognition; user affinity and loyalty; the       
ability to target a specific demographic; variety of value-added services;      
ease-of-use; quality of service; reliability and critical mass; and the overall 
cost-effectiveness of the advertising medium. We compete with sites, and sites  
with areas, that are primarily focused on targeting teens online. These sites   
include MTV Online and the Yahoo! Teen Chat area. We also compete with retailers
that have moved to the Web such as Delia's. We will likely also face online     
competition in the future from: search engine providers; content sites;         
commercial online services; sites maintained by Internet service providers;     
traditional media companies such as MTV, Disney and NBC, many of which have     
recently made significant acquisitions or investments in Internet companies; and
other entities that will attempt to establish communities on the Internet by    
developing their own or purchasing one of our competitors. We also compete with 
traditional forms of media, such as newspapers, magazines, radio and television,
for advertisers and advertising revenues.                                       

TECHNOLOGY AND SYSTEMS                                                          

       We rely almost exclusively on a variety of third-party products for our
hardware and software. We operate our network to ensure maximum uptime, to      
obtain, preserve and analyze customer data, and to enhance our members'         
experience. Our goal is to maintain the technological infrastructure required to
handle heavy traffic, e-commerce and complex graphics on our site. We currently 
house our servers at Exodus Communications in California. Exodus maintains an   
environmentally controlled data center with multiple communication lines and    
uninterrupted power. We believe that our infrastructure conforms to the latest  
industry standards. We are also in the process of installing additional servers.
If a server fails, we believe that we have enough back-up servers to ensure that
our service interruption would be minimized. Our infrastructure is scalable in  
that as additional capacity is needed, additional servers can be easily added.  
We are also planning to expand our server system to multiple data centers. We   
also run weekly full backups of all of our servers, as well as daily incremental
backups of these same machines. These tape backups are stored off of the        
premises.                                                                       

TRADEMARKS AND INTELLECTUAL PROPERTY                                            

    We use the following trademarks for which applications in the United
States Patent and Trademark Office are pending: our logo, "Stanzine," "Stan Lee 
Presents," "The 7th Portal," and "Excelsior," as well as the marks for the      
various heroes and villains of The 7th Portal. We also have                     

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trademark and domain name applications pending in other countries. Any claims or
confusion related to such marks, or our failure to obtain trademark             
registration, might materially adversely affect our business.                   

      We rely on a combination of copyright, trademark and trade secret laws
and our contractual obligations with employees and third parties to protect our 
proprietary rights. Protection of our intellectual property is limited. Despite 
our efforts to protect our proprietary rights, it may be possible for a third   
party to copy or obtain and use our intellectual property without our           
authorization. In addition, other parties may breach confidentiality agreements 
or other protective contracts we have entered into, and we may not be able to   
enforce our rights in the event of these breaches.                              

        We have entered into confidentiality and invention assignment agreements
with our employees and consultants, and nondisclosure agreements with our       
vendors and strategic partners to limit access to and disclosure of our         
proprietary information. We cannot be certain that these contractual            
arrangements or the other steps taken by us to protect our intellectual property
will prevent misappropriation of our technology. We have licensed in the past,  
and expect that we will license in the future, some of our proprietary rights,  
such as trademarks or copyrighted material, to third parties. While we attempt  
to ensure that the quality of the stanlee products and brand is maintained by   
these licensees, we cannot assure that these licensees will not take actions    
that might hurt the value of our proprietary rights and reputation.             

GOVERNMENT REGULATION                                                           

       We are subject to various laws and governmental regulations relating to
our business. Although there are currently few laws or regulations directly     
applicable to online services or the Internet, the increasing popularity and use
of the Internet might cause additional laws and regulations to be adopted. These
laws and regulations currently cover or may cover in the future issues including
the following:                                                                  

       Internet Privacy. The Children's Online Privacy Protection Act of 1998,
which was enacted by the United States Congress on October 21, 1998 and for     
which the Federal Trade Commission issued its final regulations on October 20,  
1999, regulates the collection, use, and/or disclosure of personal information  
obtained from children under the age of 13. Under the provisions of this Act,   
which becomes effective on April 21, 2000, websites catering to children will be
required to: provide notice on their website and to parents of children under   
the age of 13 with notice of what information is being collected, how the site  
uses the information, and the website's practices regarding disclosures of      
information; obtain verifiable parental consent for the collection, use and/or  
disclosure of their children's information, and allow parents to terminate their
consent at any time; provide parents an opportunity to review the information   
collected from their children; and refrain from conditioning a child's          
participation in a game on the child revealing more information than reasonably 
necessary to participate. If we discover that a member about whom we have       
collected information has misrepresented his or her age and is in fact under age
13, or that a child under 13 has disclosed personal information on our bulletin 
boards or in any other public forum on our site, we will have to either (1)     
remove that person as a member, or (2) comply with the Federal Trade Commission 
regulations under the Act. It is important to our members that we protect their 
privacy. We use password protection and member IDs to ensure anonymity among our
members. In addition, we do not sell or distribute information about the        
identities, preferences or page views of individual members without their       
permission. We do disclose certain information to third parties, with our       
members' permission, in connection with product promotions and special programs 
in which members elect to participate. Market research data that we may sell to 
third parties consists of trend information about various segments of our       
members; for example, what certain types of users like to do in their spare time
or which of two products our members prefer. While we believe that we           

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currently adequately provide for our members' privacy, our current programs may 
not conform to legislation or regulations adopted in the future by the Federal  
Trade Commission or other governmental entities. In addition, if unauthorized   
persons were able to penetrate our security and gain access to, or otherwise    
misappropriate, our members' personal information, we could be subject to       
liability. Such liability could include claims for misuses of personal          
information, such as for unauthorized marketing purposes or unauthorized use of 
credit cards. These claims could result in litigation which could require us to 
expend significant financial resources and divert management's attention from   
operations.                                                                     

        The European Union adopted a Directive which became effective in October
1998 that imposes restrictions on the collection and use of personal data. Under
the Directive, European Union citizens are guaranteed the right of access to    
their data, the right to know where the data originated, the right to have      
inaccurate data corrected, the right to recourse in the event of unlawful       
processing of information and the right to withhold permission to use their data
for direct marketing. The Directive could affect U.S. companies that collect    
information over the Internet from individuals in European Union member         
countries and may impose restrictions that are more stringent than current      
Internet privacy standards in the United States or our own privacy policies. The
Directive does not, however, define what standards of privacy are adequate. As a
result, the Directive might adversely affect the activities of entities,        
including us, that engage in data collection from members in European Union     
member countries.                                                               

      Internet Taxation. A number of legislative proposals have been made by
federal, state, local and foreign governments that would impose additional taxes
on the sale of goods and services over the Internet, and some states have taken 
measures to tax Internet-related activities. Although in October 1998 Congress  
placed a three-year moratorium on state and local taxes on Internet access or on
discriminatory taxes on electronic commerce, existing state or local laws were  
excluded from this moratorium. Further, once this moratorium is lifted, some    
type of federal or state taxes may be imposed upon Internet commerce. Such      
legislation or other attempts at regulating commerce over the Internet may cause
sales at the Stan Store to decrease which might adversely affect advertising    
revenues as well since Internet sales generally may decline.                    

   Domain Names. Our domain names are our Internet "addresses." Domain
names have been the subject of significant trademark litigation in the United   
States. We have applied for registration of certain domain names in the United  
States and foreign countries. Third parties might bring claims for infringement 
against us for the use of these domain names. Moreover, because domain names    
derive value from the individual's ability to remember such names, it is        
possible that our domain names could lose their value if, for example, members  
begin to rely on mechanisms other than domain names to access online resources. 
The current system for registering, allocating and managing domain names has    
been the subject of litigation and of proposed regulatory reform. Our domain    
names might lose their value, and we might have to obtain entirely new domain   
names in addition to or instead of our current domain names if such litigation  
or reform efforts result in a restructuring of the current system.              

     Jurisdiction. Due to the global reach of the Internet, it is possible
that the governments of other states and foreign countries might attempt to     
regulate our activities or prosecute us for violations of their laws. This could
seriously affect our business. In addition, because our products and services   
are available over the Internet anywhere in the world, multiple jurisdictions   
may claim that we are required to qualify to do business as a foreign           
corporation in each of those jurisdictions. Our failure to qualify as a foreign 
corporation in a jurisdiction where we are required to do so could subject us to
taxes and penalties for the failure to qualify. It is possible that state and   
foreign governments might also attempt to regulate our transmissions of content 
on our Websites or prosecute us for violations of their laws. State or foreign  
governments might allege or charge us with violations of local laws, we might   
unintentionally violate these laws, and these laws might be modified, or new    
laws might be enacted, in                                                       

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the future.                                                                     

EMPLOYEES                                                                       

      As of March 1, 2000, we employed a total of 85 full-time employees, 56
of whom were in content creation and product development; 6 in technology; 12 in
sales, marketing, business development and e-commerce; 1 in market research; and
11 in finance and administration. In addition, about 18 persons provide services
to us pursuant to consulting and/or freelance agreements. To support our        
anticipated future growth, we expect to hire additional employees, particularly 
in the areas of content creation and product development. None of our employees 
is represented by unions, and we believe our relations with our employees are   
good.                                                                           

ITEM 2. DESCRIPTION OF PROPERTY                                                 

        Our principal executive offices are located in Encino, California, where
we sublease approximately 7,000 square feet that expires in April 2002. In      
November 1999, we entered into two separate leases expiring in October 2004 for 
an additional approximate 7,000 and 6,500 feet of ground floor space,           
respectively, in the same building for our studio production facilities, and a  
sublease expiring in April 2000 for an additional approximate 3,500 feet of     
office space for our technology infrastructure requirements. We have initiated  
negotiations to extend the sublease and anticipate that it will be extended for 
an additional period as desired by the Company, but no assurance can be made    
that such extension will be granted. As we expand, we anticipate that additional
space will be available on commercially reasonable terms, but no assurance can  
be made in this regard. We intend to rent additional space in the same building 
in which our principal executive offices are situated, aggregating an additional
approximate 18,000 square feet pursuant to two separate leases, and that terms  
of these leases will vary as to duration and rent escalation provisions tied to 
either increases in the landlord's operating expenses or fluctuations in the    
consumer price index in the relevant geographical area.                         

ITEM 3. LEGAL PROCEEDINGS                                                       

        We are not currently involved in any material legal proceedings, nor, to
our knowledge, are any threatened.                                              

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                     

  There have been no matters submitted to a vote of security holders
during the quarter ended December 31, 1999.                                     

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 PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                

       Our common stock is traded on the over-the-counter bulletin board under
the symbol "SLEE." The following table sets forth the range of reported closing 
bid prices of Stan Lee Media, Inc.'s common stock during the periods indicated. 
Such prices reflect prices between dealers in securities and do not include any 
retail markup, markdown or commission and may not necessarily represent actual  
transactions. The information set forth below was obtained from America Online. 

                                                                [Download Table]

Fiscal Year Ended December 31, 1999                             High       Low 
                                                                               
        Three Months Ended -                                                   
               September 30, 1999                              $ 9.00     $2.50
               December 31, 1999                               $ 7.50     $4.06

For the period January 1, 2000 through March 6, 2000           $30.00     $5.88

      As of February 25, 2000, we had 438 shareholders of record of Stan Lee
Media, Inc.'s common stock, excluding shares held in street name by brokerage   
firms and other nominees who hold shares for multiple investors, and one        
shareholder of record of Stan Lee Media, Inc.'s Series A Preferred Stock.       

    Holders of common stock are entitled to receive dividends if, as and
when declared by the Board of Directors out of funds legally available therefor,
subject to the dividend and liquidation rights of any preferred stock that may  
be issued and outstanding. We have never declared or paid any dividends on our  
common stock. We intend to retain any future earnings for use in the operation  
and expansion of our business. Consequently, we do not anticipate paying any    
cash dividends on our common stock to our shareholders for the foreseeable      
future.                                                                         

     The holders of Series A Preferred Stock are not entitled to dividends
unless dividends are paid on the common stock, in which case the Series A       
Preferred Stock will receive dividends at the same rate payable on the common   
stock on the basis of the number of shares of common stock into which the Series
A Preferred Stock is convertible. The holders of Series A Preferred Stock vote  
together with the holders of common stock, on the basis of the number of shares 
of common stock into which the Series A Preferred Stock is convertible, on all  
matters presented to the stockholders to vote. The Series A Preferred Stock will
vote separately as a class on matters which affect its rights and preferences.  

RECENT SALES OF UNREGISTERED SECURITIES                                         

       Sales of Common Stock Prior to January 1, 2000. Between January 1, 1999
and June 30, 1999, 400,000 shares of common stock were issued for services      
before any stock was issued for cash. Each issuance was valued at $0.001 per    
share at that time.                                                             

      Effective July 23, 1999, SLM Delaware engaged in a share exchange with
Boulder Capital Opportunities, Inc. ("Boulder"), a public company, incorporated 
in the State of Colorado, which previously had no operating history. This share 
exchange was accounted for as a reverse acquisition in which SLM Delaware is    
considered our predecessor because it had operations at the time of the share   
exchange. In this share exchange, the shareholders of SLM Delaware received     
8,500,000 shares of                                                             

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common stock of Boulder in exchange for all of the issued and outstanding shares
of common stock of SLM Delaware. The number of shares of common stock           
outstanding after this transaction was 11,025,000.                              

          On July 23, 1999, the Company issued 60,000 shares of common
stock at $2.50 per share, the fair value on the date of issuance, to employees  
for services rendered. The fair value of these shares, $150,000, was charged to 
operations during 1999. On December 9, 1999, 50,000 of these shares were        
cancelled in conjunction with the termination of an employee and the            
corresponding $125,000 fair value originally expensed at the date of the grant  
was reversed upon cancellation. As settlement of amounts due under the          
terminated employment contract, the Company issued 7,000 shares of              
common stock. The fair value of these shares, $38,500, was charged to           
operations.                                                                     

            On July 30, 1999, 37,500 shares of common stock were issued at
$4.00 per share as part of a private placement, resulting in gross proceeds of  
$150,000.                                                                       

             Through July 1999, a total of $738,100 in cash was received for
subscription stock. The subscription stock consisted of 246,029 shares of common
stock that were issued on July 23, 1999 in consideration for $3.00 per share. In
addition, the subscription stock investors were granted warrants to purchase    
another 246,029 shares at an exercise price of $5.00 per share.                 

              During August 1999, 62,500 shares of common stock were issued at
$4.00 per share in private placements, resulting in gross proceeds of $250,000. 

             On October 12, 1999, the Company issued 10,000 shares of common
stock in connection with a bridge loan from VMR Luxembourg S.A. The fair value  
of these shares, $61,800, was recorded as debt offering costs at December 31,   
1999 and is being amortized into interest expense over the six-month term of the
loan. As of December 31, 1999, $30,900 has been amortized to interest expense.  

             On November 8, 1999, the Company issued 25,000 shares of common
stock at $7.19 per share in exchange for rights to use software developed by    
Cyberworld International Corporation, a third party. The fair value of these    
shares, $179,675, on the date of issuance was recorded as a licensing right     
asset.                                                                          

             On November 8, 1999, the Company issued 10,000 shares of common
stock at $7.19 per share to VMR Luxembourg S.A. for services rendered relating  
to the Company's listing on the Frankfurt stock exchange. The fair value of     
these shares, $71,870, was charged to operations during 1999.                   

   Series A Preferred Stock Issuance. On November 3, 1999, the Company
entered into an agreement with Macromedia, Inc. ("Macromedia") to issue 714,286 
shares of the Company preferred stock at $7.00 per preferred share for a total  
of $5,000,002 in cash. The Company entered into a five-year distribution        
agreement with Macromedia to distribute flash-animated episodes of series       
produced by the Company. During the first year of the term, the Company must    
make 10 submissions of series at an average rate of at least one submission     
every two months. Macromedia will reimburse the Company for production costs    
plus profit and overhead in addition to a license fee after delivery of the last
episode in each accepted series. The Company is required to pay $178,000 of the 
advertising costs to launch the first series.                                   

       Stock Option Issuances. From July 23, 1999 through October 5, 1999, the
Company entered                                                                 

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into stock option agreements with certain executives, employees, consultants and
directors to purchase 2,435,000 common shares at $2.50 to $5.50 per share, the  
fair market values at the date of grant. Of said amount, options to purchase    
1,110,000 common shares have a term of five years, and are subject to various   
vesting periods ranging up to two years. Options to purchase the remaining      
1,325,000 common shares were issued to consultants, have a term of 10 years and 
are fully vested at December 31, 1999. The fair value of these options,         
$3,258,979, was charged to operations during 1999.                              

       1999 Stock Incentive Plan. The company adopted the 1999 Stock Incentive
Plan (the "1999 Plan"), effective on October 11, 1999. Each director, officer,  
employee or consultant of the Company or any of its subsidiaries is eligible to 
be considered for the grant of awards under the 1999 Plan. The maximum number of
shares of Common Stock that may be issued pursuant to awards granted under the  
1999 Plan is 3,000,000 pursuant to an amendment by the board of directors in    
March 2000 to increase the total number of shares reserved for issuance         
thereunder. Any shares of Common Stock subject to an award which for any reason 
expires or terminates unexercised are again available for issuance under the    
1999 Plan. Options granted generally have a term of five years and usually vest 
over two years beginning on the anniversary date of the grant.                  

       Under the 1999 Plan, the Company issued 355,000 options to officers and
employees during 1999. In addition, under the 1999 Plan, the Company issued     
202,500 options to consultants. The fair value of these options, $611,425, was  
charged to operations during 1999.                                              

        Warrant Issuances. On September 15, 1999, the Company issued warrants to
purchase 5,000 common shares in conjunction with debt financing. The warrants   
have a $5.00 per share exercise price and a term of three years. Since the note 
was repaid by December 31, 1999, the fair value of these warrants, $7,486, was  
charged to interest expense during the year.                                    

            On September 21, 1999, the Company issued warrants to purchase
5,000 common shares in conjunction with debt financing. The warrants have a     
$5.00 per share exercise price and a term of three years. Since the note was    
repaid by December 31, 1999, the fair value of these warrants, $7,486, was      
charged to interest expense during the year.                                    

