AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH ___, 2002

REGISTRATION NO. 333-______

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

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

FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

ENTERTAINMENT TECHNOLGIES & PROGRAMS, INC.
(Name of small business issuer in its charter)

DELAWARE 7929 87-521389
(State of jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification
organization) Number)

17300 SATURN LANE; SUITE 111
HOUSTON, TEXAS 77058
TELEPHONE: (281) 486-6115
(Address and telephone number of principal executive offices)
-----------------------------------

GEORGE C. WOODS
CHIEF EXECUTIVE OFFICER
ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
17300 SATURN LANE; SUITE 111
HOUSTON, TEXAS 77058
TELEPHONE: (281) 486-6115
(Name, address, and telephone
number of agent for service)
-----------------------------------

COPY TO

ROBERT L. SONFIELD, JR., ESQ.
SONFIELD & SONFIELD
770 SOUTH POST OAK LANE
HOUSTON, TEXAS 77056
(713) 877-8333
(713) 877-1547 (FAX)
-----------------------------------

Approximate date of proposed sale to the public: From time to time after the
- --------------------------------------------------
effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [x]

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
------------------------

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
-------------------------
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
-------------------------
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. [ ]

=================================================================================================================
CALCULATION OF REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED (1) REGISTERED OFFERING PRICE PER AGGREGATE REGISTRATION FEE
SHARE (2) OFFERING PRICE (2)
- -----------------------------------------------------------------------------------------------------------------

Common Stock, par value $.001 per share 17,083,742 $ 0.03 $ 512,512.26 $ 47.15
- -----------------------------------------------------------------------------------------------------------------
<FN>

(1) This Registration Statement relates to the registration of 17,083,742
shares of common stock, $.001 par value, including 1,000,000 shares of common
stock issuable upon exercise of warrants at $0.045 per share and 876,081 shares
of common stock issuable upon exercise of warrants at $0.09 per share, which we
are obligated to register on behalf of Selling Shareholders. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Financial Condition and Liquidity" and "Selling Shareholders."

(2) Pursuant to Rule 457(c) under the Securities Act of 1933, the aggregate
offering price of the shares of common stock and common shares underlying the
warrants is computed on the basis of the average of the bid and asked price for
our common stock in the over-the-counter market on March 11, 2002.

================================================================================

The registrant hereby amends this registration statement on the date or dates as
may be necessary to delay its effective date until the registrant shall file a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on the date the Commission, acting pursuant to said Section 8(a), may
determine.

================================================================================

PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED MARCH ___, 2002

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.

[GRAPHIC OMITTED]

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.

17,083,742 SHARES
COMMON STOCK

We are registering the following shares for resale by Selling Shareholders.
See "Selling Shareholders":

- 10,423,133 shares of common stock issued at a price per share of $.08
to capital lease holders who have exchanged their capital leases for
common stock;

- 4,784,528 shares of our common stock issued to 26 shareholders;

- 1,000,000 shares of common stock issuable at $.045 per share upon
exercise of warrants held by 2 of the selling shareholders;

- 876,081 shares of common stock issuable at $.09 per share upon
exercise of consultant's warrants held by 2 of the selling
shareholders.

We will pay the expenses of registering these shares.

We will receive no part of the proceeds from any sale of the shares by the
selling shareholders. See "Selling Shareholders." We will receive proceeds from
the exercise of the warrants but we will not receive proceeds from the sale of
the shares of common stock underlying the warrants should such warrants be
exercised.

The selling shareholders will receive the price per share available in the
Over-The-Counter market. See "Determination of Offering Price."

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

INVESTING IN THESE SHARES INVOLVES SIGNIFICANT RISKS.

SEE "RISK FACTORS" SECTION OF THIS PROSPECTUS BEGINNING ON PAGE 52.

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

Our common stock is registered under Section 12(b) of the Securities
Exchange Act of 1934 and trades are reported on the Over-The-Counter Electronic
Bulletin Board (OTCBB) under the symbol "ETPI." The last reported sale price per
share of our common stock by the OTCBB on March 18, 2002 was $0.03 per share.

THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE NOT
APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this prospectus is ________, 2002

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TABLE OF CONTENTS

CAPTION PAGE
- ------- ----

PROSPECTUS SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RISK FACTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
DETERMINATION OF OFFERING PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
DILUTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SELLING SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
PLAN OF DISTRIBUTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
DESCRIPTION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. . . . . . . . . . . . . . . 16
DESCRIPTION OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
DESCRIPTION OF PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
DIRECTORS AND EXECUTIVE OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. . . . . . . . . . . . 32
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. . . . . . . . . . . . . . . . . . . . 32
LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
WHERE YOU CAN FIND MORE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 35
INDEX TO FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
===========================================================================================

PROSPECTUS SUMMARY

The following summary highlights material information contained in this
prospectus. This summary does not contain all the information you should
consider before investing in the securities. Before making an investment
decision, you should read the entire prospectus carefully, including the "Risk
Factors" section, the financial statements and the notes to the financial
statements. Some of the statements made in this prospectus discuss future events
and developments, including our future business strategy and our ability to
generate revenue, income and cash flow. These forward-looking statements involve
risks and uncertainties that could cause results to differ materially from those
contemplated in these forward-looking statements.

THE COMPANY

Entertainment Technologies & Programs, Inc., is a 23-year-old vertically
integrated entertainment and amusement game company. We are strategically
positioned as the provider of a comprehensive array of entertainment products
and services to both the military and the civilian markets. We are primarily
engaged in the design and construction of nightclub facilities in military
venues and the provision of entertainment services within these facilities, the
retail sale of professional sound and lighting equipment through catalogs and
the internet, the installation and operation of amusement game equipment, and
the promotion and production of live performances.

We operate approximately 110 entertainment systems within nightclub venues
on 40 U.S. military bases located in the United Sates, Europe and Asia. We are
the only supplier of entertainment services on U.S. military bases worldwide to
have been awarded AFNAF (Armed Forces Non Appropriated Fund) contracts and the
first service company ever to be awarded such AFNAF status. AFNAF contracts
allow us to obtain business from the various branches of the military without
entering into competitive bids, a process typically required of most independent
government contractors and service providers. Through our renewable AFNAF
contracts and many years of reliable and quality services, we have developed
very strong relationships with base commanders and venue coordinators, and have
become the leading independent entertainment provider to U.S. military bases. In
addition to military markets, we have the opportunity to exploit our success
through expansion into commercial markets, both domestically and
internationally, utilizing our valuable experience and developed expertise.

We provide our services through three wholly-owned subsidiaries as follows:

1. Nitelife Military Entertainment, Inc. ("Nitelife") The development,
management and operation of entertainment systems within nightclubs,
located on U. S. military bases throughout the world, and the
designing, planning, promotion, and production of live performances
and other entertainment bookings in both the military and the civilian
markets.

2. Performance Sound & Light, Inc. (PS&L) The design, installation and
retail sale of professional sound and lighting equipment through mail
order catalogs, the Internet and direct sales targeting the military
market through AFNAF purchase agreements and civilian consumer
markets.

3. Hero's Family Fun Entertainment, Inc. (Hero's) The ownership,
installation and operation of amusement equipment in a company-owned
and operated facility which offers entertainment for the entire
family, including laser tag, soft play area, redemption center,
high-end video games, a restaurant and party rooms.

Our principal executive offices are located at 17300 Saturn Lane; Suite
111, Houston, Texas 77058, and our telephone number is (281) 486-6115. Our
facsimile number is (281) 486-6155.

THE OFFERING

Common Stock Offered for Resale:. . . . . . 17,083,742 shares, offered by
Selling Shareholders and issuable
upon the exercise of warrants

Shares Outstanding Before the Offering (1): 68,552,545

Shares Outstanding After the Offering (2):. 70,428,626

Use of Proceeds (3):. . . . . . . . . . . . Working capital and general
corporate purposes.

Over-The-Counter Electronic Bulletin
Board Symbol: . . . . . . . . . . . . . . . ETPI

<FN>
- ----------------
(1) As of March 11, 2002.
(2) Assumes all shares registered in this prospectus are sold.
(3) We will receive no proceeds from the issuance of shares of common stock to
the Selling Shareholders. If exercised, we will receive proceeds from the
sale of shares issuable upon the exercise of the warrants by the Selling
Shareholders. However, we will not received proceeds from resale of shares
issuable upon the exercise of the warrants by the Selling Shareholders.

SUMMARY FINANCIAL AND OPERATING DATA

The information presented below, except nightclub data, as of and for each
of the years in the two-year period ended September 30, 2001 and 2000 is derived
from the consolidated financial statements, which have been audited by Ham,
Langston & Brezina, L.L.P., our independent auditors. The information presented
below, except nightclub data, for, and at the end of, each of the three month
periods ended December 31, 2001 and 2000 is derived from the consolidated
financial statements, which have been reviewed by Ham, Langston & Brezina,
L.L.P.

The information presented below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," the Consolidated Financial Statements for each of the years in the
two year period ended September 30, 2001 and 2000 and the related notes and
Independent Auditors' Report, which are included elsewhere in this prospectus.

============================================================
FOR THE 12 MONTHS ENDED FOR THE 3 MONTHS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------------------- ---------------------------
2001 2000 2001 2000
-------------- ---------------- ----------- --------------

STATEMENT OF OPERATIONS DATA:
Revenue . . . . . . . . . . . . . . $ 3,348,390 $ 4,817,594 $ 850,844 $ 740,235
Gross margin . . . . . . . . . . . . 1,107,595 2,363,308 334,368 277,722
General and administrative expenses. 2,020,041 3,067,203 360,097 401,281
Net income (loss). . . . . . . . . . (1,473,462) (2,226,489) (199,104) (181,820)
Net income (loss) per share. . . . . $ (0.03) $ (0.06) $ (0.00) $ (0.00)

OTHER DATA:
EBITDA (1) . . . . . . . . . . . . . $ (354,579) $ (703,895) $ (2,708) $ (13,457)
Capital expenditures . . . . . . . . 357,217 324,077 21,093 110,484

UNIT DATA:
Military bases serviced. . . . . . . 40 42 40 41
Nitelife venues on bases . . . . . . 110 107 103 105

================================
DECEMBER 31, 2001
--------------------------------
ACTUAL AS ADJUSTED (2)
-------------- ----------------
BALANCE SHEET DATA:
Working capital. . . . . . . . . . . $ (1,634,833) $ (1,510,986)
Total assets . . . . . . . . . . . . 2,491,450 2,615,297
Current liabilities. . . . . . . . . 2,406,916 2,406,297
Long-term liabilities. . . . . . . . 1,463,952 1,463,952
Stockholders' deficit. . . . . . . . $ (1,379,418) $ (1,255,571)

<FN>
- ----------------

(1) Earnings before interest income, interest expense, (gain) loss on property
transactions, discontinued operations, extraordinary items, depreciation,
amortization and income taxes.

(2) Includes the $123,847 in cash resulting the exercise of the warrants to
purchase 1,000,000 and 876,081 shares of common stock at $.045 and $.09 per
share, respectively.

RECENT DEVELOPMENTS

On September 5, 2001, we entered into a loan agreement with Gabriel Albert
Martin, as trustee, in the amount of $200,000. This loan has a term of two
years with interest payable in our common stock at the rate of 12% per year. At
the end of the 2-year term, the entire principal amount will be due and payable.
This loan was secured by an interest in the property and equipment of our
subsidiary, Nitelife Military Entertainment, Inc., as well as through the pledge
of the stock of Nitelife Military Entertainment, Inc., which is owned by us. In
consideration for this loan, Mr. Martin received the right to nominate two
members to our board of directors. At that time, our board of directors
consisted of five members, of which there were two vacancies. Mr. Martin filled
the two vacancies through the nomination of himself and Mr. George Woods, our
interim chief executive officer. Additionally, there exist certain provisions
in the loan agreement regarding the acceleration of repayment of this loan
including, but not limited to, the sale of assets by us, violation of maximum
allowable debt covenants, and the receipt of cash proceeds from debt or equity
financing in an amount greater than $1,000,000. On February 8, 2002, Mr.
Martin, as trustee, agreed to accrue the interest payable quarterly in stock to
the maturation of the note. The accrued interest shall be payable in the form
of common stock at the then market price. The number of shares to be issued for
the payment of interest will be calculated by dividing the total amount of
interest due and payable divided by the average of the closing bid and ask
prices of our common stock for the ten trading days prior to September 5, 2003.

On October 31, 2001, the board of directors requested and received the
resignation of James D. Butcher from his position as Chief Executive Officer.
Prior to October 31, 2001, Mr. Butcher served as our Chairman of the board of
directors and Chief Executive Officer. At the time of Mr. Butcher's
resignation, the Board elected George C. Woods, our President and Chief
Financial Officer, as interim Chief Executive Officer. The Board is now
preparing to conduct a search, which may include Mr. Woods, for a permanent
replacement of our Chief Executive Officer.

On November 8, 2001, we entered into a second loan agreement with Mr.
Martin, as trustee, in the amount of $70,000. This loan has a term of 90 days
with interest payable in cash at the rate of 12% per year. At the end of the
90-day term, the entire principal and accrued interest will be due and payable.
This loan is included under the security and stock pledge agreements previously
entered into in conjunction with Mr. Martin's $200,000 loan dated September 5,
2001. On February 8, 2002, Mr. Martin, as trustee, agreed to extend the term of
this loan for an additional 30 days, and may provide additional 30-day
extensions at his discretion.

On November 15, 2001, a majority of our board of directors elected to
remove Mr. Butcher as Chairman of our board of directors. According to our by
laws, in the absence of an appointed Chairman of the board of directors, the
President of the company is to serve as the Acting-Chairman of the board of
directors. Furthermore, on November 15, 2001, a majority of the members of our
board of directors elected to remove Jack D. Nolan as Secretary of our company.
On November 15, our board of directors also instructed management to explore
options regarding the sale or closure of our Hero's Family Entertainment Center
located in Channelview, Texas.

On December 12, 2001, we concluded a private exchange offer to 31 existing
securityholders of our company to exchange certain capital leases held by these
existing securityholders for shares of our common stock at an exchange price of
$.08 per share. Of the 31 capital leaseholders, 29, or 93.5%, elected to
exchange their capital leases for an aggregate of 10,423,133 shares of our
common stock. Those leaseholders that elected to exchange their capital leases
represented $833,850 of the aggregate $844,287 in principal portion of capital
lease amounts outstanding plus accrued interest, or approximately 98.8% of the
outstanding liability. These shares are included in this prospectus.

On December 18, 2001, Jack D. Nolan tendered his resignation from our board
of directors, effectively immediately. The board of directors intends for this
board seat to be filled by Mr. Martin's third nominee, pursuant to the terms and
conditions of his December 19, 2001 loan agreement with us, thereby maintaining
the board's current number of members at five.

On December 19, 2001, we entered into a third loan agreement with Mr.
Martin, in the amount of $250,000. This loan has a term of 18 months with
interest payable quarterly in cash at the rate of 16% per year. The principal,
also payable quarterly, is amortized over 48 months with a balloon payment in
the amount of $156,250 due and payable upon maturity of the loan. This loan is
also included under the security and stock pledge agreements previously entered
into in conjunction with Mr. Martin's $200,000 loan. In consideration for this
loan, Mr. Martin received the right to nominate one additional member to our
board of directors. Additionally, this loan includes certain provisions
regarding the acceleration of repayment of this loan including, but not limited
to, changes in executive management, changes in the board of directors, and the
receipt of cash proceeds from debt or equity financing in an amount greater than
$1,000,000. With this loan, Mr. Martin now has the right to nominate 3 out of 5
members in total to our board of directors.

Effective December 31, 2001, Kevin P. Regan was nominated to serve on our
board of directors as one of the nominees held by Mr. Martin. Mr. Regan is a
member of Genesis Financial Group, L.L.C., a firm that provides consulting
services to the Company.

On February 2, 2002, James D. Butcher tendered his resignation from our
board of directors. The board of directors intends to fill this seat in its
upcoming slate of directors presented to the shareholders in the next annual
shareholder meeting.

On February 12, 2002, we filed suit against James D. Butcher, our former
Chairman and Chief Executive Officer, in the 151st District Court of Harris
County alleging Mr. Butcher's violation of covenant not to compete, breach of
fiduciary duty, breach of contract and conversion under the terms of his
employment agreement dated November 10, 1995 and effective as of May 11, 1995.
On February 27, 2002, Mr. Butcher filed counterclaims against us.

On February 18, 2002, we entered into a settlement agreement with Verizon
Capital in the matter of Verizon Capital v. Entertainment Technologies &
Programs, Inc. in the 11th District Court of Harris County, Texas, Cause No.
2001-08321.

RISK FACTORS

You should carefully consider the following risks and all of the other
information set forth in this prospectus. Some of the following risks relate
principally to our business. Other risks relate to our financial condition, the
securities markets and ownership of our stock. The risks and uncertainties
described below are not the only ones facing our company. Additional risks and
uncertainties not presently known to us or that we currently believe to be
immaterial may also adversely affect our business.

If any of the following risks and uncertainties develops into actual
events, our business, financial condition or results of operations could be
harmed and the price of our stock could go down. This means you could lose all
or part of your investment.

There are risks associated with forward-looking statements made by us and
actual results may differ.

Some of the information in this Form SB-2 contains forward-looking
statements that involve substantial risks and uncertainties. You can identify
these statements by forward-looking words as "may," "will," "expect,"
"anticipate," "believe," "estimate" and "continue," or similar words. You should
read statements that contain these words carefully because they:

- Discuss our future expectations;

- Contain projections of our future results of operations or of our
financial condition; and

- State other "forward-looking" information.

We believe it is important to communicate our expectations. However, there
may be events in the future that we are not able to accurately predict or over
which we have no control. The risk factors listed in this section, as well as
any cautionary language in this prospectus, provide examples of risks,
uncertainties and events that may cause our actual results to differ materially
from the expectations we describe in our forward-looking statements. You should
be aware that the occurrence of the events described in these risk factors could
have an adverse effect on our business, results of operations and financial
condition.

RISKS RELATED TO THIS OFFERING

OUR SHARE PRICE MAY DECLINE BECAUSE OF THE ABILITY OF THE SELLING SHAREHOLDERS
TO SELL SHARES OF OUR COMMON STOCK, RESULTING IN A LOSS OF VALUE TO OUR OTHER
SHAREHOLDERS.

This prospectus covers 17,083,742 shares for sale by the Selling
Shareholders. Sales of substantial amounts of our common stock by the Selling
Shareholders, or the possibility of sales of up to approximately 22% of the
presently outstanding shares, could adversely affect the prevailing market price
of our common stock and impede our ability to raise capital through the issuance
of equity securities. Subject to applicable federal and state securities laws
and contractual limitations, after exercising their warrants to purchase shares
of our common stock, the Selling Shareholders may sell any and all of their
Shares. Trading volume in our stock on the OTC Bulletin Board has historically
been light; and sale of blocks of common stock could depress the market price of
our stock.

OUR COMMON STOCK IS A "PENNY STOCK," AND COMPLIANCE WITH REQUIREMENTS FOR
DEALING IN PENNY STOCKS MAY MAKE IT DIFFICULT FOR HOLDERS OF OUR COMMON STOCK TO
RESELL THEIR SHARES.

The limited public market for our common stock is in what is known as the
over-the-counter market and, trading of our stock is quoted under the symbol
"ETPI" on the Electronic Bulletin Board operated for the NASD. At least for the
foreseeable future, our common stock will be deemed to be a "penny stock" as
that term is defined in Rule 3a51-1 under the Securities Exchange Act of 1934.
Rule 15g-2 under the Exchange Act requires broker/dealers dealing in penny
stocks to provide potential investors with a document disclosing the risks of
penny stocks and to obtain from these inventors a manually signed and dated
written acknowledgement of receipt of the document before effecting a
transaction in a penny stock for the investor's account. Compliance with these
requirements may make it more difficult for holders of our common stock to
resell their shares to third parties or otherwise, which could have a material
adverse effect on the liquidity and market price of our common stock (see
"Description of Securities - Penny Stock Rules").

Penny stocks are stocks:

* With a price of less than $5.00 per share unless traded on NASDAQ or a
national securities exchange;

Penny stocks are also stocks that are issued by companies with:

* Net tangible assets of less than:

- $2.0 million (if the issuer has been in continuous operation
for at least three years); or

- $5.0 million (if in continuous operation for less than three
years); or

* Average revenue of less than $6.0 million for the last three
years.

IT IS MORE DIFFICULT FOR OUR SHAREHOLDERS TO SELL THEIR SHARES BECAUSE WE ARE
NOT, AND MAY NEVER BE, ELIGIBLE FOR NASDAQ OR ANY NATIONAL STOCK EXCHANGE.

We are not presently, and it is likely that for the foreseeable future we
will not be, eligible for inclusion in the NASDAQ National Market System or for
listing on any other United States national stock exchange. To be eligible to be
included in the NASDAQ National Market System, a company is required to have not
less than $4,000,000 in net tangible assets, a public float with a market value
of not less than $5,000,000, and a minimum bid of price of $4.00 per share. At
the present time, we are unable to state when, if ever, we will meet the NASDAQ
National Market System application standards. Unless we are able to increase our
net worth and market valuation substantially, either through the accumulation of
surplus out of earned income or successful capital raising financing activities,
we will never be able to meet the eligibility requirements of the NASDAQ
National Market System. As a result, it will more difficult for holders of our
common stock to resell their shares to third parties or otherwise, which could
have a material adverse effect on the liquidity and market price of our common
stock.

RIGHTS TO ACQUIRE SHARES OF OUR COMMON STOCK WILL RESULT IN DILUTION AND
POSSIBLE LOSS OF VALUE TO OTHER HOLDERS OF OUR COMMON STOCK.

Outstanding warrants and options could adversely affect the terms on which
we can obtain additional financing, and the holders of these warrants and
options can be expected to exercise these securities at a time when, in all
likelihood, we would be able to obtain additional capital by offering shares of
common stock on terms more favorable to us than those provided by the exercise
of these warrants and options. Holders of the warrants and options will have the
opportunity to profit from an increase in the market price of our common stock,
with resulting dilution in the interests of the holders of our common stock. As
of February 28, 2002, there were issued and outstanding the following warrants
and options:

- Warrants held by our directors, officers, employees and affiliates to
purchase an aggregate of 500,000 and 876,081 shares of common stock
with an exercise price $0.045 and $0.09 per share, respectively.

- Warrants and options held by unaffiliated third parties to purchase an
aggregate of 500,000 shares of common stock with an exercise price of
$0.45 per share.

OUR BOARD OF DIRECTORS CAN ISSUE ADDITIONAL SHARES OF OUR COMMON STOCK WITHOUT
THE CONSENT OF ANY OF OUR SHAREHOLDERS; SUBSTANTIAL FUTURE STOCK ISSUANCES COULD
RESULT IN THE DILUTION OF YOUR VOTING POWER AND OF EARNINGS PER SHARE THAT COULD
DECREASE THE VALUE OF YOUR SHARES.

Our certificate of incorporation authorizes the issuance of 200,000,000
shares of common stock. Upon the sale of all of the shares of common stock
offered by this prospectus, 129,571,374 of our authorized common shares will
remain unissued. Our board of directors has the power to issue any or all of
the remaining authorized common shares for general corporate purposes, without
shareholder approval. Potential investors should be aware that any stock
issuances may result in a reduction of the book value or market price of the
outstanding common shares. If we issue any additional common shares, any
issuance will reduce the proportionate ownership and voting power of each other
common shareholder. See "Description of Securities - Common Stock."

BECAUSE WE DO NOT ANTICIPATE PAYING DIVIDENDS ON OUR COMMON STOCK IN THE
FORESEEABLE FUTURE THE ONLY WAY YOU CAN REALIZE A RETURN ON AN INVESTMENT IN OUR
STOCK IS FOR THE STOCK PRICE TO INCREASE.

Rather, we plan to retain earnings, if any, for the operation and expansion
of business. Investment in our common stock is unsuitable for an investor
seeking current income.

YOU MAY SUFFER ADDITIONAL DILUTION FROM FUTURE ISSUANCE OF OUR COMMON STOCK.

To the extent that any future financing involves the issuance of our equity
securities or instruments convertible into equity securities, existing
shareholders will be diluted, perhaps substantially, and future investors may be
granted rights superior to those of existing shareholders. Our failure to raise
capital on acceptable terms when needed will have a material adverse effect on
us. In addition, we may be obligated to issue additional shares of common stock
to a trust in the future to satisfy any shortfall in proceeds which may be
experienced from liquidation of the trust's assets. We have in the past and in
the future may enter into transactions with strategic third parties pursuant to
which we will issue shares of our common stock to such third parties for
non-cash consideration. Any such transactions will further dilute the interests
of the existing shareholders. In addition, our granting of additional stock
options to employees and consultants will further dilute existing shareholders.
Shareholders will experience substantial dilution in the event that we issue
additional shares of our common stock. In addition, the exercise of the
warrants and the subsequent public sales of common stock by holders of the
securities covered by this prospectus or another registration statement effected
at their demand, under Rule 144 or otherwise, would result in dilution to our
shareholders.

