Edgar Filing: URBAN TELEVISION NETWORK CORP

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-KSB

(Mark One)
/ X / ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2004

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from ______ to _____

Commission file number 000-23105

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Urban Television Network Corporation
(Exact Name of Small Business Issuer as Specified in Its Charter)

Nevada 22-2800078
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)

2707 South Cooper Street Suite 119 76015
Arlington, Texas (Zip Code)
(Address of Principal Executive offices)

Issuer's telephone number, including area code: (817) 303-7449
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Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.0001 par value

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

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge in the definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. / /

State issuer's revenues for its most recent fiscal year: $ 222,794

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity as of a
specified date within the past 60 days. The aggregate market value of our common
stock held by non-affiliates as of December 29, 2004 was approximately
$23,531,000. State the number of shares outstanding of each of the issuer's
classes of common equity as of the latest practicable date. As of December 29,
2004, there were approximately 127,063,384 shares of our common stock issued and
outstanding.

Transitional Small Business Disclosure Format: Yes / / No / X /

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URBAN TELEVISION NETWORK CORPORATION
TABLE CONTENTS

Page

PART I

Item 1. Business..........................................................4
Item 2. Properties.......................................................20
Item 3. Legal Proceedings................................................20
Item 4. Submission of Matters to a Vote of Security Holders..............20

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters..........................................................20
Item 6. Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................21
Item 7. Financial Statements and Supplementary Data......................28
Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.........................................28

PART III

Item 9. Directors and Executive Officers of the Registrant...............29
Item 10. Executive Compensation...........................................33
Item 11. Security Ownership of Certain Beneficial Owners and
Management.......................................................35
Item 12. Certain Relationships and Related Transactions...................36
Item 13. Exhibits, Lists and Reports on Form 8-K..........................37

PART I

This Annual Report on Form 10-KSB contains forward-looking statements within the
meaning of the Securities Exchange Act of 1934. The words "expect", "estimate",
"anticipate", "predict", "believe", and similar expressions and variations
thereof are intended to identify forward-looking statements. These statements
appear in a number of places in this document and include statements regarding
the intent, belief, or current expectations of the Company, its directors or its
officers with respect to, among other things, trends affecting the Company's
financial condition or results of operations. The readers of this document are
cautioned that any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties and that actual results could
differ materially from those projected in the forward-looking statements. This
report also identifies other factors that could cause such differences. No
assurance can be given that these are all of the factors that could cause actual
results to vary materially from the forward-looking statements. The Company does
not ordinarily make projections of its future operating results and undertakes
no obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
required by law. This section should be read in conjunction with the audited
consolidated financial statements of the Company and related notes set forth
elsewhere herein.

Item 1. Business

Overview

Urban Television Network Corporation ("Urban Television", "The Company")
operates a U.S. based, broadcast television network (as opposed to cable
networks discussed in the competition section) focused primarily on serving the
African-American and Hispanic populations and other ethnic populations in the
urban markets. The Company has branded the broadcast television network, for
marketing purposes, as UATV.

Urban Television provides free over-the-air programming to television viewing
audiences in the comm unities served through our local affiliate television
stations. The programming is delivered 24 hours a day, seven days a week.
Currently, we have approximately 74 affiliates located in over 60 markets and
with a household coverage of approximately 24 million households. Our affiliates
are comprised of broadcast stations with approximately 35% of them being on
cable in their local markets.

The affiliates have the right to air all or a portion of the daily program
schedule provided by the Company. Generally, we request that an affiliate
broadcast a minimum of 12 hours of our programming within a 24 hour period.
Approximately 20% of our affiliates broadcast 12 hours or more per day of our
Urban Television programming, with the remaining affiliates airing at least 6
hours or less. Generally the network advertising rates are calculated only for
that portion of time that the affiliate broadcasts our programming.

We have the broadcast rights to a variety of sports and entertainment
programming. Urban Television broadcasts a variety of other shows, including,
sports, movies, news, entertainment, variety, and family programming. We obtain
our programming from a variety of sources.

We are targeting the African-American and Hispanic markets because we believe
that they contain numerous marketing opportunities and are currently
under-served. According to Census Bureau statistics, approximately 35.5 million
African-American and 35+ million Hispanic citizens living in the United States,
or approximately 27% of the total U.S. population. These two populations have a
combined $1 Trillion dollar urban spending power and would rival the 11th
richest nation in the world. The income of this group has increased by 170% over
the last 17 years and exceeds the growth rate of 112% for other ethnic groups
over that same period. According to the Selig Center for Economic Growth at the
University of Georgia, African-American and Hispanic buying power - the personal
income available after taxes for spending on goods and services - stands at over
$1.3 trillion and will increase to over $1.6 trillion in 2007.

The vision of the Company focuses on operating a dynamic, quality broadcast
television and cable network oriented towards the urban market, which is
predominately African- American and multi-ethnic. In turn, a successful
broadcast television and cable network will have the ability to serve as the
engine of growth for an exciting media company that capitalizes on its position

of owning/operating broadcast media properties, possessing excellent talent
relations and controlling its capabilities to finance, produce, and distribute
entertainment-driven products. The Company's goal is to be a ground-breaking
media company that is publicly traded, has a majority of
African-American/Minority ownership and control, and presents a positive image
of African- American and urban America's varied multi-ethnic culture.

Additionally, the Company has as the result of becoming majority owned by
minority shareholders obtained status as a "Minority Business Enterprise" under
the standards established by the National Minority Supplier Development Council.
The Company believes that as a certified minority business it may achieve
significant advantages when it comes to major advertisers allocating their
advertising budgets.

Urban Television Network

We operate two television stations that are currently broadcasting Urban
Television programming. We have a goal of operating stations through local
marketing agreements, or LMA's, pursuant to which we would control all
programming, be entitled to all revenues and be liable for all expenses pending
acquisition of the stations. We broadcast our programming to a combination of
full-power and low-power stations, the latter of which are generally located
close to or are directed at urban areas.

Programming

The Company's mission is "to chronicle the beauty, depth and breadth of African-
American, Hispanic and other ethnic groups' cultures and histories from
yesterday to Today and into the future." There are approximately 36 million
African-American citizens living in the United States, or 12.8% of the total
population. They have an estimated spending power of $600+ billion.

UATV Network's programming will be suitable for African-American and Hispanic
families, as well as other ethnic demographics and will not include adult-only
programming. UATV Network's goal is to give the African-American and Hispanic
urban communities a network that will demonstrate more of their traditional
cultures and heritages. As a new network, UATV does not currently have
sufficient capital to allow it to develop more than a fraction of its
programming for the network and thus will rely on outside sources of programming
for the foreseeable future. As cash flow allows, UATV Network will look to
develop a larger percentage of its programming. To insure the quality of our
programming, we have decided that we will limit the airing of "infomercials," or
program-like commercials on the UATV Network.

UATV Network will seek to develop a library of interest for its African-American
and Hispanic markets that include documentaries; biographies; comedies; kids
programming; music; dramas; film shorts; animation; international lifestyle; and
news. UATV Network current programming can be seen on Exhibit 2 and at
www.uatvn.com by clicking the "Programming" link.

The Company will seek to develop a library of interest for its African-American
and Hispanic markets that includes documentaries, biographies, comedies, kids
programming, music, dramas, film shorts, animation, international lifestyle and
news. The Company's goal is to target the "trendsetter" marketing demographic
(young, urban, African-American teens) that major companies such as Nike, Coke,
Pepsi, Proctor and Gamble, General Electric, Dell, Microsoft, Apple, General
Motors, Ford, Chrysler, Nissan, Exxon-Mobil, Texaco, Prudential Securities,
Merrill Lynch, American Airlines, Delta Airlines, and music companies pursue as
the major focal point for network, during pivotal prime-time viewing hours. The
plan is to "adapt and improve on" key original and other ethnic programming that
other networks successfully offer, (e.g., A&E's Biography, a multi- ethnic Soul
Train, the Discovery Channel's documentaries, MTV's and Vh-1's music based
programming around stars, groups, genres of music, "behind the scenes" looks,
etc.) and various other shows that will resonate with the network's audience.
The network will only have a small amount of original programming from its
inception but plans to increase its original programming going forward to set it
apart from other minority focused networks. The network's programming can be
seen at www.uatvn.com by clicking the "Programming" link.