          On October 12, 1999, the Company issued warrants to purchase
25,000 shares of common stock in connection with a bridge loan from VMR         
Luxembourg S.A. The warrants have a $6.18 per share exercise price and a term of
three years. The fair value of these warrants, $35,572, was recorded as debt    
offering costs at December 31, 1999 and is being amortized into interest expense
over the six-month term of the loan. As of December 31, 1999, $17,756 remained  
capitalized in deferred offering costs.                                         

          On November 1, 1999, the Company issued warrants to purchase
2,500 common shares in conjunction with debt financing. The warrants have a     
$6.00 per share exercise price and a term of three years. Since the note was    
repaid by December 31, 1999, the fair value of these warrants, $3,351, was      
charged to interest expense during the year.                                    

      Sales of Common Stock Post December 31, 1999. On February 1, 2000, the
Company sold, in a private placement, 200,000 shares of common stock at $8.00   
per share for a total purchase price of $1,600,000, and issued five-year        
warrants to purchase an additional 100,000 shares of common stock at an exercise
price of $10.00 per share.                                                      

            On February 4, 2000, the Company sold, in a private placement,
200,000 shares of common stock at $11.00 per share for a total purchase price of
$2,200,000, and issued five-year warrants to purchase an additional 100,000     
shares of common stock at an exercise price of $11.00 per                       

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share.                                                                          

         Under the terms of these two separate February 2000 private
placements, the Company is required to file a registration statement registering
such securities for sale to the general public within 180 days following their  
respective closings, and to have such registration statement be ordered         
effective by the Securities and Exchange Commission within 225 days following   
their respective closings. Failure to comply with such registration requirements
will result in the Company being subjected to certain penalty provisions,       
including the issuance and delivery of additional warrants in an amount equal to
3% of the number of shares issued in each offering. Finder's fees totaling      
$150,000 were paid in conjunction with these financings and five-year warrants  
to purchase 5,000 shares of common stock at an exercise price of $10.00 per     
share were granted.                                                             

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION               

        This discussion contains forward-looking information that involves risks
and uncertainties. Our actual results could differ materially from those        
anticipated by this forward-looking information. This discussion should be read 
in conjunction with our financial statements and the related notes thereto set  
forth elsewhere in this Report.                                                 

 Our predecessor company conducted only organizational activities.
Accordingly, there were no material operations for the comparable periods for   
the prior year, and therefore, there is no discussion of comparable historical  
periods.                                                                        

       As of December 31, 1999, our company was considered to be a development
stage company as it had not recognized revenue from planned principal           
operations.                                                                     

PLAN OF OPERATIONS                                                              

 Our plan of operations for the next 12 months is to carry out our
business plan as described in this Annual Report; namely, to create premier     
branded content focused on the Super Hero genre, and develop and grow multiple  
revenue streams through entertainment, merchandising (e.g., toys, video games   
and apparel licenses) and promotional exploitation initially via the Internet,  
and thereafter, by harnessing our offline strategic publishing/media partners   
worldwide.                                                                      

  We launched our initial franchise, The 7th Portal, on Macromedia's
shockwave.com animation portal, thereby exposing our content to a global        
audience of millions of registered users who will be encouraged to visit the    
stanlee.net website. By contracting with best of breed online content           
distribution partners, we intend to build the Stan Lee brand and community      
without incurring traditional huge resource commitments to generate traffic that
Internet companies historically incur in order to aggregate eyeballs. In this   
regard, we have entered into an agreement with The Backstreet Boys to produce   
and co-own a Super Hero franchise based on their personae having Internet-based 
Super Hero alter-egos, thereby extending our reach over the Internet to a       
dedicated international fan base of girls and women aged 8 to 25. In February   
2000, we commenced selling The Backstreet Project comic book in furtherance of  
this strategic partnership over the Internet and at the venue locations for The 
Backstreet Boys current concert tour. We also have entered into an agreement    
with Viacom Productions to reinvent and produce Internet-based animated         
webisodes reviving Viacom's world famous Mighty Mouse franchise. Our site also  
will feature content generated by our users, thereby creating a platform for    
users to interact and tools that allow our members to personalize their user    
experience.                                                                     

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We plan to launch localized versions of our website in strategic
locations throughout the world. The Super Heroes of The 7th Portal are situated 
in the following countries outside the United States: Japan, India, Germany,    
Brazil and South Africa. Accordingly, we have entered into a relationship in    
Japan and are pursuing the establishment of strategic partnerships with local   
operators who will contribute assets, operating infrastructure and capital to   
build, maintain, market and promote our Company's global branded content in     
their local market, and who will host and webcast local language versions of    
Super Hero series produced by us, repurpose such webisodes for exploitation in  
the local language, and jointly develop original Super Hero and comic character 
properties. We intend to leverage our domestic production facility to maintain  
economies of scale as we focus on additional countries.                         

      We intend to license elements of our original content to third-parties
for exploitation in publishing, television and feature motion picture           
productions, which opportunities will include licensing and merchandising fees. 
In December 1999, we and Stan Lee were engaged by DC Comics to reinvent DC's    
principal Super Heroes through the publishing of 12 issues of approximately 48  
story pages each tentatively entitled "The Staniverse" or "If Stan Lee Had      
Created the DC Universe," to enrich the DC Comic book characters such as        
Superman, Batman and Wonder Woman with the sensibilities and style of Stan Lee. 
Also, in November 1999, Simon & Schuster, Inc. entered into an agreement with   
Stan Lee to publish a Stan Lee official biography entitled Stan Lee: Master of  
Imagination. We are pursuing publishing, television and feature productions to  
further broaden the reach of our branded content creations.                     

     In addition to the traditional online banner ads and sponsorships, we
have initiated a campaign through advertising supported insert entertainment    
(via our majority-owned subsidiary, Eat-Time Media, Inc.), including without    
limitation, the placement of card strips, promotional material and collectible  
items into suitable prepackaged pastry products and other snack foods throughout
the country, which will cross-promote our branded content.                      

   We also have established strategic alliances with leading companies
engaging in Internet e-commerce (NPO Online (NextPlanetOver.com) and            
WhatsHotNow.com). We intend to continue to make e-commerce an integrated and    
valuable part of our website. The Stan store, operated by WhatsHotNow.com,      
currently offers over 100 products, and we intend to significantly increase the 
number of products we offer over the next year. In addition, we plan to         
integrate global shopping opportunities into the store for our users outside of 
the United States who seek access to American products.                         

  We have entered into a working relationship with Iwerks to license
elements of our original branded content for exploitation as simulation rides   
and as wait-time entertainment at movie theaters and shopping malls. We also    
have initiated a campaign to license elements of our branded content for        
exploitation as theme-park attractions.                                         

   We intend to develop the ability to access many of the features and
functionality found on stanlee.net by as many electronic means as possible,     
including wireless phones, personal digital assistants and pagers. We are       
planning to develop, with a strategic partner, the stanlee card, a co-branded   
financial resource for children and teens that will not only provide them with a
non-credit based means of conducting transactions at the Stan store but will    
also allow them to make purchases throughout the Internet.                      

 Since our formation in October 1998, we have incurred substantial
operating expenses to produce our branded content, establish our Internet       
infrastructure, and expand our operations to include                            

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more than 100 employees and consultants. Operating expenses for the year ended  
December 31, 1999 and for the period from October 13, 1998 (date of inception)  
to December 31, 1999 were $7,877,830 and $7,910,180, respectively. Operating    
expenses have increased as we engaged additional personnel and incurred other   
expenses in producing original characters and content for delivery on the       
Internet and other media pursuant to existing and anticipated contractual       
arrangements. We expect to incur operating losses at least through 2000.        

LIQUIDITY AND CAPITAL RESOURCES                                                 

        Our primary sources of liquidity and capital resources have been private
placements of common stock and borrowings from related and non-related parties. 
We refer you to Note 7 to the Financial Statements (Shareholders' Equity) and   
Note 9 to the Financial Statements (Subsequent Events) for further descriptions 
of these activities. We will require additional capital financing to continue   
the development of our business plan consistent with anticipated growth in      
operations, infrastructure and personnel. We anticipate that the cash on hand   
coupled with the cash to be raised from additional private placements and public
offerings, assuming they will be successful, will be sufficient to satisfy our  
operating expenses and capital until such time as revenues are sufficient to    
meet operating requirements.                                                    

INCOME TAXES                                                                    

    Net operating losses generated a deferred tax asset of
approximately $1,000,000 at December 31, 1999. The deferred tax asset has not   
been recognized since management is unable to determine whether it is more      
likely than not that it will be realized. Accordingly, a 100% valuation         
allowance has been provided.                                                    

ACCOUNTING PRONOUNCEMENTS                                                       

     In June 1998, the FASB issued SFAS No. 133, "According for Derivative
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 requires companies to
recognize all derivative contracts as either assets or liabilities in the       
balance sheet and to measure them at fair value. If certain conditions are met, 
a derivative may be specifically designated as a hedge, the objective of which  
is to match the timing of gain or loss recognition on the hedging derivative    
with the recognition of (i) the changes in the fair value of the hedged asset or
liability that are attributable to the hedge risk or (ii) the earnings effect of
the hedged forecasted transaction for a derivative not designated as a hedging  
instrument, the gain or loss is recognized in income in the period of change.   
SFAS 133 is effective for all fiscal quarters of fiscal years beginning after   
June 15, 1999. Historically, the Company has not entered into derivative        
contracts either to hedge existing risks or for speculative purposes.           
Accordingly, the Company does not expect adoption of the new standard on January
1, 2000 to affect its financial statements.                                     

       In June 1998, the Accounting Standards Executive Committee of the AICPA
issued SOP 98-5, Reporting on the Costs of Start-up Activities. SOP 98-5        
requires all start-up and organizational costs to be expensed as incurred. It   
also requires all remaining historically capitalized amounts of these costs     
existing at the date of adoption to be expensed and reported as the cumulative  
effect of a change in accounting principles. SOP 98-5 is effective for all      
fiscal years beginning after December 31, 1998. The adoption of SOP 98-5 on     
January 1, 1999 had no effect on the financial statements.                      

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ITEM 7. FINANCIAL STATEMENTS                                                    

 The consolidated financial statements are listed at the "Index to
Financial Statements" elsewhere in this Report.                                 

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND         
FINANCIAL DISCLOSURE.                                                           

           Effective August 16, 1999, we engaged BDO Seidman, LLP as the
registrant's independent public accountants, subsequent to the July 1999        
reorganization transaction with our predecessor and concurrent with the         
resignation of the registrant's previously engaged independent accountant. The  
engagement of BDO Seidman, LLP was approved by our board of directors. The      
financial statements for the past two years contained no adverse opinion or     
disclaimer of opinion and were not qualified or modified as to uncertainty,     
audit scope or accounting principles. There were no accounting or auditing      
disagreements between the Company, the registrant's previously engaged          
independent accountant, and BDO Seidman, LLP. Prior to its engagement by the    
registrant, BDO Seidman, LLP represented each of Stan Lee Entertainment, Inc.   
and Stan Lee Media, Inc. (SLM Delaware).                                        

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PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT                          

       Our Board of Directors consists of only one class. All of the directors
will serve until the next annual meeting of shareholders and until their        
successors are elected and qualified, or until their earlier death, retirement, 
resignation or removal. There are no family relationships among directors and   
executive officers. We also have provided a brief description of the business   
experience of each director and executive officer during the past five years and
an indication of directorships held by each director in other companies subject 
to the reporting requirements under the Federal securities laws.                

     Our predecessor company conducted only organizational activities and,
accordingly, no information is included for the period prior to July 23, 1999.  
Effective July 24, 1999, the number of directors of the company was increased to
five. Effective December 10, 1999, the number of directors of the company was   
increased to seven.                                                             

DIRECTORS AND EXECUTIVE OFFICERS                                                

The following tables set forth certain information regarding the
directors, executive officers and certain key employees of Stan Lee Media, Inc.:

DIRECTORS:                                                      

                                                                [Download Table]

Name                        Age    Date Director Service Commenced
----                        ---    -------------------------------
                                                                  
Stan Lee(1)                 77     July 23, 1999                  
Devendra Mishra             55     July 23, 1999                  
Gill Champion(2)            56     July 23, 1999                  
Nelson S. Thall(2)          41     January 1, 2000                
Robert K. Burgess           42     January 1, 2000                
Arthur E. Schramm, Jr.(2)   58     March 1, 2000                  

----------                                                      
(1) Member of Compensation Committee.                           

(2) Member of Audit Committee.                                  

EXECUTIVE OFFICERS:                                             

                                                                [Download Table]

Name                        Age    Position                             
----                        ---    --------                             
                                                                        
Stan Lee                    77     Chairman and Chief Creative Officer  
Devendra Mishra             55     President, Chief Executive Officer   
                                     and Director                       
Gill Champion               56     Chief Operating Officer and Director 
Stephen M. Gordon           49     Executive Vice President - Operations
                                     and Secretary                      
Robert M. Schultz           56     Vice President, Finance              

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CERTAIN KEY STAN LEE TEAM MEMBERS                               

                                                                [Download Table]

Name                 Age    Position                                            
----                 ---    --------                                            
                                                                                
Bryce Zabel          45     President, Linear Content and Television Production 
Jon Corfino          41     President, Theme Park and Location Based Attractions
Stephen L. Brain     45     Executive Vice President, Production                
Jamie Wilkinson      27     Executive Vice President, Internet Strategy         
Stephen A. Segal     45     Chief Technology Officer                            

BIOGRAPHIES OF DIRECTORS, EXECUTIVE OFFICERS                    
AND CERTAIN KEY STAN LEE TEAM MEMBERS:                          

        Stan Lee is the Founder of the Company and has served as its Chairman of
the Board of Directors and Chief Creative Officer since inception. Known to     
millions as the man whose Super Heroes propelled Marvel to its preeminent       
position in the comic book industry, Stan Lee's co-creations include Spider-Man,
The Incredible Hulk, X-Men, The Fantastic Four, Iron Man, Daredevil, Silver     
Surfer and Dr. Strange. Now the Chairman Emeritus of Marvel Media and a member  
of the Editorial Board of Marvel Comics, Lee first became publisher of Marvel   
Comics in 1972. In 1977, he introduced Spider-Man as a syndicated newspaper     
strip which became the most successful of all syndicated adventure strips and   
now appears in more than 500 newspapers worldwide -- making it the              
longest-running of all Super Hero strips.                                       

      Devendra Mishra has served as the Company's President, Chief Executive
Officer since January 1999, and as a Director since July 1999. Prior thereto,   
Mr. Mishra was a consultant to the worldwide entertainment, distribution and    
multimedia industries and served multiple Fortune 500 companies as a senior     
executive for 20 years. From 1994 to 1996, Mr. Mishra was President and Chief   
Executive Officer of Multifoods, a billion dollar, independently-owned,         
specialty distribution subsidiary of VSA, Inc., after having served as the      
President of Worldwide New Media, Distribution Services and New Ventures at     
Technicolor, Inc. He launched Technicolor Entertainment Services, a             
state-of-the-art, physical distribution business to supply movie prints to      
theaters in the United States. He also engineered and put into production an    
"Optical Media Manufacturing Facility." From 1986 to 1992, Mishra held senior   
management positions at LIVE Entertainment -- a diversified supplier, wholesaler
and retailer of home video, music and personal computer software -- and         
eventually served as its President and Chief Operating Officer. During his      
tenure at LIVE Entertainment, revenues grew from $32 million to over $600       
million. At LIVE Entertainment, Mishra operationally launched the Teenage Mutant
Ninja Turtles home video and demonstrated his retail management capability by   
rapidly growing Strawberries Records and Tapes in the Northeast. During this    
time, Mishra also served as the Managing Director of VCL-Carolco, a leading home
video company in Germany that he helped acquire in 1989. Prior to 1986, Mishra  
was Vice President of the $900 million worldwide manufacturing and distribution 
operations of RCA-Ariola Records. Mishra holds a Master's degree in business    
administration from Butler University, a Master's degree in operations research 
from Purdue University and a Bachelor of Science degree in mechanical           
engineering from the Indian Institute of Technology.                            

Gill Champion has served as the Company's Vice President, Chief 
Operating Officer since March 1999, and as a Director since July 1999. Mr.      
Champion brings 20 years of executive experience in global entertainment,       
marketing, retail and licensing industries to his role at the Company. Prior to 
joining the Company, he was Chief Financial Officer and Vice President of Mirage
Holdings, Inc., a company that went public in 1998. There, he originated the    
concept, design and application for Virtual Mart and Showroom, an apparel, home 
furnishings and accessories Internet site, and orchestrated Mirage Holding      
Inc.'s                                                                          

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acquisition of NetSol International, a fully integrated IT company in Southeast 
Asia. Concurrently, Mr. Champion worked as a production executive on the motion 
picture Jinnah. From 1990 to 1997, Mr. Champion was Chief Executive Officer of  
American CinemaStores, Inc., a private company that went public in 1994, trading
on the NASDAQ SmallCap Market. He was elected Chairman in 1994 and opened 42    
mini-stores in shopping malls and over a hundred kiosks in entertainment venues 
with licensed-related apparel and merchandise. Establishing the American Cinema 
Industries licensing division, he created original apparel designs and marketing
strategies for the official lines of Baywatch, the CBS cartoon Hyperman, the    
film Miracle on 34th Street and the initial Forrest Gump apparel license. On a  
global scale, he was responsible for both domestic and international sales      
strategies and distribution, for licensed entertainment products. From 1985 to  
1989, Mr. Champion was Vice President of Real Treasures, Inc., in Dallas, TX, a 
company that licensed technology pivotal in the production process of television
commercials and movie production. From 1981 to 1984, Mr. Champion was Vice      
President of Gaylord Broadcasting in charge of New Projects and oversaw 15      
episodes of Faerie Tale Theatre in association with Shelly Duval and Showtime,  
as well as feature films and television, some made for Spanish TV. At Producer  
Circle Co. he was Vice President of Production from 1976 to 1981, which         
Company's Broadway shows included Norman Conquest, Sweeney Todd, On the         
Twentieth Century, Crimes of the Heart and the original Broadway production of  
Chicago. Additional film credits include Boys from Brazil, starring Laurence    
Olivier and Gregory Peck; The Shining, directed by Stanley Kubrick and starring 
Jack Nicholson; and Fort Apache, the Bronx, starring Paul Newman.               