ADDITIONAL SHARES ARE ELIGIBLE FOR FUTURE SALE UNDER RULE 144.

As of March 11, 2001, we estimate that 41,236,876 shares of the our common
stock currently outstanding are "restricted securities" which have been
outstanding for more than two years and can be sold publicly in compliance with
Rule 144 adopted under the Securities Act of 1933 (the "Securities Act").
Holders of restricted securities must comply with the requirements of Rule 144
in order to make a public sale of their shares without violating the Securities
Act. In general, under Rule 144 as currently in effect, a person who has
beneficially owned restricted securities for at least one year, and persons who
may be deemed affiliates of the Company who have beneficially owned restricted
securities for at least two years, are entitled to sell within any three-month
period a number of shares that does not exceed the greater of 1% of the then
outstanding shares of Common Stock or the average weekly trading volume in the
common stock during the four calendar weeks preceding such sale, provided that
the Company has filed certain periodic reports with the Securities and Exchange
Commission and the sale is made in a "broker's transaction" or in a transaction
directly with a "market maker" as those terms are used in Rule 144. A person who
is not deemed to have been an affiliate of the Company at any time during the 90
days preceding a sale by such person, and who has beneficially owned restricted
shares for at least two years, would be entitled to sell such shares under Rule
144 without regard to the volume limitations and public information and manner
of sale requirements described above. No predictions can be made as to the
effect, if any, that market sales of such shares, or the availability of such
shares for future market sales, will have on the market price of our common
stock prevailing from time to time. Sales of substantial amounts of our common
stock (including shares issued upon the exercise of stock options or warrants),
or the perception that such sales could occur, could materially adversely affect
the prevailing market price for our common stock and could impair our future
ability to raise capital through an offering of equity securities. The
possibility that substantial amounts of common stock may be sold in the public
market under Rule 144 may adversely affect the prevailing market price for the
common stock.

RISKS RELATED TO OUR FINANCIAL CONDITION

WE HAVE A RECENT HISTORY OF INCURRING NET LOSSES.

We have recently experienced substantial net losses. For the years ending
September 30, 2001 and 2000, we incurred net losses of $1,473,462 and
$2,226,489, respectively. For the quarters ended December 31, 2001 and 2000, we
incurred net losses of $199,104 and $181,820, respectively. Although we have
implemented a restructuring and turnaround strategy and expect to reduce or
eliminate net losses in the near future, there can be no assurance that
management will be successful in this endeavor. As a result of going concern
issues that we face, our independent auditors included an emphasis paragraph in
their report on the Company's financial statements for the year ended September
30, 2001 and 2000 stating that there exists substantial doubt about our ability
to continue as a going concern. Furthermore, there can be no guarantee as to
our ability to raise sufficient cash through operations, borrowings or issuances
of its common stock to meet other obligations of the company that may exist or
arise in the future.

OUR FINANCIAL AND OPERATING ACTIVITIES ARE LIMITED BY RESTRICTIONS CONTAINED IN
THE TERMS OF OUR FINANCINGS.

As is customary in similar agreements, covenants in our SBA loan will
restrict our ability to, among other things:

- Sell or transfer assets;

- Pay dividends;

- Make certain investments or acquisitions; and

- Repurchase or redeem capital stock.

The covenants in our SBA loan also require us to comply with certain
financial ratios. These restrictions may interfere with our ability to obtain
financing or to engage in other necessary or desirable business activities.

If we cannot comply with the requirements in our existing SBA loan, then
the lenders may require us to repay immediately all of our outstanding debt
under the SBA loan. If our debt payments were accelerated, our assets might not
be sufficient to repay our debt. Our lenders may also require us to use all of
our available cash to repay our debt or may prevent us from making payments to
other creditors on certain portions of our outstanding debt.

We may not be able to obtain a waiver of these provisions or, if needed,
refinance our debt. In such a case, our business, prospects, results of
operations and financial condition would suffer.

In addition, there are restrictions on the use of proceeds in our loan
agreement with Mr. Martin dated December 19, 2001. These restrictions limit the
use of proceeds to marketing, fulfillment of purchase orders or capital
expenditures associated with the implementation of our military contracts for
Nitelife, PS&L and Hero's operations, with a maximum of $50,000 of the proceeds
for use for general corporate purposes by us.

WE MAY BE LIMITED ON USE OF NET OPERATING LOSS AND TAX CREDIT CARRY FORWARDS.

Federal income tax laws may limit the amount of net operating losses and
certain tax credits that might otherwise be used by us to offset future income
and tax liabilities. There can be no assurance as to the availability of such
losses and credits for such offset.

RISKS RELATED TO OUR BUSINESS

THE LOSS OF AFNAF CONTRACTS COULD HAVE A NEGATIVE IMPACT ON OPERATIONS.

Our dealings with the U. S. government, specifically the Department of
Defense ("DOD") and the various branches of the military, are contracted through
the Air Force Non Appropriated Fund Purchasing Office ("AFNAFPO"). This type of
contract allows us to contract with the service branches of the military without
going through the competitive bidding process each time. We have been awarded
two AFNAF contracts. These contracts are typically renewed annually. There can
be no assurances that the DOD will renew these contracts. Should our contracts
not be renewed, we will be required to bid competitively for each contract we
enter into individually with each military base. However, we received AFNAF NPA
master contracts in 1993 and 1995 for Nitelife and PS&L, respectively, and have
successfully renewed these two master contract annually. We currently have no
known issues with AFNAFPO. In June 2001, Nitelife's AFNAF NPA master contract
was renewed for an additional one-year period. PS&L's AFNAF NPA master contract
expires on March 31, 2002. Though we can provide no guarantee that PS&L's AFNAF
NPA master contract will be renewed for an additional year, we do not anticipate
or foresee any issue that would prohibit AFNAFPO from renewing PS&L's master
contract.

WE COMPETE AGAINST A WIDE VARIETY OF ENTERTAINMENT CHOICES.

We compete against a wide variety of concepts vying for leisure time and
entertainment spending. These competing concepts encompass a broad spectrum of
entertainment opportunities, including family entertainment centers, theme,
water and amusement parks, sports attractions, movie theaters, nightclubs,
concert events, and other in-home and out-of-home entertainment activities. Our
business is subject to factors that affect the recreation and leisure industries
generally, such as general and local economic conditions, demographic trends,
consumer tastes, and changes in consumer spending habits, over which we have no
control.

Due to our unique status resulting from our AFNAF contracts, we believe we
possess a competitive advantage when providing entertainment services and
products to the military markets since we do not have to bid on those
opportunities. However, the downsizing of the military, which began in the
1990's, will continue to reduce the total number of military installations that
remain open and possibly limit the future growth of Nitelife. Substantially all
of the business conducted through our Nitelife and PS&L subsidiaries comes
through our AFNAF contracts.

Hero's competes in the pay-for-play children's entertainment center
industry by targeting its activities and

programming to children ages two to sixteen. The principal competitive factors
affecting a family entertainment center include location, price, uniqueness and
perceived quality of the attractions and amusement games, atmosphere and
cleanliness of the facility and quality of food and entertainment. This industry
is affected by general and local economic conditions, demographic trends and
consumer tastes over which we have no control. Consumer tastes, in particular,
are subject to rapid changes which could result in our activities falling out of
favor with its target customers, requiring it to invest in new equipment for
family entertainment centers. Our future revenues will depend to a significant
extent upon its ability to respond to changes in consumer tastes. The
performance of our family entertainment center may be affected by a variety of
factors such as the location of competing facilities, increased labor and
employee benefit costs and the availability of experienced management and hourly
employees.

Competitive market conditions, including the emergence of significant new
competitors, could materially adversely affect our ability to improve our
results of operations. Such new competitors and certain existing competitors
have or may have longer operating histories, substantially greater name
recognition and more extensive financial, technical, marketing, sales and
distribution resources. There can be no assurance that we will be able to
compete successfully against existing and future competitors or that the
competitive pressures we face will not materially adversely affect our business,
operating results and financial condition.

OUR BUSINESS IS HIGHLY SENSITIVE TO PUBLIC TASTES AND DEPENDENT ON OUR ABILITY
TO SECURE POPULAR ARTISTS, LIVE ENTERTAINMENT EVENTS AND VENUES.

As a participant in the live entertainment industry, our ability to
generate revenues is highly sensitive to rapidly changing public tastes and is
dependent on the availability of popular performers and events. Since we rely
on unrelated parties to create and perform live entertainment, any disruption in
the availability of popular musical artists and other performers could limit our
ability to generate revenues. In addition, we require access to venues to
generate revenues from live entertainment events.

LOCAL CONDITIONS, DISTURBANCES, EVENTS AND NATURAL DISASTERS CAN ADVERSELY
AFFECT TRAFFIC COUNTS AT OUR FAMILY ENTERTAINMENT CENTER.

Lower traffic counts may also be caused by other local conditions or
events. In addition, since our family entertainment center is near major urban
areas and appeals to teenagers and young adults, there may be disturbances at
our family entertainment center, which negatively affect our image. Such
disturbances could result in lower attendance at our family entertainment
center. We work with local police authorities on security-related precautions
to prevent these types of occurrences. We can make no assurance, however, that
these precautions will be able to prevent disturbances or their impact on our
image.

WE ARE SENSITIVE TO NEGATIVE PUBLICITY.

The target market for Hero's, children between two and sixteen years of age
and families with small children, is potentially highly sensitive to adverse
publicity. There can be no assurance that we will not experience negative
publicity regarding our family entertainment center. The occurrence of negative
publicity regarding our entertainment center could materially and adversely
affect our image with customers and the results of our operations.

AN INCREASE IN LABOR COSTS COULD REDUCE OUR INCOME FROM OPERATIONS.

We are dependent upon an available labor pool of unskilled and semi-skilled
employees. We are also subject to the Fair Labor Standards Act, which governs
such matters as minimum wage, overtime and other working conditions. Numerous
proposals have been made on state and federal levels to increase minimum wages.
A shortage in the labor pool or other general inflationary pressures or changes
in applicable laws and regulations could increase labor costs, which could have
a material adverse effect on our income from operations.

OUR RESULTS OF OPERATIONS MAY EXPERIENCE FLUCTUATION DUE TO SEASONALITY AND
OTHER FACTORS.

We have experienced, and in the future could experience, quarterly
variations in revenues as a result of a variety of factors, many of which are
outside of our control, including the number of new or renewed contracts with
the military, the timing of capital investments in existing locations,
unfavorable weather conditions, war and natural disasters. We typically
experience lower net sales in the first and second quarters than in the third
and fourth quarters. If revenues are below expectations in any given quarter,
our operating results would likely be materially adversely affected for that
quarter.

WE ARE DEPENDENT ON THE SERVICE OF KEY PERSONNEL.

Our success depends upon the continuing contributions of our executive
officers and other key operating personnel, including George C. Woods, our
interim Chief Executive Officer, President and Chief Financial Officer, Robert
Carroll, President of Nitelife Military Entertainment, Inc., and Timothy B. Hay,
Director of Sales and Marketing for Nitelife Military Entertainment, Inc. and
Performance Sound & Light, Inc. The complete or partial loss of their services
or the services of other key personnel could adversely affect our business.
Although we have entered into employment agreements with Messrs. Woods, Carroll
and Hay, we cannot be certain that we will be able to retain their services
during this or any subsequent period. Messrs. Woods, Carroll and Hay are in
good health; however, their retirement, disability or death could have a
significant adverse impact on our business.

Our success will also depend upon our ability to retain and attract
additional skilled personnel to our senior management team and to our
operational level. We intend to hire additional personnel to assist it in
implementing its plan of operations. There can be no assurance that we will be
able to attract and train key employees to implement our business plan.

WE MAY BE UNSUCCESSFUL IN IMPLEMENTING OUR GROWTH STRATEGIES.

Our continued growth depends, to a significant degree, on our ability to
implement our growth strategies. Among such strategies, we plan to expand the
number of bases on which we operate entertainment systems in addition to
expanding the scope of products we can sell to the military under our AFNAF
contacts. Our ability to successfully expand our Nitelife and PS&L operations
is highly dependent on our ability to raise sufficient capital to fund the
acquisition and installation of additional entertainment systems on additional
bases.

WE MAY NOT BE ABLE TO MANAGE OR INTEGRATE FUTURE ACQUISITIONS.

The acquisition and successful integration of businesses that provide
synergistic or vertical integration opportunities for Nitelife and PS&L are key
elements of our operating strategy. We have experienced significant difficulties
in integrating and profitably operating acquisitions that we have made in the
past. We believe problems arising out of past acquisitions have been corrected
and we will consider acquisition opportunities that arise in the future.
However, future acquisitions could place a future strain on our existing
operations. Our ability to manage future acquisitions will depend on our ability
to successfully evaluate investments, monitor operations, control costs,
maintain effective quality controls, expand our internal management, technical
and accounting systems and integrate acquired businesses into our company. As
you evaluate our prospects, you should consider the many risks we will encounter
during the process of integrating businesses that we may acquire in the future,
including the:

- Distraction of management's attention from other business concerns;

- Potential loss of key employees or customers of the acquired
businesses; and

- Potential inability to integrate controls, standards, systems and
personnel.

Although our management has significant experience, we may be unable to
effectively integrate businesses we expect to acquire in the future without
encountering the difficulties described above. Failure to effectively integrate
such businesses could have a material adverse effect on our business, prospects,
and results of operations or financial condition. In addition, the combined
companies may not benefit as expected from the integration.

To fund future acquisitions, we may need to borrow more money, assume the
debts of acquired companies, or issue more stock, thereby diluting the value of
our existing common stock. To incur or assume additional debt, we must comply
with the restrictions contained in existing debt agreements. If these
restrictions are not met and we do not receive necessary consents or waivers of
these restrictions, we may be unable to make future acquisitions.

We cannot guarantee that any future acquisition will generate the earnings
or cash flow we expect. In connection with any future acquisitions, unexpected
liabilities might arise and the planned benefits may not be realized. Any or all
of these circumstances could materially adversely affect our financial position
and/or stock price.

WE HAVE EXPOSURE TO CLAIMS OF PERSONAL INJURY.

As a producer of a public entertainment event, we have exposure to claims
of personal injury suffered by visitors to our family entertainment center, live
venues and other attractions. To date, we have experienced claims that we have
been able to resolve through litigation.

OUR BUSINESS IS SUBJECT TO EXTENSIVE GOVERNMENTAL REGULATION.

We are subject to various federal, state and local laws and regulations
affecting operations, including those relating to the use of video and arcade
games and rides, those relating to the preparation and sale of food, and those
relating to building and zoning requirements. We are also subject to laws
governing our relationship with employees, including minimum wage requirements,
overtime, working and safety conditions, and citizenship requirements.
Difficulties or failures in obtaining required licenses or other regulatory
approvals could delay or prevent the opening of a family entertainment center,
and the suspension of, or inability to renew, a license or permit could
interrupt operations at an existing facility.

USE OF PROCEEDS

We will not receive any of the proceeds from the sale of the shares of our
common stock offered by the Selling Shareholders.

DETERMINATION OF OFFERING PRICE

The agreed value of our common shares issued upon conversion of securitized
equipment leases is equal to 75% of the average of the closing prices of our
common stock for the 60-day period beginning September 17, 2001 and ending
November 15, 2001; provided however, in no event will the exchange price by less
than $0.08 per share or greater than $0.12 per share. At the closing of the
exchange offer, based on the formula above, the exchange price was set at $0.08
per share. Other shares issued and included in this registration statement were
originally sold or issued at prices ranging from $0.045 to $0.07 per share. The
shares issuable upon exercise of the warrants will be issued based on exercise
prices ranging from $0.045 to $0.09 per share.

Upon resale of the shares by the Selling Shareholders, the price per share
will be the market price available in the over-the-counter market at the time of
sale.

DILUTION

As of March 11, 2002, there were 68,552,545 outstanding shares of our
$0.001 par value common stock. The following table sets forth the net tangible
book value per share at December 31, 2001, and the net tangible book value per
share assuming the exercise of all of the outstanding options and warrants,
totaling 1,876,081 shares

Net tangible book value per share as of December 31, 2001 is calculated
by dividing total tangible assets less total liabilities, or ($1,379,418), by
the number of shares outstanding, 68,365,184.

After giving effect to the 1,876,081 shares issuable upon exercise of the
options and warrant for $123,847 in cash, our pro forma net tangible book value
will increase to $(1,255,571), or $(.018) per share, representing an immediate
increase in pro forma net tangible book value of $.002 per share for existing
shareholders.

Net tangible book value at December 31, 2001. . . . . . . . . . . $(.020) per share
Net tangible book value after giving effect to issuance 1,876,081
issuable upon exercise of the warrants. . . . . . . . . . . . . . $(.018) per share
Per share dilution to Selling Shareholders. . . . . . . . . . . . $(.002) per share
Percent dilution to Selling Shareholders. . . . . . . . . . . . . 10.0%

SELLING SHAREHOLDERS

The following table sets forth information with respect to the Selling
Shareholders as of March 11, 2002. Gabriel Albert Martin and Kevin P. Regan are
two of our directors. Genesis Financial Group, L.L.C. is an advisor to the
company under its consulting agreement dated August 8, 2000, as amended. The
other Selling Shareholders are not currently our affiliates, and have not had a
material relationship with us during the past three years, other than as holders
of our securities.

The table assumes:

- The exercise of warrants to purchase 1,000,000 common shares at a
price of $.045 per share and warrants to purchase 876,081 at a
price of $.09 per share;

- All of the shares that may be offered by the Selling Shareholders
actually are sold;

- The Selling Shareholders do not acquire beneficial ownership of
any other shares or dispose of any shares other than in this
offering; and

- We do not issue or cancel any other shares.

Stanley Fraley2 1,452,500 2.12 1,452,500 -- --
Frank Wigginton2 1,199,063 1.75 1,199,063 -- --
Iva Noles2 1,174,219 1.71 1,174,219 -- --
Elizabeth Jackson2 1,075,000 1.57 1,075,000 -- --
Hazel Walkup2 978,516 1.43 978,516 -- --
Linda Wiggington2 854,375 1.25 854,375 -- --
Robbie Holley2 730,000 1.06 730,000 -- --
Raymond Herbert2 704,532 1.03 704,532 -- --
Francisco Fernandez 555,556 .81 555,556 -- --
Daniel Dominguez3 714,286 1.04 500,000 214,286 .31
Gabriel Albert Martin4 714,286 1.04 500,000 214,286 .31
Robert E. Chamberlain, Jr.5 473,756 .69 438,041 35,715 .01
Kevin P. Regan6 473,754 .69 438,040 35,714 .01
Sue Rozell2 375,000 .55 375,000 -- --
Price Brown2 365,313 .53 365,313 -- --
Mary McMahon2 363,125 .53 363,125 -- --
Chapman Family Limited Partnership 333,333 .49 333,333 -- --
Richard D. Gittin 333,333 .49 333,333 -- --
Thomas H. Stockton 333,333 .49 333,333 -- --
James S. Underwood 333,333 .49 333,333 -- --
Betty McFatter2 273,985 .40 273,985 -- --
Ruth Conrady2 260,938 .38 260,938 -- --
Mark J. Kemp 250,000 .37 250,000 -- --
Joseph Mikita 250,000 .37 250,000 -- --
Jack N. Underwood 222,223 .32 222,223 -- --
Marcel Millet2 208,750 .30 208,750 -- --
Larry R. Cramer 263,754 .38 200,000 63,754 --
Lois Andrews2 194,532 .28 194,532 -- --
Aline Hamner2 194,532 .28 194,532 -- --
Dean Vaterlaus2 156,563 .23 156,563 -- --
Mark Hendley2 104,375 .15 104,375 -- --
Conroy Nini2 104,375 .15 104,375 -- --
Jeanetta Reyenga2 104,375 .15 104,375 -- --
Josh & Susan Roberts2 103,750 .15 103,750 -- --
Billy Souther2 103,750 .15 103,750 -- --
Bob Ratliff 100,000 .15 100,000 -- --
M.H. Yokoyama & Jaye S. Venuti Family Trust 143,365 .21 100,000 43,365 --

- -------------------------------------------------------------------------------------------------------------------------
NUMBER OF NUMBER
SHARES OF SHARES NUMBER OF SHARES
BENEFICIALLY PERCENT OF THAT MAY BENEFICIALLY PERCENT OF
NAME OF BENEFICIAL OWNED BEFORE CLASS BEFORE BE OWNED AFTER THE CLASS AFTER
OWNER1 THE OFFERING OFFERING1 OFFERED OFFERING OFFERING1
- -------------------------------------------------------------------------------------------------------------------------
William D. Wallace, TTEE 100,000 .15 100,000 -- --
Armand M La Sorsa 282,652 .41 100,000 182,652 --
James K. Underwood 100,000 .15 100,000 -- --
John F. Loafman 66,667 .10 66,667 -- --
Robert E. Hinman 60,000 .09 60,000 -- --
Ralph Fox2 52,188 .08 52,188 -- --
Robert Fulp2 52,188 .08 52,188 -- --
Colleen Huffstickler2 52,188 .08 52,188 -- --
Virginia Kay Johnson2 52,188 .08 52,188 -- --
Charles Reyenga2 52,188 .08 52,188 -- --
Reda Jurney2 51,875 .08 51,875 -- --
Judy Vogt2 51,875 .08 51,875 -- --
Larry York2 51,875 .08 51,875 -- --
Bruno Nordberg 50,000 .07 50,000 -- --
Mike B. McCook or Ellen A. McCook, Joint Tenants 50,000 .07 50,000 -- --
Richard M. & Linda J. Gawlik 50,000 .07 50,000 -- --
Shawn Helms 41,250 .06 41,250 -- --
Bruce L. Rogers 40,500 .06 40,500 -- --
Doug W. Miller 125,606 .18 20,000 105,606 --
Bennie J. Pendley 10,000 .01 10,000 -- --
Catherine E. Robinson 10,000 .01 10,000 -- --
Total 17,979,120 26.23% 17,083,742 895,378 1.28%
------------ ------------- ---------- ---------------- ------------
<FN>
(1) Shares of common stock subject to options or warrants currently exercisable
or convertible, or exercisable or convertible within 60 days of March 11,
2002 are deemed outstanding for computing the percentage of the person
holding such option or warrant but are not deemed outstanding for computing
the percentage of any other person. Percentages are based on a total of
68,552,545 shares of common stock outstanding before the offering and
70,428,626 shares outstanding after the offering.

(2) Each was a holder of a securitized equipment lease or securitized equipment
leases and elected to exchange their lease for the indicated number of
shares of our common stock pursuant to a private offering made by us.

(3) Includes 500,000 shares issuable upon exercise of a warrant at $0.045 per
share. Mr. Dominguez is a participant in two notes with us. The first note,
dated September 5, 2001, is a $200,000 note, of which Mr. Dominguez has a
25% or $50,000 interest. The second note dated November 8, 2001 is a
$70,000 note, in which Mr. Dominguez has $20,000 interest. In addition, Mr.
Dominguez is the holder of a warrant to purchase 500,000 shares of our
common stock at $0.045 per share.

(4) Includes 500,000 shares issuable upon exercise of a warrant at $0.045 per
share. Mr. Martin is a director of the company. In addition to his
directorship, Mr. Martin has the right to nominate individuals to two other
members of our board of directors. Mr. Martin is also a participant and
acting trustee for three notes with the company. The first note, dated
September 5, 2001, is a $200,000 note, of which Mr. Martin has a 75% or
$150,000 interest. The second note dated November 8, 2001 is a $70,000
note, in which Mr. Martin has a $50,000 interest. The third note dated
December 19, 2001 is a $250,000 note, and Mr. Martin is the sole lender.
Furthermore, Mr. Martin is the holder of a warrant to purchase 500,000
shares of our common stock at $0.045 per share.

(5) Includes 438,041 shares issuable upon exercise of a warrant at $0.09 per
share. Mr. Chamberlain is a member of Genesis Financial Group, L.L.C., a
consultant to us.

(6) Includes 438,041 shares issuable upon exercise of a warrant at $0.09 per
share. Mr. Regan is a member of our board of directors, as well as a member
of Genesis Financial Group, L.L.C., a consultant to us.

