Detour Media Group Inc – ‘10KSB’ for 12/31/01

On:  Friday, 4/12/02   ·   For:  12/31/01   ·   Accession #:  1013596-2-31   ·   File #:  0-25388

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

Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB       Form 10-Ksb for Fiscal Year Ended 12/31/01            47    175K 

Document Table of Contents

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 FORM 10-KSB

(Mark One)                                                            
[X]  Annual Report Pursuant to Section 13 or 15(d) of the                       
Securities Exchange Act of 1934                     

[ ]  Transitional Report Under Section 13 or 15(d) of the                       
Securities Exchange Act of 1934                     

 For the fiscal year ended December 31, 2001

 Commission File No. 0-25388

DETOUR MEDIA GROUP, INC.
------------------------
(Name of small business issuer in its charter)

Colorado                                                   84-1156459   
--------                                                   ----------   
(State or other jurisdiction of                             (I.R.S. Employer    
Incorporation or Organization)                            Identification Number)

 10008 National Blvd. #345
 Los Angeles, California 90034
(323) 369-9444
--------------
 (Address, including zip code and telephone number, including area
code, of registrant's executive offices)

7060 Hollywood Blvd., Suite 1150
 Los Angeles, California 90038
 -----------------------------
(Former Address)

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

 Securities registered under to Section 12(g) of the Exchange Act:
Common Stock
------------
(Title of class)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Securities  Exchange  Act of 1934  during the  preceding  12
months (or for such  shorter  period that the Company was  required to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days. Yes  X   No                                                               
---     ---                                                 

 (Continued on Following Page)

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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. X                                                             

Issuer's revenues for its most recent fiscal year: $1,197,966.                  

State the  aggregate  market value of the voting stock held by non-  affiliates,
computed by reference  to the price at which the stock was sold,  or the average
bid and asked  prices of such stock,  as of a specified  date within the past 60
days: As of April 11, 2002: $698,292.                                           

State the number of shares outstanding of each of the issuer's classes of common
equity,  as of the  latest  practicable  date:  As of April 11,  2002 there were
42,242,965 shares of our common stock issued and outstanding.                   

Documents Incorporated by Reference: None                                       

 This Form 10-KSB consists of Forty Seven Pages.
Exhibit Index is located at Page Forty Five.

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 TABLE OF CONTENTS

 FORM 10-KSB ANNUAL REPORT

DETOUR MEDIA GROUP, INC.

                                                                            PAGE
                                                                            ----

Facing Page                                                                     
Index                                                                           
PART I                                                                          
Item 1.    Description of Business..........................................  4 
Item 2.    Description of Property.......................................... 13 
Item 3.    Legal Proceedings................................................ 13 
Item 4.    Submission of Matters to a Vote of                                   
              Security Holders............................................. 14

PART II                                                                         
Item 5.    Market for the Registrant's Common Equity                            
              and Related Stockholder Matters.............................. 14
Item 6.    Management's Discussion and Analysis of                              
Financial Condition and Results of                
              Operations................................................... 15
Item 7     Financial Statements............................................. 20 
Item 8.    Changes in and Disagreements on Accounting                           
              and Financial Disclosure..................................... 41

PART III                                                                        
Item 9.    Directors, Executive Officers, Promoters                             
and Control Persons, Compliance with              
              Section 16(a) of the Exchange Act............................ 41
Item 10.   Executive Compensation........................................... 42 
Item 11.   Security Ownership of Certain Beneficial                             
              Owners and Management........................................ 43
Item 12.   Certain Relationships and Related                                    
              Transactions................................................. 44

PART IV                                                                         
Item 13.   Exhibits and Reports on Form 8-K................................. 45 

SIGNATURES.................................................................. 47 

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PART I

ITEM 1. DESCRIPTION OF BUSINESS.                                                

     Detour Media Group,  Inc., f/k/a Detour Magazine,  Inc. ("we," "our," "us,"
the  "Company"  or  "Detour")  is engaged  principally  in the  publication  and
distribution  of Detour  Magazine  ("Detour"),  an  internationally  distributed
magazine best known for presentation of cutting-edge trends and strong editorial
focus in fashion,  entertainment,  lifestyle and contemporary social issues. Our
mission is to be the  premier  urban  avant-garde  publication  devoted to these
topics,  thereby  attracting a readership  consisting  primarily of affluent and
style  conscious  men and  women  in the 18 to 35 age  group.  We  have  derived
revenues  primarily  from  advertising  in the magazine and, to a lesser extent,
from subscription and newsstand sales.                                          

     Our magazine has been published since 1987.  Through December 31, 2000, the
magazine was published ten times a year, with two double issues per year. During
the  fiscal  year ended  December  31,  2001,  print runs were cut and only four
issues of the magazine were published. The last issue was the Fall Fashion issue
published in October 2001, after which we were forced to discontinue publication
caused by our lack of available cash and our distressed financial condition.  We
intend to relaunch  publication of our magazine in the third quarter of 2002, in
accordance  with our new  business  plan  discussed  below  under "New  Business
Plan.".                                                                         

DETOUR MAGAZINE                                                                 

     To  distinguish  itself  from  other  entertainment  publications,   Detour
Magazine attempts to identify and feature  entertainers and media  personalities
well  before they reach  widespread  recognition  and the level of  conventional
acceptance  which  typifies  its  competition,  and is devoted  to  contemporary
lifestyles,  entertainment  and  fashion.  This  in  part  accounts  for  Detour
Magazines's   image   as  a   "cutting-edge"   magazine   featuring   tomorrow's
personalities.                                                                  

     Editorials follow the same focus,  providing insight into and publicity for
entertainers  and  media  personalities  who  have not yet  received  widespread
recognition,  as well as new  trends and  styles as they  first  emerge.  Detour
Magazine  prides  itself on some of the most talked  about and  respected  photo
journalism and editorials in the industry.                                      

     Since  inception,  our  magazine  has been  supported  by over 375 national
advertisers,  primarily  in the  fashion,  footwear,  eyewear,  jewelry,  watch,
fragrance,  cosmetics,  film, television,  music, liquor and tobacco industries.
During 2001, our advertising                                                    

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customers included, among others, Apple Computers,  Bacardi,  Beefeater,  Bombay
Sapphire,  Calvin Klein,  Christian Dior,  Diesel,  Evian,  FILA, Gap, Hard Rock
Hotel,  Helvetia Watches,  Khalua,  Lexus, Lucky Strike,  Motorola,  Parliament,
Perrier, Polo Jeans,  PumaSketchers,  Skyy Spirits,  Tanquary,  Universal Music,
Virginia  Slims and Warner Bros.  Records.  Advertising  revenues  accounted for
virtually all of our total revenues during 2001.  Other than Virginia Slims, who
accounted for  approximately  6% ($62,300) of our revenues during 2001, no other
advertiser accounted for 5% or more of our advertising revenues.                

     Commencing  with the May 2000 issue,  the magazine has been  distributed by
Curtis  Circulation  Company  ("Curtis").  Curtis  is  a  leading  international
distributor.                                                                    

     Detour's  reputation as a cutting-edge  fashion and entertainment  magazine
has translated into a readership profile comprised of an attractive audience for
advertisers.  Detour's  average  reader is a 29 year old  professional,  with an
average  income in excess of  $75,000+  per year.  Over 60% of the  readers  are
single,  and 74% percent have obtained  college  degrees.  The average reader of
Detour spends over $15,000 per year on clothing and dines out 2.6 times per week
based upon a reader's survey conducted in Detour Magazine during the year 2000. 

     We remain  committed  to our  long-standing  editorial  mission:  to be the
premier  urban  avant-garde   publication  devoted  to  entertainment,   fashion
lifestyle and  contemporary  social issues.  Our targeted  audience of affluent,
educated and creative  professionals thrives on new information about the latest
cultural trends. Long before assimilating into the mainstream, styles and trends
begin on the margins,  which is where Detour,  as its name implies,  derives its
sensibility  - off the beaten path,  miles from the safe,  familiar,  well-paved
roads of the pop-culture highway.                                               

     Over the past year, in a dual effort to reinforce our image as an essential
fashion  resource and to attract coveted fashion  advertisers,  we have featured
30-60 pages of fashion  pictorials in each issue and it is expected that we will
continue to do so in the future,  provided that we are financially able to begin
publishing the magazine  again in the future.  Our ability to do so is dependent
upon our  ability  to  obtain  additional  financing,  of which  there can be no
assurance.  In addition,  we have expanded our style coverage to include service
pages  devoted  to  health  and  beauty,  as well  as  profiles  of new  stores,
restaurants,  products  and  accessories,  which we  believe  provides  enhanced
opportunities for advertisers.                                                  

     Management  does not  expect  to  change  the  content  or format of Detour
Magazine materially beyond editorial changes necessary to                       

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broaden the magazine's appeal within the target readership, including making the
magazine  more  visual by  continuing  to seek out both  established  and rising
photographers.                                                                  

NEW BUSINESS STRATEGY                                                           

     During the fiscal  year ended  December  31,  2001,  print runs were cut by
nearly  half and only four issues of the  magazine  appeared,  the Fall  Fashion
issue being published in October 2001, after which we were forced to discontinue
publication  as a result  of our lack of cash  availability  and our  distressed
financial condition.  In January 2002, we completed a new business plan which we
believe approaches the future on a disciplined,  focused, prioritized and phased
basis, which is described in detail below.                                      

Phase 1                                                                         

     Execute a  Financial  Reorganization  - We are  currently  in a  distressed
     financial condition that has resulted in a cessation of publication.  While
     measures  have been  taken to reduce  the  operating  budget,  an influx of
     approximately  $5 million dollars of equity capital is required to not only
     effect a financial  reorganization,  but also to provide sufficient working
     capital  going  forward.  Liquidation  of existing  loans and  accounts and
     accrued expenses  payable are anticipated to include  conversion of debt to
     equity, forgiveness of debt and prorated cash settlements.  In the interim,
     the  magazine  will  remain on hiatus.  Assuming we are able to secure such
     financing  by  April  30,  2002,  of  which  there  can  be  no  assurance,
publication would recommence with the September 2002 issue.           

Phase 2                                                                         

     Effect Key Outsourcing  Relationships - Many publishers,  including Detour,
     rely  on  outside   entities  for  printing,   single  copy   distribution,
     subscription  circulation and fulfillment services.  Under the new business
     plan,  Detour will  initially  outsource a number of other key functions as
     well, including  advertising sales, barter sales, and licensing.  While the
     entities that perform such functions  typically  command a significant fee,
     the rationale for pursuing this strategy is twofold.  It will (i) enable us
     to keep our operating  expenses as low as possible;  and (ii) significantly
     elevate the  magnitude and quality of resources  working on our behalf.  If
     and when our  business  grows to a point where it makes both  economic  and
     operational sense to bring one or more of these functions in-house, we will
do so.                                                                

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     Relaunch the Magazine - Relaunching the magazine will entail the following:

          Branding - We will transform the current Detour name and logotype into
          a brand identity that captures and manifests the iconoclastic  essence
          of the  magazine  and its readers as  trendsetters  who "take the road
less traveled."                                             

          Circulation:  To rebuild the magazine's circulation, we will undertake
the following measures:                                     

          -    Single  Copy  Sales - Over the  course of its  history,  Detour's
               single  copy  sell-through  rate has ranged  from a low 14% to an
               acceptable  42%.  Going  forward,   we  will  seek  to  assure  a
consistently high sell-through rate by:           

(i) Hiring a quality distributor;                 

               (ii)  Focusing   distribution  in  selected  major,   urban,  hip
               population   centers  like  New  York,   Los  Angeles,   Chicago,
               Washington  D.C., San Francisco,  Philadelphia,  Boston,  Dallas,
Houston, Miami, Atlanta and Seattle;              

               (iii) Further focusing  distribution within each of these markets
               into selected,  demographically  appropriate retail channels such
               as newsstands,  bookstores,  airline  terminals and commuter rail
terminals;                                        

               (iv)  Supporting the retailers with meaningful POS promotions and
display materials.                                