Urban Television believes that there is adequate programming available from
program syndicators, independent companies and other minority networks with
which it will be bundling (sharing) programming. The network is broadcasting 24
hours daily, seven days per week with a diversified programming schedule that it
is continually revising for new programming coming to the network.

A typical 24 hour schedule during the week of network programming is as follows:

UrbanTV Network Program Schedule
November 29, 2004 through December 5, 2004

-------------------------|--------------------------------------------------------------|--------------|--------------|----------
EST |Mon 11/29/2004|Tues 11/30/2004|Wed 12/01/2004|Thurs 12/02/2004|Fri 12/03/2004|Sat 12/04/2004|Sun 12/05/2004| EST
----------|--------------|---------------|--------------|----------------|--------------|--------------|--------------|----------
| | | | | | What's Up |Steel Dreams |
6:00 A.M. | | | | | | Spike | | 6:00 A.M.
----------| MBC News | MBC News | MBC News | MBC News | MBC News |--------------|--------------|----------
| | | | | | Cartoon Zone | Latin Eyes |
6:30 A.M.| | | | | | | | 6:30 A.M.
----------|--------------|---------------|--------------|----------------|--------------|--------------|--------------|----------
| Newswatch | Newswatch | Newswatch | Newswatch | Newswatch | Tama and | Gospel TV |
7:00 A.M.| | | | | | Friends | | 7:00 A.M.
----------|--------------|---------------|--------------|----------------|--------------|--------------|--------------|----------
| First | First | First | First | First | Kimba | Urban |
7:30 A.M.| Business | Business | Business | Business | Business | | Outdoorsman | 7:30 A.M.
----------|--------------|---------------|--------------|----------------|--------------|--------------|--------------|-----------
| American | Reality | American | Reality | American | Zebby Zoo | Holy Hip Hop |
8:00 A.M.| Review | Talks | Review | Talks | Review | | | 8:00 A.M.
----------|--------------|---------------|--------------|----------------|--------------|--------------|--------------|----------
| Dr. Anna |P. Allen Smith | American |P. Allen Smith | Dr. Anna | Animal |Keysone Golf |
8:30 A.M.| Marie | | Adventurer | | Marie | Rescue | | 8:30 A.M.
----------|--------------|---------------|--------------|----------------|--------------|--------------|--------------|----------
| | | | | | Through Our | Black |
9:00 A.M.| | | | | | Eyes | Forum | 9.00 A.M.
----------| | | | | |--------------|--------------|----------
| UrbanTV Movie| UrbanTV Movie | UrbanTV Movie| UrbanTV Movie |UrbanTV Movie | 411 | Chosen |
9:30 A.M.| His Girl | Jack and the | The Jungle | Made For | Paper Tiger | | Vessel | 9:30 A.M.
----------| Friday | Beanstalk | Book | Each Other | (1975) |--------------|--------------|----------
.| (1940) | (1952) | (1942) | (1939) | | Fun | Breath of |
10:00 A.M.| | | | | | | Life |10:00 A.M.
----------| | | | | |--------------|--------------|----------
| | | | | | Planet X | Time For |
10:30 A.M.| | | | | | | Hope |10:30 A.M.
----------|--------------|---------------|--------------|----------------|--------------|--------------|--------------|----------
|Make It Happen| Latin Eyes |Creative Decor| Estelle's | Keysont Golf | Real Life | Bible Answers|
11:00 A.M.| | | | Paradise | | 101 | |11:00 A.M.
----------|--------------|---------------|--------------|----------------|--------------|--------------|--------------|----------
| Entertainment| Dr. Anna | Box Office | Main Floor | Box Office | Rolling Art |P. Allen Smith|
| Las Vegas | Marie | America | | America | | |
11:30 A.M.| Sytle | | | | | | |11:30 A.M.
----------|------------- |---------------|--------------|----------------|--------------|--------------|--------------|----------
| Beverly | Beverly | Beverly | Beverly | Beverly | Steel Dreams | Crosstalk |
12:00 P.M.| Hillbillies | Hillbillies | Hillbillies | Hillbillies | Hillbillies | | |12:00 P.M.
----------|--------------|---------------|--------------|----------------|--------------|--------------|--------------|----------
12:30 P.M.| Lucy Show | Lucy Show | Lucy Show | Lucy Show | Lucy Show | Car Clinic |Awakening Hour|12:30 P.M.
----------|--------------|---------------|--------------|----------------|--------------|--------------|--------------|----------
| | | | | | Raceline | |
1:00 P.M.| UrbanTV Movie| UrbanTV Movie | UrbanTV Movie| UrbanTV Movie |UrbanTV Movie | |UrbanTV Movie | 1:00 P.M.
----------| A Boy and his| A Killing | Midnight Cop | Mr. Wrong | Rage at Dawn |--------------| The Painted |----------
| Dog | Affair | (1988) | Detective | (1955) | Hunting | Hills |
| (1975) | (1988) | | (1938) | | Adventure | (1951) |
1:30 P.M.| | | | | | | | 1:30 P.M.
----------| | | | | |--------------| |----------
| | | | | | Inside the | |
2:00 P.M.| | | | | | Game | | 2:00 P.M.
----------| | | | | |--------------| |----------
2:30 P.M.| | | | | | | | 2:30 P.M.
----------|--------------|---------------|--------------|----------------|--------------| |--------------|---------
3:00 P.M.| Crimestrike | Crimestrike | Crimestrike | Crimestrike | Crimestrike | | | 3:00 P.M.
----------|--------------|---------------|--------------|----------------|--------------| | |----------
| Kimba | What's Up | Kimba | What's Up | Kimba | Pioneer Bowl |UrbanTV Movie |
3:30 P.M.| | Spike | | Spike | | CIAA | Rage at Dawn | 3:30 P.M.
----------|--------------|---------------|--------------|----------------|--------------| vs | (1955) |----------
4:00 P.M.| Cartoon Zone | Cartoon Zone | Cartoon Zone | Cartoon Zone | Cartoon Zone | SIAC | | 4:00 P.M.
----------|--------------|---------------|--------------|----------------|--------------| | |----------
| 411 | Real Life | Through Our | Planet X | Fun | | |
4:30 P.M.| | 101 | Eyes | | | | | 4:30 P.M.
----------|--------------|---------------|--------------|----------------|--------------| |--------------|----------
5:00 P.M.| Nu Joint | Nu Joint | Nu Joint | Nu Joint | Nu Joint | | NeoSoul Cafe | 5:00 P.M.
----------| | | | | | | |----------
5:30 P.M.| | | | | | | | 5:30 P.M.
----------|--------------|---------------|--------------|----------------|--------------|--------------|--------------|----------