PLAN OF DISTRIBUTION

The Selling Shareholders, and any of their pledges, assignees and
successors-in-interest, may, from time to time, sell any or all of their shares
of common stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The Selling Shareholders may use any one or more of the
following methods when selling shares:

- Ordinary brokerage transactions and transactions in which the
broker-dealer solicits the purchaser;

- Block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;

- Purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;

- An exchange distribution in accordance with the rules of the
applicable exchange;

- Privately-negotiated transactions;

- Broker-dealers may agree with the Selling Shareholders to sell a
specified number of shares at a stipulated price per share;

- A combination of any of the methods of sale; and

- Any other method permitted pursuant to applicable law.

The Selling Shareholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.

The Selling Shareholders may also engage in short sales against the box,
puts and calls and other transactions in our securities or derivatives of our
securities and may sell or deliver shares in connection with these trades. The
Selling Shareholders may pledge their shares of common stock to their brokers
under the margin provisions of customer agreements. If a Selling Shareholder
defaults on a margin loan, the broker may, from time to time, sell the pledged
shares.

Broker-dealers engaged by the Selling Shareholders may arrange for other
broker-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Shareholders (or, if any broker-dealer acts as
agent for the purchase of shares, from the purchaser) in amounts to be
negotiated. The Selling Shareholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.

We are required to pay all fees and expenses incident to the registration
of the shares, including fees and disbursements of counsel to the Selling
Shareholders, but excluding brokerage commissions or underwriter discounts. We
and the Selling Shareholders have agreed to indemnify each other against named
losses, claims, damages and liabilities, including liabilities under the
Securities Act.

Pursuant to the Securities Exchange Act of 1934, any person engaged in a
distribution of the common stock offered by this prospectus may not
simultaneously engage in market making activities for our common stock during
the applicable "cooling off" periods prior to the commencement of the
distribution. In addition, the Selling Shareholders will be required to comply
with all the requirements of the Securities Exchange Act of 1934.

Regulation M prohibits any bids or purchases made in order to stabilize the
price of a security in connection with the distribution of that security, except
as specifically permitted by Rule 104 of Regulation M. These stabilizing
transactions may cause the price of the common stock to be higher than it would
otherwise be in the absence of these transactions. We have advised the Selling
Shareholders that stabilizing transactions permitted by Regulation M allow bids
to purchase our common stock so long as the stabilizing bids do not exceed a
specified maximum, and that Regulation M specifically prohibits stabilizing that
is the result of fraudulent, manipulative, or deceptive practices. The Selling
Shareholders and distribution participants will be required to consult with
their own legal counsel to ensure compliance with Regulation M.

DESCRIPTION OF SECURITIES

Our authorized capital stock consists of 200,000,000 shares of common stock
and 10,000,000 shares of preferred stock. The statements under this caption are
brief summaries of certain material provisions of our certificate of
incorporation and by-laws. These summaries do not purport to be complete, are
subject to, and are qualified in their entirety by reference to, such documents.

COMMON STOCK

As of March 11, 2002, there were 68,552,545 shares of our common stock
outstanding that were held by approximately 473 shareholders of record. In
addition, at March 11, 2002, we had outstanding options and warrants to purchase
a total of 1,876,081 shares of common stock that are currently exercisable
within 60 days of the date of this filing.

Holders of our common stock are entitled to one vote per share on all
matters to be voted upon by the shareholders. Subject to the rights of the
holders of the shares of our outstanding preferred stock, holders of our common
stock are entitled to receive ratably any dividends that our board of directors
may from time to time declare out of legally available funds. In the event of
the liquidation, dissolution or winding up of our company, whether voluntary or
involuntary, holders of our common stock are entitled to share ratably in all
assets legally available for distribution, remaining after the payment of all
our debts and other liabilities and the payment of any preferential amount due
to the holders of shares of our outstanding preferred stock. Our common stock
has no preemptive or conversion rights or other subscription rights. There are
no redemption or sinking fund provisions applicable to our common stock. All
outstanding shares of common stock are fully paid and nonassessable.

Up to 1,876,081 shares may be issued upon the exercise of certain warrants
to purchase common stock. The outstanding warrants consist of the following:

PREFERRED STOCK

Our board of directors has the authority to issue up to 10,000,000 shares
of preferred stock in one or more series. The board is authorized to fix the
rights, preferences, privileges and restrictions of the preferred stock,
including dividend rights, dividend rates, conversion rights, voting rights,
terms of redemption, redemption prices, liquidation preferences and the number
of shares constituting any series or the designation of such series, without any
action by the shareholders. The issuance of preferred stock may have the effect
of delaying, deferring or preventing a change in control of our company and may
adversely affect the voting and other rights of the holders of our common stock.
The issuance of preferred stock with voting and conversion rights may adversely
affect the voting power of the holders of our common stock, including the loss
of voting control to others. At present, we have no preferred stock outstanding
and we have no present plans to issue any preferred stock.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock is American Register
& Transfer, 432 East 900 South, Salt Lake City, UT 84111.

PENNY STOCK RULES

At the present time, our common stock is traded in the over-the-counter
market and trading activity is reported on the OTC Electronic Bulletin Board.

The United States Securities and Exchange Commission "Securities
Enforcement and Penny Stock Reform Act of 1990" requires special disclosure
relating to the trading of any stock defined as a "penny stock." Commission
regulations generally define a penny stock to be an equity security that has a
market price of less than $5.00 per share and is not listed on The Nasdaq Small
Cap Stock Market or a major stock exchange. These regulations subject all
broker-dealer transactions involving our securities to special "Penny Stock
Rules." Following the completion of this offering the commencement of trading of
our common stock, and the foreseeable future thereafter, the market price of our
common stock is expected to be substantially less than $5 per share.
Accordingly, should anyone wish to sell any of our shares through a
broker-dealer, the sale will be subject to the Penny Stock Rules. These Rules
will affect the ability of broker-dealers to sell our shares (and will therefore
also affect the ability of purchasers in this offering to re-sell their shares
in the secondary market, if a market should ever develop.)

The Penny Stock Rules impose special sales practice requirements on
broker-dealers who sell shares defined as a "penny stock" to persons other than
their established customers or "Accredited Investors." Among other things, the
Penny Stock Rules require that a broker-dealer make a special suitability
determination respecting the purchaser and receive the purchaser's written
agreement to the transaction prior to the sale. In addition, the Penny Stock
Rules require that a broker-dealer deliver, prior to any transaction, a
disclosure schedule prepared in accordance with the requirements of the
Commission relating to the penny stock market. Disclosure also has to be made
about commissions payable to both the broker-dealer and the registered
representative and the current quotations for the securities. Finally, monthly
statements have to be sent to any holder of penny stocks disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks. Consequently, the rule may affect the ability of
broker-dealers to sell our shares and may affect the ability of holders to sell
our shares in the secondary market. Accordingly, for so long as the Penny Stock
Rules are applicable to our common stock, it may be difficult to trade our stock
because compliance with the Penny Stock Rules can delay or preclude some trading
transactions. This could have an adverse effect on the liquidity and price of
our common stock.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our shares are trading on the OTC Electronic Bulletin Board under the stock
ticker symbol "ETPI" (CUSIP 293810107); however, there is no "established
trading market" for our shares of common stock, and we can give no assurance
that such a market will develop. If an "established trading market" for our
common stock does develop in the future, we can give no assurance that it will
continue or be maintained. Any market price for our shares of common stock is
likely to be very volatile, and factors such as competition, governmental
regulation and fluctuations in operating results may all have a significant
effect on our market price. In addition, the stock markets generally have
experienced and continue to experience extreme price and volume fluctuations
which have affected the market price of many small capital companies, and these
fluctuations have often been unrelated to the operating performance of these
companies. Broad market fluctuations, as well as general economic and political
conditions, may adversely affect the market price of our common stock.

The sale of "restricted securities" held by members of our company's
management and others could also have an adverse effect on the market for our
common stock. As of March 11, 2002, 68,552,545 shares of our common stock were
outstanding, 41,236,876 of which are designated as "restricted securities." Of
our outstanding shares, substantially all "restricted securities" have been held
for a sufficient period of time to be sold under Rule 144 of the Securities and
Exchange Commission.

The following table sets forth the reported high and low closing bid
quotations for our common stock. The bid prices reflect inter-dealer
quotations, do not include retail mark-ups, markdowns or commissions and do not
necessarily reflect actual transactions.

=======================================
QUARTER ENDED HIGH BID LOW BID
- ---------------------------------------

December 31, 1998. $ 0.63 $ 0.13
March 31, 1999 . . 0.82 0.21
June 30, 1999. . . 0.34 0.13
September 30, 1999 0.49 0.12
December 31, 1999. 0.24 0.12
March 31, 2000 . . 0.43 0.12
June 30, 2000. . . 0.31 0.11
September 30, 2000 0.23 0.08
December 29, 2000. .094 .063
March 30, 2001 . . .12 .10
June 29, 2001. . . .08 .06
September 28, 2001 .09 .09
December 31, 2001. .06 .05

DESCRIPTION OF BUSINESS

OVERVIEW

We are a 23-year-old vertically integrated entertainment and amusement game
company. We are incorporated in the State of Delaware. Nitelife, Inc., a
predecessor company, was incorporated on October 2, 1985 and was formed to
provide audio and video entertainment at military bases located in the United
States and internationally, to provide mobile musical entertainment, and to
operate a music store in San Diego, California. Since our formation, we have
expanded both the number of products and services we provide and the markets
into which products and services are distributed. Today, we are strategically
positioned as the provider of a comprehensive array of entertainment products
and services to both the military and the civilian markets. We are primarily
engaged in the design and construction of nightclub facilities in military
venues and the provision of entertainment services within these facilities, the
retail sale of professional sound and lighting equipment through catalogs and
the internet, the installation and operation of amusement gaming equipment, and
the promotion and production of live performances.

We have a unique and dominant market share in the creation and operation of
approximately 103 entertainment systems within nightclub venues on 40 U.S.
military bases located in the United Sates, Europe and Asia. The barriers to
entry in our business with the military are formidable for any private group
attempting to compete in this market. New entrants would require significant
time and effort to develop the necessary relationships to become a preferred
independent contractor to the government, especially for entertainment venues.
We are the only supplier of entertainment services on U.S. military bases
worldwide to have been awarded AFNAF (Armed Forces Non Appropriated Fund)
contracts and the first service company to be awarded such AFNAF status. AFNAF
contracts allow us to obtain business from the various branches of the military
without entering into competitive bids, a process typically required of most
independent government contractors and service providers. Through our renewable
AFNAF contracts and many years of reliable and quality services, we have
developed very strong relationships with base commanders and venue coordinators,
and have become the leading independent entertainment provider to U.S. military
bases. This highly unique advantage has been developed through years of
successful interaction with all branches of the Armed Forces in military
entertainment venues throughout the world. In addition to military markets, we
have the opportunity to exploit our success through expansion into commercial
markets, both domestically and internationally, utilizing our valuable
experience and developed expertise.

We provide our services through three wholly-owned subsidiaries as follows:

1. Nitelife Military Entertainment, Inc. The development, management
and operation of entertainment systems within nightclub venues,
located on U. S. military bases throughout the world, and the
designing, planning, promotion, and production of live
performances and other entertainment bookings in both the
military and the civilian markets.

2. Performance Sound and Light, Inc. The design, installation and
retail sale of professional sound and lighting equipment through
mail order catalogs, the Internet and direct sales targeting the

military market through AFNAF purchase agreements and civilian
consumer markets.

3. Hero's Family Fun Entertainment, Inc. (Hero's) The ownership,
installation and operation of amusement equipment in a
company-owned and operated facility which offers entertainment
for the entire family unit and including laser tag, soft play
area, redemption center, high-end video games, a restaurant and
party rooms.

HISTORY

The Music Makers, our predecessor company, was a small mobile music company
that provided disc jockey, music, sound and lighting services to Naval military
clubs for parties, dances and other special events. The Music Makers was
started in 1978 by our former Chairman and Chairman Executive Officer, James D.
Butcher, who provided these entertainment services to the military bases on
which he was stationed. The business grew as Mr. Butcher secured several Naval
contracts to perform with Music Makers on base nightclubs throughout the San
Diego, California area. In 1985, The Music Makers was incorporated as Nitelife,
Inc. and purchased a San Diego-based retail music store to lower its music and
related equipment costs. Nitelife evolved into a successful designer and
provider of entertainment services to themed entertainment centers and
nightclubs, located exclusively on U.S. military bases. Further, Nitelife
developed a unique turnkey equipment installation and entertainment service by
securing separate contracts with each individual military customer. These
contracts provided for the design, construction and installation of custom
entertainment facilities, often with little or no capital expenditure from the
military customer. Subsequently, Nitelife provided a full array of
entertainment services to these facilities, including club disc jockeys, music
videos, club promotions and production of live artist performances.

After establishing a successful track record of designing, constructing,
installing, managing and operating military entertainment systems within venues
throughout the world, Nitelife was awarded the Department of Defense's first
service-oriented AFNAF contract in 1993. This contract allows Nitelife to
secure negotiated, renewable 12-month equipment installation and entertainment
service contracts with any U.S. Military customer worldwide, without the
requirement of competitive bidding. Nitelife is currently the only provider of
such entertainment services to possess this unique advantage. The AFNAF
contract allows Nitelife to recover its entire expenditure for designing,
equipping and providing entertainment services to each entertainment facility
via monthly service fees, generally within the first year of the facility
opening.

Performance Sound & Light ("PS&L") was formed in 1994 to handle all
equipment sales and installations. PS&L applied for and received a second AFNAF
contract from the military that not only allowed for the sale of equipment in
Nitelife facilities, but also for sales of sound, lighting, music, stage and
other related entertainment equipment for the military's use on other on-base
facilities, all without the requirement of competitive bidding. Nitelife sold
its retail music stores in 1995 so it could concentrate on the global expansion
and continued vertical integration of its location-based entertainment
installations and operations.

In April 1995, Nitelife entered into a merger transaction with the
shareholders of Westcott Financial Corporation, a public company, in which the
assets and the business of Nitelife became a wholly-owned subsidiary of
Westcott. Westcott subsequently changed its name to Entertainment Technologies
& Programs, Inc.

NITELIFE MILITARY ENTERTAINMENT, INC. [GRAPHIC OMITTED] (AFNAF NPA#:
F4199-96-D6183) [GRAPHIC OMITTED]

Nitelife is engaged in the development, management and operation of
approximately 110 entertainment systems within nightclub venues located on 40 U.
S. military bases in the United Sates, Europe and Asia. Nitelife is also
involved in the designing, planning, promotion, and production of live
performances and other entertainment bookings in both the military and the
civilian markets. Nightclubs have historically been established on military
bases in an attempt to:

- Retain service men and women on base, thereby avoiding potential
problems arising out of interaction between servicemen and civilians;

- Boost morale by providing U.S. style entertainment in foreign
countries where none otherwise exists; and

- Provide a less expensive on-base alternative using U.S. currency that
often is devalued against the foreign currencies that servicemen must
use if they go off base for entertainment.

In order to meet the needs of this market, Nitelife provides a wide variety
of entertainment programs and services to military nightclubs by installing
audio and video equipment, including custom-built disc jockey booths,
state-of-the-art industrial DVD players and turntables, top-of-the-line mixing
consoles and several television monitors in each nightclub. Nitelife provides
the maintenance of all the equipment installed and supplies all of the records
and music videos for use within its managed nightclubs. Nitelife hires (on an
independent contractor basis), trains and manages all club coordinators and disc
jockey talent operations within its managed nightclubs. Nitelife also designs
and produces club promotions for nightclub managers. This comprehensive package
of entertainment equipment and services is provided to military customers on a
fee basis pursuant to one-year renewable contracts (as required by Federal Law)
between Nitelife and the Armed Forces Non-Appropriated Fund Purchasing Office.
Each contract provides for a minimum number of hours of disc jockey services at
a specified hourly rate. These minimum hours are established so that Nitelife
can recover its initial investment in approximately eight months.

Star Concerts and Promotions, formerly Vision Quest Productions and a
subsidiary of Nitelife, was created in January 2001 to concentrate solely on
booking, promoting and producing live entertainment performances (i.e., popular
bands, comedians, etc.) on U.S. military bases around the world, an operation
Nitelife has performed since its inception. In 1993, the Company was selected
by the Pacific Air Force to produce a program entitled "Stateside Sounds" which
brought top 40 bands to the Asian theater for a tour of U. S. military bases.
"Sounds of Nitelife" is another program that has been produced by us since 1993,
and brings top 40, rock, and country acts to military bases located throughout
the United States, Europe and Asia. Past performance promotions and productions
have included acts such as Kansas, Eddie Money, Starship, REO Speedwagon, Tami
Wynette and Lee Greenwood, to name a few.

Growth Plan

Through our Nitelife division, we have successfully diversified
geographically into both domestic and international U.S. military bases located
throughout the United States, Europe and Asia. Base locations include all
branches of the U.S. Armed Forces. As of September 2001, we had operations in
110 venues on more than 40 bases worldwide. The U.S. operates over 360 military
bases worldwide, providing potential for growth within the military. It has
been our experience that, with the continued loss of military budget funding,
military nightclubs must become self-sufficient or they will be closed. We
believe that Nitelife's turnkey nightclub installation and operation program
provides an attractive and cost effective solution for military bases that may
be experiencing budget reductions, as well as those military bases that are not
experiencing such budget constraints.

In addition to continually seeking to enhance our cost-effectiveness, our
operating efficiencies and our capability to provide a broader spectrum of
entertainment experiences to both military and private markets, our management
intends to implement an active program to market our nightclub management and
concert promotion services to those military installations to whom we currently
do not provide our services.

Entertainment Products and Services

We design our program to minimize or eliminate the need for capital
expenditures from our military clientele. Unless otherwise desired, Nitelife
capitalizes all the equipment costs and renovates the nightclub with minimal
government expense. This is very important to our military customers who have
been affected over the last decade by a downsizing of the military budget.
There are very few budgeted dollars for nightclub upgrades that are necessary to
compete with civilian markets. Nitelife solves that problem by supplying
state-of-the-art sound, light and video products such as, DVD Players, Speaker
Systems, Amplification Systems, Dual Compact Disc Players, Industrial VCR's with
Jog and Shuttle, Mixers & Turntables with Pitch Control for Mixing, Club
Lighting, Televisions, Custom Built Deejay Booths, among many others. Should a
military customer choose not to renew our annual contract, Nitelife either
recovers the equipment for use in future facilities or, in many instances, the
military customer is obligated to purchase the equipment and backup equipment we
have installed during the term of our contract.

Nitelife sends in installation teams of audio/video technicians, carpenters
and electricians to professionally install these systems. Nitelife derives its
income by charging an hourly fee for the deejay service. There are weekly
minimums of deejay hours a nightclub must use from the Nitelife service. The
contracted weekly minimums of deejay hours are directly related to the amount
and type of equipment Nitelife installs. Nitelife attempts to recover its costs
within the first eight months of the contracted period of service.

The most important service is the hiring of the deejay talent. An important
element of the hiring of the deejay is training. Deejays must be trained to use
the microphone, to create a fun atmosphere and to promote upcoming events. The
Nitelife area manager, known as the Area Talent Coordinator ("ATC"), hires,
schedules

and pays the deejay. All of this allows the nightclub management to spend more
time on their own staff, while keeping total control and final approval of the
deejay staff. Nitelife also controls the music formats through use of its
newsletter containing music charting and with playlists that are routinely used
to monitor nightly formats.

The service contract also provides for equipment maintenance and software
support. Even if a military nightclub has the money to buy the equipment, they
often do not have the capital to repair or replace equipment when it breaks
down. Nitelife bears the cost of removing, repairing and/or replacing and
reinstalling the equipment. In many cases, back up equipment is also provided.
Nitelife also provides the software package to the military nightclub that
includes the most recent DVD Technology for music video play. Opening libraries
of music video consist of 60 hours of DVD. Formats include Country and Western,
Top 40 Dance, Rock and Alternative music. This library is updated ten times a
year. Deejays also bring their tools of the trade and provide all the latest in
CD selections. All of the software is provided in Nitelife hourly fees.

Nitelife, through ATCs, provides promotional support through weekly
brainstorming sessions with management. These sessions are held to develop fun
and exciting contests and prizes, resulting in more clientele and a more
interesting atmosphere. Nitelife provides interactive games such as Sumo
Wrestling and Jousting as seen on television. The success of special events is
largely dependent on the promotion of such events. Nitelife works as a partner
with the military base to produce camera-ready flyers and calendars. Nitelife
deejays promote the events each night in the nightclub, on ships and throughout
the base.

Nitelife strives for total client satisfaction and is active in a system of
quality control throughout the length of the contract. Through an aggressive
telephone campaign, Nitelife keeps monthly tabs on each client's situation and
entertainment desires. When there are problems in the field, a Total Client
Satisfaction team is dispatched immediately to the location. This team is made
up of administrative personnel along with technical support. Whether it is
deejay training, promotional support or equipment maintenance, these teams
handle the problems on site.

Competition

Nitelife has developed a unique and dominant market share within the
military entertainment industry. It is now embarking upon the utilization of
this presence and expertise for expansion into the private sector. Currently,
Nitelife is the only company of its type to possess AFNAF contracts with the
U.S. military, which creates a significant barrier to entry for other companies
that may attempt to penetrate this market. We believe we are significantly more
experienced, are more vertically integrated and more developed than any similar
company. Other entertainment companies have certain limited joint venture
relationships with the military, but most of these are for a single facility,
the operation of which reverts to the military shortly after it is constructed.
Nitelife renews its contracts annually for, in most cases, multiple facilities
on each base throughout the world, providing us with ongoing, monthly revenue
streams. If a base elects for non-renewal of a contract, Nitelife either
recovers its equipment from the facility for use in future installations or
allows the base to purchase the installed equipment. Nitelife has experienced
an average annual renewal rate in excess of 90%, which we believe attests to the
satisfaction level the military customers enjoy from us.

Base Locations
UNITED STATES BASES (29)
NAME OF BASE BRANCH VENUES BASE LOCATION FIRST CONTRACT
- -------------------------------- --------- ------ ----------------------- --------------

San Diego. . . . . . . . . . . . Naval 5 San Diego, CA Oct. 98
Sheppard . . . . . . . . . . . . Air Force 3 Wichita Falls, TX Jun. 95
Hickam . . . . . . . . . . . . . Air Force 3 Honolulu, HI Jan.94
Randolph . . . . . . . . . . . . Air Force 3 San Antonio, TX Jul 96
Miramar. . . . . . . . . . . . . Marine 2 San Diego, CA Jan. 87
Hill . . . . . . . . . . . . . . Air Force 2 Salt Lake City, UT Oct. 95
China Lake . . . . . . . . . . . Naval 1 Ridgecrest, CA Oct 95
Bangor . . . . . . . . . . . . . Naval 2 Silverdale, WA Dec 90
Maxwell. . . . . . . . . . . . . Air Force 2 Montgomery, AL Nov 95
Great Lakes. . . . . . . . . . . Naval 2 Chicago, IL Mar 95
Mayport. . . . . . . . . . . . . Naval 3 Jacksonville, FL Apr 96
Patuxent River . . . . . . . . . Naval 3 Lexington Park, MD Sep 90
Keesler. . . . . . . . . . . . . Air Force 2 Biloxi, MS Feb 96

Scott. . . . . . . . . . . . . . Air Force 2 St. Louis, IL Apr 95
Gunter . . . . . . . . . . . . . Air Force 1 Montgomery, AL Jul 95
Travis . . . . . . . . . . . . . Air Force 2 Fairfield, CA Apr 97
Whidbey Island . . . . . . . . . Naval 2 Oak Harbor, WA Dec 90
Fort Stewart . . . . . . . . . . Army 2 Savannah, GA Nov 98
Fort Hood. . . . . . . . . . . . Army 2 Killeen, TX Dec 98
Barksdale. . . . . . . . . . . . Air Force 2 Shreveport, LA Feb 99
Beale. . . . . . . . . . . . . . Air Force 3 Sacramento, CA Jul 99
Edwards. . . . . . . . . . . . . Air Force 3 Edwards, CA Oct 99
Ft. McCoy. . . . . . . . . . . . Army 1 Madison, WI Feb 00
Minot. . . . . . . . . . . . . . Air Force 2 Minot, ND May 00
Fort Lewis . . . . . . . . . . . Army 3 Seattle, WA Sep 00
Fallon . . . . . . . . . . . . . Navy 1 Fallon, NV Oct 01
Tyndall. . . . . . . . . . . . . Air Force 3 Panama City, FL Oct 01
Bremerton. . . . . . . . . . . . Navy 3 Silverdale, WA Jan 01
Ft. Polk . . . . . . . . . . . . Army 1 Ft. Polk, LA Jul 00
---------
Total Number of U.S. Venues: . . 66
=========

ASIAN BASES (5)
NAME OF BASE . . . . . . . . . . BRANCH VENUES BASE LOCATION FIRST CONTRACT
- -------------------------------- --------- ------ ----------------------- --------------
Kadena . . . . . . . . . . . . . Air Force 6 Okinawa City, OKI Jul 93
Yokota . . . . . . . . . . . . . Air Force 5 Misawa, Japan Mar 92
Kunsan . . . . . . . . . . . . . Air Force 3 Kunsan, Korea Aug 95
New Sanno. . . . . . . . . . . . Naval 1 Tokyo, Japan Jul 95
Osan . . . . . . . . . . . . . . Air Force 5 Seoul, Korea Jul 93
---------
Total Number of Asian Venues . . 20
=========

EUROPEAN BASES (6)
NAME OF BASE . . . . . . . . . . BRANCH VENUES BASE LOCATION FIRST CONTRACT
- -------------------------------- --------- ------ ----------------------- --------------
Ramstein . . . . . . . . . . . . Air Force 5 Kaiserslautern, Jul 94
Germany
Mildenhall . . . . . . . . . . . Air Force 3 Mildenhall, UK Dec 94
Sigonella. . . . . . . . . . . . Naval 2 Catania, Italy Nov 93
Rhein Main . . . . . . . . . . . Air Force 2 Frankfurt, Germany May 96
Sembach. . . . . . . . . . . . . Air Force 1 Kaiserslautern, Germany Jul 94
Lakenheath . . . . . . . . . . . Air Force 4 Lakenheath, UK Oct 99
---------
Total Number of European Venues. 17
=========

PERFORMANCE SOUND & LIGHT, INC. [GRAPHIC OMITTED] (AFNAF NPA#:
F4199-95-D6012) [GRAPHIC OMITTED]

Realizing the benefit of cross selling to the government as a preferred
independent contractor, we formed Performance Sound & Light. PS&L is engaged in
providing professional sound and lighting equipment, as well as security video
equipment to military nightclubs and the civilian markets through catalogs, the
Internet and direct sales. In January 1995, PS&L commenced distribution of its
sales catalog, which is being promoted throughout the military using our
existing sales force and commission-based contract sales representatives. We
believe that the exclusivity of our AFNAF contract combined with an aggressive
direct sales marketing program, will establish PS&L as a primary source from
which nightclub managers and professionals may meet their entertainment
equipment needs.

