This Form 10-K is the subject of a Form 12b-25

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, 2003

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

For the transition period from [ ] to [ ]

For the transition period from [ ]to[ ]

Commission file number

000-27387

INTERNETSTUDIOS.COM, INC. (Exact name of Registrant as specified in its charter)
Nevada (State or other jurisdiction of incorporation or organization)		134009696 (I.R.S. Employer Identification No.)
1351 4th Street, Suite 227 Santa Monica, CA (Address of principal executive offices)		90401 (Zip Code)

INTERNETSTUDIOS.COM, INC.

(Exact name of registrant as specified in its charter)

Registrant's telephone number, including area code

Nevada		134009696
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1601 Cloverfield Boulevard 2nd Floor, South Tower Santa Monica, CA		90404
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code 888.784.6166

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

Title of each class
Nil

Name of each exchange on which registered
Nil

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

Common Shares, par value $0.0001 ~~par value~~ (Title of class)

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

Yes [X] No [ ]

~~Check~~Indicate ifby ~~there~~check ismark noif disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and ~~no disclosure~~ will not be contained, to the best of ~~the Registrant~~registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

~~State~~Indicate ~~the~~by ~~aggregate~~check ~~market~~mark ~~value~~whether of the ~~voting and non-voting common equity held by non-affiliates of the~~ registrant. ~~The~~is ~~aggregate~~an ~~market~~accelerated ~~value~~filer ~~shall~~(as bedefined ~~computed~~in byRule ~~reference~~12b-2 ~~to the price at which the common equity was sold, or the average bid and asked prices~~ of ~~such common equity, as of a specified date within 60 days prior to~~ the ~~date of filing~~Act).

~~4,195,495~~[ ~~common~~] ~~shares~~Yes @[X] ~~$0.30(1) = $1,258,648.50~~No

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked prices of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter.

Note - If a determination as to whether a particular person or entity is an affiliate cannot be made without involving unreasonable effort and expense, the aggregate market value of the common stock held by non-affiliates may be calculated on the basis of assumptions reasonable under the circumstances, provided that the assumptions are set forth in this form.

10,262,249 common shares @ $0.55⁽¹⁾ = $5,644,236.95

(1) Average of bid and ask closing prices on April 8, 2004.

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes [ ] No [ ]

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

Indicate the number of shares outstanding of each of the Registrant's classes of common stock, as of the latest practicable date.

412,~~308~~129,~~605~~209 common shares issued and outstanding as of ~~July~~April 258, ~~2002~~2004.

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement, and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders fo fiscal year ended December 31, 1980).

None.

PART I

Item 1. ~~Description of~~ Business.

This annual report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors", that may cause our company's or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are stated in United States ~~dollars~~Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. ~~In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to CDN$ refer to Canadian dollars.~~

In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to "CDN$" refer to Canadian dollars and all references to "common shares" refer to the common shares in our capital stock.

As used in this annual report, the terms "we", "us", "our", and "InternetStudios" mean InternetStudios.com, Inc. and our wholly-owned subsidiaries, unless otherwise indicated.

~~Business~~Corporate ~~Development - General~~Overview

InternetStudios.com, Inc. ~~was~~is ~~incorporated~~a incompany ~~Nevada~~focused on ~~April 14, 1998 under~~ the ~~name The Enterprise~~production, ~~Inc.~~distribution ~~For~~and amarketing ~~period~~ of ~~time~~filmed ~~prior~~entertainment ~~to December 14~~products, ~~1998,~~including wetheatrical ~~were~~motion ~~engaged in the word processing business. We changed our name to eHealth.com~~pictures, ~~Inc.~~television ~~in anticipation of acquiring a license to software technology for the health industry~~programs, ~~which~~home ~~acquisition~~video ~~was never consummated. Effective September 21~~products, ~~1999,~~and wedigitally ~~changed~~delivered ~~our name to InternetStudios.com, Inc. Since that date, InternetStudios has been in the business of providing web-based solutions for the~~ entertainment ~~industry. We own a proprietary online platform~~ and ~~database to transact film and television rights~~media. ~~With this technology, we have focused on the development and marketing of our website at www.onlinefilmandtvsales.com.~~

Subsidiaries	Jurisdiction of Incorporation	Date of Incorporation	Percentage of Securities Owned
OnlineFilmSales.com, LLC(1)	Delaware	March 8, 2000	100% by InternetStudios
ReporterTV.com, LLC(2)	Delaware	March 8, 2000	75% by OnlineFilmSales. com, LLC
StudioBuzz.com, LLC(3)	Delaware	March 17, 2000	50% by OnlineFilmSales. com, LLC
OnlineFilmandTVSales.com, Inc. (4)	California	April 12, 2000	100% by InternetStudios
InternetStudios UK Limited(5)	United Kingdom	February 21, 2000	100% by InternetStudios
InternetStudios Entertainment Finance(6)	British Columbia	June 29, 2000	100% by InternetStudios

We were incorporated in the State of Nevada on April 14, 1998 under the name The Enterprise, Inc. We changed our name to eHealth.com, Inc. in anticipation of acquiring a license to software technology for the health industry. This acquisition was not completed. Effective September 21, 1999 we changed our name to InternetStudios.com, Inc.

~~(1)~~Our Webusiness ~~conduct~~model ~~our~~has ~~business~~evolved ~~through~~toward a greater focus on the control of our ~~wholly~~own ~~owned~~filmed ~~subsidiary,~~entertainment ~~OnlineFilmSales~~properties.~~com,~~ ~~LLC.~~Our ~~This~~shift ~~entity~~in ~~owns~~focus ~~100%~~has ofbeen motivated by opportunities management believes have arisen due to recent structural changes in the ~~membership~~entertainment ~~interests~~sector. ofThe ~~Online~~motion ~~Films,~~picture ~~LLC,~~industry ahas ~~private~~entered ~~Delaware~~an ~~limited~~unusual ~~liability~~phase ~~company~~in ~~which~~its ~~originated~~history, ~~our~~where ~~business~~the confluence of ~~compiling~~two antrends ~~online~~has ~~database~~created a unique investment opportunity. The first of ~~filmed~~these ~~entertainment~~is a consumer technology trend - the introduction and ~~facilitating~~mass penetration of DVD players in homes - that has led to a ~~digital~~record ~~marketplace~~surge ~~targeted~~in atconsumer ~~the~~purchases ~~entertainment~~of ~~industry~~movies for home viewing. ~~Online~~The ~~Films,~~second ~~LLC~~trend is ~~currently~~a ~~inactive~~cyclical market downturn that has driven media asset valuations to recent historic lows, particularly for films and film libraries.

~~(2)~~Taken ~~ReporterTV.com~~together, ~~LLC~~these istrends ahave ~~Delaware~~resulted ~~Limited~~in ~~Liability~~an ~~Company.~~environment ~~OnlineFilmSales.com~~where valuable, ~~LLC~~cash-generating ~~holds~~assets ~~75%~~like ofproduction ~~the~~companies ~~economic~~and ~~interest~~home invideo ~~this~~distribution ~~company~~rights ~~and~~can ~~has~~be aacquired ~~100%~~at ~~voting~~prices ~~interest.~~below ~~ReporterTV~~their ultimate market value.~~com,~~ ~~LLC~~We isplan ~~currently~~to ~~inactive~~exploit this situation by assembling a world-class film production and ~~OnlineFilmSales~~DVD distribution company and management team.~~com~~ To this end, ~~LLC~~we ishave inentered ~~the~~into ~~process~~negotiations ofto ~~winding~~acquire upboth ~~its~~filmed ~~operations~~entertainment content and a recognizable brand under which this content can be distributed.

~~(3)~~As ~~StudioBuzz.com~~part of this change in business direction, ~~LLC~~on isFebruary 13, 2003, we entered into a ~~Delaware~~Letter ~~Limited~~of ~~Liability~~Intent ~~Company.~~with ~~OnlineFilmSales~~Dominique Bigle to acquire Bigle's library of over 1500 motion pictures (the "Trocadero Library").~~com~~ In consideration for acquiring the library of motion pictures, ~~LLC~~we ~~holds~~agreed ~~50%~~to issue to Bigle 1,000,000 shares of our common stock and to pay $125,000 to Bigle. As of the ~~economic~~date ~~interest~~hereof, inwe ~~this~~have ~~company~~paid a deposit of $115,000 to Bigle and ~~has~~issued a1,000,000 ~~100%~~shares ~~voting~~of ~~interest.~~common ~~StudioBuzz~~stock.~~com~~ The closing of this agreement extended by agreements dated July 30, ~~LLC~~2003 isand anJanuary ~~inactive~~19, ~~company~~2004. Those extensions have now expired and ~~OnlineFilmSales~~we have not obtained any further extensions.~~com~~ Despite not having a further extension, ~~LLC~~we iscontinue to negotiate in good faith and expect to close this acquisition on the ~~process~~same ofterms ~~winding~~in upthe ~~its~~near ~~operations~~future . We anticipate closing this acquisition by April 30, 2004.

~~(4)~~Additionally, ~~OnlineFilmandTVSales~~as ispart ~~a California Corporation. Pursuant to an Agreement and Plan~~ of ~~Merger~~this ~~dated~~new ~~May~~business 5strategy, ~~2000,~~on byMay ~~and among InternetStudios~~12, ~~OnlineTVSales.com~~2003 ~~Inc., TAMNW Inc. and itstv.com,~~ we ~~acquired~~formed ~~all the capital stock of itstv.com. Itstv.com was~~ a ~~web-based~~wholly ~~resource~~owned ~~for~~subsidiary ~~television~~called ~~programming.~~International OnMedia ~~November~~Acquisition 16Group, ~~2000,~~a ~~OnlineTVSales.com,~~Delaware ~~Inc.~~LLC ~~changed its name to OnlineFilmandTVSales~~("IMAG").com, Inc. Its operations were merged with those of OnlineFilmSales such that the digital online market place became available at www.onlinefilmandtvsales.com and/or www.oftvs.com. As OnlineFilmandTVSales.com, Inc. is an inactive company, InternetStudios is in the process of winding it up.

~~(5)~~During Onthe ~~February~~quarter 21ended June 30, ~~2000~~2003, ~~InternetStudios~~IMAG ~~formed~~entered ~~InternetStudios~~into a letter of intent to acquire RKO Pictures, LLC, ("RKO") one of the classic Hollywood studios.~~com~~ UKPursuant ~~Limited~~to the terms of the letter of intent, aIMAG ~~private~~agreed ~~limited~~to ~~liability~~acquire ~~company~~100% ~~incorporated~~of the membership interests of RKO Pictures LLC in ~~England~~consideration for $5.5 ~~InternetStudios~~million in cash.~~com~~ UKIn ~~amended~~addition ~~its~~to ~~name~~the purchase price, IMAG agreed to ~~InternetStudios~~set UKaside ~~Limited~~a onworking ~~September~~capital 25reserve of $4.5 million. Under the terms of the letter of intent, ~~2000~~a warrant was to be issued to the members of RKO Pictures, ~~has~~LLC noentitling ~~employees~~them ~~and~~to ~~does~~acquire ~~not~~up ~~carry~~to onfive ~~business~~(5%) percent of our fully diluted share capital post-acquisition. ~~InternetStudios~~The ~~has~~letter ~~filed~~of tointent ~~have~~with ~~this~~RKO ~~company~~also ~~wound~~requires upthat we enter into a services agreement with the current Chairman of RKO Pictures, for a three-year term during which the individual will be paid total compensation of $875,000. During the three months after the execution of the letter of intent, we paid deposits of $687,500 toward the purchase price.

~~(6)~~We Onanticipated ~~June~~closing ~~29,~~this ~~2000,~~acquisition ~~InternetStudios~~on ~~formed~~September ~~InternetStudios~~2, ~~Entertainment~~2003 ~~Finance~~and ~~("IEF")~~executed tofinal ~~provide~~documentation ~~interim~~between ~~financing~~us, ~~for~~IMAG ~~the~~and ~~production~~RKO in anticipation of ~~filmed~~such ~~entertainment~~closing. ~~projects~~Unfortunately, ~~with~~the ~~budgets~~financing ~~between~~for $2this ~~million~~transaction ~~and~~did $8not ~~million~~close. ~~The~~However, ~~operations~~the ofparties ~~IEF~~continue ~~have~~to ~~been~~negotiate ~~significantly~~in ~~curtailed~~good asfaith aand ~~result~~expect ofto close a ~~lack~~transaction ofon ~~available~~substantially ~~financing~~similar terms in the near future.

~~ONLINEFILMSALES.COM,~~We ~~LLC~~also plan to continue exploring other available business opportunities whereby it can add to its library of filmed entertainment assets and build a niche-oriented DVD releasing and merchandising company.

OnlineFilmSales.com, LLC is a manager-managed limited liability company formed in Delaware. Except for matters as to which the approval of the members is required by Delaware law, the manager of OnlineFilmSales has full, complete and exclusive authority, power and discretion to manage and control the business, property and affairs of OnlineFilmSales. OnlineFilmSales has one manager, InternetStudios. The manager of OnlineFilmSales is elected by the affirmative vote or written consent of the holders of a majority of all voting interests of Class A members of OnlineFilmSales. History

~~Effective~~We ~~March~~are ~~28,~~a ~~2000~~Nevada corporation, ~~substantially~~incorporated ~~all~~on ofApril ~~InternetStudios'~~14, ~~assets~~1998 ~~were~~under ~~contributed (~~the ~~"Asset~~name ~~Contribution~~")The toEnterprise, ~~OnlineFilmSales~~Inc." ~~Included~~For ~~in the Asset Contribution were (i) InternetStudios' 91.847% membership interest in Online Films, LLC so that Online Films, LLC became~~ a ~~subsidiary~~period of ~~OnlineFilmSales,~~time ~~and~~prior ~~(ii)~~to aDecember ~~Secured Promissory Note~~14, ~~originally issued on November 12~~1998, ~~1999~~we ~~(as~~were ~~amended~~engaged ~~several times and having a final principal balance of $2,025,000), by MediaChase Ltd., a Delaware corporation~~ in ~~favor of InternetStudios (~~the ~~"MediaChase~~word ~~Note")~~processing business. ~~Excluded~~We ~~from~~changed ~~the~~our ~~Asset~~name ~~Contribution~~ to ~~OnlineFilmSales were all trademarks, trade names, and domain names containing "InternetStudios~~eHealth.com~~" or "InternetStudios" and all associated goodwill~~, ~~InternetStudios'~~Inc. ~~equity interest~~ in ~~InternetStudiosUK~~anticipation ~~Limited,~~of ~~and~~acquiring ~~InternetStudios' rights under~~ a ~~Letter~~license ofto ~~Intent~~software ~~dated~~technology ~~March 15, 2000 with TAMNW, Inc. (as discussed below). In exchange~~ for the ~~Asset~~health ~~Contribution~~industry, ~~OnlineFilmSales~~however ~~issued to InternetStudios all of~~ the ~~Class~~acquisition Awas ~~membership~~never ~~interests in OnlineFilmSales~~consummated.

~~Concurrently~~On ~~with~~September ~~the~~21, ~~Asset Contribution~~1999, ~~two~~we ~~members~~changed ofour ~~InternetStudios'~~name ~~then management also made contributions~~ to ~~OnlineFilmSales in exchange for Class B membership interests in OnlineFilmSales~~"InternetStudios. ~~Heidi Lester~~com, ~~the then Chief Executive Officer of InternetStudios, contributed to OnlineFilmSales an 8~~Inc.~~153%~~" ~~interest~~We inhave ~~Online~~been ~~Films and Steve Fredericks, the then Acting President and Chief Financial Officer of InternetStudios, contributed all of his interest~~ in ~~certain agreements relating to~~ the ~~development~~business of aproviding ~~digital~~web-based ~~production~~solutions ~~center and a related digital training program~~ for ~~artists and producers in~~ the ~~People's~~entertainment ~~Republic of China~~industry. AsIn a2003, ~~result~~we ofchanged ~~the~~our ~~contribution~~business direction to ~~OnlineFilmSales~~focus ofon ~~Heidi~~acquiring ~~Lester's~~more ~~membership~~traditional ~~interest~~media ~~in Online Films, LLC, Online Films LLC became a wholly owned subsidiary of OnlineFilmSales~~assets.

~~The~~We ~~holders~~have ofthe ~~Class~~following Bactive membership interests in OnlineFilmSales were entitled to convert their interests into shares of InternetStudios' common stock at any time. Steve Fredericks converted 39.15% of his Class B Membership Interest into 7,829 shares of InternetStudios' common stock on March 30, 2001 and Heidi Lester's Class B Membership Interest was converted into 30,000 shares of InternetStudios' common stock on May 29, 2001.subsidiary:

REPORTERTV.COM, LLC

Subsidiary	Jurisdiction of Incorporation	Date of Incorporation	Percentage of Securities Owned
International Media Acquisition Group, LLC	Delaware	June 30, 2003	100% by InternetStudios

~~InternetStudios,~~We ~~through~~have ~~OnlineFilmSales,~~the ~~entered~~following ~~into~~inactive ~~a joint venture with MediaChase Ltd., a Los Angeles based software company, on March 28, 2000 to form ReporterTV.com, LLC.~~subsidiaries:

To fund the development of ReporterTV, InternetStudios advanced $2,025,000 in the form of a loan, evidenced by the MediaChase Note. As a part of the Asset Contribution, InternetStudios contributed to OnlineFilmSales, all of its rights as payee under the MediaChase Note. OnlineFilmSales contributed all of its rights as payee under the MediaChase Note to ReporterTV and MediaChase assigned all of its obligations as payor under the MediaChase Note to ReporterTV, as a result of which contribution and assignment, the MediaChase Note has been cancelled.

Subsidiaries	Jurisdiction of Incorporation	Date of Incorporation	Percentage of Securities Owned
OnlineFilmandTVSales.com, Inc. ⁽¹⁾	California	April 12, 2000	100% by InternetStudios
InternetStudios UK Limited⁽²⁾	United Kingdom	February 21, 2000	100% by InternetStudios
InternetStudios Entertainment Finance⁽³⁾	British Columbia	June 29, 2000	100% by InternetStudios

^{In consideration of the cancellation of the MediaChase Note and the issuance by OnlineFilmSales to MediaChase of Class B membership interests convertible into 12,500 shares of InternetStudios' common stock, MediaChase (i1) entered into a Consulting Agreement with each of OnlineFilmSales and StudioBuzz.com, LLC, (ii) contributed certain assets to ReporterTV and StudioBuzz.com, LLC, and (iii) contributed to OnlineFilmSales (a) a 75% membership interest in ReporterTV and (b) a 100% voting interest and 50% economic interest in StudioBuzz.com, LLC. Pursuant to the terms} OnlineFilmandTVSales is a California Corporation. This company is not in good standing and has been struck for failure to file its annual statements.

^{Pursuant to the terms of the RTV Agreement, OnlineFilmSales is not obligated to fund ReporterTV for amounts over and above a defined contribution cap of $1,650,000, which contribution was provided by OnlineFilmSales. Additionally, pursuant to the terms of the RTV Agreement, OnlineFilmSales has no ongoing financial obligation to ReporterTV and is entitled to look to MediaChase to provide financing for the company. As no financial resources were made available to fund the ongoing operations of the company, ReporterTV's activities ceased during fiscal year 2001, and the company has not been operational since May 15, 2001.(2)} InternetStudios.com UK Limited is a private limited liability company incorporated in England. This company is not in good standing and has been struck for failure to file its annual statements.

^{BUSINESS STRATEGY(3)} On June 29, 2000, InternetStudios formed InternetStudios Entertainment Finance ("IEF") to provide interim financing for the production of filmed entertainment projects with budgets between $2 million and $8 million. This is an inactive company.

~~Through~~We ~~our~~have ~~online platform, www.oftvs.com, we provide an enterprise solution complete with transactional capabilities for~~ the ~~licensing~~following ofdissolved ~~filmed entertainment, complementary technology to track such transactions, and relevant and timely industry data and information. This yields multiple revenue streams including~~subsidiaries:

- Hosting fees

Subsidiaries	Jurisdiction of Incorporation	Date of Incorporation	Percentage of Securities Owned
OnlineFilmSales.com, LLC⁽¹⁾	Delaware	March 8, 2000	100% by InternetStudios
ReporterTV.com, LLC⁽¹⁾	Delaware	March 8, 2000	75% by OnlineFilmSales. com, LLC
StudioBuzz.com, LLC⁽¹⁾	Delaware	March 17, 2000	50% by OnlineFilmSales. com, LLC

^{- Customization and Licensing fees(1)} OnlineFilmSales.com, LLC , ReporterTV.com, LLC and StudioBuzz.com, LLC were cancelled-voided by the State of Delaware Division of Corporations on June 1, 2003. In 2003, we wrote off debts of $244,165 as a result of the cancellation of these LLC's.

-Business ~~Transactional fees~~ Overview

InternetStudios.com, Inc. is a development stage company engaged in the acquisition and development of production, distribution and marketing of filmed entertainment products, including theatrical motion pictures, television programs, home video products, and digitally delivered entertainment and media. Our company was founded in 1999 to incorporate innovative structures and technology to address the marketing, sales and releasing of filmed entertainment. Our business model has evolved toward a greater focus on the control of its own filmed entertainment properties, and toward that end we have recently entered negotiations to acquire the Trocadero Library and RKO Pictures, LLC, one of the classic Hollywood studios. In light of these proposed acquisitions, we intend to assemble a world class entertainment company under the classic Hollywood brand of RKO Pictures. Our goal is to leverage the RKO brand and assets along with our own distribution technology platform to establish a new mini-major ~~Marketing~~studio ~~fees~~and profitably position our company as a leading purveyor of classic films, memorabilia and merchandise that celebrate the very best that Hollywood has to offer.

Our company's shift in focus has been motivated by opportunities management believes have arisen due to recent structural changes in the entertainment sector. The motion picture industry has entered an unusual phase in its history, where the confluence of two trends has created a unique investment opportunity. The first of these is a consumer technology trend - ~~Sales~~the ~~revenue~~introduction and mass penetration of DVD players in homes-that has led to a record surge in consumer purchases of movies for home viewing. The second trend is a cyclical market downturn which has driven media asset valuations to recent historic lows, particularly for films and film libraries. Taken together, these trends have resulted in an environment where valuable, cash-generating assets like production companies and home video distribution rights can be acquired at prices below their ultimate market value. We plan to exploit this situation by assembling a world class film production and DVD distribution company and management team centered around the classic Hollywood brand of RKO Pictures.

~~COMPETITION~~Rarely in Hollywood does the opportunity arise to inexpensively acquire a great branded company with underexploited assets. In the strong economic climate of the 1990s, huge premiums were paid by the major media conglomerates for such valuable assets as Miramax Films, New Line Cinema, Castle Rock, Artisan, and other independent companies with strong brand names.

~~The~~But ~~Internet~~the ~~and~~capital ~~online~~markets ~~commerce~~have issince ~~new,~~entered ~~rapidly~~a ~~evolving~~cyclical ~~and~~downturn ~~intensely~~with ~~competitive.~~an ~~Our~~accompanying ~~current~~decline in asset values, and ~~potential~~it ~~competitors~~has ~~can~~become ~~launch~~more ~~new~~of ~~sites~~a ~~quickly~~buyers' ~~and~~market ~~inexpensively.~~for Nosuch ~~substantial~~strong ~~barriers~~brands. toAnd ~~entry~~now ~~into~~one of the ~~online~~most ~~business~~important tobrands ~~business~~in ~~marketplace~~motion ~~for~~picture ~~filmed~~history, ~~entertainment~~RKO ~~industry~~Pictures, ~~exist~~has become available for acquisition. ~~Increased~~In ~~competition~~the ~~from~~belief ~~these~~that ~~and~~RKO ~~other~~Pictures ~~sources~~represents ~~could~~a ~~require~~rare usopportunity to ~~respond~~purchase toand ~~competitive~~rebuild ~~pressures~~a byunique ~~establishing~~company ~~pricing~~to its former great status, ~~marketing~~we have entered into negotiations to acquire 100% of the members' interest in RKO Pictures, and ~~other~~we ~~programs~~are ornow seeking funding to carry out ~~additional~~this ~~strategic~~acquisition. ~~alliances~~If orwe ~~acquisitions~~successfully ~~that~~complete ~~may~~our beproposed ~~less~~acquisition, ~~favorable~~we intend to usquickly ~~than~~build ~~would~~a ~~otherwise~~niche-oriented beDVD ~~established~~releasing orand ~~obtained~~merchandising company focused on Hollywood's classic era. DVD sales have become Hollywood's cash cow, and ~~thus~~we ~~could~~plan ~~have~~to capture a ~~material~~share ~~adverse~~of ~~effect~~this onrapidly ~~our~~growing ~~business,~~market. ~~prospects~~Secondly, ~~financial~~we ~~condition~~intend ~~and~~to ~~results~~build ofa ~~operations.~~production Weand ~~believe~~releasing ~~that~~operation from the ~~principal~~strong ~~competitive~~foundation ~~factors~~of inRKO's ~~our~~library ~~market~~of ~~are:~~unexploited remake/sequel rights and un-produced screenplays.

Just as record buyers embraced the CD-ROM ~~filmed~~format ~~entertainment~~twenty ~~rights~~years ~~industry~~ago, ~~connections~~movie viewers around the world have fallen in love with the DVD, purchasing some 344 million DVD units in the U.S. alone in 2001. Industry analysts estimate that U.S. DVD sales will exceed 633 million units in 2002, an 84 percent increase over 2001 levels. (Sources: Adams Media; MPAA). Amid this surge of consumer spending niche opportunities abound, and our company is positioned to profitably exploit them. Through its planned acquisition of the Trocadero Films 1,500 title public domain film library, and our pending acquisition of RKO Studios, our company will own the necessary brand, library, and film exploitation rights to establish itself as the leading "classic Hollywood" film company for DVD collectors. Using the RKO label as our marketing platform, we will serve the sophisticated film lover with DVDs of these and other classic films, and with "contemporary classics," that is, new films based on or inspired by classic older films.

-Throughout ~~brand~~its ~~recognition;~~golden years RKO attracted an impressive list of top Hollywood talent. Orson Welles, John Ford, Cary Grant, Fred Astaire, Ginger Rogers, John Wayne, Lucille Ball, Robert Mitchum, Kirk Douglas, Jane Russell, Maureen O'Hara, Douglas Fairbanks, Jr., and Claudette Colbert are just a small representative group of the legends of Hollywood who helped to create some of the greatest films of all time for RKO. Films ranging from "Citizen Kane" to "The Hunchback of Notre Dame" are part of the volume of work associated with the RKO brand.

Now, at a time when consolidation has left Hollywood with few truly independent mini-major ~~selection;~~studios, the opportunity exists to acquire RKO Pictures and all of its assets, including its name, trademarks, sequel and remake rights, un-produced script rights and other substantial assets. RKO's brand name and its signature lightning bolt tower logo-which embody the enduring qualities of classic Hollywood-are ideally suited for launching a classic DVD releasing company. Moreover, RKO has retained rights to create new productions based on a substantial number of its original titles, over 800 films in all. RKO's assets also include some 800 un-produced screenplays which can provide the source material for new feature films and TV programs. RKO also has a vast archive of historic materials ranging from photographs and letters to original screenplays and interviews which can be exploited through publishing, documentary programs, and other media.

-RKO ~~variety~~Pictures is clearly distinguished from the dozens of ~~value~~independent production companies dotting the Hollywood landscape, who have no provenance or library depth or brand recognition. The ability to utilize RKO's vast library of stories and titles without paying huge sums for these scripts and underlying rights will create a distinct advantage over other independent production and distribution companies. Moreover, through aggressive and measured use of the RKO name, a branded distribution platform can be created. The time is particularly ripe for this approach given the rapid rise of the DVD platform. Additionally, an RKO-~~added~~branded ~~services;~~block of time on television, which would contain original films from the RKO library as well as original productions based upon the RKO remake and sequel rights, would likely draw meaningful viewership. Further extension of the RKO brand into licensed consumer products is an additional opportunity to be pursued.

-Our ~~ease~~company is uniquely positioned to capitalize on RKO's assets and leverage RKO into a major media company. By taking advantage of ~~use~~the industry knowledge and relationships of our management team, ~~site~~our ~~content;~~core marketing, tracking and licensing technology, and our currency as a public entity, we hope to build RKO into a diversified entertainment company.

-We ~~user~~are seeking the necessary financing to close the RKO Pictures acquisition. Successful execution of our business plan will profitably position our company as a leading purveyor of classic films, memorabilia and ~~advertiser~~merchandise ~~fulfillment;~~that celebrate the very best that Hollywood has to offer.

-Revenue ~~reliability;~~Sources

-If ~~quality~~we are successful in completing the Trocadero Library and RKO Pictures transactions, we will derive our revenues from the worldwide exploitation of ~~search~~our ~~tools;~~filmed entertainment properties across multiple media and distribution channels, both directly as a producer and distributor of those properties, and also indirectly through royalty and license arrangements with third-parties who may pay for the right to exploit our brands and properties.