               (v)  Refining  our sales  forecasting.  Perhaps  the single  most
               important component of achieving an acceptable  sell-through rate
               is the  sales  forecast.  While  quality  distributors  regularly
               provide  publishers  with detailed  reports that can serve as the
               basis for  formulating and assessing  their sales  forecasts,  we
 have not historically assigned someone to the task.

          -    Subscription  Sales - At peak,  Detour  had a small  fraction  of
               subscribers  compared  to the  industry  average  of  84%.  Going
               forward,  we will  proactively  pursue  subscriptions.  This will
entail:                                           

               (i)  Investing  in the printing  and  insertion  of  subscription
solicitation cards in the magazine.               

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               (ii) Hiring top quality subscription  circulation and fulfillment
house services.                                   

               (iii)  Providing  complimentary  copies  to  guests  of  selected
hotels, airline club lounges, beauty salons, etc. 

               (iv) Implementing an array of direct response campaigns,  ranging
               traditional direct mail to piggybacking samples or teasers of the
               magazine with other demographically  compatible,  metro- oriented
publications.                                     

          -    Expand  Editorial/Advertising  Appeal - We will seek to attract a
broader range of advertisers by:                  

       (i) Hiring quality advertising and barter sales agencies.

               (ii) Creating  synergy between the magazine's  editorial  content
and the advertising community.                    

               (iii)   Consistent  and  concurrent  with  focusing  single  copy
               distribution  in major metro  markets,  expanding the  magazine's
               editorial  coverage of happenings in these markets.  By doing so,
               the  magazine  will  continue to appeal to national  advertisers,
               while also attracting a broad range of quality local advertisers,
               e.g.,  hotels,  restaurants  and clubs,  retail malls and stores,
               beauty salons and spas,  cultural and entertainment  venues,  new
residential developments, etc.                    

          -    Marketing  - To effect the  relaunch,  we will stage a  low-cost,
               high-impact  marketing,   public  relations,   promotion,  direct
mail/response and POS campaign.                   

               It should be noted that a number of our  advertisers,  along with
               various media outlets, will, as they traditionally do, contribute
               to  a  significant   portion  of  the  cost  of  the  sweepstakes
promotion.                                        

          -    Web Site - We launched  two web sites in 2000.  However,  neither
               was modeled to generate revenues or yield efficiencies. Under the
               new  business  plan,  a web  site  will  be  maintained,  but its
functions limited to the following:               

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                    - A picture of the  current  issue's  cover and a listing of
                    its table of contents, as well as a teaser of the content in
the next issue.                         

                    -  A  means  for  the   consumer   to  obtain  and  renew  a
                    subscription, change a mailing address, find a retailer that
                    sells the  magazine,  order a back issue,  write a letter to
                    the editor or  otherwise  contact the  magazine,  as well as
             purchase Detour branded merchandise (when available).

                    - A means for advertisers and agencies to order a Media Kit.

          -    Install  a New  Management  Team - While  Detour  has  some  very
               talented people,  as is self-evident from looking at the magazine
               itself, we are currently  recruiting to fill the vacant positions
of Publisher/COO and CFO.                         

Phase 3                                                                         

     Catalyze  International  Editions - Although Detour's  distribution to date
     has been limited to North America,  we ultimately  foresee editions in Asia
     (Japan), Europe (England, France, Germany, Italy and Spain) and South/Latin
     America (a South/Latin  America Spanish language  edition,  plus a separate
     Portuguese language edition in Brazil). While no assurances can be provided
     and subject to our receipt of sufficient equity capital,  it is anticipated
     that the first two international  editions will not premier until September
     2003,  while the next four editions  will be introduced  over the course of
2004 and the remaining two editions beyond.                           

     It is  envisioned  that  these  endeavors  will be  structured  so that the
     international  publishers will: a) have the exclusive  magazine  publishing
     and distribution  rights to the Detour name, logo and editorial content, as
     well as the  latitude  to create  original  content  for  their  respective
     territories,  b) be responsible for all start-up and on-going expenses, and
c) pay us royalties against net revenues.                             

     Exploit the Brand as an Intellectual  Property - As with the  international
     editions,  once the  magazine  has  been  reestablished,  and the  enhanced
     branding concept has taken hold, we will hire a quality licensing agency to
     begin to fulfill Detour's potential as an intellectual  property asset that
     can be  legitimately  extended  and applied  across  other media  platforms
     including  television,  radio, film, books, music, etc., as well as against
various types of products and                                         

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services such as apparel, accessories, cafes or clubs and travel.     

Phase 4                                                                         

     Pursue  Roll-Ups - The soft  economic  environment  has put pressure on all
     advertising dependent media, including the magazine publishing business. As
     a result,  there  are,  and will  continue  to be, a number of  potentially
attractive magazines available for sale in the foreseeable future.    

     The operating efficiencies (overhead, advertising sales, etc.) and enhanced
     leverage  (printing,  distribution,  etc.) that  accrue to a multi-  versus
     single-title  publisher  can be  substantial.  Therefore,  we  will  assess
     potential roll-up candidates and, should a compelling  opportunity  emerge,
     may seek to acquire same using our stock as currency, augmented by discrete
     financing.  While  we  are  committed  to  focusing  on our  core  magazine
     publishing  business  during the  forecast  period,  our  long-term  vision
     includes   extending  our  content  creation  and   intellectual   property
exploitation expertise to other media as well.                        

CONSULTING AGREEMENTS                                                           

     In order to assist us in our implementation of our new business plan and in
our efforts to raise additional capital, we entered into various agreements with
third parties, including the following:                                         

     In October  2001,  we entered into a one year,  non-exclusive  Finder's Fee
Agreement and a  non-exclusive  Consulting  Agreement with  Lexington  Ventures,
Inc,. Los Angeles, CA, ("Lexington").  These agreements provide for Lexington to
assist  us in our  attempts  to  raise  additional  funding.  The  Finder's  Fee
Agreement  provides  for us to pay to  Lexington a finder's  fee equal to 10% of
gross proceeds which we may receive as a result of  introductions to prospective
investors which are provided by Lexington.  In addition, if we receive a minimum
of $1  million  and a  maximum  of  $2  million  from  investors  introduced  by
Lexington,  we have agreed to issue to Lexington  warrants to purchase shares of
our common stock in an amount equal to 0.0015%,  multiplied by the fully diluted
number of shares our outstanding common stock immediately  following the closing
of such financing  (including any securities  issued as part of such financing).
The  exercise  price of these  warrants  will be equal to the price at which our
common  stock  is  sold  in  such  financing  and  the  agreement  provides  for
"piggyback"   registration  rights  applicable  to  the  shares  underlying  the
warrants.  Further, we have also agreed to pay a transaction fee to Lexington in
an amount equal to 5% of the initial million dollars received, 4% of            

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the second  million,  3% of the third  million,  2% of the fourth million and 1%
thereafter.  If  Lexington  performs  under this  agreement  and we elect not to
proceed, it is entitled to receive either one-third of the fees which would have
been payable.                                                                   

     Under the  Consulting  Agreement with  Lexington,  it has agreed to provide
assistance  to us in  identifying,  developing  and  promoting  the formation of
relationships  with persons that may be beneficial to  implementation of our new
business plan,  including potential  strategic  partners,  merger or acquisition
candidates,  customers,  business contacts,  employees,  agents,  consultants or
other valuable contacts. In exchange therefore,  we agreed to issue to Lexington
350,000 warrants,  each warrant  exercisable to purchase one share of our common
stock at an exercise price of $.04 per warrant and are  exercisable for five (5)
years from the date of issuance.                                                

     In November  2001, we entered into a  non-exclusive  agreement with Rockann
Enterprises, Inc. ("REI"), a privately held company based in Los Angeles, CA, to
provide us with  consulting  services.  The  services are to be conducted in two
phases,  including  (i)  preparation  of  a  revised  business  plan,  resolving
outstanding  creditor  issues,   identifying  potential  prospective  management
candidates and identifying  potential investors.  Phase two only commences if we
close a minimum of $2 million in financing  from any sources  within one year of
the commencement of the agreement.  Thereafter, REI will assist us in developing
a branding concept, relaunching of our magazine, identifying potential strategic
partners,  international partners,  roll-up candidates and third party licenses.
As  compensation  therefore,  we did agree to pay REI an  aggregate  of $55,000,
payable $25,000 upon execution and $5,000 a month thereafter for six (6) months.
However, if we receive financing resulting from an introduction provided by REI,
REI will also receive 10% of the gross  proceeds of such  financing,  as well as
warrants  equal to 10% of the number of shares issued in such  financing,  which
shall be exercisable at the financing offering price for a period of five years.
The shares of common stock  underlying  these  warrants  shall have  "piggyback"
registration rights.                                                            

     In  December  2001,  we  entered  into  two  (2)  separate  Engagement  Fee
Agreements  with EST  Consulting,  Inc,  Boardman,  Ohio and Suffield  Financial
Group, LLC, Bloomfield,  CT, respectively.  These agreements provide for each of
the aforesaid  entities to provide us with financial  consulting  services.  The
terms of these agreements provide for the payment of fees in the event either of
the applicable  entities  provides us with equity  capital,  either  directly or
indirectly.                                                                     

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Subsequent Events                                                               

     Between  January  1, 2002 and March  31,  2002,  we  received  $193,500  in
additional advances from Ed Stein, our President and Chairman.  In addition,  we
borrowed  an  additional   $111,600  from  1970  Asset   Management   Corp.,  an
unaffiliated  creditor.  These funds were  utilized  to pay certain  obligations
necessary  to allow us to continue  to remain in  business.  These loans  accrue
interest at the rate of 11% per annum and are due upon demand.                  

EMPLOYEES                                                                       

     At March 15, 2002, we had 3 full time employees  retained as a "core-group"
during our reorganization  period;  president/CEO,  editor in chief and creative
director,   in  addition  to  several   consultants   attending  to   financial,
administrative and going- forward business plan matters.  If and when we receive
a commitment on obtaining a $5 million capital infusion,  we will employ the new
management  team and rehire and /or newly hire the staff  necessary  to relaunch
and publish the magazine.  In that  eventuality,  we will also engage additional
persons on an "as needed" basis and outsource certain operational  activities on
a part  time or  independent  contractor  basis.  Management  believes  that our
relationship with our employees is satisfactory.  No employee is a member of any
union.                                                                          

COMPETITION                                                                     

     We compete with publicly and  privately  held  companies in the  publishing
business. Specifically,  management views Interview (circulation 150,000), Paper
(circulation 75,000) and Surface Magazine  (circulation 50,000) as our principal
magazine competitors,  each of whom are believed to have greater resources, both
financial and otherwise, than the resources presently available to us.          

TRADEMARKS                                                                      

     We have been issued a federal registration of the trademark Detour with the
United States Patent and Trademark Office, Washington,  D.C. and the application
has been assigned a filing date of September 2, 1997, Serial No. 75-350798.     

GOVERNMENT REGULATIONS                                                          

     We are not subject to any extraordinary  governmental  regulations relating
to our business.                                                                

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ITEM 2.  DESCRIPTION OF PROPERTY                                                

     We vacated our  previous  principal  place of  business  at 7060  Hollywood
Blvd.,  Suite 1150,  Los Angeles,  California at the  expiration of our lease on
February 28, 2002.  Our temporary  address is 10008  National  Blvd.  #345,  Los
Angeles,  California  90034,  which is  merely a mailing  address  which we have
rented for a three month period,  at a cost of $30 per month. No formal business
activities  are  undertaken  at this  location  as of the  date of this  Report.
Effective  April 1,  2002,  we also  leased  approximately  150  square  feet of
executive  office space at 1925 Century  Park East,  Suite 500, Los Angeles,  CA
90067.  We  leased  this  space on a month to month  basis at a cost of $950 per
month.  As of the date of this Report,  we are reviewing our space  requirements
and are beginning to seek out a more permanent suitable location in anticipation
of relaunching the magazine during the third quarter 2002 in accordance with our
business plan.  However,  no definitive  decision has been made  concerning this
matter.                                                                         

We own no other property, other than general office equipment.        