PS&L, as part of its plan to increase the number of products it can sell to
the military under its AFNAF contract, recently received AFNAF approval to begin
selling security video equipment to the military. In addition,

PS&L recently received AFNAF approval to be the only link for professional sound
and lighting equipment and security video equipment on the military's website
for its purchasing managers.

PS&L produces two mail order catalogs, each targeting a specific market
niche. The first catalog offers sound and lighting equipment to the military.
The second catalog targets the civilian consumer market. The marketing emphasis
to the civilian consumer market is to provide business and institutional
purchasers professional equipment and turnkey systems solutions in an easy to
read and purchase mail-order format. Pricing is an integral part of marketing.
PS&L prices its competitively in order to meet margin requirements and retain
customers. Although there are many companies offering this type of catalog, we
believe, as a result of our presence on military bases, we possess a unique
ability to be extremely price competitive. The civilian market catalog is
intended to target professional users of entertainment products such as
classrooms across the nation using computer monitors and televisions that allow
them to interact, churches that have full sound and light production
capabilities, retail stores that have giant screen projectors, cameras and
special lighting effects to enhance the shopping experience, and airports that
require television monitors.

We have established a national base of targeted customers from coast to
coast through advertising, sales and acquisition of third-party mailing lists.
We continue to build our customer base through nationally run advertisements in
various trade publications and magazines such as DJ Times and Mobile Beat. Our
customers have expressed their satisfaction at having a dependable source for
competitively priced products, resulting in customer referrals. PS&L's
marketing strategy is to aggressively promote and support the existing product
lines and offer total client satisfaction and service on all sales. The
principle method of marketing is through the distribution of a comprehensive
catalog. The catalog features professional sound and light equipment and is
distributed through the mail, displayed in retail stores and inserted in
publications. Upon request from the customer, an 80-page, tabloid sized, black
and white publication. Smaller spot mailers are also distributed. Telephone
follow up to past and potential customers is scheduled to coincide with
marketing efforts.

PS&L expects to be on the forefront of the very exciting world of
electronic commerce. PS&L operates a web site (www.performance-s-l.com) that
repeatedly scores in the top 30 search "hits".

Growth Plan

Management intends to grow PS&L primarily through the sales of new products
to the military under its existing AFNAF contracts. Currently, PS&L is approved
to sell professional sound and light equipment, as well as security video
equipment through its AFNAF contact number. To add products under this AFNAF
contract number, PS&L must make application to the AFNAF Purchasing Office along
with requisite product pricing data. Such application and pricing is reviewed
and commented on by the AFNAF Purchasing Office before written approval is
granted and notification sent on-site military purchasing managers. While
management believes that it will be able to receive such approvals for the sale
of new products to the military in the future, it can give assurances at this
time that it will be successful in doing so.

Management intends to effect its growth plan for PS&L primarily by first
securing requisite AFNAF approvals and then securing purchasing relationships
with manufactures and primary vendors of such goods products. Management may,
on a selective basis, review opportunities relating to the acquisition of
primary vendors of specific products in which it has received all requisite
AFNAF approvals and intends to begin selling to the military. However, there
can be no assurance that management will first, be able to secure purchasing
relationships with manufacturers and/or primary vendors or second, that it will
be able to identify and consummate acquisitions of primary vendors or products
it intends to sell to the military.

Entertainment Products and Services

We sell premium quality products that are required by our customers. PS&L
currently offers a comprehensive assortment of brand names and established
product lines. Other brands that cater to the professional sound and light
market are being pursued. As the demonstrated needs of our market change, new
products and services will be continually developed to expand our current
product lines and custom support products. Our principal product lines include:

American DJ JBL Samson Audio
Audio Technica JBL Electronics Sanyo
BBE Martin Seleco

Best Devices Middle Atlantic Sonic
Cerwin Vega Mitsubishi Sony
Consoles Mobil Tech Spirit
Crest NSI Stanton
Crown Pioneer TC Electronics
Denon QSC Videosel
Fisher Sabine Vestax

Mail Order and Catalog Market

The overall mail-order business remains a growth market and is continuing
to expand. According to the National Mail Order Association, U.S mail order
sales reached $357.3 billion in 1998, up 12% over 1997. This figure represents
an approximate $42.8 billion increase over 1997. In addition, according to
Catalog Age's Exclusive Consumer Shopping Survey report (Catalog Age, August
2001), the number of U.S. consumers that shop from traditional catalogs rose 7%
over the previous year and online catalog purchases increased approximately
164%. The music industry's catalog sales are continuing to expand according to
published information. Music industry leaders who are engaged in mail order are
among the fastest growing segment of the music market.

A review of current music industry catalog offerings reveals a majority of
the music industry's catalogs are geared towards the consumer market and focused
primarily on musical instruments, sheet music and recordings. Currently, in the
area of professional sound and lighting and special effects equipment,
businesses must rely on a variety of catalogs and retail sources to obtain the
various components required to equip their entertainment venues. These venues
include nightclubs, bars, hotels, motels, resorts, recording studios,
restaurants, amusement parks, band/talent agencies, independent DJ's, schools,
and churches, among others. There are no national mail order catalogs
specializing in professional sound and lighting equipment that targets the
military market. Based on these facts, there currently exists a distinct
opportunity for PS&L to become the dominate source for the music industry's
professional sound and light catalog market with a focus on providing total
entertainment solutions to the professional customer market.

More often than not, the buying process associated with the purchase of
this type of equipment comes down to a purchasing agent, owner of an
establishment or building contractor who must acquire the components from
various sources. Once received, those products may or may not work together,
and may also require the expertise of additional contractors to integrate them
into a total working system for the purchaser. Internal research into the
market indicates that only one privately-owned company provides both catalog and
retail sales of primarily professional sound, lighting and special effects
products. This company is located in Southern California, and shipping and
distribution costs have stopped them from being effective outside the West Coast
market.

Competition

Even though the overall size of the retail music industry can be estimated,
the exact size of the market share, which the music industry encompasses, is
impossible to determine. Many of the largest companies that produce music
catalogs also operate retail stores and use a catalog to compliment their store
operations.

The quality of products offered in music catalogs varies significantly.
The goal for a storefront retailer is to use the catalog to generate revenues
and profits in a tightly focused market to increase their local store's customer
base. Nearly all the music catalogers target the largest consumer market
possible. If they are using the catalog strictly to compliment the retail
store, they market their catalog to the broadest consumer base possible since
they normally ship out of their store.

There are some targeted business-to-business music catalogs that sell sheet
music and retail/leased band instruments. However, this market is tightly
focused on schools and they generally do not deviate from the market. Most
musical catalogs are targeting the civilian consumer market within their local
region and to the best of our knowledge, only one catalog in the United States
is focused on professional sound and lighting.

HERO'S FAMILY FUN ENTERTAINMENT, INC.

Hero's Family Fun Entertainment, Inc. is engaged in operating a family
entertainment center under the name Hero's. Our family entertainment center is
designed to operate attractions meeting the demands of local demographics. Our
facility offers entertainment for the entire family unit and generally include
laser tag, soft play

area, redemption center, high-end video games, a restaurant and party rooms.
Hero's acquired its family entertainment center, "Hero's Family Fun Center," in
Pasadena, Texas. Hero's Pasadena occupies a 16,000 square foot stand-alone
building. Our management does not intend to expand this business. We may choose
to sell our Pasadena location in the future in order to focus our resources on
the growth of Nitelife and PS&L subsidiaries, though there are no assurances
given that if we choose to do so, we will be successful in finding a buyer and
consummated a sale. Furthermore, any and all proceeds from such sale, if it were
to occur, would be payable to our lenders first, and to the ETPI 2000 Trust
second, resulting in no sales proceeds going to us.

Entertainment Products and Services

Our family entertainment center is designed to offer children a unique
entertainment experience while meeting their parents' needs for value and
convenience. Our family entertainment center is generally divided into four
areas: a kitchen and related areas (cashier, prize area, restrooms, manager's
office, etc.) occupying approximately 5% of the premises, a dining area
occupying approximately 10% of the premises, party rooms for birthdays and other
group events occupying approximately 20% of the premises; and an activity area
occupying approximately 65% of the premises.

The Hero's facility contains a family-oriented playroom area. Our facility
typically includes: (i) laser tag; (ii) "soft play" zone consisting of any
combination of a series of tubes, slides, ball bins, climbing mountains, air
trampolines, obstacle courses, ramps and other devices for crawling, jumping,
running, swinging and climbing, all of which have been designed and constructed
with an emphasis on safety; and (iii) "game zone" consisting of coin and
token-operated attractions such as arcade-style games, kiddie rides, video
games, skill-oriented games and other similar entertainment venues that award
tickets redeemable for prizes. Most games dispense tickets that can be redeemed
by guests for prize merchandise such as toys and dolls.

Laser tag is an adventure game offering players an interactive
entertainment experience. The 15 to 20 minutes spent in the unique, laser tag
arena is all encompassing, and both mentally and physically challenging. As
such, the experience has broad demographic appeal and is suitable for
individuals, families, parties, leagues and corporate groups. The object of
laser tag is to achieve as many points as possible, either individually or as a
team, by hitting opposing targets or capturing the other team's headquarters.
The custom-designed computer-energized packs worn by players consist of a laser,
as well as front, back and shoulder LED targets. When fired, the laser emits
both an invisible infrared and a visible red laser beam. A successful target
hit is indicted by vibration, LED color change and deactivation of the hit
players pack. Points are scored for hits to the pack target areas and to the
laser. During the game, details of the scoring as it occurs are communicated to
players and each player's score is transmitted to the central game computer. At
the end of the game, each player receives a personalized scorecard detailing
individual player statistics and scores, as well as team scores if a team game
was played.

Hero's employ one general manager and various shift managers, as required,
to conduct its operations. Electronics specialists are shared between the two
facilities. Management maintains direct and frequent contact with unit level
managers.

Competition

The family entertainment industry is a broad and growing industry. The
spectrum of entertainment opportunities for families with young children is
extremely broad, ranging from low-cost, short-lived activities to more lengthy
and expensive activities. Low cost, low commitment activities include events
such as stopping for treats, ice cream, etc. while high cost, high time
commitment activities would be events such as amusement park visits, field
trips, etc. Hero's and its entertainment industry peer group are more
medium-cost, medium-time commitment activities, typically offering
value-oriented, activity-based entertainment costing approximately $7.25 per
person per visit and lasting approximately one and one-half hours per visit.
The family restaurant industry is also very broad. Young children, however,
greatly limit the range of opportunities for family restaurant-goers. As a
result, convenience and value are significant decision factors for families
dining out with young children; the ultimate objective is to minimize the adult
"hassle factor" and provide value.

Marketing Strategy

The primary customer for Hero's is a family with children between 2 and 16
years old. We estimate that the typical customer visits a Hero's location two
to six times a year, spends an average of $7.25 per person and spends
approximately one and one-half hours per visit. We believe that approximately
75% of Hero's customers have children under the age of 12. The typical Hero's
customer has young children and seeks a fun, entertaining restaurant experience
that includes a fun atmosphere quality food and good value.

Historically, we have conducted advertising campaigns primarily through
radio and print media that target families with young children. Parents are
periodically targeted by advertising campaigns in local newspapers. These
advertisements feature package deals available at Hero's that include laser tag
and game tokens. These birthday package deals provide tokens with meal
purchases rather than requiring continual purchases by parents.

EMPLOYEES

As of March 11, 2002, we had 24 employees, of which 14 were full time and
10 were employed part time. Our employees are not represented by any collective
bargaining agreements, and we have never experienced a work stoppage. We believe
that our employee relations are good.

Number of
Company Employees
- ------- ---------

Entertainment Technologies & Programs, Inc. 4
Performance Sound & Light, Inc. . . . . . . 3
Nitelife Military Entertainment, Inc. . . . 5
Hero's Family Fun Entertainment, Inc. . . . 12

GOVERNMENT REGULATION

The operation of Hero's facilities are subject to various federal, state
and local laws and regulations, including but not limited to those that impose
restrictions, levy a fee or tax, or require a permit or license on the operation
of games and rides. We are subject to the Fair Labor Standards Act, the
Americans With Disabilities Act and family leave mandates. A significant
portion of our personnel is paid at rates related to the minimum wage
established by federal and state law. Increases in such minimum wage will
result in higher labor costs to us, which may be partially offset by price
increases and operational efficiencies.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the our
unaudited consolidated interim financial statements and related notes thereto
included in the quarterly report and in the audited consolidated Financial
Statements and Management's Discussion and Analysis of Financial Condition and
Results of Operations ("MD&A") contained in our 10-KSB for the year ended
September 30, 2000. Certain statements in the following MD&A are forward
looking statements. Words such as "expects", "anticipates", "estimates" and
similar expressions are intended to identify forward looking statements. Such
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those projected.

THREE MONTHS ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

Our revenues for the quarter ended December 31, 2001 increased by $110,609
from $740,235 for the quarter ended December 31, 2000 to $850,844 for the
quarter ended December 31, 2001 primarily due to an increase in retail sales of
professional sound and lighting equipment during the quarter ended December 31,
2001.

Our general and administrative expenses decreased by $41,184 from $401,281
for the quarter ended December 31, 2000 to $360,097 for the quarter ended
December 31, 2001 primarily due to a decrease in salaries and wages for the
Company's retail operations.

Our interest expense increased by $51,435 from $58,261 for the quarter
ended December 31, 2000 to $109,696 for the quarter ended December 31, 2001.
This increase is a result of extension fees recorded as interest on our
Company's trust obligation during the quarter ended December 31, 2001.

LIQUIDITY AND CAPITAL RESOURCES

During the year ended September 30, 2001, we experienced negative financial
results which have continued during the three months ended December 31, 2001 as
follows:

=========================================
THREE MONTHS YEAR ENDED
DECEMBER 31, SEPTEMBER 30,
2001 2001
------------------- --------------------

Net loss $ (199,104) $ (1,473,462)
Negative working capital (1,634,833) (1,964,856)
Negative cash flows from operations (110,652) (325,819)
Accumulated deficit (10,064,971) (9,865,867)

YEAR ENDED SEPTEMBER 30, 2001 COMPARED TO YEAR ENDED SEPTEMBER 30, 2000

Our revenues for the year ended September 30, 2001, decreased $1,469,204 or
30% to $3,348,390 from $4,817,594 for the year ended September 30, 2000. The
decrease in revenues is primarily the result of the closure of Vision Quest,
which accounted for $929,403 in live entertainment revenues and due to the
elimination of a waterpark facility, which accounted for approximately $441,000
in amusement revenues.

Our gross margin for the year ended September 30, 2001, decreased $524,492
or 32% to $1,107,595 from $1,632,087 for the year ended September 30, 2000. The
decrease is primarily the result of the closure of Vision Quest, which accounted
for $262,866 in gross margin and the elimination of the waterpark, which
accounted for approximately $236,000 in gross margin. The decrease was
partially offset by a $173,354 or 24% decrease in depreciation due to reduced
installation of sound and lighting equipment and full depreciation of certain
assets added in earlier years.

Our general and administrative expenses for the year ended September 30,
2001, decreased $1,047,162 or 34% to $2,020,041 from $3,067,203 for the year
ended September 30, 2000. The decrease is attributable to the elimination of
the waterpark facility and the closure of Vision Quest.

Interest expense decreased $204,104 or 27% to $561,016 for the year ended
September 30, 2001, from $765,120 for the year ended September 30, 2000. The
decrease is due to a reduction in debt issuance costs and the elimination of the
debt on the waterpark facility.

LIQUIDITY AND CAPITAL RESOURCES

During the years ended September 30, 2001 and 2000, we experienced negative
financial results as follows:

================================
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
2001 2000
--------------------------------

Net loss $ (1,473,462) $ (2,226,489)
Negative working capital (1,964,856) (5,442,904)
Negative cash flows from operations (325,819) (403,055)
Accumulated deficit (9,865,867) (8,392,405)
Stockholders' deficit (2,117,950) (1,920,370)

In addition to the negative financial results, we are also delinquent on
payments of principal and accrued interest for a significant portion of our
notes payable and capital lease obligations. Additionally, at September 30,
2001 and 2000, we are in violation of numerous financial and non-financial
covenants included in our notes payable and capital lease agreements for which
waivers have not been obtained. Debt under those agreements has been classified
as current in the accompanying financial statements (See Notes 6 and 7) and
certain balances could be called by the creditors.

We have developed specific current and long-term plans to address our
viability as a going concern as follows:

- - During 2001, we began a multi-stepped debt reduction plan. In the first
phase of the plan, we agreed to exchange certain assets to ultimately repay
approximately $2,900,000 of long-term debt and accrued interest (See Note 9
to the consolidated financial statements). In the second phase of the plan,
in December 2001, we completed an exchange offer to retire capital lease
obligations with a face value of $806,000 in exchange for shares of our
common stock (See Note 16 to the consolidated financial statements). In the
third phase of the plan, we will explore ways to extinguish additional debt
in exchange for assets or through issuances of common stock and to
concentrate on our core business.

- - On March 31, 2001, we obtained 100% approval and began to transfer assets
under a debt reduction agreement. Under the debt reduction agreement,
certain of our notes payable were brought current and will ultimately be
repaid through our contribution of property (a waterpark facility, a
racetrack and certain raw land) located in Midland, Texas and 2,200,000
shares of our common stock, to a trust for liquidation, with the proceeds
used for repayment of the notes. The debt reduction agreement provides for
any shortfall in the proceeds from liquidation of the property and shares
of our common stock to be satisfied through our issuance of additional
shares of our common stock or through the trustee's foreclosing on certain
other property that we pledged. If excess proceeds are received, such
proceeds will be returned to us after satisfaction of fees of the trust.

- - During 2001, we took steps to restructure our management team and board of
directors as follows:

- Tim Hay joined the Company as the director of sales and marketing for
Nitelife and PS&L. Mr. Hay has over 32 years of military sales
experience.

- Gabriel Albert Martin joined our board of directors.

- On October 31, 2001, our board of directors requested and received the
resignation of James D. Butcher, the founder of the Company. He was
replaced on an interim basis by our president and chief financial
officer, George C. Woods.

There can be no assurance that we will have the ability to implement our
plan and ultimately attain profitability. Our long-term viability as a going
concern is dependent upon three key factors, as follows:

- - Our ability to obtain adequate sources of debt or equity funding to meet
current commitments and fund the continuation of its business operations in
the near term.

- - Our ability to control costs and expand revenues from existing or new
businesses.

- - Our ability to ultimately achieve adequate profitability and cash flows
from operations to sustain our operations.

As a result of going concern issues that we face, our independent auditors
included an emphasis paragraph in their report on our financial statements for
the year ended September 30, 2001 and 2000 stating that there exists substantial
doubt about our ability to continue as a going concern.

DESCRIPTION OF PROPERTY

We lease office space at the monthly rate of $1,339 consisting of
approximately 2,160 square feet, for our corporate headquarters at 17300 Saturn
Lane, Suite 111, Houston, Texas, 77058. The lease expires May 31, 2004.

Nitelife Military Entertainment, Inc. leases office space at the monthly
rate of $1,488 consisting of app. 2,400 square feet for its operations at 17300
Saturn Lane, Suite 110, Houston, Texas, 77058. The lease expires on May 31,2004.

Performance Sound and Light, Inc. leases office space at the monthly rate
of $1,686 consisting of approximately 2,720 square feet for its operation at
17300 Saturn Lane, Suite 109, Houston, Texas, 77058. The lease expires on May
31,2004.

Hero's Entertainment - Pasadena is a 2.2-acre parcel of land located at
7770 Spencer Highway, Pasadena, Texas 77505, consisting of a 16,000 square foot
building, which is owned by the Hero's.

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information concerning our executive
officers and directors:

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

George C. Woods . . . 43 President, Interim-Chief Executive Officer, Chief Financial Officer
and Director

Robert N. Carroll . . 46 President, Nitelife Military Entertainment, Inc.

Timothy B. Hay. . . . 55 Director of Sales and Marketing, Performance Sound & Light and
Nitelife Military Entertainment, Inc.

Mark A. Madamba . . . 39 General Manager, Hero's Family Fun Entertainment, Inc.

Mark E. Stutzman. . . 42 Director

Gabriel Albert Martin 68 Director

Kevin P. Regan. . . . 33 Director

GEORGE C. WOODS, Director, President, Chief Financial Officer and interim
Chief Executive Officer, has been with the Company since June 2000. Mr. Woods
has considerable experience in consolidation transactions, capital formation,
IPO's and mergers and acquisitions. Currently, also Mr. Woods serves as one of
the nominees to our board of directors held by Mr. Gabriel Albert Martin. Most
recently, Mr. Woods was President of Fallright America, L.L.C., where he
obtained capital for growth and provided monetization of existing shareholder
equity. Prior to joining Fallright, Mr. Woods was a co-founder and principal of
WJG Capital, L.L.C., a Houston, Texas-based limited liability company dedicated
to identifying consolidation opportunities in highly fragmented industries. WJG
Capital funded Nationwide Staffing Services, Inc., a consolidation company in
the staffing industry. WJG Capital assisted Nationwide with the simultaneous
merger of eight founding companies and the filing of its initial public offering
registration statement to be listed on the New York Stock Exchange. From 1987 to
1996, Mr. Woods held senior financial and accounting positions at Quality Tubing
at which he was the Chief Financial Officer, Vice President-Finance and
Administration. From 1982 to 1987, he was the Corporate Controller and Treasurer
of Paragon Industries, a privately-owned manufacturing division of the WEDGE
Group, Inc. a private company developing consolidations in numerous industries.
Mr. Woods is a graduate of the University of Texas with a B.B.A. in Finance and
earned an MBA from the University of Houston.

ROBERT N. CARROLL, President, Nitelife Military Entertainment, Inc., has
been associated with Nitelife since 1991. He had a dual career serving in the
military Recon Operations and was the owner/operator of Oasis Entertainment
before joining Nitelife in 1991. He started with Nitelife as a DJ and became
the Area Talent Coordinator at Yokota Air Force Base in 1992. As operation
expended in Asia, he was chosen as Nitelife's first Area Director of Asia in
1993 and served in this capacity until 1995. After retiring from the military
in 1996, he moved to Houston to become Vice-President of Nitelife. In January
2001, Mr. Carroll became President of Nitelife. He has 25 years experience in
DJ entertainment, concerts, promotion, club designing and technical application.