-We ~~customer~~expect ~~service;~~to ~~and~~receive revenue from all of the following sources:

Rental fees from primary theatrical and non-theatrical ~~technical~~exhibition ~~expertise.~~of our films
~~Historically,~~Wholesale ~~key~~revenue ~~competitors~~from ~~have~~the ~~included:~~sale ~~FilmFinders.com,~~of ~~Reeplay.com,~~physical ~~FilmBazzaar.com,~~copies ~~ScreenExchange.com, ShowBizData.com, Tivix.com, Hollywood Software Inc., and Jaguar Consulting. The operational status~~ of ~~these companies is unknown. However, there can be no assurance that~~ our competitors will not develop services that are superior to ours or achieve greater market acceptance. Our failure to provide services that achieve success in the short term could materially and adversely affect our business, prospects, financial condition and results of operations. In addition, we compete with filmed entertainment rights transaction venues such as film ~~festivals, subscription databases~~ and ~~trade~~television ~~magazines.~~programs ~~The~~on ~~online venues competing with us may be acquired by~~DVD, ~~receive investments from~~videocassette, ~~or enter into other commercial relationships with, larger, more established~~ and ~~more adequately financed companies as the use of the Internet and~~ other ~~online~~home ~~services~~video ~~increases. Increased competition may result in reduced operating margins, loss of market share and a diminished brand franchise.~~media
~~TECHNOLOGY~~Revenue-sharing payments from the rental of our films and television programs via pay-per-view, video on demand and home video rental arrangements
~~The~~License ~~InternetStudios~~fees ~~technology~~from ~~platform~~the ~~has~~exhibition ~~been designed to support rapid, scalable deployment~~ of ~~buyer~~our ~~and~~films ~~seller services both online~~ and ~~offline~~television toprograms ~~enhance~~via ~~the~~pay ~~value~~cable, ~~for~~basic ~~our~~cable, ~~customers~~network ~~which~~television ~~can~~broadcasting ~~range in size from small to large companies. Our platform creates value for our customers by saving costs~~ and ~~increasing~~television ~~sales of filmed entertainment.~~syndication
~~Through~~Cash ~~December 31~~advances, ~~2001,~~license ~~InternetStudios~~fees ~~expended approximately $16,281 on its rights platform~~ and ~~transaction~~royalty ~~system~~or ~~and~~profit-sharing ~~website~~payments ~~development.~~from Itthird isparties ~~not~~who ~~expected~~acquire ~~that~~from ~~any~~our ~~significant~~company ~~additional~~the ~~investment~~right ~~is required in this area~~ to ~~allow~~exploit the ~~platform~~literary toand ~~support~~re-make ~~richer~~rights ~~functionality~~to ~~with~~our ~~the~~screenplays ~~products~~and orfilm ~~the addition of more products.~~ properties
~~All~~Royalty ~~production~~payments ~~equipment~~from ismerchandising ~~co-located~~of atconsumer ~~the~~products ~~NetNations~~bearing ~~Data~~the ~~Center~~logos, ~~in Vancouver~~brands, BC and isother ~~monitored~~forms 24of ~~hours~~intellectual aproperty ~~day~~from byour ~~the~~company's ~~NetNations~~films, ~~Operations~~television ~~Center.~~programs ~~Secondary~~and ~~support to the production environment is provided by contracted solutions providers that work in-house at our Vancouver office.~~archives
~~InternetStudios~~Royalties ~~applies industry standards~~ and ~~best~~license ~~practices~~payments byfrom ~~using~~exploitation ~~Microsoft's~~of ~~scalable~~soundtrack ~~Distributed Network Architecture with built in redundancy~~ and ~~fail~~music ~~over~~publishing ~~capabilities.~~rights ~~The~~for ~~system~~music ~~platforms/environments~~from ~~are~~our ~~Microsoft~~company's ~~Windows 2000 / NT based. All database applications are written / designed in MS SQL*Server 7.0. InternetStudios also uses various Microsoft development tools/ software packages. In addition~~films, ittelevision ~~uses a number of other~~ programs ~~from~~and ~~vendors~~archives ~~such as Macromedia & Adobe.~~
Catalogue and direct marketing sales of home video products

~~InternetStudios~~Sales uses Tape Library backup systems in the operational development environment as well as in the production environment. We are currently employing a combined full/incremental backup scheme to ensure reliable and ~~timely backup and recovery.~~Marketing

~~InternetStudios~~The ~~will~~digital ~~continue~~video todisc ~~devote~~format ~~resources~~for tomovies ~~develop~~has ~~its~~experienced ~~technology~~unprecedented ~~infrastructure.~~popularity ~~Our~~and ~~future~~has ~~success~~driven ~~will~~a ~~depend~~global onswell ~~our~~of ~~ability~~consumer todemand ~~upgrade~~for ~~our~~movies ~~technology~~on disk, ~~adapt~~both ~~our~~for ~~services~~new toreleases ~~evolving~~and ~~industry~~for ~~standards~~older ~~and~~catalogue ~~continually~~titles. ~~improve~~Domestic ~~the~~digital ~~performance,~~video ~~features~~disc ~~and~~revenues ~~reliability~~reached of$8.4 ~~our~~billion ~~service~~in 2002.

~~InternetStudios~~We ~~will~~intend ~~continually look~~ to ~~expand~~capitalize ~~and~~on ~~stabilize~~this ~~the~~opportunity ~~performance~~by ofproviding ~~its~~mainstream-friendly ~~web~~entertainment ~~servers,~~with ~~optimize~~worldwide ~~the~~commercial ~~performance~~appeal ofin ~~its~~a ~~network~~low-risk, ~~servers~~cost-efficient ~~and~~manner. ~~ensure~~We ~~the~~plan ~~stable~~to ~~performance~~exploit ofour ~~its~~own ~~entire~~films ~~network.~~in ~~InternetStudios~~digital ~~may~~video ~~not~~disc beformat ~~successful~~featuring inspecial ~~its~~features ~~ongoing~~and ~~efforts~~ to ~~upgrade~~acquire ~~its~~high ~~systems,~~quality orassets ifthat itwill ~~does~~be ~~successfully~~exploitable ~~upgrade~~from ~~its~~a ~~systems,~~video ~~InternetStudios may not do so on time~~ and ~~within~~ancillary ~~budget.~~media perspective.

~~INTELLECTUAL~~As ~~PROPERTY~~part of this plan, we intend to distribute or sell directly to mass merchandisers, such as Wal-Mart Stores Inc., Costco Wholesale Corporation, Target Corporation and Best Buy Co. Inc., and others who buy large volumes of digital video disc's to sell directly to the consumer in international markets.

InternetStudios regards the protection of its copyrights, service marks, trademarks, trade dress and trade secrets as critical to its success. InternetStudios relies on a combination of copyright, trademark, service mark and trade secret laws and contractual restrictions to protect its proprietary rights in products and services. InternetStudios maintains confidentiality and invention assignment agreements with its employees and contractors, and nondisclosure agreements with parties with which it conducts business to limit access to and disclosure of its proprietary information. Any contractual arrangements and the other steps taken by InternetStudios to protect its intellectual property may not prevent misappropriation of its technology or deter independent third-party development of similar technologies. Competition

~~InternetStudios~~We compete with the major studios, numerous independent motion picture and television companies. In addition, our filmed entertainment library competes for audience acceptance with those of other companies. The success of any of our products is dependent not only on the quality and acceptance of a particular motion picture or television program but also on the quality and acceptance of other competing filmed entertainment released into the marketplace at or near the same time.

~~INDUSTRY~~The ~~BACKGROUND~~sale and distribution of filmed entertainment is a highly competitive business. The entertainment industry now comprises seven major film distributors/studios: Sony Pictures, Paramount, Twentieth Century Fox, Warner Brothers, The Walt Disney Company, MGM/UA and Universal. Today, the major studios are multi-national, multi-media and mass marketing communication complexes with wholly owned distribution operations throughout the world. In addition to these major seven, there are numerous independent production and distribution companies. Many of our competitors are larger and better capitalized than us and have existing distribution channels. In addition, the number of films or television products released in any given period may create an oversupply of product in the market, and that may reduce our share of potential sales and make it more difficult for the films in our library to succeed.

~~THE~~We ~~FILMED~~believe ~~ENTERTAINMENT~~that ~~RIGHTS~~the ~~MARKET~~principal competitive factors in our market are:

~~Historically,~~ filmed entertainment rights ~~have~~industry ~~been~~connections; bought and sold primarily through major and minor film festivals and trade shows. Producers create over 12,000 films and hundreds of thousand of hours of television programs each year. Each project requires marketing of the distribution rights for different media, such as theatrical release, video sales and rental, video on demand, pay television, free television and the Internet, in every geographic market. This results in six or more licenses for each production in as many as 200 territories. The rise of independent feature film and television productions over the last 15 years has created a demand for a more efficient marketplace for distribution of the rights for these filmed entertainment.
~~The~~brand ~~market~~recognition; for filmed entertainment rights is fragmented. There is no central service available for entertainment industry executives to access information with respect to the availability and nature of filmed entertainment rights. Currently, the entertainment industry utilizes a combination of subscription database services, trade magazines and relies heavily on the networking of staff and attendance at the film markets and festivals to locate and purchase project exploitation and distribution rights or list and license their available inventories. The market is inefficient, labor intensive and the cost of concluding a licensing arrangement can be prohibitively high.
~~InternetStudios~~quality ~~believes~~of ~~that~~assets; ~~there are significant market opportunities for an easily accessible, centralized forum where entertainment industry executives~~ and producers can buy and sell filmed entertainment rights. An online database and digital market will enable holders to list and sell any unsold filmed entertainment rights. InternetStudios also believes that the Internet provides such a forum for the transaction of filmed entertainment rights.
~~THE~~quality ~~INTERNET~~of filmed entertainment product.

~~The~~Intellectual Internet has emerged as a global platform that allows millions of people to share information, communicate with each other and conduct business electronically. International Data Corporation ("IDC") estimates that the number of web users will grow from approximately 150 million worldwide in 1998 to approximately 500 million worldwide by the end of 2003. The growing adoption of the web represents an enormous opportunity for buyers and vendors of filmed entertainment rights to conduct commerce over the Internet. IDC estimates that commerce over the Internet will increase from approximately $40 billion worldwide in 1998 to approximately $900 billion worldwide in 2003.Property

~~Filmed~~We ~~entertainment~~regard ~~rights~~the ~~have~~protection ~~been~~of ~~historically~~our ~~bought~~copyrights, ~~and~~service ~~sold~~marks, ~~primarily~~trademarks, ~~through~~trade ~~major~~dress and ~~minor~~trade ~~film~~secrets ~~festivals~~as critical to our success. We rely on a combination of copyright, trademark, service mark and trade ~~shows~~secret laws and contractual restrictions to protect our proprietary rights in products and services. ~~These~~We ~~markets~~maintain ~~are~~confidentiality ~~highly~~and ~~inefficient~~invention ~~for~~assignment agreements with our employees and contractors, and nondisclosure agreements with parties with which we conduct business to limit access to and disclosure of our proprietary information. Any contractual arrangements and the ~~following~~other ~~reasons:~~steps taken by us to protect our intellectual property may not prevent misappropriation of our technology or deter independent third-party development of similar technologies.

-InternetStudios ~~their~~became ~~fragmented,~~a ~~regional~~registered ~~nature~~mark ~~makes~~with itthe ~~difficult~~United ~~and~~States ~~expensive~~Trademark ~~for buyers~~ and ~~vendors~~Patent toOffice's ~~meet,~~Supplemental ~~exchange~~Registry ~~information~~effective ~~and~~April ~~complete~~2, ~~transactions;~~2002.

~~- they offer a limited breadth of filmed entertainment rights;~~Employees

-As ~~they~~of ~~often~~April 8, 2004, we employed six people, four in the area of corporate administration and two in sales and marketing. We also have ~~high~~two ~~transaction~~independent ~~costs~~contractors ~~from~~providing ~~intermediaries;~~management consulting services and capital raising services. We are not subject to any collective bargaining agreements and we consider relations with our employees to be excellent.

- they are information inefficient, as buyers and vendors lack a reliable and convenient means of setting prices for sales or purchases.
The Internet offers for the first time the opportunity to create a compelling global marketplace that overcomes the inefficiencies associated with traditional trading of filmed entertainment rights by offering the benefits of Internet-based commerce. An Internet-based centralized trading place offers the following benefits:
- facilitates buyers and vendors meeting, listing filmed entertainment rights for sale, exchanging information, interacting with each other and, ultimately, consummating transactions;
- allows buyers and vendors to trade directly, bypassing traditional intermediaries and lowering costs for both parties;
- is global in reach, offering buyers a significantly broader selection of filmed entertainment rights to purchase and providing vendors the opportunity to sell their filmed entertainment rights efficiently to a broader base of buyers; and
- offers significant convenience, allowing trading at all hours and providing continually updated information.
As a result, there exists a significant market opportunity for an Internet-based centralized marketplace that applies the unique attributes of the Internet to facilitate the trading of filmed entertainment rights directly from vendors to buyers.
STRATEGIC ALLIANCES
In March 2002, we entered into a marketing partnership with DISCOP to develop an enterprise version of our OnlineFilmandTVSales platform. DISCOP is managed by Key3Media East, a division of the Key3Media Group, Inc. InternetStudios was chosen exclusively by DISCOP to create and develop the look of the site called Discop+.
Discop+ will provide broadcasters, distributors and buyers of television content with an online marketplace in which to preview, select, and acquire television programming in a secure environment. The target markets to be served by the DISCOP+ solution are estimated to be worth between US$300 and US$500 million per year.
RISK FACTORS

Much of the information included in this annual report includes or is based upon estimates, projections or other "forward -looking statements". Such forward -looking statements include any projections or estimates made by us and our management in connection with our business operations. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions, or other future performance suggested herein. We undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of such statements.

Such estimates, projections or other "forward -looking statements" involve various risks and uncertainties as outlined below. We caution ~~the~~readers ~~reader~~of this annual report that important factors in some cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other "forward -looking statements". In evaluating us, our business and any investment in our business, readers should carefully consider the following factors.

WERISKS ~~ARE~~SPECIFIC aNTO ~~EARLY Stage Company AND HAVE NOT EARNED ANY SIGNIFICANT REVENUES SINCE THE IMPLEMENTATION OF~~ OUR ~~WEBSITE Which Makes IT DIFFICULT TO EVALUATE WHETHER WE WILL OPERATE PROFITABLY.~~COMPANY
We are an early stage company which is primarily involved in providing transactional capabilities for the licensing of filmed entertainment, complementary technology for tracking such transactions and industry data and information. We are involved in a relatively new business, having launched our website on May 10, 2002, and as a result, we do not have a ~~historical~~limited ~~record~~operating ~~of sales and revenues nor an established business track record from the operation of our business.~~history

ToWe ~~December~~are ~~31,~~an ~~2001,~~early westage ~~have~~company ~~incurred regular operating losses~~ and have nonot ~~significant~~earned ~~source~~any ofsignificant ~~revenue. Unanticipated problems~~revenues, ~~expenses~~which ~~and~~makes ~~delays~~it ~~are~~difficult ~~frequently encountered in ramping up sales and launching new businesses. Our ability~~ to ~~successfully~~evaluate ~~develop~~whether ~~our~~we ~~website and to generate significant operating revenues~~ will ~~depend~~operate onprofitably. ~~our~~Investors ~~ability~~must toconsider ~~successfully~~the ~~develop~~risks and ~~maintain~~difficulties afrequently ~~brand~~encountered ~~name~~by ~~for~~early ~~our~~stage ~~website~~companies. ~~and~~Such torisks ~~attract new and maintain old users of our website.~~include:

~~Given~~competition; our limited operating history, operating losses and other factors set out above, there can be no assurance that we will be able to achieve our goals and develop a sufficiently large user base of our website to be profitable. Management intends to raise debt and equity capital as needed on a private placement basis to finance the operating and capital requirements of our company. In addition, management expects cash flow from operations to increase over the next year. It is management's intention to continue to finance planned capital expansion and continued development in the e-marketplace and Internet website business. These factors raise substantial doubt about our company's ability to continue as a going concern as described in an explanatory paragraph to our independent auditors' report on the December 31, 2001 audited financial statements. The future of our company will depend upon our ability to obtain adequate financing and continuing support from stockholders and creditors and to achieve and maintain profitable operations. To the extent that we cannot achieve our plans and generate revenues which exceed expenses on a consistent basis and in a timely manner, our business, results of operations, financial condition and prospects would be materially adversely affected.
whether we ~~expect~~can tocompete ~~experience~~successfully ~~significant~~with ~~and~~others ~~rapid~~pursuing ~~growth in~~ the ~~scope~~same ~~and~~line ~~complexity~~ of ~~our~~ business; as we proceed with the development OF OUR WEBSITE. if we are unable to hire staff to manage our operations, Our Growth Could Harm Our Future Business Results and may strain our managerial and operational resources.
Aswhether we ~~proceed~~can ~~with~~anticipate ~~the development of our website~~ and ~~services~~adapt ~~associated with our website, we expect~~ to ~~experience~~a ~~significant~~developing ~~and rapid growth in the scope and complexity of our business. We will need to add staff to~~ market; our website, manage operations, handle marketing efforts and perform finance and accounting functions. We will be required to hire a broad range of additional personnel in order to successfully advance our operations. This growth is likely to place a strain on our management and operational resources. The failure to develop and implement effective systems, or to hire and retain sufficient personnel for the performance of all of the functions necessary to effectively service and manage our potential business or the failure to manage growth effectively, could have a materially adverse effect on our business and financial condition.
WEwhether ~~MUST~~we ~~DEVELOP~~can Aeffectively ~~MARKETING~~manage ~~PROGRAM~~rapidly TOexpanding ~~GENERATE~~operations ~~ANY~~should ~~SIGNIFICANT~~our ~~REVENUES~~operations rapidly expand;
Wethe ~~will~~amount beand ~~required~~timing ~~to develop a marketing campaign that will effectively demonstrate the advantages~~ of ~~our~~operating ~~website~~costs and ~~services.~~capital Weexpenditures ~~may~~relating ~~also elect~~ to ~~enter~~expansion ~~into agreements or relationships with third parties regarding the promotion or marketing~~ of our ~~website and services. There can be no assurance that we will be able to establish adequate marketing capabilities~~business, ~~that~~operations we will be able to enter into marketing agreements or relationships with third parties on financially acceptable terms or that any third parties with whom we enter into such arrangements will be successful in marketing and ~~promoting~~infrastructure; ~~our website and services.~~
~~OUR~~whether ~~SUCCESS~~we IScan ~~DEPENDENT~~provide ~~UPON~~acceptable ~~THE~~customer ~~ACCEPTANCE~~service; ~~OF OUR COMPANY, OUR WEBSITE AND OUR BUSINESSES~~
~~Our~~whether ~~success~~we iscan ~~dependent~~respond upon achieving significant market acceptance of our company and our website and services. We cannot guarantee that users will accept our website, or even the Internet, as a replacement for traditional sources of film and television rights transactions. Market acceptance of our website depends upon continued growth in the use of the Internet generally and, in particular, as a source of film and television rights transactions. The Internet may not prove to becompetitive adevelopments; ~~viable channel for these services. Failure to achieve and maintain market acceptance of our website would seriously harm our business.~~
~~Acceptance of our website depends on~~ the ~~success~~possibility of ~~our~~unforeseen ~~advertising,~~price ~~promotional~~competition ~~and~~for ~~marketing efforts and the ability to continue to provide high-quality information and services to~~ our ~~users of our website. To date~~services, weor ~~have~~reductions ~~not spent a considerable amount on marketing and promotional efforts. To increase awareness of our website, we expect to spend a significant amount on promotion, marketing and advertising~~ in ~~the~~market ~~future.~~prices Iffor ~~these~~digital ~~expenses~~video ~~fail~~disc tosales ~~develop~~; ~~an awareness of our website, these expenses may never be recovered~~ and we may never be able to generate any significant future revenues. In addition, even if awareness of our website increases, we may not be able to increase or maintain the number of users of our website.
~~OUR~~our ~~CONTINUED~~dependence ~~OPERATIONS~~upon ~~DEPEND~~key ONpersonnel. ~~TECHNOLOGY AND COMPUTER SYSTEMS~~

~~The~~Given ~~markets~~our inlimited ~~which~~operating wehistory, ~~compete~~operating ~~are~~losses ~~characterized~~and byother ~~rapidly~~factors ~~changing~~set ~~technology,~~out ~~evolving technological standards~~ in ~~the~~this ~~industry~~document, ~~frequent~~there ~~new~~can ~~websites,~~be ~~services~~no ~~and~~assurance ~~products~~that ~~and~~we ~~changing consumer demands. Our future success~~ will ~~depend~~be onable ~~our ability~~ to ~~adapt~~achieve ~~to these changes and to continuously improve the performance, features and reliability of~~ our ~~service~~goals ~~in response to competitive services~~ and ~~the~~be ~~evolving~~profitable. ~~demands~~In of the ~~marketplace,~~event ~~which~~that we ~~may~~do not besuccessfully ~~able~~address tothese ~~do.~~risks, Inour ~~addition~~business, ~~the widespread adoption of new Internet~~prospects, ~~networking~~financial orcondition ~~telecommunications~~and ~~technologies~~results orof ~~other~~operations ~~technological~~will ~~changes~~be ~~could~~materially ~~require~~and usadversely ~~to incur substantial expenditures to modify or adapt our services or infrastructure, which might impact our ability to become or remain profitable~~affected.

~~Our website utilizes sophisticated and specialized network and computer technology.~~ We ~~anticipate that it will be necessary to continue to invest in and develop new and enhanced technology on a timely basis to maintain our competitiveness. Significant capital expenditures~~ may beincur ~~required to keep our technology up to date. Investments in technology and~~ future investments in upgrades and enhancements to software for such technology may not necessarily maintain our competitiveness. Our business is highly dependent upon our computer and software systems, and the temporary or permanent loss of such equipment or systems, through casualty, operating malfunction or otherwise, could have a material adverse effect upon us.losses

We may incur net losses for the foreseeable future. The ~~Loss~~extent of these losses, if any, will depend, in part, on the amount and rates of ~~OUR~~growth ~~KEY~~in ~~MANAGEMENT~~our ~~PERSONNEL~~net ~~Would~~revenue ~~Have~~from andigital ~~Adverse~~video ~~Impact~~disc onsales, ~~OUR~~filmed ~~Future~~entertainment ~~Development~~distribution and ~~could~~related ~~impair~~activities. As a result of our ~~ability~~early stage of development, we believe that period-to-period ~~succeed~~comparisons of our operating results are not meaningful and that our operating results for any period should not be relied upon as an indication of future performance. To the extent that (a) net revenue does not grow at anticipated rates, (b) increases in our operating expenses precede or are not subsequently followed by commensurate increases in net revenue or (c) we are unable to adjust operating expense levels accordingly, our business, prospects, financial condition and results of operations will be materially and adversely affected. There can be no assurance that our operating losses will not increase in the future or that we will ever achieve or sustain profitability.

Our ~~performance~~future is substantially dependent on the expertise of key management personnel, and our ability to continue to hire and retain such personnel. It may be difficult to find sufficiently qualified individuals to replace key management personnel if we were to lose any one or more of them. Accordingly, the loss of any of our key management personnel could have a material adverse effect on our business, development, financial condition, and operating results. are unpredictable

WeAs doa ~~not~~result ~~maintain~~of ~~"key~~our ~~person"~~lack ~~life~~of ~~insurance~~operating onhistory, we cannot forecast accurately our revenues, operating expenses and operating results. Accordingly, we may be unable to adjust our expenditures in a timely manner to compensate for any ofunexpected revenue shortfall. We may also be unable to increase our ~~directors~~spending orand ~~senior~~expand ~~executive~~our ~~officers~~operations in a timely manner to compensate for any unexpected revenue shortfall.

~~SINCE~~Our ~~OUR~~annual ~~SHARES~~and ~~ARE~~quarterly ~~thinly~~operating ~~traded~~results ~~and~~may ~~trading~~fluctuate onsignificantly ~~the~~as ~~QUOTATION~~a ~~SERVICE~~result ~~OPERATED~~of BYnumerous ~~THE~~factors, ~~PINK~~many ~~SHEETS~~of ~~LLC~~which ~~may~~are beoutside ~~sporadic~~of ~~because~~our itcontrol. isThese ~~not~~factors ~~an exchange~~include, ~~STOCKHOLDERS~~but ~~MAY~~are ~~HAVE~~not ~~DIFFICULTY~~limited ~~RESELLING THEIR SHARES.~~to:

~~Our~~fluctuating ~~common~~demand ~~stock~~for isfilmed ~~quoted~~entertainment; on the quotation service operated by the Pink Sheets LLC and is thinly traded. In the past, our trading price has fluctuated widely, depending on many factors that may have little to do with our operations or business prospects. In addition, the Pink Sheets LLC are not an exchange and, because trading of the securities on the Pink Sheets LLC is often more sporadic than the trading of securities listed on an exchange or the Nasdaq Stock Market, Inc., you may have difficulty reselling any of our common shares.
~~Trading of Our Stock May Be Restricted by~~ the ~~SEC's~~amount ~~Penny~~and ~~Stock~~timing ~~Regulations~~of ~~Which~~capital ~~May~~expenditures ~~Limit~~and aother ~~Stockholder's~~costs ~~Ability~~relating to ~~Buy~~the ~~and~~expansion ~~Sell~~of our ~~Stock.~~operations;
~~The~~whether ~~U.S.~~we ~~Securities~~can ~~and~~acquire ~~Exchange~~filmed ~~Commission~~entertainment ~~has~~product adopted regulations which generally define "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors." The term "accredited investor" refers generally to institutions with assets in ~~excess of $5,000,000 or individuals with~~ a ~~net~~timely worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and ~~the~~effective ~~nature~~manner; and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.
WEwhether DOwe ~~NOT~~can ~~EXPECT~~attract TOnew ~~DECLARE~~personnel ORin ~~PAY~~a ~~ANY~~timely ~~DIVIDENDS.~~and effective manner and to retain existing personnel;
competition;
costs relating to future acquisitions;
seasonality;
general economic conditions and economic conditions specific to the filmed entertainment rights industry, the Internet or all or a portion of the technology market.

Due to the foregoing factors, we believe that quarter-to-quarter comparisons of our operating results are not an accurate indication of our future performance. It is likely that our operating results for any period may fail to meet or exceed the expectations of our investors. In that event, the value of our common stock would likely be materially adversely affected.

We may need significant additional funds, which we may not be able to obtain

If we raise the financing necessary to complete the RKO and Trocadero transactions, we believe that we will be able to meet our anticipated cash needs for working capital, capital expenditures and normal business expansion for the next 24 months. If we do not manage to raise the full amount necessary, or if our business model should prove to be based on assumptions that prove to have been incorrect, our financial resources may not be sufficient to satisfy our capital requirements for this period. If this occurs, we will probably need to raise additional funds in order to achieve the goals we set for ourselves in our business plan. If our financial resources are insufficient we will require additional financing in order to execute our plans for expansion. If we raise additional funds through the issuance of equity, equity-related or debt securities, such securities may have rights, preferences or privileges senior to those of the rights of our common stock and our stockholders may experience additional dilution. We cannot be certain that additional financing will be available to us on favorable terms, when required, or that additional financing will be available to us at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to fund our expansion, promote our brand as we desire, take advantage of unanticipated acquisition opportunities, develop or enhance services or respond to competitive pressures.

Risks associated with the Acquisition of RKO Pictures

Our future performance will depend in part upon our ability to complete our acquisition of RKO Pictures, or to integrate the operations of our company with those of RKO Pictures in order to leverage this relationship into sources of revenue. Acquisitions involve numerous risks and uncertainties, including, without limitation:

material adverse effects on reported results of operations from acquisition-related charges and amortization of goodwill and purchased technology;
inability to maintain customers or goodwill of a consolidated business;
difficulties in the integration of operations, personnel, technologies, products and the information systems of the consolidated companies;
diversion of management's attention from other business concerns;
risks of entering geographic and business markets in which we have no or limited prior experience; and
potential loss of key employees of consolidated organizations.

There can be no assurance that we will be able to consolidate our business with that of RKO Pictures, or that if we do, we will be able to integrate the merged or consolidated businesses or technology or otherwise successfully leverage the new businesses into additional user traffic for our web site, advertising agreements or sources of revenue. Such failures could have a material adverse effect on our business, prospects, financial condition and results of operations.

We depend on our ability to attract key personnel

We depend on the continued services and performance of our senior management and other key personnel, including senior management at RKO Pictures. The loss or unavailability of any of these individuals for any significant period of time could have a material effect on our business, prospects, financial condition and results of operations. Our performance also depends on our ability to attract, hire, train, retain and motivate other highly-skilled technical, managerial, editorial, merchandising, marketing and customer service personnel. Competition for such personnel is intense, and there can be no assurance that we will be able to successfully attract, integrate or retain sufficiently qualified personnel. The failure to attract, retain, and integrate such personnel could have a material adverse effect on our business, prospects, financial condition and results of operations.

Failure to manage future growth may adversely affect our business.

If our management is unable to manage growth effectively, then our operations could be adversely affected. We will need to add staff to market our new library and website, manage operations, and perform finance and accounting functions. We will be required to hire a broad range of additional personnel in order to successfully advance our operations. This growth is likely to place a strain on our management and operational resources. The failure to develop and implement effective systems, or to hire and retain sufficient personnel for the performance of all of the functions necessary to effectively service and manage our potential business or the failure to manage growth effectively, could have a materially adverse effect on our business and financial condition.

Our management owns a significant percentage of our company and will be able to exercise control over our company

Our management holds a significant voting block which can be used to elect directors and/or approve or block significant corporate transactions. Such share ownership may also have the effect of delaying or preventing a change in control of our company, impeding a merger, consolidation, takeover or other business combination involving our company or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of our company, thereby having a material adverse effect on the value of our company's common stock. In addition, investors may have difficulty obtaining the necessary stockholder vote required for corporate actions contrary to the wishes of the management.

RISKS RELATED TO INDUSTRY
Our markets are competitive

The sale and distribution of filmed entertainment is a highly competitive business. The entertainment industry is currently comprised of seven major film distributors/studios: Sony Pictures, Paramount, Twentieth Century Fox, Warner Brothers, The Walt Disney Company, MGM/UA and Universal. Today, the major studios are multi-national, multi-media and mass marketing communication complexes with wholly owned distribution operations throughout the world. In addition to these major seven, there are numerous independent production and distribution companies. Many of our competitors are larger and better capitalized than our company is and have existing distribution channels. In addition, the number of films or television products released in any given period may create an oversupply of product in the market, and that may reduce our share of potential sales and make it more difficult for the films in our library to succeed.

We believe that the principal competitive factors in our market are:

filmed entertainment rights industry connections;
brand recognition;
quality of assets; and
quality of filmed entertainment product.

Success depends on external factors in the film and television industry.