-------------------------|--------------------------------------------------------------|--------------|--------------|----------
EST |Mon 11/29/2004|Tues 11/30/2004|Wed 12/01/2004|Thurs 12/02/2004|Fri 12/03/2004|Sat 12/04/2004|Sun 12/05/2004| EST
----------|--------------|---------------|--------------|----------------|--------------|--------------|--------------|----------
| Dr. Anna | Main Floor |Animal Rescue | Creative Decor | Box Office | Neiman | Make It |
6:00 P.M.| Marie | | | | America | Marcus | Happen | 6:00 P.M.
----------|--------------|---------------|--------------|----------------|--------------| Adolphus |--------------|----------
| Estelle's | American |Entertainment | Inside | Latin Eyes | Children's | Black Life |
| Paradise | Adventurer | Las Vegas | The Game | | | In Japan |
6:30 P.M.| | | Style | | | | | 6:30 P.M.
----------|--------------|---------------|--------------|----------------|--------------|--------------|--------------|----------
7:00 P.M.| American | American | American | American | American | Urban | The Clio |
| News Network | News Network | News Network | News Network | News Network | Outdoorsman | Exchange | 7:00 P.M.
----------|--------------|---------------|--------------|----------------|--------------|--------------|--------------|----------
| America's | America's | America's | America's | America's |Sport Fishing | Latin Eyes |
7:30 P.M.| Black Forum | Black Forum | Black Forum | Black Forum | Black Forum | | | 7:30 P.M.
----------|--------------|---------------|--------------|----------------|--------------|--------------|--------------|----------
| Black Life | | Rolling Art | UrbanTV | Crimestrike | UrbanTV Movie| Missing |
8:00 P.M.| In Japan | | | Classic Movie | | Alien Species| | 8:00 P.M.
----------|--------------| NeoSoul Cafe |--------------| His Priveate |--------------| |--------------|----------
| Latin Eyes | | Steel Dreams | Secretary | Planet X | | US Bounty |
8:30 P.M.| | | | (1933) | | | Hunters | 8:30 P.M.
----------|--------------|---------------|--------------| |--------------| |--------------|----------
| Make It | Estelle's | US Bounty | | Ultimate | | USAR PRO CUP |
9:00 P.M.| Happen | Paradise | Hunters | | Choice | | Racing | 9:00 P.M.
----------|--------------|---------------|--------------| |--------------| | USA |----------
9:30 P.M.| Missing | Love Zone | Crimestrike | | Nuttz | | International| 9:30 P.M.
----------|--------------|---------------|--------------|----------------|--------------|--------------| Speedway |----------
| The Clio | | American | Lighter Side | Stufio Mix | Cruzin TV | |
10:00 P.M.| Exchange | Rhythms | Advenurer | of Sports | | | |10:00 P.M.
----------|--------------| |--------------|----------------|--------------|--------------| |----------
| Estelle's | | Missing | Black Life | American News| Love Zone | |
10:30 P.M.| Paradise | | | In Japan | Network | | |10:30 P.M.
----------|--------------|---------------|--------------|----------------|--------------|--------------|--------------|----------
| Steel Dreams | | | Comix | Macabre | Nuttz |Entertainment |
| | | | Spotlight | Theatre | | Las Vegas |
11:00 P.M.| | | | | Presents: | | Style |11:00 P.M.
----------|--------------| Irie TV | Switchplay |----------------| Warewolf vs. |--------------|--------------|----------
| US Bounty | | | Point Blank | The Vampire | Point Blank |Smooth Grooves|
11:30 P.M.| Hunters | | | | Woman | | |11:30 P.M.
----------|--------------|---------------|--------------|----------------| |--------------|--------------|----------
| American | American | American | American | | | |
12:00 A.M.| Network News | Network News | Network News | Network News | | | NWA Total |12:00 A.M.
----------|--------------|---------------|--------------|----------------| |Switchplay TV |Nonstop Action|----------
12:30 A.M.| Da Blues | Da Blues | Da Blues | Da Blues | | | |12:30 A.M.
----------|--------------|---------------|--------------|----------------|--------------|--------------|--------------|----------
1:00 A.M.| |Smooth Grooves | | | | | Underground | 1:00 A.M.
----------| Rhythms |---------------| NeoSoul Cafe | Irie TV | NWA Wildside | NuJoint | Video |----------
| | Black Life | | | | | |
1:30 A.M.| | In Japan | | | | | | 1:30 A.M.
----------|--------------|---------------|--------------|----------------|--------------|--------------|--------------|----------
2:00 A.M.| | | | | American | NeoSoul Cafe | USAR PRO CUP | 2:00 A.M.
----------| UrbanTV Movie| UrbanTV Movie | UrbanTV Movie| UrbanTV Movie | International| | Racing |----------
2:30 A.M.| His Girl | Jack and the | The Jungle | Made for | Wrestling | | USA | 2:30 A.M.
----------| Friday | Beanstalk | Book | Each Other |--------------|--------------| International|----------
| (1940) | (1952) | (1942) | (1939) | NWA Total | NWA Total | Speedway |
3:00 A.M.| | | | |Nonstop Action|Nonstop Action| | 3:00 A.M.
----------| | | | | | | |----------
3:30 A.M.| | | | | | | | 3:30 A.M.
----------|--------------|---------------|--------------|----------------|--------------|--------------|--------------|----------
4:00 A.M.| | | | | | Macabre | | 4:00 A.M.
----------| UrbanTV Movie| UrbanTV Movie | UrbanTV Movie| UrbanTV Movie | UrbanTV Movie| Theatre | UrbanTV Movie|----------
4:30 A.M.| A Boy and his| A Killing | Midnight Cop | Mr. Wrong | Paper Tiger | Presents: | The Painted | 4:30 A.M.
----------| Dog | Affair | (1988) | Detective | (1975) | Warewolf vs. | Hills |----------
5:00 A.M.| (1975) | (1988) | | (1938) | | The Vampire | (1951) | 5:00 A.M.
----------| | | | | | Woman | |----------
5:30 A.M.| | | | | | | | 5:30 A.M.
----------|--------------|---------------|--------------|----------------|--------------|--------------|--------------|----------

Programming Costs

Urban Television obtains virtually all of the existing programming from outside
sources in exchange for allowing the provider to fill a portion of the
advertising slots. For example, a thirty-minute program routinely contains six
to seven minutes of advertisements or spots that are available to Urban
Television. Urban Television generally allows the provider to fill up to 50% of
these slots in exchange for use of the programming.

Programming Distribution

There are a number of mediums for distribution of the Urban Television network
programming to viewing audiences. Generally, the three largest are traditional
broadcast television stations, cable television systems and direct satellite
broadcasters such as DirectTV and Dish Network. Presently, the Urban Television
network has approximately 74 broadcast television station affiliates (which can
be seen at www.uatvn.com and clicking the "Affiliates" link) of which a number
are also on cable in their local markets.

The Company's goal is to negotiate with the operators of cable television
systems and satellite broadcasters for these operators to carry the network for
nominal or no charges, especially with the network having a minority focused
programming grid. The Company believes that many of these operators may be
willing to offer attractive terms because of their desire to carry additional
programming addressed to the African- American and other minority viewers.
Because none of these arrangements have yet been negotiated, there can be no
assurance that these goals will come to fruition.

The Broadcast Facilities and Satellite Signal.

In November 2002, the Company entered into agreements with Loral Skynet (now
Intelsat, Inc.) for 6 MHZ of bandwidth on the Telstar 5 (now Intelsat 5) for
satellite space and with Verestar, Inc. to uplink the Urban Television Network
signal to the satellite. The cost to the Company for both agreements is a total
of $26,043 per month for three years.

Licensing Rights.

Our basic form of licensing rights agreement with program suppliers contains
terms pursuant to which the Company obtains broadcasting rights to certain
identified programming and in exchange, we allow the licensor advertising time
during the broadcast of such programs. Generally speaking, in a thirty (30)
minute program with seven (7) minutes of commercial time, the time is allocated
as follows:

o two and one-half (2.5) minutes to the licensor;

o two (2) minutes to our affiliate station; and

o two and one-half (2.5) minutes to Urban Television Network.

The licensor can then sell this advertising time to outside parties, thereby
earning income on the licensing of their program. Our licensing agreements are
generally for a term of 26 to 52 weeks and are cancelable by either party upon
thirty (30) days written notice. We also have the right to refuse any program,
without prior notice, if the content, subject matter, or production quality does
not meet our standards. The Company's policy is to recognize the revenue
associated with these sources of revenue at the time that it inserts the
short-form advertising spots or airs the long-form program a the network or
local level.

Affiliates

Currently, we have approximately 74 affiliates located in over 60 markets and
with a household coverage of approximately 24 million households. Our affiliates
are comprised of broadcast stations with approximately 35% of them being on
cable in their local markets.

Generally, we request that an affiliate broadcast a minimum of 12 hours of our
programming within a 24 hour period. Approximately 20% of our affiliates
broadcast 12 hours or more per day of our Urban Television programming, with the
remaining affiliates airing at least 6 hours or less. Generally the network
advertising rates are calculated only for that portion of time that the
affiliate broadcasts our programming.

We grant the Urban Television affiliates a limited license pursuant to an
affiliate license agreement. This limited license permits our affiliates to
receive Urban Television programming via satellite transmissions and to exhibit
and rebroadcast our programming. Additionally, we request affiliates' to submit
monthly broadcast logs in order to monitor compliance with these requirements.
Our affiliates agree that they will not preempt, cover or in any way disrupt
national advertisements contained in any program or portion thereof that they
broadcast with the exception of two (2) two-minute spots per hour for local
commercial insertions, as well as two (2) ten-second station breaks per hour.
Either the network or our affiliate may cancel the agreement at any time with
thirty (30) days written notice.

In exchange for providing the affiliate with programming and commercial time, we
retain the remainder of the advertising time, which we sell to advertising firms
and independent advertisers, or use it to barter with third-parties to acquire
additional programs.