TIMOTHY B. HAY, Director of Sales and Marketing, Performance Sound & Light
and Nitelife Military Entertainment, Inc., joined the Company in June of 2000.
He brings 32 years of government and military experience in the area of Morale,
Welfare and Recreation. Mr. Hay served 22 years in the United States Air Force
specializing in the management of military clubs and dining facilities all over
the world. After leaving active duty, he continued working with the Air Force by
accepting a civil service position with the Department of Defense as

Chief, Morale Welfare and Recreation at Incirlik Air Base, Turkey, where he was
promoted for his efforts during Desert Storm. He continued on to several
locations in the Asia Theater including Headquarters Pacific Air Forces where he
served as Chief, Business Operations for the eight large Air Force Bases in the
Pacific Rim. Mr. Hay received numerous awards for his outstanding efforts in
providing Quality of Life Programs for our military, their dependents and
government employees serving overseas. Mr. Hay is a graduate of the Community
College of Air Force and attended the University of Maryland.

MARK A. MADAMBA, General Manager, Hero's Family Fun Entertainment, Inc.,
has been with the Company since May 1994. Prior to joining the Company, Mr.
Madamba spent approximately 14 years in the U.S. Air Force where, among other
positions, he served as Technical Advisor and Program Manager for the Air
Force's $30 million per year slot machine program, which encompassed 35 military
bases worldwide. During his career in the Air Force, Mr. Madamba became
recognized as one of their top electronics troubleshooters and designers. He
later provided technical and management oversight to 10 bases at Headquarters
Pacific Air Forces and was based out of Osan Air Base, South Korea. Mr. Madamba
received his Digital Electronics diploma from the Technical Vocational Institute
of New Mexico in 1980.

MARK E. STUTZMAN has been director of the Company since June 2001. He is
also the Chief Operating Officer and General Counsel for Capital Growth
Planning, Inc. and all its affiliated companies. Mr. Stutzman joined Capital
Growth in October of 1997 after 12 years in private practice. Mr. Stutzman
earned his degree from the Northwestern School of Law, graduating with Honors.
Mr. Stutzman coordinates the due diligence process for all underwritings placed
through Capital Growth Resources. Other core responsibilities include
management of all Corporate & Broker/Dealer Operations. Mr. Stutzman holds
licenses in securities and is licensed to practice law in the State of
California.

GABRIEL ALBERT MARTIN was recently elected to an open position on the board
of directors, pursuant to a financing entered into between an investor group
lead by Mr. Martin and the Company earlier this year. Mr. Martin, born in
Argentina, has been a successful restaurateur and real estate developer in
Houston, Texas for over 40 years. Currently, Mr. Martin serves as President and
Director of Gabriel's Inc., which owned and operated the world-renowned Swiss
Chalet Restaurant, among many other restaurant establishments. Gabriel's, Inc.
also owns several rental properties, develops raw land, and has several
interests in oil and gas properties, among other investments. Mr. Martin has
served as a Director and Vice President of Magna Flux, Inc., as well as a
Director of InterFirst Bank in Houston, Texas.

KEVIN P. REGAN was recently nominated to serve as on our board of directors
by Mr. Gabriel Albert Martin as one of Mr. Martin's three nominees to our board
of directors. Mr. Regan is a co-founder and managing member of Genesis
Financial Group, L.L.C., a consultant to us since August of 2000. Mr. Regan has
extensive background in analyzing and structuring corporate finance and merger
and acquisition transactions for both public and private company clients. His
industry experience includes Internet infrastructure (fiber optic and wireless),
application service provider, gaming, new media, telecommunications, third-party
verification services, software development, and personnel staffing/temporary
labor, among many others. In addition to his varied industry experience, Mr.
Regan has significant experience in the preparation of public and private
offering documentation, as well a standard non-offering related public filings.
Mr. Regan has also worked on several merger and acquisition transactions for
client companies ranging from single "one-off" transactions to consolidations
for both public and private company clients. During his career, Mr. Regan has
participated in the consolidations of paging companies, traditional and new
media companies, and gaming operations in the secondary and tertiary gaming
markets. Mr. Regan's corporate finance experience includes both public and
private issuance of preferred stock, common stock, and senior and mezzanine debt
securities. Mr. Regan is a graduate of the University of Houston, where he
earned a B.S. in Economics.

EXECUTIVE COMPENSATION

The following table sets forth information concerning compensation of the
chief executive officer and all other executive officers of the Company whose
salary and bonus exceeded $100,000 for services rendered to the Company for the
fiscal year ended September 30, 2001.

================================================================================
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------
Annual Compensation
-----------------------------
STOCK
BONUS
(SHARES) OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY (1) COMPENSATION
- --------------------------- -------- -------- ---------- -------------

James D. Butcher, then Chairman
and former Chief Executive
Officer . . . . . . . . . . . . 2001 $156,000 840,000(2) None.

George C. Woods, President and
Chief Financial Officer and
Interim Chief Executive Officer 2001 102,000 700,000(3) None.

<FN>
- ----------------
(1) The Company adopted an Employee Stock Bonus Plan effective March 15, 2001.
(2) Mr. Butcher received 840,000 shares as bonus compensation in 2000.
(3) Mr. Woods received 700,000 shares as a signing bonus pertaining to his
employment agreement, signed February 28, 2001.

We are not aware of any involvement by our directors or executive officers
during the past five years in legal proceedings that are material to an
evaluation of the ability or integrity of any director or executive officer.

EMPLOYEE STOCK BONUS PLAN

Effective March 15, 2001, our board adopted an Employee stock bonus plan.
The stock bonus plan provides for the grant of bonus shares to any company
employee, former employee, officer or director to recognize exceptional service
and performance beyond the service recognized by the employee's salary. Our
board has authorized up to an aggregate of 3,895,538 shares of common stock for
issuance as bonus awards under the stock bonus plan. The stock bonus plan is
currently administered by our board and each grant of bonus shares is in an
amount determined by the board. After adoption of the stock bonus to September
30, 2001, we have issued 2,870,538 shares under the stock bonus plan. The stock
bonus plan terminates on March 14, 2002.

EMPLOYMENT AGREEMENTS
Effective November 10, 1995, we entered a ten-year employment agreement
with James D. Butcher. His employment agreement provides for an annual salary of
$156,000, increasing to $240,000 upon completion of a public offering of
securities. All future increases will be at the discretion of the compensation
committee of our board of directors. Mr. Butcher's employment agreement may be
terminated upon death, disability or for "just cause" (as defined therein).
Effective October 31, 2001, Mr. Butcher resigned his position of chief executive
officer at the request of the board of directors. On February 2, 2002, Mr.
Butcher resigned as a director of the company.

Effective June 19, 2000, we entered into a three year employment agreement
with George C. Woods. The agreement provides for an annual salary of $102,000,
with annual increases and bonuses at the discretion of our board of directors.
All future increases will be at the discretion of the compensation committee of
our board of directors. Mr. Woods' employment agreement may be terminated upon
death, disability or for "just cause" (as defined therein).

COMPENSATION OF DIRECTORS

We compensate members of our board of directors as follows:

For all four meetings attended. . . 50,000 shares

Per meeting attended. . . . . . . . 10,000 shares

Additional for any special meetings 10,000 shares

For telephone attendance. . . . . . 2,500 shares

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the beneficial
ownership of our common stock as of December 31, 2001, for (a) each person known
by us to own beneficially more than 5% of the common stock, (b) each director,
(c) each executive officer identified in the compensation table above, and (d)
officers and directors of the Company as a group.

=================================================================
NUMBER OF
SHARES
BENEFICIALLY PERCENTAGE
NAME OF BENEFICIAL OWNER OWNED OWNED
- -------------------------------------- ------------ -----------

Butcher Family Trust &
Beneficial Ownership . . . . . . . . . 10,028,058 14.6%
Mark E. Stutzman . . . . . . . . . . . 1,500 --%
George C. Woods. . . . . . . . . . . . 800,000 1.2%
Gabriel Albert Martin (1). . . . . . . 757,143 1.1%
Kevin P. Regan (2) . . . . . . . . . . 473,754 0.7%
------------ -----------
All Officers and Directors as a group. 12,060,455 17.5%
============ ===========
<FN>
- ----------------

(1) Includes warrants granted to Gabriel Albert Martin, a director of the
company, as part of a $15,000 equity financing completed in July 2001. Mr.
Martin has the right to acquire up to 500,000 shares of our common stock.
The warrant grants the holder the right to acquire each share of our common
stock at a price of $0.045 per share. The warrant expires December 6,
2002.

(2) Includes warrants to purchase 438,040 shares of our common stock. The
warrant grants the holder the right to acquire our common stock at a price
of $0.09 per share. The warrant expires August 8, 2006.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Other than those transactions listed below, there have been no material
transactions, series of similar transactions, currently proposed transactions,
or a series of similar transactions, to which we or any of our subsidiaries was
or is to be a party, in which the amount involved exceeds $60,000 and in which
any director or executive officer or any security holder who is known to us to
own of record or beneficially more than 5% of our common stock or any member of
the immediate family of any of the foregoing persons, had a material interest.

members to our board of directors. At that time, our board of directors
consisted of five members, of which there were two vacancies. Mr. Martin filled
the two vacancies through the nomination of himself and Mr. Woods.
Additionally, the loan agreement contains certain provisions regarding the
acceleration of repayment of this loan including, but not limited to, the sale
of assets by us, violation of maximum allowable debt covenants, and the receipt
of cash proceeds from debt or equity financing in an amount greater than
$1,000,000. On February 8, 2002, Mr. Martin, as trustee, agreed to accrue the
interest payable quarterly in stock to the maturation of the note. The accrued
interest shall be payable in the form of common stock at the then market price.
The number of shares to be issued for the payment of interest will be calculated
by dividing the total amount of interest due and payable divided by the average
of the closing bid and ask prices of our common stock for the ten trading days
prior to September 5, 2003.

On November 8, 2001, we entered into a second loan agreement with Mr.
Martin, as trustee, in the amount of $70,000. This loan has a term of 90 days
with interest payable in cash at the rate of 12% per year. At the end of the
90-day term, the entire principal and accrued interest will be due and payable.
This loan is included under the security and stock pledge agreements previously
entered into in conjunction with Mr. Martin's $200,000 loan dated September 5,
2001. On February 8, 2002, Mr. Martin, as trustee, agreed to extend the term of
this loan for an additional 30 days, with the option for additional 30-day
extensions and his discretion.

On December 19, 2001, we entered into a third loan agreement with Mr.
Martin, in the amount of $250,000. This loan has a term of 18 months with
interest payable quarterly in cash at the rate of 16% per year. The principal,
also payable quarterly, is amortized over 48 months with a balloon payment in
the amount of $156,250 due and payable upon maturity of the loan. This loan is
also included under the security and stock pledge agreements previously entered
into in conjunction with Mr. Martin's $200,000 loan. In consideration for this
loan, Mr. Martin received the right to nominate one additional member to our
board of directors. Additionally, the loan agreement contains certain
provisions regarding the acceleration of repayment of this loan including, but
not limited to, changes in executive management, the board of directors, and the
receipt of cash proceeds from debt or equity financing in an amount greater than
$1,000,000. With this loan, Mr. Martin now has the right to nominate 3 out of 5
members in total to our board of directors.

In April 2001, Jack D. Nolan, formerly a member of our board of directors
and currently our General Counsel, made a loan to the Company in the amount of
$20,000. This loan was repaid in whole on December 26, 2001.

LEGAL PROCEEDINGS

1. Entertainment Technologies & Programs, Inc. vs. Bronco Group, Mgt., Inc.
and Bowling & Billiard Supply Company, Inc.; 191st Judicial District Court;
Dallas County, Texas

This is a breach of contract and tortuous interference with a business
relationship case. Entertainment Technologies & Programs, Inc. entered into a
contract with Bronco Group Management, Inc. concerning the installation of video
games at a location provided by Bronco. Thereafter, Bowling & Billiard Supplies
Company, Inc. ("Billiard") approached Bronco and induced them to breach their
contract with the Company. We brought suit against Bronco Group Management, Inc.
for breach of contract and against Billiard for tortuous interference with the
business relationship between Bronco and us. The contract with Bronco contained
a mandatory binding arbitration clause. Arbitration resulted in a judgment being
entered against Bronco for breach of contract in the sum of $339,878.00. We have
filed a pleading seeking a severance of the two causes of action to make the
judgment against Bronco a final judgment and will continue our case against
Billiard for tortuous interference with a business relationship. We have
aggressively pursued this case and a favorable outcome and we believe that a
recovery in excess of $250,000 from Billiard is possible.

2. Entertainment Technologies & Programs, Inc., et al. vs. GameCom, Inc.
and Ferris Productions, Inc. United States District Court for the Southern
District of Texas; Houston Division

On April 23, 2001, we filed suit against GameCom, Inc. ("GameCom") and
Ferris Productions, Inc. ("Ferris") seeking to recover an unspecified amount of
damages due to Ferris' alleged breach of a letter of intent between Ferris and
us dated March 9, 2001. We also seek injunctive and declaratory relief relating
to the letter of intent. We assert causes of action for breach of contract,
fraud and tortious interference. Our claims are based upon allegations that
Ferris breached the letter of intent and that GameCom wrongfully interfered with
the our rights under the letter of intent. On July 17, 2001, we filed a motion
for partial summary judgment with respect to the counterclaims and sought
summary judgment in our favor on multiple issues. On August 24, 2001, we
received a partial summary judgment against GameCom and Ferris. In this partial
summary judgment, the court held that the contract is governed by Delaware law
- -- not Texas law -- as Ferris and GameCom have contended. Second, the court held
that the ETPI/Ferris letter of intent contains no contractual limitation of
Ferris' liability for a breach. Finally, the court held that GameCom's tortious
interference counter-claim is barred because we were justified in bringing this
legal action. We intend to vigorously prosecute this matter to a conclusion,
though, we cannot predict with any certainty the eventual outcome of the motion
for summary judgment or this litigation. On January 30, 2002, the court order
the parties to participate in non-binding mediation, which is scheduled for
April 19, 2002.

3. Civil Action No. H-01-0323; Tracie Barefield vs. Entertainment
Technologies & Programs, Inc., et al; In the United States District Court,
Southern District of Texas; Houston Division

The basis for this case is an alleged sexual harassment claim against
Hero's Family Fun Entertainment, Inc., one of our a wholly-owned subsidiaries. A
former employee has alleged that a supervisor at Hero's Family Fun
Entertainment, Inc. center in Pasadena, Texas made improper sexual advances
toward her. While still employed by our company, she did not file a formal or
informal complaint against us even though the company provided a written
procedure for dealing with sexual harassment claims. Our counsel believes the
case has no merit and that the company shall prevail in a trial on the merits.
We are vigorously contesting this case and on January 11, 2002, we filed a
motion for summary judgment. We believe there is no significant exposure to our
company should an adverse outcome be forth coming.

4. No. 2001-56974; Market News Alert, Inc. vs. Entertainment Technologies &
Programs, Inc., In the District Court of Harris County, Texas; 334th Judicial
District

This case is founded upon an alleged written contract between the parties
dated on or about April 25, 2001. The plaintiffs allege that we employed their
firm as a consultant to disseminate information to our company at least
1,000,000 potential investors, in a manner to encourage investments in our
company. The compensation agreed in the written contract was the issuance of
1,000,000 shares of our common stock, restricted pursuant to the provisions of
Rule 144, to Market News Alert, Inc. Our legal counsel feels the case has little
merit and substantial evidence is available to prove Market News Alert, Inc.
failed to fulfill its obligations under our written agreement. We intend to
contest this case vigorously and our legal counsel believes that a favorable
outcome is probable. Our company's maximum exposure is 1,000,000 shares of
common stock and attorney's fees.

5. No. 2002-08825; Entertainment Technologies & Programs, Inc. vs. James
Douglas Butcher, In the District Court of Harris County, Texas; 151st Judicial
District

On February 12, 2002, we filed suit against James Douglas Butcher, our
former Chairman and Chief Executive Officer to recover an unspecified amount of
damages due to Mr. Butcher's alleged violation of a covenant not to compete,
breach of fiduciary duty, breach of contract and conversion relating to his
employment agreement dated November 10, 1995 and effective as of May 11, 1995.
On February 27, 2002, Mr. Butcher filed counterclaims against us. We intend to
vigorously prosecute this matter to a conclusion, though, we cannot predict with
any certainty the eventual outcome of this litigation.

LEGAL MATTERS

Sonfield & Sonfield, Houston, Texas, will pass upon the validity of the
shares of our common stock covered by this prospectus for us.

EXPERTS

The consolidated balance sheets of Entertainment Technologies & Programs,
Inc. as of September 30, 2001 and September 30, 2000 and the related
consolidated statements of operations for the years then ended included in this
prospectus s have been audited by Ham, Langston and Brezina, L.L.P., independent
certified public accountants, as stated in their report, which is included in
this prospectus in reliance upon the report of the firm given upon their
authority as experts in accounting and auditing. In addition, Ham, Langston and
Brezina, L.L.P., has reviewed our consolidated balance sheets as of December 31,
2001 and December 31, 200 and the related consolidated statement of operation
for the quarters then ended included in this prospectus.

WHERE YOU CAN FIND MORE INFORMATION

We file annual reports, quarterly reports and current reports, proxy
statements and other information with the U.S. Securities and Exchange
Commission (SEC). In addition, we have filed with the SEC a Registration
Statement on Form SB-2 under the Securities Act of 1933 with respect to our
common stock offered in this prospectus. This prospectus does not contain all of
the information set forth in the registration statement and the exhibits and
schedules to that registration statement. For further information with respect
to us and our common stock, we refer you to the registration statement and its
exhibits and schedules. With respect to statements contained in this prospectus
as to the contents of any contract or other document, reference is made to the
copy of that contract or document filed as an exhibit to the registration
statement.

You may read and copy materials that we have filed with the SEC, including
the registration statement, at the following SEC Public Reference Room:

450 Fifth Street, N.W.
Room 1024
Washington, D.C. 20549

You can call the SEC at 1-800-SEC-0330 for more information about the
operation of the Public Reference Room. Copies of our filings with the SEC are
also available to the public through the SEC's Internet website at
http:\\www.sec.gov.

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.

__________

CONSOLIDATED FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT ACCOUNTANTS
FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000

UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2001 AND 2000

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
TABLE OF CONTENTS
__________

PAGE(S)
-------

Report of Independent Accountants F-2

Consolidated Financial Statements, For the years ended
September 30, 2001 and 2000:

Consolidated Balance Sheets as of September 30,
2001 and 2000 F-3

Consolidated Statements of Operations for the
years ended September 30, 2001 and 2000 F-4

Consolidated Statements of Cash Flows for the
years ended September 30, 2001 and 2000 F-5

Consolidated Statements of Stockholders' Deficit
for the years ended September 30, 2001 and 2000 F-6

Notes to Consolidated Financial Statements F-8

Unaudited Consolidated Condensed Financial Statements, For the three
months ended December 31, 2001 and 2000:

Consolidated Condensed Balance Sheet as of
December 31, 2001 (unaudited) and September 30,
2001 F-27

Unaudited Consolidated Condensed Statement of
Operations for the three months ended December 31,
2001 and 2000 F-28

Unaudited Consolidated Condensed Statement of Cash
Flows for the three months ended December 31, 2001
and 2000 F-29

Unaudited Consolidated Condensed Statement of
Stockholders' Deficit for the three months ended
December 31, 2001 F-30

Selected Notes to Unaudited Consolidated Condensed
Financial Statements F-31

F-1

REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------

To the Board of Directors and Stockholders of
Entertainment Technologies & Programs, Inc.

We have audited the accompanying consolidated balance sheets of Entertainment
Technologies & Programs, Inc. and its subsidiaries (collectively, the "Company")
as of September 30, 2001 and 2000, and the related consolidated statements of
operations, stockholders' deficit and cash flows for each of the 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 generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Entertainment Technologies &
Programs, Inc. and subsidiaries as of September 30, 2001 and 2000, and the
results of their operations and their cash flows for each of the years then
ended in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company has suffered recurring losses from operations and at
September 30, 2001 is in a negative working capital position and stockholders'
deficit position. These factors raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 2. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

/s/ Ham, Langston & Brezina, L.L.P.

Houston, Texas
December 31, 2001

F-2

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.

CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2001 AND 2000
__________

ASSETS 2001 2000
------ ------------ ------------

Current assets:
Cash and cash equivalents $ 30,288 $ 9,604
Accounts receivable, net 266,334 300,353
Inventory 39,340 92,729
Prepaid assets 57,017 54,210
------------ ------------

Total current assets 392,979 456,896

Property and equipment, net 1,740,155 3,894,443
Other assets 43,800 28,091
------------ ------------

Total assets $ 2,176,934 $ 4,379,430
============ ============

LIABILITIES AND STOCKHOLDERS' DEFICIT
- -------------------------------------

Current liabilities:
Current portion of notes payable to stockholders $ 15,500 $ 85,000
Current portion of notes payable 853,633 3,651,002
Current portion of capital lease obligations 568,430 568,430
Accounts payable and accrued liabilities 920,272 1,595,368
------------ ------------

Total current liabilities 2,357,835 5,899,800

Notes payable to stockholders 370,000 -
Notes payable 15,017 -
Capital lease obligation 675,599 400,000
Debt settlement trust obligation 876,433 -
------------ ------------

Total liabilities 4,294,884 6,299,800
------------ ------------

Commitments and contingencies

Stockholders' deficit:
Common stock, $.001 par value, 200,000,000 and
50,000,000 shares authorized, 54,333,455 and
41,540,211 shares issued and 53,933,455 and
41,140,211 shares outstanding at September 30,
2001 and 2000, respectively 54,333 41,540
Additional paid-in capital 7,688,384 6,580,495
Unissued common stock 155,200 -
Accumulated deficit (9,865,867) (8,392,405)
Treasury stock, 400,000 shares at cost (150,000) (150,000)
------------ ------------

Total stockholders' deficit (2,117,950) (1,920,370)
------------ ------------

Total liabilities and stockholders' deficit $ 2,176,934 $ 4,379,430
============ ============

See accompanying notes to consolidated financial statements.

F-3

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000
__________

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

Revenue:
Entertainment services $ 2,742,673 $ 4,048,720
Retail 605,717 768,874
------------ ------------

Total revenue 3,348,390 4,817,594
------------ ------------

Cost of sales and services:
Entertainment services 1,838,137 2,818,550
Retail 402,658 366,957
------------ ------------

Total cost of sales and services 2,240,795 3,185,507
------------ ------------

Gross margin 1,107,595 1,632,087

General and administrative expenses 2,020,041 3,067,203
------------ ------------

Loss from operations (912,446) (1,435,116)

Interest expense (561,016) (765,120)
------------ ------------

Loss from continuing operations (1,473,462) (2,200,236)

Discontinued operations:
Loss on disposal of discontinued restaurant
division, including provision for losses
during the phase-out period - (26,253)
------------ ------------

Net loss $(1,473,462) $(2,226,489)
============ ============

Basic and diluted net loss per common share:
Continuing operations $ (0.03) $ (0.06)
Discontinued operations - -
------------ ------------

Net loss $ (0.03) $ (0.06)
============ ============

Weighted average shares outstanding 47,755,506 37,060,044
============ ============

See accompanying notes to consolidated financial statements.

F-4

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000
__________

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

Cash flows from operating activities:
Net loss $(1,473,462) $(2,226,489)
Adjustments to reconcile net loss to net cash
used in operating activities:
Loss on disposal of discontinued operations - 26,253
Depreciation and amortization 557,867 731,221
Provision for doubtful accounts 10,000 -
Common stock issued for services 456,542 199,930
Common stock issued for interest expense 110,777 323,514
Common stock issued for employee compensation 188,732 -
Changes in operating assets and liabilities:
Accounts receivable 24,019 141,508
Inventory 53,389 (284)
Prepaid assets (2,807) (54,210)
Other assets (15,709) 21,756
Book overdraft - (36,888)
Accounts payable and accrued liabilities (329,167) 344,055
Debt settlement trust obligation 94,000 -
------------ ------------

Net cash used in continuing operations (325,819) (529,634)
Net cash provided by discontinued operations - 126,579
------------ ------------

Net cash used in operating activities (325,819) (403,055)
------------ ------------

Cash flows from investing activities:
Capital expenditures (357,217) (324,077)
------------ ------------

Net cash used in investing activities (357,217) (324,077)
------------ ------------

Cash flows from financing activities:
Proceeds from notes payable and capital lease
obligations 634,798 702,639
Proceeds from sale of common stock 300,600 167,500
Proceeds from sale of treasury stock 15,000 -
Payments on notes payable and capital lease
obligations (196,678) (133,403)
Purchase of treasury stock (50,000) -
------------ ------------

Net cash provided by financing activities 703,720 736,736
------------ ------------

Increase in cash and cash equivalents 20,684 9,604

Cash and cash equivalents, beginning of year 9,604 -
------------ ------------

Cash and cash equivalents, end of year $ 30,288 $ 9,604
============ ============

Supplemental disclosure of cash flow information:
Cash paid for interest expense $ 247,199 $ 143,430
============ ============

Cash paid for income taxes $ - $ -
============ ============

See accompanying notes to consolidated financial statements.