       Nelson S. Thall, has been a Director of the Company since January 2000.
Mr. Thall is the Director of Research for the Centre for Media Sciences of      
Toronto and a leading authority on the science of communication/media theory and
process analysis, and served as President of the Marshall McLuhan Center on     
Global Communications from 1990-1995. In 1998, Mr. Thall was elected to the     
Board of Directors of Torstar Corp., the largest newspaper-publishing group in  
Canada and owner of the Harlequin Romance publishing franchise. Mr. Thall has   
consulted to government, federal tribunals, commissions and business            
organizations, appeared regularly on the CBC Television Network as a media      
scientist, and has been published widely.                                       

        Robert K. Burgess has been a Director of the Company since January 2000.
Mr. Burgess has been Chief Executive Officer and a director of Macromedia, Inc. 
since November 1996 and has served as Chairman of the Board of Macromedia, Inc. 
since July 1998. Prior to joining Macromedia, Mr. Burgess was Senior Vice       
President of Silicon Graphics, Inc., responsible for the Silicon Interactive    
Strategic Business Unit. Prior to this position, he was President of            
Alias/Wavefront, a wholly-owned independent software subsidiary of Silicon      
Graphics, created from the 1995 merger of Alias Research, Inc. and Wavefront    
Technologies, Inc. From 1992 to 1995, he was President, CEO, COO and Director of
Alias Research. Prior to joining Alias Research, Mr. Burgess held a number of   
senior management positions at Silicon Graphics, including Vice President of    
Marketing, Applications and Business Development (1991), Vice President of      
Applications (1990) and President of Silicon Graphics Canada, Inc. (1984-1990). 
Mr. Burgess earned a Bachelors Degree in Commerce from McMaster University. Mr. 
Burgess is also a director of Paraform Technologies, Inc.                       

     Arthur E. Schramm, Jr. has been a Director of the Company since March
2000. Mr. Schramm has 25 years experience in the shopping center industry,      
advising in a legal and financial capacity, and acting as a financial adviser   
and a senior negotiator for Westfield America, Inc. (NYSE: WEA) which is one of 
the largest publicly traded shopping center REITs, in conjunction with          
acquisitions, financing and equity raisings. In addition, Mr. Schramm has served
on a variety of corporate boards, including directorships with Fujita Investors 
of California, a private REIT, and Interim Trustee for three regional service   
trusts for Apartment Investment and Management Company, a publicly traded REIT. 
He is also a                                                                    

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Trustee of the Southern California Chapter of the National Multiple Sclerosis   
Society and has for the past four years been a co-chair of the MS Dinner of     
Champions. Mr. Schramm earned his Juris Doctor/Bachelor of Laws Degree from the 
University of Pennsylvania, a Masters of Business Administration Degree from the
University of California, Berkeley, and a Bachelors Degree with Honors from     
Lehigh University.                                                              

       Stephen M. Gordon has served as the Company's Executive Vice President,
Operations since inception, and was appointed Secretary in December 1999. Mr.   
Gordon has 27 years of experience in corporate management and finance. In 1972, 
he co-formed Gordon & Associates, Inc., a market maker of precious metals,      
coins, bars and other related materials. He became President and CEO in 1981 and
sold the company in 1986. He then became a consultant to American Coin Company, 
where he innovated a marketing strategy and dealer network to distribute the    
U.S. Mint's new American Eagle Gold Coin series. From 1988 to 1992, he was a    
financial workout consultant to various small-to-medium sized companies. In     
1992, he was one of the founders of Gourmet Group Ltd., a nationwide network of 
sales representatives, who distributed Hershey's sports line of chocolates and  
Le Cordon Bleu, a French gift line of gourmet food products. He later founded   
Trumpets Gourmet Teas. Mr. Gordon attended California State University at       
Northridge as a business and marketing major.                                   

       Robert M. Schultz joined the Company as Vice President, Finance in July
1999. Before joining the Company and for the prior period beginning January 1,  
1997, Mr. Schultz was Managing Director of Goldmark Advisers, Inc., an          
investment banking and corporate development firm located in Los Angeles,       
California. Prior to Goldmark, from 1995 through 1996, he was Vice President -  
Corporate Finance and Managing Director of the Capital Markets Division of J.B. 
Oxford & Co., a registered broker-dealer with national and international        
offices. From 1993 to 1995, Schultz was the Chief Financial Officer at Portfolio
Capital Corporation, a financial services company specializing in the health    
care industry. From 1983 to 1993 he was the Treasurer at Monex Corporation, a   
holding company with subsidiaries and affiliates involved in the wholesale and  
retail sales of commodities. Schultz's experience prior to 1983 includes his    
acting as Vice President and Treasurer of Gateway Sporting Goods Company, an    
AMEX-listed company, and Director of Taxation for National Patent Development   
Corporation, a multinational AMEX listed Company. Mr. Schultz is a CPA who began
his career at KPMG Peat Marwick and is a graduate of Pace University.           

CERTAIN KEY STAN LEE TEAM MEMBERS:                              

    Bryce Zabel joined the Company in November 1999 as President, Linear
Content and Television Production. Mr. Zabel has helped launch a dozen one hour 
TV drama series, often as the Executive Producer or Showrunner. He has received 
the Writers Guild "created by" or "developed for television by" credit on five  
prime-time network or syndication series including NBC's Dark Skies and Fox's   
M.A.N.T.I.S. His writing and producing credits include popular series from L.A. 
Law to Life Goes On. Mr. Zabel has carved out a niche in the world of science   
fiction and established a specialty in turning comic book properties into       
television series, most notably as a supervising producer on the first season of
Lois & Clark: The New Adventures of Superman and as Executive Producer of last  
season's The Crow: Stairway to Heaven. In the world of new media, Mr. Zabel has 
consulted on the creation of websites for both SONY and Polygram, and developed 
a video game for DreamWorks. He also wrote the feature film, Mortal Kombat:     
Annihilation for New Line Cinema. Immediately before joining our company, Mr.   
Zabel worked as the Co-Executive Producer of the Steven Spielberg mini-series   
Taken for the Sci-Fi Channel. Over the years, Zabel has been nominated by the   
WGA, the Mystery Writers of America, the Environmental Media Association and the
Emmy                                                                            

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awards. He currently has been re-elected as a Governor of the Academy of        
Television Arts and Sciences. He is a member of the Writers Guild, the Directors
Guild and AFTRA.                                                                

        Jon Corfino joined the Company in February 2000 as President, Theme Park
and Location Based Attractions. Previously, Mr. Corfino served in various       
executive capacities with Iwerks Entertainment Inc., most recently as Senior    
Vice President of Film and Executive in Charge of Production since March 1998,  
and prior thereto, as Vice President of Attractions, Vice President of Owned and
Operated Operations, Director of Studio Operations and Production Manager. Over 
the past seven years, he supervised the production and/or acquisition at Iwerks 
of over 30 Specialty films, i.e. Simulation, Attraction and Large Format films. 
Mr. Corfino previously worked at MCA in various capacities, and assisted in the 
development and hosting of presentations to potential sponsors and investors in 
the Universal Florida and Japan theme park projects. As a Project Manager in the
Planning and Development group at Universal, Mr. Corfino was directly involved  
in the creative development and construction of a variety of projects and       
attractions, including "The Star Trek Adventure", "Back to the Future" The Ride,
Studio Center expansion, "ET the Extraterrestrial", and the "Special Effects    
Stages".                                                                        

   Stephen L. Brain joined the Company in January 2000 as Executive Vice
President, Production. Prior thereto, from 1996 to 1999, Mr. Brain served as    
President and Chief Executive Officer of Arizona Studios and White Tiger        
Productions and achieved recognition in the Arizona film and business community 
for his efforts to attract film production to the state. During the 1994 to 1996
period, Mr. Brain was recruited to serve as Senior Vice President and General   
Manager of 20th Century Fox's new feature animation division, where he managed a
budget of $100 million, hired more than 320 employees, and helped develop Fox   
Animation Studios into one of the most modern animation studios in the world,   
revolutionizing the process of animation through the use of computers. During   
the 1991 to 1994 period, Mr. Brain worked for Silver Pictures at Warner Bros. in
several management capacities including Executive Vice President, responsible   
for daily management of the company and completely reorganized the              
administration of the company. During the 1983 to 1990 period, Mr. Brain was    
hired by Stephen J. Cannell Productions, ultimately serving as Vice President of
Studio Operations responsible for all real estate and facilities as the company 
grew from several hundred to several thousand employees. As the company expanded
internationally, Mr. Brain was given the responsibility for the development of  
North Shore Studios in Vancouver, B.C. From 1981 to 1983, Mr. Brain was an      
executive of Financial News Network, responsible for network operations and     
facilities nationwide. He began his professional career in June 1977 as an      
assistant to television producer Glen Larson at Universal Studios. Mr. Brain    
currently serves on the Board of the Arizona Biltmore Children's Charity and the
Governor's Film and Television Advisory Board. He previously served on the Board
of the Phoenix Chamber of Commerce. Mr. Brain also serves on the Board of       
Directors of Xomba.com, an Internet portal company.                             

   Jamie Wilkinson joined the Company in June 1999 as Executive Vice
President, Internet Strategy. For the prior three-year period, Mr. Wilkinson had
been innovating website production at Disney Online, where he was responsible   
for research and development of Squeak applications and for new content areas,  
which included Stories and Studio Blast. As Associate Producer/Director of New  
Technology, Wilkinson managed the 15 member Disney Blast Story group, including 
research and development, overall                                               

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design, financial control, and all other production responsibilities. He also 
handled the corporate license acquisition of Cartoon Maker software and produced
multi-user interactive content, as well as SQUEAK OS development with Alan Kay. 
Prior thereto, at NBC Interactive in New York Wilkinson was the graphic designer
who designed, developed and maintained an internal graphics network for         
NBC/Microsoft. He was responsible for the development and initial launch of NBC 
on Microsoft Network, NBC.com, TNBC.com, MSNBC.com, SUPERBOWL.com, Olympics.com,
NBA.com and Live Playoff Broadcast. He also worked with the Broadcast Group to  
develop telefusion content. Mr. Wilkinson's freelance credits include           
photography and computer imaging for Franklin Spier Inc., Comedy Central and    
Grey Advertising.                                                               

        Stephen A. Segal joined the Company in February 2000 as Chief Technology
Officer. Mr. Segal brings to Stan Lee Media over 20 years of information        
technology experience, including extensive Internet and Intranet development and
implementation for companies such as Seagate Technology and the IBM Corporation.
Mr. Segal's Web consulting projects have included technical support services for
the bmwusa.com and nikonusa.com websites, and development of a database driven  
retail product catalog system, an online site guest book and a sales lead       
tracking system with data gathering capabilities. Intranet projects have        
included work for Sprint and Northern States Power Company, and include the     
development of systems for online approval routing and support, employee        
recognition and registration, and online product ordering. Mr. Segal's          
experience in systems programming, database administration skills and           
implementation of software such as Oracle and SQL Server will assist in         
developing the Company's databases, interfaces and retail and community sites.  
His experience with dynamic HTML, JavaScript, Cold Fusion and Active Server     
Pages will facilitate online user experiences. Mr. Segal also served as a       
Technical Instructor and Systems Engineer for the IBM Corporation for six years.
Mr. Segal received a Master in Business Administration in Management Information
Systems from the University of Minnesota and a Bachelor of Arts Degree in       
Economics and Accounting from the University of California, Los Angeles, and has
MCSE (Microsoft Certified Systems Engineer) and MCT (Microsoft Certified        
Trainer) certifications from the Microsoft Corporation.                         

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT                               

To our knowledge, during and for Stan Lee Media, Inc.'s year ended December 31, 
1999, there were no directors or officers or more than 10% shareholders of the  
Company who failed to timely file a Form 3, Form 4 or Form 5, other than the    
individuals set forth below. All of the filings have been made as of the date of
this Annual Report.                                                             

       (a)    Stan Lee failed to timely file a Form 4 in which one transaction
was reported.                                     

(b)    Gill Champion failed to timely file a Form 4 in which two
transactions were reported.                       

    (c)    Stephen M. Gordon failed to timely file a Form 4 in which two
transactions were reported.                       

    (d)    Robert M. Schultz failed to timely file a Form 3 in which two
transactions were reported.                       

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ITEM 10. EXECUTIVE COMPENSATION                                                 

  The following table sets forth information for 1999 with regard to
compensation paid to our chief executive officer and the executive officers or  
key employees whose total salary and bonus exceeded $100,000. None of our       
officers was compensated in 1998.                                               

SUMMARY COMPENSATION TABLE

                                                        [Enlarge/Download Table]

                                                                              LONG-TERM                
                                       ANNUAL COMPENSATION                   COMPENSATION              
                                       -------------------                   ------------              
                                                              OTHER ANNUAL    SECURITIES    ALL OTHER  
                                                              COMPENSATION    UNDERLYING   COMPENSATION
  NAME AND PRINCIPAL POSITION  YEAR   SALARY($)     BONUS($)      ($)         OPTIONS(#)     ($)(1)    
  ---------------------------  ----   ---------     --------  -------------   ----------   ------------
                                                                                                       
Stan Lee ....................  1999  $247,500(1)    $25,000       --                --          --     
Chairman and                                                                                           
Chief Creative Officer                                                                                 

Devendra Mishra..............  1999    48,500(2)         --       --                --          --     
President and                                                                                          
Chief Executive Officer                                                                                

Stephen M. Gordon(3).........  1999   108,999        25,000       --           150,000          --     
Secretary and                                                                                          
Executive Vice President                                                                               
Operations                                                                                             

       (1) $235,000 of Mr. Stan Lee's wages were paid to his corporation, S.L.
Productions.                                                                    

        (2) $48,500 of Mr. Devendra Mishra's wages were paid to his corporation,
MND Resources.                                                                  

 (3) Mr. Stephen M. Gordon was elected Secretary of the Company on
December 1, 1999.                                                               

       The following table sets forth further information regarding individual
grants of stock options during fiscal 1999 to each of the named executive       
officers. In accordance with the rules of the Securities and Exchange           
Commission, the table sets forth the hypothetical gains or "option spreads" that
would exist for the options at the end of their respective five-year terms based
on assumed annualized rates of compound stock price appreciation of 5% and 10%  
from the dates the options were granted to the end of the respective option     
terms. Actual gains, if any, on option exercises are dependent on the future    
performance of the Company's Common Stock and overall market conditions. There  
can be no assurance that the potential realizable values shown in this table    
will be achieved. The table also shows all options that were granted with       
exercise prices equal to fair market value on the dates of grant.               

OPTION GRANTS IN FISCAL 1999

                                                        [Enlarge/Download Table]

                                                   INDIVIDUAL GRANTS                                              

                          ---------------------------------------------------------------    POTENTIAL REALIZABLE 
                                        PERCENT OF                                                 VALUE          
                           NUMBER OF      TOTAL                                            AT ASSUMED ANNUAL RATES
                          SECURITIES     OPTIONS                  PER SHARE                    OF STOCK PRICE     
                          UNDERLYING     GRANTED     PER SHARE      MARKET                 APPRECIATION FOR OPTION
                            OPTIONS        TO        EXERCISE      PRICE ON                       TERM(2)         
                            GRANTED   EMPLOYEES IN     PRICE      GRANT DATE   EXPIRATION  -----------------------
NAME                        (#)(1)     FISCAL 1999   ($/SH)(1)      ($/SH)        DATE      5%($)           10%($)
----                      ----------  ------------   ---------    ----------   ----------   -----           ----- 
                                                                                                                  
Stan Lee.................       --          --            --            --             --       --              --
Devendra Mishra..........       --          --            --            --             --       --              --
Stephen M. Gordon .......  100,000         6.8        2.5000        2.5000      7/22/2004  749,815         946,175
Stephen M. Gordon........   50,000         3.4        5.8750        5.8750     12/30/2004  374,908         392,760

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

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       (1) Stock options are generally awarded with an exercise price equal to
the fair market value of the Company's Common Stock on the date of grant.       
Options granted to new employees generally become exercisable, so long as the   
employee continues to provide services to the Company, as to 50% of the shares  
at the end of the first year and as to 50% at the end of the second year.       
Options expire five years from the date of grant or at the time of the          
optionee's termination of employment.                                           

(2) The 5% and 10% assumed rates of annual compound stock price 
appreciation are prescribed by rules of the SEC and do not represent the        
Company's estimate or projection of future Common Stock prices.                 

      There were no exercises of stock options by any of the named executive
officers in 1999. The following table sets forth certain information concerning 
the exercise of stock options during fiscal 1999 by each of the Named Executive 
Officers and the number and value at December 31, 1999 of unexercised options   
held by said individuals.                                                       

AGGREGATED OPTION EXERCISES IN FISCAL 1999

                                                        [Enlarge/Download Table]

                                                     NUMBER OF SECURITIES       VALUE OF UNEXERCISED     
                                                          UNDERLYING            IN-THE-MONEY OPTIONS     
                            SHARES       VALUE      UNEXERCISED OPTIONS AT    AT FISCAL YEAR-END(2)($)   
                          ACQUIRED ON  REALIZED      FISCAL YEAR-END(#)                                  
NAME                      EXERCISE(#)   ($)(1)   EXERCISABLE   UNEXERCISABLE  EXERCISABLE   UNEXERCISABLE
----                      -----------  --------  -----------   -------------  -----------   -------------
                                                                                                         

Stan Lee.................      0       $   0          0                0        $     0       $      0   
Devendra Mishra..........      0       $   0          0                0        $     0       $      0   
Stephen M. Gordon........      0       $   0          0          150,000        $     0       $506,250   

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

   (1) "Value Realized" represents the fair market value of the shares
underlying the option on the date of exercise less the aggregate exercise price.