ITEM 3.  LEGAL PROCEEDINGS                                                      

     In February  2002, we commenced an action  against  Andrew Left, our former
President,  which action has been filed in the  Superior  Court for the State of
California for the County of Los Angeles, Case No. BC269050, for the recovery of
approximately  $25,000, plus costs, interest and exemplary and punitive damages.
Our complaint alleges fraud and deceit, negligent  misrepresentation,  breach of
fiduciary duty and unlawful monetary conversion.  As of the date of this Report,
our complaint has been filed and we are awaiting the filing of an answer.  While
no assurances can be provided,  we are optimistic  that we will be successful in
this matter.                                                                    

     In June 2001, our former publisher,  Barbara Zowlocki and her company,  BZI
Media Services,  Inc.  obtained a judgment against us in the principal amount of
$59,186,  arising  out of sums due Ms.  Zowlocki  for  services  rendered to us.
Approximately $52,000 remains due on this judgment.                             

     In August 2001,a  judgment in the principal  amount of $144,714 was entered
against  us and in favor of  Western  Laser  Graphics,  Inc.,  one of our  prior
printers. As of the date of this Report, this judgment remains outstanding.     

     In July 2001,  a judgment in the  principal  amount of $180,473 was entered
against us and in favor of Gottesman, Inc. This judgment remains outstanding.   

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     Numerous  other  judgments  have been  entered  against us and we have been
named as a  defendant  in several  other  lawsuits  in the normal  course of our
business.  We have also received numerous threats of pending litigation from our
creditors who hold delinquent notes and other obligations. See "Part II, Item 6,
Management's  Discussion - Liquidity and Capital Resources" below for a detailed
description  of these  obligations.  It is  anticipated  that we will enter into
settlement  negotiations  to  resolve  these  matters  if and  when  we  receive
additional funding.  Except for those matters specifically  discussed above, and
in the "Liquidity and Capital Resource"  section,  in the opinion of management,
the liabilities,  if any,  resulting from these matters will not have a material
affect  on  our  financial  statements.  See  "Part  II,  Item  6,  Management's
Discussion - Liquidity and Capital Resources."                                  

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

None.                                                                 

 PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS   

     (a)  Market  Information.  Our  common  stock  is  traded  on the  National
Association of Securities Dealers OTC Bulletin Board. The table below sets forth
the reported high and low bid prices for the periods  indicated.  The bid prices
shown  reflect  quotations  between  dealers,  without  adjustment  for markups,
markdowns or  commissions,  and may not  represent  actual  transactions  in our
securities.                                                                     

                                 Bid Price
Quarter Ended                           High       Low        
-------------                           ----       ---        

March 31, 2000                         $1.02     $0.17        
June 30, 2000                          $1.09     $0.375       
September 30, 2000                     $1.01     $0.53        
December 31, 2000                      $0.688    $0.22        

                                 Bid Price
Quarter Ended                           High       Low        
-------------                           ----       ---        

March 31, 2001                         $0.34     $0.1675      
June 30, 2001                          $0.26     $0.10        
September 30, 2001                     $0.165    $0.025       
December 31, 2001                      $0.10     $0.011       

   As of April 11, 2002, the closing bid price of our common stock was $.02.

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     (b) Holders.  As of March 30, 2002, there were 100 holders of record of our
common  stock,  not  including  those  persons who hold their  shares in "street
name."                                                                          

     (c) Dividends.  We did not pay any dividends on our common stock during the
two  years  ended  December  31,  2001.  Pursuant  to the  laws of the  State of
Colorado,  a  corporation  may not issue a  distribution  if,  after  giving its
effect, the corporation would not be able to pay its debts as they became due in
the usual course of business,  or such corporation's  total assets would be less
than the sum of their total liabilities plus the amount that would be needed, if
the corporation were to be dissolved at the time of the distribution, to satisfy
the  preferential  rights upon  dissolution of shareholders  whose  preferential
rights are superior to those receiving the distribution. As a result, management
does not  foresee  that we will have the ability to pay a dividend on our common
stock in the  fiscal  year  ended  December  31,  2001.  See "Part  II,  Item 7,
Financial Statements."                                                          

ITEM 6. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS                                                                   

     The following  discussion  should be read in  conjunction  with our audited
financial  statements and notes thereto included herein. In connection with, and
because we desire to take  advantage  of, the "safe  harbor"  provisions  of the
Private  Securities  Litigation Reform Act of 1995, we caution readers regarding
certain forward looking statements in the following  discussion and elsewhere in
this Report and in any other statement made by, or on our behalf, whether or not
in future filings with the Securities and Exchange  Commission.  Forward looking
statements are statements not based on historical  information  and which relate
to future  operations,  strategies,  financial  results  or other  developments.
Forward looking  statements are necessarily based upon estimates and assumptions
that are inherently  subject to significant  business,  economic and competitive
uncertainties and  contingencies,  many of which are beyond our control and many
of which,  with  respect to future  business  decisions,  are subject to change.
These  uncertainties and contingencies can affect actual results and could cause
actual results to differ  materially from those expressed in any forward looking
statements made by, or our behalf.  We disclaim any obligation to update forward
looking statements.                                                             

     The  following  information  is intended to highlight  developments  in our
operations,  to present the results of our  operations,  to identify  key trends
affecting our business and to identify  other  factors  affecting our results of
operations for the fiscal years ended December 31, 2001 and 2000.               

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RESULTS OF OPERATIONS                                                           

     Comparison of Results of Operations for the fiscal years ended December 31,
2001 and 2000                                                                   

     Total revenues  decreased from  $3,995,820 in 2000 to $1,197,966 in 2001, a
decrease of $2,797,854 (70%). This decrease was attributable to only four issues
of our  magazine  being  published  during this  period,  compared to two double
issues and eight single issues being  published  during the year ended  December
31, 2001,  resulting in a decrease of advertising  revenue, our principal source
of revenue, as well as newsstand and subscription revenues.                     

     Costs of sales were  $2,804,395  in 2000,  compared to $782,692 in 2001,  a
decrease of $2,021,702 (72%), which was also due to the publication of only four
issues of our  magazine  during the  applicable  period,  compared to two double
issues and eight single issues in 2000.                                         

     Selling,  general and  administrative  expenses  were  $6,141,071  in 2000,
compared to $3,000,130 in 2001, a decrease of  $3,228,577  (53%).  This decrease
was attributable to reduced salary costs,  closing of the New York office, and a
significant  reduction  in  financial  marketing  expenses,   which  included  a
substantial  reduction in issuances  of the  Company's  warrants in lieu of cash
fees to  financial  consultants  with regard to equity and debt  financings  and
consulting, and related costs.                                                  

     Our interest  expense  decreased from  $1,150,790  during 2000, to $921,019
during 2001,  as a result of the  conversion  of  $1,072,913  of principal  debt
during the applicable period, thereby eliminating additional interest expense to
the extent of the principal  reduction on those obligations.  See "Liquidity and
Capital Resources" below.                                                       

     As a result,  we  incurred a net loss of  $(3,509,419)  in 2001  ($0.11 per
share), as compared to our net loss of $(6,100,436) ($.30 per share) in 2000.   

LIQUIDITY AND CAPITAL RESOURCES                                                 

     At December 31, 2001, we had $9,683 in cash. Accounts receivable  decreased
to $92,778 from $397,447 for the similar  period in 2000, a decrease of $304,669
(77%).  The  decrease is primarily  due to the fact that we published  only four
issues  of  our  Magazine  during  the  applicable   period  with   considerably
advertising  billings  and  related  accounts  receivable  per  issue and in the
aggregate.                                                                      

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     Due to our diminished accounts  receivable,  in June 2001 we terminated our
factoring  arrangement  with Receivable  Financing  Corp.,  Boca Raton,  Florida
(RFI).                                                                          

     At December 31, 2001, we had a working  capital  deficiency of  $9,211,609.
Due to a lack of working capital, we have been forced to discontinue  publishing
the magazine  following our October Fall Fashion issue.  As a result,  we do not
expect to generate cash flow from operations  until the magazine is re-launched,
which is not expected  until  September  2002. We have a  significant  number of
notes  payable,  most of which were in  default at  December  31,  2001.  We are
currently  negotiating  with these creditors to extend the repayment terms until
such time as our new business  plan can be  implemented,  which may include some
forgiveness  of debt  and/or  issuance of our common  stock to these  creditors.
There  can be no  guarantee  that we will be  able to  renegotiate  these  notes
payable. If we are unable to renegotiate the repayment terms of these notes, the
impact would be severe. These outstanding notes payable include the following:  

     In August 1998, we obtained a loan in the principal amount of $550,000 from
IBF Special Purpose Corporation II to be used for general working capital.  This
loan  currently  bears interest at the default rate of 28% per annum and was due
December 19,  1998,  including a one-time  extension  fee paid to this lender of
$5,500.  The loan provides for an exit fee equal to 3% of the original principal
amount of the loan  ($16,500)  and is secured by 1,000,000  shares of our common
stock, which were provided by 7 shareholders,  including Mr. Stein, who tendered
190,000 shares as part of the security. Mr. Stein has also personally guaranteed
this obligation.  In December 1998, we repaid $27,500 of the principal  balance.
We have also paid all interest which had accrued through June 30, 2000. In April
2001, we tendered a payment of $173,760 on this  obligation,  applied to accrued
interest and late fees, and entered into a Forbearance Agreement which provides,
among other things, for us to pay this lender $25,000 per month applicable first
to interest and then to principal  until the entire  balance is paid in full. In
September and October,  2001,  shares of our common stock being held as security
were sold for an aggregate  principal  reduction in the amount of $46,089.  Upon
payment in full of this loan,  the lender  will  return the balance of the stock
provided as security.  Interest  continues to accrue at the default  rate. As at
December  31,  2001,  interest  was paid on a current  basis  and the  principal
balance was $447,442.  As of the date of this Report,  we remain current on this
obligation.                                                                     

     In December 1999, we obtained a $200,000 loan from  Sigmapath  Corporation,
which  accrues  interest  at the rate of 6% per annum and became due on March 8,
2000.  We paid $100,000 on this  obligation.  In March 2001, an action was filed
against  us by an officer  of  Sigmapath  to  collect  the  balance of  $100,000
remaining  due.                                                                 

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However,  this  action was  dismissed  by the court  because the  plaintiff  who
brought the action was not the proper party in interest.  Subsequently,  we were
served with another copy of a complaint in November  2001. See "Part II, Item 1,
Legal Proceedings" above.                                                       

     At December 31, 2001,  we had eight other notes  payable,  in the aggregate
principal amount of $802,090,  bearing interest at rates ranging from 10% to 14%
per annum,  all of which  require a monthly or  quarterly  payment of  principal
and/or interest. These notes are due on demand or past due.                     

     During the period October 1, 2001, to December 31, 2001 we borrowed, in the
aggregate,  $252,000 from 1970 Asset  Management  Corp.  bearing interest at the
rate of 10% per annum. Principal and accrued interest on this Note is payable in
full on June 30, 2002.                                                          

     In 1995, our majority  stockholder  loaned us $932,313.  In 1996, this note
was converted to a demand note,  bearing  interest at the rate of 12% per annum.
In 1996, this stockholder  subsequently assigned this Note to JCM Capital Corp.,
a minority stockholder,  who, upon information and belief, has assigned portions
of this note to other unaffiliated  parties.  In July 2001, the holders of these
various  notes agreed to convert this  obligation,  including  all principal and
accrued  interest,  into  shares of our common  stock at a  conversion  price of
approximately $.46 per share. They received 3,237,468 shares of our common stock
in the aggregate.  These notes were secured by substantially  all of our assets,
except for  accounts  receivable.  Upon  conversion  of the notes,  the security
interest was released.                                                          

     In the periods  ended June 30, 2000 and March 31, 2001, we borrowed a total
of $1,300,000 in 10% Convertible  Debentures  from five  creditors.  Among other
terms, the debentures may be converted at any time during a three year term at a
conversion  price  equal to the lesser of $.90 per share,  or 80% of the average
three  lowest  closing bid prices of our common  stock during the 22 day trading
period prior to conversion. In June, July and December, 2001 a total of $125,000
of principal and $13,872 in accrued  interest was converted,  with the resulting
issuance  of  3,399,861  shares of our  common  stock.  At  December  31,  2001,
$1,175,000 of principal remained outstanding.                                   