F-5

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000
__________

ADDITIONAL UNISSUED
COMMON STOCK PAID-IN COMMON ACCUMULATED TREASURY
SHARES AMOUNT CAPITAL STOCK DEFICIT STOCK TOTAL
------------ -------- ------------ ------------ ------------ ---------- ------------

Balance at September 30, 1999 32,579,877 $ 32,580 $ 5,663,293 $ - $(6,165,916) $(150,000) $ (620,043)

Issuance of common stock for cash 988,889 989 166,511 - - - 167,500

Issuance of common stock for
services 1,519,500 1,519 198,411 - - - 199,930

Notes payable converted to common
stock 1,975,693 1,976 233,242 - - - 235,218

Issuance of common stock as
collateral 2,000,000 2,000 (2,000) - - - -

Issuance of common stock in set-
tlement of accrued interest 2,476,252 2,476 321,038 - - - 323,514

Net loss - - - - (2,226,489) - (2,226,489)
------------ -------- ------------ ------------ ------------ ---------- ------------

Balance at September 30, 2000 41,540,211 41,540 6,580,495 - (8,392,405) (150,000) (1,920,370)

Purchase of 1,000,000 shares of
treasury stock - - - - - (50,000) (50,000)

Issuance of treasury shares for
cash - - - - - 15,000 15,000

Issuance of common stock for cash, 1,868,911 1,869 108,531 - - 35,000 145,400
net of treasury stock of $35,000
issued for syndication costs

Unissued common stock - - - 155,200 - - 155,200

See accompanying notes to consolidated financial statements.

F-6

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000
__________

Issuance of common stock for
services 4,304,980 4,305 452,238 - - - 456,543

Issuance of common stock for
employee compensation 2,870,538 2,870 185,862 - - - 188,732

Note payable converted to common
stock 850,000 850 84,150 - - - 85,000

Issuance of common stock in
settlement of accrued interest 2,021,815 2,022 191,160 - - - 193,182

Issuance of common stock in set-
tlement of accounts payable 877,000 877 85,948 - - - 86,825

Net loss - - - - (1,473,462) - (1,473,462)
------------ -------- ----------- ------------ ------------ ---------- ------------

Balance at September 30, 2001 54,333,455 $ 54,333 $ 7,688,384 $ 155,200 $(9,865,867) $(150,000) $(2,117,950)
============ ======== =========== ============ ============ ========== ============

See accompanying notes to consolidated financial statements.

F-7

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

1. BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------------

BACKGROUND
----------

Entertainment Technologies & Programs, Inc. ("ETP") and its wholly-owned
subsidiaries (the "Company") are engaged in three major areas of operations
as follows:

- Operation of night clubs and other entertainment facilities on United
States military bases throughout the world, including the planning,
promotion and production of live performances at such facilities.

- Sale of professional sound and lighting equipment to both the United
States military and the non-military consumer markets.

- Operation of amusement facilities and equipment.

The accompanying consolidated financial statements include the accounts and
transactions of ETP, along with its wholly-owned subsidiaries. All
intercompany balances and transactions have been eliminated in
consolidation. The consolidated financial statements and notes thereto are
presented as if all mergers and business combinations accounted for as
poolings of interest have operated as one entity since inception.

USE OF ESTIMATES
------------------

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts and related disclosures. Actual
results could differ from estimates.

REVENUE RECOGNITION
--------------------

Revenue is recognized at the time services are performed or when products
are shipped.

CONCENTRATIONS OF CREDIT RISK
--------------------------------

Financial instruments which subject the Company to concentrations of credit
risk include cash and cash equivalents and accounts receivable. The Company
maintains its cash in well known banks selected based upon management's
assessment of the banks' financial stability. Balances periodically exceed
the $100,000 federal depository insurance limit; however, the Company has
not experienced any losses on deposits. Accounts receivable generally arise
from sales of equipment and services to the United States government and to
United States consumers. Collateral is generally not required for credit
granted. Sales to the United States government approximate 70% of total
sales reported in the accompanying statements of operations.

Continued

F-8

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

1. BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
--------------------------------------------------------------------

CASH EQUIVALENTS
-----------------

For purposes of reporting cash flows, the Company considers all short-term
investments with an original maturity of three months or less when
purchased to be cash equivalents.

INVENTORIES
-----------

Inventories, consisting primarily of electronic equipment are valued at the
lower of cost or market. Cost is determined based upon the first-in,
first-out (FIFO) method.

PROPERTY AND EQUIPMENT
------------------------

Property and equipment is stated at cost. Depreciation is computed
principally by the straight-line method over estimated useful lives as
follows:

ESTIMATED
DESCRIPTION USEFUL LIVES

Amusement games 5 years
Furniture and equipment 5-7 years
Club equipment 5-7 years
Leasehold improvements 15 years
Vehicles 5 years
Buildings 39 years

INCOME TAXES
-------------

The Company uses the liability method in accounting for income taxes. Under
this method, deferred tax assets and liabilities are determined based on
differences between financial reporting and income tax carrying amounts of
assets and liabilities and are measured using the enacted tax rates and
laws that will be in effect when the differences are expected to reverse.

LOSS PER SHARE
----------------

Basic and diluted loss per share is computed on the basis of the weighted
average number of shares of common stock outstanding during each period.

STOCK-BASED COMPENSATION
-------------------------

The Company accounts for its stock compensation arrangements under the
provisions of APB No. 25 "Accounting for Stock Issued to Employees". The
Company provides disclosure in accordance with the disclosure-only
provisions of SFAS No. 123 "Accounting for Stock-Based Compensation".

Continued

F-9

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

1. BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
--------------------------------------------------------------------

IMPAIRMENT OF LONG-LIVED ASSETS
----------------------------------

In the event that facts and circumstances indicate that the carrying value
of a long-lived asset, including associated intangibles, may be impaired,
an evaluation of recoverability is performed by comparing the estimated
future undiscounted cash flows associated with the asset or the asset's
estimated fair value to the asset's carrying amount to determine if a
write-down to market value or discounted cash flow is required.

FAIR VALUE OF FINANCIAL INSTRUMENTS
---------------------------------------

The Company includes fair value information in the notes to financial
statements when the fair value of its financial instruments is different
from the book value. When the book value approximates fair value, no
additional disclosure is made.

COMPREHENSIVE INCOME
---------------------

The Company has adopted Statement of Financial Accounting Standard ("SFAS")
No. 130, "Reporting Comprehensive Income". Comprehensive income includes
such items as unrealized gains or losses on certain investment securities
and certain foreign currency translation adjustments. The Company's
financial statements include none of the additional elements that affect
comprehensive income. Accordingly, comprehensive income and net income are
identical.

SEGMENT INFORMATION
--------------------

The Company has adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information". SFAS No. 131 supersedes SFAS No. 14,
"Financial Reporting for Segments of a Business Enterprise". Under the new
standard, the Company is required to use the management approach to
reporting its segments. The management approach designates that the
internal organization that is used by management for making operating
decisions and assessing performance as the source of the Company's
segments. The accounting policies of the segments are the same as those
described elsewhere in Note 1.

RECLASSIFICATIONS
-----------------

Certain items in these financial statements have been reclassified to
conform to the current period presentation.

Continued

F-10

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

2. GOING CONCERN CONSIDERATIONS
------------------------------

During the years ended September 30, 2001 and 2000, the Company experienced
negative financial results as follows:

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

Net loss $(1,473,462) $(2,226,489)

Negative cash flows from operations (325,819) (403,055)

Negative working capital (1,964,856) (5,442,904)

Accumulated deficit (9,865,867) (8,392,405)

Stockholders' deficit (2,117,950) (1,920,370)

In addition to its negative financial results, the Company is also
delinquent on payments of principal and accrued interest for a significant
portion of its note payable and capital lease obligations. Additionally, at
September 30, 2001 and 2000, the Company is in violation of numerous
financial and non-financial covenants included in such note payable and
capital lease agreements for which waivers have not been obtained. Debt
under those agreements has been classified as current in the accompanying
financial statements (See Notes 6 and 7) and certain balances could be
called by the creditors.

Management has developed specific current and long-term plans to address
its viability as a going concern as follows:

- During 2001 the Company began a multi-stepped debt reduction plan (the
"Plan"). In the first phase of the Plan, the Company agreed to
exchange certain of its assets to repay approximately $2,900,000 of
long-term debt and accrued interest (See Note 9). In the second phase
of the Plan, in December 2001, the Company completed an exchange offer
to retire capital lease obligations with a face value of $806,000 in
exchange for shares of the Company's common stock (See Note 16). In
the third phase of the Plan, management is currently exploring ways to
extinguish additional debt in exchange for assets or through issuances
of common stock and to concentrate on its core business.

- During 2001 the Company took steps to restructure its management team
and Board of Directors.

There can be no assurance that the Company will have the ability to
implement its business plan and ultimately attain profitability. The
Company's long-term viability as a going concern is dependent upon three
key factors, as follows:

Continued

F-11

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

2. GOING CONCERN CONSIDERATIONS, CONTINUED
------------------------------------------

- The Company's ability to obtain adequate sources of debt or equity
funding to meet current commitments and fund the continuation of its
business operations in the near term.

- The ability of the Company to control costs and expand revenues from
existing or new businesses.

- The ability of the Company to ultimately achieve adequate
profitability and cash flows from operations to sustain its
operations.

3. ACCOUNTS RECEIVABLE
--------------------

Accounts receivable consist primarily of amounts due from U.S. military
bases for the purchase of entertainment equipment and services. An
allowance for doubtful accounts is provided, when appropriate, based on
past experience and other factors which, in management's judgment, deserve
current recognition in estimating probable bad debts. Such factors include
circumstances with respect to specific accounts receivable, growth and
composition of accounts receivable, the relationship of the allowance for
doubtful accounts to accounts receivable and current economic conditions.
Accounts receivable at September 30, 2001 and 2000 are stated net of an
allowance for doubtful accounts of $10,000 and $17,985, respectively.

4. PROPERTY AND EQUIPMENT
----------------------

Property and equipment consisted of the following at September 30, 2001 and
2000:

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

Land, buildings and improvements $ 497,479 $ 2,539,890
Club equipment 2,823,645 2,446,974
Amusement games 1,759,201 2,035,259
Furniture and equipment 322,025 351,702
Vehicles 96,164 111,701
------------ ------------

5,498,514 7,485,526
Less: accumulated depreciation
and amortization (3,758,359) (3,591,083)
------------ ------------

Property and equipment, net $ 1,740,155 $ 3,894,443
============ ============

Depreciation expense for the years ended September 30, 2000 and 2001 was
$557,867 and $731,221, respectively.

Continued

F-12

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

5. NOTES PAYABLE TO STOCKHOLDERS
-----------------------------

The Company periodically obtained loans from stockholders to provide the
Company with working capital. Notes payable to stockholders consist of the
following at September 30, 2001 and 2000:

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

Promissory note payable to a stockholder
bearing interest at 12% per year and due
in full in September 2003. This note is
collateralized by certain property and
equipment of the Company. $200,000 $ -

Promissory note payable to a stockholder
bearing interest at 20% per year. This
note is due in monthly payments of int-
erest only of $2,265 with the entire
principal balance due April 2008. This
note includes a 20% prepayment penalty
if repaid prior to April 2006, and is
uncollateralized. 170,000 85,000

Other notes payable to stockholders 15,500 -
--------- ---------

385,500 85,000
Less current portion (15,500) (85,000)
--------- ---------

$370,000 $ -
========= =========

6. NOTES PAYABLE
-------------

Notes payable consist of the following at September 30, 2001 and 2000:

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

Note payable to a bank (the "SBA Loan"),
bearing interest of 9.5% per year and due
in monthly payments of $5,928, including
interest, through December 2016. This
note is guaranteed by the United States
Small Business Administration ("SBA") and
is collateralized by certain real estate
and by the personal guarantee of an
officer/stockholder of the Company. $500,495 $515,157

Notes payable to individuals, bearing int-
erest at various rates up to 12.5% per
year, with maturities in 2002. These
notes are not collateralized. 43,177 107,045

Continued

F-13

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

6. NOTES PAYABLE, CONTINUED
------------------------

Notes payable to factoring companies,
bearing interest at graduated rates based
upon the collection period for factored
receivables. 214,370 309,797

Note payable to a bank, bearing interest of
10.75% per year and due on demand. This
note is not collateralized. 53,750 68,750

Note payable to a leasing company, due in
monthly payments of $1,112 through
September 2004 and collateralized by
certain equipment. 37,520 50,253

Note payable to a financial institution,
bearing interest of 11.95% per year and
due in monthly payments of $488, including
interest, through October 2005. This note
is collateralized by a vehicle. 19,338 -

Notes payable to investors (the "Investor
Notes") under private placements handled
by an investment company. These notes
bear interest at stated rates ranging from
12% to 14% per year and are collateralized
by substantially all assets of the Company
(See Note 9). - 2,600,000
---------- ------------

868,650 3,651,002
Less current portion (853,633) (3,651,002)
---------- ------------

$ 15,017 $ -
========== ============

Following is an analysis of contractual future annual maturities of notes
payable for the next five years and in the aggregate:

SBA LOAN
YEAR ENDING CONTRACTUAL RECLASSIFIED
SEPTEMBER 30, MATURITIES TO CURRENT AS PRESENTED
------------- ------------ -------------- -------------

2002 $ 368,500 $ 485,133 $ 853,633
2003 21,176 (16,887) 4,289
2004 23,394 (18,562) 4,832
2005 25,846 (20,404) 5,442
2006 22,882 (22,428) 454
Thereafter 406,852 (406,852) -
------------ -------------- -------------

$ 868,650 $ - $ 868,650
============ ============== =============

Continued

F-14

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

6. NOTES PAYABLE, CONTINUED
------------------------

The SBA Loan, contains various financial and non-financial covenants, which
require the Company, among other things, to maintain certain levels of cash
flows, stockholders' equity and debt to equity. The covenants also
prohibit, without the consent of the lender, the Company from making
material changes to its business, declaring or paying dividends,
transferring ownership interests in the Company, paying salaries to certain
officers of the Company in excess of specified limits, or incurring new
debt. The Company is in violation of many of the covenants of the SBA Loan.
Accordingly, the SBA Loan could be called at any time by the lender. The
Company has not requested or received covenant violation waivers from the
lender and the SBA Loan has been classified as current in the financial
statements.

7. CAPITAL LEASE OBLIGATIONS
---------------------------

At various dates during the years ended September 30, 2001 and 2000, the
Company entered into sale/leaseback transactions (the "Sale/Leaseback
Transactions") for certain equipment used at its amusement facilities. The
leases underlying the Sale/Leaseback Transactions were capital leases and,
accordingly, the Sale/Leaseback Transactions represented financing
arrangements collateralized by amusement facility equipment. The terms of
the Sale/Leaseback Transactions generally provided for the Company to
receive cash proceeds equal to 100% of the fair value of the equipment at
the date of closing (the "Closing Value"). The Company then entered into
five year lease agreements with the lessors that require the Company to
make monthly payments equal to 1.25% of the Closing Value and a final
payment at the end of five years equal to 125% of the Closing Value.
Capital lease obligations entered into as a result of the Sale/Leaseback
Transactions have a balance of $675,599 at September 30, 2001 and the
entire balance is non-current. (The lease obligations related to the
Sale/Leaseback Transactions bear interest at an effective rate of
approximately 23.5% per year.)

In December 2001, the Company negotiated exchange agreements (the
"Exchange") with substantially all of the lessors that were involved in the
Sale/Leaseback Transactions. The Exchange will allow the Company to retire
substantially all related capital lease obligations in exchange for shares
of the Company's common stock (See Note 16).

Continued

F-15

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

7. CAPITAL LEASE OBLIGATIONS, CONTINUED
---------------------------------------

During the year ended September 30, 1997, the Company entered into a
capital lease agreement (the "1997 Lease") to acquire $700,000 of games for
use in its amusement facilities. The Company has not made payments under
the 1997 Lease agreement for the past three years due to disputes about the
equipment. The 1997 Lease includes certain covenants that require the
Company to provide various financial information to the lessor in a timely
manner. During the year ended September 30, 2001 and 2000, the Company did
not comply with the lease covenants and at September 30, 2001, the Company
was past due on required payments under the lease obligation. Such past due
payments total $873,924 and include accrued interest expense of $248,619,
accrued sales tax expense of $56,875 and principal payments of $568,430.
Accordingly, the Company is in default of the lease agreement and the
lessor could repossess the amusement games or request payment of past due
amounts. If the lessor requested payment of past due amounts and the
Company was unable to comply, the lessor's recourse is repossession of the
leased amusement games. The Company has not requested or received any
waiver of covenant violations and its present financial circumstances
prevent the Company from making past due lease payments. The Company is
currently discussing settlement options with the lessor.

Included in property and equipment in the accompanying consolidated balance
sheet at September 30, 2001 and 2000 are the following assets held under
capital leases:

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

Amusement games $1,449,300 $1,200,000

Accumulated amortization (884,999) (519,999)
----------- -----------

Assets under capital leases, net $ 564,301 $ 680,001
=========== ===========

Minimum lease payments due under capital leases with remaining lease terms
of greater than one year and expiration dates subsequent to September 30,
2001 are summarized as follows:

Continued

F-16

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

7. CAPITAL LEASE OBLIGATIONS, CONTINUED
---------------------------------------

YEAR ENDING
SEPTEMBER 30,
--------------

2002 $ 682,375
2003 121,920
2004 121,920
2005 410,470
2006 519,820
----------

Total minimum lease payments 1,856,505

Less amount representing interest 612,476
----------

Present value of minimum lease payments 1,244,029

Less current portion 568,430
----------
$ 675,599
==========

8. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
--------------------------------------------

Accounts payable and accrued liabilities consisted of the following at
September 30, 2001 and 2000:

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

Accounts payable, trade $175,683 $ 545,803
Accrued payroll and related taxes 103,536 136,944
Accrued rent expense 105,101 79,373
Accrued interest expense 286,975 353,324
Sales taxes payable 61,791 56,493
Accrued property tax expense 30,999 65,241
Accrued legal settlement - 82,500
Accrued phase-out period losses of
discontinued restaurant operations - 82,832
Other accrued expenses 156,187 192,858
-------- ----------

$920,272 $1,595,368
======== ==========

Continued

F-17

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

9. DEBT SETTLEMENT TRUST OBLIGATION
-----------------------------------

In December 2000, the Company entered into an agreement (the "Trust
Agreement") with the holders of the Investor Notes (See Note 6). Under the
terms of the Trust Agreement, the Company placed certain of its amusement
properties with an appraised value of $2,495,000 (the "Properties) into a
trust (the "Trust") that was established to (i) consolidate the ownership
interests of the individual holders of the Investor Notes into beneficial
interests in the Trust, (ii) liquidate the Properties that were placed into
the Trust, and (iii) distribute the proceeds from liquidation of the
Properties to the beneficial interests in the Trust. The Trust ultimately
seeks to fully retire the Investor Notes plus accrued interest through the
date of retirement. At the inception of the Trust, the Investor Notes had a
face value of $2,600,000 and accrued interest of $320,487. An extension fee
of 10% of the outstanding note balance is due to the beneficial holders
quarterly and is to be paid by the Trust. The Company has also agreed to
place shares of its restricted common stock and certain other amusement
properties into the Trust if the Properties prove insufficient for the
purposes of the Trust, which include payment of trust expenses and
extension fees.

Following is an analysis of the debt settlement trust obligation at
September 30, 2001:

Investor Notes to be repaid by the Trust $2,600,000
Accrued interest at the date the Trust was 320,487
established
-----------
Liability transferred to the Trust 2,920,487

Net book value of assets transferred to
the Trust 1,957,949
Fair market value of common stock
transferred to the Trust as collateral 108,000
-----------
Assets transferred to the Trust 2,065,949

Net liability after transfer 854,538
Common stock of the Company issued for
accrued interest (172,182)
Extension fees earned by the note holders and
due to the trust 195,000
Other Trust activity (923)
-----------

Debt settlement trust obligation at
September 30, 2001 $ 876,433
===========

Continued

F-18

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

10. INCOME TAXES
-------------

The Company has incurred losses since its inception and, therefore, has not
been subject to federal income taxes. As of September 30, 2001, the Company
had net operating loss ("NOL") carryforwards for income tax purposes of
approximately $9,900,000 which expire in various tax years through 2021.
United States tax laws limit the time during which NOL carryforwards may be
applied against future taxable income, the Company will, in all likelihood,
be unable to take full advantage of its NOL for federal income tax purposes
should the Company generate taxable income.

The composition of deferred tax assets and liabilities and the related tax
effects at September 30, 2001 and 2000 are as follows:

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

Deferred tax assets:
Net operating losses $ 3,372,007 $ 2,986,049
Other assets basis difference - 55,827
Accrued liabilities and reserves 25,335 28,050
Valuation allowance (3,375,840) (2,989,882)
------------ ------------

Total deferred tax assets 21,502 80,044
------------ ------------

Deferred tax liabilities:
Property and equipment (21,502) (80,044)
------------ ------------

Total deferred tax liability (21,502) (80,044)
------------ ------------

Net deferred tax asset (liability) $ - $ -
============ ============

The difference between the income tax benefit in the accompanying statement
of operations and the amount that would result if the U.S. Federal
statutory rate of 34% were applied to pre-tax loss for the years ended
September 30, 2001 and 2000 is as follows:

Continued

F-19

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

10. INCOME TAXES, CONTINUED
-------------------------

2001 2000
---------------- -----------------
AMOUNT % AMOUNT %_
---------- ----- ---------- -----

Benefit for income tax at
federal statutory rate $(499,407) (34)% $(757,006) (34)%
Difference in depreciation 58,542 4 (28,267) (1)
Difference in amortization
of start-up costs - - (11,601) (1)
Difference in recognition
of accrued expenses - - 6,847 1
Difference in recognition of
accrued loss on disposal of
discontinued operations - - (101,784) (5)
Other (23,725) (2) - -
Non-deductible expenses 78,632 6 3,500 -
Increase in valuation
allowance 385,958 26 888,311 40
---------- ----- ---------- -----

$ - - % $ - - %
========== ===== ========== =====

11. STOCK BONUS PLAN AND STOCK WARRANTS
----------------------------------------

EMPLOYEE STOCK BONUS PLAN
-------------------------

Effective March 15, 2001, the Board adopted an Employee Stock Bonus Plan
(the "Stock Bonus Plan"). The Stock Bonus Plan provides for the grant of
bonus shares to any Company employee, former employee, officer or director
to recognize exceptional service and performance beyond the service
recognized by the employee's salary. The Board has authorized up to an
aggregate of 3,895,538 shares of common stock for issuance as bonus awards
under the Stock Bonus Plan. The Stock Bonus Plan is currently administered
by the Board. Each grant of bonus shares is in an amount determined by the
Board. Since Plan inception to September 30, 2001, 2,870,538 shares have
been issued under the Stock Bonus Plan. The Stock Bonus Plan terminates on
March 14, 2002.

STOCK WARRANTS
---------------

In July 2001, the Company issued warrants to purchase 876,081 shares of the
Company's common stock at $0.09 per share as part of the agreement with two
consultants assisting in the debt reduction plan Exchange (See Note 2).

In July 2001, the Company issued warrants to purchase 1,000,000 shares of
the Company's common stock at $0.07 per share as an incentive for two
individuals to purchase stock.

No expense related to warrants issued was recognized by the Company in the
accompanying statement of operations during the years ended September 30,
2001 or 2000.