Operating in the television and film distribution industry involves a substantial degree of risk. Each television program and motion picture is a unique piece of art that depends on unpredictable audience reaction to determine commercial success. There can be no assurance that our television programs and feature films will be favorably received and even if our products are initially successful, the popularity of any given program may diminish over time.

We face inherent international trade risks.

Selling and distributing filmed entertainment around the world results in a percentage of our revenue coming from sources outside of North America. Consequently, our business is subject to certain risks inherent in international trade, many of which are beyond our control. These risks include:

changes in laws and policies affecting trade;
changes to laws and policies related to investments and taxes;
varying degrees of protection for intellectual property;
instability of foreign economies and governments;
cultural barriers; and
currency risk.

These factors can adversely affect our business and result of operations.

We must develop a marketing program to generate any significant revenues.

We will be required to develop a marketing campaign that will effectively make buyers aware of our catalog of DVD's and filmed entertainment library. We may also elect to enter into agreements or relationships with third parties regarding the promotion or marketing of our DVD's and library. There can be no assurance that we will be able to establish adequate marketing capabilities, that we will be able to enter into marketing agreements or relationships with third parties on financially acceptable terms or that any third parties with whom we enter into such arrangements will be successful in marketing and promoting our services.

Risks associated with brand development

We believe that establishing and maintaining an accepted brand of filmed entertainment product is critical to attracting buyers to our digital video disc sales and to expanding our commerce relationships. In order to attract and retain purchasers, advertisers and commerce partners, and to promote and maintain our brand in response to competitive pressures, we intend to increase substantially our financial commitment to creating and maintaining distinct brand loyalty among these groups. We expect our efforts to include advertising and marketing and traditional media advertising campaigns directed at the filmed entertainment rights industry. In addition, we may need to expend additional resources to build the brand. If we do not generate a corresponding increase in net revenue as a result of our branding efforts or otherwise fail to promote our brand successfully, or if we incur excessive expenses in an attempt to promote and maintain our brand, our business, prospects, financial condition and results of operations, will be materially and adversely affected.

We have not implemented sophisticated managerial, operational and financial systems, which could effect our ability to manage growth effectively

We have not implemented sophisticated managerial, operational and financial systems and controls. We are required to manage multiple relationships with various strategic partners, technology licensors, users, advertisers and other third parties. Our ability in this regard will be strained in the event of rapid growth of our company or in the number of third party relationships, and there can be no assurance that our systems, procedures or controls will be adequate to support our operations or that our management will be able to manage any growth effectively. To manage the expected growth of our operations and personnel, we will be required to significantly improve or replace existing managerial, financial and operational systems, procedures and controls, and to expand, train and manage our growing employee base. We also will be required to expand our finance, administrative and operations staff. Some key members of management have other professional obligations beyond their obligations to our company that may impact their ability to implement the necessary financial, administrative and operational systems necessary for our success. There can be no assurance that we will complete in a timely manner the improvements to our systems, procedures and controls necessary to support our future operations, that we will be able to hire, train, retain, motivate and manage required personnel or that we will be able to successfully identify, manage and exploit existing and potential market opportunities.

Risks associated with potential general economic downturn

Our success may be affected significantly by changes in local, regional and national economic conditions. Factors such as inflation, labor and energy costs, the availability and cost of suitable technical employees, fluctuating interest and insurance rates, federal, state and local regulations and licensing requirements can all have a material adverse effect on our business, prospects, financial condition and results of operations.

Our intellectual property may be subject to infringement claims

There can be no assurance that our business activities will not or have not infringed upon the proprietary rights of others, or that other parties will not assert infringement claims against us. From time to time, we may be subject to claims in the ordinary course of our business, including claims of alleged infringement of the trademarks, service marks and other intellectual property rights of third parties by us and the content generated by our members. Such claims and any resultant litigation, should it occur, might subject us to significant liability for damages and might result in invalidation of our proprietary rights and even if these claims are not meritorious, could be time consuming and expensive to defend and could result in the diversion of management time and attention, any of which might have a material adverse effect on our business, prospects, results of operations and financial condition.

We are an early stage company and have not earned any significant revenues which makes it difficult to evaluate whether we will operate profitably.

To December 31, 2003, we have incurred regular operating losses and have no significant source of revenue. Unanticipated problems, expenses and delays are frequently encountered in ramping up sales and launching new businesses. Our ability to successfully acquire additional filmed entertainment assets, to utilize our website and to generate significant operating revenues will depend on our ability to successfully develop and maintain a brand name for our products and to attract new and maintain old users of our services.

Given our limited operating history, operating losses and other factors set out above, there can be no assurance that we will be able to achieve our goals and develop a sufficiently large user base of our website to be profitable. Our management intends to raise debt and equity capital as needed on a private placement basis to finance the operating and capital requirements. In addition, our management expects cash flow from operations to increase over the next year. These factors raise substantial doubt about our ability to continue as a going concern as described in an explanatory paragraph to our independent auditors' report on the December 31, 2003 audited financial statements. Our future will depend upon our ability to obtain adequate financing and continuing support from stockholders and creditors and to achieve and maintain profitable operations. To the extent that we cannot achieve our plans and generate revenues, which exceed expenses on a consistent basis and in a timely manner, our business, results of operations, financial condition and prospects would be materially adversely affected.

Since our shares are thinly traded and trading on the OTCBB trading may be sporadic because it is not an exchange, stockholders may have difficulty reselling their shares.

Our common stock is quoted on the OTC Bulletin Board and is thinly traded. In the past, our trading price has fluctuated widely, depending on many factors that may have little to do with our operations or business prospects. In addition, the OTC Bulletin Board is not an exchange and, because trading of the securities on the OTC Bulletin Board is often more sporadic than the trading of securities listed on an exchange or the Nasdaq Stock Market, Inc., you may have difficulty reselling any of our common shares.

Trading of our stock may be restricted by the United States Securities and Exchange Commission's ("SEC") penny stock regulations which may limit a stockholder's ability to buy and sell our stock.

The SEC has adopted regulations which generally define "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors." The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

We do not expect to declare or pay any dividends.

We have not declared or paid any dividends on our common stock since our inception and we do not anticipate paying any such dividends for the foreseeable future.

Item 2. ~~Description of Property~~ Properties.

~~Pursuant~~We tosublease aoffice ~~three~~space ~~year~~at ~~lease~~1601 ~~commencing~~Cloverfield ~~on November 1~~Boulevard, ~~1999,~~2nd ~~InternetStudios leases offices for its executive offices at 1351 4th Street~~Floor, ~~Suite~~South ~~227~~Tower, Santa Monica, California. atThese aoffices ~~base~~are ~~rent~~rented ofon ~~$8,000~~a ~~(CDN$12,281) per~~ month.-to-month Webasis ~~are~~for ~~currently~~$225 inper ~~negotiation with the landlord to terminate this lease~~month. ~~After~~This ~~this lease~~ is ~~terminated,~~where ~~we intend to relocate~~ our principal executive offices toare ~~more suitable premises in Los Angeles~~located.

~~InternetStudios~~We also ~~leases~~lease office space at 1040 Hamilton Street, Vancouver, British Columbia ~~pursuant~~on to a ~~three-year~~month ~~lease~~to ~~entered~~month ~~into on March 1, 2000~~basis. ~~The~~This ~~monthly~~office ~~rental~~ is $approximately 2,~~749~~000 ~~(CDN$4,218)~~square ~~for~~feet ~~the~~in ~~period~~size. ~~commencing~~The ~~March~~monthly 1,rental ~~2000~~is ~~and ending February 28, 2001 and~~ $21,~~838~~500 (CDN$42,~~354~~000) ~~for~~which ~~the~~includes ~~period commencing March 1, 2001 and ending February 28, 2003, plus all~~ operating costs.

~~From~~We ~~March~~believe ~~28,~~that ~~2000~~our toexisting ~~November~~facilities ~~30,~~are ~~2001~~adequate ~~InternetStudios~~for ~~leased~~our anneeds ~~office~~through at ~~1400~~least ~~Cahuenga~~the ~~Boulevard~~end inof ~~Hollywood,~~2004. ~~California~~Should we require additional space at athat ~~rental~~time, ~~rate~~or ofprior ~~$17~~thereto,~~500~~ ~~per~~we ~~month.~~believe ~~Effective~~that ~~November~~such ~~30,~~space ~~2001,~~can ~~this~~be ~~lease~~secured ~~was~~on ~~terminated~~commercially reasonable terms.

Beginning September 1, 2000, InternetStudios UK Limited leased office space at 6/7 D'Arblay Street, London, England. The initial rent was $76,960 ($52,500 British pounds) per year and the lease was for a term of six (6) years ending on August 31, 2006. As InternetStudios UK Limited is inactive and is in the process of being wound up, we are currently in negotiation with the landlord to terminate the lease.
Item 3. Legal Proceedings.

Other than set out below, we know of no material, active or pending legal proceedings against ~~our company~~us, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

OnTwo orof ~~about~~our ~~September~~former 1,employees ~~2000,~~have ~~Steven~~received Jjudgments against us. ~~Fredericks,~~One ~~our~~received ~~former~~a ~~acting~~Stipulated ~~President~~Judgment ~~and~~against ~~Chief~~us ~~Financial~~in ~~Officer,~~the ~~brought~~amount anof ~~action~~$10,000 infrom the Los Angeles County Superior Court ~~against~~on ~~our~~April 10, 2002. ~~company~~The ~~and~~other ~~certain~~received ofan ~~our~~Order, ~~senior~~Decision ~~management~~or ~~alleging~~Award ~~that he was wrongfully discharged~~ from ~~his~~the ~~employment~~Labour ~~with~~Commissioner ~~InternetStudios. As~~ of ~~December~~California ~~31,~~awarded ~~2001,~~against ~~this~~us ~~matter~~and ~~was unresolved~~OnlineFilmSales. ~~However~~com, ~~the~~LLC ~~matter was referred to our insurance carrier who participated~~ in ~~settling~~ the ~~matter~~amount inof ~~April 2002 for~~ $7026,~~000~~578.24 ~~The~~on ~~insurance~~May ~~carrier agreed to pay $60~~29,~~000~~ ~~of the settlement amount as well as cover all attorney and legal fees incurred by InternetStudios~~2002. WeAs ~~agreed~~of toApril ~~pay~~8, ~~the remaining $10~~2004,~~000~~ ofno ~~which~~payments ~~$5000~~have ~~has~~ been ~~paid~~made asto either of ~~July~~these ~~25,~~former ~~2002~~employees.

August Entertainment, Inc. brought an action against ~~our~~us ~~company~~ on September 7, 2000, in Los Angeles County Superior Court for breach of contract arising from an alleged contract for distribution of films. This matter was settled in December 2001. Pursuant to the terms of the settlement, we agreed to pay August Entertainment $70,000, of which $4546,000 has been paid as of ~~July~~the ~~25,~~date ~~2002.~~of this report.

~~Two~~On ~~former~~November ~~employees~~5, ~~of OnlineFilmSales.com~~2001, ~~LLC~~we ~~filed~~agreed ~~claims~~to ~~with~~an ~~the~~Arbitration ~~Labor~~Award, ~~Commissioner~~from in the ~~State~~American ofArbitration ~~California.~~Association, ~~The~~in ~~first~~favor ~~made~~of aSitrick ~~claim~~and ~~against~~Company ~~InternetStudios~~in ~~with~~ the ~~Labor~~sum ~~Commissioner's~~of ~~office~~$42,000 on ~~April~~the ~~25,~~condition ~~2001~~that ~~even~~the ~~though~~Award ~~she~~not ~~was~~be ~~never~~confirmed ~~directly~~or ~~employed~~entered byas ~~InternetStudios.~~a ~~The~~judgment ~~former~~in ~~employee~~California ~~alleged~~or ~~non-payment~~any ofother ~~wages~~jurisdiction ~~plus~~until ~~interest~~after ~~and~~February ~~penalties. On July 10~~5, ~~2001,~~2002. ~~she~~We ~~received~~are ancurrently ~~"Order,~~in ~~Decision~~negotiation orwith ~~Award"~~Sitrick ~~(sic)~~and ~~from~~Company ~~the~~to ~~Labor~~reach ~~Commissioner~~an ~~against~~amicable ~~InternetStudios~~resolution inof ~~the~~Sitrick's ~~amount~~claim offor ~~$11,328.09.~~money Asowed ofand ~~July~~there ~~25,~~are ~~2002,~~ no ~~payments~~plans to have ~~been~~the ~~made~~award toentered ~~this~~as ~~employee~~a judgment.

~~The~~On ~~second~~November ~~former~~15, ~~employee~~2002, ~~filed his initial claim with~~ the ~~Labor~~Hollywood ~~Commissioner's~~Reporter ~~office~~Incorporated ~~against~~commenced ~~InternetStudios~~a ~~and~~lawsuit ~~OnlineFilmSales.com,~~in ~~LLC~~the onSupreme ~~August~~Court ~~24,~~of ~~2001~~British ~~alleging~~Columbia ~~non-payment~~(Vancouver ofRegistry). ~~wages~~Hollywood's ~~plus~~claim ~~expenses,~~is ~~interest~~for ~~and~~debt ~~penalties.~~arising Onfor ~~May~~the ~~29,~~failure ~~2002,~~to ~~the~~pay ~~former~~off ~~employee~~advertising ~~received~~published anin ~~"Order,~~Hollywood's ~~Decision~~periodical. orThe ~~Award"~~amount ~~(sic)~~of ~~from~~ the ~~Labor~~claim ~~Commissioner~~is ~~against~~$8,843 ~~InternetStudios~~plus costs and ~~OnlineFilmSales~~interest.~~com,~~ ~~LLC~~We inhave ~~the~~filed ~~amount~~a ofStatement ~~$26,578.24. As~~ of ~~July~~Defence ~~25,~~and ~~2002,~~intend ~~no payments have been made~~ to defend this ~~employee~~lawsuit.

On ~~or about~~ September 59, ~~2001~~2003 Oxford & Associates, ~~Total~~A ~~Creative~~Division of Oxford Global Resources, Inc. filed a ~~complaint~~Writ of Summons and Statement of Claim in ~~the~~British ~~Superior~~Columbia Supreme Court ofunder ~~Los~~action ~~Angeles~~number S034865. Oxford's claim against ~~OnlineFilmandTVSales.com,~~us ~~Inc.~~is for ~~money~~debt ~~allegedly~~arising ~~due~~for the failure to pay for ~~work~~software ~~and~~development services. ~~allegedly~~Oxford ~~supplied~~claims byUS$107,121.25, ~~the~~plus ~~claimant~~court ordered interest. OnAlthough ~~November~~no ~~27,~~assurance ~~2001~~can be given as to the outcome of this lawsuit, we believe that the ~~claimant~~ultimate ~~received~~outcome of this matter will not have a ~~Default~~material ~~Money~~adverse ~~Judgement~~effect inon ~~the~~our ~~amount~~financial position or results of ~~$34,531~~operations.~~49.~~ AsWe offiled ~~July~~a ~~25,~~Statement ~~2002,~~of noDefence ~~payment~~on ~~has~~October ~~been~~16, ~~made~~2003 and intend to ~~Total~~defend ~~Creative~~this lawsuit.

On ~~November~~September 529, ~~2001,~~2003 wea ~~agreed~~former toemployee anfiled ~~Arbitration~~a ~~Award,~~cross-complaint ~~from~~in ~~the~~case ~~American~~number ~~Arbitration~~SC ~~Association,~~077372 in ~~favor~~the ofSuperior ~~Sitrick~~Court ~~and~~of ~~Company in~~ the ~~sum~~State of ~~$42~~California,~~000~~ onCounty ~~the~~of ~~condition~~Los ~~that~~Angeles ~~the~~alleging ~~Award~~that ~~not~~our becompany ~~confirmed~~is orresponsible ~~entered~~for ascertain acredit ~~judgement~~card indebts. ~~California~~The oraction ~~any~~was ~~other~~brought ~~jurisdiction~~against ~~until~~the ~~after~~former ~~February~~employee 5,by ~~2002.~~American WeExpress ~~are~~Travel ~~currently~~Related inServices ~~negotiation~~Company, ~~with~~Inc. ~~Sitrick~~We ~~and~~have ~~Company~~been toadvised ~~reach~~that anthe ~~amicable~~action ~~resolution~~against ofthe ~~Sitrick's~~former ~~claim~~employee ~~for~~has ~~money~~been ~~owed~~settled and ~~there~~that ~~are no plans to have~~ the ~~Award~~cross-complaint ~~entered~~will asbe ~~a judgement~~withdrawn.

Certain former employees have indicated an intention to pursue alleged claims against the Company by taking legal action. To date no actions have been filed against InternetStudios. In the opinion of management, any actions that may arise from these claims are immaterial to us or are without significant merit. Although no assurance can be given as to the outcome of any potential lawsuit, we believe that the ultimate outcome of these matters will not have a material adverse effect on our financial position or results of operations and ~~the~~we ~~Company~~intend ~~intends~~ to vigorously defend against any action.

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

NoThere ~~matters~~ were no matters submitted to a vote of ~~the~~our ~~shareholders~~security holders either through solicitation of ~~InternetStudios~~proxies ~~during~~or otherwise in the fourth quarter of the fiscal year ended December 31, ~~2001~~2003.

Effective March 22, 2002, a majority of our shareholders voted to increase our authorized capital from five million (5,000,000) to one hundred million (100,000,000) shares of common stock with a par value of $0.0001.
PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.

On ~~December~~August 617, ~~2001~~1998, weour ~~effected~~common astock ~~twenty~~began ~~(20)~~trading ~~for~~on ~~one~~the ~~(1)~~National ~~reverse~~Association ~~stock~~of ~~split~~Securities ofDealers ~~our~~Inc.'s ~~authorized~~Over-the-Counter Bulletin Board under the name "Enterprise Inc" and under the symbol "ETPS". On April 7, ~~issued~~1999, the symbol was changed to "EHLC", and ~~outstanding~~on September 23, 1999, the symbol was changed to "ISTS". Our common stock was removed from the OTCBB on September 27, 2001. AsOn aDecember ~~result~~6, 2001, our ~~authorized~~common ~~capital~~stock ~~decreased~~began ~~from~~trading ~~100,000,000~~under tothe 5symbol "ISTO". On August 23,~~000~~ 2002,~~000~~ our common shares ofwere reinstated for trading on the NASD OTC Bulletin Board. The following table reflects the high and low bid information for our common stock ~~with~~for aeach ~~par~~fiscal ~~value~~quarter ofduring $0the fiscal years ended December 31, 2003 and 2002.~~0001~~ The bid information was obtained from stockwatch.com and reflects interdealer prices, without retail mark-up, markdown or commission, and may not necessarily represent actual transactions.

Quarter Ended	High ⁽¹⁾	Low ⁽¹⁾
December 31, 2003	$0.82	$0.28
September 30, 2003	$1.51	$0.75
June 30, 2003	$1.23	$0.80
March 31, 2003	$1.91	$1.11
December 31, 2002	$1.24	$0.62
September 30, 2002	$0.62	$0.25
June 30, 2002	$0.53	$0.30
March 31, 2002	$0.51	$0.20

On August 17, 1998, our common stock began trading on the National Association of Securities Dealers Inc.'s Over-the-Counter Bulletin Board under the name "Enterprise Inc" and under the symbol "ETPS".. On April 78, ~~1999~~2004, the ~~symbol~~closing ~~was~~price ~~changed~~for ~~to "EHLC", and on September 23, 1999,~~ the ~~symbol was changed to "ISTS". Our~~ common stock ~~was~~as ~~removed~~reported ~~from~~by the ~~OTCBB on September 27, 2001 and has been quoted on the~~ quotation ~~system~~service operated by the ~~Pink~~OTC ~~Sheets~~Bulletin ~~LLC~~Board since that date. On December 6, 2001, InternetStudios' common stock began trading under the symbol "ISTO". The following table reflects the high and low bid information for our common stock for each fiscal quarter during the fiscal years ended December 31, 2000 and 2001. The bid information was ~~obtained from BigCharts~~$0.~~com and reflects interdealer prices, without retail mark-up, markdown or commission, and may not necessarily represent actual transactions~~55.

~~FISCAL~~As ~~YEAR~~of ~~ENDED~~April ~~DECEMBER~~8, 312003, ~~2000~~there were approximately 63 holders of record of our common stock. As of such date, 12,129,209 common shares were issued and outstanding.

	High(1)	Low(1)
Quarter Ended March 31, 2000	$448.00	$108.00
Quarter Ended June 30, 2000	$380.00	$260.00
Quarter Ended September 30, 2000	$260.00	$140.00
Quarter Ended December 31, 2000	$140.00	$92.00

Our common shares are issued in registered form. Computershare Trust Company of Canada, 510 Burrard Street, Vancouver, British Columbia, Canada, V6C 3B9 (Telephone: 604.661.9400; Facsimile 604.685.3694 is the registrar and transfer agent for our common shares. We have no other exchangeable securities.

~~FISCAL~~Dividend ~~YEAR ENDED DECEMBER 31, 2001(1)~~Policy

	High(1)	Low(1)
Quarter Ended March 31, 2001	$92.00	$35.60
Quarter Ended June 30, 2001	$48.00	$14.00
Quarter Ended September 30, 2001	$16.00	$0.80
Quarter Ended December 31, 2001	$0.60	$0.01

We have not paid any cash dividends on our common stock and have no present intention of paying any dividends on the shares of our common stock. Our current policy is to retain earnings, if any, for use in our operations and in the development of our business. Our future dividend policy will be determined from time to time by our board of directors.

(1)
On July 25, 2002, the closing price for the common stock as reported by the quotation service operated by the Pink Sheets LLC was $0.30.
As of July 25, 2002, there were approximately 58 holders of record of our common stock. As of such date, 4,308,605 common shares were issued and outstanding.
Dividends
We currently intend to retain any earnings for use in our business and we do not anticipate paying any cash dividends on our capital stock in the foreseeable future.
Recent Sales of Unregistered Securities

WeDuring ~~did~~October ~~not~~2003, we agreed to issue ~~any~~547,086 ~~unregistered~~common ~~securities~~shares ~~during~~at ~~the~~a ~~quarter~~deemed ~~ended~~price ~~December~~of ~~31,~~$0.50 ~~2001~~per share to a lender in settlement of a loan in the amount of $273,543.

~~Item~~During 6January 2004, we completed a private placement of 200,000 units at a price of $.50 ~~Selected~~per ~~Financial~~unit ~~Data~~for net proceeds of $100,000 with a lender who had previously entered into a convertible loan dated June 25, 2003. Each unit consists of one common share and one share purchase warrant. Three share purchase warrants entitle the holder to acquire an additional common share at a price of $1.00 for a period of two years. As part of this transaction, we agreed to amend the convertible loan so that it is now convertible into common stock at $0.50 per share. The shares were issued to one accredited investor relying on Rule 506 of Regulation D and/or Section 4(2) of the Securities Act.

~~The~~During ~~selected~~January ~~consolidated~~2004 ~~financial~~we ~~data~~paid ~~presented~~to ~~below~~Bigle ~~for~~an ~~the~~additional ~~four~~$15,000 ~~years~~and ~~ended~~issued ~~December 31~~1,000,000 ~~2001~~common isshares ~~derived~~as ~~from~~a ~~our~~further ~~consolidated~~deposit ~~financial~~towards ~~statements~~the ~~which~~purchase ~~were~~price ~~examined~~of bythe ~~our~~Trocadero ~~independent auditor~~Library. ~~The~~As ~~information~~a ~~set~~result, ~~forth~~Bigle ~~below~~has ~~should~~agreed beto ~~read~~extend inthe ~~conjunction~~closing ~~with~~date ~~our~~of ~~Consolidated~~this ~~Financial~~transaction. ~~Statements~~We ~~(including~~continue ~~related~~to ~~notes~~negotiate ~~thereto)~~the ~~and~~final ~~"Management's~~terms ~~Discussion and Analysis~~ of ~~Financial~~the ~~Condition~~purchase ~~and~~agreement ~~Results~~with ofrespect ~~Operations".~~to ~~The~~this ~~data is presented in United States dollars~~transaction.

During January 2004, we entered into an agreement with Incap Group, Inc. whereby Incap Group, Inc. was engaged to act as agent and use its best efforts in connection with the private placement of one or more debt or equity-related securities to raise between $5,000,000 and $8,000,000. In consideration, Incap Group, Inc. was issued 40,000 common shares valued at $20,000 as a non-refundable retainer and will receive a placement fee on funds raised of 7.5% on the first $5,000,000 raised and 5.5% on the balance. The shares were issued relying on Rule 506 of Regulation D and/or Section 4(2) of the Securities Act.

Equity Compensation Plan Information

We adopted two stock option plans entitled the 1999 Non-U.S. Stock Option Plan and the 1999 U.S. Stock Option Plan. Both of these plans were approved by our shareholders on January 18, 2000.

	Number of securities to be issued upon exercise of outstanding options ⁽¹⁾	Weighted-Average exercise price of outstanding options, warrants and rights ⁽¹⁾	Number of securities remaining available for future issuance under equity compensation plans ⁽¹⁾
Non-U.S. Stock Option Plan	13,300	$100	25,000
U.S. Stock Option Plan	Nil	N/A	50,000

⁽¹⁾ These numbers reflect a 20 to 1 reverse stock split which we effected on December 6, 2001.

Item 6. Selected Financial Data.

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data presented below for the five fiscal years ended December 31, 2003 is derived from our consolidated audited financial statements which were examined by our independent chartered accountants. The following selected financial data should be read in conjunction with the Consolidated Financial Statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included at Item 7 of this annual report on Form 10-K. The statement of operations data and the balance sheet data are derived from our Consolidated Financial Statements prepared in accordance with accounting principles generally accepted in the United States.

Selected Consolidated Financial Data

Statement of Operations⁽¹⁾⁽²⁾
Fiscal Year Ended December 31

Fiscal Year Ended December 31

	2003	2002	2001	2000	1999
Sales	-	--	$82,555	$137,736	--
Expenses:
Cost of sales	-	--	--	--	--
Sales and marketing	-	--	$222,061	$2,780,920	$126,476
Research and development	-	--	$16,281	$5,678,683	$632,943
General and administrative and other	$566,717	$2,189,896	$10,223,077	$28,667,565	$1,971,392
Total expenses	$566,717	$2,189,895	$10,461,419	$37,127,168	$2,730,811
Net loss from Operations	$566,717	$2,189,896	$10,378,864	$36,989,432	$2,746,948
Loss on Impairment of Goodwill	-	--	$15,462,534	--	--
Other Expenses	$119,834	($986,025)	$1,012,029	($783,764)	--
Net income (loss) attributable to common stockholders	$(446,883)	($1,203,871)	($26,853,427)	($36,205,668)	($2,746,948)
Basic and diluted net loss per common share	($0.04)	($0.20)	($32.72)	($48.30)	($9.68)
Weighted average number of common stock and common stock equivalents outstanding used in basic and diluted per share calculation	10,524,773	5,983,890	820,731	749,645	283,798

2001 2000 1999 1998
Revenue $82,555 $137,736 $ - $ -
Direct Costs
Selling, general and administrative 4,997,848 20,629,094 2,730,811 16,137
Amortization 5,452,290 8,370,325 - -
Loss on disposition of furniture and equipment 544,523 - - -
Lawsuit settlements 132,500 - - -
Impairment provision for goodwill 15,462,534 - - -
Net income (loss) (26,853,427) (36,205,66) (2,730,811) (16,137)
Net income (loss) per share (32.72) (48.20) (6.40) (0.22)
Total assets 2,354,774 25,768,567 14,151,685 31,025
Balance Sheet⁽¹⁾⁽²⁾
Fiscal Year Ended December 31

	2003	2002	2001	2000	1999
Cash and Cash Equivalents	$(77,712)	$2,617	--	$700,068	$661,124
Working Capital (deficiency)	$1,342,599	($1,154,759)	($2,405,063)	$796,488	$792,819)
Total assets	$1,112,286	$37,754	$2,354,774	$25,768,567	$14,151,685
Current liabilities	$1,647,385	$1,192,513	$3,003,175	$1,124,896	$531,453
Long Term Liabilities	-	--	--	--	--
Total Liabilities	$1,647,385	$1,192,513	$3,003,175	$1,124,896	$531,453
Total stockholders' equity (deficiency)	$(535,099)	($1,154,759)	($648,401)	$24,643,671	$13,620,232

⁽¹⁾See Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operation.

⁽²⁾ Comparability of Results - The consolidated selected financial data set forth above is derived from the continuing financial statements of Internetstudios.com, Inc., a company incorporated under the State of Nevada in 1998. Internetstudios.com, Inc.'s common shares are quoted on the OTC Bulletin Board. The consolidated financial statements are a continuation of the financial statements of the accounting acquirer, Internetstudios.com, Inc.

	*2003*	*2002*	*2001*	*2000*	*1999*
Revenue	-	$ -	$82,555	$137,736	$ -
Direct Costs
Selling, general and administrative	566,717	828,636	4,997,848	20,629,094	2,730,811
Amortization	-	1,361,260	5,452,290	8,370,325	-
Loss on disposition of furniture and equipment	-		544,523	-	-
Lawsuit settlements	-	52,500	132,500	-	-
Impairment provision for goodwill	-		15,462,534	-	-
Net income (loss)	(446,883)	(1,203,871)	(26,853,427)	(36,205,66)	(2,730,811)
Net income (loss) per share	(0.04)	(0.20)	(32.72)	(48.20)	(0.32)
Total assets	1,112,286	37,754	2,354,774	25,768,567	14,151,685

The assets of Online Films, LLC are included in the total assets. The loss from continuing operations includes the losses of Online Films, LLC since October 1, 1999.
Item 7. Management's ~~Discussion~~Discussions and Analysis of Financial Condition and Results of Operation.
This annual report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors", that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.Overview

~~Although~~You weshould ~~believe~~read ~~that~~ the ~~expectations~~following ~~reflected~~discussion inof ~~the~~our ~~forward-looking~~financial ~~statements~~condition ~~are~~and ~~reasonable,~~results weof ~~cannot~~operations ~~guarantee~~together ~~future~~with ~~results,~~the ~~levels~~consolidated ofaudited ~~activity,~~financial ~~performance~~statements orand ~~achievements.~~the ~~Except~~notes asto ~~required~~consolidated byaudited ~~applicable~~financial ~~law,~~statements ~~including~~included ~~the~~elsewhere ~~securities~~in ~~laws~~this offiling ~~the~~prepared ~~United~~in ~~States,~~accordance wewith doaccounting ~~not~~principles ~~intend~~generally toaccepted ~~update~~in ~~any~~the ofUnited ~~the~~States. This discussion contains forward-looking statements tothat ~~conform~~reflect ~~these~~our ~~statements~~plans, toestimates and beliefs. Our actual results could differ materially from those anticipated in these forward-looking statements.