     (2) These values, unlike the amounts set forth in the column entitled
"Value Realized," have not been, and may never be, realized, and are based on   
the positive spread between the respective exercise prices of outstanding stock 
options and the closing price of the Company's Common Stock on December 31, 1999
($5.875 per share).                                                             

BOARD OF DIRECTORS:                                                             

       From the Company's inception through December 31, 1999, there have been
no meetings of the Company's board of directors. Other actions in 1999 were     
conducted by means of unanimous written consents on 11 separate instances. The  
Company held a meeting on March 1, 2000, at which all directors eligible to     
attend did so attend.                                                           

      Non-employee directors receive options to purchase 7,500 shares of the
Company's common stock as of January 10 of each year of service, and are        
reimbursed for travel costs and other out-of-pocket expenses incurred in        
attending board of directors and committee meetings. Directors do not receive   
compensation for attending meetings of the board of directors.                  

  Effective June 25, 1999, the authorized number of directors on the
Company's board of directors was fixed at four. Effective July 23, 1999,        
concurrent with the closing of the reverse merger transaction, the Company's    
board of directors was comprised of Stan Lee, Devendra Mishra, Gill Champion    
and Andrea L. Freitag. Effective July 24, 1999, the Company's bylaws were       
amended by unanimous written consent of the board of directors to provide that  
the number of directors of the corporation shall be fixed from time to time by  
the board, within a range of not less than three nor more than seven, and fixed 
the number of directors at five. There then existed one vacancy on the          
Company's board of directors. The vacancy on the Company's board of directors   
was filled by the election of Stanley A. Weston by unanimous written consent of 
the board of directors effective October 15, 1999. Effective December 1, 1999,  
Ms. Freitag resigned as a director and as the Company's Secretary, and Mr.      
Mishra resigned from the Company's board of directors to accommodate the        
election of Robert K. Burgess and Nelson S. Thall to the board, and the         
appointment of Stephen M. Gordon as the Company's Secretary. Effective December 
7, 1999, Mr. Weston resigned from the Company's board of directors for personal 
reasons. Effective December 10, 1999, the vacancy on the Company's board of     
directors was filled by the election of Devendra Mishra by unanimous written    
consent of the board of directors effective immediately, and the Company's      
bylaws were amended to provide that the number of directors of the corporation  
shall be fixed from time to time by the board, within a range of not less than  
three nor more than seven, and fixed the number of directors at seven, in part  
to respond to changes to the Nasdaq independent director and audit committee    
requirements. There then existed two vacancies on the Company's board of        
directors. At a meeting of the board of directors held on March 1, 2000, Arthur 
E. Schramm, Jr. was elected to fill a vacancy on the board. As of the date of   
this Annual Report, there exists one vacancy on the Company's board of          
directors.                                                                      

     Andrea L. Freitag was the Secretary and a Director of the Company and
its predecessor, Stan Lee Entertainment, Inc. since October 18, 1998 until her  
resignation effective December 1, 1999. Prior thereto, Ms. Freitag was the      
founder and President of TLS Media Inc., a multimedia publishing and            
distribution company, and President of Global Language Solutions Inc., a        
language acquisition and training company. Ms. Freitag is the spouse of Peter   
F. Paul, a Co-Founder of the Company, and a general partner of P.F.P. Family    
Holdings, L.P., the holder of 2,700,000 shares of the Company's common stock.   
Paraversal, Inc. provides the services to the Company of Peter F. Paul pursuant 
to a consulting agreement.                                                      

   Stanley A. Weston entered into a consulting relationship to provide
licensing and merchandising services to the Company, and entered into an        
agreement providing for the issuance of options to purchase 27,500 shares of the
Company's common stock as of October 5, 1999, vesting to occur as follows:      
options to purchase 17,500 shares of the company's common stock as of April 1,  
2000 and options to purchase all of said 27,500 shares of the company's common  
stock as of April 1, 2001. Mr. Weston was elected to serve as a director of the 
company, effective as of October 15, 1999,                                      

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and resigned from the company's board of directors for personal reasons on      
December 7, 1999.                                                               

   Arthur E. Schramm, Jr. entered into a consulting agreement with the
Company providing for the issuance of options to purchase 20,000 shares of the  
company's common stock, vesting to occur as follows: 8,000 shares of the        
Company's common stock as of January 10, 2000, and the issuance of options to   
purchase an additional 1,000 shares monthly of the Company's common stock       
commencing as of January 31, 2000, pending continued provision of services under
said consulting agreement. Mr. Schramm was elected to serve as a director of the
company, effective immediately, at the company's March 1, 2000 board of         
directors meeting.                                                              

      As of March 1, 2000, options to acquire 175,000 shares of common stock
held in the aggregate by such directors are outstanding, and 29,500 of such     
options are vested or will be vested within the next 60 days.                   

      During the period from July 23, 1999 to October 13, 1999, the Board of
Directors administered the Stan Lee Media, Inc. stock option plans. Effective   
October 13, 1999, the committees of the Board of Directors were established or  
restructured. As of March 1, 2000, the Company currently has three committees:  
the Executive Committee, the Compensation Committee and the Audit Committee.    

 Messrs. Lee, Mishra and Champion are the members of the Executive
Committee. The Executive Committee has full authority to exercise all the powers
of the board of directors to the fullest extent permitted by Colorado law.      
Actions of the Executive Committee are taken by a majority vote.                

  Mr. Stan Lee is the sole member of the Compensation Committee. The
Compensation Committee administers, reviews and approves, subject to the board  
of directors, Stan Lee Media, Inc.'s stock option plans, and makes              
recommendations to the board of directors regarding compensation, including     
payment of salaries, bonuses and incentive compensation and other benefit       
programs, including those relating to Stan Lee Media's senior management.       

Messrs. Champion, Thall and Schramm are the members of the Audit
Committee. The Audit Committee interacts with Stan Lee Media, Inc.'s Chief      
Financial Officer and outside auditors concerning Stan Lee Media, Inc.'s        
independent public accountants and the establishment and oversight of such      
systems of internal accounting and auditing control as it deems appropriate.    

     The board of directors does not have a nominating committee. However,
the board of directors will consider nomination recommendations from            
shareholders, which should be addressed to Stan Lee Media, Inc.`s secretary at  
its principal executive offices.                                                

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EMPLOYMENT AND SERVICES AGREEMENTS:                                             

      The Company entered into a lifetime employment agreement with Stan Lee
in 1998 in consideration for the assignment and transfer of all of Mr. Lee's    
right, title and interest in and to any and all ideas, names, titles,           
characters, symbols, logos, designs, likenesses, visual representations,        
artwork, stories, plots, scripts, episodes, literary property, and the          
conceptual universe related thereto, including his name and likeness. Mr. Lee's 
services for and on behalf of the Company shall be exclusive with the exception 
of those services provided under a lifetime agreement with Marvel Enterprises,  
Inc., which shall require no more than an average of 10-15 hours per week on its
behalf. The employment agreement provides for base salary compensation of       
$250,000 annually, a discretionary bonus as determined by the company's board of
directors, stock options equal to the highest number of options offered to      
company executives, reimbursement of certain business expenses, including       
without limitation, business-related travel and entertainment expenses, and a   
term life insurance policy in the minimum principal sum of $2 million.          

      The Company entered into a five-year employment agreement with Stephen
M. Gordon, its Executive Vice President - Operations, commencing as of November 
1, 1999, subject to annual successive one-year renewals thereafter unless either
party notifies the other party of its election not to so renew not less than 90 
days prior to the expiration of the initial term or the then current renewal    
term, as the case may be. Mr. Gordon receives base compensation of $135,000 for 
the period ending May 31, 2000, increasing to $150,000 for the period June 1,   
2000 through May 31, 2001, and thereafter, annual base compensation in an amount
not less than $175,000. Mr. Gordon also is entitled to receive an annual bonus  
determined by the board of directors in its discretion. All options granted to  
Mr. Gordon will vest upon a change in control of Stan Lee Media, Inc. In        
addition, if Mr. Gordon is terminated other than for cause, during the first    
three years of his employment agreement, Mr. Gordon will receive 200% of his    
base compensation as a severance payment; if termination other than cause occurs
during the fourth year of his employment agreement, Mr. Gordon will receive 250%
of his base compensation as a severance payment; and if termination occurs in   
the fifth year of his employment agreement or thereafter, Mr. Gordon will       
receive 299% of his base compensation as a severance payment.                   

        The Company entered into a seven-year agreement with Paraversal, Inc. to
provide the Company with strategic business development services, including     
structuring of corporate partnering relationships and strategic alliances. The  
agreement may be renewed for two additional three-year terms by the parties. The
agreement provides for the Company to pay Paraversal monthly compensation of    
$16,500 for the period commencing October 1, 1999. Coincident with the receipt  
by the Company of equity financing in an amount not less than $5,000,000, the   
monthly compensation paid by the Company to Paraversal will increase to $20,000,
and upon receipt of an additional equity infusion of $5,000,000, such monthly   
compensation will increase to $25,000. Currently, the Company pays Paraversal   
$20,000 monthly. Under the agreement, Paraversal is entitled to an annual bonus 
in accordance with the terms and provisions mutually agreed upon with the       
Company, will receive options to purchase 200,000 shares of the Company's common
stock at a price equal to 110% of the closing bid price at each date of issue.  
On October 5, 1999, Paraversal was granted options to purchase 500,000 shares of
the Company's common stock at $5.50, which options vested on October 8, 1999.   
The agreement further provides that if Paraversal is terminated for any reason  
other than for cause or for death and disability, Paraversal will be entitled to
a lump sum payment of $1,000,000.                                               

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STOCK OPTIONS AND WARRANTS                                                      

    From July 23, 1999 through October 5, 1999, the Company entered into
stock option agreements with certain executives, employees, directors and       
consultants to purchase 2,435,000 common shares at $2.50 to $5.50 per share. Of 
said amount, options to purchase 1,110,000 common shares have a term of five    
years, and are subject to various vesting periods ranging up to two years.      
Options to purchase the remaining 1,325,000 common shares were issued to        
consultants, have a term of 10 years and are fully vested at December 31, 1999. 
The board of directors determined the terms and conditions of all the stock     
options granted pursuant to written compensatory agreements for the period      
from July 23, 1999 to October 5, 1999, including the number of shares subject   
to the option, exercise price, term, transferability and exercisability.        
Payment of the exercise price may be made by any of the following alternative   
payment procedures: (a) cash; (b) check; (c) cancellation of indebtedness; (d)  
other shares that (x) in the case of shares acquired upon exercise of an        
option, have been owned by the optionee for more than six months on the date of 
surrender or such other period as may be required to avoid a charge to the      
corporation's earnings, and (y) have a fair market value on the date of         
surrender equal to the aggregate exercise price of the shares as to which such  
option shall be exercised; or (e) authorization for the corporation to retain   
from the total number of shares as to which the option is exercised that number 
of shares having a fair market value on the date of exercise equal to the       
exercise price for the total number of shares as to which the option is         
exercised.                                                                      

      No option may be transferred by the optionee other than by will or the
laws of descent or distribution; provided, however, that the board of directors 
may in its discretion provide for the transferability of the options. Each      
option may be exercised during the lifetime of the optionee only by such        
optionee or permitted transferee. Options granted pursuant to the written       
compensatory agreements generally must be exercised within 3 months after the   
termination of the optionee's status as an employee of the Company, or within   
12 months if such termination is due to the death or disability of the          
optionee, but in no event later than the expiration of the option's term.       
Options granted pursuant to the written compensatory agreements generally vest  
over a two-year period at a rate of one-half of the total number of shares      
subject to the option twelve months after the date of grant, with the remaining 
shares vesting in equal installments at the end of the two years. In the event  
of our merger with or into another corporation, the successor corporation is    
obligated to assume each option.                                                

  The Company also has issued three-year warrants to acquire 246,029
shares of Common Stock at an exercise price of $5.00 per share to investors in  
certain of the Company's private placement transactions.                        

    On September 15, 1999, the Company issued warrants to purchase 5,000
common shares in conjunction with debt financing. The warrants have a $5.00 per 
share exercise price and a term of three years. On September 21, 1999, the      
Company issued warrants to purchase 5,000 common shares in conjunction with debt
financing. The warrants have a $5.00 per share exercise price and a term of     
three years. On October 12, 1999, the Company issued warrants to purchase 25,000
shares of common stock in connection with a bridge loan from VMR Luxembourg S.A.
On November 1, 1999, the Company issued warrants to purchase 2,500 common shares
in conjunction with debt financing. The warrants have a $6.00 per share exercise
price and a term of three years.                                                

STOCK PLANS                                                                     

        1999 Incentive Stock Plan. Our 1999 stock plan provides for the grant of
incentive stock options to employees and nonstatutory stock options and stock   
purchase rights to employees, directors and consultants to acquire shares of    
common stock. The purposes of the 1999 stock plan are to attract and retain the 
best available personnel, to provide additional incentives to our employees and 
consultants and to promote the success of our business. Our board of directors  
originally adopted the 1999 stock plan in October 1999. The 1999 stock plan was 
amended by the board of directors in March 2000 to increase the total number of 
shares of common stock reserved for issuance to 3,000,000 shares and to         
incorporate certain other changes. Unless terminated earlier by the board of    
directors, the 1999 stock plan will terminate in October 2009. All grants under 
the 1999 stock plan are subject to the approval of our shareholders.            

       Under the Company's 1999 stock plan, the Company issued 355,000 options
to officers and employees during 1999, and 202,500 options to consultants. As of
March 1, 2000, options to purchase 3,766,000 shares of common stock were        
outstanding at a weighted average exercise price of $4.60 per share. Of said    
amount, options to purchase 1,331,000 shares of common stock had been issued    
under our 1999 stock plan and were outstanding at a weighted average price of   
$6.50 per share. The remaining options, 2,435,000, had been issued pursuant to  
written compensatory agreements prior to the adoption of our 1999 stock plan and
were outstanding at a weighted average price of $3.47 per share. No shares had  
been issued upon exercise of outstanding options, and 1,669,000 shares remained 
available for future grant under the 1999 stock plan.                           

      The 1999 stock plan may be administered by the board of directors, a
committee appointed by the board of directors or a combination of the board of  
directors and a committee, as determined by the board of directors. The         
administrator determines the terms of options granted under the 1999 stock plan,
including the number of shares subject to the option, exercise price, term and  
exercisability. In no                                                           

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event, however, may an individual receive option grants for more than 500,000   
shares of common stock under the 1999 stock plan in any fiscal year. Incentive  
stock options granted under the 1999 stock plan must have an exercise price of  
at least 100% of the fair market value of the common stock on the date of grant 
and at least 110% of such fair market value in the case of an optionee who holds
more than 10% of the total voting power of all classes of our stock.            
Nonstatutory stock options granted under the 1999 stock plan will have an       
exercise price as determined by the administrator. Payment of the exercise price
may be made in cash or such other consideration as determined by the            
administrator.                                                                  

      The administrator determines the term of options, which may not exceed
10 years or 5 years in the case of an incentive stock option granted to a holder
of more than 10% of the total voting power of all classes of our stock. No      
option may be transferred by the optionee other than by will or the laws of     
descent or distribution, provided, however, that the administrator may in its   
discretion provide for the transferability of nonstatutory stock options granted
under the 1999 stock plan if the common stock is listed or approved for listing 
on a national securities exchange or designated as a national market system     
security by the National Association of Securities Dealers, Inc. Each option may
be exercised during the lifetime of the optionee only by such optionee or       
permitted transferee. The administrator determines when options become          
exercisable. Options granted under the 1999 stock plan generally must be        
exercised within 3 months after the termination of the optionee's status as an  
employee, director or consultant of the Company, or within 12 months if such    
termination is due to the death or disability of the optionee, but in no event  
later than the expiration of the option's term. Options granted under the 1999  
stock plan generally vest over a two-year period at a rate of one- half of the  
total number of shares subject to the option twelve months after the date of    
grant, with the remaining shares vesting in equal installments at the end of the
two years.                                                                      

In the event of our merger with or into another corporation, the
successor corporation may assume each option and outstanding stock purchase     
right or may substitute an equivalent option or stock purchase right. However,  
if the successor corporation does not agree to this assumption or substitution, 
the option or stock purchase right will terminate. The board of directors has   
the authority to amend or terminate the 1999 stock plan provided that no action 
that impairs the rights of any holder of an outstanding option may be taken     
without the holder's consent. In addition, we will obtain requisite stockholder 
approval for any action requiring stockholder approval under the applicable law.

 In addition to stock options, the administrator may issue stock
purchase rights under the 1999 stock plan to employees, directors and           
consultants. The administrator determines the number of shares, price, terms,   
conditions and restrictions related to a grant of stock purchase rights and the 
purchase price of a stock purchase right granted under the 1999 stock plan. The 
administrator also determines the period during which the stock purchase right  
is held open, but in no case shall such period exceed 30 days. Unless the       
administrator determines otherwise, the recipient of a stock purchase right must
execute a restricted stock purchase agreement granting an option to repurchase  
the unvested shares at cost upon termination of such recipient's relationship   
with us.                                                                        

            1999 Stock Compensation Plan. Our 1999 Stock Compensation Plan
(the "Compensation Plan") was adopted on October 11, 1999, and was instituted   
for the purpose of compensating non-employee directors by granting them shares  
of the company's common stock in lieu of annual director's fees. A total of     
150,000 were reserved for issuance pursuant to the Compensation Plan. By its    
terms, the Compensation Plan may be terminated or amended by the board of       
directors or the shareholders. No shares of the company's common stock were     
issued under the Compensation Plan, and the Compensation Plan was terminated by 
the board of directors as of December 10, 1999.                                 

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ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT         

   The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock as of March 1, 2000 by (i) each person  
known by the Company to be the beneficial owner of more than five percent of its
Common Stock; (ii) each director; and (iii) all directors and executive officers
as a group. Beneficial ownership is determined in accordance with the rules of  
the Securities and Exchange Commission and includes voting or investment power  
with respect to the securities. Shares of common stock that may be acquired by  
an individual or group within 60 days of March 1, 2000, pursuant to the exercise
of options or warrants are deemed to be outstanding for the purpose of computing
the percentage ownership of such individual or group, but are not deemed to be  
outstanding for the purpose of computing the percentage ownership of any other  
person shown in the table. Percentage of ownership is based on 11,856,362 shares
of common stock outstanding, which does not assume the conversion of all        
outstanding shares of preferred stock into common stock.                        