Continued

F-20

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

11. STOCK BONUS PLAN AND STOCK WARRANTS, CONTINUED
----------------------------------------------------

A summary of warrant activity is as follows:

WEIGHTED
AVERAGE
NUMBER EXERCISE EXERCISE
OF SHARES PRICE PRICE
--------- ----------- ---------

Balance at September 30, 2000 and
2001 - $ - $ -

Warrants issued in connection with
the Exchange (See Note 16) 876,081 $ 0.09 $ 0.09

Warrants issued in connection with
sales of common stock 1,000,000 $ 0.07 $ 0.07
---------

Balance at September 30, 2001 1,876,081 $0.07-$0.09 $ 0.08
=========

All outstanding warrants are currently exercisable. A summary of
outstanding stock warrants at September 30, 2001 follows:

NUMBER OF REMAINING
COMMON STOCK CONTRACTUAL EXERCISE
EQUIVALENTS EXPIRATION DATE LIFE (YEARS) PRICE
------------ ---------------- ------------ ---------

876,081 August 8, 2006 4.9 $ 0.09
1,000,000 December 6, 2002 1.2 $ 0.07
------------

1,876,081
============

The Company has elected to apply the disclosure only provisions of Statement of
------------
Financial Accounting No. 123, Accounting for Stock-Based Compensation ("SFAS
- -------------------------------------------------------------------------
123") which, if fully adopted by the Company, would change the method the
Company applies in recognizing the cost of the Plan. Adoption of the cost
recognition provisions of SFAS 123 is optional and the Company has decided not
to elect those provisions. As a result, the Company continues to apply
Accounting Principles Board Opinion No. 25 ("APB 25") and related
- -----------------------------------------------
interpretations in accounting for the measurement and recognition of the cost of
warrants issued.

Continued

F-21

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

11. STOCK BONUS PLAN AND STOCK WARRANTS, CONTINUED
----------------------------------------------------

Under SFAS 123, compensation cost is measured at the grant date based on
the fair value of the awards and is recognized over the service period,
which is usually the vesting period. The fair value of warrants granted
during 2001 and 2000 was estimated on the date of grant using the Black
Scholes option-pricing model with the following assumptions used to
calculate fair value of warrants awarded in 2001 and 2000: (i) average
dividend yield of 0.00%; (ii) expected volatility of 80.00%; (iii) expected
life of one to six years; and (iv) estimated risk-free interest rate of
5.00%.

The proforma disclosures as if the Company adopted the cost recognition
requirements of SFAS 123 are as follows (in thousands):

2001 2000
-------------------------- --------------------------
AS REPORTED PROFORMA AS REPORTED PROFORMA
------------- ----------- ------------- -----------

Net Loss $ (1,473) $ (1,555) $ (2,226) $ (2,226)
============= =========== ============= ===========

Basic and dilutive net
loss per common share:
Continuing operations $ (0.03) $ (0.03) $ (0.06) $ (0.06)
Discontinued operations - - - -
------------- ----------- ------------- -----------

Net loss per common
share $ (0.03) $ (0.03) $ (0.06) $ (0.06)
============= =========== ============= ===========

12. LEASE OBLIGATIONS
------------------

The Company has entered into an operating lease for office and retail
operations. The lease provides for a renewal option, payment of taxes and
utilities by the Company, and increases to rent should certain costs to the
landlord increase. Rental expense under operating leases was $88,362 and
$100,908 for the years ended September 30, 2001 and 2000, respectively. At
September 30, 2001, due to liquidity problems, the Company is delinquent on
rent at its former headquarters in the amount of $105,101.

Minimum lease payments under operating leases with remaining lease terms of
greater than one year are summarized as follows:

2002 $ 54,156
2003 54,156
2004 36,285

Continued

F-22

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

13. DISCONTINUED OPERATIONS
------------------------

On September 15, 1999, the Company adopted a plan to dispose of all
restaurant operations. The Company's restaurant operations were conducted
through its wholly owned subsidiary, Redfish Management, Inc. ("RMI"). As
part of the Company's plan, RMI sought Chapter 11 federal bankruptcy
protection in November 1999 and began an effort to sell all assets of RMI.
Management completed disposition of RMI's assets in 2000 and recognized a
$26,353 loss on the disposition.

14. CONTINGENCIES
-------------

During October 1998, the Company abandoned certain lease space in a
shopping mall in Arlington, Texas before the expiration of the lease term.
Management abandoned the lease because management believed that the lessor
improperly induced the Company to enter the lease through
misrepresentations about the ability of the shopping mall to support the
amusement services offered by the Company. In January 1999, the lessor
filed a lawsuit against the Company seeking damages of $124,727, plus
applicable interest and attorney's fees, for breach of lease. During 2000,
the case went to mediation and the lessor received a settlement of
$135,000. The Company paid $67,500 during 2000 and the remaining balance
during 2001.

The Company is currently a party to certain other litigation arising in the
normal course of business. Management believes that such litigation will
not have a material impact on the Company.

15. BUSINESS SEGMENTS
------------------

During the fiscal year ended September 30, 2001 and 2000, the Company
operated primarily in three strategic business units that offer different
products and services: Military entertainment services, retail sale of
sound and lighting equipment and operation of amusement facilities and
equipment. Financial information regarding the other business segments is
as follows:

Continued

F-23

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

15. BUSINESS SEGMENTS, CONTINUED
------------------------------

MILITARY RETAIL AMUSE-
ENTERTAINMENT SALES MENT OTHER TOTAL
--------------- -------- -------- ------- --------
(AMOUNTS IN THOUSANDS)

YEAR ENDED SEPTEMBER 30,
2001:

Revenues $ 2,313 $ 606 $ 429 $ - $ 3,348
Income (loss) from op-
erations 140 (241) (541) (270) (912)
Total assets 1,181 107 859 30 2,177
Interest expense 64 49 448 - 561
Depreciation expense 274 2 282 - 558
Capital expenditures 299 5 53 - 357

YEAR ENDED SEPTEMBER 30,
2000:

Revenues $ 3,327 $ 769 $ 722 $ - $ 4,818
Income (loss) from op-
erations (109) (113) (935) (278) (1,435)
Total assets 1,060 163 3,128 28 4,379
Interest expense 74 18 673 - 765
Depreciation expense 357 5 362 7 731
Capital expenditures 303 7 14 - 324

The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. All intersegment sale
prices are market based. The Company evaluates performance based on
operating earnings of the respective business units.

16. SUBSEQUENT EVENTS
------------------

On December 21, 2001, the Company completed an exchange (the "Exchange") of
approximately 10,425,000 shares of the Company's common stock to retire
approximately $834,000 of securitized equipment lease obligations. The
$0.08 conversion price used in the Exchange was $0.01 greater than the
closing market price of the Company's common stock on the date the Exchange
was completed and the resulting gain partially offset the extraordinary
loss from extinguishment of debt. The following is condensed proforma
financial information of the Company, with the balance sheet presented as
if the transaction had been completed at September 30, 2001, and the income
statement presented as if the transaction had been completed at October 1,
2000:

Continued

F-24

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

16. SUBSEQUENT EVENTS, CONTINUED
------------------------------

CONSOLIDATED BALANCE SHEET
----------------------------

PROFORMA
AS PROFORMA ADJUSTED
PRESENTED ADJUSTMENTS BALANCE
------------ ------------- ------------

ASSETS
------

Current assets $ 392,979 $ - $ 392,979
Property and equipment, net 1,740,155 - 1,740,155
Other assets 43,800 - 43,800
------------ ------------- ------------

Total assets $ 2,176,934 $ - $ 2,176,934
============ ============= ============

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Current liabilities $ 2,342,335 $ (20,000)(a) $ 2,322,335
Notes payable to stockholders 385,500 - 385,500
Notes payable 15,017 - 15,017
Capital lease obligations 675,599 (667,320)(a) 8,279
Debt settlement trust obligation 876,433 - 876,433
------------ ------------- ------------

Total liabilities 4,294,884 (687,320) 3,607,564

Stockholders' equity (2,117,950) 687,320(a) (1,430,630)
------------ ------------- ------------

Total liabilities and
stockholders' equity $ 2,176,934 $ - $ 2,176,934
============ ============= ============

(a) Adjustment to reclassify accrued interest on past due lease payments
and the related capital lease obligation to common stock and additional
paid-in capital.

Continued

F-25

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
__________

16. SUBSEQUENT EVENTS, CONTINUED
------------------------------

CONSOLIDATED STATEMENT OF OPERATIONS
---------------------------------------

PROFORMA
AS PROFORMA ADJUSTED
PRESENTED ADJUSTMENTS BALANCE
------------ ------------- ------------

Revenue $ 3,348,390 $ - $ 3,348,390
Cost of sales and services 2,240,795 - 2,240,795
------------ ------------- ------------

Gross margin 1,107,595 - 1,107,595

General and administrative
expenses 2,020,041 - 2,020,041
------------ ------------- ------------

Loss from operations (912,446) - (912,446)

Interest expense (561,016) 153,998(b) (407,018)
------------ ------------- ------------

Loss before extraordinary loss
on extinguishment of debt (1,473,462) 153,998 (1,319,464)

Extraordinary loss on extin-
guishment of capital lease
obligations - (35,430)(c) (35,430)
------------ ------------- ------------

Net loss $(1,473,462) $ 118,568 $(1,354,894)
============ ============= ============

(b) Adjustment to remove interest expense on the securitized lease
obligations.

(c) Adjustment to record the loss on extinguishment of the capital lease
obligations. The loss is the result of the acceleration of discount
amortization.

17. NON-CASH FINANCING AND INVESTING ACTIVITY
---------------------------------------------

During the year ended September 30, 2001 and 2000, the Company engaged in
the following non-cash financing and investing activities:

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

Issued common stock to vendors to satisfy
accounts payable $ 86,825 $ -
Converted notes payable to common stock 85,000 235,218
Satisfied liability for accrued interest
through issuance of common stock 82,406 -
Placed property in the Trust to satisfy
notes payable 1,957,949 -

F-26

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET

__________

DECEMBER 31, SEPTEMBER 30,
2001 2001
ASSETS (UNAUDITED) (NOTE)
------ -------------- ---------------

Current assets:
Cash and cash equivalents $ 221,348 $ 30,288
Accounts receivable, net 397,222 266,334
Inventory 61,074 39,340
Prepaid expenses 92,439 57,017
-------------- ---------------

Total current assets 772,083 392,979

Property and equipment, net 1,672,565 1,740,155
Other assets 46,802 43,800
-------------- ---------------

Total assets $ 2,491,450 $ 2,176,934
============== ===============

LIABILITIES AND STOCKHOLDERS' DEFICIT
- -------------------------------------

Current liabilities:
Current portion of notes payable to stockholders $ 132,500 $ 15,500
Current maturities of notes payable 893,875 853,633
Current portion of capital lease obligation 568,430 568,430
Accounts payable and accrued liabilities 812,111 920,272
-------------- ---------------

Total current liabilities 2,406,916 2,357,835

Notes payable to stockholders 557,500 370,000
Notes payable 15,017 15,017
Capital lease obligation - 675,599
Debt settlement trust obligation 891,435 876,433
-------------- ---------------

Total liabilities 3,870,868 4,294,884
-------------- ---------------

Commitments and contingencies

Stockholders' deficit:
Common stock, $.001 par value, 200,000,000
shares authorized, 68,765,184 and 54,333,455
shares issued and 68,365,184 and 53,933,455
shares outstanding at December 31, 2001 and
September 30, 2001, respectively 68,765 54,333
Additional paid-in capital 8,631,588 7,688,384
Unissued common stock 135,200 155,200
Accumulated deficit (10,064,971) (9,865,867)
Treasury stock: 400,000 shares at cost (150,000) (150,000)
-------------- ---------------

Total stockholders' deficit (1,379,418) (2,117,950)
-------------- ---------------

Total liabilities and stockholders'
deficit $ 2,491,450 $ 2,176,934
============== ===============

Note: The balance sheet at September 30, 2001 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. See notes to unaudited consolidated condensed financial
statements.

F-27

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS

__________

THREE MONTHS THREE MONTHS
ENDED ENDED
DECEMBER 31, DECEMBER 31,
2001 2000
-------------- --------------

Total revenue $ 850,844 $ 740,235

Total cost of sales and services 516,476 462,513
-------------- --------------

Gross margin 334,368 277,722

General and administrative expenses 360,097 401,281

Loss from operations (25,729) (123,559)

Other income (expenses):
Interest expense (109,696) (58,261)
Gain on disposal of property and equipment 5,017 - _
Severence pay to former employee (34,676)
-------------- --------------

Total other income (expenses), net (139,355) (58,261)
-------------- --------------

Net loss before extraordinary loss (165,084) (181,820)

Extraordinary loss on extinguishment of debt (34,020) - _
-------------- --------------

Net loss $ (199,104) $ (181,820)
============== ==============

Basic and diluted net loss per common share $ (0.00) $ (0.00)
============== ==============

Weighted average shares outstanding 61,433,199 42,123,759
============== ==============

See notes to unaudited consolidated condensed financial statements.
F-28

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS

__________

THREE MONTHS THREE MONTHS
ENDED ENDED
DECEMBER 31, DECEMBER 31,
2001 2000
-------------- --------------

Cash flows from operating activities:
Net loss $ (199,104) $ (181,820)
Adjustments to reconcile net loss to net
cash used in operating activities 88,452 96,400
-------------- --------------

Net cash used in operating activities (110,652) (85,420)
-------------- --------------

Cash flows from investing activities:
Capital expenditures (21,093) (110,484)
-------------- --------------

Net cash used in investing activities (21,093) (110,484)
-------------- --------------

Cash flows from financing activities:
Proceeds from sale of common stock 35,000 71,000
Proceeds from notes payable 320,000 115,300
Payments on notes payable and capital
lease obligations (32,195) - _
-------------- --------------

Net cash provided by financing activities 322,805 186,300
-------------- --------------

Increase (decrease) in cash and cash equivalents 191,060 (9,604)

Cash and cash equivalents, beginning of period 30,288 9,604
-------------- --------------

Cash and cash equivalents, end of period $ 221,348 $ - _
============== ==============

See notes to unaudited consolidated condensed financial statements.
F-29

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE THREE MONTHS ENDED DECEMBER 31, 2001

__________

ADDITIONAL UNISSUED
COMMON STOCK PAID-IN COMMON ACCUMULATED TREASURY
SHARES AMOUNT CAPITAL STOCK DEFICIT STOCK TOTAL
------------ -------- ----------- ------------- ------------- ---------- ------------

Balance at September 30, 2001 54,333,455 $ 54,333 $ 7,688,384 $ 155,200 $ (9,865,867) $(150,000) $(2,117,950)

Common stock issued for services 101,750 102 4,986 - - - 5,088

Common stock issued for interest 45,000 45 3,555 - - - 3,600

Common stock issued for cash 777,779 778 34,222 - - - 35,000

Common stock issued for prepaid
assets 171,429 171 8,400 - - - 8,571

Capital lease obligations con-
verted to common stock 10,423,133 10,423 719,196 - - - 729,619

Common stock issued for rent
obligation 150,000 150 11,850 - - - 12,000

Issuance of unissued stock 200,000 200 19,800 (20,000) - - -

Common stock issued for trust
liability 2,562,638 2,563 141,195 - - - 143,758

Net loss for the three months
ended December 31, 2001 - - - - (199,104) - (199,104)
------------ -------- ----------- ------------- ------------- ---------- ------------

Balance at December 31, 2001 68,765,184 $ 68,765 $ 8,631,588 $ 135,200 $(10,064,971) $(150,000) $(1,379,418)
============ ======== =========== ============= ============= ========== ============

See notes to unaudited consolidated condensed financial statements.
F-30

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

__________

1. General
-------

The unaudited consolidated condensed financial statements included herein
have been prepared without audit pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted, pursuant to such rules and regulations. These
unaudited consolidated condensed financial statements should be read in
conjunction with the audited consolidated financial statements and notes
thereto of Entertainment Technologies & Programs, Inc. and Subsidiaries
(the "Company") included in the Company's Annual Report on Form 10-KSB for
the year ended September 30, 2001. Certain reclassifications have been made
to prior year amounts to conform with the current year presentation.

In the opinion of management, the unaudited consolidated condensed
financial information included herein reflect all adjustments, consisting
only of normal, recurring adjustments, which are necessary for a fair
presentation of the Company's financial position, results of operations and
cash flows for the interim periods presented. The results of operations for
the interim periods presented herein are not necessarily indicative of the
results to be expected for a full year or any other interim period.

2. Background
----------

Entertainment Technologies & Programs, Inc. ("ETP") and its wholly-owned
subsidiaries (the "Company") are engaged in three major areas of operations
as follows:

- - The development, management and operation of entertainment systems
within nightclub venues, located on U.S. military bases throughout the
world, and the designing, planning, promotion and production of live
performances and other entertainment bookings in both the military and
the civilian markets.

- - The design, installation and retail sale of professional sound and
lighting equipment through mail order catalogs, the internet and
direct sales targeting the military market through AFNAF purchase
agreements and civilian consumer markets.

- - The ownership, installation and operation of amusement equipment in
company-owned and operated facilities and the design and construction
of entertainment facilities.

The accompanying consolidated condensed financial statements include the
accounts and transactions of ETP, along with its wholly-owned subsidiaries.
All intercompany balances and transactions have been eliminated in
consolidation.

Continued

F-31

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

__________

3. Comprehensive Income
---------------------

The Company has adopted Statement of Financial Accounting Standard ("SFAS")
No. 130, "Reporting Comprehensive Income", which establishes standards for
reporting and display of comprehensive income and its components in a full
set of financial statements. Comprehensive income includes all changes in a
company's equity, except those resulting from investments by and
distributions to owners. There was no difference between comprehensive loss
and net loss for the three months ended December 31, 2001 and 2000.

4. Income Taxes
-------------

Deferred income taxes reflect the tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. The
Company has provided deferred tax valuation allowances for cumulative net
operating tax losses to the extent that the net operating losses may not be
realized. The difference between the federal statutory income tax rate and
the Company's effective income tax rate is primarily attributed to changes
in valuation allowances for deferred tax assets related to net operating
losses.

5. Business Segments
------------------

During the three months ended December 31, 2001 and 2000, the Company
operated primarily in three strategic business units that offer different
products and services: providing military entertainment services, retail
sale of sound and lighting equipment and design and operation of amusement
facilities and equipment. Financial information regarding business segments
is as follows:

Continued

F-32

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

__________

5. BUSINESS SEGMENTS, CONTINUED
------------------------------

MILITARY RETAIL
ENTERTAINMENT SALES AMUSEMENT TOTAL
-------------- ---------- ----------- -----------

THREE MONTHS ENDED
DECEMBER 31, 2001:

Revenues $ 525,330 $ 209,174 $ 116,340 $ 850,844
Net income (loss) 61,213 931 (120,053) (57,909)
Total assets 1,255,292 159,633 330,099 1,745,024

THREE MONTHS ENDED
DECEMBER 31, 2000:

Revenues $ 591,089 $ 54,215 $ 94,931 $ 740,235
Net income (loss) 50,375 (50,848) (67,730) (68,203)
Total assets 961,249 42,592 743,229 1,747,070

Intersegment receivables and payables have been shown net in total assets for
each segment. The Company evaluates performance based on operating earnings of
the respective business units.

Following are reconciliations of net income or loss and total assets for
reportable segments to the consolidated totals of the Company:

THREE MONTHS ENDED
DECEMBER 31,
2001 2000
----------- -----------

Net income or loss
- ------------------

Total net income or loss for reportable
segments $ (57,909) $ (68,203)
Unallocated amounts:
Corporate management fees charged to
segments 49,051 44,414
Other corporate expenses (156,226) (158,031)
----------- -----------

Total consolidated loss before income
taxes and extraordinary loss $ (165,084) $ (181,820)
=========== ===========

Assets
- ------

Total assets for reportable segments $1,745,024 $1,747,070
Elimination of receivables from corporate
headquarters 435,509 221,007
Other unallocated assets 310,917 2,447,845
----------- -----------

Total consolidated assets $2,491,450 $4,415,922
=========== ===========

Continued

F-33

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

__________

6. Debt Settlement Trust Obligation
-----------------------------------

In December 2000, the Company entered into an agreement (the "Trust
Agreement") with the holders of the Investor Notes. Under the terms of the
Trust Agreement, the Company placed certain of its amusement properties
with an appraised value of $2,495,000 (the "Properties) into a trust (the
"Trust") that was established to (i) consolidate the ownership interests of
the individual holders of the Investor Notes into beneficial interests in
the Trust, (ii) liquidate the Properties that were placed into the Trust,
and (iii) distribute the proceeds from liquidation of the Properties to the
beneficial interests in the Trust. The Trust ultimately seeks to fully
retire the Investor Notes plus accrued interest through the date of
retirement. At the inception of the Trust, the Investor Notes had a face
value of $2,600,000 and accrued interest of $320,487. An extension fee of
10% of the outstanding note balance is due to the beneficial holders
quarterly and is to be paid by the Trust. The Company has also agreed to
place shares of its restricted common stock and certain other amusement
properties into the Trust if the Properties prove insufficient for the
purposes of the Trust, which include payment of trust expenses and
extension fees.

Following is an analysis of the debt settlement trust obligation at
September 30, 2001 and a roll forward of the obligation to December 31,
2001:

Continued

F-34

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

__________

6. DEBT SETTLEMENT TRUST OBLIGATION, CONTINUED
- ------------------------------------------------

Investor notes to be repaid by the Trust $2,600,000
Accrued interest at the date the Trust was
established 320,487
-----------

Liability transferred to the Trust 2,920,487

Net book value of the property transferred
to the Trust 1,957,949
Fair market value of common stock transferred
to the Trust as collateral 108,000
-----------

Assets transferred to the Trust 2,065,949

Net liability after transfer 854,538
Common stock of the Company issued for accrued
interest (172,182)
Extension fees earned by the note holders and
due to the Trust 195,000
Other Trust activity (923)
-----------

Debt settlement trust obligation at September 30,
2001 876,433

Additional expenses of the trust 93,760

Extension fees earned by the note holders and
due to the Trust 65,000

Common stock of the Company issued for collateral
and payment of trust expenses (143,758)
-----------

Debt settlement trust obligation at December 31,
2001 $ 891,435
===========

The Company remains primarily responsible for approximately $3,000,000 of debt
to the extent that assets in the Trust are not sufficient to settle the debt.
Under terms of the Trust, certain additional assets and shares of the Company's
common stock will be used to settle any remaining liability after current Trust
assets are liquidated.

Continued

F-35

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

__________

7. Exchange Offering
------------------

At various dates during the years ended September 30, 2001 and 2000, the
Company entered into sale/leaseback transactions (the "Sale/Leaseback
Transactions") for certain equipment used at its amusement facilities. The
leases underlying the Sale/Leaseback Transactions were capital leases and,
accordingly, the Sale/Leaseback Transactions represented financing
arrangements collateralized by amusement facility equipment. The terms of
the Sale/Leaseback Transactions generally provided for the Company to
receive cash proceeds equal to 100% of the fair value of the equipment at
the date of closing (the "Closing Value"). The Company then entered into
five year lease agreements with the lessors that require the Company to
make monthly payments equal to 1.25% of the Closing Value and a final
payment at the end of five years equal to 125% of the Closing Value.
Capital lease obligations entered into as a result of the Sale/Leaseback
Transactions had a balance of $675,599 at September 30, 2001 and the entire
balance was non-current. (The lease obligations related to the
Sale/Leaseback Transactions bear interest at an effective rate of
approximately 23.5% per year.)

During this quarter, the Company completed an exchange (the "Exchange") of
10,423,133 shares of the Company's common stock to retire approximately
$834,000 of securitized equipment lease obligations with substantially all
of the lessors that were involved in the Sale/Leaseback Transactions. The
$0.08 conversion price used in the Exchange was $0.01 greater than the
closing market price of the Company's common stock on the date the Exchange
was completed and the resulting gain partially offset the extraordinary
loss from extinguishment of debt.

The Exchange resulted in a $34,020 loss on extinguishment of the capital
lease obligations. The net loss is the result of a $138,251 loss from
acceleration of discount amortization offset by a $104,231 gain due to the
difference between the conversion price used and the fair market value of
the Company's stock on the day the Exchange was completed.

F-36

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Under the Delaware General Corporation Law, a corporation has the power to
indemnify any person who is made a party to any civil, criminal, administrative
or investigative proceeding, other than an action by or in the right of the
corporation, by reason of the fact that such person was a director, officer,
employee or agent of the corporation, against expenses, including reasonable
attorneys' fees, judgments, fines and amounts paid in settlement of any such
actions; provided, however, in any criminal proceeding, the indemnified person
shall have had no reason to believe the conduct was committed was unlawful.

In addition, our by-laws provide that we will indemnify the directors and
officers from claims, liabilities, damages, expenses, losses, costs, penalties
or amounts paid in settlement incurred by any director or officer arising out of
his capacity as a director or officer of the Company to the maximum extent
provided by applicable law.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

We will pay all expenses in connection with the registration of the shares
of our common stock which may be resold by the Selling Shareholders (including
fees and disbursements of one legal counsel for the Selling Shareholders). We
will not pay any selling commissions or discounts allocable to sales of those
shares by any Selling Shareholder or any fees and disbursements of counsel and
other representatives of the Series C Holders. The estimated expenses of
registration of the shares are set forth below.