     In December 2000, we borrowed  $160,000 in 6% Convertible  Debentures  from
eight entities.  Among other terms,  the debentures may be converted at any time
during a five year term at a conversion price equal to the lesser of 120% of the
closing bid price or 80% of the average  three lowest  closing bid prices of our
common stock during the 22 day trading period prior to  conversion.  In December
2001, $15,600 of principal was converted, with the                              

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resulting  issuance of 991,533 shares of our common stock. At December 31, 2001,
$144,000 of principal remained outstanding.                                     

     Advances  from  stockholder   represent   advances  made  by  our  majority
stockholder  for working capital  purposes.  At September 30, 2000, the advances
bore  interest at 8% per annum and were  payable on demand.  In March 2000,  our
majority  stockholder  agreed to reduce the annual interest rate to 8% from 12%,
effective  January  1,  2000,  and modify  the  repayment  terms.  Under the new
repayment terms, the advances are repayable in monthly principal installments of
$24,000  commencing  January 1, 2001. We did not make the principal  payments in
2001 and  2000.  However,  we must use at least 25% of the net  proceeds  of any
financing received by us to repay the advances. Further, all of the advances are
due and payable in full at such time as we have received equity  financing of at
least $10 million. At December 31, 2001, $2,952,293 of principal was outstanding
and  classified  as  short-term.   Accrued  interest  payable  to  the  majority
stockholder at December 31, 2001,  totaled  $1,131,872.  Interest expense on the
advances was $333,245 for the year ended December 31, 2001.                     

     We are in  default  in most of these  obligations  and some  have  demanded
repayment of the outstanding principal and interest. Our management has been and
is currently  negotiating  with each of these  creditors to extend the repayment
terms until such time as our  business  plan is  capitalized  and the  financial
reorganization  plan can be implemented,  which may include some  forgiveness of
debt and/or issuance of our common stock to these creditors. If we are unable to
renegotiate  the  repayment  terms of these notes  payable,  the impact could be
severe.                                                                         

     Our  viability  as a  company  is  dependent  upon  our  ability  to  raise
additional  capital to continue as a going concern.  We are in discussions  with
investment  bankers and others to provide or assist in providing this financing.
However, we do not have any written commitments for any of this financing and no
assurances  can be provided that we will obtain any  additional  financing.  The
failure to infuse additional capital into our Company will affect our ability to
implement our new business plan. These issues raise  substantial doubt about our
ability to continue as a going concern.                                         

TRENDS                                                                          

     In order to implement our business  strategy  described  herein, we need to
raise  approximately $5 million of capital. In the event all current discussions
toward  that  endeavor  terminate,  we  will  have to  enter a joint  publishing
arrangement with other magazine publishers or liquidate.                        

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INFLATION                                                                       

     Although our operations are influenced by general economic  conditions,  we
do not believe that inflation had a material affect on our results of operations
during 2001.                                                                    

ITEM 7.  FINANCIAL STATEMENTS                                                   

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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Stockholders                                             
Detour Media Group, Inc.                                                        

We have  audited the  accompanying  balance  sheet of Detour  Media  Group,  Inc
(formerly  known as Detour  Magazine,  Inc.) as of December  31,  2001,  and the
related statements of operations, deficit in stockholders' equity and cash flows
for the years ended December 31, 2001 and 2000.  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 auditing standards generally accepted
in the  United  States of  America.  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 Detour Media Group, Inc. as of
December 31, 2001,  and the results of its operations and its cash flows for the
years ended December 31, 2001 and 2000, in conformity with accounting principles
generally accepted in the United States of America.                             

The accompanying  financial  statements have been prepared  assuming the Company
will  continue  as a going  concern.  As  discussed  in Note C to the  financial
statements,  the Company has sustained  losses from  operations in recent years,
its total  liabilities  exceed its total  assets,  it has a net working  capital
deficiency and the Company is in default on several of their obligations;  these
factors,  among others, raise substantial doubt about its ability to continue as
a going  concern.  Management's  plans  in  regard  to  these  matters  are also
described in Note C. The  financial  statements  do not include any  adjustments
that might result from the outcome of this uncertainty.                         

Los Angeles, California                                                         
March 4, 2002                                                                   

F-1 
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Detour Media Group, Inc.
 (formerly known as Detour Magazine, Inc.)
 BALANCE SHEET
 December 31, 2001

ASSETS                
CURRENT ASSETS                                                                  
 Cash                                                             $      9,683
Accounts receivable, less allowance                                         
   for doubtful accounts of $13,253                                     92,778
 Prepaid expenses and other                                             30,511
                                                                  ------------

         Total current assets                                          132,972

FURNITURE AND EQUIPMENT, net                                             20,912 

DEPOSITS AND OTHER ASSETS                                                 8,890 
                                                                  ------------

                                                                  $    162,774
                                                                  ============

LIABILITIES AND DEFICIT IN STOCKHOLDERS' EQUITY                   

CURRENT LIABILITIES                                                             
 Accounts payable and accrued expenses                            $  2,149,914
 Current maturities of notes payable                                 2,776,532
 Accrued interest payable                                              333,969
 Advances from stockholder                                           2,952,293
 Accrued interest payable to stockholder                             1,131,873
                                                                  ------------

         Total current liabilities                                   9,344,581

NOTE PAYABLE, less current maturities                                   144,400 

COMMITMENTS AND CONTINGENCIES                                                 - 

DEFICIT IN STOCKHOLDERS' EQUITY                                                 
Preferred stock, $.01 par value                                             
10,000,000 shares authorized,                                         
    none issued and outstanding                                              -
Common stock, $0.001 par value,                                             
100,000,000 shares authorized,                                        
    38,020,154 shares issued and outstanding                            38,021
 Additional paid-in capital                                         12,120,858
  Accumulated deficit                                               (21,485,086)
                                                                  ------------

          Total deficit in stockholders' equity                      (9,326,207)
                                                                  ------------

                                                                  $    162,774
                                                                  ============

The accompanying notes are an integral part of this statement.

 F-2

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Detour Media Group, Inc.
 (formerly known as Detour Magazine, Inc.)
STATEMENTS OF OPERATIONS
Years ended December 31,

                                                  2001          2000
                                                 -----------   -----------

Revenue                                                                         
 Advertising                                     $ 1,125,743   $ 3,670,035
 Newsstand and subscription, net of returns           72,223       325,785
                                                 -----------   -----------

                 Total revenue                     1,197,966     3,995,820
                                                 -----------   -----------

Cost and expenses                                                               
 Cost of sales and other direct expenses             782,692     2,804,395
 Selling, general and administrative expenses      3,000,130     6,141,071
                                                 -----------   -----------
                                                   3,782,822     8,945,466
                                                 -----------   -----------

                  Loss from operations             (2,584,856)   (4,949,646)
                                                 -----------   -----------

Other expenses                                                                  
  Interest expense, net                              (921,019)   (1,150,790)
 Loss on disposal of assets                           (3,544)            -
                                                 -----------   -----------

                  Total other expenses               (924,563)   (1,150,790)
                                                 -----------   -----------

                  Net loss                        $(3,509,419)  $(6,100,436)
                                                 ===========   ===========

Loss per share of common stock (basic and diluted)  $     (0.11)  $     (0.30)  
                                                 ===========   ===========

The accompanying notes are an integral part of these statements.

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                                                        [Enlarge/Download Table]

                            Detour Media Group, Inc.                                                                       
                    (formerly known as Detour Magazine, Inc.)                                                              
                  STATEMENT OF DEFICIT IN STOCKHOLDERS' EQUITY                                                             
                     Years ended December 31, 2001 and 2000                                                                


                                                                                    Unamortized                            
                                                      Common Stock      Additional      Debt                               
                                                  --------------------    Paid-in     Issuance   Accumulated               
                                                    Shares     Amount     Capital       Costs       Deficit      Total     
                                                  ----------  --------  ------------  ---------  ------------  ----------- 
                                                                                                                           
Balance at January 1, 2000                        16,002,669  $ 16,002  $ 5,020,426  $       -   $(11,875,231) $(6,838,803)
Sale of restricted common stock,                                                                                           
   net of costs of $317,312                        4,000,000     4,000    1,178,688          -              -    1,182,688 
Issuance of restricted common stock in                                                                                     
   connection with short-term borrowings             150,000       150       58,350          -              -       58,500 
Issuance of restricted stock in                                                                                            
   connection with convertible debentures            500,000       500      147,950   (123,708)             -       24,742 
Beneficial conversion feature of                                                                                           
   convertible debentures                                  -         -      212,687          -              -      212,687 
Issuance of restricted common stock in                                                                                     
   exchange for release from consulting                                                                                    
   agreement                                         600,000       600      393,000          -              -      393,600 
Issuance of restricted common stock for services   1,412,100     1,413      728,137          -              -      729,550 
Conversion of note payable to common stock           250,000       250      209,750          -              -      210,000 
Fair value of warrants issued for services                 -         -    1,059,884          -              -    1,059,884 
Net loss for the year                                      -         -            -                (6,100,436)  (6,100,436)
                                                  ----------  --------  -----------  ---------  -------------  ----------- 

Balance at December 31, 2000                      22,914,769    22,915    9,008,872   (123,708)   (17,975,667)  (9,067,588)
Sale of restricted common stock                    3,028,523     3,029      735,971          -              -      739,000 
Issuance of restricted common stock in                                                                                     
   connection with short-term borrowings             335,000       335       80,065          -              -       80,400 
Issuance of restricted common stock to                                                                                     
   cure violation of warranties under                                                                                      
   stock purchase agreement                        1,000,000     1,000      149,000          -              -      150,000 
Issuance of restricted common stock for services   1,780,000     1,780      330,520          -              -      332,300 
Conversion of stockholders' notes                                                                                          
   payable to common stock                         3,237,468     3,237    1,482,559          -              -    1,485,796 
Conversion of convertible                                                                                                  
   debentures to common stock                      4,391,394     4,392      150,004          -              -      154,396 
Fair value of warrants issued for services                 -         -      185,200          -              -      185,200 
Amortization of debt issuance costs                        -         -            -     123,708             -      123,708 
Exercise of warrants                               1,333,333     1,333       (1,333)          -             -            - 
Net loss for the year                                      -         -            -           -    (3,509,419)  (3,509,419)
                                                  ----------  --------  -----------  ----------  ------------  ----------- 

Balance at December 31, 2001                      38,020,154  $ 38,021  $12,120,858  $        -  $(21,485,086) $(9,326,207)
                                                  ==========  ========  ===========  ==========  ============  =========== 

The accompanying notes are an integral part of this statement.