~~The~~We ~~following~~are ~~discussion~~an ~~should~~emerging beEntertainment ~~read~~Media inCompany. ~~conjunction~~Our ~~with~~business ~~our~~model ~~audited~~has ~~consolidated~~evolved ~~financial~~to ~~statements~~incorporate ~~and~~innovative ~~the~~structures ~~related~~and ~~notes~~technology ~~that~~to ~~appear~~address ~~elsewhere~~the ~~in this annual report. The following discussion contains forward-looking statements that reflect our plans~~marketing, ~~estimates~~sales and ~~beliefs.~~releasing ~~Our~~of ~~actual~~filmed ~~results~~entertainment. ~~could~~The ~~differ~~current ~~materially~~business ~~from~~direction ~~those~~includes ~~discussed in~~ the ~~forward-looking~~acquisition ~~statements.~~of ~~Factors~~existing ~~that~~libraries ~~could~~of ~~cause~~motion orpictures ~~contribute~~and totelevision ~~such~~programming ~~differences~~which ~~include,~~will ~~but~~be ~~are~~marketed ~~not~~and ~~limited~~sold ~~to,~~internationally ~~those~~under ~~discussed~~a ~~below~~new and ~~elsewhere~~exciting ~~in this annual report, particularly in the section entitled "Risk Factors"~~brand.

~~General~~Results of Operations for the fiscal years ended December 31, 2003 and December 31, 2002

~~InternetStudios.com, Inc. was incorporated in the State of Nevada on April 14, 1998 under the name~~ The ~~Enterprise,~~discussion ~~Inc.~~set ~~For~~forth abelow ~~period~~relating ~~of time, prior~~ to ~~December~~results ~~14, 1998, we were engaged in the word processing business. We changed our name to eHealth.com, Inc. in anticipation~~ of ~~acquiring~~operations apertains ~~license~~ to ~~software technology for~~ the ~~health~~comparison ~~industry. This acquisition was not completed. Effective September 21, 1999 we changed our name to InternetStudios.com, Inc. Since that date, InternetStudios has been in the business~~ of ~~providing web-based solutions for~~ the ~~entertainment~~fiscal ~~industry.~~years Weended ~~own~~December ~~a proprietary online platform and database to transact film and television rights. With this technology~~31, we2003 ~~have focused on the development~~ and ~~marketing of our website at www~~2002.~~onlinefilmandtvsales.com which has complete transactional capabilities for the licensing of filmed entertainment.~~

Through our online platform, www.onlinefilmandtvsales.com, we provide an enterprise solution complete with transactional capabilities for the licensing of filmed entertainment, complementary technology to track such transactions, and relevant and timely industry data and information. This yields multiple revenue streams including:Revenues

We recognized $nil revenues in the year ended December 31, 2003 as compared to $nil for the previous year. Historically we have recognized revenue from our internet-based ~~Hosting~~activities. ~~fees~~Revenues ceased in 2001 as we focused all of our resources on raising capital, reorganizing and streamlining operations and developing a self sustaining business model that would see us focus on more traditional film and television marketing efforts.

-Cost ~~Customization~~of ~~and Licensing fees~~Revenues

-We ~~Transactional~~have ~~fees~~currently not recognized significant revenues to date, and therefore have not allocated any significant amounts to cost of revenues. Once our revenues increase, costs of revenues will primarily consist of costs associated with marketing, customer service activities and allocation of overhead.

-Advertising and Marketing ~~fees~~ Expenses

-For ~~Sales~~the ~~revenue~~years ended December 31, 2003 and December 31, 2002, we had no expenses related to advertising and marketing as a result of the implementation of the restructuring plan.

WeGeneral ~~are still in our infancy as a viable commercial entity~~ and ~~consequently~~Administrative our focus over the past three years has been on the identification of market needs, development of our technology and product, www.onlinefilmandtvsales.com, and the branding of our company and product. We believe that we will generate increased revenue over the next three fiscal years due to the recent release of the upgraded onlinefilmandtvsales.com website. In addition, we plan to hire an experienced sales and marketing team to develop and enhance our sales and marketing program. These individuals will focus on increasing traffic and volume at the site. We expect that initial revenue growth will be reflected in the third and fourth quarters of 2002. We also anticipate a further increase in revenues in fiscal 2003 and 2004, which we expect will result from partnering arrangements with large corporate organizations. We anticipate that the expected growth in revenues may enable us to attract additional financing to allow us to add the needed resources to further support the growth of our operations. Despite our expectations, there are no assurances that our estimated revenue growth can be achieved. Should we be unable to achieve the anticipated revenue growth, our business and future success may be adversely affected. Expenses

~~RESULTS~~Our OFgeneral ~~OPERATIONS~~and administrative expenses consist primarily of salaries and related costs for general and corporate functions, including finance, accounting, facilities and fees for legal and other professional services. Our general and administrative expenses, for the period ended December 31, 2003 were $566,717 as compared to the year ended December 31, 2002 were $828,636. Our general and administrative expenses, for the period from inception to the year ended December 31, 2003 were $28,105,817 of which $10,925,152 were non-cash related to stock based compensation. The decrease of general and administrative expenses is primarily a result of the implementation of a restructuring plan that resulted in a reduction in personnel costs, lease and office costs, and a reduction in legal and accounting fees.

The discussion set forth below relating to results of operations pertains to the comparison of the fiscal year ended December 31, 2001 and the period from April 1998 (incorporation) to December 31, 2000.Summary

~~REVENUES~~Presently, we have no significant sources of revenue. ~~InternetStudios~~We ~~has~~have ~~recognized~~incurred ~~revenues~~operating tolosses ~~date~~since inception. The continuation of ~~$220~~our business is dependent upon the continuing financial support of our creditors and stockholders,~~921~~ obtaining further financing, ~~all~~our acquiring additional filmed entertainment assets, and the completion of ~~which~~the transactions relating to the acquisition of RKO and the Trocadero library. There are, ~~from~~however, ~~operating~~no ~~revenues~~assurances ~~sources~~we will be able to generate funds required for these transaction. WeAccordingly, ~~recognize~~our ~~revenue~~consolidated ~~from~~financial statements contain note disclosures describing the circumstances that lead there to be doubt over our ~~customers~~ability ~~listing~~to ~~material~~continue as a going concern. In their report on the ~~OFTVS~~consolidated ~~website~~financial asstatements, ~~well~~our asindependent ~~revenues~~auditors ~~from~~included ~~transactions~~an ~~consummated~~explanatory byparagraph ~~buyers~~regarding ~~and~~our ~~sellers~~ability ~~using~~to ~~the~~continue ~~OFTVS~~as ~~system.~~a going concern.

~~COST~~Net OF REVENUES. InternetStudios has currently not recognized significant revenues to date, and therefore has not allocated any significant amounts to cost of revenues. Once InternetStudios' revenues increase, cost of revenues will primarily consist of costs associated with marketing, customer service activities, and server and network operations, and to a lesser extent, bank and escrow processing charges on fees earned on transactions, Internet connection charges, depreciation of server and network equipment and allocation of overhead.Loss

~~ADVERTISING~~Our ~~AND~~net ~~MARKETING~~loss ~~EXPENSES.~~was ~~Costs~~$446,883 ~~related~~and to$1,203,871 ~~InternetStudios'~~for ~~advertising~~the ~~and~~fiscal ~~marketing~~years ~~efforts~~ended ~~are~~December ~~currently~~31, ~~classified~~2003 ~~as general~~ and ~~administrative~~2002 ~~expenses~~respectively. ~~InternetStudios'~~The ~~advertising~~primary ~~and~~reason ~~marketing~~for ~~expenses~~the ~~consist~~reduction ~~mainly~~in ofnet ~~advertising~~loss ~~expenses,~~is ~~creative~~due ~~development~~to ~~and~~the ~~promotional~~implementation ~~costs~~of ~~and~~our ~~commissions,~~restructuring ~~and~~plan ~~compensation~~in ~~for~~2002 ~~advertising~~that ~~and~~involved ~~marketing~~the ~~personnel.~~writedown ~~The~~of ~~majority~~goodwill, ofthe ~~these~~reduction ~~costs~~in ~~were~~personnel, ~~directed~~office tolease ~~programs~~commitments ~~designed~~and tosubsequent ~~build~~writedown ~~brand~~on ~~name~~disposal ~~recognition~~of assets, ~~attract~~Management ~~filmed~~feels ~~entertainment~~that ~~companies~~the ~~and~~restructuring ~~individuals~~plan tois ~~InternetStudios'~~now ~~websites,~~complete and tothat ~~attract~~ongoing ~~motion~~net ~~pictures~~loss ~~and~~will ~~television~~be ~~programming~~a ~~for~~result ~~listing~~from ~~on the OnlineFilmandTVSales~~operations.~~com web site.~~

~~WEBSITE~~Results ~~AND DEVELOPMENT EXPENSES. These expenses consist primarily~~ of ~~payroll~~Operations ~~and related expenses~~ for ~~development~~the infiscal ~~network~~years ~~operations~~ended ~~personnel and consultants, cost related to modifications, enhancement and new operations to enhance our websites. Website development costs as of~~ December 31, ~~2000~~2002 ~~were $9,536,992 of which $2,639,668 were capitalized under EITF 00-02~~ and ~~$4,750,000 were recorded as a non-cash cost related to stock based compensation. At~~ December 31, 2001 ~~website development costs were $16,281, none of which were capitalized under EITF 00-02. InternetStudios expects to incur additional website development and maintenance expense in the future.~~

~~GENERAL~~The ~~AND~~discussion ~~ADMINISTRATIVE~~set ~~EXPENSES.~~forth ~~InternetStudios'~~below ~~general~~relating ~~and~~to ~~administrative~~results ~~expenses consist primarily~~ of ~~salaries~~operations ~~and~~pertains ~~related~~to ~~costs~~the ~~for~~comparison ~~general~~of and corporate functions, including finance, accounting, facilities and fees for legal and other professional services. InternetStudios' general and administrative expenses, excluding website development costs, for the ~~period~~fiscal ~~from~~years ~~inception and~~ ended December 31, ~~2000~~2002 ~~were~~and ~~$22,013,775 of which $10,925,152 were non-cash related to stock based compensation. At December 31,~~ 2001 ~~these costs were $4,852,157~~.

~~SUMMARY~~Revenues

InternetStudios has recognized revenues to date of $220,921, all of which are from operating revenues sources. We recognized revenue from our customers listing material on the OFTVS website as well as revenues from transactions consummated by buyers and sellers using the OFTVS system.

Cost of Revenues

InternetStudios has currently not recognized significant revenues to date, and therefore has not allocated any significant amounts to cost of revenues. Once InternetStudios' revenues increase, cost of revenues will primarily consist of costs associated with marketing, customer service activities, and server and network operations, and to a lesser extent, bank and escrow processing charges on fees earned on transactions, internet connection charges, depreciation of server and network equipment and allocation of overhead.

Advertising and Marketing Expenses

Costs related to InternetStudios' advertising and marketing efforts are currently classified as general and administrative expenses. InternetStudios' advertising and marketing expenses consist mainly of advertising expenses, creative development and promotional costs and commissions, and compensation for advertising and marketing personnel. The majority of these costs were directed to programs designed to build brand name recognition, attract filmed entertainment companies and individuals to InternetStudios' websites, and to attract motion pictures and television programming for listing on the OnlineFilmandTVSales.com web site.

Website and Development Expenses

These expenses consist primarily of payroll and related expenses for development in network operations personnel and consultants, cost related to modifications, enhancement and new operations to enhance our websites. Website development costs as of December 31, 2000 were $9,536,992 of which $2,639,668 were capitalized under EITF 00-02 and $4,750,000 were recorded as a non-cash cost related to stock based compensation. At December 31, 2002 website development costs were $16,281, none of which were capitalized under EITF 00-02. InternetStudios expects to incur additional website development and maintenance expense in the future.

General and Administrative Expenses

InternetStudios' general and administrative expenses consist primarily of salaries and related costs for general and corporate functions, including finance, accounting, facilities and fees for legal and other professional services. InternetStudios' general and administrative expenses, excluding website development costs, for the period from inception and ended December 31, 2000 were $22,013,775 of which $10,925,152 were non-cash related to stock based compensation. At December 31, 2002 these costs were $4,852,157.

Summary

Presently, we have no significant sources of revenue. We have incurred operating losses since inception. The continuation of our business is dependent upon the continuing financial support of our creditors and stockholders, obtaining further financing, successful and sufficient market acceptance of updated versions of our existing services and achieving a profitable level of operations. There are, however, no assurances we will be able to generate further funds required for our continued operations. Accordingly, our consolidated financial statements contain note disclosures describing the circumstances that lead there to be doubt over our ability to continue as a going concern. In their report on the consolidated financial statements, our independent auditors included an explanatory paragraph regarding our ability to continue as a going concern.

~~LIQUIDITY~~Liquidity ~~AND~~and ~~CAPITAL~~Capital ~~RESOURCES~~Resources

From inception, ~~InternetStudios~~we ~~has~~have financed ~~its~~our operations entirely from private placements of equity and loans. OnAs at December 31, ~~2001~~2003, ~~InternetStudios~~we had noa ~~cash~~bank oroverdraft of $77,712 as compared to cash ~~equivalents~~on hand of $2,617 at December 31, 2002. Since inception, ~~InternetStudios~~we ~~has~~have had negative cash flows from operating activities in each fiscal and quarterly period to date.

Net cash used in operating activities was $17429,~~826,035~~771 for the ~~period~~year ~~from~~ended ~~inception~~December ~~and~~31, 2003 as compared to $393,448 for the year ended December 31, ~~2000,~~2002. ~~and~~Net cash used in operating activities was $1819,~~182~~006,~~843~~062 for the period from inception to the year ended December 31, ~~2001~~2003. The net cash was used primarily for expenses related to the RKO and Trocadeo transactions. In addition, in 2003, we realized a gain in settlement on debt of $116,050 and a gain on the write off of debt and accounts payable of $443,285 as part of the reorganization.

As ofshown ~~March~~in ~~29,~~our ~~2000,~~financial ~~950~~statements,~~000~~ ~~shares~~we ofhave ~~common~~sustained ~~stock~~substantial ~~were~~losses ~~issued~~from ~~for~~operations ~~$10~~since ~~per share to an unrelated third party, U~~inception.~~S.-based~~ ~~investor. This offering was done pursuant to Regulation D.~~ As of ~~April~~the 5,date ~~2000,~~of anthis ~~additional~~annual ~~480~~report,~~000~~ ~~shares~~we ofhave ~~common~~utilized ~~stock~~substantially ~~were~~all ~~issued~~of ~~for~~our ~~$10~~available ~~per~~funding ~~share~~and toat ~~four~~December ~~unrelated third party~~31, ~~non~~2003 ~~U.S.~~had ~~investors for~~ a ~~total~~working ~~offering~~capital ~~price~~deficiency of $41,~~800~~641,~~000~~349. ~~This~~Our ~~offering~~continuation ~~was~~as ~~done~~a ~~pursuant~~going toconcern ~~Regulation~~will S.depend Ason ofour ~~April~~ability ~~10,~~to ~~2000,~~raise an additional ~~15,000~~capital. ~~shares~~No ofassurance ~~common~~can ~~stock~~be ~~were~~given ~~issued~~that ~~for~~we ~~$10~~will ~~per~~be ~~share~~able to anraise ~~unrelated~~additional ~~third party non U~~funds.S. ~~investor.~~In Athe ~~finder's~~absence ~~fee~~ of 4%such ~~was~~funds, ~~paid~~we ~~pursuant~~will be required to ~~this~~cease ~~offering~~operations.

InOur ~~February~~management ~~2001,~~has wetaken ~~received~~steps ~~loans~~to ~~from~~revise ~~nine~~and ~~individual~~reduce ~~lenders~~our inoperating ~~the~~requirements, ~~aggregate~~which ~~principle~~we ~~amount~~believe ofwill ~~$199,158.66,~~be ~~pursuant~~sufficient to ~~convertible~~assure ~~note~~continued ~~purchase~~operations ~~agreements between our company~~ and ~~each~~implementation of ~~the~~our ~~lenders~~plans. ~~Each~~These ~~loan~~steps ~~was~~include ~~evidenced~~expense byreduction ain ~~convertible~~staffing, ~~grid~~marketing ~~promissory note that bears no interest~~ and isconsulting, ~~repayable~~We onare ~~demand.~~also ~~These~~in ~~loans were made with~~ the ~~agreement~~process ~~that~~of ifsecuring ~~our~~additional ~~company~~capital ~~could~~through ~~not repay the loans from any future~~ debt/equity ~~financings~~transactions, ~~the~~which ~~loans~~will ~~would~~ be ~~convertible~~required ~~into~~in ~~share~~order ~~of our common stock at a price~~ to becontinue ~~negotiated upon notice of conversion~~operations. ~~These transactions were effected in accordance with Regulation S under the Securities Act of 1933, as amended.~~

OnGiven ~~February~~our 19limited operating history, ~~2001~~operating losses and other factors set out above, there can be no assurance that we ~~received~~will ~~funding~~be ~~from~~able anto ~~unrelated~~achieve ~~third~~our ~~party~~goals inand develop a self sustaining business model. Management intends to raise debt and equity capital as needed on a private placement basis to finance the ~~form~~operating and capital requirements of our company. We have engaged investment bankers to act as placement agent for any debt and equity offerings. It is management's intention to continue to continue to modify our company's business plan to focus on more traditional film and television marketing. These factors raise substantial doubt about our company's ability to continue as a ~~secured~~going ~~loan~~concern as described in Note 2 to the ~~amount~~Financial Statements. The future operations of ~~$425,000~~our company will depend upon our ability to obtain adequate financing and continuing support from creditors. ~~This~~To ~~same~~the ~~unrelated~~extent ~~third~~that ~~party~~we ~~loaned~~cannot achieve our ~~company~~financing anand ~~additional~~acquisition ~~$30~~plans and generate revenues,~~000~~ which exceed expenses on ~~April~~a 20consistent basis and in a timely manner, ~~2001~~our business, results of operations, financial condition and prospects could be materially adversely affected.

~~Throughout~~There ~~the~~can ~~third~~be ~~and~~no ~~fourth~~assurance ~~quarters~~that ofsuch ~~2001,~~additional ~~our~~financing ~~management~~would ~~loaned~~be ~~funds~~available to ~~interim~~us, ~~finance~~or ~~the~~if ~~corporate activities of InternetStudios. Additionally~~available, ~~one~~that ~~executive~~the ~~officer~~terms of ~~our~~such ~~Company~~additional ~~repaid~~financing ~~$104,908~~will ofbe ~~monies~~acceptable ~~loaned~~to ~~from the Company~~us.

As shown in our financial statements, we have sustained substantial losses from operations since inception. As of the date of this annual report, we have utilized substantially all of our available funding. Our continuation as a going concern will depend on our ability to raise additional capital. No assurance can be given that we will be able to raise additional funds. In the absence of such funds, we will be required to cease operations.
In accordance with our original business plan, we were required to make a significant investment in technology and website development. In addition, the plan called for the necessary investments to market our company and our services to brand our company globally. Website development was substantially completed in October 2000. Revenues derived from implementation of our platform commenced in the fourth quarter of 2000.
Our management has taken steps to revise and reduce our operating requirements, which we believe will be sufficient to assure continued operations and implementation of our plans. These steps include expense reduction in staffing, marketing and consulting, as well as a significant decrease in operating costs as a result of completion of Web developments activities. We are also in the process of securing additional capital through equity transactions, which will be required in order to continue operations.
Given our limited operating history, operating losses and other factors set out above, there can be no assurance that we will be able to achieve our goals and develop a sufficiently large user base of our website to be profitable. Management intends to raise debt and equity capital as needed on a private placement basis to finance the operating and capital requirements of our company. In addition, management expects cash flow from operations to increase over the next year. It is management's intention to continue to finance planned capital expansion and continued development in the e-marketplace and Internet website business. These factors raise substantial doubt about our company's ability to continue as a going concern as described in an explanatory paragraph to our independent auditors' report on the December 31, 2001 audited financial statements. The future of our company will depend upon our ability to obtain adequate financing and continuing support from stockholders and creditors and to achieve and maintain profitable operations. To the extent that we cannot achieve our plans and generate revenues which exceed expenses on a consistent basis and in a timely manner, our business, results of operations, financial condition and prospects would be materially adversely affected.
In the event that our plans or assumptions change or prove inaccurate (due to delays in development, the inability to sign any significant sales agreements or generate revenues, unfavorable economic conditions, or other unforeseen circumstances), there can be no assurance that such additional financing would be available to us, or if available, that the terms of such additional financing will be acceptable to us.
Future Cash Requirements

We expect that the ~~release~~implementation of our ~~revamped~~new ~~website~~business ~~services~~strategy will lead to ~~an increase in revenues in fiscal 2002. We expect that further development and marketing of~~ the ~~service~~realization ~~combined with the planned introduction~~ of ~~new services in late 2002, will lead to increased~~ revenues in ~~2003 and 2004. Although we expect to see an increase in revenues in 2002, we do not anticipate this to materialize until the~~ third ~~and fourth~~ quarter of fiscal ~~2002~~2004. ~~Consequently~~Our weplans ~~required~~indicate a requirement of approximately $~~200~~500,000 ~~over~~to ~~the~~continue ~~period ended July 25, 2002~~ to ~~accomplish~~expand our ~~goals.~~operations ~~We estimate that approximately $375,000 is required~~ to the end of ~~fiscal~~June 30, ~~2002~~2004, $~~100~~250,000 of which is required to ~~hire~~complete ~~sales~~the ~~and~~acquisition ~~marketing~~of ~~persons~~the Trocadero library and to ~~implement~~commence ~~our~~production ~~sales~~of ~~and~~DVD's ~~marketing~~for ~~program~~distribution. The balance of $~~275~~250,000 will be required to support general corporate expenses, including expenses in connection with the engaging of both senior and intermediate management personnel, ~~and~~ other general operating expenses and to implement our digital video disc sales and marketing program. We intend to ~~receive~~raise the balance of the cash requirements through private placements or by debt financing.

~~Plan~~In addition, over the next twelve months, our capital plan contemplates the company raising up to $10 million in order to complete the RKO acquisition. $2 million of ~~Operation~~this financing will be used to re-master motion pictures from the Trocadero Library for release on digital video disc and to create a menu of added features. If we are successful in completing the acquisition of RKO we intend to role out a minimum of 20 digital video disc in the next 18 month period.

~~Our~~Plan primary objective over the twelve months ending December 31, 2002 will be to implement an aggressive sales and marketing program in connection with the OnlineFilmandTVSales.com website service. We plan to achieve a critical mass of product listing for buyers and sellers to transact business using OFTVS technology as well as offer "private-label" enterprise solutions for larger industry players through the customization of the OFTVS platform. Operations

Our ~~strategy~~primary isobjective toover ~~continue~~the tofiscal ~~enhance~~year ~~www.onlinefilmandtvsales.com's~~ending ~~functionality~~December ~~through~~31, ~~new~~2004 ~~feature~~will ~~development~~be to ~~meet~~build ~~the~~a ~~continually~~niche ~~changing~~distribution ~~requirements~~platform ~~of our customers. At the same time, we plan~~ to ~~complete~~maximize ~~development~~revenues offrom ~~an off-line~~ filmed entertainment ~~catalogue~~content ~~management~~in ~~system,~~all ~~which~~formats ~~communicates~~through ~~with~~ the ~~OFTVS~~building ~~software.~~a ~~Additionally~~brand, wethe ~~intend~~re-labelling toof ~~assemble~~classic acontent ~~major~~and ~~library~~strict ofasset ~~filmed~~management. ~~content~~We byintend ~~expanding~~to ~~the~~focus ~~number~~on ofcreating ~~copyrights~~efficiencies ~~and~~through ~~distribution~~technology ~~rights~~and ~~that~~innovative ~~InternetStudios~~systems ~~owns,~~to ~~represents~~address orthe ~~brokers,~~marketing ~~which~~and ~~will~~sales ~~generate~~of ~~growth~~filmed ~~and~~entertainment ~~annuity income~~globally.

~~SALES~~Additionally, ~~AND~~we ~~MARKETING~~intend to assemble a major library of filmed content by expanding the number of copyrights and distribution rights that InternetStudios owns, represents or brokers, which will generate growth and annuity income.

~~Since~~Sales ~~the acquisition of Online Films, InternetStudios' management team has focused on marketing~~ and public relations efforts to attract vendors to list their filmed entertainment rights on the OnlineFilmandTVSales.com website. InternetStudios believes that much of the awareness of the OnlineFilmandTVSales.com website will be generated by attendance at film festivals, entertainment industry forums and other events. Marketing

~~InternetStudios~~The ~~intends~~digital tovideo ~~generate~~disc ~~additional~~format ~~brand~~for ~~awareness~~movies ~~from~~has ~~specific~~experienced ~~promotional~~unprecedented ~~activities~~popularity ~~such~~and ~~as:~~has driven a global swell of consumer demand for movies on disk, both for new releases and for older catalogue titles. Domestic digital video disc revenues reached $8.4 billion in 2002.

InternetStudios intends to capitalize on this opportunity by providing mainstream-friendly ~~setting~~entertainment upwith ~~promotional~~worldwide ~~booths~~commercial ~~and~~appeal ~~kiosks~~in ata ~~major~~low-risk, cost-efficient manner. We plan to exploit our own films in digital video disc format from the Trocadero Library featuring special features and ~~minor~~to ~~film~~acquire ~~festivals;~~high quality assets that will be exploitable from a video and ancillary media perspective.

-As ~~entering~~part ~~into~~of ~~relationships~~this ~~with~~plan, ~~other~~we ~~websites~~intend to ~~place~~distribute ~~links~~or onsell ~~their~~directly ~~sites~~to mass merchandisers, such as Wal-Mart Stores Inc., Costco Wholesale Corporation, Target Corporation and Best Buy Co. Inc., and others who buy large volumes of digital video disc's to sell directly to the ~~OnlineFilmandTVSales.com~~consumer ~~website~~in international markets.

~~InternetStudios~~RECENT ~~expects~~ACCOUNTING ~~to hire sales personnel as demand increases.~~PRONOUNCEMENTS

ToIn ~~date~~June 2002, ~~InternetStudios~~the ~~has~~FASB ~~used~~issued aSFAS ~~combination~~No. 146, of"Accounting ~~online~~for ~~and~~Costs ~~offline~~Associated ~~advertising~~with toExit ~~generate~~or ~~awareness~~Disposal ofActivities." ~~InternetStudios~~Such ~~and~~standard ~~OFTVS.~~requires ~~This~~costs ~~expense~~associated ~~was~~with ~~significant~~exit inor ~~fiscal~~disposal ~~2001~~activities as(including werestructurings) ~~built~~to ~~brand~~be ~~awareness~~recognized inwhen the ~~industry.~~costs ~~However~~are incurred, ~~this~~rather ~~type~~than at a date of ~~expense~~commitment ~~will~~to bean ~~reduced~~exit inor ~~2002~~disposal plan. SFAS No. 146 nullifies EITF Issue No. 94-~~2003~~3, as"Liability ~~industry~~Recognition ~~acceptance~~for isCertain ~~achieved~~Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." InUnder ~~2002~~SFAS No. 146, wea ~~intend~~liability related to ~~establish~~an exit or disposal activity is not recognized until such liability has actually been incurred whereas under EITF Issue No. 94-3 a ~~customer~~liability ~~relations~~was ~~center~~recognized ~~that~~at ~~will~~the ~~assist~~time ~~clients~~of a commitment to an exit or disposal plan. The provisions of ~~OFTVS~~this asstandard ~~well~~are aseffective ~~aggressively~~for ~~market~~exit ~~programming~~or disposal activities initiated after December 31, 2002. The adoption of SFAS 146 did not have a material effect on the ~~system~~Company's tofinancial ~~end-users~~position ~~worldwide.~~or results of operations.

In ~~addition~~April 2003, wethe ~~intend~~Financial toAccounting ~~focus~~Standards onBoard aissued ~~number~~SFAS No. 149, "Amendment of ~~key~~Statement ~~initiatives~~133 inon ~~order~~Derivative toInstruments ~~increase~~and ~~the~~Hedging ~~revenues~~Activities", which clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. The adoption of SFAS 149 did not have a material effect on the ~~digital~~Company's ~~marketplace:~~financial position or results of operations.

~~Cross-Pollination:~~In ~~Finding~~May ~~new~~2003, ~~buyers~~SFAS 150, "Accounting for ~~product~~Certain Financial Instruments with Characteristics of both Liabilities and Equity", ~~especially~~was ~~video~~issued. This Statement establishes standards for how an issuer classifies and ~~DVD~~measures ~~buyers~~certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments were previously classified as equity. Generally, a financial instrument, whether in the form of shares or otherwise, that is mandatorily redeemable, i.e. that embodies an unconditional obligation requiring the issuer to TVredeem ~~product~~it by transferring its shares or assets at a specified or determinable date (or dates) or upon an event that is certain to occur, ~~and~~must ~~bringing~~be ~~Feature~~classified ~~Films~~as ~~directly~~a liability (or asset in some circumstances). In some cases, a financial instrument that is conditionally redeemable may also be subject to ~~end-user~~the ~~broadcasters~~same treatment. This Statement does not apply to features that are embedded in a financial instrument that is not a derivative (as defined) in its entirety. For public entities, ~~circumventing~~this ~~middlemen~~Statement is effective for financial instruments entered into or modified after May 31, 2003. The adoption of SFAS 150 did not affect the Company's financial position or results of operations.