       Except as indicated in the footnotes to this table, we believe that the
shareholders named in this table have sole voting and investment power with     
respect to all shares of common stock shown to be beneficially owned by them    
based on information provided to us by such shareholders. Unless otherwise      
indicated, the address for each director and executive officer listed is: c/o   
Stan Lee Media, Inc., 15821 Ventura Boulevard, Suite 675, Encino, California,   
91436.                                                                          

                                                                [Download Table]

Name of Shareholder                   Number of Shares  Percent of Common Stock
-------------------                   ----------------  -----------------------
                                                                               
Stan Lee(1)                              3,345,000                28.2%        
P.F.P. Family Holdings, L.P.(2)          3,200,000                27.0         
Devendra Mishra(3)                          50,000                 *           
Gill Champion(4)                            50,000                 *           
Stephen M. Gordon(5)                       270,000                 2.3         
Robert M. Schultz(6)                        10,000                 *           
Nelson S. Thall (7)                          9,000                 *           
Robert K. Burgess(8)                       721,786                 5.7         
Arthur E. Schramm, Jr.(9)                   12,000                 *           

All executive officers and directors                                           
  as a group (8 persons)                 4,467,786                35.5         

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

        *   Less than one percent (1%) of the issued and outstanding shares of
Common Stock.                                         

  (1)  All shares are held in the name of the Lee Family 1985 Trust.

        (2)  Includes options to purchase 500,000 shares immediately exercisable
             by Paraversal, Inc. Paraversal, Inc. provides the services of Peter
       F. Paul, a Co-Founder of the Company pursuant to a consulting
             agreement. Mr. Paul is a general partner of P.F.P. Family Holdings,
           L.P. While Mr. Paul is not an officer, director or shareholder of
            Paraversal, Inc., he may be deemed to share voting and dispositive
             power with Paraversal by virtue of his capacity. Mr. Paul disclaims
  beneficial ownership with respect to the options held by
Paraversal, Inc.                                      

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      (3)  Excludes options to purchase 30,000 shares granted to Mr. Mishra,
          15,000 of which vest as of January 10, 2001, and 15,000 of which
vest as of January 10, 2002.                          

(4)  Excludes options to purchase 150,000 shares granted to Mr. 
            Champion, 50,000 of which vest as of July 23, 2000, 5,000 of which
          vest as of December 31, 2000, 20,000 of which vest as of January
            10, 2001, 50,000 of which vest as of July 23, 2001, 5,000 of which
      vest as of December 31, 2001, and 20,000 of which vest as of
January 10, 2002.                                     

        (5)  Includes 220,000 shares held directly by Mr. Gordon and his spouse,
             and 50,000 shares held in a custodial capacity of behalf of a minor
           child, and excludes options to purchase 150,000 shares granted to
         Mr. Gordon, 50,000 of which vest as of July 23, 2000, 25,000 of
             which vest as of December 31, 2000, 50,000 of which vest as of July
     23, 2001, and 25,000 of which vest as of December 31, 2001.

        (6)  Excludes options to purchase 110,000 shares granted to Mr. Schultz,
             50,000 of which vest as of July 23, 2000, 5,000 of which vest as of
          December 31, 2000, 50,000 of which vest as of July 23, 2001, and
5,000 of which vest as of December 31, 2001.          

      (7)  Includes options to purchase 7,500 shares immediately exercisable
            by Mr. Thall. Mr. Thall's address is One Yonge Street, Suite 1103,
Toronto, Ontario, Canada, M5E 1E5.                    

      (8)  Includes options to purchase 7,500 shares immediately exercisable
             by Mr. Burgess, and includes 714,286 shares of the Company's Series
             A Preferred Stock immediately convertible into the Company's common
           stock held by Macromedia, Inc. Mr. Burgess, one of our directors,
     is the Chairman and Chief Executive Officer and Director of
     Macromedia, Inc., whose address is 600 Townsend Street, San
           Francisco, California, 91403. Based on information provided to us
            by Mr. Burgess and Macromedia, Inc., Mr. Burgess shares voting and
          dispositive power with respect to the shares held by Macromedia,
             Inc., and disclaims beneficial ownership with respect to the shares
held by Macromedia, Inc.                              

       (9)  Includes options to purchase 12,000 shares immediately exercisable
             or exercisable within 60 days by Mr. Schramm. Mr. Schramm's address
  is 11601 San Vicente Boulevard, Suite 1200, Los Angeles,
California, 90025.                                    

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                         

   Stanley A. Weston entered into a consulting relationship to provide
licensing and merchandising services to the Company, and entered into an        
agreement providing for the issuance of options to purchase 27,500 shares of the
Company's common stock as of October 5, 1999, vesting to occur as follows:      
options to purchase 17,500 shares of the company's common stock as of April 1,  
2000 and options to purchase all of said 27,500 shares of the company's common  
stock as of April 1, 2001. Mr. Weston was elected to serve as a director of the 
company, effective as of October 15, 1999, and resigned from the company's board
of directors for personal reasons on December 7, 1999.                          

      The Company entered into a consulting agreement as of January 10, 2000
with Arthur E. Schramm, Jr., who subsequently became a Director of the Company  
on March 1, 2000. The term of the agreement is approximately 12 months ending   
December 31, 2000, subject to extension, and terminable at will. Under the terms
of the consulting agreement, Mr. Schramm will assist the Company in defining its
product and developing its business plan; introduce the Company to potential    
strategic partners for the                                                      

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Company's products and services; and assist the Company in issues of overall    
business and capital formation strategies. The Company has granted Mr. Schramm  
options to purchase 20,000 shares of the Company's common stock, vesting as     
follows: as to 8,000 of the optioned shares as of January 10, 2000, and         
commencing as of January 31, 2000, and as of the last day of each month to and  
including December 31, 2000, options to purchase an additional 1,000 shares of  
the total number of shares optioned.                                            

        The Company entered into a seven-year agreement with Paraversal, Inc. to
provide the Company with strategic business development services, including     
structuring of corporate partnering relationships and strategic alliances.      
Paraversal provides the services of Peter F. Paul, a co-founder of the Company, 
and a general partner of P.F.P. Family Holdings, L.P., the holder of            
approximately 22.8% of the Company's issued and outstanding common stock as of  
March 1, 2000. The agreement may be renewed for two additional three-year terms 
by the parties. The agreement provides for the Company to pay Paraversal monthly
compensation of $16,500 for the period commencing October 1, 1999. Coincident   
with the receipt by the Company of equity financing in an amount not less than  
$5,000,000, the monthly compensation paid by the Company to Paraversal will     
increase to $20,000, and upon receipt of an additional equity infusion of       
$5,000,000, such monthly compensation will increase to $25,000. Currently, the  
Company pays Paraversal $20,000 monthly. Under the agreement, Paraversal is     
entitled to an annual bonus in accordance with the terms and provisions mutually
agreed upon with the Company, and will receive options to purchase 200,000      
shares of the Company's common stock at a price equal to 110% of the closing bid
price at each date of issue. On October 5, 1999, Paraversal was granted options 
to purchase 500,000 shares of the Company's common stock at $5.50, which options
vested on October 8, 1999. The agreement further provides that if Paraversal is 
terminated for any reason other than for cause or for death and disability,     
Paraversal will be entitled to a lump sum payment of $1,000,000.                

ITEM 13. EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES AND REPORTS ON FORM 8-K   

    (a) Financial Statements and Schedules. The Financial Statements and
Schedules required to be filed hereunder are enclosed on Pages F-1 through F-27.

   (b) Current Reports on Form 8-K. A Current Report on Form 8-K dated
November 3, 1999, was filed on November 17, 1999 with the Securities and        
Exchange Commission, to report a transaction under Item 5, Other Events,        
containing information related to the investment of $5,000,002 by Macromedia,   
Inc. in the company, in the form of the issuance and delivery of 714,286 shares 
of the company's Series A Preferred Stock, and the establishment of a           
distribution relationship with Macromedia and its subsidiary, shockwave.com.    

(c) Exhibits                                                    

                                                                [Download Table]
                                                                                
 2.1   Reorganization and Stock Purchase Agreement dated as of June 25, 1999    

 3.1   Articles of Incorporation                                                

 3.2   Articles of Amendment to Articles of Incorporation Filed August 12, 1999 

 3.3   Articles of Amendment to Articles of Incorporation Filed November 5, 1999

 3.4   Bylaws                                                                   

10.1   Securities Purchase Agreement dated as of November 3, 1999, between the  
       Registrant and Macromedia, Inc.                                          

10.2   Agreement between the Registrant and Macromedia                          


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                                                                [Download Table]
                                                                                
10.3   Purchase Agreement dated as of February 1, 2000                          

10.4   Purchase Agreement dated as of February 4, 2000                          

10.5   Revolving Credit Agreement dated July 23, 1999, between the Registrant   
       and Santo Development Worldwide                                          

10.6   Revolving Credit Agreement dated July 23, 1999, between the Registrant   
       and Maxi Technologies Limited                                            

10.7   Financial Consulting Agreement dated as of October 11, 1999, between the 
       Registrant and VMR Capital Markets, U.S.                                 

10.8   Form of 8% Convertible Debenture Due April 11, 2000                      

10.9   Warrant Agreement dated as of October 11, 1999, in favor of VMR          
       Luxembourg, S.A.                                                         

10.10  1999 Stock Incentive Plan                                                

10.11  Form of 1999 Stock Incentive Plan Option Agreement                       

10.12  Agreement dated July 23, 1999, between the Registrant and Gill Champion  

10.13  Agreement dated July 23, 1999, between the Registrant and Robert M.      
       Schultz                                                                  

10.14  Agreement dated July 23, 1999, between the Registrant and Stephen M.     
       Gordon                                                                   

10.15  Agreement dated July 23, 1999, between the Registrant and Dana Moreshead 

10.16  Agreement dated July 23, 1999, between the Registrant and Dave Medinnis  

10.17  Agreement dated July 23, 1999, between the Registrant and Zachary Foley  

10.18  Linking and Stock Issuance Agreement dated March 16, 1999, between the   
       Registrant and NPO Online, Inc.                                          

10.19  Agreement dated July 23, 1999, between the Registrant and Gary Manfredi  

10.20  Agreement dated July 23, 1999, between the Registrant and Shawn McManus  

10.21  Agreement dated July 23, 1999, between the Registrant and Andrey         
       Pavlovskiy                                                               

10.22  Agreement dated July 23, 1999, between the Registrant and Aaron Sowd     

10.23  Agreement dated July 23, 1999, between the Registrant and Jason Thomas   

10.24  Agreement dated July 23, 1999, between the Registrant and William James  
       Wilkinson, Jr.                                                           

10.25  Agreement dated July 23, 1999, between the Registrant and Anthony Winn   

10.26  Agreement dated July 23, 1999, between the Registrant and Jeffrey D.     
       Segal                                                                    

10.27  Agreement dated July 23, 1999, between the Registrant and Ziffren,       
       Brittenham, Branca & Fischer LLP                                         

10.28  Agreement dated September 24, 1999, between the Registrant and Iyan Bruce

10.29  Agreement dated September 24, 1999, between the Registrant and Zachary   
       Foley                                                                    

10.30  Agreement dated September 24, 1999, between the Registrant and Jennifer  
       Kahn                                                                     

10.31  Agreement dated September 24, 1999, between the Registrant and Tony      
       Pastor                                                                   

10.32  Agreement dated September 24, 1999, between the Registrant and Mone      
       Peterson                                                                 

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                                                                [Download Table]
                                                                                
10.33  Agreement dated September 24, 1999, between the Registrant and Patricia  
       Smith                                                                    

10.34  Agreement dated September 24, 1999, between the Registrant and Russ Heath

10.35  Agreement dated September 27, 1999, between the Registrant and Brady     
       Darvin                                                                   

10.36  Agreement dated September 27, 1999, between the Registrant and Larry     
       Houston                                                                  

10.37  Agreement dated September 27, 1999, between the Registrant and Ruben     
       Martinez                                                                 

10.38  Agreement dated October 5, 1999, between the Registrant and Stanley A.   
       Weston                                                                   

10.39  Agreement dated October 5, 1999, between the Registrant and Jeffrey D.   
       Segal                                                                    

10.40  Agreement dated October 5, 1999, between the Registrant and Paraversal,  
       Inc.                                                                     

10.41  Agreement dated October 15, 1998, between Registrant and Mr. Stan Lee    

10.42  Agreement dated October 22, 1999, between Registrant and Mr. Stan Lee    

10.43  Consulting Agreement dated October 5, 1999, between Registrant and       
       Paraversal, Inc.                                                         

10.44  Employment Agreement dated October 8, 1999, between the Registrant and   
       Stephen M. Gordon                                                        

10.45  AcmeCity Interactive Community Agreement dated June 14, 1999, between the
       Registrant and AcmeCity, a Delaware LLC                                  

10.46  Agreement dated February 2, 2000, between the Registrant and KBNHA       
       Enterprises, Inc.                                                        

10.47  Publishing Agreement between Simon & Schuster, Inc., Stan Lee and George 
       Mair                                                                     

10.48  Agreement dated December 7, 1999, among DC Comics, Stan Lee, the         
       Registrant and Branded Entertainment, LLC                                

10.49  Strategic Alliance Agreement dated November 8, 1999, between the         
       Registrant and Cyberworld International Corporation                      

10.50  Deal Memo dated as of August 1, 1999, between the Registrant and         
       WhatsHotNow.com, Inc.                                                    

10.51  Sublease Agreement dated as of November 4, 1998, between the Registrant  
       and One Twelve Interactive, Inc.                                         

10.52  Third Amendment to Office Lease, dated May 27, 1999, between Douglas     
       Emmett Realty Fund 1997, a California limited partnership, and 1-12      
       Interactive, Inc., a Delaware corporation                                

10.53  Office Lease dated September 22, 1999, between the Registrant and        
       Douglas Emmett Realty Fund 1997, a California limited partnership        

10.54  First Amendment to Office Lease dated November 2, 1999, between the      
       Registrant and Douglas Emmett Realty Fund 1997, a California limited     
       partnership                                                              

21.1   Subsidiaries of the Registrant                                           

27     Financial Data Schedule                                                  

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 STAN LEE MEDIA, INC. AND SUBSIDIARY
 (A DEVELOPMENT STAGE COMPANY)

 CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1999 AND 1998

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 STAN LEE MEDIA, INC. AND SUBSIDIARY
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                [Download Table]
                                                                               
Report of Independent Certified Public Accountants                          F-3

Consolidated Financial Statements                                              

      Consolidated Balance Sheets                                           F-4

      Consolidated Statements of Operations                                 F-5

      Consolidated Statements of Shareholders' Equity                       F-6

      Consolidated Statements of Cash Flows                                 F-8

      Notes to Consolidated Financial Statements                           F-10

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INDEPENDENT AUDITORS' REPORT                                                    

To the Shareholders                                                             
Stan Lee Media, Inc. and Subsidiary (a development stage company)               
Encino, California                                                              

We have audited the accompanying consolidated balance sheets of Stan Lee Media, 
Inc. and subsidiary (a development stage company) as of December 31, 1999 and   
1998, and the related consolidated statements of operations, shareholders'      
equity and cash flows for the year ended December 31, 1999, the period from     
inception (October 13, 1998) through December 31, 1998, and the period from     
inception (October 31, 1998) through December 31, 1999. These financial         
statements are the responsibility of the Company's management. Our              
responsibility is to express an opinion on these financial statements based on  
our audits.                                                                     

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

In our opinion, the financial statements referred to above present fairly, in   
all material respects, the financial position of Stan Lee Media, Inc. and       
subsidiary (a development stage company) as of December 31, 1999 and 1998, and  
the results of its operations and its cash flows for the year ended December 31,
1999 and the period from inception (October 13, 1998) through December 31, 1998 
and the period from inception (October 13, 1998) through December 31, 1999, in  
conformity with generally accepted accounting principles.                       

                   /s/  BDO Seidman, LLP
                                   -------------------------------------

Los Angeles, CA                                                                 
February 4, 2000                                                                

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 STAN LEE MEDIA, INC. AND SUBSIDIARY
 (A DEVELOPMENT STAGE COMPANY)

 CONSOLIDATED BALANCE SHEETS

                                                        [Enlarge/Download Table]

                                                                                         December 31,        
                                                                                  -------------------------- 
                                                                                     1999            1998    
                                                                                  -----------      --------- 
                                                                                                             
Assets                                                                                                       

Current assets                                                                                               
   Cash and cash equivalents                                                      $ 2,020,162      $  21,276 
   Inventory                                                                           11,883             -- 
   Subscriptions receivable                                                                --        275,000 
   Prepaid expenses and other current assets                                           10,450         10,000 
                                                                                  -------------------------- 
Total current assets                                                                2,042,495        306,276 

Property and equipment, net of accumulated depreciation (Note 3)                      602,009          1,898 

Other assets                                                                                                 
   Debt offering costs (net of $36,257 of accumulated                                                        
   amortization) (Note 7)                                                              17,756             -- 
   Licensing rights (net of $5,989 of accumulated amortization) (Note 7)              173,686             -- 
   Trademarks                                                                         103,636             -- 
   Deposits                                                                            47,464             -- 
                                                                                  -------------------------- 
Total other assets                                                                    342,542             -- 
                                                                                  -------------------------- 
                                                                                  $ 2,987,046      $ 308,174 
                                                                                  ========================== 

Liabilities and Shareholders' Equity                                                                         

Current liabilities                                                                                          
   Accounts payable and accrued liabilities                                       $   172,267      $   5,175 
   Obligations under capital leases, current portion (Note 5)                          45,864             -- 
   Note payable (Note 4)                                                              500,000             -- 
                                                                                  -------------------------- 
Total current liabilities                                                             718,131          5,175 
                                                                                  -------------------------- 

Obligations under capital leases, long-term portion (Note 5)                           80,979             -- 
Commitments (Note 5)                                                                                         
Shareholders' equity (Notes 1 and 7)                                                                         
   Series A Convertible Preferred stock, par value $0.001,                                                   
   authorized 1,500,000 issued and outstanding 714,286 and none;                                             
   liquidation preference of $7 per share                                           5,000,002             -- 

   Common stock, par value $0.001, authorized 100,000,000 issued and outstanding                             
   11,433,029 and 8,100,000                                                            11,433          8,100 
   Additional paid-in capital                                                       5,137,787        327,320 
   Deficit accumulated during the development stage                                (7,961,286)       (32,421)
                                                                                  -------------------------- 
Total shareholders' equity                                                          2,187,936        302,999 
                                                                                  -------------------------- 
                                                                                  $ 2,987,046      $ 308,174 
                                                                                  ========================== 

                                 See accompanying notes to financial statements.