 F-4
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                            Detour Media Group, Inc.                                          
                    (formerly known as Detour Magazine, Inc.)                                 
                            STATEMENTS OF CASH FLOWS                                          
                            Years ended December 31,                                          


                                                                         2001         2000    
                                                                     -----------  ------------
                                                                                              
Cash flows from operating activities:                                                         
    Net loss                                                         $(3,509,419) $(6,100,436)
    Adjustments to reconcile net loss to net cash                                             
       used in operating activities:                                                          
          Amortization of debt issuance costs                            123,708       24,742 
          Loss on disposal of equipment                                    3,544            - 
          Depreciation of furniture and equipment                         18,297       22,049 
          Issuance of restricted common stock for:                                            
             Services                                                    332,300      729,550 
             Release from consulting agreement                                 -      393,600 
          Issuance of restricted common stock in connection                                   
             with short-term borrowings                                   80,400       58,500 
          Issuance of restricted common stock in connection                                   
             with debt conversion                                              -       60,000 
          Issuance of restricted common stock issued to cure                                  
             violation of warranties under stock purchase agreement      150,000            - 
          Warrants issued for services                                   185,200    1,059,884 
          Expense of beneficial conversion feature of the                                     
             convertible debentures                                            -      212,687 
          Decrease in accounts receivable                                304,669     (204,435)
          Increase in prepaid expenses                                   (18,912)      87,588 
          Decrease (increase) in employee advances                             -       46,500 
          Decrease in other assets                                         7,235         (615)
          Increase (decrease) in accounts payable                                             
             and accrued expenses                                        192,296      960,125 
          Decrease in unexpired subscriptions                                  -      (83,515)
          Increase in accrued interest payable                           591,883      513,666 
                                                                     -----------  ----------- 

                Net cash used in operating activities                 (1,538,799)  (2,220,110)
                                                                     -----------  ----------- 


The accompanying notes are an integral part of these statements.

 F-5

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                            Detour Media Group, Inc.                                     
                    (formerly known as Detour Magazine, Inc.)                            
                      STATEMENTS OF CASH FLOWS - CONTINUED                               
                            Years ended December 31,                                     


                                                                   2001         2000     
                                                               -----------  ------------ 
                                                                                         
Cash flows from investing activities:                                                    
    Purchase of furniture and equipment                        $         -  $    (15,656)
                                                               -----------  ------------ 
Cash flows from financing activities:                                                    
    Proceeds from short term borrowings                                  -             - 
    Principal payments of short term borrowings                   (222,688)     (731,626)
    Proceeds from long term borrowings, net of issuance costs            -     1,160,000 
    Principal short-term borrowings                                960,572       765,754 
    Proceeds from issuance of common stock, net                    739,000     1,182,688 
                                                               -----------  ------------ 

                Net cash provided by financing activities        1,476,884     2,376,816 
                                                               -----------  ------------ 
                Net (decrease) increase in cash                    (61,915)      141,050 

Cash (overdraft) at beginning of year                               71,598       (69,452)
                                                               -----------  ------------ 
Cash at end of year                                            $     9,683  $     71,598 
                                                               ===========  ============ 

Supplemental disclosures of cash flow information                                        
    Cash paid during the years for:                                                      
       Interest                                                $   273,678  $    295,359 
                                                               ===========  ============ 
       Income taxes                                            $         -  $          - 
                                                               ===========  ============ 

Noncash investing and financing activities:                                     

     In 2001, a major  shareholder  converted  its debt into common  stock.  The
     principal  balance of the debt was  $932,313  and the accrued  interest was
     $553,483 at the time of conversion. In connection with the debt conversion,
the Company issued 3,237,468 shares of common stock to the creditors. 

     In 2001,  other  creditors  converted  their debt into  common  stock.  The
     principal  balance of the debt was  $140,600  and the accrued  interest was
     $13,872  at the  time  of the  conversion.  In  connection  with  the  debt
     conversion,  the Company  issued  4,391,394  shares of common  stock to the
creditors.                                                            

     In 2001, one creditor sold shares of the Company's  common stock being held
     as security resulting in a principal reduction of $46,089.  The shares were
     owned by the Company's major shareholder. The reduction of principal to the
     creditor  was offset by a  corresponding  increase in the amount due to the
shareholder.                                                          

     In 2000, one creditor  converted its debt into common stock.  The principal
     balance of the debt was $150,000 at the time of  conversion.  In connection
     with the debt conversion, the Company issued an additional 72,000 shares of
     common  stock to the  creditor  resulting  in a  noncash  financing  charge
(included in interest expense) of $60,000.                            

The accompanying notes are an integral part of these statements.

F-6 
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Detour Media Group, Inc.
 (formerly known as Detour Magazine, Inc.)
 NOTES TO FINANCIAL STATEMENTS
December 31, 2001 and 2000

NOTE A - DESCRIPTION OF BUSINESS                                                

     Detour Media Group,  Inc.  formerly known as Detour  Magazine,  Inc.,  (the
     "Company"), was incorporated under the laws of the State of Colorado on May
     18, 1990.  The Company is in the business of  publishing  an  international
     fashion  and  entertainment  magazine.  The  Company  derives  its  revenue
     primarily from advertising, with the balance from circulation. The magazine
     has been published since 1987.  Through December 31, 2000, the magazine was
     published  ten times a year with two  double  issues  per year.  During the
     fiscal  year ended  December  31,  2001,  print runs were cut and only four
     issues of the magazine appeared.  The last issue was the Fall Fashion issue
     published  in  October  2001,   after  which  the  Company  was  forced  to
     discontinue  publication  caused by its lack of cash  availability  and its
     distressed  financial   condition.   The  Company  intends  on  relaunching
     publication  of the magazine in the third quarter 2002, in accordance  with
its business plan discussed in Note C.                                

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                             

Revenue Recognition                                                   
-------------------                                                   

     Periodicals published and distributed are sold on a fully returnable basis.
     Revenue  and  related  costs  are  recognized  at the  on-sale  date and an
     allowance  for returns is  established  based upon  historical  experience,
     current events and assumptions about future events.  Management reviews and
     revises  the  estimate  for  returns  periodically.  Adjustments  to income
     resulting  from  such  revisions  are  recorded  in the year in  which  the
revisions are made.                                                   

     Revenue  from the sale of  magazine  subscriptions,  net of  certain  costs
     related to their  procurement,  are deferred and  recognized as income over
the term of the subscriptions.                                        

     Advertising revenue is recorded net of agency commissions and is recognized
at the on-sale date of related issues.                                

Prepaid Publishing Expenses                                           
---------------------------                                           

     Certain  production  expenses and other prepaid  expenses related to future
     periodicals are incurred prior to sale. These costs are recorded as prepaid
     expenses and charged to cost of sales and other direct expenses at the time
the related revenues are recognized.                                  

F-7 
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Detour Media Group, Inc.
 (formerly known as Detour Magazine, Inc.)
 NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2001 and 2000

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued                 

Furniture and Equipment                                               
-----------------------                                               

     Furniture and equipment are stated at cost, less  accumulated  depreciation
     and amortization. Depreciation and amortization are provided for in amounts
     sufficient  to relate the cost of  depreciable  assets to  operations  over
     their estimated service lives.  Leased  improvements are amortized over the
     shorter of the lives of the respective  leases or over the service lives of
     the assets.  The  straight-line  method of  depreciation  is  followed  for
     substantially  all assets for financial  reporting and income tax purposes.
     The  estimated  lives used in  determining  depreciation  are five to seven
years.                                                                

Income Taxes                                                          
------------                                                          

     Income taxes are  accounted  for using the  liability  method,  under which
     deferred tax assets and liabilities are determined based on the differences
     between the financial  accounting and tax bases of assets and  liabilities.
     Deferred tax assets or liabilities at the end of each period are determined
     using the currently enacted tax rate expected to apply to taxable income in
     the periods in which the  deferred tax asset or liability is expected to be
settled or realized.                                                  

     At  December  31,  2001,  the  Company has  approximately  $14,300,000  and
     $10,200,000 of federal and state net operating loss carryforwards available
     to offset future taxable income. The losses expire at various years through
     2025 for federal  purposes  and 2015 for state  purposes.  The deferred tax
     asset related to these net operating  loss  carryforwards  is $5,800,000 at
     December 31,  2000.  There are no other  significant  deferred tax asset or
     liability amounts at December 31, 2000. In the opinion of management, it is
     more  likely than not that these  deferred  tax assets will not be realized
     and  therefore  a valuation  allowance  has been  recorded  for 100% of the
deferred tax asset.                                                   

     The  provision  for  income  taxes  differs  from the  amount of income tax
     determined  by  applying  the  applicable  U.S.  statutory  rate due to the
increase in the valuation allowance.                                  

Concentration of Credit Risk                                          
----------------------------                                          

     Financial  instruments that potentially  subject the Company to significant
     concentrations of credit risk consist primarily of accounts receivable. The
     Company has no significant off-balance sheet concentrations of credit risk,
     such  as  foreign   exchange   contracts,   option   contracts  or  hedging
     arrangements.  Accounts  receivable are typically unsecured and are derived
     from transactions  with and from customers  primarily located in the United
     States.  The Company performs  ongoing credit  evaluations of its customers
     and maintains  reserves for potential credit losses.  The Company maintains
     an allowance for doubtful accounts based on the expected  collectibility of
accounts receivable.                                                  

F-8 
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Detour Media Group, Inc.
 (formerly known as Detour Magazine, Inc.)
 NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2001 and 2000

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued                 

Fair Value of Financial Instruments                                   
-----------------------------------                                   

     The  Company's  financial  instruments  consist of cash,  short-term  trade
     receivables and payables,  short-term and long-term  borrowings and amounts
     due to  stockholders.  The  carrying  values of cash and  short-term  trade
     receivables and payables  approximate their fair values. Based on borrowing
     rates currently  charged to the Company for financing,  the carrying values
     of the short-term and long-term  borrowings and amounts due to stockholders
approximate their estimated fair values.                              

Using Estimates                                                       
---------------                                                       

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

Advertising Costs                                                     
-----------------                                                     

     Advertising costs are expensed as incurred and included in selling, general
     and administrative expenses.  Advertising expenses amounted to $379,969 and
$597,259 for the year ended December 31, 2001 and 2000, respectively. 

Segment Reporting                                                     
-----------------                                                     

     The Company is  centrally  managed and  operates in one  business  segment:
publishing.                                                           

Loss per Share                                                        
--------------                                                        

     Basic income (loss) per share excludes dilution and is computed by dividing
     net loss by the weighted  average number of common shares  outstanding  for
     the period.  Diluted income per share reflects the potential  dilution that
     could occur if options to acquire common stock were exercised. The weighted
     average  number of shares  used in the  basic  and  diluted  loss per share
     calculation  was  31,895,892 and 20,009,185 for the year ended December 31,
     2001 and 2000, respectively.  All potential common shares from the exercise
     of stock options and warrants have been  excluded from the  denominator  of
     the diluted  per-share  computation as a result of the net loss incurred by
the Company in 2001 and 2000.                                         

F-9 
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Detour Media Group, Inc.
 (formerly known as Detour Magazine, Inc.)
 NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2001 and 2000

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued                 

     Warrants to purchase  3,520,000 and  3,035,000  shares of common stock were
     not  included  in the  computation  of diluted  loss per share for the year
     ended  December  31,  2001  and  2000  because  to do so  would  have  been
antidilutive for the periods presented.                               

NOTE C - GOING CONCERN MATTERS                                                  

     The accompanying financial statements have been prepared in conformity with
     generally accepted accounting principles, which contemplate continuation of
     the Company as a going  concern.  The Company  has  incurred  net losses of
     $3,509,419  and  $6,100,436  during the years ended  December  31, 2001 and
     2000. At December 31, 2001, the Company's  total  liabilities  exceeded its
     total  assets by  $9,326,207  and the  Company  had a net  working  capital
     deficiency  of  $9,211,609.  Following  the Fall  Fashion  issue  which was
     published  in  October  2001,   the  Company  was  forced  to   discontinue
     publication of the magazine caused by its lack of cash availability and its
     distressed financial  condition.  The Company is also in default of certain
     notes payable. These factors,  among others,  indicate that the Company may
be unable to continue as a going concern.                             