~~Customer~~In ~~service:~~November We2002, ~~will~~the ~~focus~~FASB onissued ~~localization~~FASB Interpretation No. 45, ~~through~~"Guarantor's aAccounting ~~variety~~for Disclosure Requirements for Guarantees, Including Indirect Guarantees of ~~methods~~Indebtedness of Others, an interpretation of FASB Statements No. ~~Instructing~~5, ~~responding~~57 toand ~~needs~~107 and rescission of FASB Interpretation No. 34, Disclosure of Indirect Guarantees of Indebtedness of Others" ("FIN 45"). FIN 45 clarifies the requirements for a guarantor's accounting for, and ~~integrating~~disclosure ~~with~~of, ~~businesses~~certain guarantees issued and outstanding. It also requires a guarantor to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in ~~Latin~~issuing ~~America~~the guarantee. This interpretation also incorporates without reconsideration the guidance in FASB Interpretation No. 34, ~~Asia~~which ~~and~~is ~~Australia~~being superseded. The adoption of FIN 45 did not affect the Company's financial position or results of operations.

~~Teaching~~In ~~buyers~~January 2003, the FASB issued FASB Interpretation No. 46, Consolidation of Variable Interest Entities, an interpretation of Accounting Research Bulletins ("ARB") No. 51, Consolidated Financial Statements ("FIN 46"). Fin 46 applies immediately to variable interest entitles created after January 31, 2003, and in the first interim period beginning after June 15, 2003 for variable interest entities created prior to January 31, 2003. The interpretation explains how to identify variable interest entities and ~~why:~~how ~~OFTVS~~an enterprise assesses its interest in a variable interest entity to decide whether to consolidate that entity. The interpretation requires existing unconsolidated variable interest entities to be consolidated by their primary beneficiaries if the entities do not effectively disperse risks among parties involved. Variable interest entities that effectively disperse risks will ~~conduct~~not ~~more~~be ~~one-on-one~~consolidated ~~training,~~unless ~~especially~~a assingle weparty ~~roll~~holds ~~out~~an ~~functionality~~interest or combination of interests that effectively recombines risks that were previously dispersed. The adoption of FIN 46 did not affect the Company's financial position or results of operations.

~~Signing~~Item &7A. Quantitative ~~teaching~~and ~~sellers:~~Qualitative ToDisclosures ~~create~~About ~~volume~~Market ~~as well as more exclusivity and lead product~~Risk.

Ancillary Revenue through Data Sales and Fee For Service: Available from the sale of OFTVS' data, especially Pre-Sale Information.

Constant updating of users' data. We are actively enhancing our customer relation management systems.

More & richer Global Directory data/Calendar/TV: To build more activity on the site.

Presenting instructions & descriptions in foreign languages.

Extensive E-marketing initiatives based on the existing templates.

Producers Site: Providing Application Service Provider services to targeted, knowledgeable producers to market and pre-sell directly to end-users. Revenue on transaction and fee for service sales.

Focus on Catalogues of Studios & Defunct Libraries.

Focus on Niche and Specialty Broadcasters: Take advantage of the growth of Niche & Specialty stations/broadcasters, with smaller audiences with smaller budgets but with equivalent needs in terms of hours.

Assuring a strong presence at film festivals, entertainment industry forums and other events to service existing clients and sign new contracts and register new buyers will generate ongoing awareness of the OnlineFilmandTVsales.com Web site. Our executives intend to provide sales and marketing expertise and the most comprehensive information and complete catalogue of film and TV product in the world.

EMPLOYEES

As of July 25, 2002, InternetStudios had 6 full time employees with 4 in the area of corporate administration and 2 in sales and marketing. We also have 7 independent contractors providing product development services, management consulting services and capital raising services. Over the 12 months ending December 31, 2002, we plan to expand our total number of permanent employees in these same departments as required.

PURCHASE OR SALE OF EQUIPMENT

We do not anticipate that we will spend any significant amount on equipment for our present or future operations over the twelve months ending December 31, 2002. However, we will continue to purchase computer hardware and software, as needed, for our ongoing operations.

NEW ACCOUNTING PRONOUNCEMENTS

In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" was issued. SFAS No. 133 requires companies to recognize all derivatives contracts as either assets or liabilities on the balance sheet and to measure them at fair value. If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (I) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change. SFAS No. 133 was effective for all fiscal quarters of fiscal years beginning after June 15, 2000.

Historically, our company has not entered into derivatives contracts either to hedge existing risks or for speculative purposes. Accordingly, adoption of the new standards on January 1, 2001 did not affect our consolidated financial statements.

In June 2001, the Financial Accounting Standards Board ("FASB") finalized SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS 141 requires the use of the purchase method of accounting and prohibits the use of the pooling-of-interests method of accounting for business combinations initiated after June 30, 2001. SFAS 141 also requires that we recognize acquired intangible assets apart from goodwill if the acquired intangible assets meet certain criteria. SFAS 141 applies to all business combinations initiated after June 30, 2001 and for purchase business combinations completed on or after July 1, 2001. It also requires, upon adoption of SFAS 142, that we reclassify the carrying amounts of intangible assets and goodwill based on the criteria in SFAS 141.

SFAS 142 requires, among other things, that companies no longer amortise goodwill, but instead test goodwill for impairment at least annually. In addition, SFAS 142 requires that we identify reporting units for the purposes of assessing potential future impairments of goodwill, reassess the useful lives of other existing recognized intangible asset, and cease Amortization of intangible assets with an indefinite useful life. An intangible asset with an indefinite useful life should be tested for impairment in accordance with the guidance in SFAS 142. SFAS 142 is required to be applied in fiscal years beginning after December 15, 2001 to all goodwill and other intangible assets recognized at that date, regardless of when those assets were initially recognized. SFAS 142 requires us to complete a transitional goodwill impairment test six months from the date of adoption. We are also required to reassess the useful lives of other intangible assets within the first interim quarter after adoption of SFAS 142.

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". SFAS No. 144 requires that those long-lived assets be measured at the lower of carrying amount or fair value less cost to sell, whether reported in continuing operations or in discontinued operations. Therefore, discontinued operations will no longer be measured at net realizable value or include amounts for operating losses that have not yet occurred. SFAS No. 144 is effective for financial statements issued for fiscal years beginning after December 15, 2001 and, generally, is to be applied prospectively.

The implementation of these new standards is not expected to have a material effect on the our consolidated financial statements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

We do not utilize derivative instruments to manage market related risks. We do not have any long-term debt instruments so our company is not subject to market related risks such as interest or foreign exchange on long-term debt. All of our operations are conducted in the United States and thus, we are not exposed to significant risk of currency loss due to fluctuations in the Canadian and U.S. exchange rates.

Item 8. Financial Statements and Supplementary Data.
Selected Quarterly Data

Fiscal 2001	1st Quarter Fiscal 2001	2nd Quarter Fiscal 2001	3rd Quarter Fiscal 2001	4th Quarter Fiscal 2001	Fiscal 2001
Fiscal 2003	1st Quarter Fiscal 2003	2nd Quarter Fiscal 2003	3rd Quarter Fiscal 2003	4th Quarter Fiscal 2003	Fiscal 2003
Revenues	$~~60,930~~-	$-	$~~21,625~~-	$-	$~~82,555~~-
Net income (loss) for the period	$(5,739,800)	$(18,732,613)	$(779,712)	$(1,601,302)	$(26,853,427)
Gross Profit	$-	$-	$-	$-	$-
Net income (loss) per share	$(7.40)	$(23.60)	$(1.00)	$(1.96)	$(32.72)
Net Loss	$(80,118)	$(316,222)	$(330,853)	$280,310	$(446,883)
Basic and Diluted Loss per share	$(0.01)	$(0.03)	$(0.03)	$0.03	$(0.04)

Fiscal 2000	1st Quarter Fiscal 2000	2nd Quarter Fiscal 2000	3rd Quarter Fiscal 2000	4th Quarter Fiscal 2000	Fiscal 2000
Fiscal 2002	1st Quarter Fiscal 2002	2nd Quarter Fiscal 2002	3rd Quarter Fiscal 2002	4th Quarter Fiscal 2002	Fiscal 2002
Revenues	$-	$~~5,355~~-	$~~64,530~~-	$~~67,851~~-	$~~137,736~~-
Net income (loss) for the period	$(15,368,356)	$(9,098,018)	$(9,192,639)	$(2,546,655)	$(36,205,668)
Gross Profit	$-	$-	$-	$-	$-
Net income (loss) per share	$(22.80)	$(12.00)	$(11.80)	$(3.20)	$(45.00)
Net Loss	$(750,719)	$(185,781)	$(218,532)	$(48,839)	$(1,203,871)
Basic and Diluted Loss per share	$(0.18)	$(0.05)	$(0.03)	$(0.01)	$(0.12)

Our financial statements are stated in United States dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

The following consolidated financial statements are filed as part of this annual report:

Independent Auditor's Report, dated ~~May~~March 31, ~~2002~~2004

Consolidated Balance Sheets as at December 31, ~~2001~~2003 and ~~2000~~2002

Consolidated Statements of ~~Changes~~Operations infor ~~Stockholders'~~the ~~Equity~~years ~~(Deficit)~~ended December 31, 2003 and 2002 and for the period from April 14, 1998 (~~incorporation~~inception) to December 31, ~~2001~~2003

Consolidated Statements of Cash Flows for the ~~year~~years ended December 31, ~~2001~~2003 and 2002 and for the period from April 14, 1998 (~~incorporation~~inception) to December 31, ~~2001~~2003

~~Summary~~Consolidated Statements of ~~Significant~~Changes ~~Accounting~~in ~~Policies~~Stockholders' Equity (Deficit) for the period from April 14, 1998 (inception) to December 31, 2003

Notes to the Consolidated Financial Statements

INTERNETSTUDIOS.COM, INC.

(A Development Stage Company)

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, ~~2001 AND 2000~~2003

INDEPENDENT AUDITORS' REPORT

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED STATEMENTS OF OPERATIONS

CONSOLIDATED ~~STATEMENTS~~STATEMENT OF STOCKHOLDERS' EQUITY

CONSOLIDATED STATEMENTS OF CASH FLOWS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~LABONTE~~INDEPENDENT &AUDITORS' ~~CO. CHARTERED ACCOUNTANTS~~REPORT

1205 - 1095 West Pender Street Vancouver, B.C. Canada V6E 2M6 Telephone (604) 682-2778 Facsimile (604) 689-2778 Email rjl@labonteco.com

AUDITORS' REPORT

To the Stockholders and Board of Directors of Internetstudios.com, Inc.

We have audited the consolidated balance ~~sheet~~sheets of Internetstudios.com, Inc. as at December 31, ~~2001~~2003 and 2002 and the statements of operations, stockholders' equity and cash flows for the ~~year~~years then ended. 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 ~~Canadian and~~ United States generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance 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 ~~audit~~audits ~~provides~~provide a reasonable basis for our opinion.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, ~~2001~~2003 and 2002 and the results of its operations and its cash flows for the ~~year~~years then ended in accordance with United States generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the Company will continue as ata ~~December~~going 31concern. As discussed in Note 1 to the financial statements, ~~2000~~the Company has a working capital deficiency, a capital deficiency, has incurred significant losses since inception and ~~for~~further losses are anticipated in the ~~year~~development ~~then~~of ~~ended~~its ~~were~~business ~~audited~~opportunities byraising ~~other~~substantial ~~auditors~~doubt ~~who~~about ~~rendered~~the anCompany's ~~unqualified~~ability ~~opinion~~to continue as a going concern. Management's plans in ~~their~~regard ~~report~~to ~~dated~~these ~~April~~matters ~~14,~~are ~~2001~~also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

~~/s/~~"Dale ~~Labonte~~Matheson &Carr-Hilton ~~Co. CHARTERED ACCOUNTANTS~~LaBonte"

~~Vancouver,~~CHARTERED ~~B.C. May 31, 2002~~ACCOUNTANTS

~~COMMENTS~~Vancouver, ~~BY AUDITORS FOR U~~B.SC. March ~~READERS~~31, ~~ON CANADA-UNITED STATES REPORTING DIFFERENCES~~2004

In the United States, reporting standards for auditors would require the addition of an explanatory paragraph following the opinion paragraph when the financial statements are affected by conditions and events that cast substantial doubt on the Company's ability to continue as a going concern, such as those described in Note 1. Our report to the stockholders and Board of Directors dated May 31, 2002 is expressed in accordance with Canadian reporting standards which do not permit a reference to such conditions and events in the auditors' report when these are adequately disclosed in the financial statements.
/s/ Labonte & Co. CHARTERED ACCOUNTANTS
Vancouver, B.C. May 31, 2002
INTERNETSTUDIOS.COM, INC.
(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS

	December 31, 2001	December 31, 2000
	December 31, 2003	December 31, 2002
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$ -	$~~700~~ 2,~~068~~617
Restricted cash	-	435,000
Taxes recoverable	6,036	35,137
Taxes recoverable	24,305	55,685
	6,036	37,754
Accounts receivable	969	57,318
PREPAID FINANCE FEE (Note 4)	298,750	-
Loans receivable from related party (Note 7)	373,679	535,217
DEPOSITS ON ACQUISITIONS (Note 3)	807,500	-
Prepaid expenses	-	138,096
	$ 1,112,286	$ 37,754
	398,953	1,921,384
WEBSITE DEVELOPMENT COSTS	2,639,668	2,779,668
FURNITURE AND EQUIPMENT	-	993,942
	2,639,668	3,773,610
Less - accumulated depreciation and amortization	(1,278,408)	(786,762)
	1,361,260	2,986,848
LOANS RECEIVABLE (Note 6)	594,561	759,065
DEPOSITS AND OTHER	-	96,933
GOODWILL AND OTHER INTANGIBLE ASSETS, net of accumulated amortization of $8,194,621 in 2000 (Note 3)	-	20,004,337
	$2,354,774	$25,768,567
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank overdraft	$4 77,~~428~~712	$ -
Accounts payable and accrued liabilities	2623,~~157,435~~781	~~976~~778,~~270~~288
Loans payable	632,153	-
Loans payable (Note 4)	945,892	414,225
Due to related parties	10,000	-
	1,647,385	1,192,513
Deferred revenue	-	148,626
GOING CONCERN CONTINGENCY (Note 1)
	2,804,016	1,124,896
STOCKHOLDERS' EQUITY (DEFICIT) (Note 6)
CONVERTIBLE LOANS (Note 8)	199,159	-
Common stock, $.0001 par value, 100,000,000 shares authorized
	3,003,175	1,124,896
10,889,209 shares issued and outstanding (2002 - 10,216,705 shares)	2,650	2,583
STOCKHOLDERS' EQUITY (DEFICIT) (Note 9)
Additional paid-in capital	66,496,755	65,852,572
Common stock, $.0001 par value, 5,000,000 shares authorized
Obligation to issue shares	422,293	-
820,742 shares issued and outstanding (2000 - 782,902 shares)	1,643	1,567
Deficit accumulated during the development stage	(67,456,797)	(67,009,914)
Additional paid-in capital	65,250,791	66,131,524
Total Stockholders' Equity (Deficit)	(535,099)	(1,154,759)
Deferred compensation	(94,792)	(2,536,804)
	$ 1,112,286	$ 37,754
Deficit accumulated during the development stage	(65,806,043)	(38,952,616)
Total Stockholders' Equity (Deficit)	(648,401)	24,643,671
	$2,354,774	$25,768,567

The accompanying notes are an integral part of these consolidated financial statements

INTERNETSTUDIOS.COM, INC.
(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year ended December 31, 2001	Year ended December 31, 2000	April 14, 1998 (inception) to December 31, 2001
	Year ended December 31, 2003	Year ended December 31, 2002	April 14, 1998 (inception) to December 31, 2003
REVENUE	$~~82,555~~ -	$~~137,736~~ -	$ 220,291
OPERATING EXPENSES
General and administrative	4566,~~770,787~~717	20828,~~629,094~~636	2628,~~710~~105,~~464~~817
Sales and marketing	~~222,061~~-	~~2,780,920~~-	3,129,457
Amortization of goodwill	~~4,541,803~~-	~~7,592,773~~-	12,737,424
Amortization of website development costs	910,487	445,698	1,356,185
Amortization and write-off of website development costs	-	1,361,260	2,779,668
Website development costs	~~16,281~~-	~~5,678,683~~-	6,327,907
	10,461,419	37,127,168	50,261,437
	566,717	2,189,896	53,080,273
Loss from operations	(10566,~~378,864~~717)	(362,~~989~~189,~~432~~896)	(5052,~~041~~859,~~146~~982)
Other income (expenses)
Interest income, net of interest expense	37,049	277,514	240,465
Interest and finance fees	(439,501)	(16,575)	(215,611)
Minority interest in loss of subsidiary	-	~~506,250~~-	506,250
Loss on impairment of loans receivable	~~(309,832)~~-	-	(309,832)
Loss on disposal of furniture and equipment	~~(544,523)~~-	-	(544,523)
Loss on impairment of goodwill	~~(15,462,534)~~-	-	(15,462,534)
Loss on write off of website development costs	(62,223)	-	(62,223)
Gain (loss) on settlement of lawsuits	-	52,500	(80,000)
Loss on settlement of lawsuits	(132,500)	-	(132,500)
Gain on settlement of debts (Note 7)	116,050	153,280	269,330
NET LOSS FOR THE PERIOD	$(26,853,427)	$(36,205,668)	$(65,806,043)
Gain on write off of debt (Note 7)	443,285	796,820	1,240,105
NET LOSS FOR THE YEAR	$ (446,883)	$ (1,203,871)	$ (67,456,797)

BASIC NET LOSS PER SHARE	$ (320.7204)	$ (480.3020)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING	~~820,731~~	~~749,645~~

10,524,773

5,983,890

The accompanying notes are an integral part of these consolidated financial statements

INTERNETSTUDIO.COM, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE PERIOD APRIL 14, 1998 (INCEPTION) TO DECEMBER 31, 2003

	Number of shares	Amount	Additional paid in capital	Obligation to issue shares	Deferred compensation	Deficit accumulated during the development stage	Total


Common stock issued for cash	7,117,200	$ 712	$ 37,558	$ -	$ -	$ -	$ 38,300
Net loss for the period	-	-	-		-	(16,137)	(16,137)


Balance at December 31, 1998	7,117,200	712	37,558	-	-	(16,137)	22,163
Common Stock issued for acquisition of Online Films LLC	5,632,800	563	11,828,317	-	-	-	11,828,880
Common Stock issued for cash pursuant to Regulation S offering	562,500	56	4,499,944	-	-	-	4,500,00
Net loss for the year ended December 31, 1999	-	-	-	-	-	(2,730,811)	(2,730,811)


Balance at December 31, 1999	13,312,500	1,331	16,365,849	-	-	(2,746,948)	13,620,232
Common Stock options granted for services	-	-	5,019,895		(5,019,895)	-	-
Amortization of deferred compensation	-				2,483,091	-	2,483,091
Common Stock issued for cash pursuant to Regulation S offering	437,500	44	3,499,956		-	-	3,500,000
Exercise of employee stock options	66,044	7	842,054		-	-	842,061
Common stock issued for cash pursuant to Regulation D offerings, net of costs	1,445,000	145	14,180,685		-	-	14,180,830
Common stock issued for acquisition of itstv.com	120,000	12	1,859,988	-	-	-	1,860,000
Common stock warrants issued for acquisition of itstv.com	-	-	1,119,375	-	-	-	1,119,375
Common stock issued for services	27,000	3	(3)		-	-	-
Acquisition of minority interest in OnlineFilmSales.com	-	-	11,400,000	-	-	-	11,400,000
Common stock equity interest issued for services	-	-	7,600,000	-	-	-	7,600,000
Conversion of LLC membership	250,000	25	4,243,725	-	-	-	4,243,750
Net loss for the year ended December 31, 2000	-	-	-	-	-	(36,205,668)	(36,205,668)


Balance at December 31, 2000	15,658,044	1,567	66,131,524	-	(2,536,804)	(38,952,616)	24,643,671
Conversion of Class B Membership	156,800	16	(16)	-		-	-
Conversion of Class B Membership	600,000	60	(60)	-		-	-
Amortization of deferred compensation	-	-	-	-	1,561,356	-	1,561,356
Reversal of deferred compensation	-	-	(880,657)	-	880,656	-	(1)
20 to 1 Rollback	(15,594,102)	-	-	-	-	-	-
Net loss for the year ended December 31, 2001	-	-	-	-	-	(26,853,427)	(26,853,427)


Balance at December 31, 2001	820,742	1,643	65,250,791	-	(94,792)	(65,806,043)	(648,401)
Common stock issued for debt	3,487,863	349	198,810	-	-	-	199,159
Common stock issued for debt	5,720,000	572	326,040	-	-	-	326,612
Common stock issued for cash, net of finder's fee of $8,550 and 17,100 shares	188,100	19	76,931	-	-	-	76,950
Amortization of deferred compensation	-	-	-	-	94,792	-	94,792
Net loss for the year ended December 31, 2002	-	-	-	-	-	(1,203,871)	(1,203,871)


Balance at December 31, 2002	10,216,705	$ 2,583	$ 65,852,572	$ -	$ -	$ (67,009,914)	$ (1,154,759)

INTERNETSTUDIO.COM, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE PERIOD APRIL 14, 1998 (INCEPTION) TO DECEMBER 31, 2003

	Number of shares	Amount	Additional paid in capital	Obligation to issue shares	Deferred compensation	Deficit accumulated during the development stage	Total


Balance forward at December 31, 2002	10,216,705	$ 2,583	$ 65,852,572	$ -	$ -	$ (67,009,914)	$ (1,154,759)
Common stock issued for services at $1.40	7,500	1	10,499		-	-	10,500
Common stock issued for cash at $0.50	10,000	1	4,999		-	-	5,000
Common stock issued for services at $1.00	30,000	3	29,997		-	-	30,000
Common stock issued for cash at $1.00	90,000	9	89,991		-	-	90,000
Common stock issued for finance fee at $1.00	360,000	36	359,964		-	-	360,000
Common stock issued for finance fee at $0.85	175,000	17	148,733		-	-	148,750
Obligation to issue shares	-	-	-	422,293	-	-	422,293
Net loss for the year ended December 31, 2003	-	-	-	-	-	(446,883)	(446,883)


Balance at December 31, 2003	10,889,205	$ 2,650	$ 66,496,755	$ 422,293	$ -	$ (67,456,797)	$ (535,099)

The accompanying notes are an integral part of these consolidated financial statements

INTERNETSTUDIOS.COM, INC.
(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31, 2001		Year Ended December 31, 2000	April 14, 1998 (inception) to December 31, 2001
	Year Ended December 31, 2003	Year Ended December 31, 2002	April 14, 1998 (inception) to December 31, 2003
CASH FLOWS FROM OPERATING ACTIVITIES	~~$ (26,853,427)~~		~~$ (36,205,668)~~	~~$ (65,806,043)~~
Net loss for the period
Net loss for the year	(446,883)	$ (1,203,871)	$ (67,456,797)
Adjustments to reconcile net loss to net cash from operating activities:
Non-cash expenses:
Amortization and depreciation	5,586,469		8,370,325	14,509,602
Amortization and write-off of website development costs	-	1,361,260	15,933,085
Bad debts	~~46,087~~-	-	-46,087	~~46,087~~
Loss on disposal of furniture and equipment	~~544,523~~-	-	-544,523	~~544,523~~
Loss on impairment of goodwill	~~15,462,534~~-	-	-15,462,534	~~15,462,534~~
Loss on write-off of website development costs	62,223		-	62,223
Loss on impairment of loans	-	-	309,832
Loss on impairment of loans	309,832		-	309,832
Stock based compensation, finance and other expense	399,250	94,792	12,980,550
Compensation expense related to stock and stock options	1,561,356		10,925,152	12,486,508
Minority interest in loss of subsidiary	-	-	(506,250)
Minority interest in loss of subsidiary	-		(506,250)	(506,250)
Stock based website development expense	-	-	3,185,882
Stock based website development expense	-		3,185,882	3,185,882
Gain on settlement of debt	(116,050)	(153,280)	(269,330)
Changes in operating assets and liabilities:
Gain on write-off of accounts payable	(443,285)	(796,820)	(1,240,105)
Restricted cash	435,000		(435,000)	-
Changes in operating assets and liabilities:
Accounts receivable	~~10,262~~-	969	(5746,~~318~~087)	~~(47,056)~~
Taxes recoverable	3129,~~380~~101	(10,832)	~~(37~~11,~~722)~~927	~~(6,342)~~
Prepaid expenses	~~138,096~~-	-	~~369~~(117,~~149~~685)	~~(117,685)~~
Deposits and other	96,933		-	-
Accounts payable and accrued liabilities	148,096	314,334	2,155,772
Accounts payable and accrued expenses	1,178,663		444,817	1,693,342
CASH USED IN OPERATING ACTIVITIES	(429,771)	(393,448)	(19,006,062)
Deferred revenue	(148,625)		148,625	-
CASH FLOWS FROM INVESTING ACTIVITIES
CASH USED IN OPERATING ACTIVITIES	(1,538,694)		(13,798,008)	(18,182,843)
Acquisition of furniture and equipment	-	-	(2,218,566)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of ReporterTV.com, net of cash acquired	-	-	(1,532,192)
Acquisition of furniture and equipment for cash	(23,324)		(2,133,841)	(2,218,566)
Incorporation costs	-	-	(1,000)
Acquisition of ReporterTV.com, net of cash acquired	-		(1,531,192)	(1,532,192)
Deposit on acquisitions	(807,500)	-	(807,500)
Incorporation costs	-		-	(1,000)
Acquisition of itsTV.com	-	-	(232,274)
Acquisition of itsTV.com	-		(232,274)	(232,274)
Cash acquired on acquisition of Online Films, LLC	-	-	363,759
Cash acquired on acquisition of Online Films, LLC	-		-	363,759
CASH FLOWS USED IN INVESTING ACTIVITIES	(807,500)	-	(4,427,773)
Increase in deposits and other	-		(96,933)	-
CASH FLOWS FROM FINANCING ACTIVITIES
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES	(23,324)		(3,994,240)	(3,620,273)
Bank overdraft (repayment)	77,712	(4,428)	77,712
CASH FLOWS FROM FINANCING ACTIVITIES
Loans receivable	-	50,000	(1,201,609)
Bank overdraft	4,428		-	4,428
Loans payable	1,061,942	273,543	1,967,638
Loans receivable	26,210		150,507	(1,251,609)
Convertible loan payable	-	-	199,159
Loans payable	632,153		-	632,153
Net proceeds on sale of common stock	95,000	76,950	22,390,935
Convertible loan payable	199,159		-	199,159
CASH FLOWS FROM FINANCING ACTIVITIES	1,234,654	396,065	23,433,835
Net proceeds on sale of common stock	-		17,680,685	22,218,985
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(2,617)	2,617	-
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES	861,950		17,831,192	21,803,116
CASH AND EQUIVALENTS, BEGINNING OF YEAR	2,617	-	-
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(700,068)		38,944	-
CASH AND CASH EQUIVALENTS, END OF YEAR	$ -	$ 2,617	$ -
CASH AND EQUIVALENTS, BEGINNING OF PERIOD	700,068		661,124	-
CASH AND CASH EQUIVALENTS, END OF PERIOD	$ -		$700,068	$ -

Supplemental cash flow information: See Notes 4 and 6.