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 STAN LEE MEDIA, INC. AND SUBSIDIARY
 (A DEVELOPMENT STAGE COMPANY)

 CONSOLIDATED STATEMENTS OF OPERATIONS

                                                        [Enlarge/Download Table]

                                                                    Period from         Period from 
                                                                     Inception           Inception  
                                                                    (October 13,        (October 13,
                                                 Year Ended           1998) to            1998) to  
                                                December 31,        December 31,        December 31,
                                                    1999               1998                1999     
                                                ----------------------------------------------------
                                                                                                    
Revenue                                         $    30,605         $        --         $    30,605 
                                                --------------------------------------------------- 

Operating expenses:                                                                                 
    Cost of revenue                                   1,275                                   1,275 
    Development costs                             1,142,378                  --           1,142,378 
    General and administrative                    6,734,177              32,320           6,766,497 
                                                --------------------------------------------------- 
Total operating expenses                          7,877,830              32,320           7,910,150 
                                                --------------------------------------------------- 

Operating loss                                   (7,847,225)            (32,320)         (7,879,545)

Net interest expense                                (81,640)               (101)            (81,741)
                                                --------------------------------------------------- 
Net loss                                        $(7,928,865)        $   (32,421)        $(7,961,286)
                                                =================================================== 

Basic and diluted net loss per share            $     (0.81)        $     (0.01)                    
                                                ===============================                     

Weighted average number of shares used in                                                           
computing basic and diluted net loss per share    9,776,021           8,100,000                     
                                                ===============================                     

                                 See accompanying notes to financial statements.

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 STAN LEE MEDIA, INC. AND SUBSIDIARY
 (A DEVELOPMENT STAGE COMPANY)

 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM INCEPTION (OCTOBER 13, 1998) THROUGH
 DECEMBER 31, 1999

                                                        [Enlarge/Download Table]

                                                                                                     Deficit                 
                                                                                                   Accumulated               
                                                                                     Additional       During                 
                                 Preferred                  Common                     Paid-In     Development               
                                  Shares       Amount       Shares       Amount        Capital        Stage        Total     
                                 ------------------------------------------------------------------------------------------- 
                                                                                                                             
Issuance of founders shares                                                                                                  
    (October 1998) ($0.001 per                                                                                               
    share)                             --    $       --    6,900,000   $     6,900   $     3,100   $        --   $    10,000 

Issuance of stock for services                                                                                               
    ($0.001 per share)                 --            --      420,000           420            --            --           420 

Issuance of stock for cash                                                                                                   
    ($0.417 per share)                 --            --      780,000           780       324,220            --       325,000 

Net loss for period                    --            --           --            --            --       (32,421)      (32,421)
                                 ------------------------------------------------------------------------------------------- 

BALANCE, at December 31, 1998          --            --    8,100,000         8,100       327,320       (32,421)      302,999 

Issuance of stock for services                                                                                               
    ($0.001 per share) (Note 7)        --            --      400,000           400            --            --           400 

Reverse merger (Note 1)                --            --    2,525,000         2,525       (13,062)           --       (10,537)

Issuance of stock for services                                                                                               
    ($2.50 per share) (Note 7)         --            --       60,000            60       149,940            --       150,000 

Issuance of stock for cash                                                                                                   
    ($3.00 per share) (Note 7)         --            --      246,029           246       733,854            --       734,100 

Issuance of stock for cash                                                                                                   
    ($4.00 per share) (Note 7)         --            --       37,500            38       149,962            --       150,000 

Issuance of stock for cash                                                                                                   
    ($4.00 per share) (Note 7)         --            --       62,500            62       249,938            --       250,000 

Cancellation and retirement of                                                                                               
    stock issued for services                                                                                                
    ($2.50 per share) (Note 7)         --            --      (50,000)          (50)     (124,950)           --      (125,000)

Issuance of stock for debt                                                                                                   
    financing costs ($6.18 per                                                                                               
    share) (Note 7)                    --            --       10,000            10        61,790            --        61,800 

Issuance of preferred stock                                                                                                  
    ($7.00 per share) (Note 7)    714,286     5,000,002           --            --            --            --     5,000,002 

Issuance of stock for services                                                                                               
    ($7.187 per share) (Note 7)        --            --       10,000            10        71,860            --        71,870 

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                                                        [Enlarge/Download Table]
                                                                                                                            
Issuance of stock for                                                                                                       
    licensing right ($7.187                                                                                                 
    per share) (Note 11)              --            --       25,000            25       179,650            --       179,675 

Issuance of stock for services                                                                                              
    ($5.50 per share) (Note 7)        --            --        7,000             7        38,493            --        38,500 

Warrants issued for financing                                                                                               
    (Note 7)                          --            --           --            --        54,014            --        54,014 

Options issued for services                                                                                                 
    (Note 7)                          --            --           --            --     3,258,978            --     3,258,979 

Net loss for year ended                                                                                                     
    December 31, 1999                 --            --           --            --            --    (7,928,865)   (7,928,865)
                                ------------------------------------------------------------------------------------------- 

BALANCE, at December 31, 1999    714,286    $5,000,002   11,433,029   $    11,433   $ 5,137,787   $(7,961,286)  $ 2,187,936 
                                =========================================================================================== 

                                 See accompanying notes to financial statements.

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 STAN LEE MEDIA, INC. AND SUBSIDIARY
 (A DEVELOPMENT STAGE COMPANY)

 CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                        [Enlarge/Download Table]

                                                                                 Period From      Period From 
                                                                                  Inception        Inception  
                                                                   Year          (October 13,     (October 13,
                                                                   Ended          1998) to          1998) to  
                                                                December 31,     December 31,     December 31,
                                                                   1999             1998             1999     
                                                                ----------------------------------------------
                                                                                                              
Cash flows from operating activities                                                                          
   Net loss                                                     $(7,928,865)     $   (32,421)     $(7,961,286)
   Adjustments to reconcile net loss to net cash and                                                          
     cash equivalents provided by (used in) operating                                                         
     activities:                                                                                              
      Non-cash items resulting from issuance of stock, options                                                
        and warrants                                              3,492,807              420        3,493,227 
      Depreciation and amortization                                  84,531               54           84,585 
      Changes in:                                                                                             
         Inventory                                                  (11,883)              --          (11,883)
         Prepaid expenses and other current assets                     (450)         (10,000)         (10,450)
         Deposits                                                   (47,464)              --          (47,464)
         Accounts payable                                           156,555            5,175          161,730 
                                                                --------------------------------------------- 
Net cash used in operating activities                            (4,254,769)         (36,772)      (4,291,541)
                                                                --------------------------------------------- 

Cash flows from investing activities                                                                          
   Purchase of property and equipment                              (488,617)          (1,952)        (490,569)
   Application for trademarks                                      (103,636)              --         (103,636)
                                                                --------------------------------------------- 
Net cash used in investing activities                              (592,253)          (1,952)        (594,205)
                                                                --------------------------------------------- 

Cash flows from financing activities                                                                          
   Proceeds from notes and loans payable                          1,417,000               --        1,417,000 
   Repayment of notes and loans payable                            (917,000)              --         (917,000)
   Payments under capital lease obligations                         (63,194)              --          (63,194)
   Receipt of subscriptions                                         275,000               --          275,000 
   Issuance of preferred stock                                    5,000,002               --        5,000,002 
   Issuance of common stock                                       1,134,100               --        1,134,000 
   Capital contribution                                                  --           60,000           60,000 
                                                                --------------------------------------------- 
Net cash provided by financing activities:                        6,845,908           60,000        6,905,908 
                                                                --------------------------------------------- 
Increase (decrease) in cash and cash equivalents                  1,998,886           21,276        2,020,162 

Cash and cash equivalents, beginning of period                       21,276               --               -- 
                                                                --------------------------------------------- 
Cash and cash equivalents, end of period                        $ 2,020,162      $    21,276      $ 2,020,162 
                                                                ============================================= 

                                 See accompanying notes to financial statements.

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 STAN LEE MEDIA, INC. AND SUBSIDIARY
 (A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - NATURE OF BUSINESS                                                     

Stan Lee Media, Inc. ("SLM" or the "Company") (a development stage company) is  
an Internet-based, global branded content creation, production and marketing    
company founded by comic book icon Stan Lee to conceive, create, co-create and  
produce marketable characters and story franchises for entertainment,           
merchandising and promotional exploitation worldwide.                           

Stan Lee Entertainment, Inc. ("Entertainment") was incorporated in the State of 
Delaware on October 13, 1998. Stan Lee Media, Inc. ("SLM Delaware") was         
originally incorporated in the State of Delaware on January 14, 1999.           
Entertainment was merged with SLM Delaware on April 14, 1999 with SLM Delaware  
being the surviving corporation. Effective July 23, 1999, SLM Delaware engaged  
in a share exchange with Boulder Capital Opportunities, Inc. ("Boulder") a      
public company, incorporated in the State of Colorado. This share exchange was  
accounted for as a reverse acquisition in which SLM Delaware is considered the  
predecessor of the Company because it had operations at the time of the share   
exchange. The new name of the company after the share exchange is Stan Lee      
Media, Inc. ("SLM" or the "Company"). In this share exchange, the shareholders  
of SLM Delaware received 8,500,000 shares of common stock of Boulder in exchange
for all of the issued and outstanding shares of SLM Delaware common stock. The  
number of shares outstanding after this transaction was 11,025,000.             

PRINCIPLES OF CONSOLIDATION                                                     

The consolidated financial statements of the Company include the accounts of    
Stan Lee Media, Inc., and its wholly owned subsidiary. All significant          
intercompany balances and transactions have been eliminated.                    

DEVELOPMENT STAGE                                                               

As of December 31, 1999, SLM is considered a development stage company as it has
not recognized significant revenue from planned principal operations.           
Accordingly, the Company has provided cumulative consolidated statements of     
operations, consolidated statements of stockholders' equity and consolidated    
statements of cash flows.                                                       

MANAGEMENT PLANS                                                                

The Company has incurred cumulative losses of approximately $7.9 million through
December 31, 1999, and currently does not have sufficient cash to fully         
implement management's business plan. As a result, management is seeking        
additional financing. There can be no assurance that the Company will raise     
sufficient financing to enable management to implement the Company's business   
plan. (See Note 9).                                                             

CASH EQUIVALENTS                                                                

SLM considers all highly liquid investments with an original maturity of three  
months or less to be cash equivalents.                                          

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 (A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                             

INVENTORY                                                                       

Inventory consists of various promotional items and memorabilia based on the    
characters created and co-created by Stan Lee. The inventory is stated at the   
lower of cost or market on a first-in, first-out basis.                         

PROPERTY AND EQUIPMENT                                                          

Property and equipment are recorded at cost, with depreciation computed         
utilizing the straight-line method. Equipment and furniture are depreciated over
the estimated useful lives, which range from three to five years. Leasehold     
improvements are amortized over the shorter of the estimated useful life or the 
term of the lease, generally five years.                                        

LICENSING RIGHTS                                                                

SLM acquired the right to use certain proprietary software from Cyberworld      
International Corporation. The licensing right is being amortized over the term 
of the agreement of five years. (See Note 9).                                   

TRADEMARKS                                                                      

Trademarks include amounts paid for legal fees and registration of trademark    
applications in various countries for the characters, names and marks created by
SLM. After the trademarks have been accepted by the agencies of each country,   
they will be amortized over an expected life of five to ten years.              

LONG-LIVED ASSETS                                                               

In accordance with Financial Accounting Standards Board ("FASB") Statement No.  
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived     
Assets to be Disposed of", SLM records impairment losses on long-lived assets   
used in operations, including intangible assets, when events and circumstances  
indicate that the assets might be impaired and the undiscounted cash flows      
estimated to be generated by those assets are less than the carrying amounts of 
those assets.                                                                   

INCOME TAXES                                                                    

SLM uses the asset and liability method to account for income taxes as required 
by Statement of Financial Accounting Standards No. 109, "Accounting for Income  
Taxes" ("SFAS No. 109"). Under this method, deferred tax assets and liabilities 
are determined based on differences between financial reporting and tax bases of
assets and liabilities and are measured using enacted tax rules and laws that   
will be in effect when the differences are expected to reverse.                 

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 STAN LEE MEDIA, INC. AND SUBSIDIARY
 (A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                 

CONCENTRATION OF CREDIT RISK                                                    

Financial instruments which potentially expose SLM to concentration of credit   
risk consist primarily of cash and cash equivalents. SLM places its cash and    
cash equivalents with major financial institutions. At times, cash balances may 
be in excess of the amounts insured by the Federal Deposit Insurance            
Corporation, however, management believes the risk of loss to be minimal.       

REVENUE                                                                         

SLM receives webcasting fees for certain Webisode series pursuant to agreements 
with customers. Revenue is recognized after each series has been accepted and   
after each Webisode of the series has been delivered.                           

Revenue from distribution fees, licensing and sub-licensing of characters owned 
by SLM are recorded in accordance with the distribution agreement and at the    
time characters are available to the licensee. Revenue is recognized as earned  
and reasonably estimable.                                                       

COST OF REVENUE                                                                 

Cost of revenues consists primarily of costs to develop and produce webisodes.  
Webisode costs consist of the costs of development and production of digitally  
animated webisodes including labor, material and production overhead. All       
Webisode cost capitalized are evaluated quarterly for net realizable value and  
all write-downs are included in Cost of Revenue.                                

NET LOSS PER SHARE                                                              

The Company reports loss per share in accordance with Statement of Financial    
Accounting Standards No. 128, "Earnings Per Share" (SFAS 128), which requires   
the presentation of basic and diluted earnings per share. Basic earnings or loss
per share are calculated by dividing net income (loss) by the weighted average  
number of common shares outstanding during the period. Diluted earnings per     
share are calculated by dividing net income (loss) by the basic shares and all  
dilutive securities, including stock options, warrants and convertible notes,   
but does not include the impact of potential common shares which would be       
antidilutive. These dilutive securities were antidilutive for 1999.             

For the year ended December 31, 1999, potential dilutive securities representing
2,992,500 outstanding stock options, 283,529 outstanding warrants, and 714,286  
shares of convertible preferred stock are not included in the earnings per share
calculation since their effect would be antidilutive.                           

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 (A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                 

STOCK BASED COMPENSATION                                                        

SLM accounts for employee stock options or similar equity instruments in        
accordance with Statement of Financial Accounting Standards (SFAS) No. 123,     
"Accounting for Stock-Based Compensation" ("SFAS No. 123"). SFAS No. 123 defines
a fair-value-based method of accounting for employee stock options or similar   
equity instruments. This statement gives entities a choice to recognize related 
compensation expense by adopting the new fair-value method or to measure        
compensation using the intrinsic value method under Accounting Principles Board 
(APB) Opinion No. 25 "Accounting for Stock Issued to Employees", the former     
standard. If the former standard for measurement is elected, SFAS No. 123       
requires supplemental disclosure to show the effect of using the new measurement
criteria. SLM has used the intrinsic value method prescribed by APB Opinion No. 
25. See Note 7 for supplemental disclosure.                                     

USE OF ESTIMATES                                                                

The preparation of financial statements in conformity with generally accepted   
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of         
contingent assets and liabilities at the date of the financial statements and   
the reported amounts of revenues and expenses during the reporting period.      
Actual amounts could differ from those estimates.                               

RECLASSIFICATIONS                                                               

Certain amounts for prior years have been reclassified to conform with the 1999 
financial statement presentation.                                               

RECENT ACCOUNTING PRONOUNCEMENTS                                                

In June 1998, the FASB issued SFAS No. 133, "According for Derivative           
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 requires companies to
recognize all derivative contracts as either assets or liabilities in the       
balance sheet and to measure them at fair value. If certain conditions are met, 
a derivative may be specifically designated as a hedge, the objective of which  
is to match the timing of gain or loss recognition on the hedging derivative    
with the recognition of (i) the changes in the fair value of the hedged asset or
liability that are attributable to the hedge risk or (ii) the earnings effect of
the hedged forecasted transaction for a derivative not designated as a hedging  
instrument, the gain or loss is recongnized in income in the period of change.  
SFAS 133 is effective for all fiscal quarters of fiscal years beginning after   
June 15, 1999. Historically, the Company has not entered into derivative        
contracts either to hedge existing risks or for speculative purposes.           
Accordingly, the Company does not expect adoption of the new standard on January
1, 2000 to affect its financial statements.                                     

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 (A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In June 1998, the Accounting Standards Executive Committee of the AICPA issued  
SOP 98-5, Reporting on the Costs of Start-up Activities. SOP 98-5 requires all  
start-up and organizational costs to be expensed as incurred. It also requires  
all remaining historically capitalized amounts of these costs                   

RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)                                    

existing at the date of adoption to be expensed and reported as the cumulative  
effect of a change in accounting principles. SOP 98-5 is effective for all      
fiscal years beginning after December 31, 1998. The adoption of SOP 98-5 on     
January 1, 1999 had no effect on the financial statements.                      

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 (A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - PROPERTY AND EQUIPMENT                                                 

Property and equipment consists of the following:                               

                                                        [Enlarge/Download Table]

                                                December 31,     December 31,      Estimated 
                                                   1999             1998          Useful Life
                                                ---------------------------------------------
                                                                                             
Automobile                                       $ 15,000           $   --         5 years   
Computer equipment                                103,249            1,904         3 years   
Computer software                                  18,011               48         3 years   
Furniture and fixtures                            187,960               --         5 years   
Leasehold improvements                            166,349               --         5 years   
Equipment under capital leases                    190,036                                    
                                                ---------------------------------------------
                                                  680,605            1,952                   
Less accumulated depreciation and amortization     78,596               54                   
                                                ---------------------------------------------

                                                 $602,009           $1,898                   
                                                =============================================

At December 31, 1999, accumulated depreciation and amortization included $26,864
related to assets under capital leases.                                         

NOTE 4 - DEBT                                                                   

SHORT-TERM FINANCING                                                            

During 1999 investors provided SLM with a total of $250,000 notes with interest 
at 8% per annum payable with interest in one lump sum during 1999. All of these 
notes and interest were fully paid during the year.                             