Marketing

The Company plans to use (although it has none hired at this time) marketing
professionals, known as account executives, to target advertisers and
advertising agencies that are interested in the Urban market demographics. They
will consist of network and national spot account executives and local spot
account executives for markets where the Company by agreement has control of the
stations operations. Account executives targeting network advertisers will serve
a dual role as national spot sellers. These sales personnel will have the
flexibility of offering a network wide sales package or a market specific sales
package. Generally, the majority of network and national spot advertising sales
is generated from the same advertising agencies. This efficiency will allow us
to generate greater profits while controlling our own sales efforts. Account
executives responsible for local spot sales will be located in each of the
operated station markets. They will target advertising agencies, businesses and
service providers in their individual markets.

These marketing efforts will be enhanced through the use of research developed
by an in-house research department (which is yet to be established) utilizing
both qualitative and quantitative information. This research will allow the
sales departments to better negotiate and price our commercial inventory. The
research department will further help our sales efforts by identifying and
targeting advertisers in this utilized market.

As the Company grows, its goal is to have national and network sales offices in
the major markets such as Los Angeles, New York, Miami, Chicago, Dallas, Atlanta
and Houston.

Competition

The network television broadcasting business is highly competitive. As a result
of the wide range of programming available in both the broadcast and cable
formats; the Network will compete with a large number of competitors in the
television, cable and direct television markets. The Network will compete for
available airtime, channel capacity, advertiser revenues, revenue from license
fees, number of viewing households, and programming material. Competition for
sales of broadcast advertising time is based primarily on the anticipated and
delivered size and demographic characteristics of audiences as determined by
various rating services that price the time of day when the advertising is to be
broadcast. Other factors include competition from other broadcast networks;
cable television systems; DBS services; and other media and general economic
conditions. Competition for audiences is based primarily on the selection of
programming, the acceptance of which is dependent on the reaction of the viewing
public that is often difficult to predict. The Company believes that its
strongest competitive advantages are: (1) the quality of and vision of its
African American and Hispanic oriented programming; (2) its competitive
advertising rates; (3) the African-American and Hispanic nature of the network's
broadcasts and programming; (4) cross promotional and advertising opportunities
with other media; (5) its technology plan that gives its affiliates the tools to
manage their stations; and (6) its success in becoming a publicly traded
majority minority owned Minority Business Enterprise that enables it to access
diversity spending by major advertisers; (7) access large capital at
cost-effective rates to grow its core business and synergistic entertainment
opportunities in film, television, music, the internet and intellectual
property.

In its operations, Urban Television expects to experience substantial
competition from other entities with greater financial resources. Current
networks targeting the African-American/Hispanic urban market are cable networks
with little or no broadcast station distribution. There is no assurance that the
Company will be able to compete successfully.

Some of the competition in our market niche are:

Black Entertainment Television (BET): BET, formed and headed by Bob
Johnson, and now owned by Viacom, has been in business for 20 years and
currently reaches approximately 55+ million homes. BET's annual revenues have
hover at around $160 million. BETs programming basically consists of no-cost
music videos, low-cost standup comic shows, infomercials and some talk shows.
Programming has always been a sore spot for BET with its relationships with the
Multiple Systems Operators (MSOs) and the African-American Community. The sore
spot comes from the fact that the African-American Community does not believe
that BET's programming depicts the true culture and lifestyle of this ethnic
group. Bob Johnson's, and now Viacom's, retort has been over the years, "We are
a business first and a black network second." This is clear to many and provides
Urban TV with a great opportunity to provide a different programming philosophy
that will depict the culture and lifestyle of the African-American Community,
allowing it to take pride in and support the Urban TV programming. BET will try
to obtain more channel space on cable networks to thwart the competition,
including the Company's Urban Television network. BET.com, a great website and
venture with major media entities as partners, has been launched.

TV One: a new cable channel was launched in January 2004. Its investors
include Radio One, the nation's seventh largest radio broadcasting company;
Comcast Corporation, a leading cable television company in the country;
Constellation Ventures; Syndicated Communications; Pacesetters Capital Group;
and Opportunity Capital Partners. On its launch date, TV One was available to
2.2 million subscribers in Comcast markets. "We have worked very hard to make TV
One a television home that will serve African American adults' entertainment
interest and show the rest of society the depth, variety and vitality of our
lifestyle and culture," said TV One President and CEO Jonathan Rodgers.

Major Broadcasting Corporation: MBC launched in 1999 as a cable network
but has not acquired the distribution it expected. Our estimate is that MBC has
cable subscriber service of less than ten million. Headed by celebrities:
Evander Holyfield, Marlon Jackson, Cecil Fielder, attorney Willie Gary and
businessman, Alvin James, MBC has chosen to go after the African-American,
Christian family audience. The "esprit de corps" and corporate culture are two
of MBC's assets.

Overall, UATV expects strong competition from all of the above competitors. BET
will likely attempt to launch additional BET channels for Family, Movies and
Jazz. BET, as part of Viacom, has significant financial resources. TV One with
its partnership with Comcast will have a strong competitive edge in securing
cable channel space. MBC, being a cable channel, is not an immediate threat, but
poses a threat if each successive MSO that airs MBC will not then carry UATV
Network. In addition, there are and always have been other entities, attempting
to launch networks focusing on the African American and Hispanic populations.

Urban Television's response to the competition includes (1) Being a certified
minority company that will allow it to qualify for diversity dollars set aside
by the Fortune 500 companies (2) Developing a Partnership with corporate America
program (3) developing a network grid format with family oriented programs that
the urban minority community will endorse and support (4) producing, owning and
programming quality shows to make the UATV Network more appealing to the
broadcast television stations, the direct to home broadcast systems, the MSOs
and the African American and Hispanic television consumer; (5) developing a
technology component designed around an Internet application that will
distinguish the Network and its affiliates.

For Urban Television to continue to grow, particular emphasis has to be placed
on (1) securing affiliations from broadcast television stations, cable MSOs and
direct to home systems in the major African American demographic markets, (2)
implementation of an effective sales force and (3) securing innovative
programming to attract advertisers, sponsors and viewers and (4) becoming a
certified Minority Business Enterprise which will allow it to qualify for
diversity dollars set aside by the major corporations.

Competitive Strategy

Urban Television's goal is to become the best managed, highest quality,
multimedia company that focuses on the African-American and other minority
ethnic markets. Led, initially, by its broadcast television station network and
later as it adds cable and direct-to-home systems, Urban Television plans to
build a network that will make it one of the predominate television programming
networks focusing on the depth, breadth, history and beauty of African-American
people and their culture. Urban Television will pursue a strategy of
differentiation within the broadcast television, cable and direct to home
industry.

Urban Television's competitive strategy consists of the following key
points:

1. Hire and retain a strong management team. Develop a Board of
Directors and Advisory Board who will help lead and advise
Urban Television, in addition to bringing in valuable
resources and relationships.

2. Produce (or partner with producers) and broadcast as many
high- concept, quality original programs and series as it can
economically and prudently afford to do each year. Such
original productions will enable Urban Television to build
brand loyalty, attract advertisers and sponsors and build a
library of media copyrights to exploit worldwide

3. In regards to cost and risk management, Urban Television will
seek to minimize overhead; obtain no-cost, low-cost and barter
programming, and establish strong financial relationships with
strategic partners;

4. Pursue parallel strategies of distribution for the network
with MSOs for analog and digital cable carriage, satellite
systems, and broadcast television stations;

5. Pursue affiliate and distribution deals with independent
television stations and MSOs where there is a heavy African-
American and/or multi-ethnic population;

6. Obtain and maintain the status of being a certified Minority
Business Enterprise to attract major corporate and
governmental advertisers/sponsors;

7. Establish a strong sales presence in New York, Los Angeles,
Dallas-Fort Worth, Chicago, San Antonio, Detroit, Orlando,
Houston, Philadelphia, Memphis, Washington D.C., Nashville,
New Orleans, Atlanta to obtain the maximum penetration of the
African-American market that will translate into higher
advertising rates;

8. Establish a lobbying presence in Washington, DC to push for
Urban Television's interest with the FCC, congress,
governmental agencies and to certify Urban Television as a
minority vendor;

9. Establish a working committee for Business Development to
serve as an incubator for ventures utilizing Urban
Television's management skills and unsold commercial
inventory;

10. Feature prominent stars and writer-producers for Urban
Television's programming;

11. Develop and launch a cost-effective, profitable, strategic
internet business(s);

12. Use corporate sponsors; especially other media entities, to
co-finance and co-promote Urban Television programming;

13. Develop "franchise" intellectual properties in-house to
develop revenue streams in all media;

14. Develop a merchandising/licensing arm to create revenue
streams for Urban Television's intellectual properties;

15. Develop a music division at the appropriate time to take
advantage of opportunities, when they arise in the future to
brand Urban Television products;

16. Establish a technology relationship with Cresson Technology,
Inc. to help Urban Television maximize its technology
opportunities in all areas of media distribution;

17. Program the most profitable shows for the day-part, especially
in regards to the late night and early morning time slots;

18. When appropriate, develop, produce and sell television
programming to other networks and/or syndicators via the
Company's in-house production unit as capital sources allow;

19. Develop and nurture strong community relations through the use
of fund raisers, scholarships, tie-ins to national and local
groups, contests for viewers, awards shows, programming, use
of the web sites, education and information, etc.