     Management has developed a business plan that they believe will improve the
     operating results of the Company.  The primary components of the plan are a
     financial   reorganization,   new  management  team  members,   effect  key
     outsourcing  relationships  and re-launch of the  magazine.  The Company is
     currently  in a  distressed  financial  condition  that has  resulted  in a
     cessation  of  publication.  While  measures  have been taken to reduce the
     operating budget,  an influx of approximately  $5,000,000 of equity capital
     is  required to not only  effect a  financial  reorganization,  but also to
     provide  sufficient  working  capital  going  forward.  In  addition,   the
     liquidation  of  existing  loans and  accounts  payable  will  require  the
     conversion  of debt  to  equity,  forgiveness  of debt  and  prorated  cash
     settlements.  In the interim,  the magazine will not be  published.  If the
     Company is able to secure  such  financing  by April 30,  2002,  management
     believes that the  publication  would  recommence  with the September  2002
issue.                                                                

     Detour  currently  relies on outside  entities  for  printing,  single copy
     distribution,  subscription circulation and fulfillment services. Under the
     new business plan,  Detour will  initially  outsource a number of other key
     functions as well, including  advertising sales and licensing.  The Company
     believes that  outsourcing  such functions will keep operating  expenses as
low as possible and improve the quality of resources.                 

F-10
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Detour Media Group, Inc.
 (formerly known as Detour Magazine, Inc.)
 NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2001 and 2000

NOTE C - GOING CONCERN MATTERS - Continued                                      

     Prior to  resuming  publishing  of its  magazine,  the  Company  intends on
     re-branding the Detour name and logo. In addition, the Company will attempt
     to rebuild the magazine's  circulation,  focusing  distribution in selected
     urban centers and proactively pursuing  subscriptions.  The plan also calls
     for the hiring of a new senior management team, including the Publisher/COO
position.                                                             

     Going forward, significant amounts of additional cash will be needed to pay
     the costs to implement  the new business  plan and to fund losses until the
     Company is  profitable.  While there is no  assurance  that funding will be
     available to execute the plan,  the Company is continuing to seek financing
     to support its business plan and is exploring a number of  alternatives  in
     this regard. As of March 4, 2002, the Company has not raised the additional
funding required to effect a financial reorganization.                

     Management  believes  that,  despite  the  financial  hurdles  and  funding
     uncertainties  going  forward,  it has  developed a business  plan that, if
     successfully  funded and  executed,  can  significantly  improve  operating
     results.  The  support  of  the  Company's  vendors,  customers,   lenders,
     stockholders  and employees will continue to be key to the Company's future
success.                                                              

     In view of the matters  described above,  recoverability of a major portion
     of the recorded  asset amounts shown in the  accompanying  balance sheet is
     dependent  upon  continued  operations  of the  Company,  which  in turn is
     dependent upon the Company's ability to meet its financing  requirements on
     a continuing  basis, to maintain present  financing,  and to succeed in its
     future operations.  The financial statements do not include any adjustments
     relating to the recoverability and classification of recorded asset amounts
     or amounts and classification of liabilities that might be necessary should
the Company be unable to continue in existence.                       

NOTE D - ACCOUNTS RECEIVABLE                                                    

     During  2001,  the  Company  sold a  portion  of its  advertising  accounts
     receivable to a finance company without recourse. The receivables were sold
     at a discount ranging from 4.00% to 11.0% on a pre-approved  basis (average
     discount rate of 5% per month for 2001),  with a "hold-back" of 12% on each
     invoice until payment of the  receivables.  Therefore,  the finance company
     was only factoring 88% of the Company's eligible  advertising  receivables.
     The finance company provided certain credit services for the Company,  such
     as obtaining credit reports on customers and collections. In June 2001, the
     Company  discontinued  selling  its  accounts  receivable  and  there is no
     remaining amount due from the finance company at December 31, 2001. Finance
     fees for the year ended  December 31, 2001 is included in interest  expense
     on the  statement  of  operations.  Proceeds  received  from  the  sales of
     accounts  receivable  in 2001 are  included  in cash flows  from  operating
activities in the statements of cash flows.                           

F-11
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Detour Media Group, Inc.
 (formerly known as Detour Magazine, Inc.)
 NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2001 and 2000

NOTE E - FURNITURE AND EQUIPMENT                                                

Furniture and equipment at December 31, 2001 consist of the following:

  Office equipment                                         $ 171,055
  Furniture and fixtures                                       4,749
                                                           ---------

                                                             175,804
   Less accumulated depreciation                             (154,892)
                                                           ---------

                                                           $  20,912
                                                           =========

NOTE F - NOTES PAYABLE                                                          

Notes payable at December 31, 2001 consist of the following:          

Note payable to a financial institution, principal and        
unpaid interest was originally due in December 1998.          
The note bore interest at 18% through its maturity date       
and currently bears interest at 28%. In April 2001, the       
Company entered into a forbearance agreement requiring        
monthly principal and interest payments of $25,000.  The      
note is personally guaranteed by the Company's majority       
stockholder and collateralized by the majority                
stockholder's common stock of the Company.  In September      
2001, the financial institution sold shares of the            
stockholder's common stock being held as security for an      
       aggregate principal reduction of $46,089.                 $   447,442

Note payable, principal and unpaid interest was due on        
March 8, 2000. The note bears interest at 6%.  The note       
was not repaid on the due date and the Company is             
       currently in default of this note.                            100,000

Notes payable, principal and unpaid interest was due on       
July 15, 1999. The note bore interest at 12% through          
maturity and currently bears interest at 14%.  The note       
was not repaid on the due date and the Company is             
       currently in default of this note.                             77,972

Convertible debentures maturing on June 19, 2003.  The        
debentures are issued to five creditors and bear interest     
at 10%. The debentures require quarterly interest only        
       payments.                                                   1,175,000

F-12
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Detour Media Group, Inc.
 (formerly known as Detour Magazine, Inc.)
 NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2001 and 2000

NOTE F - NOTES PAYABLE - Continued                                              

Convertible debentures maturing in December 2005.  The        
debentures are issued to eight creditors and bear             
interest at 6%.  Principal and interest are due at            
       maturity.                                                 $   144,400

Note payable to 1970 Asset Management Corp. bearing           
interest at the rate of 10% per annum.  Principal and         
       interest are payable in full on June 30, 2002.                252,000

Seven notes payable, bearing interest at rates                
ranging from 10% to 12% and requiring monthly or              
quarterly interest payments.  All eight notes are             
       payable on demand.                                            724,118
                                                                 -----------
                                                                   2,920,932
       Less current maturities                                     2,776,532
                                                                 -----------

       Long-term portion                                         $   144,400
                                                                 ===========

     In connection  with the issuance of  convertible  debentures  in 2000,  the
     Company paid issuance costs to financial  advisors totaling $ 141,032.  The
     debt issuance  costs are included in interest  expense in fiscal 2000.  The
     Company  also  issued  500,000  shares  of its  common  stock  to the  same
     financial  advisors  (see  Note  I).  The  convertible  debentures  can  be
     converted  into common stock at an amount equal to 80% of the average three
     lowest  closing  bid  prices  from the 20 days  immediately  preceding  the
     conversion date. This beneficial  conversion  feature resulted in a noncash
charge of $212,687 included in interest expense in fiscal 2000.       

     As of December 31, 2001,  the Company did not make the  quarterly  interest
     payments on the convertible  debentures  maturing in 2003. This is an event
     of default under these agreements and the Company has not obtained a waiver
     of the  violations.  In accordance  with  accounting  principles  generally
     accepted in the United States of America, the debt is classified as current
as of December 31, 2001.                                              

     Interest expense on notes payable (excluding interest expense on amount due
     to stockholders  and debt issuance costs) totaled $293,000 and $209,000 for
the year ended December 31, 2001 and 2000, respectively.              

F-13
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Detour Media Group, Inc.
 (formerly known as Detour Magazine, Inc.)
 NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2001 and 2000

NOTE F - NOTES PAYABLE - Continued                                              

    Future maturities of notes payable as of December 31, 2001 are as follows:

Year ending December 31.                      
----------------------------------                    

               2002                           $2,776,532
               2003                                    -
               2004                                    -
               2005                              144,400
               2006                                    -
                                              ----------
                                              $2,920,932
                                              ==========

NOTE G - RELATED PARTY TRANSACTIONS                                             

     In 1995, the majority  stockholder  loaned the Company  $932,313.  In 1996,
     this note was converted to a demand note,  bearing  interest at the rate of
     12% per annum. In 1996, this stockholder subsequently assigned this Note to
     JCM Capital Corp., a minority  stockholder,  who assigned  portions of this
     note to other  unaffiliated  parties.  In July 2001,  the  holders of these
     various  notes agreed to convert this  obligation,  including all principal
     ($932,313) and accrued interest  ($553,483) into shares of our common stock
     at a  conversion  price of  approximately  $.46 per  share.  They  received
     3,237,468 shares of common stock in the aggregate. These notes were secured
     by  substantially  all  of  the  Company's   assets,   except  for  account
     receivable.  Upon  conversion  of the  notes,  the  security  interest  was
released.                                                             

     Advances  from  stockholder   represent   advances  made  by  the  majority
     stockholder of the Company for working capital  purposes.  The advances are
     repayable  in monthly  principal  installments  of  $24,000;  however,  the
     Company has not made the monthly  principal  payments in 2001 and 2000. The
     Company must use at least 25% of the net proceeds of any financing received
     by the Company to repay the advances.  Further, all of the advances are due
     and  payable  in full  at such  time as the  Company  has  received  equity
     financing of at least  $10,000,000.  At December 31,  2001,  $2,952,293  of
     principal is outstanding  and classified as  short-term.  Accrued  interest
     payable  to  the  majority   stockholder   at  December  31,  2001  totaled
     $1,131,873.   Interest   expense  on  the  advances  from  stockholder  was
     approximately  $333,000 and  $304,000 for the year ended  December 31, 2001
and 2000, respectively.                                               

F-14
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Detour Media Group, Inc.
 (formerly known as Detour Magazine, Inc.)
 NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2001 and 2000

NOTE H - COMMITMENTS AND CONTINGENCIES                                          

1.   Operating Leases                                                           
----------------                                                      

     The  Company  vacated  its  principal  place of  business  in Los  Angeles,
     California  at the  expiration  of its  lease  which was  extended  through
     February 28, 2002. The Company entered into a lease for  approximately  150
     square feet on a month-to-month basis commencing April 1, 2002 at a monthly
rental of $950.                                                       

     Rent  expense for the years ended  December  31, 2001 and 2000 was $113,646
and $119,807, respectively.                                           

2.   Cease-and-Desist Proceeding by the Securities and Exchange Commission      
--------------------------------------------------------------------- 

     By notice  dated March 30, 2000,  the staff of the Salt Lake City  District
     Office  of  the   Securities  and  Exchange   Commission   ("SEC"  or  "the
     Commission") notified the Company and its Chairman that it was recommending
     to the SEC that an enforcement action be filed against both the Company and
     its  Chairman  relating to accuracy of certain of the  Company's  financial
     statements in 1997 and 1998. The recommended  enforcement  action was based
     on:  (i)  the  improper   presentation  of  certain   quarterly   financial
     information;  and (ii) the failure to record in accordance  with  generally
     accepted accounting  principles the proper  compensation  expense resulting
     from the issuance to consultants  in 1997 of options to purchase  4,400,000
     shares of common stock.  According to the notice from the  Commission,  the
     SEC anticipates alleging that the Company has violated Section 17(a) of the
     Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of
     1934,  rule 10b-5,  Section  13(a) of the  Exchange  Act and various  rules
promulgated thereunder.                                               

     The Company  believes that the issue  regarding  improper  presentation  of
     quarterly  financial  information  relates to the  Company's  averaging  of
     certain  costs and expenses in certain  quarterly  periods in 1997 and 1998
     instead of calculating these costs and expenses  precisely.  To comply with
     the staff's  requirement,  the Company  would be required to determine  the
     actual  costs and  expenses  for the  affected  quarters.  The second issue
     related to whether the Company  recorded the proper amount of  compensation
     expense in connection with the issuance of the options to the  consultants.
     The Company recorded an expense of $21,991,  based on the exercise price of
     the  options of $.005 per share.  The  Company  understands  that the staff
     believes that the expense should be the fair market value of the options at
     the time the options  were  issued.  Under  generally  accepted  accounting
     principles, any such additional compensation expense in connection with the
     options would result in a corresponding  increase in the paid-in capital of
     the Company.  Thus, while the expense would increase the Company's net loss
     for 1997, the paid-in capital would be similarly  increased and there would
     be no change to the Company's total deficit in  stockholders'  equity as of
the end of 1997.                                                      

F-15
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Detour Media Group, Inc.
 (formerly known as Detour Magazine, Inc.)
 NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2001 and 2000

NOTE H - COMMITMENTS AND CONTINGENCIES - Continued                              

     In 2000,  the Company  advised the staff that it wished to cooperate  fully
     and reach an agreement on an appropriate remedy to resolve this matter. The
     Company had  determined to restate its financial  statements to address the
concerns raised by the staff.                                         

     On November 22, 2000, the Commission issued a  cease-and-desist  proceeding
     pursuant to Section 8A of the Securities Act of 1933 and Section 21C of the
     Securities  Exchange  Act of 1934.  The  Commission  ordered the Company to
     amend its filings with the  Commission  to properly  reflect its  financial
     condition and operating results, and as required by Section 13(b)(2) of the
     Exchange Act, make and keep books, record and accounts which, in reasonable
     detail,  accurately and fairly reflect the transactions and dispositions of
     the assets of the Company.  The Commission  further  ordered the Company to
     devise and maintain a system of internal  accounting controls sufficient to
     provide  reasonable  assurances that, among other things,  transactions are
     recorded as necessary to permit the preparation of financial  statements in
     conformity with generally accepted accounting  principles.  The Company has
     amended its filings with the  Commission and believes it has complied fully
with the Commissions cease-and-desist proceeding.                     