The accompanying notes are an integral part of these consolidated financial statements

INTERNETSTUDIO.COM, INC. (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2003 AND 2002

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
FOR THE PERIOD APRIL 14, 1998 (INCEPTION) TO DECEMBER 31, 2001
Number of shares Amount Deferred compensation Additional paid in capital Deficit accumulated during the development stage Total
Common stock issued for cash 7,117,200 $712 $ - $37,558 $ - $38,300
Net loss for the period - - - - (16,137) (16,137)
Balance at December 31, 1998 7,117,200 712 - 37,558 (16,137) 22,163
Common Stock issued for acquisition of Online Films LLC 5,632,800 563 - 11,828,317 - 11,828,880
Common Stock issued for cash pursuant to Regulation S offering 562,500 56 - 4,499,944 - 4,500,00
Net loss for the year ended December 31, 1999 - - - - (2,730,811) (2,730,811)
Balance at December 31, 1999 13,312,500 1,331 16,365,849 (2,746,948) 13,620,232
Common Stock options granted for services, net of cancellations - - (5,019,895) 5,019,895 - -
Amortization of deferred compensation - 2,483,091 - 2,483,091
Common Stock issued for cash pursuant to Regulation S offering 437,500 44 - 3,499,956 - 3,500,000
Exercise of employee stock options 66,044 7 - 842,054 - 842,061
Common stock issued for cash pursuant to Regulation D offerings, net of costs 1,445,000 145 - 14,180,685 - 14,180,830
Common stock issued for acquisition of itstv.com 120,000 12 - 1,859,988 - 1,860,000
Common stock warrants issued for acquisition of itstv.com - - - 1,119,375 - 1,119,375
Common stock issued for services 27,000 3 - (3) - -
Acquisition of minority interest in OnlineFilmSales.com - - - 11,400,000 - 11,400,000
Common stock equity interest issued for services - - - 7,600,000 - 7,600,000
Conversion of LLC membership 250,000 25 - 4,243,725 - 4,243,750
Net loss for the year ended December 31, 2000 - - - - (36,205,668) (36,205,668)
Balance at December 31, 2000 15,658,044 1,567 (2,536,804) 66,131,524 (38,952,616) 24,643,671
Conversion of Class B Membership 156,800 16 (16) - -
Conversion of Class B Membership 600,000 60 (60) - -
Amortization of deferred compensation - - 1,561,356 - - 1,561,356
Reversal of deferred compensation - - 880,656 (880,657) - (1)
20 to 1 Rollback (15,594,102) - - - - -
Net loss for the year ended December 31, 2001 - - - - (26,853,427) (26,853,427)
Balance at December 31, 2001 820,742 $1,643 $(94,792) $ 65,250,791 $(65,806,043) $(648,401)
The accompanying notes are an integral part of these consolidated financial statements
INTERNETSTUDIO.COM, INC. (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2001 AND 2000
NOTE 1 - DESCRIPTION OF BUSINESS

~~InternetStudios.com,~~The ~~Inc.~~Company ~~owns~~was ~~four~~incorporated ~~subsidiaries:~~on ~~OnlineFilmSales.com~~April ~~LLC~~14, ~~InternetStudios~~1998 ~~UK,~~in ~~Ltd.,~~the ~~InternetStudios~~State ~~Entertainment~~of ~~Finance,~~Nevada ~~Inc.,~~as ~~and~~The ~~OnlineFilmandTVSales.com~~Enterprise, Inc. ~~(inactive);~~Effective inDecember ~~turn~~14, ~~OnlineFilmsSales.com~~1998, ~~LLC~~the ~~owns~~Company ~~membership~~changed ~~interests~~its inname ~~two~~to ~~inactive~~eHealth.com, ~~limited~~Inc., ~~liability~~and ~~companies~~on September 20, ~~ReporterTV.com~~1999 ~~LLC~~changed ~~and~~its ~~StudioBuzz.com~~name ~~LLC~~to ~~(collectively~~InternetStudios.com, ~~"the~~Inc. ~~Company")~~ The Company is inan ~~the~~emerging ~~business~~entertainment ofmedia ~~the~~company. ~~management,~~Its ~~marketing~~business ~~and~~model ~~delivery~~has ofevolved ~~digital~~to ~~filmed~~incorporate ~~entertainment.~~innovative ~~The~~structures ~~Company~~and ~~was~~technology ~~incorporated~~to onaddress ~~April~~the 14marketing, ~~1998~~sales inand ~~the~~releasing ~~State~~ of ~~Nevada~~filmed asentertainment. The ~~Enterprise,~~current ~~Inc.~~business ~~Effective~~direction ~~December~~includes ~~14, 1998,~~ the ~~Company~~acquisition ~~changed~~of ~~its~~existing ~~name~~libraries toof ~~eHealth.com,~~motion ~~Inc.,~~pictures and ontelevision ~~September~~programming ~~20,~~which ~~1999~~will ~~changed~~be ~~its~~marketed ~~name~~and tosold ~~InternetStudios.com,~~internationally ~~Inc~~under a new brand.

~~NOTE~~The 2consolidated financial statements have been prepared on the basis of a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. At December 31, 2003 the Company had a working capital deficiency of $1,641,349 (2002 - ~~GOING~~$1,154,759) ~~CONCERN~~and a stockholders' deficit of $535,099 (2002 - $1,154,759). The Company has incurred losses since inception and further losses are anticipated in the development of its products raising substantial doubt as to the Company's ability to continue as a going concern. The Company's continued operations are dependent on the successful implementation of its business plan, its ability to obtain additional financing as needed, continued support from creditors, settling its outstanding debts and ultimately attaining profitable operations. The Company has been unable to raise the necessary financing to complete the acquisition of RKO Pictures LLC or the Trocadero Library and its main assets consist solely of advances made to date towards these potential acquisitions (refer to Note 3). Management's is currently seeking funding sources for these transactions . Such funding will be pursued on a private placement basis with qualified investors in applicable US states and Canada. The Company has engaged investment advisors to assist in securing this financing. Refer to Note 10.

~~The~~NOTE accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. However, as shown in the accompanying financial statements, the Company has sustained substantial losses from operations since inception. In addition, the Company has used, rather than provided, cash in its operations. As of December 31, 2001, the Company had a working capital deficiency of $2~~,405,063~~ ~~and~~- ~~commencing~~SUMMARY inOF ~~June~~SIGNIFICANT ~~2001~~ACCOUNTING ~~significantly reduced the scope of operations due to the lack of operating capital.~~ POLICIES

In view of the matters described in the preceding paragraph, there is substantial doubt regarding the Company's ability to continue operations as a going concern. 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 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.
Management of the Company has taken steps to revise and reduce its operating requirements, which it believes will be sufficient to assure continued operations and implementation of the Company's plans. These steps include expense reductions in staffing, marketing and consulting, as well as a significant decrease in operating costs as a result of completion of website development costs.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles Of Consolidation

The financial statements include the accounts of the Company and its active subsidiary, International Media Acquisition Group LLC ("IMAG"). During 2003 all other inactive subsidiaries ~~described~~were ~~above~~dissolved or struck from the registrar. All intercompany accounts and balances have been eliminated in consolidation.

Use Of Estimates And Assumptions

Preparation of the Company's financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Cash And Cash Equivalents

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

Revenue Recognition
Revenue is recognized at the time a transaction is consummated by a buyer and seller using the Company's website. The Company also may charge for its services and recognizes revenue at the time the customer lists material on the Company's website. Revenue related to financing of outside productions is amortized over the life of the agreement, typically 18 months, using a method that approximates the effective interest method.
Furniture and Equipment
Furniture and equipment are stated at cost. Depreciation is recorded using accelerated methods over useful lives of three to five years. Carrying values are reviewed periodically for impairment whenever events or changes in circumstances indicate the carrying amount of assets may not be recoverable. During the second quarter of 2001 the Company disposed of substantially all its furniture and equipment and recorded a full impairment provision for all remaining furniture and equipment.
Foreign Currency Translation

The financial statements are presented in United States dollars. In accordance with Statement of Financial Accounting Standards No. 52, "Foreign Currency Translation", foreign denominated monetary assets and liabilities are translated to their United States dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Revenue and expenses are translated at average rates of exchange during the year. Related translation adjustments are reported as a separate component of stockholders' equity, whereas gains or losses resulting from foreign currency transactions are included in results of operations. Translation adjustments were immaterial for all periods presented.

INTERNETSTUDIO.COM, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Net Loss Per Common Share

Basic loss per share includes no dilution and is computed by dividing the net loss by the weighted average number of common shares outstanding for the period. Diluted loss per share reflects the potential dilution of securities that could share in the earnings of the Company. ~~Convertible~~Fully ~~securities~~diluted ~~and~~loss ~~stock~~per ~~options~~share ~~were~~has not ~~included~~been inpresented ~~the~~as ~~calculation of weighted average number of shares because~~ the ~~effect~~effects ~~would be anti-dilutive. The weighted average number~~ of ~~common~~cconvertible ~~shares~~securities ~~outstanding~~and ~~for~~stock ~~prior~~options ~~periods~~ have been ~~recalculated~~excluded ~~to take into effect the 20:1 roll-back~~ as ~~described~~they inare ~~Note 9~~anti-dilutive.

~~Website~~Prepaid ~~Development~~Finance ~~Costs~~Fees

The Company ~~adopted~~has ~~EITF~~capitalized ~~00-2~~finance ~~"Accounting~~fees ~~for~~paid ~~Web~~in ~~Site~~connection ~~Development~~with ~~Costs"~~a ~~and~~convertible ~~development~~loan ~~costs~~payable ~~incurred~~issued ~~subsequent~~during tothe ~~June~~year. ~~30,~~These ~~2000,~~finance ~~associated~~fees ~~with~~will ~~the~~be ~~Company's~~expensed ~~Web~~on ~~Site~~a ~~were~~straight-line ~~recorded~~basis inover ~~accordance~~the ~~with~~term ~~EITF~~of ~~00-2.~~the ~~Development~~loan ~~costs~~Unamortized offees ~~$2,639,668~~will ~~have~~be ~~been~~charged ~~capitalized~~to ~~and~~additional ~~are~~paid ~~being~~in ~~amortized~~capital onin the ~~straight-line~~event ~~method~~of ~~over~~and ain ~~period~~connection with the conversion of 3the ~~years~~loan.

Stock Based Compensation

~~The~~In ~~Company~~December ~~accounts~~2002, the Financial Accounting Standards Board issued Financial Accounting Standard No. 148, "Accounting for ~~stock~~Stock-~~based~~Based ~~compensation~~Compensation in- ~~respect~~Transition toand ~~stock~~Disclosure" ~~options~~("SFAS ~~granted~~No. to148"), ~~employees~~an ~~and~~amendment ~~officers~~of ~~using~~Financial ~~the~~Accounting ~~intrinsic~~Standard ~~value~~No. ~~based~~123 ~~method~~"Accounting infor ~~accordance~~Stock-Based ~~with~~Compensation" ~~APB~~("SFAS 25No. ~~Stock~~123"). ~~options~~The ~~granted~~purpose of SFAS No. 148 is to: ~~non-employees~~(1) ~~are~~provide ~~accounted~~alternative methods of transition for ~~using~~an entity that voluntarily changes to the fair value based method inof ~~accordance~~accounting ~~with~~for ~~SFAS~~stock-based ~~No.~~employee ~~123.~~compensation, In(2) ~~addition,~~amend the disclosure provisions to require prominent disclosure about the effects on reported net income of an entity's accounting policy decisions with respect to stock-based ~~options~~employee ~~granted~~compensation, and (3) to ~~employees,~~require ~~the~~disclosure ~~Company~~of ~~provides~~those ~~pro-forma~~effects in interim financial information. asThe ~~required~~disclosure byprovisions of SFAS No. ~~123~~148 ~~showing~~were ~~the~~effective ~~results~~for ~~of applying~~ the ~~fair~~Company ~~value~~for ~~method using~~ the ~~Black-Scholes~~year ~~option~~ended ~~pricing~~December ~~model.~~31, 2003.

In accordance with SFAS No. 123, the Company applies the fair value method using the Black-Scholes option-pricing model in accounting for options granted to consultants.

The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with SFAS No. 123 and the conclusions reached by the Emerging Issues Task Force in Issue No. 96-18. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by EITF 96-18.

The Company has also adopted the provisions of the Financial Accounting Standards Board Interpretation No.44, Accounting for Certain Transactions Involving Stock Compensation - An Interpretation of APB Opinion No. 25 ("FIN 44"), which provides guidance as to certain applications of APB 25. FIN 44 is generally effective July 1, 2000 with the exception of certain events occurring after December 15, 1998.

~~Impairment~~INTERNETSTUDIO.COM, OfINC. (A ~~Long~~Development ~~Lived~~Stage ~~Assets~~Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2003 AND 2002

~~The~~NOTE ~~Company~~2 ~~evaluates its long~~-~~lived~~ ~~assets~~SUMMARY byOF ~~measuring~~SIGNIFICANT ~~the~~ACCOUNTING ~~carrying~~POLICIES amount of the assets against the estimated undiscounted future cash flows associated with them. If such evaluations indicate that the future undiscounted cash flows of certain long-lived assets are not sufficient to recover the carrying value of such assets, the assets are adjusted to their fair values.(continued)

Goodwill
Intangible assets, principally goodwill, are amortized on the straight-line method over a period of 3 years. The carrying amount of intangible assets are assessed for impairment when operating profit from the related business indicates the carrying amount of the assets may not be recoverable. Carrying values are reviewed periodically for impairment whenever events or changes in circumstances indicate that the carrying amounts of intangible assets may not be recoverable. Effective June 30, 2001 as a result of the significant reduction in the scope of operations due to the lack of capital the Company recorded a full impairment provision for the unamortized balance of goodwill in the amount of $15,462,534.
Foreign Currency Translation
The financial statements are presented in United States dollars. In accordance with Statement of Financial Accounting Standards No. 52, "Foreign Currency Translation", foreign denominated monetary assets and liabilities are translated to their United States dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Revenue and expenses are translated at average rates of exchange during the year. Related translation adjustments are reported as a separate component of stockholders' equity, whereas gains or losses resulting from foreign currency transactions are included in results of operations.
Income Taxes

The Company follows the liability method of accounting for income taxes. Under this method, deferred ~~income~~ tax assets and liabilities are recognized for the ~~estimated~~future tax consequences attributable to differences between the financial statement carrying ~~values~~amounts of existing assets and liabilities and their respective ~~income~~tax balances. Deferred tax ~~basis~~assets ~~(temporary~~and liabilities are measured using enacted or substantially enacted tax rates expected to apply to the taxable income in the years in which those differences) are expected to be recovered or settled. The effect on deferred ~~income~~ tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment ~~date~~or substantive enactment. As at December 31, 2003 the Company had net operating loss carryforwards; however, due to the uncertainty of realization the Company has provided a full valuation allowance for the deferred tax assets resulting from these loss carryforwards.

~~NOTE~~Recent 4Accounting -Pronouncements ~~ONLINEFILMSALES.COM, LLC~~

In ~~March 2000~~June 2002, the ~~Company~~FASB ~~contributed~~issued ~~substantially~~SFAS ~~all~~No. 146, of"Accounting ~~its~~for ~~assets~~Costs toAssociated ~~the~~with ~~capital~~Exit ofor ~~OnlineFilmSales~~Disposal Activities.~~com,~~" ~~LLC,~~Such astandard ~~newly-formed~~requires ~~Delaware~~costs ~~limited~~associated ~~liability~~with ~~company~~exit or disposal activities (~~"OnlineFilmSales"~~including restructurings). ~~Included~~to inbe recognized when the ~~assets~~costs ~~contributed~~are incurred, rather than at a date of commitment to ~~OnlineFilmSales~~an ~~were~~exit ~~(i)~~or ~~the~~disposal ~~Company's~~plan. 91SFAS No.~~847%~~ 146 ~~membership~~nullifies ~~interest~~EITF inIssue ~~Online~~No. 94-3, ~~Films~~"Liability soRecognition ~~that~~for ~~Online~~Certain ~~Films~~Employee ~~became~~Termination aBenefits ~~subsidiary~~and ofOther ~~OnlineFilmSales,~~Costs ~~and~~to Exit an Activity (iiincluding Certain Costs Incurred in a Restructuring)." Under SFAS No. 146, a ~~Secured~~liability ~~Promissory~~related ~~Note~~to inan ~~the~~exit ~~amount~~or ofdisposal ~~$2,025,000~~activity byis ~~MediaChase~~not ~~Ltd~~recognized until such liability has actually been incurred whereas under EITF Issue No. 94-3 ~~Excluded~~a ~~from~~liability was recognized at the ~~assets~~time ~~contributed~~of a commitment to ~~OnlineFilmSales~~an ~~were~~exit ~~all~~or ~~trademarks,~~disposal ~~trade~~plan. ~~names,~~The ~~and~~provisions ~~domain~~of ~~names~~this ~~containing~~standard ~~"InternetStudios.com"~~are effective for exit or ~~"InternetStudios"~~disposal ~~and~~activities ~~all~~initiated ~~associated~~after ~~goodwill~~December 31, 2002. AsThe aadoption ~~result~~ of ~~the~~SFAS ~~Asset~~146 ~~Contribution,~~did not have a material effect on the Company's ~~conducts~~financial ~~all~~position ~~operations~~or ~~through~~results ~~operating~~of ~~subsidiaries~~operations.

In ~~exchange~~April ~~for~~2003, the ~~assets~~Financial ~~which~~Accounting ~~OnlineFilmSales~~Standards ~~received~~Board inissued ~~the~~SFAS ~~Asset~~No. ~~Contribution~~149, ~~OnlineFilmSales~~"Amendment ~~issued~~of aStatement ~~one~~133 ~~hundred~~on ~~percent~~Derivative ~~Class~~Instruments Aand ~~membership~~Hedging ~~interest~~Activities", ~~constituting~~which ~~one~~clarifies ~~hundred~~financial ~~percent~~accounting ofand ~~the~~reporting ~~voting~~for ~~power~~derivative ofinstruments, ~~the~~including ~~Class~~certain Aderivative ~~members~~instruments ofembedded ~~OnlineFilmSales~~in other contracts and for hedging activities under SFAS No. ~~The~~133, ~~Company~~"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 149 is ~~the~~effective ~~sole~~for ~~holder~~contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. The adoption of SFAS 149 did not have a ~~Class~~material Aeffect ~~membership~~on ~~interest~~the inCompany's ~~OnlineFilmSales~~financial position or results of operations.

~~Concurrently~~In ~~with~~May ~~the~~2003, ~~Asset~~SFAS ~~Contribution~~150, ~~two~~"Accounting ~~former~~for ~~officers~~Certain Financial Instruments with Characteristics of ~~the~~both ~~Company~~Liabilities ~~also~~and ~~made~~Equity", ~~contributions~~was toissued. ~~OnlineFilmSales~~This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. ~~Heidi~~It ~~Lester,~~requires ~~the~~that ~~former~~an ~~Chief~~issuer ~~Executive~~classify ~~Officer,~~a ~~contributed~~financial instrument that is within its scope as a liability (or an 8asset in some circumstances).~~153%~~ ~~interest~~Many inof ~~Online~~those ~~Films~~instruments inwere ~~exchange~~previously ~~for~~classified ~~Class~~as Bequity. ~~Membership~~Generally, ~~Interests~~a financial instrument, whether in ~~OnlineFilmSales~~the ~~and~~form ~~Steve~~of ~~Fredericks~~shares or otherwise, ~~the~~that ~~former~~is ~~Acting~~mandatorily ~~President~~redeemable, ~~and~~i.e. ~~Chief~~that ~~Financial~~embodies ~~Officer~~an ~~contributed~~unconditional obligation requiring the issuer to ~~OnlineFilmSales~~redeem ~~all~~it ofby ~~his~~transferring ~~right~~its shares or assets at a specified or determinable date (or dates) or upon an event that is certain to occur, ~~title~~must ~~and~~be ~~interest~~classified as a liability (or asset in ~~and~~some tocircumstances). In some cases, ~~certain~~a ~~agreements~~financial ~~for~~instrument that is conditionally redeemable may also be subject to the ~~development~~same oftreatment. This Statement does not apply to features that are embedded in a ~~digital~~financial ~~production~~instrument ~~center~~that ~~and~~is not a ~~related~~derivative ~~digital~~(as ~~training~~defined) ~~program~~in its entirety. For public entities, this Statement is effective for ~~artists~~financial ~~and~~instruments ~~producers~~entered ininto ~~the~~or ~~People's~~modified ~~Republic~~after May 31, 2003. The adoption of ~~China~~SFAS in150 ~~exchange~~did ~~for~~not ~~Class~~affect Bthe ~~Membership~~Company's ~~Interests~~financial inposition ~~OnlineFilmSales~~or results of operations.

~~The holders of Class B membership interests in OnlineFilmSales are entitled to convert their interests into up to 1~~INTERNETSTUDIO.COM,~~000,000~~ ~~pre-consolidation shares of common stock of the Company at any time~~INC. (A ~~The~~Development ~~Class~~Stage ~~B membership interests will automatically be converted into the~~ Company's) NOTES ~~common~~TO ~~stock~~CONSOLIDATED ~~upon~~FINANCIAL ~~the~~STATEMENTS DECEMBER ~~occurrence of certain transactions and in any event~~31, on2003 ~~March~~AND 28, 2007. Each holder of a Class B membership interest is entitled to receive distributions of cash based upon the amount of all cash which each holder of Class B membership interests would have received in the form of dividends on and proceeds from redemptions of that number of shares of common stock into which such holder's Class B Membership Interest is convertible, if such Class B member had held those shares during the period from such member's admission as a Class B member of OnlineFilmSales to the date of such distribution of cash by OnlineFilmSales. Refer to Note 9.2002

NOTE 52 - ~~REPORTERTV.COM,~~SUMMARY ~~LLC~~OF SIGNIFICANT ACCOUNTING POLICIES (continued)

~~InternetStudios~~In November 2002, ~~through~~the ~~OnlineFilmSales~~FASB issued FASB Interpretation No. 45, ~~entered~~"Guarantor's ~~into~~Accounting afor ~~joint~~Disclosure ~~venture~~Requirements ~~with~~for ~~MediaChase~~Guarantees, ~~Ltd~~Including Indirect Guarantees of Indebtedness of Others, an interpretation of FASB Statements No. 5, a57 ~~Los~~and ~~Angeles~~107 ~~based~~and ~~software~~rescission ~~company~~of FASB Interpretation No. 34, onDisclosure ~~March~~of 28Indirect Guarantees of Indebtedness of Others" ("FIN 45"). FIN 45 clarifies the requirements for a guarantor's accounting for, ~~2000~~and disclosure of, certain guarantees issued and outstanding. It also requires a guarantor to ~~form~~recognize, ~~ReporterTV~~at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee.~~com~~ This interpretation also incorporates without reconsideration the guidance in FASB Interpretation No. 34, ~~LLC~~which is being superseded. The adoption of FIN 45 did not affect the Company's financial position or results of operations.

ToIn ~~fund~~January 2003, the ~~development~~FASB ofissued ~~ReporterTV,~~FASB ~~InternetStudios~~Interpretation ~~advanced~~No. $246,~~025,000~~ inConsolidation ~~the~~of ~~form~~Variable Interest Entities, an interpretation of aAccounting ~~loan~~Research Bulletins ("ARB") No. 51, ~~evidenced~~Consolidated byFinancial ~~the~~Statements ~~MediaChase~~("FIN ~~Note~~46"). AsFin a46 ~~part~~applies ofimmediately to variable interest entitles created after January 31, 2003, and in the ~~Asset~~first ~~Contribution~~interim period beginning after June 15, ~~InternetStudios~~2003 ~~contributed~~for variable interest entities created prior to ~~OnlineFilmSales~~January 31, ~~all~~2003. ofThe ~~its~~interpretation ~~rights~~explains ashow ~~payee~~to ~~under~~identify ~~the~~variable ~~MediaChase~~interest ~~Note.~~entities ~~OnlineFilmSales~~and ~~contributed~~how ~~all~~an ofenterprise assesses its ~~rights~~interest asin ~~payee~~a ~~under~~variable ~~the~~interest ~~MediaChase~~entity ~~Note~~to decide whether to ~~ReporterTV~~consolidate ~~and~~that ~~MediaChase~~entity. ~~assigned~~The ~~all~~interpretation ofrequires ~~its~~existing ~~obligations~~unconsolidated asvariable ~~payor~~interest ~~under~~entities to be consolidated by their primary beneficiaries if the ~~MediaChase~~entities ~~Note~~do tonot ~~ReporterTV,~~effectively asdisperse risks among parties involved. Variable interest entities that effectively disperse risks will not be consolidated unless a ~~result~~single party holds an interest or combination of ~~which~~interests ~~contribution~~that ~~and~~effectively ~~assignment,~~recombines risks that were previously dispersed. The adoption of FIN 46 did not affect the ~~MediaChase~~Company's ~~Note~~financial ~~has~~position ~~been~~or ~~cancelled.~~results of operations.

InNOTE ~~consideration~~3 ~~of the cancellation of the MediaChase Note and the issuance by OnlineFilmSales to MediaChase of Class B membership interests convertible into 250,000 pre~~-~~consolidation~~ ~~shares~~DEPOSITS ofON InternetStudios' common stock, MediaChase (i) entered into a Consulting Agreement with each of OnlineFilmSales and StudioBuzz.com, LLC, (ii) contributed certain assets to ReporterTV and StudioBuzz.com, LLC, and (iii) contributed to OnlineFilmSales (a) a 75% membership interest in ReporterTV and (b) a 100% voting interest and 50% economic interest in StudioBuzz.com, LLC. Pursuant to the terms of the Limited Liability Agreement with ReporterTV ("RTV Agreement"), MediaChase had a one-time right to repurchase all or any part of a 25% membership interest in ReporterTV, upon the payment of certain sums to ReporterTV on or before January 31, 2001, which payments did not occur.ACQUISITIONS

~~Pursuant~~By toAgreement ~~the~~dated ~~terms~~February of13, ~~the~~2003, ~~RTV~~as ~~Agreement,~~amended ~~OnlineFilmSales~~on isJuly ~~not~~30, ~~obligated~~2003 toand ~~fund~~January ~~ReporterTV~~19, ~~for~~2004, ~~amounts~~the ~~over~~Company ~~and~~entered ~~above~~into a ~~defined~~Letter ~~contribution~~of ~~cap~~Intent with Dominique Bigle ("Bigle") to acquire Bigle's library of ~~$1,650,000,~~over ~~which~~1500 ~~contribution~~motion ~~was~~pictures ~~provided~~(the by"Trocadero ~~OnlineFilmSales~~Library"). ~~Additionally,~~In ~~pursuant~~consideration tofor acquiring the ~~terms~~Trocadero ofLibrary, the ~~RTV~~Company ~~Agreement,~~agreed ~~OnlineFilmSales~~to ~~has~~issue noto ~~ongoing~~Bigle ~~financial~~one ~~obligation~~million to(1,000,000) ~~ReporterTV~~common ~~and~~shares isof ~~entitled~~its tocapital ~~look~~stock and to ~~MediaChase~~pay $250,000 to ~~provide~~Bigle. ~~financing~~The final terms for completion of this acquisition is subject to further negotiations and the ~~company~~execution of a definitive purchase agreement. As noof ~~financial~~December ~~resources~~31, ~~were~~2003, ~~made~~the ~~available~~Company has paid a deposit of $120,000 to ~~fund~~Bigle ~~the~~and ~~ongoing~~subsequent ~~operations~~to ofDecember ~~the~~31 ~~company~~,2003 ~~ReporterTV's~~paid ~~activities~~an ~~ceased~~additional ~~during~~$15,000 ~~May~~and issued the 1,000,000 ~~2001~~shares.

~~NOTE~~By Agreement dated May 8, 2003, as amended on June 6, 2003, IMAG entered into a Letter of Intent to acquire 100% of the membership interests of RKO Pictures, LLC (the "RKO Letter of Intent"). Pursuant to the terms of the RKO Letter of Intent, the Company has agreed to acquire 100% of the membership interests of RKO Pictures, LLC in consideration for $5.5 million in cash. In addition to the purchase price, the Company is required to have a working capital reserve of $4.5 million. A warrant will also be issued to the members of RKO Pictures, LLC entitling them to acquire up to five (5%) percent of the Company's fully diluted share capital post-acquisition. ~~LOANS~~The ~~RECEIVABLE~~completion of this acquisition is subject to ongoing due diligence, completion of the required financing and the execution of a definitive purchase agreement. As of December 31, 2003, the Company has paid a deposit of $687,500 to RKO Pictures, LLC.

~~During~~These ~~2000,~~deposits ~~the Company loaned a total of approximately $761,000 to a film production company. Advances under the loan agreement~~ are ~~collateralized~~secured by ~~all~~Promissory ~~of the assets of the production company~~Notes, which bear interest at the ~~prime~~California ~~rate~~Federal ~~plus~~Bank 3%prime rate and are ~~due~~as on demand. Collectability of these amounts is dependent on the success of the film projects financed. Subsequent to year end the Company assigned this loan to certain creditors in settlement of outstanding debts. Refer to Note 12.follows:

~~NOTE 7~~- ~~RELATED~~Promissory ~~PARTY~~Note ~~TRANSACTIONS~~dated May 14, 2003 in the amount of $125,000, which is repayable by May 14, 2004;

~~The~~- ~~Company~~Promissory ~~entered~~Note ~~into~~dated ~~formal employment or management contracts with four officers of the Company or with consulting firms owned by those officers. Subsequent to~~ June 3016, ~~2001,~~2003 ~~two~~in ~~officers~~the ~~resigned.~~amount ~~The remaining contracts provide for a combined base salary~~ of $~~384~~250,000 ~~per annum for a three year term ending December 31~~, 2002 and granting of stock options providing the right to acquire a total of 350,000 pre-consolidation shares of common stock at a pre-consolidation price of $5 per share to be vested over the term of the contracts. The contracts include a severance provision of 150% of base salary which ~~totals~~is ~~$576,000~~repayable ~~for~~by ~~these~~June ~~two officers. At December 31~~16, ~~2001,~~2004; ~~a total of $288,000 is owing under these contracts.~~

~~During~~- ~~2000,~~Promissory ~~the~~Note ~~Company~~dated ~~loaned~~July ~~a total of approximately $535~~7,~~000~~ to2003 anin ~~executive officer of~~ the ~~Company~~amount ~~and a film production company owned and managed by this executive officer. Advances under the loan agreement are collateralized by all~~ of ~~the assets of the related company~~$250, ~~bear interest at the prime rate plus 3% until March 31~~000, ~~2001~~which ~~and are due on demand. Collectability of these amounts~~ is ~~dependent~~repayable onby ~~the~~July ~~success of the film projects financed. During the year ended December 31~~7, 2001 interest and fees of $37,594 were accrued under this loan. Additionally, during the year ended December 31, 2001 the Company assumed loans to this entity from a bank totaling $215,588 and this officer repaid $104,908 of outstanding loans. Due to uncertainty of recovery the Company recorded an impairment provision of $309,832 leaving a balance outstanding at year end of $373,679 which was assigned to creditors subsequent to year end in settlement of outstanding debts of the Company.2004;

~~NOTE~~- 8Promissory -Note ~~CONVERTIBLE~~dated ~~LOANS~~August 7, 2003 in the amount of $62,500, which is repayable by August 7, 2004.