Our affiliate stations also face competition from direct broadcast satellite
services which transmit programming directly to homes equipped with special
receiving antennas and from video signals delivered over telephone lines.
Satellites may be used not only to distribute non-broadcast programming and
distant broadcasting signals but also to deliver certain local broadcast
programming which otherwise may not be available to a station's audience.

The broadcasting industry is continuously faced with technological change and
Innovation and the possible rise in popularity of competing entertainment and
communications media. The rules and the policies of the FCC also encourage
increased competition among different electronic communications media. As a
result, we may experience increased competition from other free or pay systems
that deliver entertainment programming directly to consumers and this could
possibly have a material adverse effect on our operations and results. For
example, commercial television broadcasting may face future competition from
interactive video and data services that provide two-way interaction with
commercial video programming, along with information and data services that may
be delivered by commercial television stations, cable television, direct
broadcast satellites, multi-point distribution systems, multi-channel
multi-point distribution systems, Class A low-power television stations, digital
television and radio technologies, or other video delivery systems.

In addition, actions by the FCC, Congress and the courts all presage significant
future involvement in the provision of video services by telephone companies.
The Telecommunications Act of 1996 lifts the prohibition on the provision of
cable television services by telephone companies in their own telephone areas
subject to regulatory safeguards and permits telephone companies to own cable
systems under certain circumstances. It is not possible to predict the effect on
our television stations of any future relaxation or elimination of the existing
limitations on the ownership of cable systems by telephone companies. The
elimination or further relaxation of the restriction, however, could increase
competition that our affiliate stations face from other distributors of video
programming.

Factors that are material to a television station's competitive position include
signal coverage, local program acceptance, network affiliation, audience
characteristics, assigned frequency and strength of local competition. Although
there is competition for our target market, we believe that we possess certain
competitive advantages over our competitors, including:

Our Ability to Broadcast in Digital. Unlike many television networks,
we Broadcast our programming in a digital format from a fully-digital
earth station. We chose this format in anticipation of an FCC
regulation requiring all television stations to broadcast in digital by
2006. The operation of a digital control room requires much less input
and effort than a traditional analog station. Although, not all of our
affiliate stations have the ability to broadcast in digital, sending
out a digital signal helps reduce our operating costs because the cost
of a digital signal is less than leasing an analog signal on the
satellite transponder.

Our Management Team Reflects our Target Audience. From CEO, Lonnie
Wright to President, Edward Maddox, to Executive Vice President of
Network Operations, Jacob R. Miles III, our team is expected to be
comprised of many African- Americans. We believe that the best way to
understand the needs and wants of our target market is to include
people that share a similar cultural background to our target audience.
The nature of our management team is also reflective of our dedication
to the creation of an African American television network.

In the course of its business our network uses various trademarks including its
logo in its advertising and promotions. We believe the strength of our
trademarks are important to our business and intend to continue to protect and
promote our marks as appropriate. Currently, we have applied for trademark
protection on Urban Television and certain other brand identification. There can
be no assurance that we will receive each of these trademarks. Other than these
pending trademarks, we do not hold or depend upon any material patent,
government license, franchise or concession.

Federal Communications Commission Regulation

FCC Licenses

In general, the television broadcast industry in the U.S. is highly regulated by
Federal Laws and regulations issued and administered by various Federal
agencies, including the FCC. The FCC regulates television broadcast stations
pursuant to the Communications Act of 1934, as amended (the "Communications
Act"). The Communications Act permits the operation of television broadcast
stations only in accordance with a license issued by the FCC upon a finding that
grant of the license would serve the public interest, convenience and necessity.
The FCC grants television station license for specific periods of time and upon
application, may renew the licenses for additional terms. Under the
Communications Act, television broadcast licenses may be granted for a maximum
permitted term of eight years. Generally the FCC renews broadcast licenses upon
finding that (i) the television station has served the public interest,
convenience and necessity, (ii) there have been no serious violations by the
licensee of the Communications Act or FCC rules and regulations, and (iii) there
have been no other violations by the licensee of the Communications Act or FCC
rules and regulations which, taken together, indicate a pattern of abuse. After
considering these factors, the FCC may grant the license renewal application
with or without conditions, including renewal for a term shorter than the
maximum other permitted, or hold an evidentiary hearing. In addition to the
above powers, the Communications Act empowers the FCC, among other things:

o to decide whether to approve a change of ownership or control
of station licenses;

o to regulate the equipment used by stations; and

o to adopt and implement regulations to carry out the provisions
of the Communications Act.

Failure to observe FCC or other governmental rules and policies can result in
the imposition of various sanctions, including monetary forfeitures, the grant
of short, or less than maximum, license renewal terms or, for particularly
egregious violations, the denial of a license renewal application, the
revocation of a license or denial of FCC consent to acquire additional broadcast
properties.

We have a lease agreement with KOUT Channel 19, which is a low power UHF
television station in Oklahoma City, Oklahoma. The lease term is for 60 months
starting on October 1, 2003. The monthly lease payment due by the Company is
$3,000 through month three, $4,500 for months 4 through 6, $6,000 for months 7
through 24 and will vary between $6,500 and $7,800 for months 25 through 60
depending on whether the station is upgraded to a higher power station. The
Company also has an option to purchase the station during the five year lease
period for $3,250,000, however at this time the Company does not have the
financial ability to exercise this option and may not acquire the ability within
the option period. The Company will file an application to get FCC approval of
the license transfer at the time that the Company elects to exercise its option
on KOUT Channel 19.

Under the Communications Act, a broadcast license may not be granted to or held
by any corporation that has more than one-fifth of its capital stock owned or
voted by non- U.S. citizens or entities or their representatives, by foreign
governments or their representatives, or by non-U.S. corporations. The
Communications Act further provides that no FCC broadcast license may be granted
to any corporation directly or indirectly controlled by any other corporation of
which more than one-fourth of its capital stock is owned or record or voted by
non-U.S. citizens if the FCC finds the public interest will be served by the
refusal of such.

In June 2003, the FCC concluded the 2002 biennial review of its broadcast
ownership Regulations required by the 1996 Telecom Act by amending its rules
governing ownership Of television and radio stations and by replacing its
newspaper/broadcast cross- ownership ban the radio/television cross-ownership
restrictions with a new set of cross- media ownership limits. The new rules
would (i) permit an entity to have an attributable ownership interest in an
unlimited number of television stations nationally so long as the audience reach
of such stations does not exceed, in the aggregate and after the application of
the UHF Discount, 45% of the U.S. television households; (ii) permit common
ownership of up to three television stations in DMAs with 18 or more television
stations, and two television stations in DMAs with between five and 17
television stations, provided, in both cases, that a single entity cannot have
an attributable interest in two television stations ranked among the top four
(in terms of audience share) in any DMA (the "Local Restriction"); (iii) permit
(A) in markets with nine or more television stations, common ownership of daily
news- papers and up to the maximum number of television and radio stations
permitted by the Local Restriction and the local radio ownership rule, and in
(B) in markets with between four and eight television stations, common ownership
of a daily newspaper and up to 50% of the television and radio stations
permitted by the Local Restriction and the local radio ownership rule, or a
daily newspaper and up to the maximum number of radio stations permitted by the
local radio ownership rule.

Common ownership of multiple television stations in a market could adversely
affect the Company's future affiliate possibilities, if the larger networks
control most of the television stations in given markets.