3.   Litigation                                                                 
----------                                                            

     The Company is a defendant in several  other  lawsuits in the normal course
     of its business. In the opinion of management,  after consulting with legal
     counsel,  the  liabilities,  if any,  resulting from these matters will not
have a material effect on the Company's financial statements.         

NOTE I - EQUITY                                                                 

     In December 1999, the Company and its majority  stockholder entered into an
     agreement  with two  financial  advisors to assist the Company in obtaining
     equity  and  debt  financing  and to  provide  other  consulting  services,
     including  identifying  potential   acquisitions  and  strategic  partners,
     analyzing potential acquisitions and other business arrangements, assisting
     in  strategic  planning  and  business  development,   market  support  and
     assisting  in  developing   e-business   plans.  In  connection  with  this
     agreement,  the Company issued to each advisor warrants to purchase 800,000
     shares  of its  common  stock at an  exercise  price  of $.10 a share.  The
     vesting of such warrants was subject to certain conditions during a service
     period that extended through  September 30, 2000.  Management  believed the
     agreement  did not contain a performance  commitment  because the financial
     advisors had no disincentive for nonperformance  other than the loss of the
     cash, options and warrants attributable to the work performed. Accordingly,
     the options and warrants  issued under this  agreement were measured at the
fair value on the dates the                                           

F-16
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Detour Media Group, Inc.
 (formerly known as Detour Magazine, Inc.)
 NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2001 and 2000

NOTE I - EQUITY - Continued                                                     

     advisors were  successful in obtaining  financing for the Company.  Between
     January 1, 2000 and March 31,  2000,  the Company  received  $1,800,000  of
     financing  (debt and  equity)  resulting  in the  vesting  of  warrants  to
     purchase  416,000 shares of the Company's  common stock.  The agreement was
     amended in fiscal 2000  resulting in the vesting of the remaining  warrants
     to purchase an additional  1,184,000  shares of the company's common stock.
     The vesting of the remaining  warrants to purchase  1,184,000 resulted in a
     noncash charge of $663,040 included in general and  administrative  expense
in fiscal 2000.                                                       

     The agreement  also  provided the financial  advisors an option to purchase
     3,000,000  shares of common  stock of the Company at an  exercise  price of
     $.10. The options were  exercisable if and only if the Company  received at
     least  $5,000,000  in financing  arranged by the  financial  advisors.  The
     agreement  also  provided  for a cash  financing  fee  of 10% of the  funds
     raised. In addition,  the financial advisors may have been entitled to cash
     consulting  fees up to $10,000 per month,  depending on the amount of funds
raised on behalf of the Company.                                      

     In September  2000,  the Company  terminated  this  agreement  with the two
     financial advisors.  In addition to the 800,000 of stock warrants issued to
     each  advisor,  the  Company  issued an  additional  300,000  shares of its
     restricted  common  stock  to  each  advisor  in  order  to  terminate  the
     agreement.  The issuance of these  additional  600,000 shares resulted in a
     noncash charge of $393,600 included in general and  administrative  expense
     in fiscal 2000. In connection with this termination  agreement,  the option
to provide 3,000,000 shares of the Company's stock was cancelled.     

     In January  2000,  the  Company  issued 20 units for $5,000 per unit,  or a
     total of $100,000.  Each unit consists of promissory note of the Company in
     a  principal  amount of $5,000,  bearing  interest  at 10% per year due and
     payable on April 25, 2000, and 5,000 warrants,  each warrant  entitling the
     holder to purchase one share of common stock for $.10 per share at any time
through December 31, 2002. The notes were repaid in April 2000.       

     In February  2000, the Company issued two units for $100,000 per unit, or a
     total of $200,000.  Each unit consists of a promissory  note of the Company
     in a principal amount of $100,000, bearing interest at 10% per year due and
     payable on January 31, 2001, and 75,000  warrants,  each warrant  entitling
     the holder to purchase one share of common stock for $.10 per share, at any
time through December 31, 2004.                                       

     In March 2000, the Company issued 3,000,000 shares of common stock for $.33
     1/3 per share, or a total of $1,000,000  (less stock issuance  costs).  The
     purchasers  received demand registration rights exercisable after September
     14,  2000.  The Company was in  violation  of certain  representations  and
warranties made in the stock purchase agreements and has not received 

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Detour Media Group, Inc.
 (formerly known as Detour Magazine, Inc.)
 NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2001 and 2000

NOTE I - EQUITY - Continued                                           

     waivers of these violations.  These violations could subject the Company to
     damages,  including  the  potential  rescission  of the shares,  if waivers
     cannot be obtained.  In the opinion of  management,  the  damages,  if any,
     resulting  from the  violations  would  not be  material  to the  Company's
financial position or results of operations.                          

     In April 2000, the Company issued 1,000,000 shares of common stock for $.50
     per  share,  for a total of  $500,000  (less  stock  issuance  costs).  The
     purchaser received demand  registration  rights exercisable after April 30,
2001.                                                                 

     Between June 2000 and December 2000, the Company issued 1,412,100 shares of
     common  stock in exchange  for  various  professional  services,  including
     legal, marketing, promotional and financial services. The issuance of these
     shares resulted in a noncash charge included in general and  administrative
expenses of $729,550 in fiscal 2000.                                  

     In  2000,  the  Company  also  issued  warrants  to  acquire  approximately
     2,120,000  shares of the  Company's  common  stock in exchange  for various
     professional  services  including  the  1,184,000  shares issued to the two
     financial  advisors  described above. The fair value of the warrants issued
     in fiscal 2000 totaled  $1,259,884 and is included in selling,  general and
administrative expense.                                               

     In February  2000, the Company issued 150,000 shares of its common stock in
     connection with short-term borrowings.  The issuance of the shares resulted
     in a noncash  financing charge (included in interest expense) of $58,500 in
fiscal 2000.                                                          

     In November  2000, the Company issued 500,000 shares of its common stock to
     financial  advisors in connection with the issuance of certain  convertible
     debentures  (Note F). The  issuance of the shares has been  reflected  as a
     debt issuance cost in the statement of deficit in stockholder's  equity and
was fully amortized as of December 31, 2001.                          

     In February 2001, the Company issued 335,000 shares of its common stock for
     $.240 per share,  or a total of  $80,400,  in  connection  with  short-term
     borrowings.  The issuance of shares resulted in a noncash  financing charge
(included in interest expense) of $80,400.                            

     In March 2001,  the Company  issued  3,028,523  shares of common  stock for
     $.243 per share,  for a total of $739,000.  Also in March 2001, the Company
     issued  1,000,000  shares  of  common  stock  for  $.149  per share to cure
     violations of warranties  under a previous  stock purchase  agreement.  The
     issuance of the shares resulted in a noncash  financing charge (included in
interest expense) of $150,000 in fiscal 2001.                         

F-18
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Detour Media Group, Inc.
 (formerly known as Detour Magazine, Inc.)
 NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2001 and 2000

NOTE I - EQUITY - Continued                                                     

     Between March 2001 and June 2001,  the Company issued  1,780,000  shares of
     common  stock in exchange  for various  professional  services,  including,
     marketing, promotional, financial and administrative services. The issuance
     of the  shares  resulted  in a  noncash  charge  included  in  general  and
administrative expenses of $332,300.                                  

     Between the period June 1, 2001 and December  31, 2001,  the holders of the
     convertible  debentures described in Note F converted $140,600 of principal
     and $13,796 of accrued  interest  into  common  stock.  The Company  issued
  4,391,394 of restricted common stock as a result of the debt conversion.

     The Company also issued warrants to acquire approximately  2,100,000 shares
     of  the  Company's  common  stock  in  exchange  for  various  professional
     services.  The fair value of the  warrants  issued in fiscal  2001  totaled
$185,200 and is included in general and administrative expenses.      

     On April  9,  2001,  the  company's  former  financial  advisors  exercised
     1,600,000  warrants in a cashless exercise that resulted in the issuance of
1,333,333 shares of the Company's common stock.                       

     The following  tables  summarize  the changes in the number of  outstanding
common stock warrants during 2000 and 2001:                           

                                                              Weighted
                                             Number of         Average
                                                 Shares       Exercise Price
                                               ----------     --------------

   Outstanding at December 31, 1999        2,100,000         0.174
      Granted                                935,000         0.379
     Cancelled                             (500,000)        0.41
     Exercised                                    -            -
                            ----------

   Outstanding at December 31, 2000        3,253,000         0.203
      Granted                              2,100,000         0.197
      Cancelled                              (15,000)         0.50
      Exercised                           (1,600,000)         0.10
                            ----------

   Outstanding at December 31, 2001        3,020,000         0.252
                            ==========

F-19
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Detour Media Group, Inc.
 (formerly known as Detour Magazine, Inc.)
 NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2001 and 2000

NOTE I - EQUITY - Continued                                                     

     The following table summarizes  additional  information about the Company's
common stock warrants at December 31, 2001:                           

                                Number outstanding      Weighted average
                             and exercisable at          remaining
         Exercise Prices         December 31, 2001         life (months)
         ---------------        ------------------      ----------------

   $0.01 - 0.04                 425,000                 55
       0.10                     260,000                 37
   $0.20 - 0.25               1,765,000                 55
   $0.41 - 0.66                 570,000                 24
         -----------
           3,020,000

NOTE J - SUBSEQUENT EVENTS                                                      

     Between January 1, 2002 and March 31, 2002, the Company  received  $193,500
     in additional advances from its major stockholder. In addition, the Company
     borrowed  an  additional  $111,600  from 1970  Asset  Management  Corp,  an
     unaffiliated creditor. The funds were used principally for debt service and
to provide working capital for operations.                            

F-20

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

None.                                                                 

PART III

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

     The directors and officers of our company as of the date of this Report are
as follows:                                                                     

Name                       Age          Position                                
----------------           ---          ----------------------                  

Edward T. Stein             51          Chairman of Board,                      
               President & CEO

Kevin Nesis                 33          Secretary & Director                    

     Directors are elected for one-year  terms or until the next Annual  Meeting
of Shareholders and until their  successors are duly elected and qualified.  Our
officers are  appointed  by our Board of Directors  and serve at the pleasure of
the Board, subject to any rights under employment agreements.                   