On October 11, 1999, SLM executed an unsecured promissory note (the "Note") in  
the amount of $500,000. The terms of the note call for SLM to pay interest at 8%
per annum. The principal and accrued and unpaid interest shall be payable in one
lump sum by April 11, 2000. Pursuant to the promissory note, warrants for 25,000
shares of SLM's common stock exercisable at $6.18 per share expiring October 11,
2002 were granted to the Note holder. The fair value of $35,512 of these        
warrants was capitalized as debt offering costs and amortized over the term of  
the loan. The note and all accrued interest were paid in January 2000.          

In addition shareholders of SLM advanced a total of $667,000 during 1999, as    
working capital. The balance was non-interest bearing and due on demand with no 
specific payment provisions. These loans were repaid during 1999.               

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 (A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 - COMMITMENTS                                                            

LEASE AGREEMENTS                                                                

SLM entered into sublease agreements for office space through October 31, 2004. 
Minimum future annual payments under these agreements as of December 31, 1999   
are as follows:                                                                 

                                                                [Download Table]

Year ended December 31,                                             Amount  
                                                                  ----------
                                                                            
     2000                                                         $  483,763
     2001                                                            480,419
     2002                                                            393,001
     2003                                                            343,982
     2004                                                            443,007
                                                                  ----------
                                                                  $2,144,172
                                                                  ==========

Rent expense for the year ended December 31, 1999 was $141,978.                 

EMPLOYMENT AGREEMENT                                                            

SLM has entered into an employment agreement with Stan Lee. Under the agreement 
Stan Lee will receive a base salary of $250,000 per year, beginning April 1,    
1999 and is payable for the remainder of his life. In addition, Stan Lee shall  
also receive an annual discretionary bonus as determined by the Board of        
Directors. Stan Lee will serve as Chairman and Chief Creative Officer of SLM.   

The Company entered into a five-year employment agreement with Stephen M.       
Gordon, its Executive Vice President - Operations, commencing as of November 1, 
1999, subject to annual successive one-year renewals thereafter unless either   
party notifies the other party of its election not to so renew not less than 90 
days prior to the expiration of the initial term or the then current renewal    
term, as the case may be. Mr. Gordon receives base compensation on an annualized
rate of $135,000 through May 31, 2001, increasing to $150,000 for the period    
June 1, 2000 through May 31, 2001, and thereafter, annual base compensation in  
an amount not less than $175,000. Mr. Gordon also is entitled to receive an     
annual bonus determined by the board of directors in its discretion. All options
granted to Mr. Gordon will vest upon a change in control of Stan Lee Media, Inc.
In addition, if Mr. Gordon is terminated other than for cause, during the first 
three years of his employment agreement, Mr. Gordon will receive 200% of his    
base compensation as a severance payment; if termination other than cause occurs
during the fourth year of his employment agreement, Mr. Gordon will receive 250%
of his base compensation as a severance payment; and if termination occurs in   
the fifth year of his employment agreement or thereafter, Mr. Gordon will       
receive 299% of his base compensation as a severance payment.                   

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 (A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 - COMMITMENTS (CONTINUED)                                                

EQUIPMENT LEASES                                                                

SLM entered into various capital leases for computers and related equipment. The
leases range from 24 to 60 month terms. Minimum future lease payments under     
capital leases as of December 31, 1999 for each of the next five years and in   
aggregate are:                                                                  

                                                                [Download Table]

Year ended                                                      Amount  
                                                               -------- 
                                                                        
     2000                                                      $ 66,532 
     2001                                                        58,329 
     2002                                                        31,667 
     2003                                                         5,772 
     2004                                                           527 
                                                               -------- 

Total minimum payments                                         $162,827 

Less: Amount representing interest                              (35,984)
                                                               -------- 

Present value of net minimum lease payments                    $126,843 
                                                               ======== 

BUSINESS DEVELOPMENT AGREEMENT                                                  

On October 5, 1999, SLM entered into a seven year agreement with Paraversal,    
Inc. ("Paraversal"), a related party, to provide SLM with strategic business    
development services, including structuring of corporate partnering             
relationships and strategic alliances. The agreement calls for SLM to pay       
Paraversal monthly compensation of $16,500 for the period commencing October 1, 
1999. Coincident with the receipt by SLM of equity financing in an amount not   
less than $5,000,000, the monthly compensation paid to Paraversal by SLM will   
increase to $20,000 per month. Coincident with an additional receipt by SLM of  
equity financing in an amount not less than $5,000,000, the monthly compensation
paid by SLM to Paraversal will increase to $25,000 per month. Under the         
agreement, Paraversal is entitled to an annual bonus in accordance with the     
terms and provisions mutually agreed upon with SLM.                             

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 - COMMITMENTS (CONTINUED)                                                

BUSINESS DEVELOPMENT AGREEMENT (CONTINUED)                                      

Under the agreement, Paraversal will receive options to purchase 200,000 shares 
of SLM's common stock at a price equal to 110% of the closing bid price at each 
anniversary date of the agreement. On October 5, 1999, Paraversal was granted   
options to purchase 500,000 shares of SLM's common stock exercisable at $5.50,  
which options vested on October 8, 1999. The fair value of $1,506,735 of these  
options was charged to operations during 1999. Under the agreement, if          
Paraversal is terminated for any reason other than for cause or death and       
disability, Paraversal will be entitled to a one lump sum payment of $1,000,000.

REVOLVING CREDIT AGREEMENTS                                                     

On July 23, 1999 SLM entered into two revolving line of credit agreements for a 
total of $2,000,000, of which none was drawn at December 31, 1999. Both lines of
credit terminate on July 31, 2000. The lines bear interest at LIBOR, plus two   
percent (2%) per annum computed using a 360-day year.                           

NOTE 6 - INVESTMENT IN NPO ONLINE, INC.                                         

On March 16, 1999, SLM entered into an agreement with NPO Online, Inc. ("NPO"), 
a Company which will provide an e-commerce store front Internet site, that is   
linked between SLM's Internet site, which will enable purchasing of retail Comic
Books and related retail Comic Book products of SLM and NPO. In exchange for    
exclusive retail linking rights, and joint marketing and promotions, SLM will   
receive 10% of the gross revenue received for the NPO sales transacted through  
this Internet site to be paid to SLM, on a monthly basis for the previous       
month's sales. If SLM sells any merchandise through the NPO site and fulfills   
the order itself, SLM will pay 10% of those gross sales to NPO. For any resale  
or collectible merchandise sold by SLM using NPO's storefront, which is not     
readily available on the retail market, SLM will pay 7.5% of those gross sales  
to NPO.                                                                         

NPO will be the exclusive provider of retail comic books for SLM. For this      
exclusivity, NPO issued 180,000 shares of its common stock with a fair value of 
$0.285 per share to SLM, at the grant date of March 16, 1999. As of December 31,
1999 the value of this investment of $51,000 was written off and charged to     
general and administrative expense.                                             

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 - SHAREHOLDERS' EQUITY                                                   

SLM has 100,000,000 authorized shares of $0.001 par value common stock and      
10,000,000 shares of $0.001 par value preferred stock. Of the total preferred   
stock, 1,500,000 shares were designated as Series A. The Series A preferred     
stock is convertible into common stock, has a liquidation preference of $7 per  
share, and bears dividends equal to any dividends declared on the common shares.

The Series A preferred stock converts into common at the rate of one share of   
common stock for one share of preferred stock (subject to adjustment). The      
preferred stock shares may be converted any time at the option of the holder.   
The preferred shares automatically convert to common shares upon the earlier of 
a public offering priced at a minimum of $15 per share and raising proceeds of  
$25 million or an affirmative rate of two-thirds of the preferred shareholders. 

COMMON STOCK                                                                    

Between January 1, 1999 and June 30, 1999, stock was issued for services before 
any stock was issued for cash. Each issuance was valued at $0.001 per share at  
that time.                                                                      

On July 23, 1999, SLM issued 60,000 shares of restricted common stock at $2.50  
per share, the fair value on the date of issuance, for services to employees.   
The $150,000 fair value of these shares was charged to operations during 1999.  
On December 9, 1999, 50,000 of these shares were cancelled in conjunction with  
the termination of an employee. The $125,000 fair value originally expensed at  
the date of the grant was reversed upon cancellation. As settlement of amounts  
due under the terminated employment contract, SLM issued 7,000 shares of        
restricted common stock. The fair value of $38,500 of these shares was charged  
to operations.                                                                  

On July 30, 1999, 37,500 shares of restricted common stock were issued at $4 per
share as part of a private placement, resulting in gross proceeds of $150,000.  

During August 1999, 62,500 shares of restricted common stock were issued at $4  
per share in private placements, resulting in gross proceeds of $250,000.       

On October 12, 1999, SLM issued 10,000 shares of common stock in connection with
a bridge loan from VMR Luxembourg S.A. The fair value of $61,800 ($6.18 per     
share) related to these shares was recorded as debt offering costs at December  
31, 1999 and is being amortized into interest expense over the term of the loan.
As of December 31, 1999, $61,800 has been amortized to interest expense.        

On November 8, 1999, SLM issued 25,000 shares of common stock at $7.19 per share
in exchange for rights to use software developed by Cyberworld International    
Corporation, a third party. The fair value of $179,675 of the shares on the date
of issuance was recorded as a licensing right asset.                            

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On November 8, 1999, SLM issued 10,000 shares of common stock to VMR Capital at 
$7.19 per share in relation to the Company's listing on the Frankfurt stock     
exchange. The fair value of $71,870 was charged to operations during 1999.      

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 - SHAREHOLDERS' EQUITY (CONTINUED)                                       

Through July 1999, a total of $738,100 in cash was received for the sale of     
stock. The stock sale consists of 246,029 shares of restricted stock that were  
issued on July 23, 1999 in consideration for purchase for a value of $3.00 per  
share. In addition, the subscription stock investors were granted warrants to   
purchase another 246,029 shares at $5.00 per share.                             

STOCK OPTIONS                                                                   

From July 23, 1999 through October 5, 1999, SLM entered into stock option       
agreements with certain executives, key employees, consultants and non-employee 
directors to purchase 2,435,000 common shares at $2.50 to $5.50 per share, the  
fair market values at the date of grant. The options have terms ranging from 5  
to 10 years. The options and warrants are subject to various vesting terms      
ranging from immediate vesting to vesting in two years. Included are 500,000    
options to purchase common stock granted on October 5, 1999, at $5.50 per share 
to a related party consultant for business development services. These options  
have a term of 10 years and are fully vested at December 31, 1999. The fair     
value of $2,647,554 of these options was charged to operations during 1999.     

WARRANTS                                                                        

On September 15, 1999, SLM issued warrants to purchase 5,000 common shares in   
conjunction with debt financing. The warrants have a $5 per share exercise price
and a term of three years. Since the note was repaid by December 31, 1999, the  
fair value of $7,486 of the warrants was charged to interest expense during the 
year.                                                                           

On September 21, 1999, SLM issued warrants to purchase 5,000 common shares in   
conjunction with debt financing. The warrants have a $5 per share exercise price
and a term of three years. Since the note was repaid by December 31, 1999, the  
fair value of $7,486 of the warrants was charged to interest expense during the 
year.                                                                           

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 - SHAREHOLDERS' EQUITY (CONTINUED)                                       

On October 12, 1999, SLM issued warrants to purchase 25,000 shares of common    
stock at $6.18 per share through October 11, 2000 in connection with a bridge   
loan from VMR Luxembourg S.A.                                                   

On November 1, 1999, SLM issued warrants to purchase 2,500 common shares in     
conjunction with debt financing. The warrants have a $6 per share exercise price
and a term of three years. As the note was repaid by December 31, 1999, the fair
value of $3,470 of the warrants was charged to interest expense during the year.

The fair value of $35,572 related to all of the above was recorded as debt      
offering costs at December 31, 1999 and is being amortized into interest expense
over the six-month term of the loan. As of December 31, 1999, $17,756 remained  
capitalized in deferred offering costs.                                         

CONVERTIBLE PREFERRED STOCK ISSUANCE                                            

On November 3, 1999, the Company entered into an agreement with Macromedia, Inc.
("Macromedia") to issue 714,286 shares of the Company preferred stock at $7.00  
per preferred share for a total of $5,000,002 in cash. The Company entered into 
a five-year distribution agreement with Macromedia to distribute flash-animated 
episodes of series produced by the Company. During the first year of the term,  
SLM must make 10 submissions of series at an average rate of at least one       
submission every two months. Macromedia will reimburse the Company for          
production costs plus profit and overhead in addition to a license fee after    
delivery of the last episode in each accepted series. The Company is required to
pay $178,000 of the advertising costs to launch the first series.               

1999 STOCK OPTION PLAN                                                          

The company adopted a Stock Option Plan (the "1999 Plan") which became effective
on October 11, 1999. Each director, officer, employee or consultant of the      
Company or any of its subsidiaries is eligible to be considered for the grant of
awards under the 1999 Plan. The maximum number of shares of Common Stock that   
may be issued pursuant to awards granted under the 1999 Plan is 1,500,000. Any  
shares of Common Stock subject to an award which for any reason expires or      
terminates unexercised are again available for issuance under the 1999 Plan.    
Options granted generally have a term of five years and usually vest over two   
years beginning on the anniversary date of the grant.                           

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 - SHAREHOLDERS' EQUITY (CONTINUED)                                       

The following table summarizes stock option activity under the 1999 Plan and    
other options granted by the Board of Directors:                                

                                                                [Download Table]

                                                        Number of        Option
                                                        Shares           Price 
                                                        -----------------------
                                                                               
Outstanding at December 31, 1998                                 --      $  -- 
Granted                                                   3,402,500       3.86 
Terminated                                                 (410,000)      2.50 
                                                        -----------------------

Outstanding at December 31, 1999                          2,992,500       4.05 
                                                        -----------------------

Exercisable at December 31, 1999                          1,527,500      $4.22 
                                                        -----------------------

Additional information with respect to outstanding options to purchase common   
stock at December 31, 1999 is as follows:                                       

                                                        [Enlarge/Download Table]

                                             Options outstanding                                                          
                          ---------------------------------------------------------                                       
                                              Weighted average                                Options exercisable         
                                                  Remaining                           ------------------------------------
                                                 contractual       Weighted average                       Weighted average
Range of exercise prices  Number of shares     life (in years)      exercise price    Number of shares     exercise price 
                                                                                                                          
$2.50                        1,545,000              6.93                $2.50              725,000             $2.50      
$5.00                          152,500              8.06                 5.00              100,000              5.00      
$5.01 to $5.50                 900,000              7.56                 5.48              500,000              5.50      
$5.51 to $6.00                 130,000              4.94                 5.87                2,500              5.88      
$6.01 to $6.75                  65,000              4.88                 6.44                    -                 -      
$6.88                          200,000              4.83                 6.88              200,000              6.88      
                          ------------------------------------------------------------------------------------------------
Total                        2,992,500              6.91                $4.05            1,527,500             $4.22      
                          ================================================================================================

Under the 1999 Plan, SLM issued 202,500 options to consultants. The fair value  
of $611,425 was charged to operations during 1999.                              

As discussed in Note 2, the Company has adopted the disclosure-only provisions  
of SFAS No. 123 which requires the use of option valuation models to provide    
supplemental information regarding options. Pro forma information regarding net 
loss and loss per share shown below was determined as if the Company had        
accounted for its employee stock options using the fair value method pursuant to
SFAS No. 123.                                                                   

The fair value of the options and warrants at the date of grant was calculated  
using the Black-Scholes option pricing model with the following weighted-average
assumptions for 1999: risk free interest rate of 5.8%; dividend yield of 0%;    
expected volatility of 90%; and expected life of 5 years. These assumptions     
resulted in a weighted average fair value of $1.44 per option and $1.04 per     
warrant granted in 1999.                                                        

F-22

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 STAN LEE MEDIA, INC. AND SUBSIDIARY
 (A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 - SHAREHOLDERS' EQUITY (CONTINUED)                                       

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options. The Company's employee stock options have not been
traded. In addition, the assumptions used in option valuation models are highly 
subjective, particularly the expected stock price volatility of the underlying  
stock. Because changes in these subjective input assumptions can materially     
affect the fair value estimate, in management's opinion, the existing models do 
not provide a reliable single measure of the fair value of its employee stock   
options.                                                                        

These pro forma amounts may not be representative of future disclosures since   
the estimated fair value of the options is amortized to expense over the        
options' vesting periods. The pro forma effect on net loss for 1999 is not      
representative of the pro forma effect on net income (loss) in future years     
because it reflects expense for a period less than one year's vesting. Pro forma
information in future years will also reflect the amortization of any stock     
options granted in succeeding years.                                            

The Company's pro forma information is as follows:                              

                                                                [Download Table]

                                                           Year Ended    
                                                        December 31, 1999
                                                        -----------------
                                                                         
Net loss, as reported                                     $(7,928,865)   
Net loss, pro forma                                       $(8,192,679)   
Basic and diluted loss per share, as reported                   (0.81)   
Basic and diluted loss per share, pro forma                     (0.84)   

NOTE 8 - SIGNIFICANT BUSINESS AGREEMENTS                                        

PENTAFOUR MEDIA,INC.                                                            

The Company entered into a three-year strategic alliance agreement with         
Pentafour Media, Inc. on January 11, 1999, pursuant to which the companies will 
work together in the creation of entertainment content. Pentafour will provide  
services on a "work-for-hire" basis and become co-producers of content.         