Transfers or Assignment of License

The Communications Act prohibits the assignment of a broadcast license or
transfer of control of a broadcast licensee without the prior approval of the
FCC. In determining whether to permit the assignment or transfer of control of,
or the grant or renewal of, a broadcast license, the FCC considers a number of
factors pertaining to the licensee, including:

o compliance with various rules limiting common ownership of
media properties;

o the character of the licensee and those persons holding
attributable interests therein; and

o compliance with the Communications Act's limitations on alien
ownership.

Character generally refers to the likelihood that the licensee or applicant will
comply with applicable law and regulation. Attributable interests generally
refers to the level of ownership or other involvement in station operations that
would result in the FCC attributing ownership of that station or other media
outlets to the person or entity in determining compliance with FCC ownership
limitations.

To obtain the FCC's prior consent to assign a broadcast license or transfer
control of a broadcast licensee, an application must be filed with the FCC. If
the application involves a substantial change in ownership or control, the
application must be placed on public notice for a period of no less than 30 days
during which petitions to deny the application or other objections may be filed
by interested parties, including certain members of the public. If the FCC
grants the application, interested parties have no less than 30 days from the
date of public notice of the grant to seek reconsideration or review of that
grant by the full commission or, as the case may be, a court of competent
jurisdiction. The full FCC has an additional 10 days to set aside on its own
motion any action taken by the FCC's staff acting under delegated authority.
When passing on an assignment or transfer application, the FCC is prohibited
from considering whether the public interest might be served by an assignment or
transfer to any party other than the assignee or transferee specified in the
application.

Programming and Operation

The FCC continues to enforce strictly its regulations concerning "indecent"
programming, political advertising, environmental concerns, technical operating
matters and antenna tower maintenance. Although not required by FCC regulation,
the Company has committed to provide program ratings information for its
broadcast network programming. FCC regulations governing network affiliation
agreements mandate that television broadcast station licensees retain the right
to reject or refuse network programming in certain circumstances or to
substitute programming that the licensee believes to be of greater local or
national importance.

The Communications Act requires broadcasters to serve the public interest,
convenience and necessity. The FCC has gradually restricted or eliminated many
of the more formalized procedures it had developed to promote the broadcast of
programming responsive to the needs of the station's community of license.
Licensees continue to be required, however, to present programming that is
responsive to community problems, needs and interests and to maintain certain
records demonstrating such responsiveness. Complaints from listeners concerning
a station's programming will be considered by the FCC when it evaluates the
licensee's renewal application, but these complaints may be filed and considered
at any time.

Stations must also pay regulatory and application fees and follow various FCC
rules that regulate, among other things:

o political advertising;

o children's programming;

o commercial advertising on children's programming;

o the broadcast of obscene or indecent programming;

o sponsorship identification; and

o technical operations and equal employment opportunity
requirements.

Failure to observe these or other rules and policies can result in the
imposition of various sanctions, including monetary forfeitures, the grant of
short or less than the maximum renewal terms, or for particularly egregious
violations, the denial of a license renewal application or the revocation of a
license.

Must-Carry / Retransmission Consent

As part of the Cable Television Consumer Protection and Competition Act of 1992,
television broadcasters are required to make triennial elections to exercise
either "must-carry" or "retransmission consent" rights with respect to their
carriage by cable systems in each broadcaster's local market. By electing
must-carry rights, a broadcaster demands carriage on a specified channel on
cable systems within its television market or DMA. Alternatively, if a
broadcaster chooses to exercise retransmission consent rights, it can negotiate
the terms under which the cable system will carry its broadcast signal.

The United States Supreme Court upheld the validity of the must-carry rules in a
1997 decision. These must-carry rights are not absolute and their exercise is
dependent on a variety of factors, including: (i) the number of active channels
on the cable system; (ii) the location and size of the cable system; and (iii)
the amount of programming on a broadcast station that duplicates the programming
of another broadcast station carried by the cable system. Therefore, under
certain circumstances, a cable system may decline to carry a given station.

Under the FCC's rules, television stations were required to make their election
between must-carry and retransmission consent status by October 1, 1999, for the
period from January 1, 2000 through December 31, 2002. Television stations that
failed to make an election by the specified deadline were deemed to have elected
must-carry status for the relevant three-year period.

The FCC is currently conducting a rulemaking proceeding to determine the scope
of the cable systems' carriage obligations with respect to digital broadcast
signals during and following the transition from analog to digital broadcasting.

Review of Must Carry Rules

FCC regulations implementing the Cable Television Consumer Protection and
Competition Act of 1992 require each full-power television broadcaster to elect,
at three year intervals beginning October 1,1993, to either:

o require carriage of its signal by cable systems in the
station's market, which is referred to as must carry rules; or

o negotiate the terms on which such broadcast station would
permit transmission of its signal by the cable systems within
its market, which is referred to as retransmission consent.

The United States Supreme Court upheld the must-carry rules in a 1997 decision.
These must carry rights are not absolute, and their exercise is dependent on a
variety of factors such as:

o the number of active channels on the cable system;

o the location and size of the cable system; and

o the amount of programming on a broadcast station that
duplicates the programming of another broadcast station
carried by the cable system.

Therefore, under certain circumstances, a cable system may choose to decline to
carry a given station. We are currently exploring the possibilities with cable
providers to obtain carriage for our low-power affiliate broadcast stations,
which will give the Company a higher percentage of potential viewing audience
and allow the Company to increase its advertising rates for advertising spots
sold to advertisers. We can offer no assurances, however, that we will obtain
such cable carriage.

Local Marketing Agreements

We may, from time to time, enter into local marketing agreements, or LMAs,
generally in connection with pending station acquisitions. By using LMAs, we can
provide programming and other services to a station that we intend to acquire
before we receive all applicable FCC and other governmental approvals that are
necessary to consummate that assignment.

FCC rules and policies generally permit LMAs if the station licensee retains
ultimate responsibility for and control of the applicable station, including
finances, personnel, programming and compliance with the FCC's rules and
policies. We cannot be sure that we will be able to air all of our scheduled
programming on a station with which we have LMAs or that we will receive the
anticipated revenue from the sale of advertising for such programming.

For purposes of its national and local multiple ownership rules, the FCC
attributes LMAs that involve more than 15% of the brokered station's weekly
program time. Thus, if an entity owns one television station in a market and has
a qualifying LMA with another station in the same market, this arrangement must
comply with all of the FCC's ownership rules including the television duopoly
rule.

Digital Television Services

In February 1998, The FCC has adopted rules for implementing digital television
service in the United States. Implementation of digital television will improve
the technical quality of television signals and provide broadcasters the
flexibility to offer new services, including high-definition television and data
broadcasting. The FCC has established service rules and adopted a table of
allotments for digital television. The table of digital allotments provides each
existing television station licensee or permittee with a second broadcast
channel to be used during the transition to digital television, conditioned upon
the surrender of one of the channels at the end of the digital television
transition period.

The spectrum to provide a variety of ancillary or supplemental services
including, for example, data transfer, subscription video, interactive
materials, and audio signals, subject to the digital television implementing
rules permit broadcasters to use their assigned digital requirement that they
continue to provide at least one free, over-the-air television service. The FCC
established May 1, 2002 as the deadline for initiation of digital television
service for all television stations and 2006 as the date that television
broadcasters must return their analog license to the FCC unless specified
conditions exist, that in effect limit the public's access to digital television
in a particular market. These dates are subject to biennial reviews that will
evaluate the progress of the DTV transition, including consumer acceptance. The
FCC also has adopted rules that require broadcasters to pay a fee of 5% of gross
revenues received from ancillary or supplementary uses of the digital spectrum
for which they receive subscription fees or compensation other than advertising
revenues derived from free over-the-air broadcasting services.

Equipment and other costs associated with the digital television transition,
including the necessity of temporary dual-mode operations, will impose some
near-term financial costs on television stations in their conversion to digital
television transmission. The potential also exists for new sources of revenue to
be derived from digital television. We cannot predict the overall effect the
transition to digital television might have on our business.

Satellite Home Viewer Improvement Act

The Satellite Home Viewer Improvement Act ("SHVIA") enables satellite carriers
to provide more television programming to subscribers. Specifically, SHVIA: (1)
provides a statutory copyright license to enable satellite carriers to
retransmit a local television broadcast station into the station's local market
(i.e., provide "local-into-local" service); (2) permits the continued
importation of distant network signals (i.e., network signals that originate
outside of a satellite subscriber's local television market or DMA) for certain
existing subscribers; (3) provides broadcast stations with retransmission
consent rights; and (4) mandates carriage of broadcast signals on a
"local-into-local" basis after a phase-in period. "Local markets" are defined to
include both a station's DMA and its county of license.