Registration fees. . . . . $ 48

Legal fees (estimate). . . $35,000

Accounting fees (estimate) $ 2,500

Other miscellaneous fees . $15,000
-------
$52,548
=======

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES

Below is a summary of sales of unregistered securities to our directors,
investors, employees and consultants. We believe that with a few possible
exceptions involving purchasers who do not meet the "accredited investor"
standard of Rule 501(a), each transaction is exempt from registration pursuant
to Sections 4(2), 4(6) and/or Rule 506 of the Securities Act of 1933 because (1)
the transaction did not involve a public offering; (2) no commissions were paid;
and (3) no underwriters were involved.

FOR THE CALENDAR YEAR ENDED DECEMBER 31, 1999

On January 29, 1999, we issued to the Butcher Family Trust, on behalf of
our then Chairman and Chief Executive Officer, James D. Butcher, 100,000 shares
of our unregistered and restricted common stock for compensation for Mr.
Butcher's personal guarantee of a $575,000 loan between Hero's Family Fun
Entertainment, Inc., a subsidiary of Stargate Entertainment, Inc., a wholly
owned subsidiary of the Company, and Bayshore National Bank of LaPorte, made on
December 17, 1998. Furthermore, on January 29, 1999, we issued 47,020 shares of
our unregistered and restricted common stock to two employees as bonus
compensation.

On July 27, 1999, we issued 1,700,000 shares of our unregistered and
restricted common stock as interest payments due to several participants of the
ETPI Lenders Trust.

On October 7, 1999, we issued 350,000 shares of our unregistered and
restricted common stock as additional interest payments due to several
participants of the ETPI Lenders Trust.

II - 1

In addition, on October 7, 1999, we issued 250,000 shares of our
unregistered and restricted common stock to an individual in exchange for debt
owned by the Company to the individual in the amount of $50,000 and legal
services rendered to the Company by the individual in the amount of $13,000.
Furthermore, on that same day, we issued 150,000 shares of our unregistered and
restricted common stock to three individual for legal services rendered.

On that same day, we issued 154,545 shares of our unregistered and
restricted common stock to a lender as interest payments during prior and
subsequent periods. We also issued to another lender 1,273,384 shares of our
unregistered and restricted common stock in exchange for debt owed by the
Company in the amount of $191,000.

FOR THE CALENDAR YEAR ENDED DECEMBER 31, 2000

On March 29, 2000, we issued 350,000 shares of our unregistered and
restricted common stock to the members of our board of directors as compensation
for their service.

In addition, on March 29, 2000, we issued 360,000 shares of our
unregistered and restricted common stock to A-Z Professional Consultants, Inc.
and, an aggregate of 85,000 shares of our unregistered and restricted common
stock to 3 individuals for consulting services rendered.

On May 2, 2000, we sold an aggregate of 796,722 shares of our unregistered
and restricted common stock to an individual for $130,000 in cash. In addition,
on that same day we issued 1,500,000 shares of our unregistered and restricted
common stock to Chris Scoggins Ltd., for consulting services rendered. On July
11, 2000, we issued 2,000,000 shares of our unregistered and restricted common
stock to Advanced Technology Marketing, L.L.C. for as additional collateral for
securitized capital leases we entered into with various leaseholders.

On September 12, 2000, we issued to an individual 100,000 shares of our
unregistered and restricted common stock for legal services rendered. In
addition, on that same day, we issued to an employee 100,000 shares of our
unregistered and restricted common stock previously sold to that employee for
$12,500. Furthermore, we issued sold to an individual 166,667 shares of our
unregistered and restricted common stock previously sold to that employee for
$15,000.

On November 16, 2000, we issued an aggregate of 177,096 shares of our
unregistered and restricted common stock for legal services rendered by eight
attorneys during the period.

FOR THE CALENDAR YEAR ENDED DECEMBER 31, 2001

In March 2001, we issued stock bonuses aggregating 2,480,538 shares of our
unregistered and restricted common stock to several employees. In addition, we
issued 365,000 shares of our unregistered and restricted common stock to the
members of our board of directors. Furthermore, we issued to Silvergate
Investments, Inc., 300,000 shares of our unregistered and restricted common
stock for interest expense related to notes payable to a shareholder, and we
issued 750,000 shares to Jack D. Nolan, our then legal counsel and a
former member of our Board of Director, for litigation and debt related
settlements. In each of these transactions, the shares were valued at $0.07 per
share.

Effective April 13, 2001, we issued to Elizabeth Jackson 1,075,000 shares
of our unregistered and restricted common stock in exchange for $85,000 in
principal value of a secured promissory note.

On July 6, 2001, we sold to Gabriel Albert Martin, who subsequently became
a director, 214,286 shares of our unregistered and restricted common stock for
$15,000 and issued warrants to purchase 500,000 shares of common stock, for
$0.70 per share, or $35,000. The warrants expire 180 days from the date of
issuance, or on about December 6, 2002.

On July 6, 2001, we sold to Daniel Dominguez, who subsequently became a
director, 214,286 shares of our unregistered and restricted common stock for
$15,000 and issued warrants to purchase 500,000 shares of common stock, for
$0.70 per share, or $35,000. The warrants expire 180 days from the date of
issuance, or on about December 6, 2002.

On or about July 12, 2001, we sold 1,080,000 shares of our unregistered and
restricted common stock to 11 investors for $0.065 per share or $70,200, in
conjunction with the purchase of shares of our common stock held by a former
employee.

II - 2

On July 26, 2001, pursuant to a consulting agreement dated August 8, 2000
with Genesis Financial Group, L.L.C., we issued to Robert E. Chamberlain, Jr.
and Kevin P. Regan, principals of Genesis Financial Group, L.L.C., warrants to
purchase 438,041 and 438,040, respectively. Each warrant has an exercise price
of $0.09 per share and expires on August 6, 2006.

On September 5, 2001, we issued to Gabriel Albert Martin, as trustee, who
subsequently became a director, a 12% Non-Negotiable Convertible Promissory Note
in the principal amount of $200,000. The note may be converted into shares of
common stock at a conversion price of $0.07 per share at any time at the option
of the holder. The term of the note is 24 months.

On November 8, 2001, we sold to Francisco Fernandez, 555,556 shares of our
unregistered and restricted common stock for $0.45 per share or $25,000.

Effective November 15, 2001, we issued to 29 existing securityholders,
10,423,133 shares of our unregistered and restricted common stock at $0.08 per
share pursuant to a private exchange offer of common stock for $806,000 in
principal value plus $27,850 in accrued interest of capital lease obligations of
the Company.

Effective November 20, 2001, we issued to Bruce L. Rogers, Shawn Helms,
Bennie J. Pendley and Catherine E. Robinson, 40,500, 41,250, 10,000, and 10,000
restricted shares of our common stock, respectively, for consulting services
provided to us during the period.

On November 24, 2001, we sold to Jack N. Underwood, 222,223 shares of our
unregistered and restricted common stock for $0.45 per share or $10,000.

FOR THE PERIOD JANUARY 1, 2002 THROUGH MARCH 11, 2002

March 1, 2002, we sold to James S. Underwood, 333,333 shares of our
unregistered and restricted common stock for $0.03 per share, or $10,000. In
addition, on March 1, 2002 we sold to James K. Underwood, 100,000 shares of our
unregistered and restricted common stock for $0.03 per share, or $3,000.

On March 8, 2002, we sold to Chapman Family Limited Partnership, Thomas H.
Stockton, John F. Loafman and Mark J. Kemp, 333,333, 333,333, 66,667, and
250,000 shares of our unregistered and restricted common stock, respectively,
for $0.03 per share, or an aggregate of $29,500.

On March 11, 2002, we sold to Richard D. Gittin, 333,333 shares of our
unregistered and restricted common stock for $0.03 per share, or $10,000.

ITEM 27. EXHIBITS

The exhibits included as part of this Registration Statement are listed on
the Exhibit Index of this Registration Statement.

ITEM 28. UNDERTAKINGS (pursuant to Regulation S-B Item 512(a), (e))

(a) The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made
by the Selling Shareholder, a post-effective amendment to this Registration
Statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;

(ii) To reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information set
forth in this Registration Statement; and

(iii) To include any additional or changed material information on the
plan of distribution.

(2) For determining liability under the Securities Act, to treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time shall be deemed to be
the initial bona fide offering.

(3) To file a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.

(e) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 ("Act") may be permitted to directors, officers and controlling
persons of the company pursuant to the foregoing provisions, or otherwise, we
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment of expenses incurred or paid by a
director, officer or controlling person of the company in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, we will,
unless in the opinion of our counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

II - 3

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, in
Houston, State of Texas, on March 18, 2002.

ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.

By /s/ George C. Woods
---------------------------------------
George C. Woods
President and Chief Financial Officer

In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

SIGNATURE CAPACITY DATE
- --------- -------- ----

/s/ George C. Woods Interim Chief Executive Officer, March 18, 2002
- ------------------------- President, Chief Financial
George C. Woods Officer and Director

/s/ Kevin P. Regan Director March 18, 2002
- -------------------------
Kevin P. Regan

/s/ Mark E. Stutzman Director March 18, 2002
- -------------------------
Mark E. Stutzman

/s/ Gabriel Albert Martin Director March 18, 2002
- -------------------------
Gabriel Albert Martin

II - 4

EXHIBIT INDEX
TO
REGISTRATION STATEMENT ON FORM SB-2

EXHIBIT NUMBER DESCRIPTION
- -------------- -----------

3.1 Articles of Incorporation of ETPI. *

3.2 Amended and Restated Bylaws of Entertainment Technologies & Programs, Inc. *

5.1 Opinion of Sonfield & Sonfield. *

10.1 Exchange Offer *

10.2 Nitelife AFNAF Contract. *

10.3 PS&L AFNAF Contracts. *

10.4 Employee Stock Bonus Plan. *

10.5 Warrant Agreement with Gabriel Albert Martin. *

10.6 Warrant agreement with Daniel Dominguez. *

10.7 Warrant agreement with Kevin P. Regan. *

10.8 Warrant agreement with Robert E. Chamberlain, Jr. *

10.9 ETPI 2000 Trust Agreement. *

17.1 Letter of resignation of Doug Butcher as Director. *

17.2 Letter of resignation of Jack Nolan as Director.*

23.1 Consent of Sonfield & Sonfield (included in Exhibit 5.1) *

23.2 Consent of Ham, Langston & Brezina L.L.C.*

<FN>
- -----------------
* Filed herewith.
** Previously filed.
*** To be filed by amendment.

II - 5

Exhibit 3.1

CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
WESTCOTT FINANCIAL CORPORATION

Westcott Financial Corporation, a corporation organized and existing
under by virtue of the General Corporation Law of the State of Delaware,

DOES HEREBY CERTIFY:

FIRST: The name of the Corporation is Westcott Financial
Corporation.

SECOND: The following amendments were adopted by the Board of
Directors and executive officers of the corporation who owned a majority of the
outstanding voting securities of the Company, by written consent in accordance
with Sections 141 and 228, respectively, of the General Corporation Law of the
State of Delaware as of May 31, 1995.

RESOLVED, that the corporation change its name to "ENTERTAINMENT
TECHNOLOGIES & PROGRAMS, INC.," and

FURTHER, RESOLVED, that such amendment take effect at 8:00 a.m.,
Eastern Daylight Time, on July 13, 1995.

THIRD: This amendment does not provide for any exchange,
reclassification or cancellation of issued shares.

FOURTH: The amendment has no effect on the presently issued and
outstanding shares of common stock of the Corporation and does not provide for
any change in stated capital.

IN WITNESS WHEREOF, Westcott Financial Corporation has caused this
Certificate to be signed by James D. Butcher, its President, and attested by
Leonida Butcher, its Assistant Secretary, this 26th day of June , 1995.
------ ---------

WESTCOTT FINANCIAL CORPORATION

/s/ James D. Butcher
-----------------------------------
James D. Butcher, President

Attest:

/s/ Leonida Butcher
- ------------------------------------
Leonida Butcher, Assistant Secretary

FILED
MAY 28, 1988 10 am
/s/ illegible

CERTIFICATE OF INCORPORATION
OF
WESTCOTT FINANCIAL. CORPORATION

ARTICLE I.
----------

The name of the corporation is Westcott Financial Corporation.

ARTICLE II.
-----------

The registered office of the corporation in the State Of Delaware is
located at the Corporation Trust Center, 1204 Orange Street in the City of
Wilmington, County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.

ARTICLE III.
------------

The corporation is to have perpetual existence.

ARTICLE IV.
-----------

The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
law of Delaware.

ARTICLE V.
----------

The total number of shares of all classes of capital stock which the
corporation shall have authority to issue shall be 60,000,000, which shall
consist of 50,000,000 shares of Common Stock of the par value of two cents
($.02) pet share, and 10,000,000 shares of Preferred Stack of the par value of
two cents ($.02) per share.

The following is a statement fixing certain of the designations and
powers, voting powers, preferences, and relative, participating, optional or
other rights of the Preferred Stock and the Common Stock of the corporation, and
the qualifications, limitations or restrictions thereof, and the authority with
respect thereto expressly granted to the board of Directors of the corporation
to fix any such provisions not fixed by this Certificate of Incorporation:

A. Preferred Stock

The Board of Directors is hereby expressly vested with the authority
to adopt a resolution or resolutions providing for the issue of authorized but
unissued shares of Preferred Stock.

which shares may be issued from time to time in one or more series and in such
amounts as may be determined by the Board of Directors in such resolution or
resolutions. The powers, voting powers, designations, preferences, and relative,
participating, optional or other rights, if any, of each series of preferred
Stock and the qualifications, limitations or restrictions, if any, of such
preference and/or rights (collectively, the "Series Terms"), shall be such as
are stated and expressed in a resolution or resolutions providing for the
creation or revision of such Series Terms (a "Preferred Stock Series
Resolution") adopted by the Board of Directors or a committee of the Board of
Directors to which such responsibility is specifically and lawfully delegated.
The powers of the Board with respect to the Series Terms of a particular series
(any of which powers, other than voting powers, may by resolution of the Board
of Directors be specifically delegated to one or more of its committees, except
as prohibited by law) shall include, but not be limited to, determination of the
following;

(1) The number of shares constituting that series and the
distinctive designation of that series or any increase or decrease (but
not, below the number of shares thereof then outstanding) in such number;

(2) The dividend rate on the shares of that series, whether such
dividends, if any, shall be cumulative, and, if so, the date or dates from
which dividends payable on such shares shall accumulate, and the relative
rights of priority, it any, of payment of dividends on shares of that
series;

(3) Whether that series shall have voting rights, in addition to
the voting rights provided by law and, if so, the terms of such voting
rights;

(4) Whether that series shall have conversion privileges with
respect to shares of any other class or classes of stock or of any other
series of any class of stock, and, if so, the terms and conditions of such
conversion, including provision for adjustment of the conversion rate upon
occurrence of such events as the Board of Directors shall determine;

(5) Whether the shares of that series shall be redeemable, and, if
so, the terms and conditions of such redemption including their relative
rights of priority, if any, of redemption, the date or dates upon or after
which they shall be redeemable, provisions regarding redemption notices,
and the amount per share payable in case of redemption, which amount stay
vary under different conditions and at different redemption dates:

-2-

(6) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms and
amount of such sinking fund;

(7) The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution, or winding up of the
corporation, and the relative rights of priority, if any, of payment of
shares of that series:

(8) The conditions or restrictions upon the creation of
indebtedness of the corporation or upon the issuance of additional
Preferred Stock or other capital stock ranking on in parity therewith, or
prior thereto with respect to dividends or distribution of assets upon
liquidation;

(9) The conditions or restrictions with respect to the issuance
of, payment of dividends upon, or the making of other distributions to, or
the acquisition or redemption of, shares ranking junior to the Preferred
Stock or to any series thereof with respect to dividends or distribution of
assets upon liquidation: and

(l0) Any other designations, powers, preferences, and rights,
including, without limitation. any qualifications, limitations, or
restrictions thereof.

Any of the Series Terms, including voting rights, of any series may be
made dependent upon facts ascertainable outside the Certificate of Incorporation
and the Preferred Stock Series Resolution, provided that the manner in which
such facts at operate upon such Series Terms is clearly and expressly set forth
in the Certificate of Incorporation or in the Preferred Stock Series Resolution.

Subject to the provisions of this Article V, shares of one or more
series of Preferred Stock may be authorized or issued from time to time as shall
be determined by and for such consideration as shall be fixed by the Board of
Directors or a designated committee thereof, in an aggregate amount not
exceeding the total number of shares of Preferred Stock authorized by this
Certificate of Incorporation. Except in respect of series particulars fixed by
the Board of Directors or its committee as permitted hereby, all shares of
Preferred Stock shall be of equal rank and shall be identical. All shares of any
one series of Preferred Stock so designated by the Board of Directors shall be
alike in every particular, except that shares of any one series issued at
different times may differ as to the dates from which dividends thereon shall be
cumulative.

-3-

B. Common Stock

1. Dividends. Subject to the provisions of any Preferred Stock
---------
Series the Board of Directors may, in its discretion, out of funds legally
available for the payment of dividends and at such times and in such manner as
determined by the Board of Directors, declare and pay dividends on the Common
Stock of the corporation.

No dividend (other than a dividend in capital stock ranking on a
parity with the Common Stock or cash in lieu of fractional shares with respect
to such stock dividend) shall be declared or paid on any share or shares of any
class of stock or series thereof ranking on a parity with the Common Stock in
respect of payment of dividends for any dividend period unless there shall have
been declared, for the same dividend period, like proportionate dividends on all
shares of Common Stock then outstanding.

2. Liquidation. In the event of any liquidation, dissolution or
------------
winding up of the corporation, whether voluntary or involuntary, after payment
or provision for payment of the debts and ocher liabilities of the corporation
and payment or setting aside for payment of any preferential amount due to the
holders of any other class or series of stock, the holders of the Common Stock
shall be entitled to receive ratably any or all assets retraining to be paid or
distributed.

3. Voting Rights. Subject to any special voting rights, set forth
-------------
in any Preferred Stock Series Resolution, the holders of the Common Stock of the
corporation shall be entitled at all meetings of shareholders to one vote for
each share of such stock held by them.

C. Prior, Parity or Junior Stock

Whenever reference is made in this Article V to shares "ranking prior
to" another class of stock or "on a parity with" another class of stock, such
reference shall mean and include all other shares of the corporation in respect
of which the rights of the holders thereof as to the payment of dividends or as
to distributions in the event of a voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the corporation are given preference
over, or rank on an equality with as the cast may be, the rights of the holders
of such other class of stock. Whenever reference is made to shares "ranking
junior to" another class of stock; such reference shall mean and include all
shares of the corporation in respect of which the rights of the holders thereof
as to the payment of dividends and as to distributions in the event of a
voluntary or involuntary liquidation,

-4-

dissolution or winding up of the affairs of the corporation are junior and
subordinate to the rights of the holders of such class of stock.

Except as otherwise provided herein or in any Preferred Stock Series
Resolution each series of Preferred Stock ranks an a parity with each other and
each ranks prior to the Common Stock. Common Stock ranks junior to the Preferred
Stock.

D. Liquidation.

For the purposes of Section 2 of Section 8 of this Article V and for
the purpose of the comparable sections of any Preferred Stock Series Resolution,
the merger or consolidation of the corporation into or with any other
corporation, or the merger of any other corporation into it, or the sale, lease,
or conveyance of all or substantially all the assets, property or business of
the corporation, shall not be deemed to be a liquidation, dissolution or winding
up of the corporation.

E. Reservation and Retirement of Shares

The corporations shall at all times reserve and keep available out of
its authorized but unissued shares of Common Stock or out of shares of Common
Stock held in its treasury, the full number of shares of Common Stock into which
all shares of any series of Preferred Stock having conversion privileges from
time to time outstanding are convertible.

Unless otherwise provided in a preferred Stock Series Resolution with
respect to a particular series of Preferred Stock, all shares of Preferred Stock
redeemed or acquired (as a result of conversion or otherwise) shall be retired
and restored to the status of authorized but unissued shares.

F. Repurchases of Capital Stock

The corporation may, without shareholder approval, purchase, directly
or indirectly, its own shares to the extent of the aggregate of its unrestricted
capital surplus and unrestricted reduction surplus.

ARTICLE VI.
-----------

Anything also in this Certificate of Incorporation to the contrary
notwithstanding, cumulative voting for the election of directors or for any
other purpose is prohibited.

-5-

ARTICLE VII.
------------

No stockholder of the corporation shall by reason of the holding
shares of any class of stock have any preemptive or preferential right to
purchase or subscribe to any shares of any class of stock of this corporation,
now or hereafter to be authorized of any notes, debentures, bonds of other
securities convertible into or carrying options of warrants to purchase shares
of any class, now or hereafter to be authorized, whether or not the issuance of
any such shares or such notes, debentures, bonds or voting rights of such
stockholder, other than such rights, if any, as the board of directors in its
discretion may fix.

ARTICLE VIII.
-------------

(a) The corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceedings, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the corporation
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by hint in
connection with such action, suit or proceeding if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, Conviction, or upon a
plea of nolo contendere its equivalent, shall not, of itself, create a
----------------
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.

(b) This corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that he is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses,
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and

-6-

in a manner he reasonably believed to be in or not opposed to the best interests
of the corporation and except that no indemnification shall be made in respect
of any claim, issue or matter as to which such person shall have been adjudged
to be liable for negligence or misconduct in the performance of his duty to the
corporation unless and only to the extent that the Court of Chancery of the
Store of Delaware or the court in which such action or suit was brought shall
determine upon application that despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.

(c) To the extent that a director, officer, employee or agent at a
corporation has been successful on the merits or otherwise in defense of any
action, suit of proceedings referred to in subsections (a) and (b), or in
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith.

(d) Any indemnification under subsections (a) and (b) (unless ordered
by a court) shall be made by the corporation only as authorized in the specific
case upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b). Such
determination shall be made (1) by the board of directors by a majority vote of
a quorum consisting of directors who were not parties to such action, suit or if
or (2) if such quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (3) by the stockholders.

(e) Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the corporation in advance of the final disposition of
such action, suit or proceeding only upon a vote of a majority of disinterested
directors after their receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the corporation as
authorized in this section.

(f) The indemnification provided by this Article shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any bylaw, agreement, vote of stock holders or disinterested director or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executor and administrators of such a person.

-7-

(g) This corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this Article.

ARTICLE IX.
-----------

Whenever a compromise or arrangement is proposed between the
corporation and its creditors or any class of them and/or between the
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the corporation under the
provisions of section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
corporation under the provisions of section 279 of Title 8 of the Delaware Code
order a meeting of the creditors or class of creditors, and/or of the
stockholders by class of stockholders of the corporation, as the case may be, to
be summoned in such manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors, or class of creditors,
and/or of the stockholders or class of stockholders of the corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
the corporation as consequence of such compromise or arrangement the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders of the corporation as the case may be, and also on the corporation.

ARTICLE X.
----------

The Board of Directors is expressly authorized to make, alter, or
repeal the Bylaws of the corporation or to adopt new Bylaws.

ARTICLE XI.
-----------

The names and addresses of the persons who are to serve as directors
until the first annual meeting of stockholders and until their successors are
elected and qualified are:

-8-

Name Address
---- -------

Jones Arthur Lee 2900 Weslayen, Suite 400
Houston, TX 77027

Keith E. Eastin 2301 Jefferson Davis Highway
Arlington, VA 22202

Gary S. Colton, Jr. 9601 Katy Freeway
Houston, TX 77024

ARTICLE XII.
------------

The name and mailing address of the incorporator is:

Name Address
---- -------

Jones Arthur Lee 2900 Weslayen, Suite 400
Houston, TX 77027

IN WITNESS WHEREOF, the undersigned, being the incorporator
hereinbefore named, for the purpose of forming a corporation pursuant to the
General Corporation Law of Delaware, does hereunto set his hand this 25th day of
--
May, 1988.

/s/ Jones Arthur Lee
--------------------------------
Jones Arthur Lee

-9-

THE STATE of TEXAS }
}
COUNTY OF HARRIS }

BE IT REMEMBERED, that on this 25th day of May, 1988 personally came
----
before me, a Notary Public in and for Harris County, Texas, JAMES ARTHUR LEE,
who, being duly sworn, acknowledged that he is the person who signed the
foregoing Certificate of Incorporation as incorporator, and that the facts
therein stated are true.

GIVEN UNDER AND HAND AND SEAL OF OFFICE this 25th day of May, 1988.

/s/ Patrick J. Richard
-----------------------------
Notary Public in and for
The State of TEXAS

My commission expires
07-09-89
- ----------------------
/s/ Patrick J. Richard
-----------------------------
Printed Name of Notary Public

==================================
Patrick J. Richard
[SEAL] Notary Public
STATE OF TEXAS
My Comm. expires July 9, 1989
==================================

-10-