In exchange for SLM's goodwill and brand association, SLM will receive a        
$500,000 credit towards production and promotional materials produced by        
Pentafour. This $500,000 will be spread over three years with each year's credit
not exceeding $170,000.                                                         

F-23

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 STAN LEE MEDIA, INC. AND SUBSIDIARY
 (A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - SIGNIFICANT BUSINESS AGREEMENTS (CONTINUED)                            

WARNER BROS./ACMECITY                                                           

On June 14, 1999, SLM and Warner Bros./AcmeCity ("WBAC") signed a "Community"   
agreement pursuant to which WBAC will provide SLM with web community hosting    
services, e-mail, and community tools which will provide exclusive free home    
pages, chat and message boards. WBAC also is to provide direct buttons from each
home page to the "stanlee.net" home page of SLM. In exchange for exclusively    
hosting SLM's global community of users, WBAC is providing these services to SLM
at no cost, and will pay SLM 50% of the net advertising revenue earned, payable 
on a quarterly basis. SLM also has the option to sell advertising inventory on  
the WBAC site.                                                                  

WBAC will be responsible for sales and fulfillment of any premium services such 
as purchasing additional memory for a personal home page, and will pay SLM 20%  
of the net revenues derived from the sale of these products. SLM will be        
responsible for sales and fulfillment of all goods and services within the      
Community relating to Stan Lee products and merchandise and will pay WBAC 12.5% 
of the gross revenue derived from these sales.                                  

The term of the agreement is 18 months from June 14, 1999 and WBAC will have one
option to renew for an additional 18 months. The option must be exercised by    
WBAC no later than 60 days prior to the end of the initial term.                

WHATSHOTNOW.COM                                                                 

On August 1, 1999, WhatsHotNow.com, Inc. ("WHN") and SLM entered into a one-year
agreement (automatically renewable for successive additional one-year terms     
unless either party notifies the other party of its non-renewal), whereby WHN   
will design and host SLM's official online store. SLM's store shall be SLM's    
only official online store. On merchandise acquired by WHN, WHN shall pay Client
100% of the net proceeds after deducting a management fee equal to 23% of Gross 
Retail Sales. On merchandise consigned to WHN by SLM, WHN shall pay Client 100% 
of the net proceeds after deducting a management fee equal to 18% of Gross      
Retail Sales.                                                                   

CYBERWORLD                                                                      

On November 8, 1999, the Company entered into a Strategic Alliance Agreement    
with Cyberworld (CW) to use technology and products to market, enhance and/or   
promote SLM web sites, SLM products and to provide web-hosting services by CW   
for such SLM websites. Under the terms of the agreement, SLM issued CW 25,000   
restricted shares of SLM common stock, and CW issued SLM warrants to purchase   
250,000 of CW's common stock at $1.00 per share, and 250,000 of CW's common     
stock at $2.00 per share. Under the terms of the agreement SLM is required to   
make royalty payments of 5% related to qualified revenues.                      

F-24

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 STAN LEE MEDIA, INC. AND SUBSIDIARY
 (A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 - SUBSEQUENT EVENTS                                                      

BACKSTREET BOYS                                                                 

On February 2, 2000, SLM entered into an agreement with KBNHA Enterprises, Inc. 
f/s/o Nicholas Carter, Alexander J. McLean, Howard Dorough, Kevin Richardson and
Brian Thomas Littrell, professionally collectively known as "The Backstreet     
Boys" to produce and co-own a superhero franchise based on their personae,      
having superhero alter-egos. The superhero franchise entitled "The Backstreet   
Project," co-created by Stan Lee, is co-owned by the Company, and will be       
exploited in all media and all major merchandising avenues                      

As partial consideration for entering into the agreement, KBNHA or its assigns  
received options to purchase 300,000 shares of SLM's common stock at an exercise
price of $7.00 per share. The options will vest as follows: (i) 75,000 upon     
execution of the agreement, 25,000 upon the initial webcast of the first        
Webisode, 50,000 as of February 1, 2001, 50,000 as of August 1, 2001, 50,000 as 
of February 1, 2002, and 50,000 as of February 1, 2003                          

VIACOM                                                                          

On January 25, 2000 SLM signed an agreement with Viacom Productions to produce  
two new five minute programs (called Webisodes) utilizing Mighty Mouse and other
Terry Toons characters. Viacom owns all rights to these characters. SLM shall   
prepare and produce the two new five-minute webisodes after approval from       
Viacom. Once approved, Viacom will finance the production of the webisodes and  
SLM shall receive a production fee equal to 12.5% of the approved production    
budget. SLM shall be entitled to 25% of net merchandising revenues derived from 
all exploitation of merchandising rights for the characters for a period of two 
years. Viacom shall have an option to have SLM produce additional Webisodes     
after the initial contract term. Each subsequent series will consist of six     
webisodes with SLM having the same rights as the previous contract.             

Viacom will have another option to cause SLM to produce a television            
broadcast-quality thirty-minute animated series. SLM will be reimbursed for     
actual out-of-pocket production costs plus an overhead fee of $12,500 per       
episode as well as 25% of Adjusted Gross Receipts, or 50% of Net Profits derived
from the exploitation of the animated series, whichever is greater. SLM will    
also be entitled to 25% of net merchandising revenues.                          

F-25

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 STAN LEE MEDIA, INC. AND SUBSIDIARY
 (A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 - SUBSEQUENT EVENTS (CONTINUED)                                          

PRIVATE PLACEMENTS                                                              

On February 1, 2000, the Company sold, in a private placement, 200,000 shares of
SLM's restricted common stock at $8.00 per share for a total purchase price of  
$1,600,000, and issued five-year warrants to purchase an additional 100,000     
shares of common stock at an exercise price of $10.00 per share.                

On February 4, 2000, the Company sold, in a private placement, 200,000 shares of
SLM's restricted common stock at $11.00 per share for a total purchase price of 
$2,200,000, and issued five-year warrants to purchase an additional 100,000     
shares of common stock at an exercise price of $11.00 per share.                

Certain registration rights were granted under the terms of these private       
placements. Finder's fees totaling $150,000 were paid in conjunction with these 
financings.                                                                     

NOTE 10 - INCOME TAXES                                                          

The Company's operating losses generated a deferred tax asset of approximately  
$1,000,000 at December 31, 1999. The deferred tax asset has not been recognized 
since it is more likely than not that the deferred tax asset will not be        
realized. Accordingly, a 100% valuation allowance has been recorded.            

F-26

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 STAN LEE MEDIA, INC. AND SUBSIDIARY
 (A DEVELOPMENT STAGE COMPANY)

 CONSOLIDATED STATEMENTS OF CASH FLOWS

NOTE 11 - SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITY                 

During 1999, the Company purchased $190,036 of equipment under capital leases.  

On October 12, 1999, the Company issued 10,000 common shares with a fair value  
of $61,800 to VMR Capital Markets in conjunction with debt financing.           

On November 8, 1999, the Company issued 25,000 common shares with a fair value  
of $179,675 to Cyberworld International Corporation for software licensing      
rights.                                                                         

On November 8, 1999, the Company issued 10,000 common shares with a fair value  
of $71,870 to VMR Capital Markets for assisting the Company with obtaining a    
listing on the Frankfurt stock exchange.                                        

From September through November, 1999, the Company issued warrants in           
conjunction with debt offerings. The warrants had a fair value of $54,013, of   
which $36,257 was charged to expense during 1999 and the balance was capitalized
as deferred offering costs                                                      

During 1999, the Company paid $9,377 for interest.                              

F-27

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SIGNATURES

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

 STAN LEE MEDIA, INC.,

      By:   /s/  DEVENDRA MISHRA
                                  ----------------------------------------------
                            Devendra Mishra, President and Chief
         Executive Officer

        By:   /s/  ROBERT M. SCHULTZ
                                  ----------------------------------------------
                                 Robert M. Schultz, Vice President-Finance
                                    (Principal Financial and Accounting Officer)

 POWER OF ATTORNEY

       Each person whose signature appears below constitutes and appoints Gill
Champion and Robert M. Schultz, and each of them, as his true and lawful        
attorneys-in-fact and agents with full power of substitution and resubstitution,
for him and his name, place and stead, in any and all capacities, to sign any or
all amendments to this Annual Report on Form 10-KSB and to file the same, with  
all exhibits thereto, and other documents in connection therewith, with the     
Securities and Exchange Commission, granting unto said attorneys-in-fact and    
agents, and each of them, full power and authority to do and perform each and   
every act and thing requisite and necessary to be done in and about the         
foregoing, as fully to all intents and purposes as he might or could do in      
person, hereby ratifying and confirming all that said attorneys-in-fact and     
agents, or either of them, or their substitutes, may lawfully do or cause to be 
done by virtue hereof.                                                          

SIGNATURES

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

                                                                [Download Table]

   Signature                              Title                          Date     
   ---------                              -----                          ----     
                                                                                  
/s/  DEVENDRA MISHRA            President, Chief Executive          March 16, 2000
------------------------------  Officer and Director                              
Devendra Mishra                 (Principal Executive Officer)                     

/s/  STAN LEE                   Chairman of the Board of Directors  March 16, 2000
------------------------------                                                    
Stan Lee                                                                          

/s/  ROBERT M. SCHULTZ          Vice President-Finance              March 16, 2000
------------------------------  (Principal Financial and                          
Robert M Schultz                Accounting Officer)                               

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                                                                [Download Table]
                                                                      

/s/  GILL CHAMPION               Vice President, Chief  March 16, 2000
-------------------------------  Operating Officer and                
Gill Champion                    Director                             

/s/  NELSON S. THALL             Director               March 16, 2000
-------------------------------                                       
Nelson S. Thall                                                       

                                 Director               March __, 2000
-------------------------------                                       
Robert K. Burgess                                                     

/s/  ARTHUR E. SCHRAMM, JR.      Director               March 16, 2000
-------------------------------                                       
Arthur E. Schramm, Jr.                                                

*By:  /s/  ROBERT M. SCHULTZ                                          
    --------------------------                                        
         Robert M. Schultz                                            
         Attorney-in-Fact                                             

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STAN LEE MEDIA, INC.

 FORM 10-KSB

 INDEX TO EXHIBITS

                                                        [Enlarge/Download Table]

Exhibits                                                                          Page
                                                                                  ----
                                                                                      
 2.1   Reorganization and Stock Purchase Agreement dated as of June 25, 1999          

 3.1   Articles of Incorporation                                                      

 3.2   Articles of Amendment to Articles of Incorporation Filed August 12, 1999       

 3.3   Articles of Amendment to Articles of Incorporation Filed November 5, 1999      

 3.4   Bylaws                                                                         

10.1   Securities Purchase Agreement dated as of November 3, 1999, between the        
       Registrant and Macromedia, Inc.                                                

10.2   Agreement between the Registrant and Macromedia                                

10.3   Purchase Agreement dated as of February 1, 2000                                

10.4   Purchase Agreement dated as of February 4, 2000                                

10.5   Revolving Credit Agreement dated July 23, 1999, between the Registrant         
       and Santo Development Worldwide                                                

10.6   Revolving Credit Agreement dated July 23, 1999, between the Registrant         
       and Maxi Technologies Limited                                                  

10.7   Financial Consulting Agreement dated as of October 11, 1999, between the       
       Registrant and VMR Capital Markets, U.S.                                       

10.8   Form of 8% Convertible Debenture Due April 11, 2000                            

10.9   Warrant Agreement dated as of October 11, 1999, in favor of VMR                
       Luxembourg, S.A.                                                               

10.10  1999 Stock Incentive Plan                                                      

10.11  Form of 1999 Stock Incentive Plan Option Agreement                             

10.12  Agreement dated July 23, 1999, between the Registrant and Gill Champion        

10.13  Agreement dated July 23, 1999, between the Registrant and Robert M.            
       Schultz                                                                        

10.14  Agreement dated July 23, 1999, between the Registrant and Stephen M.           
       Gordon                                                                         

10.15  Agreement dated July 23, 1999, between the Registrant and Dana Moreshead       

10.16  Agreement dated July 23, 1999, between the Registrant and Dave Medinnis        

10.17  Agreement dated July 23, 1999, between the Registrant and Zachary Foley        

10.18  Linking and Stock Issuance Agreement dated March 16, 1999, between the         
       Registrant and NPO Online, Inc.                                                

10.19  Agreement dated July 23, 1999, between the Registrant and Gary Manfredi        

10.20  Agreement dated July 23, 1999, between the Registrant and Shawn McManus        

10.21  Agreement dated July 23, 1999, between the Registrant and Andrey               
       Pavlovskiy                                                                     

10.22  Agreement dated July 23, 1999, between the Registrant and Aaron Sowd           

10.23  Agreement dated July 23, 1999, between the Registrant and Jason Thomas         

10.24  Agreement dated July 23, 1999, between the Registrant and William James        
       Wilkinson, Jr.                                                                 

10.25  Agreement dated July 23, 1999, between the Registrant and Anthony Winn         

10.26  Agreement dated July 23, 1999, between the Registrant and Jeffrey D.           
       Segal                                                                          

10.27  Agreement dated July 23, 1999, between the Registrant and Ziffren,             
       Brittenham, Branca & Fischer LLP                                               

10.28  Agreement dated September 24, 1999, between the Registrant and Iyan Bruce      

10.29  Agreement dated September 24, 1999, between the Registrant and Zachary         
       Foley                                                                          

10.30  Agreement dated September 24, 1999, between the Registrant and Jennifer        
       Kahn                                                                           

10.31  Agreement dated September 24, 1999, between the Registrant and Tony            
       Pastor                                                                         

10.32  Agreement dated September 24, 1999, between the Registrant and Mone            
       Peterson                                                                       

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                                                                [Download Table]
                                                                                

10.33  Agreement dated September 24, 1999, between the Registrant and Patricia  
       Smith                                                                    

10.34  Agreement dated September 24, 1999, between the Registrant and Russ Heath

10.35  Agreement dated September 27, 1999, between the Registrant and Brady     
       Darvin                                                                   

10.36  Agreement dated September 27, 1999, between the Registrant and Larry     
       Houston                                                                  

10.37  Agreement dated September 27, 1999, between the Registrant and Ruben     
       Martinez                                                                 

10.38  Agreement dated October 5, 1999, between the Registrant and Stanley A.   
       Weston                                                                   

10.39  Agreement dated October 5, 1999, between the Registrant and Jeffrey D.   
       Segal                                                                    

10.40  Agreement dated October 5, 1999, between the Registrant and Paraversal,  
       Inc.                                                                     

10.41  Agreement dated October 15, 1998, between Registrant and Mr. Stan Lee    

10.42  Agreement dated October 22, 1999, between Registrant and Mr. Stan Lee    

10.43  Consulting Agreement dated October 5, 1999, between Registrant and       
       Paraversal, Inc.                                                         

10.44  Employment Agreement dated October 8, 1999, between the Registrant and   
       Stephen M. Gordon                                                        

10.45  AcmeCity Interactive Community Agreement dated June 14, 1999, between the
       Registrant and AcmeCity, a Delaware LLC                                  

10.46  Agreement dated February 2, 2000, between the Registrant and KBNHA       
       Enterprises, Inc.                                                        

10.47  Publishing Agreement between Simon & Schuster, Inc., Stan Lee and George 
       Mair                                                                     

10.48  Agreement dated December 7, 1999, among DC Comics, Stan Lee, the         
       Registrant and Branded Entertainment, LLC                                

10.49  Strategic Alliance Agreement dated November 8, 1999, between the         
       Registrant and Cyberworld International Corporation                      

10.50  Deal Memo dated as of August 1, 1999, between the Registrant and         
       WhatsHotNow.com, Inc.                                                    

10.51  Sublease Agreement dated as of November 4, 1998, between the Registrant  
       and One Twelve Interactive, Inc.                                         

10.52  Third Amendment to Office Lease, dated May 27, 1999, between Douglas     
       Emmett Realty Fund 1997, a California limited partnership, and 1-12      
       Interactive, Inc., a Delaware corporation                                

10.53  Office Lease dated September 22, 1999, between the Registrant and        
       Douglas Emmett Realty Fund 1997, a California limited partnership        

10.54  First Amendment to Office Lease dated November 2, 1999, between the      
       Registrant and Douglas Emmett Realty Fund 1997, a California limited     
       partnership                                                              

21.1   Subsidiaries of the Registrant                                           

27     Financial Data Schedule                                                  

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

Dates Referenced Herein   and   Documents Incorporated By Reference

				Referenced-On Page
This 10KSB Filing		Date		First		Last			Other Filings
		1/1/97		25
		10/13/98		5		47
		10/15/98		38		69
		10/18/98		29
		10/21/98		12
		10/31/98		41					NT 10-Q, 10QSB
		11/4/98		38		69
		12/31/98		20		60
		1/1/99		15		56
		1/11/99		61
		1/14/99		5		47
		3/16/99		37		68
		4/1/99		53
		4/14/99		5		47
		5/27/99		38		69
		6/14/99		38		69
		6/15/99		20		50
		6/25/99		29		68
		6/30/99		15		56
		7/23/99		5		68			8-K/A, 8-K
		7/24/99		22		29
		7/30/99		16		56
		8/1/99		38		69
		8/12/99		36		68
		8/16/99		21					8-K
		9/15/99		17		58
		9/21/99		17		58
		9/22/99		38		69
		9/24/99		37		69
		9/27/99		38		69
		9/30/99		15					10QSB
		10/1/99		31		54
		10/5/99		16		69
		10/8/99		31		69
		10/11/99		17		68
		10/12/99		16		65
		10/13/99		30
		10/15/99		29		35
		10/20/99		12
		10/22/99		38		69
		11/1/99		17		59
		11/2/99		38		69
		11/3/99		16		68			8-K
		11/5/99		36		68
		11/8/99		16		69
		11/17/99		36					8-K
		12/1/99		28		29
		12/7/99		29		69
		12/9/99		16		56
		12/10/99		22		33
For The Period Ended		12/31/99		1		64
		1/1/00		15		50
		1/10/00		30		36
		1/25/00		63
		1/31/00		30		36
		2/1/00		17		68
		2/2/00		38		69
		2/4/00		17		68
		2/25/00		15
		2/29/00		8
		3/1/00		14		36
		3/6/00		1		15
		3/16/00		66		67
Filed On / Filed As Of		3/20/00
		4/1/00		29		35
		4/11/00		37		68
		4/21/00		12
		5/31/00		31
		6/1/00		31		53
		7/23/00		35
		7/31/00		55					8-K
		10/11/00		59
		12/31/00		35		36
		1/10/01		35
		2/1/01		63
		4/1/01		29		35
		5/31/01		31		53
		7/23/01		35
		8/1/01		63
		12/31/01		35
		1/10/02		35
		2/1/02		63
		10/11/02		52
		2/1/03		63
		10/31/04		53
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