SHVIA requires that, with several exceptions, satellite carriers may not
retransmit the signal of a television broadcast station without the express
authority of the originating station. Such express authorization is not needed,
however, when satellite carriers retransmit a station's signal into its local
market (i.e., provide local-into-local transmissions) prior to May 28, 2000.
This retransmission can occur without the station's consent. Beginning May 29,
2000, however, a satellite carrier must obtain a station's consent before
retransmitting its signal within the local market. Additional exceptions to the
retransmission consent requirement exist for noncommercial stations, certain
super stations and broadcast stations that have asserted their must-carry
rights.

In addition, SHVIA permits satellite carriers to provide distant or nationally
broadcast programming to subscribers in "unserved" households (i.e., households
are unserved by a particular network if they do not receive a signal of at least
Grade B intensity from a station affiliated with that network) until December
31, 2004. However, satellite television providers can retransmit the distant
signals of no more than two stations per day for each television network.

SHVIA also provides for mandatory carriage of all television broadcast stations
by satellite carriers, effective January 1, 2002, under certain circumstances.
Effective January 1, 2002, a satellite carrier that retransmits one local
television broadcast station into its local market under a retransmission
consent agreement, must carry upon request all television broadcast stations in
that same market. Satellite carriers are not required, however, to carry the
signal of a station that substantially duplicates the programming of another
station in the market, and are not required to carry more than one affiliate of
the same network in a given market unless the television stations are located in
different states.

In addition, SHVIA requires the FCC to commence a rulemaking proceeding that
extends the network non-duplication, syndicated exclusivity and sports blackout
rules to the satellite retransmission of nationally distributed super stations.
The FCC already has initiated several rulemaking proceedings, as required by
SHVIA, to implement certain aspects of this Act.

Therefore, under certain circumstances, a SHVIA system may choose to decline to
carry a given network or broadcast station. We are currently exploring the
possibilities with SHVIA providers to obtain carriage for the Urban Television
Network, which would give the Company another source of viewers in addition to
the current broadcast station affiliates. This increase in potential viewers
would give the Company the potential to increase its advertising rates for
advertising spots. We can offer no assurances, however, that we will obtain such
SHVIA system carriage.

Children's Television Act

The FCC's rules limit the amount of commercial matter that may be broadcast
during programming designed for children 12 years of age and younger to 12
minutes per hour on weekdays and 10.5 minutes per hour on weekends. Violations
of the children's commercial limitations may result in monetary fines or
non-renewal of a station's broadcast license. FCC rules further require
television stations to serve the educational and informational needs of children
16 years old and younger through the stations' own programming as well as
through other means. The FCC has guidelines for processing television station
renewals under which stations are found to have complied with the children's
programming requirements if they broadcast three hours per week of "core"
children's educational programming, which among other things, must have as a
significant purpose serving the educational and informational needs of children
16 years of age and younger. A television station that the FCC finds not to have
complied with the "core" programming processing guideline could face sanctions,
including monetary fines and the possible non-renewal of its broadcasting
license, if it has not demonstrated compliance with the children's programming
requirements in other ways. The FCC has indicated its intent to strictly enforce
its children's television rules. Television broadcasters must file periodic
reports with the FCC to document their compliance with foregoing obligations.

The Company takes these rules into considerations when preparing its program
schedule, to give its affiliates the ability to similarly comply with the rules
when broadcasting Urban Television programming over their local television
station.

Proposed Regulations and Legislation

In 1995, the FCC issued notices of proposed rulemaking proposing to modify or
eliminate most of its remaining rules governing the broadcast network-affiliate
relationship. The network-affiliate rules were originally intended to limit
networks' ability to control programming aired by affiliates or to set station
advertising rates and to reduce barriers to entry by networks. The dual network
rule, which generally prevents a single entity from owning more than one
broadcast television network, is among the rules under consideration in these
proceedings. Although the Telecommunications Act substantially relaxed the dual
network rule by providing that an entity may own more than one television
network, none of the four major national television networks may merge with each
other or acquire certain other networks in existence on February 8, 1996. We
cannot predict how or when the FCC proceeding will be resolved or how those
proceedings or the relaxation of the dual network rule may affect our business.

Low-Power Television

Low-power television stations are regarded by the FCC as having secondary status
to full-power television stations and are subject to being displaced by changes
in full-power stations resulting from digital television allotments. On November
29, 1999, Congress enacted the Community Broadcasters Protection Act, which
created a new "Class A" low-power television station. Class A low-power
television stations are entitled to protection from future displacement by
full-power television stations under certain circumstances. The FCC has adopted
rules governing the extent of interference protection that must be afforded to
Class A stations and the eligibility criteria for these stations.

In addition, the U.S. Congress and the FCC have under consideration, and in the
future may consider and adopt new laws, regulation and policies regarding a wide
variety of matters that could affect, directly or indirectly, the operation,
ownership and profitability of our affiliate broadcast stations. Any such
changes could result in the loss of audience share and advertising revenues for
broadcast stations, and affect our ability to acquire broadcast stations or
finance such acquisitions. Also potential FCC changes could possibly eliminate
certain broadcast stations, which would reduce the total affiliate base and
household coverage of Urban Television. In addition to the issues noted above,
such changes may include:

o spectrum use fees;

o political advertising rates;

o potential restrictions on the advertising of certain products
(beer, wine and hard liquor);

o further revisions in the FCC's cross-interest, multiple
ownership and attribution policies;

o foreign ownership of broadcast licenses;

o technical and frequency allocation matters; and

o DTV tower siting issues.

The FCC also has initiated a notice of inquiry to examine whether additional
public interest obligations should be imposed on DTV licensees. We cannot
predict the resolution of these issues or other issues discussed above, although
their outcome could, over a period of time, affect, either adversely or
favorably, the broadcasting industry generally or us specifically.

Restrictions on Broadcast Advertising

Advertising of cigarette and certain other tobacco products on broadcast
stations has been banned for many years. Various states also restrict the
advertising of alcoholic beverages and certain members of Congress are currently
contemplating legislation to place restrictions on the advertisement of such
alcoholic beverage products. FCC rules also restrict the amount and type of
advertising which can appear in programming broadcast primarily for an audience
of children twelve years old and younger.

The Communications Act and FCC rules also place restrictions on the broadcasting
of advertisements by legally qualified candidates for elective office. Among
other things,

o stations must provide "reasonable access" for the purchase of
time by legally qualified candidates for federal office,

o stations must provide "equal opportunities" for the purchase
of equivalent amounts of comparable broadcast time by opposing
candidates for the same elective office, and

o during the 45 days preceding a primary or primary run-off
election and during the 60 days preceding a general or special
election, legally qualified candidates for elective office may
be charged no more than the station's "lowest unit charge" for
the same class of advertisement, length of advertisement, and
daypart.

The foregoing summary of FCC and other governmental regulations is not intended
to be comprehensive. For further information concerning the nature and extent of
federal regulation of broadcast stations, you should refer to the Communications
Act, the Telecommunications Act, other Congressional acts, FCC rules and the
public notices and rulings of the FCC.

Facilities

We currently lease our principal offices of approximately 6,000 square feet
located at 2707 South Cooper Street, Suite 119, Arlington, Texas 76015. The term
of the lease goes through February 28, 2005 with an option to extend on a year
to year basis. We use this space for our general office and administrative
purposes, master control and production studio. We broadcast our programming to
our operated and affiliate stations from Verestar, Inc. in Cedar Hill, Texas.

Employees

As of September 30, 2004, we had 12 full time employees. The Company has
contractual relationships with its Executive Vice President and Chief Financial
Officer and the Company's corporate secretary. Our employees are not represented
by any collective bargaining organization, and we have never experienced a work
stoppage. We believe that our relations with our employees are satisfactory.

Item 2. Properties

A description of the Company's properties is included in Item 1, Business, and
is incorporated herein by reference.

Item 3. Legal Proceedings and Administrative Matters

On June 1, 2004, the Company was granted a motion for default judgment and entry
of permanent injunction against a former independent contractor and his
companies. The default judgment is for $1,575,850 and the permanent injunction
is against the defendants, their officers, agents, employees, and all persons
acting in concert with them. The defendants were further enjoined from
contacting the directors, officers, agents, consultants, servants, and employees
of the Company.