     There are no family  relationships among the officers and directors.  There
is no  arrangement  or  understanding  between  us (or any of our  directors  or
officers)  and any other  person  pursuant  to which such person was or is to be
selected as a director or officer.                                              

Resumes                                                                         

     Edward T.  Stein has been  Chairman  of the  Board  and a  Director  of our
Company and our  predecessor  since January 1995. He was appointed our President
and CEO in August, 2001. Previously, from November 1999 to April 1999, Mr. Stein
also served as our  President.  Since 1986, he has also been President of Edward
T. Stein Associates,  Ltd., a privately held financial  services firm engaged in
money  management,  insurance and financial  planning  located in Melville,  New
York,  and Prima Capital  Management  Corp.,  an affiliated  company.  Mr. Stein
obtained a Bachelor of Science degree from Rider University, where he majored in
finance.  He devoted  substantially  all of his time to our business  activities
during the fiscal year 2000.                                                    

     Kevin Nesis has been our Secretary and a director  since  November 1999. In
addition to his positions with us, since January                                

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2000, Mr. Nesis has been employed by Time Capital  Securities Corp., a privately
held New York corporation,  where his duties included financial services, estate
and tax planning.  From April 1997 through  January 2000, Mr. Nesis was employed
by  Edward T.  Stein  Associates,  Ltd.,  where his  duties  included  financial
services,  estate and tax planning. From June 1996 through March 1997, Mr. Nesis
was  unemployed.  Mr.  Nesis  received a Bachelor  of Arts  degree  from  Boston
University  in 1993 and a Juris Doctor  degree from New York Law School in 1996.
He also  holds a  Series  7 and 63  license  with the  National  Association  of
Securities  Dealers,  Inc. He devotes  approximately 30% of his business time to
our business affairs.                                                           

     Section 16(a) of the Securities Exchange Act of 1934 requires our officers,
directors  and person who own more than 10% of our common  stock to file reports
of  ownership  and  changes  in  ownership  with  the  Securities  and  Exchange
Commission.  All of the  aforesaid  persons are  required by SEC  regulation  to
furnish us with  copies of all  Section  16(a)  forms  they file.  There were no
changes in the holdings of management during 2001.                              

ITEM 10.  EXECUTIVE COMPENSATION.                                               

REMUNERATION                                                                    

     The following table reflects all forms of  compensation  for services to us
for the years  ended  December  31,  2001 and 2000 of our then  chief  executive
officer,  as well as those  persons who received in excess of $100,000 in annual
compensation from us during the aforesaid time.                                 

                                                                [Download Table]
                           SUMMARY COMPENSATION TABLE                             


                                                 Long Term Compensation           
                                              ---------------------------         
                      Annual Compensation            Awards       Payouts         
                    -----------------------   ------------------  -------         
                                                      Securities                  
                                     Other               Under-             All   
Name                                 Annual   Restricted  lying             Other 
and                                  Compen-     Stock   Options/   LTIP   Compen-
Principal           Salary   Bonus   sation     Award(s)   SARs   Payouts   sation
Position     Year     ($)     ($)      ($)        ($)      (#)      ($)      ($)  
-----------  ----  --------  -----  --------    -------  -------  -------  -------
                                                                                  
Edward T.                                                                         
Stein,(1)                                                                         
President &  2000  $105,417  $   0  $      0    $     0        0  $     0   $    0
Director     2001  $ 22,917  $   0  $      0    $     0        0  $     0   $    0

Andrew Left, 2000  $ 68,750  $   0  $      0    $     0        0  $     0   $    0
President    2001  $152,656  $   0  $      0    $     0        0  $     0   $    0

                                                                              42  

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                                                 Long Term Compensation           
                                              ---------------------------         
                      Annual Compensation            Awards       Payouts         
                   -------------------------  ------------------  -------         
                                                      Securities                  
                                     Other               Under-             All   
Name                                 Annual   Restricted  lying             Other 
and                                  Compen-     Stock   Options/   LTIP   Compen-
Principal           Salary   Bonus   sation     Award(s)   SARs   Payouts   sation
Position     Year     ($)     ($)      ($)        ($)      (#)      ($)      ($)  
-----------  ----  --------  -----  --------    -------  -------  -------  -------
                                                                                  
Barbara                                                                           
Zowlocki,    2000  $ 60,000  $   0  $157,000(2) $     0        0  $     0   $    0
Publisher                                                                         

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

<FN>                                                                              
(1)  Mr.  Stein  resigned his position as President of the Company in April 1999  
     and was  replaced  by Mr.  Left at that  time.  Mr.  Stein  re-assumed  his  
     position as our President in August 2001.                                    

(2)  This  compensation  was in the form of commissions,  which were paid to BZI  
     Media Services,  Inc., Ms.  Zowlocki's  company.  Ms. Zowlocki resigned her  
     position with our company in April 2001.                                     
</FN>                                                                             


     No  member  of  management  serves  pursuant  to  a  definitive  employment
agreement.                                                                      

     We reimburse our officers and directors for out of pocket expenses incurred
by each of them in the performance of their relevant  duties.  We reimbursed Mr.
Stein,  in the  amounts of $53,096 and  $240,925  in expenses  during the fiscal
years ended December 31, 2000 and 2001,  respectively,  and Ms.  Zowlocki in the
amount of $29,205 and $5,011 during the fiscal years ended December 31, 2000 and
2001, respectively.                                                             

     We have no  current  stock  plan for  employees,  but may  adopt one in the
future.                                                                         

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

     The table below lists the beneficial  ownership of our voting securities by
each  person  known by us to be the  beneficial  owner  of more  than 5% of such
securities,  as well as by all directors and officers of the issuer, as of April
11, 2002.  Unless  otherwise  indicated,  the  shareholders  listed possess sole
voting and investment power with respect to the shares shown.                   

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Name and           Amount and           
Address of          Nature of             
Title of           Beneficial          Beneficial    Percent of                 
Class              Owner              Ownership        Class                  
--------    -------------------------  ----------    ----------                 

Common      Edward T. Stein(1)         7,316,829        17.3%                   
201 N. Service Rd.                                      
Suite 100                                               
Melville, NY 11747                                      

Common      Kevin Nesis(1)                11,500          *                     
201 N. Service Rd.                                      
Suite 100                                               
Melville, NY 11747                                      

Common      All Officers and           7,328,329        17.3%                   
Directors as a Group                                    
(3 persons)                                               
------------------------                                                        
* Less than 1%                                                                  

(1)  Officer and/or director of our Company.                                    

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.                       

     In 1995, Edward T. Stein, our majority stockholder,  loaned us $932,313. In
1996, this note was converted to a demand note,  bearing interest at the rate of
12% per annum. In 1996, this stockholder  subsequently assigned this Note to JCM
Capital Corp., a minority  stockholder,  who, upon  information and belief,  has
assigned portions of this note to other unaffiliated  parties. In July 2001, the
holders of these various notes agreed to convert this obligation,  including all
principal and accrued interest,  into shares of our common stock at a conversion
price of  approximately  $.46 per share.  They received  3,237,468 shares of our
common stock in the aggregate.  These notes were secured by substantially all of
our assets,  except for accounts  receivable.  Upon conversion of the notes, the
security interest was released.                                                 

     Advances  from  stockholder   represent   advances  made  by  our  majority
stockholder  for working capital  purposes.  At September 30, 2000, the advances
bore  interest at 8% per annum and were  payable on demand.  In March 2000,  our
majority  stockholder  agreed to reduce the annual interest rate to 8% from 12%,
effective  January  1,  2000,  and modify  the  repayment  terms.  Under the new
repayment terms, the advances are repayable in monthly principal installments of
$24,000  commencing  January 1, 2001. We did not make the principal  payments in
2001 and  2000.  However,  we must use at least 25% of the net  proceeds  of any
financing received by us to repay the advances. Further, all of the advances are
due and payable in full at such time as we have received equity  financing of at
least $10 million.                                                              

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At December 31, 2001,  $2,952,293 of principal was outstanding and classified as
short-term. Accrued interest payable to the majority stockholder at December 31,
2001,  totaled  $1,131,872.  Interest expense on the advances was  approximately
$333,000  and  $304,000  for  the  year  ended   December  31,  2001  and  2000,
respectively.                                                                   

Subsequent Events                                                               

     Between  January  1, 2002 and March  31,  2002,  we  received  $193,500  in
additional advances from Ed Stein, our President and Chairman.  In addition,  we
borrowed  an  additional   $111,600  from  1970  Asset   Management   Corp.,  an
unaffiliated  creditor.  These funds were  utilized  to pay certain  obligations
necessary  to allow us to continue  to remain in  business.  These loans  accrue
interest at the rate of 11% per annum and are due upon demand.                  

 PART IV

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

(a)   Exhibits                                                                  
--------                                                            

3.1*     Certificate and Articles of Incorporation                  

3.2*     Bylaws                                                     

3.3**    Articles of Merger                                         

3.4***   Certificate of Correction dated March 6, 2000              

3.5****  Amendment to Articles of Incorporation                     
-----------------------                                                         

* Filed with the  Securities  and  Exchange  Commission  in the Exhibits to Form
10-SB, filed in January 1995 and are incorporated by reference herein.          

** Filed with the  Securities  and Exchange  Commission  in the Exhibits to Form
10-KSB filed in April 1998 and is incorporated by reference herein.             

*** Filed with the  Securities  and Exchange  Commission in the Exhibits to Form
10-KSB, filed in May 2000 and is incorporated by reference herein.              

**** Filed with the Securities  and Exchange  Commission in the Exhibits to Form
10-KSB, filed in May 2001 and is incorporated by reference herein.              

(b)   Reports on Form 8-K                                                       

                                                                              45

10KSB
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     In the last fiscal  quarter of the fiscal year ended  December 31, 2001, we
did not file any reports on Form 8-K.                                           

                                                                              46

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SIGNATURES

     In accordance  with Section 13 or 15(d) of the  Securities  Exchange Act of
1934,  the  Company  caused  this  Report  to be  signed  on its  behalf  by the
undersigned, thereunto duly authorized, on April 11, 2002.                      

                      DETOUR MEDIA GROUP, INC.
          (Registrant)

                   By:s/ Edward T. Stein
                                    --------------------------------
                              Edward T. Stein, President

     In  accordance  with the Exchange Act, this Report has been signed below by
the  following  persons  on  behalf  of the  registrant  and  in the  capacities
indicated on April 11, 2002.                                                    

                s/ Edward T. Stein
                                  ------------------------------------
                       Edward T. Stein, Director

            s/ Kevin Nesis
                                  ------------------------------------
                   Kevin Nesis, Director

                                                                              47

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10KSB’ Filing		Date		First		Last			Other Filings
		12/31/04		37
		6/19/03		32
		12/31/02		37
		6/30/02		18		33			NT 10-Q
		4/30/02		6		30
Filed on:		4/12/02
		4/11/02		2		47
		4/1/02		13		35			NT 10-K
		3/31/02		12		45			10QSB,  NT 10-Q
		3/30/02		15
		3/15/02		12
		3/4/02		21		31
		2/28/02		13		35
		1/1/02		12		45
For Period End:		12/31/01		1		46			NT 10-K
		10/1/01		18
		9/30/01		14					10QSB,  10QSB/A,  NT 10-Q
		6/30/01		14					10QSB,  10QSB/A,  NT 10-Q
		6/1/01		39
		4/30/01		38
		4/9/01		39
		3/31/01		14		18			10QSB,  10QSB/A,  NT 10-Q
		1/31/01		37
		1/1/01		19		44
		12/31/00		4		45			10KSB,  10KSB/A,  NT 10-K
		11/22/00		36
		9/30/00		14		44			10QSB,  NT 10-Q
		9/14/00		37
		6/30/00		14		18			10QSB,  NT 10-Q
		4/25/00		37
		3/31/00		14		37			10QSB
		3/30/00		35
		3/8/00		17		32
		3/6/00		45
		1/1/00		19		44
		7/15/99		32
		12/19/98		17
		9/2/97		12
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