~~During February 2001 the Company received loans in the aggregate principal amount of $199~~INTERNETSTUDIO.COM,~~159~~ ~~pursuant to convertible note agreements~~INC. (A ~~These~~Development ~~loans~~Stage are non-interest bearing and are repayable on demand. The convertible note agreement provides the lender the right to convert the outstanding loan into shares of common stock at a price approximating the market price of the Company's) NOTES ~~shares~~TO atCONSOLIDATED ~~the~~FINANCIAL ~~time~~STATEMENTS DECEMBER ~~of notice. Subsequent to year end these loans were converted into 3~~31,~~487,873~~ ~~shares~~2003 ofAND ~~common stock. Refer to Note 12.~~2002

NOTE 93 - ~~STOCKHOLDERS'~~DEPOSITS ~~EQUITY~~ON ACQUISITIONS (continued)

The Company's ~~authorized~~has ~~capital~~pledged ~~consists~~certain of ~~5,000,000~~these ~~shares~~promissory ofnotes ~~common~~as ~~stock~~security ~~with~~for aloans ~~par~~payable ~~value~~(refer ofto $0Note 4).~~0001~~ ~~per~~The ~~share.~~Company ~~During~~anticipated ~~December~~closing this acquisition on September 2, ~~2001~~2003 and executed final documentation between the Company, ~~completed~~IMAG aand ~~20:1~~RKO ~~roll-back~~in anticipation of ~~outstanding~~such ~~common~~closing. ~~shares~~The ~~which~~Company ~~reduced~~was ~~the~~not ~~number~~able ofto ~~outstanding~~raise ~~shares~~the ~~from~~necessary ~~16,414,844~~financing ~~shares~~and tohas ~~820,742~~not ~~shares~~closed the acquisition. OnThe ~~March~~parties ~~22,~~continue ~~2002~~to negotiate in good faith and the ~~authorized~~Company ~~capital~~is ~~was~~attempting ~~increased~~to secure financing to ~~100~~complete these acquisitions and to secure operating capital; however,~~000,000~~ ~~shares~~the Company to date has not secured financing. Refer to Note 10.

~~During~~NOTE ~~2001~~4 ~~the Company issued 756,580 pre~~-~~consolidation~~ ~~shares~~LOANS ~~of common stock on conversion of Class B membership interests in OnlineFilmSales.com, LLC~~PAYABLE

InBy ~~December~~loan ~~1999~~agreement dated July 14, 2003, the Company's ~~Board~~has a convertible loan outstanding of ~~Directors~~$300,000 ~~approved~~which abears ~~U.S.~~interest ~~Stock~~at ~~Incentive~~12% ~~Plan~~per annum, compounded monthly for a ~~maximum~~term of 1one year,~~000,000~~ ~~pre-consolidation~~or ~~shares~~until ofseven ~~common~~days ~~stock~~from ~~and~~the aclose ~~non-U.S.~~of ~~Stock~~a ~~Incentive~~proposed ~~Plan~~financing. ~~for~~The anote ~~maximum~~is ofconvertible ~~500,000~~by ~~pre-consolidation~~the ~~shares~~holder ofinto common stock ~~(collectively~~at "the ~~Plans"),~~lesser ~~under~~of ~~which~~$1.00 itor isa ~~authorized~~15% discount to ~~issue~~the ~~nonqualified~~five ~~and~~day ~~incentive~~average ~~stock~~trading ~~options~~price tobefore ~~key~~the ~~employees~~date ~~and~~of ~~consultants~~conversion. ~~The~~This ~~options~~loan ~~have~~is asecured ~~term~~by ~~not~~the toJuly ~~exceed~~7, 102003 ~~years~~RKO ~~and~~promissory ~~vest~~note ~~over~~in athe ~~period~~amount of ~~two~~$250,000 toheld ~~three~~against ~~years.~~the Atacquisition ~~that~~deposits ~~time,~~as ~~the~~described ~~Board~~in ~~also~~Note ~~approved~~3. ~~grants~~A oflender's ~~options~~bonus ~~for~~of 1300,~~012,500~~000 ~~pre-consolidation~~common shares was paid on this transaction. The ~~plan~~shares had a fair market value of $300,000 and this amount was ~~approved~~recorded byas ~~the~~a ~~Company's~~deferred ~~shareholders~~finance infee ~~January,~~and ~~2000~~is being amortized over the life of the loan.

By loan agreement dated June 25, 2003, and completed July 7, 2003, the Company has a convertible loan outstanding of $150,000 which bears interest at 10% per annum, compounded monthly for a term of one year. The note was convertible into common stock at the lesser of $1.00 per share or a 15% discount to the five day average trading price before the date of conversion. In January 2004 this note was amended to be convertible into common stock at a price of $0.50 per share. The Company has the right to repay all of the principal and accrued interest outstanding under this Note at any time before June 25, 2004 at one-hundred and twenty-five (125%) of the face value of this Note, plus accrued interest to the date of repayment.

By loan agreement dated June 20, 2003, the Company has a convertible loan outstanding of $250,000 which bears interest at 12% per annum, compounded monthly for a term of one year, or until seven days from the close of a proposed financing. The note is convertible by the holder into common stock at the lesser of $1.00 per share or a 15% discount to the five day average trading price before the date of conversion. This loan is secured by the May 14, 2003 and the June 16, 2003 RKO promissory notes in the amount of $375,000 held against the acquisition deposits as described in Note 3. A lender's bonus of 350,000 common shares is payable on this transaction. The shares had a fair market value of $297,500 and this amount was recorded as a deferred finance fee and will be amortized over the life of the loan. The Company issued 175,000 shares and has an obligation to issue an additional 175,000 common shares on this transaction.

By loan agreement dated May 28, 2003, the Company has a convertible loan outstanding of $100,000 which bears interest at 10% per annum, compounded monthly for a term of one year. The note is convertible by the holder into common stock at the lesser of $1.00 per share or a 15% discount to the five day average trading price before the date of conversion. The Company has the right to prepay all of the principal and accrued interest outstanding under this Note at any time before May 28, 2004 at one-hundred and twenty-five (125%) of the face value of this Note, plus accrued interest to the date of pre-payment.

During the year, $298,750 of the deferred finance fee was charged to operations and is included in general and administrative expenses.

INTERNETSTUDIO.COM, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002

NOTE 4 - LOANS PAYABLE (continued)

The Company had a loan payable outstanding of $273,543, which was unsecured, bore no interest and had no specific terms of repayment. During October, 2003 the Company agreed to issue 547,086 common shares at a price of $0.50 per share to settle this loan and accordingly this loan has been reclassified as an obligation to issue shares at December 31, 2003.

The Company also has a loan payable outstanding of $100,000, which is unsecured, bears a fee of $10,000 per quarter and has no specific terms of repayment

NOTE 5 - RELATED PARTY TRANSACTIONS

For the year ended December 31, 2003, the Company incurred $63,700 (2002 - $137,915) pursuant to consulting agreements with its officers and directors.

The Company also had loans payable to management outstanding of $116,050, which were unsecured, bore no interest and had no specific terms of repayment. During December, 2003 management forgave these loan amounts which was recorded as a gain on settlement of debt.

NOTE 6 - CAPITAL STOCK

During January 2002 the Directors approved a resolution to issue a maximum of 5,720,000 shares of common stock to certain directors, officers and employees in settlement of outstanding obligations that totaled $393,684. These obligations were settled at a price of $0.0571 per share resulting in a gain on settlement of debt of $67,072. These shares were issued on August 15, 2002. On December 11, 2002 the Company registered these shares for trading on a Form S-8 Registration Statement.

During February and March 2002 the Company issued a total of 3,487,863 shares of common stock on conversion of the outstanding convertible loans of $199,159.

During December, 2002 the Company completed a private placement of 171,000 common shares at a price of $.50 per share for net proceeds of $76,950 after a finder's fee of $8,550. In addition, 17,100 common shares were issued to the finder on this private placement.

During July 2003 the Company issued 300,000 common shares at a price of $1.00 per share, to a lender for payment of a lender's bonus (refer to Note 4).

During July 2003 the Company issued 15,000 common shares at a price of $1.00 per share to Capstone Investment Inc. for payment on an engagement contract.

During August 2003 the Company issued 45,000 common shares at a price of $1.00 per share to Capstone Investment Inc. for payment on an engagement contract.

During August 2003 the Company issued 175,000 common shares at a price of $0.85 per share and has an obligation to issue a further 175,000 common shares valued at $148,750 to a lender for payment of a lender's bonus (refer to Note 4).

INTERNETSTUDIO.COM, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002

NOTE 6 - CAPITAL STOCK (continued)

During October 2003 the Company agreed to issue 547,086 common shares at a deemed price of $0.50 per share to a lender in settlement of a loan in the amount of $273,543. To date these shares have not been issued.

Statement of Financial Accounting Standards No. 123, "Accounting For Stock Based Compensation", encourages, but does not require companies to record compensation cost for stock-based employee compensation plans at fair value. The Company has chosen to continue to account for stock-based compensation using the intrinsic value method prescribed in previously issued standards. Accordingly, compensation cost for employee stock options is measured as the excess, if any, of the fair market value of the Company's stock at the date of grant over the amount an employee must pay to acquire the stock. Compensation cost or deferred compensation for stock options issued to employees has been recognized to the extent market value of the stock at the grant date exceeded the option price.

The following table summarizes information about stock option transactions for the year ended December 31, ~~2001~~2003.

	Shares	Weighted Average Exercise Price	Expiry Date
Options outstanding
December 31, 2000	677,678	$5.44
December 31, 2001	13,300	$100.00	November 30, 2004
Granted	-	-
Exercised	-	-
Expired	~~(405,678)~~-	~~$.5.44~~-
20:1 roll-back	(258,700)	-
December 31, 2002	13,300	$100.00	November 30, 2004
December 31, 2001	13,300	$100.00
Granted	-	-
Options exercisable	12,745	$100.00
Exercised	-	-
Expired	-	-
December 31, 2003	13,300	$100.00	November 30, 2004

~~During~~NOTE ~~the~~7 ~~year the Company expensed $1,561,356 of previously deferred stock~~-~~based~~ ~~compensation~~WRITE ~~relating~~OFF toOF ~~outstanding stock options which vested. In addition, the Company reversed $880,656 in deferred compensation related to stock options which expired prior to vesting.~~DEBTS

~~NOTE~~During 10the -fourth ~~INCOME~~quarter ~~TAXES~~of 2003 the Company wrote off debts totaling $443,285 of which $244,165 relates to the dissolution of three former subsidiaries and $199,120 relates to old accounts payable which have been disputed or otherwise determined to no longer be valid debts of the Company. Additionally, current and former management forgave loans to the Company totaling $70,700 and $45,350 respectively.

NOTE 8 - INCOME TAXES

Income taxes are provided pursuant to SFAS No. 109, Accounting for Income Taxes. The statement requires the use of an asset and liability approach for financial reporting for income taxes. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized. Accordingly, as the realization and use of the net operating loss carryforward is not probable, the tax benefit of the loss carryforward has been offset by a valuation allowance of the same amount.

~~NOTE~~INTERNETSTUDIO.COM, 11INC. (A -Development ~~FAIR~~Stage ~~VALUE~~Company) NOTES OFTO CONSOLIDATED FINANCIAL ~~INSTRUMENTS~~STATEMENTS DECEMBER 31, 2003 AND 2002

NOTE 9 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The following disclosure of the estimated fair value of financial instruments is made in accordance with the requirements of SFAS No. 107, Disclosures about Fair Value of Financial Instruments. The estimated fair value amounts have been determined by the Company, using available market information and appropriate valuation methodologies. The fair value of financial instruments, including cash and cash equivalents and notes and accounts receivable and payable, approximate carrying value due to the short-term maturity of the instruments.

~~NOTE~~The 12Company -has ~~SUBSEQUENT~~also ~~EVENTS~~determined that the fair value of the loans payable and deposits on acquisitions approximates their carrying values.

~~During~~NOTE ~~February~~10 ~~and~~- ~~March~~SUBSEQUENT ~~2002 the Company issued a total of 3,487,873 shares of common stock on conversion of the outstanding convertible loans of $199,159.~~EVENTS

~~Pursuant~~During toJanuary ~~settlement~~2004, ~~agreements~~the ~~executed~~Company incompleted ~~May~~a ~~2002~~private ~~the~~placement ~~Company~~of ~~agreed~~200,000 tounits ~~assign~~at ~~its~~a ~~outstanding~~price ~~loan~~of ~~receivables~~$.50 per unit for net proceeds of $~~594~~100,~~561~~000 ~~from~~with a ~~film~~lender ~~production~~who ~~company~~had ~~and~~previously ~~$323~~entered into a convertible loan dated June 25,~~679~~ ~~due~~2003. ~~from~~Each aunit ~~related~~consists ~~party~~of one common share and one share purchase warrant. Three share purchase warrants entitle the holder to ~~certain~~acquire ~~creditors~~an inadditional ~~satisfaction~~common share at a price of ~~outstanding~~$1.00 ~~debts~~for a period of ~~approximately~~two ~~$970,000~~years. As part of ~~which~~this ~~$420~~transaction,~~000~~ isthe ~~owing~~Company agreed to ~~two~~amend ~~companies~~the ~~controlled~~convertible byloan ~~directors~~so ~~and~~that ~~officers~~it ofis ~~the~~now ~~Company~~convertible into common stock at $0.50 per share (refer to Note 4).

During ~~January~~2004 ~~2002~~ the ~~Directors~~Company ~~approved~~paid ato ~~resolution~~Bigle toan ~~issue~~additional up$15,000 toand 5issued 1,~~520~~000,000 common shares as a further deposit towards the purchase price of ~~common~~the ~~stock~~Trocadero toLibrary. ~~directors~~As a result, ~~officers~~Bigle ~~and~~has ~~employees~~agreed into ~~settlement~~extend the closing date of ~~outstanding~~this ~~obligations~~transaction. ~~totaling~~The ~~$315,000~~parties continue to negotiate the final terms of the purchase agreement with respect to this transaction.

~~Item~~During 9January 2004 the Company entered into an agreement with Incap Group, Inc. ~~Changes~~whereby Incap Group, Inc. was engaged to act as agent and use its best efforts in connection with the private placement of one or more debt or equity-related securities offerings to raise between $5,000,000 and $8,000,000. In consideration, Incap Group, Inc. was issued 40,000 common shares valued at $20,000 as a non-refundable retainer and ~~Disagreements~~will ~~With~~receive ~~Accountants~~a placement fee on ~~Accounting~~funds raised of 7.5% on the first $5,000,000 raised and ~~Financial~~5.5% ~~Disclosure~~on the balance.

OnItem ~~October~~ 9~~, 2001, Grant Thornton LLP resigned as independent accountants for InternetStudios~~. Changes Onin ~~October~~and 9,Disagreements ~~2001,~~With ~~InternetStudios'~~Accountants ~~board~~on ofAccounting ~~directors accepted the resignation of Grant Thornton LLP~~ and ~~approved~~Financial ~~the change of accountants from Grant Thornton LLP to Labonte & Co~~Disclosure.~~, Chartered Accountants.~~

~~During~~Not InternetStudios' most recent fiscal year, and any subsequent interim periods preceding the change in accountants, there were no disagreements with Grant Thornton LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope procedureapplicable. The report on the financial statements audited by Grant Thornton LLP for the last fiscal year contained a modifying paragraph with respect to InternetStudios' ability to continue as a going concern. Aside from this modification, the report on the financial statements audited by Grant Thornton LLP did not contain an adverse opinion or a disclaimer of opinion, nor was it qualified or modified as to any other uncertainty, audit scope or accounting principles.

~~InternetStudios~~Item ~~has engaged the firm of Labonte & Co~~9A., ~~Chartered~~Controls ~~Accountants~~and ~~as of October 9, 2001~~Procedures. Labonte & Co., Chartered Accountants was not consulted on any matter relating to accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on InternetStudios' financial statements.

As required by Rule 13a-15 under the Exchange Act, as at December 31, 2003 (being the end of the period covered by this annual report on Form 10-K) we have carried out an evaluation of the effectiveness of the design and operation of our company's disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our company's management, including our company's president and chief executive officer. Based upon that evaluation, our company's president and chief executive officer concluded that our company's disclosure controls and procedures are effective. There have been no significant changes in our company's internal controls or in other factors, which could significantly affect internal controls subsequent to the date we carried out our evaluation.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our company's reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our company's reports filed under the Exchange Act is accumulated and communicated to management, including our company's president and chief executive officer as appropriate, to allow timely decisions regarding required disclosure.

PART III

Item 10. Directors, and Executive Officers, ~~Promoters and Control Persons; Compliance With Section 16(a)~~ of the ~~Exchange Act~~Registrant.

All directors of our company hold office until the next annual meeting of the shareholders or until their successors have been elected and qualified. The officers of our company are appointed by our board of directors and hold office until their death, resignation or removal from office. Executive directors serve at the discretion of the board of directors and are appointed to serve until the first board of directors meeting following the annual meeting of our shareholders.

As of ~~July~~April 258, ~~2002~~2004, our directors and executive officers, their ages, positions held, and duration as such, are as follows:

Name	Age	Position with the Company	Date Position First Held
Robert MacLean	4648	President, Chairman of the Board, Secretary and Director	September, 1999
Mark Rutledge	42	Vice Chairman, Treasurer, Secretary and Director	September, 1999

Business Experience

The following is a brief account of the education and business experience during at least the past five years of each director, executive officer and key employee, indicating the principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.

Robert MacLean, President, Chairman of the Board of Directors, Secretary and Director

Mr. MacLean has been Chairman of the Board of Directors and a director of InternetStudios since September 1999, and served as President from September 1999 to December 1999. Mr. MacLean continues to act in an executive capacity for InternetStudios, ~~however~~and he currently ~~has~~holds nothe ~~title~~additional ortitles ~~defined~~of ~~responsibility~~President and Secretary. For the past five years, Mr. MacLean has been an independent producer of filmed entertainment projects. He has produced over twelve independent motion pictures and television movies including such films as CRIMINAL LAW, BRIGHT ANGEL and MAN WITH A GUN. Mr. MacLean also served as head of production at RKO Pictures in Los Angeles and has developed and produced a number of miniseries and movies of the week for ABC, CBS, and HBO. Mr. MacLean began his film career as a documentary filmmaker based in Paris, France where he produced several documentary series including, THE LAST SAILORS and THE GOLD LUST. Mr. MacLean obtained a Bachelor's of Art degree from University of Oregon and a Certificate of Advanced Motion Picture Productions from Banff School of Fine Arts.

Mark Rutledge, Vice Chairman of the Board of Directors, Secretary, Treasurer and Director
Mr. Rutledge has been Secretary, Treasurer, Vice President of Business Affairs and a director of InternetStudios since September 1999. He has a Bachelor of Arts (Honors) and a Bachelor of Laws from University of British Columbia. He was the Vice President of Business Affairs for Northwood Entertainment Corp. from 1997 to August 1999, and was the Vice President of Business Affairs for Movie Vista Productions from 1994 to 1997. As Vice President of those two companies, Mr. Rutledge was responsible for negotiating and preparing contracts for film and television distribution and financing of film and television productions. Prior to these positions, Mr. Rutledge practiced law for six years, specializing in the areas of corporate finance and entertainment law. In addition, Mr. Rutledge produced a number of award winning medical documentaries.
Family Relationships

There are no family relationships ~~between~~among ~~any~~our ~~director~~directors or ~~executive officer~~officers.

None of our directors, executive officers, promoters or control persons have been involved in any of the following events during the past five years:
- any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
- any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
- being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or
- being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.
Section 16(a) Beneficial Ownership Compliance

Section 16(a) of the Securities Exchange Act ~~of 1934, as amended,~~ requires our executive officers and directors, and persons who own more than 10% of aour ~~registered~~common ~~class~~stock, to file reports regarding ownership of, ~~our~~and ~~equity~~transactions ~~securities~~in, toour ~~file~~securities with the Securities and Exchange Commission ~~initial~~and ~~statements~~to ofprovide ~~beneficial~~us ~~ownership,~~with ~~reports~~copies of ~~changes~~those infilings. ~~ownership~~Based ~~and~~solely ~~annual~~on ~~reports~~our ~~concerning~~review ~~their ownership~~ of ~~our~~the ~~common~~copies ~~stock~~of ~~and~~such ~~other~~forms ~~equity~~received ~~securities,~~by ~~on Forms 3~~us, 4or ~~and~~written 5representations ~~respectively.~~from ~~Executive~~certain ~~officers~~reporting persons, ~~directors~~we ~~and~~believe ~~greater~~that ~~than~~during ~~10%~~fiscal ~~shareholders~~year ~~are~~ended ~~required~~December by31, ~~the~~2003, ~~Securities~~all ~~and~~filing ~~Exchange~~requirements ~~Commission~~applicable ~~regulations~~ to ~~furnish~~its ~~our~~officers, ~~company~~directors ~~with~~and ~~copies~~greater ofthan ~~all~~10% ~~Section~~percent ~~16(a)~~beneficial ~~reports~~owners ~~they~~were ~~file~~complied with.

ToAudit ~~our~~Committee ~~knowledge,~~Financial based solely upon our review of copies of such reports or written representations from certain reporting persons that no Form 5 was required to be filed by those persons, we believe that for the year ended December 31, 2001, all filing requirements applicable to our officers, directors and greater than 10% beneficial shareholders and other persons subject to Section 16(a) of the Securities and Exchange Act of 1934 were complied with.Expert

Our Board of Directors has determined that it does not have a member of its audit committee that qualifies as an "audit committee financial expert" as defined in Item 401(e) of Regulation S-B, and is "independent" as the term is used in Tem 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934, as amended.

We believe that the members of our Board of Directors are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. In addition, we believe that retaining an independent director who would qualify as an "audit committee financial expert" would be overly costly and burdensome and is not warranted in our circumstances given the current size of our company.

Code of Ethics

To date, we have not adopted a Code of Ethics and Business Conduct that applies to, among other persons, our company's Chief Executive Officer (being our principal executive officer and principal financial officer), as well as persons performing similar functions. A Code of Ethics and Business Conduct would set forth written standards that are designed to deter wrongdoing and to promote:

(1) honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

(2) full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to, the Securities and Exchange Commission and in other public communications made by us;

(3) compliance with applicable governmental laws, rules and regulations;

(4) the prompt internal reporting of violations of the Code of Ethics and Business Conduct to an appropriate person or persons identified in the Code of Ethics and Business Conduct; and

(5) accountability for adherence to the Code of Ethics and Business Conduct.

A Code of Ethics and Business Conduct would require, among other things, that all of our company's personnel shall be accorded full access to our Chief Executive Officer or Audit Committee with respect to any matter which may arise relating to the Code of Ethics and Business Conduct. Further, all of our company's personnel are to be accorded full access to our company's Audit Committee if any such matter involves an alleged breach of the Code of Ethics and Business Conduct by the Chief Executive Officer.

Item 11. Executive Compensation.

The following table summarizes the compensation of our Chairman of the Board and other officers and directors who received annual compensation in excess of $100,000 during the fiscal years ended December 31, ~~2001~~2003, ~~2000~~2002, and ~~1999~~2001. For the year ended December 31, 2003, named executive officer include Robert MacLean. No other officers or directors received annual compensation in excess of $100,000 during the fiscal years ended December 31, ~~2001~~2003, ~~2000~~2002 and ~~1999~~2001.

		Annual Compensation			Long Term Compensation		Pay- outs
SUMMARY COMPENSATION TABLE
Name and Principal Position	Year	Salary	Bonus	Other Annual Compen- sation	Securities Under Options/ SAR's Granted	Restricted Shares or Restricted Share Units	LTIP Pay- outs
		Annual Compensation			Long Term Compensation
Robert MacLean (1) Chairman of the Board and Director	2001 2000 1999	$47,691 $192,000 $43,000	$- $50,000 $-	$1,708 $7,200 $-	- - 6,500	- - -	$- $- $-
					Awards		Payouts
Mark Rutledge (2) Vice Chairman, Treasurer, Secretary and Director	2001 2000 1999	$40,000 $192,000 $43,000	$- $50,000 $-	$1,200 $7,200 $-	- - 6,800	- - -	$- $- $-
Name and Principal Position	Year	Salary (US$)	Bonus (US$)	Other Annual Compen- sation (US$)	Securities Underlying Options/ SARs Granted	Restricted Shares or Restricted Share Units (6)	LTIP Payouts (US$)	All Other Compen- sation
Heidi Lester (3) Former CEO	2001 2000 1999	$46,704 $252,000 $63,000	$- $50,000 $-	$- $7,200 $-	- - -	30,000 - -	$- $- $-
Robert MacLean Chairman of the Board and Director	2003 2002 2001	Nil Nil $47,691	Nil Nil Nil	$63,700(1)$55,065(2) $1,708(3)	Nil Nil Nil	Nil Nil Nil	Nil Nil Nil	Nil Nil Nil
Aline Perry (4) Former President, InternetStudios UK Limited	2001 2000 1999	$28,240 $250,000 $-	$- $50,000 $-	$- $- $-	- - -	- - -	$- $- $-
Heidi Lester (3) Former CEO	2002 2001	Nil $46,704	Nil Nil	Nil Nil	Nil Nil	Nil 30,000	Nil Nil	Nil Nil
Robert Beattie (5) Former President, IEF	2001 2000 1999	$45,133 $170,000 $-	$- $50,000 $-	$- $7,200 $-	- - -	- - -	$- $- $-

^{(1) Mr. MacLean signed a management agreement with the Company the details of which are set out below. This management agreement was terminated by agreement on January 5, 2002. In consideration of the termination of his management agreement, shares will be issued to Mr. MacLean.}Pursuant to an oral consulting agreement, Robert MacLean was paid $63,700.

^{(2) Mr. Rutledge signed a management agreement with the Company the details of which are set out below. This management agreement was terminated by agreement on January 5, 2002. In consideration of the termination of his management agreement, shares will be issued to Mr. Rutledge.}Pursuant to an oral consulting agreement, Robert MacLean was paid $55,065.

^{(3) Ms. Lester resigned from her position on August 19, 2001.}Pursuant to the terms of a Management Agreement, dated April 1, 2000, between our company and each of Robert MacLean and Spray Point Consulting Limited, Mr. MacLean rendered certain services to our company and its subsidiaries, and has acted, and continues to act, as a director and officer of our company and certain of its subsidiaries. As at August 15, 2002, we owed Mr. MacLean and Spray Point a total of $115,342 in compensation for the services performed by Mr. MacLean and Spray Point for our company and its subsidiaries pursuant to the Management Agreement. Effective January 5, 2002, Robert MacLean and our company entered into a Settlement Agreement and Mutual General Release wherein Mr. MacLean agreed to accept 2,020,000 shares of our common stock at a deemed price of $0.0571 per share as payment of $115,342 owed to Mr. MacLean and Spray Point in full and final settlement of all claims by Mr. MacLean and Spray Point arising from the Management Agreement.

^{(4) Ms. Perry resigned from her position on May 15, 2001.} Ms. Lester resigned from her position on August 19, 2001.

~~(5)~~Option/SAR ~~Mr. Beattie resigned from his position on August 27, 2001.~~Grants

~~(6)~~We ~~These~~did ~~totals~~not ~~reflect~~grant ~~post~~stock ~~consolidation~~options ~~amounts~~to any of our executive officers during the year ended December 31, 2003.

Year End Option/SAR Values

The following table sets forth for each named executive officer certain information concerning the number of shares subject to both exercisable and unexercisable stock options as of December 31, 2003. The values for "in-the-money" options are calculated by determining the difference between the fair market value of the securities underlying the options as of December 31, 2003 ($0.33 per share) and the exercise price of the individual's options. No named executive officer exercised options during the year ended December 31, 2003.

Aggregated Option/SAR Exercises in Last Fiscal Year and Financial Year-End Option/SAR Values

Name	Shares Acquired on Exercise (#)	Aggregate Value Realized	Number of Securities Underlying Unexercised Options/SARs at FY-End (#) Exercisable / Unexercisable		Value of Unexercised In-the -Money Options/SARs at FY- end ($) Exerciseable / Unexerciseable⁽¹⁾
			Exerciseable	Unexerciseable	Exerciseable	Unexerciseable
Robert MacLean	Nil	Nil	6,500⁽²⁾	Nil	$0	$0

⁽¹⁾The closing bid price on December 31, 2003 was $0.33 and accordingly the unexercised options as at December 31, 2003 had no value. On December 6, 2001, we effected a 20 for 1 reverse split of our common stock. The numbers of options as stated above have been adjusted to reflect the reverse split.

⁽²⁾On December 1, 1999, we granted to Robert MacLean 6,500 options at an exercise price of $100 per share. The options expire on December 1, 2007.

Stock Option Plan

In December, 1999, our board of directors approved a US Stock Incentive Plan for a maximum of 50,000 common shares and a Non-US Stock Incentive Plan for a maximum of 25,000 common shares, under which we are authorized to issue non-qualified and incentive stock options to key employees and consultants. The options have a term not to exceed 10 years and vest over a period of two to three years. As at December 31, ~~2001~~2003, an aggregate of 13,125 options had been granted under the US Stock Incentive Plan and an aggregate of 20,759 options had been granted under the Non-US Stock Incentive Plan. All of the options that were granted, with the exception of the 6,500 issued to current senior executives, have expired.

On December 6, 2001, we effected a 20 for 1 reverse split of our common stock. The numbers of options as stated above have been adjusted to reflect the reverse split.

All of the options that were granted, with the exception of the 13,300 issued to current senior executives, have expired under the terms of the Stock Incentive Plans.
Option/SAR Grants
We did not grant stock options to any of our executive officers during the year ended December 31, 2001.
VALUE OF THE OPTIONS GRANTED AS AT DECEMBER 31, 2001
Name Shares Acquired on Exercise (#) Value Realized ($) Number of Shares of Common Stock Underlying Unexercised Options at December 31, 2001 Exercisable/ Unexercisable Value of Unexercised In-the-Money Options at December 31, 2001 Exercisable/ Unexercisable(1)
Robert MacLean nil nil 6,229 / 271 nil / nil
Mark Rutledge nil nil 6,516 / 284 nil / nil
(1) The closing bid price on December 31, 2001 was $0.02 and accordingly the unexercised options as at December 31, 2001 had no value.
Directors' Compensation

Directors may be paid their expenses for attending each meeting of the directors and may be paid a fixed sum for attendance at each meeting of the directors or a stated salary as director. No payment precludes any director from serving ~~InternetStudios~~our company in any other capacity and being compensated for the service. Members of special or standing committees may be allowed like reimbursement and compensation for attending committee meetings.

Employment Contracts
InternetStudios, through one of its subsidiaries OnlineFilmSales, entered into an Agreement with Spray Point Consulting Limited for the services of Robert MacLean on April 1, 2000. Under this Agreement, Mr. MacLean will serve as the Company's Chairman for a term of three years. The provisions of the Agreement include:
- base salary of $142,000 per year;
- certain employee benefits and reimbursement of reasonable expenses incurred in connection with the performance of his duties; and
- noncompetition, nondisclosure and nonconsolidation covenants.
In the event InternetStudios, or one of its subsidiaries, as the case may be, terminates Mr. MacLean for any reason other than death, disability, or for cause, or in the event Mr. MacLean terminates his services for cause, Mr. MacLean will be entitled to the following compensation on the eighth day after his signing a Confidential Severance Agreement and a letter confirming that he did not revoke and will take no action to revoke the Confidential Severance Agreement:
- a lump sum severance payment equal to one and one-half times his base salary; and
- accelerated vesting of his stock options.
In addition to the agreement between OnlineFilmSales and Spray Point Consulting Limited, Mr. MacLean also entered into an Employment Agreement with InternetStudios UK LTD and InternetStudios for a term commencing on July 1, 2000 and ending on December 1, 2002. The agreement provided for a 2000 notional annual salary of US$50,000. In addition, Mr. MacLean is entitled to receive an additional $1000 for each day worked (i) in excess of 50 days in that year if a complete year or, (ii) where employment terminates during the year an additional $1000 for each day worked in excess of 50 days per year prorated to the total period of employment for that year. Where Mr. MacLean works less than 50 days in the preceding year or, where less than a year, has worked less than the proportionate number of days, Mr. MacLean is required to pay to InternetStudios UK Limited $1000 for each such day less than 50 days or the proportionate number of days as the case may be. The Employment Agreement also provides for:
- option to purchase 175,000 shares of InternetStudios' Common Stock at an exercise price of $5.00 (US) per share, subject to vesting requirements and approval of the Board of Directors and stockholders;
- certain employee benefits and reimbursement of reasonable expenses incurred in connection with the performance of his duties; and
- noncompetition, nondisclosure and nonconsolidation covenants.
In the event InternetStudios or its subsidiary InternetStudios UK LTD, as the case may be, terminates Mr. MacLean for any reason other than death, disability, or for cause, or in the event Mr. MacLean terminates his services for cause, Mr. MacLean will be entitled to the following compensation on the eighth day after his signing a Confidential Severance Agreement and a letter confirming that he did not revoke and will take no action to revoke the Confidential Severance Agreement:
- a lump sum severance payment equal to one and one-half times his base salary; and
- accelerated vesting of his stock options.
InternetStudios, through one of its subsidiaries OnlineFilmSales, entered into an Agreement with Carraway Management Inc. for the services of Mark Rutledge on April 1, 2000. Under this Agreement, Mr. Rutledge will serve as the Company's Vice President Business Affairs and as Corporate Secretary for a term of three years. The provisions of the Agreement include:
- base salary of $192,000 per year;
- certain employee benefits and reimbursement of reasonable expenses incurred in connection with the performance of his duties; and
- noncompetition, nondisclosure and nonconsolidation covenants.
In the event InternetStudios, or one of its subsidiaries, as the case may be, terminates Mr. Rutledge for any reason other than death, disability, or for cause, or in the event Mr. Rutledge terminates his services for cause, Mr. Rutledge will be entitled to the following compensation on the eighth day after his signing a Confidential Severance Agreement and a letter confirming that he did not revoke and will take no action to revoke the Confidential Severance Agreement:
- a lump sum severance payment equal to one and one-half times his base salary; and
- accelerated vesting of his stock options.
Mr. MacLean and Mr. Rutledge have not been paid under the terms of their management agreements since April 2001. The Company and these individuals have agreed pursuant to an agreement dated January 5, 2002, to terminate the management agreements in consideration of the issuance of up to 3,840,000 shares.
There are three former executives who each had a management agreement with the Company.
Under an agreement entered into April 1,2000 Heidi Lester served as Chief Executive Officer for the Company from inception until her resignation on August 19, 2001. Her agreement with InternetStudios terminated upon her resignation on August 19, 2001.
InternetStudios UK Ltd. and InternetStudios entered into a service agreement with Aline Perry on February 1, 2000. This agreement was terminated upon Ms. Perry's resignation on May 15, 2001.
The Company and its subsidiary IEF entered into a management agreement with Robert Beattie on July 1, 2000. This agreement was terminated upon Mr. Beattie's resignation on August 27, 2001.
Report on Executive Compensation

Our compensation program for our executive officers is administered and reviewed by our board of directors. Historically, executive compensation consists of a combination of base salary and bonuses. Individual compensation levels are designed to reflect individual responsibilities, performance and experience, as well as the performance of our company. The determination of discretionary bonuses is based on various factors, including implementation of our business plan, acquisition of assets, development of corporate opportunities and completion of financing.

Our board of directors also believes that executives should have a substantial equity ownership, both through direct share ownership and through stock options, to provide long-term incentives which link executive compensation to our long-term performance and return to our shareholders. We also believe that non-employee directors should have an equity interest in our company. In that regard, we adopted the 1999 Incentive Stock Option Plans.
Stock Performance Graph

The graph set forth below compares the cumulative total shareholder return on our common shares between December 31, ~~1998~~1999 and December 31, ~~2001~~2003 with the cumulative return of (i) the Russell 2000 index and (ii) Standard and Poors 500 index, over the same period. This graph assumes the investment of $100 on December 31, ~~1998~~1999 in our common shares, the Russell 2000 index and Standard and Poors 500 index, and assumes the reinvestment of dividends, if any.

The comparisons shown in the graph below are based upon historical data. We caution that the share price performance shown in the graph below is not indicative of, nor intended to forecast, the potential future performance of our common shares. Information used in the graph was obtained from Yahoo Financial, a source believed to be reliable, but we are not responsible for any errors or omissions in such information.

	12/31/98	12/31/99	12/31/00	12/31/01
	12/31/99	12/31/00	12/31/01	12/31/02	12/31/03	12/31/03
InternetStudios.com, Inc.	$100	$596.33	$435.77	$1.83	$106.14	$30.12
Russell 2000	$100	$119.81	$114.78	$115.96	$73.24	$104.49
S&P 500	$100	$119.52	$107.40	$93093.39	$88.86	$112.30

~~(1) Our~~Item ~~common~~12. Security ~~shares~~Ownership ~~commenced trading on the National Association~~ of ~~Securities~~Certain ~~Dealer~~Beneficial ~~Inc.'s~~Owners ~~Over-the-Counter Bulletin Board on September 17, 1998. Our common shares were removed from trading on the OTCBB on September 27, 2001~~ and ~~have been trading on the Pink Sheets LLC since that date~~Management.

The following table sets forth, as at ~~July~~April 258, ~~2002~~2004, certain information with respect to the beneficial ownership of our common stock by each shareholder known by us to be the beneficial owner of more than five percent (5%) of our common stock, and by each of our current directors and executive officers. Each person has sole voting and investment power with respect to the shares of common stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated.

Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership(1)	Percentage of Class(1)
Robert MacLean 207 - 1040 Hamilton Street Vancouver, BC	64,110(2)(4)	1.3%
Robert MacLean 207 - 1040 Hamilton Street Vancouver, British Columbia V6B 2R9	1,804,110(2)	14.87%
Mark Rutledge 207 - 1040 Hamilton Street Vancouver, BC	62,300(3)(4)	1.3%
Directors and Executive Officers as a Group	1,804,110(2)	14.87%
Geoffrey Last(5) 1245 Homer Street Vancouver, BC V6B 2Y9	398,614	9.25%
Corvan Ltda.(5) APDO 695-1007 Centro Colon San Jose, Costa Rica	398,614	9.25%
Jayeson Carmichael(5) Suite 38088 King Edward Court Vancouver, BC V5Z 4L2	398,614	9.25%
Randy S. White(5) 3287 Highland Blvd. North Vancouver, BC V7R 2X7	398,614	9.25%
H. Jason Stockman(5) Suite 621 - 1755 Robson Street Vancouver, BC V6G 3B7	398,614	9.25%
Larissa Sinkevitch(5) 27015 - 1395 Marine Drive West Vancouver, BC V7T 2X8	398,614	9.25%
Stephan H. Atoui(5) 303 Wood Street New Westminster, BC V3M 5K6	398,614	9.25%
Heer Slatey Ltd.(5) PO Box CB 13997 Nassau, Bahamas	398,614	9.25%
Cynthia Boire(5) #1705 - 1188 Richards Street Vancouver, BC V6B 3E6	298,961	6.9%
Directors and Executive Officers as a Group	126,410(6)	2.6%

⁽¹⁾ Based on 12,129,209 shares of common stock issued and outstanding as of April 8, 2004. Except as otherwise indicated, we believe that the beneficial owners of the common stock listed above, based on information furnished by such owners, have sole investment and voting power with respect to such shares, subject to community property laws where applicable. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of common stock subject to options or warrants currently exercisable, or exercisable within 60 days, are deemed outstanding for purposes of computing the percentage ownership of the person holding such option or warrants, but are not deemed outstanding for purposes of computing the percentage ownership of any other person.

^{(2) Includes 6,500 options exercisable within sixty days.} Includes 6,500 options exercisable within sixty days.

(3) Includes 6,800 options exercisable within sixty days.
(4) Pursuant to an agreement dated January 5, 2002, we agreed to issue up to 4,040,000 shares in settlement of obligations to management.
(5) Subject to an increase in our authorized capital, referred to in Item 4 of this annual report, upon the issuance of common shares to management of our company, pursuant to footnote number 4 above, the ownership percentage of these individuals will fall below 5%.
(6) Includes options exercisable within sixty days.
Changes in Control

~~Other~~We ~~than as listed below, we~~ are unaware of any contract or other arrangement, the operation of which may, at a subsequent date, result in a change in control of our company.

Item 13. Certain Relationships and Related Transactions.

~~Except~~Other than as ~~otherwise~~described ~~indicated~~under ~~below,~~the weheading ~~have~~"Executive ~~not been a party to any transaction~~Compensation", ~~proposed transaction,~~ or ~~series~~as ofset ~~transactions~~forth ~~in which the amount involved exceeds $60~~below,~~000,~~ ~~and~~there inare ~~which,~~no tomaterial ~~its~~transactions ~~knowledge,~~with any of ~~its~~our directors, officers, ~~five percent beneficial security holder,~~ or ~~any~~control ~~member~~person ofthat ~~the~~have ~~immediate~~occurred ~~family~~during of the ~~foregoing~~last ~~persons~~fiscal ~~has had or will have a direct or indirect material interest~~year.

WePursuant ~~entered~~to ~~into~~the ~~formal~~terms ~~employment~~of ora ~~management~~Management ~~contracts~~Agreement, ~~with~~dated ~~four~~April of1, 2000, between our ~~officers~~company orand ~~with~~each ~~consulting~~of ~~firms~~Robert ~~owned~~MacLean byand ~~those~~Spray ~~officers~~Point Consulting Limited, Mr. ~~Subsequent~~MacLean rendered certain services to ~~June~~our ~~30,~~company ~~2001~~and its subsidiaries, ~~two~~and ~~officers~~has ~~resigned.~~acted, ~~The~~and ~~remaining~~continues ~~contracts~~to ~~provide~~act, ~~for~~as a ~~combined~~director ~~base~~and ~~salary~~officer of ~~$384,000~~our ~~per~~company ~~annum~~and ~~for~~certain aof ~~three~~its ~~year~~subsidiaries. ~~term~~As ~~ending~~at ~~December~~August 3115, ~~2002~~2001, ~~and~~we ~~granting~~owed ofMr. ~~stock~~MacLean ~~options~~and ~~providing~~Spray ~~the~~Point ~~right to acquire~~ a total of ~~350~~$115,~~000~~342 ~~shares~~in ofcompensation ~~common~~for ~~stock~~the atservices aperformed ~~pre-consolidation~~by ~~price~~Mr. ofMacLean $5and ~~per~~Spray ~~share~~Point tofor beour ~~vested~~company ~~over~~and ~~the~~its ~~term~~subsidiaries ofpursuant to the ~~contracts~~Management Agreement. ~~The~~Effective ~~contracts~~January ~~include~~5, a2002, ~~severance~~Robert ~~provision~~MacLean ofand ~~150%~~our ofcompany ~~base~~entered ~~salary~~into ~~which~~a ~~totals~~Settlement ~~$576,000~~Agreement ~~for~~and ~~these~~Mutual ~~two~~General ~~officers~~Release wherein Mr. AtMacLean ~~December~~agreed ~~31,~~to ~~2001~~accept 2,020,000 ashares ~~total~~ of ~~$288,000~~our iscommon ~~owing~~stock ~~under~~at ~~these~~a ~~contracts.~~deemed ~~Pursuant~~price toof an$0.0571 ~~agreement~~per ~~dated~~share ~~January~~as 5,payment ~~2002~~of $115,342 weowed ~~agreed~~ to ~~issue~~Mr. upMacLean toand ~~4,040,000~~Spray ~~shares~~Point in full and final settlement of ~~obligations~~all toclaims ~~management~~by Mr. MacLean and Spray Point arising from the Management Agreement.

~~During~~Pursuant ~~2000,~~to wethe ~~loaned~~terms of a ~~total~~Management ofAgreement, ~~approximately~~dated ~~$535~~April 1,~~000~~ to2000, ~~one~~between of our ~~executive~~company, ~~officers~~Mark Rutledge and aCarraway ~~film~~Management ~~production~~Inc., ~~company~~Mr. ~~owned~~Rutledge ~~and~~rendered ~~managed~~certain byservices ~~this~~to ~~executive~~our ~~officer.~~company ~~Advances~~and ~~under~~its ~~the~~subsidiaries, ~~loan~~and ~~agreement~~has ~~are~~acted, ~~collateralized~~and bycontinues ~~all~~to ofact, ~~the~~as ~~assets~~a ofdirector ~~the~~and ~~related~~officer ~~company,~~of ~~bear~~our ~~interest~~company atand ~~the~~certain ~~prime~~of ~~rate~~its ~~plus~~subsidiaries. 3%As ~~until~~at ~~March~~August 3115, 2001, ~~and~~we ~~are~~owed ~~due on demand~~Mr. ~~Collectability~~Rutledge ofand ~~these~~Carraway ~~amounts~~a istotal ~~dependent on the success~~ of ~~the~~$115,342 ~~film~~in ~~projects~~compensation ~~financed.~~for ~~During~~ the ~~year~~services ~~ended~~performed ~~December~~by ~~31,~~Mr. ~~2001~~Rutledge ~~interest~~ and ~~fees~~Carraway offor ~~$37,594~~our ~~were~~company ~~accrued~~and ~~under~~its ~~this~~subsidiaries ~~loan.~~pursuant ~~Additionally,~~to ~~during~~ the ~~year~~Management ~~ended~~Agreement. ~~December~~Effective 31January 5, ~~2001~~2002, weMark ~~assumed~~Rutledge ~~loans~~and toour ~~this~~company ~~entity~~entered ~~from~~into a ~~bank~~Settlement ~~totaling~~Agreement ~~$215,588,~~ and ~~this~~Mutual ~~officer~~General ~~repaid~~Release ~~$104,908~~wherein ~~of outstanding loans~~Mr. ~~Due~~Rutledge agreed to ~~uncertainty~~accept ~~of recovery~~2,020,000 weshares ~~recorded~~of anour ~~impairment~~common ~~provision~~stock ofat ~~$309,832~~a ~~leaving~~deemed aprice ~~balance~~of ~~outstanding~~$0.0571 atper ~~year~~share ~~end~~as payment of $~~373~~115,~~679~~342 ~~which~~owed ~~was~~to ~~assigned~~Mr. toRutledge ~~creditors~~and ~~subsequent~~Carraway toin ~~year~~full ~~end~~and infinal settlement of ~~outstanding~~all ~~debts~~claims ofby ~~our~~Mr. ~~company~~Rutledge and Carraway arising from the Management Agreement.

During the year ended December 31, 2003, we paid Robert MacLean $63,700 for consulting fees.

During the year ended December 31, 2003, we paid Mark Rutledge $60,370 for consulting fees.

During 2000, we loaned a total of approximately $535,000 to Robert MacLean and a film production company owned and managed by Robert MacLean. Advances under the loan agreement were collateralized by all of the assets of the related company, bore interest at the prime rate plus 3% until March 31, 2001 and were due on demand. During the year ended December 31, 2001, due to uncertainty of recovery we recorded an impairment provision of $309,832 leaving a balance outstanding at December 31, 2001 of $373,679. During the year ended December 31, 2002, we received payment relating to this loan totalling $50,000 and the balance of this loan receivable was assigned to creditors in settlement of outstanding debts.

Item 14. Principal Accounting Fees and Services
Audit Fees

Our independent accountants, Dale Matheson Carr-Hilton LaBonte (formerly, LaBonte & Co.)("DMCL"), provided audit and other services during the years ended December 31, 2003 and 2002 as follows:

	2003	2002
Audit Fees	15,000	17,000
Audit Related Fees	-	-
Tax Fees	-	-
All Other Fees	-	-
Total Fees	15,000	17,000

Audit Fees
. This category includes the fees for the audit of our consolidated financial statements and the quarterly reviews of interim financial statements. This category also includes advice on audit and accounting matters that arose during or as a result of the audit or the review of interim financial statements and services in connection with SEC filings.

Audit Related Fees
. There were no audited related fees paid to DMCL

Tax Fees
. This category includes the fees for professional services rendered for tax compliance, tax advice and tax planning.

All Other Fees
. There were no other fees paid to DMCL

PART IV

Item 1415. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
~~Reports~~Exhibits required by Item 601 of ~~Form~~Regulation 8S-KB

On October 10, 2001 (amended October 23 and October 25, 2001), we filed a Form 8-K Current report with respect to our change in auditors. Please refer to Item 8 "Changes in and Disagreements with Accountants on Accounting and Financial Disclosure" for further details.

Exhibit Number	Description
(3)	(i) Articles of Incorporation; and (ii) Bylaws
3.1	Articles of Incorporation (incorporated by reference from our Form 10/A Registration Statement, filed February 10, 2000).
3.2	Bylaws (incorporated by reference from our Form 10/A Registration Statement, filed February 10, 2000).
3.3	Amended Bylaws (incorporated by reference from our Form 10/A Registration Statement, filed February 10, 2000).
3.4	Certificate of Amendment to Articles of Incorporation, dated December 17, 1998 (incorporated by reference from our Form 10/A Registration Statement, filed February 10, 2000)
3.5	Certificate of Amendment to Articles of Incorporation, dated September 21, 1999 (incorporated by reference from our Form 10/A Registration Statement, filed February 10, 2000)
(10)	Material Contracts
10.1	Consulting Agreement dated April 1, 2000 between OnlineFilmSales.com, LLC and Carraway Management Inc. (incorporated by reference from our Annual Report on Form 10-K filed on April 19, 2001).
10.2	Consulting Agreement dated April 1, 2000 between OnlineFilmSales.com, LLC and Spray Point Consulting Limited (incorporated by reference from our Annual Report on Form 10-K filed on April 19, 2001).
10.3	Consulting Agreement dated February 1, 2001 between InternetStudios.com, Inc. and Emergent Capital Corporation (incorporated by reference from our Quarterly Report on Form 10-Q filed on November 14, 2002).
10.4	Consulting Agreement dated February 1, 2001 between InternetStudios.com, Inc. and Liddington Ltd. (incorporated by reference from our Quarterly Report on Form 10-Q filed on November 14, 2002).
10.5	Consulting Agreement dated April 1, 2001 between InternetStudios.com, Inc. and Livint Communications Ltd. (incorporated by reference from our Quarterly Report on Form 10-Q filed on November 14, 2002).
10.6	Settlement Agreement and Mutual General Release dated July 31, 2002 between InternetStudios.com, Inc. and Robert MacLean (incorporated by reference from our Quarterly Report on Form 10-Q filed on November 14, 2002).
10.7	Settlement Agreement and Mutual General Release dated July 31, 2002 between InternetStudios.com, Inc. and Nick Waddell (incorporated by reference from our Quarterly Report on Form 10-Q filed on November 14, 2002).
10.8	Settlement Agreement and Mutual General Release dated July 31, 2002 between InternetStudios.com, Inc. and Alex McKean (incorporated by reference from our Quarterly Report on Form 10-Q filed on November 14, 2002).
10.9	Settlement Agreement and Mutual General Release dated July 31, 2002 between InternetStudios.com, Inc. and Michael Edwards (incorporated by reference from our Quarterly Report on Form 10-Q filed on November 14, 2002).
10.10	Settlement Agreement and Mutual General Release dated July 31, 2002 between InternetStudios.com, Inc. and Livint Communications Ltd. (incorporated by reference from our Quarterly Report on Form 10-Q filed on November 14, 2002).
10.11	Settlement Agreement and Mutual General Release dated July 31, 2002 between InternetStudios.com, Inc. and Emergent Capital Corporation (incorporated by reference from our Quarterly Report on Form 10-Q filed on November 14, 2002)
10.12	Settlement Agreement and Mutual General Release dated July 31, 2002 between InternetStudios.com, Inc. and Liddington Ltd. (incorporated by reference from our Quarterly Report on Form 10-Q filed on November 14, 2002)
10.13	Settlement Agreement and Mutual General Release dated July 31, 2002 between InternetStudios.com, Inc. and Mark Rutledge (incorporated by reference from our Quarterly Report on Form 10-Q filed on November 14, 2002)
10.14	Settlement Agreement and Mutual General Release dated July 31, 2002 between InternetStudios.com, Inc. and Jesse Menzies (incorporated by reference from our Quarterly Report on Form 10-Q filed on November 14, 2002)
10.15	Employment Agreement dated January 1, 2001 between InternetStudios.com, Inc. and Michael Edwards (incorporated by reference from our Registration Statement on Form S-8 filed on December 11, 2002).
10.16	Employment Agreement dated January 1, 2001 between InternetStudios.com, Inc. and Nick Waddell (incorporated by reference from our Registration Statement on Form S-8 filed on December 11, 2002).
10.17	Employment Agreement dated February 1, 2001 between InternetStudios.com, Inc. and Jesse Menzies (incorporated by reference from our Registration Statement on Form S-8 filed on December 11, 2002).
10.18	Employment Agreement dated February 29, 2000 between InternetStudios.com, Inc. and Alex McKean (incorporated by reference from our Registration Statement on Form S-8 filed on December 11, 2002).
10.19	Letter of Intent dated February 13, 2003 between InternetStudios.com, Inc. and Dominque Bigle (incorporated by reference from our Annual Report on Form 10-K filed on April 1, 2003).
10.20	Letter Agreement dated March 30, 2003 between InternetStudios.com Inc. and CapStone Investments (incorporated by reference from our Annual Report on Form 10-K filed on April 1, 2003).
10.21	Consulting Agreement dated March 1, 2003 between InternetStudios.com, Inc. and Venture Spark LLC (incorporated by reference from our Quarterly Report on Form 10-Q filed on May 20, 2003).
10.22	Addendum to Letter of Intent dated May 16, 2003 between InternetStudios.com, Inc. and Dominique Bigle (incorporated by reference from our Quarterly Report on Form 10-Q filed on May 20, 2003).
10.23	Letter of Intent dated May 8, 2003 between International Media Acquisition Group, LLC and Ted Hartley and Dina Merrill (incorporated by reference from our Quarterly Report on Form 10-Q filed on August 14, 2003).
10.24	Convertible Note dated May 28, 2003 between InternetStudios.com, Inc. and Alan Kapilow (incorporated by reference from our Quarterly Report on Form 10-Q filed on August 14, 2003).
10.25	Addendum to Letter of Intent dated June 6, 2003 between International Media Acquisition Group, LLC and Ted Hartley and Dina Merrill (incorporated by reference from our Quarterly Report on Form 10-Q filed on August 14, 2003).
10.26	Convertible Note dated June 20, 2003 between InternetStudios.com, Inc., Emergent Capital Corp. and Gustavson Development Inc. (incorporated by reference from our Quarterly Report on Form 10-Q filed on August 14, 2003).
10.27	Assignment Agreement dated June 20, 2003 between International Media Acquisition Group LLC, Emergent Capital Corp. and Gustavson Development Trust (incorporated by reference from our Quarterly Report on Form 10-Q filed on August 14, 2003).
10.28	Convertible Note dated June 25, 2003 between InternetStudios.com, Inc. and Martial Chaillet (incorporated by reference from our Quarterly Report on Form 10-Q filed on August 14, 2003).
10.29	Letter Agreement dated July 10, 2003 between InternetStudios.com, Inc. and Natexis Bleichroeder Inc. (incorporated by reference from our Quarterly Report on Form 10-Q filed on August 14, 2003).
10.30	Asset Purchase Agreement dated July 30, 2003 between InternetStudios.com, Inc. and Dominque Bigle (incorporated by reference from our Quarterly Report on Form 10-Q filed on August 14, 2003).
10.31	Management Agreement dated July 30, 2003 between InternetStudios.com and Dominique Bigle (incorporated by reference from our Quarterly Report on Form 10-Q filed on August 14, 2003).
10.32	Form of Promissory Note with RKO Pictures, LLC. in the following amounts: $125,000 (May 14, 2004), $125,000 (June 16, 2004), $125,000 (July 7, 2004) and $62,500 (August 8, 2004) (incorporated by reference from our Quarterly Report on Form 10-Q filed on November 14, 2003).
10.33	Loan Agreement dated July 14, 2003 between InternetStudios.com and Proximity Capital, L.P. (incorporated by reference from our Quarterly Report on Form 10-Q filed on November 14, 2003).
10.34	Senior Convertible Note dated July 14, 2003 between InternetStudios.com, Inc. and Proximity Capital, L.P. (incorporated by reference from our Quarterly Report on Form 10-Q filed on November 14, 2003).
10.35	Assignment Agreement dated July 14, 2003 between International Media Acquisition Group, LLC and Proximity Capital, L.P. (incorporated by reference from our Quarterly Report on Form 10-Q filed on November 14, 2003).
10.36	Form of Private Placement Subscription Agreement between Internetstudios.com, Inc and Dominique Bigle.
10.37	Advisory Fee Payment and Subscription Agreement dated February 10, 2004 between Internetstudios.com, Inc. and InCap Group, Inc.
10.38	Advisory Fee Payment and Subscription Agreement dated February 24, 2004 between Internetstudios.com, Inc. and InCap Group, Inc.
(21)	Subsidiaries of the small business issuer
	Online FilmandTVSales.com, Inc.
	InternetStudiosUK Limited
	InternetStudios Entertainment Finance
(23)	Consent of experts and counsel
23.1	Consent of Dale Matheson Carr-Hilton LaBonte.
(31)	Rule 13a-14(a)/15d-14(a) Certifications
31.1	Certification.
(32)	Section 1350 Certifications
32.1	Certification.

OnReports ~~December~~on ~~6, 2001, we filed a~~ Form 8-K Current Report with respect to the approval by our board of directors on October 19, 2001 of a twenty for one reverse stock split (the "Reverse Stock Split") of our authorized, issued and outstanding common stock. The Reverse Stock Split was effected with the Nevada Secretary of State on November 20, 2001. As a result, our authorized capital has decreased from 100,000,000 to 5,000,000 shares of common stock with a par value of $0.0001. The Reverse Stock Split took effect with the OTC Bulletin Board at the opening for trading on Thursday, December 6, 2001 under the new stock symbol ISTO.

~~Financial Statements~~None

The following consolidated financial statements are filed as part of this annual report:
Independent Auditor's Report, dated May 31, 2002
Consolidated Balance Sheets as at December 31, 2001 and 2000
Consolidated Statements of Changes in Stockholders' Equity (Deficit) for the period from April 14, 1998 (incorporation) to December 31, 2001
Consolidated Statements of Cash Flows for the year ended December 31, 2001 and for the period from April 14, 1998 (incorporation) to December 31, 2001
Summary of Significant Accounting Policies
Notes to the Consolidated Financial Statements
Exhibits
Exhibit Number and Exhibit Title
(3) Articles of Incorporation and Bylaws
3.1 Articles of Incorporation (incorporated by reference from our Form 10/A Registration Statement, filed February 10, 2000)
3.2 Bylaws (incorporated by reference from our Form 10/A Registration Statement, filed February 10, 2000)
3.3 Amended Bylaws (incorporated by reference from our Form 10/A Registration Statement, filed February 10, 2000)
3.4 Certificate of Amendment to Articles of Incorporation, dated December 17, 1998 (incorporated by reference from our Form 10/A Registration Statement, filed February 10, 2000)
3.5 Certificate of Amendment to Articles of Incorporation, dated September 21, 1999 (incorporated by reference from our Form 10/A Registration Statement, filed February 10, 2000)
(10) Material Contracts
10.1 Agreement with The Discop Organization dated March 11, 2002
(21) Subsidiaries
OnlineFilmSales.com, LLC
ReporterTV.com, LLC
StudioBuzz.com, LLC
Online FilmandTVSales.com, Inc.
InternetStudiosUK Limited
InternetStudios Entertainment Finance
SIGNATURES

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

INTERNETSTUDIOS.COM, INC.

By: /s/ Robert MacLean ~~By:~~ Robert MacLean, Chairman of the Board (Principal ofExecutive ~~Directors~~Officer, Principal Financial Officer and Principal Accounting Officer)

Date: ~~July~~April 2515, ~~2002~~2004

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

/s/ Robert MacLean By: Robert MacLean, Chairman of the Board of Directors Date: July 25, 2002

Signature	Title	Date

/s/ Robert MacLean
Robert MacLean	Chairman of the Board	April 15, 2004

/s/ Mark Rutledge By: Mark Rutledge, Vice Chairman of the Board of Directors Date: July 25, 2002

Name	Shares Acquired on Exercise (#)	Value Realized ($)	Number of Shares of Common Stock Underlying Unexercised Options at December 31, 2001 Exercisable/ Unexercisable	Value of Unexercised In-the-Money Options at December 31, 2001 Exercisable/ Unexercisable(1)
Robert MacLean	nil	nil	6,229 / 271	nil / nil
Mark Rutledge	nil	nil	6,516 / 284	nil / nil

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