In August 2004, the Company settled a lawsuit brought by Three F Productions,
Inc. vs. Pacific Family Entertainment LLC, et al. which included the Company as
a defendant as the result of the Company airing a program that Pacific Family
had represented as having the copyright and rights to air. The settlement amount
for the Company was $50,000 to be paid at the rate of $5,000 per month beginning
September 1, 2004.

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

No matter was submitted during the fourth quarter of the fiscal year covered by
this report to a vote of our security holders, through the solicitation of
proxies or otherwise. PART II

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

There was no active market for the Company's common stock. The stock was traded
on a very limited basis in limited volumes on the over-the-counter market. It
was included in the NASD's OTC Bulletin Board under the symbol, "WSCY" until the
Company changed its name in June 2002 to Urban Television Network Corporation at
which time the symbol was changed to "UNTV." The Company effectuated a 1 to 20
reverse stock split on November 28, 2002 at which time the NASD gave the Company
the new symbol "URBT". Prices for the common stock were also published in the
National Quotation Bureau, Inc.'s Pink Sheets.

A range of high and low quotations for the Company's Common Stock for fiscal
years 2004 and 2003 are listed below. The information was obtained from the
NASDAQ web site (www.nasdaq.com). The prices reported may not be indicative of
the value of the Common Stock or the existence of an active trading market. The
Company does not know whether these quotations reflect inter-dealer prices
without retail mark-up, markdown or commissions. These quotations may not
represent actual transactions.

2004 2003
Low High Low High
--- ---- --- ----

First Quarter $1.100 $2.000 $0.500 $6.000
Second Quarter $0.750 $2.000 $0.500 $6.000
Third Quarter $0.290 $1.050 $0.500 $1.900
Fourth Quarter $0.130 $0.650 $0.630 $1.950

The Company common stock commenced trading on the NASD's OTC Bulletin Board in
August of 2002.

At September 30, 2004 there were 704 holders of record. No dividends have been
paid to date and it is not anticipated that dividends will be paid in the near
future. We currently intend to retain future earnings to finance the growth of
our business. Therefore, it is unlikely that you will receive any funds from
your investment in our common stock without selling your shares. We cannot
assure you that you will receive a gain on your investment when you sell your
shares or that you will not lose the entire amount of your investment.

Recent Sales of Unregistered Securities

During the period July 1 through September 30, 2004, we sold the following
securities In exempt transactions not requiring registration:

In July 2004, the Company issued 1,000,000 restricted common shares for
management services to a director, which the Company valued at $100.000.

In August 2004, the Company issued 2,900,000 restricted common shares for
management Services to directors and employees, which the Company valued at
$290,000.

On February 14, 2003, we entered into a $1,500,000 Loan Agreement between
certain lenders and our Company. In October 2003, the Loan Agreement was amended
to increase the loan limit by $1,500,000. The Loan Agreement provides for the
periodic advance of monies with interest payable at the rate of six (6%) percent
per annum. During the periods ended September 30, 2004 and 2003, a total of
$1,873,048 and $1,105,650, respectively was advanced on the agreement. At
September 30, 2004, all the lenders had converted their loans to our common
stock. During the periods ended September 30, 2004 and 2003, the Company issued
4,135,441 and 1,957,300 shares, respectively, of its common stock to Bridge Loan
Lenders who elected to convert their bridge loans to common stock.

We believe these securities were issued in private transactions pursuant to
Sections 3(a) (9) and, or 4(2) of the Securities Act of 1933, as amended, (the
"Securities Act"). These convertible securities are considered restricted
securities and may not be publicly resold unless registered for resale with
appropriate governmental agencies or unless exempt from any applicable
registration requirements.

Item 6. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Background

Urban Television Network Corporation (the "Company") formerly known as Waste
Conversion Systems, Inc. was incorporated under the laws of the state of Nevada
on October 21, 1986. The principal office of the corporation is 2707 South
Cooper Street, Suite 119, Arlington, Texas 76015.

In January 2002, the Company underwent a change of control with the directors of
the Company appointing the directors and officers of Urban Television Network
Corporation, a Texas corporation, (Urban-Texas) as the new directors and
officers of the Company, and at the same time resigning their board positions.

On May 1, 2002, the Company entered into an agreement with Urban-Texas to
acquire the rights to the Urban-Texas affiliate network signal space which
included the assignment of the Urban-Texas broadcast television station
affiliates for 16,000,0000 shares of common stock, which became 800,000 shares
after the 1 for 20 reverse split in November 2002.

On February 7, 2003, the Company entered into a Stock Exchange Agreement with
the majority shareholders of Urban-Texas to acquire approximately 90% of the
issued and outstanding capital stock of Urban-Texas (13,248,000 of 14,759,000
shares) in exchange for the Company's issuance of 13,248,000 shares of its
authorized but unissued common stock, $.0001 par value (the "Exchange Shares"),
to the majority shareholders of Urban-Texas. In June 2003, the remaining 10% of
Urban-Texas was acquired by the Company.

Urban-Texas is considered the accounting acquirer, and the accompanying
financial statements include the operations of Urban-Texas from the earliest
period presented. The May 1, 2002 and February 7, 2003 transactions with the
Company are presented as a recapitalization of Urban-Texas.

The consideration exchanged in Stock Exchange Agreement was negotiated between
the Company and Urban-Texas in a transaction with management. The management of
the Company and Urban- Texas, were the same individuals. The transaction does
not represent an arms-length transaction.

The Company is engaged in the business of supplying programming to independent
Broadcast television stations and cable systems. Formerly the Company's business
had been the marketing of thermal burner systems that utilize industrial and
agricultural waste products as fuel to produce steam, which generates
electricity, air-conditioning or heat.

The Company acquired a television network affiliate base from Hispanic
Television Network, Inc. (HTVN). This television network provides television
programming serving ethnic minority programming interests of the
African-American population across the United States. The network presently
includes approximately 74 broadcast television station affiliates in various
parts of the country.

We are targeting the minority markets, primarily the African American and
Hispanic Markets, because we believe that they present vast marketing
opportunities and that are currently under-served by our competition. The
African American market, composes approximately 13% of the U.S. population with
a spending power in excess of $600 billion. The Hispanic population is also
approximately 13% of the U.S. total with a spending power also in the $600+
billion range. With few competitors in broadcast television that are exclusively
devoted to programming to the minority markets, we feel that there are
attractive opportunities to provide a quality broadcasting service to the
African American and Hispanic (especially bi-lingual and English speaking
Hispanic programming) populations that together make up in excess of 25% of the
U.S. population.

On July 10, 2004, the Company received a certificate from Nevada Minority
Business Council, an affiliate of the National Minority Supplier Development
Council, indicating that the Company qualifies as a Minority Owned and Managed
Company, which has met the certification criteria established by the National
Minority Supplier Development Council. The certification will be up for renewal
on February 1, 2005.

Our financial results depend on a number of factors, including the strength of
the national economy and the local economies served by our affiliate stations,
total advertising dollars dedicated to the markets served by our affiliate
stations, advertising dollars dedicated to the African American and Hispanic
consumers in the markets served by our affiliate stations, our affiliate
stations' audience ratings, our ability to provide interesting minority focused
programming, local market competition from other television stations and other
media, and government regulations and policies, such as the multiple ownership
rules, the ability of Class A affiliate stations to be considered must carry for
cable systems to increase their distribution and the deadlines for television
stations converting to digital signals.

Management is implementing a revenue generation plan that includes local
advertising sales, for company operated stations, securing network advertising
at the best available rate, uplinking other parties signals to the satellite,
plus implementing a Technology plan to assist its affiliates with sale of their
local advertising time. Management intends to increase rates as affiliate
stations are added to the network. The implementation of this comprehensive plan
is expected to have a positive affect upon sales revenues. In addition, the
Company has added a focus to secure carriage agreements with cable and digital
distribution companies.

Revenues

Our primary source of revenue is the sale of advertising and programming time on
our network and local stations. Our revenues are affected primarily by the
advertising rates that we are able to charge for national advertising
commercials on the Urban TV network and that the television stations we manage
on a local basis are able to charge as well as the overall demand for
African-American and Hispanic television advertising time. Advertising rates in
general are determined primarily by:

o the markets covered by broadcast television affiliates,

o the number of competing African-American television stations
in the same market as our affiliate stations,

o the television audience share in the demographic groups
targeted by advertisers, and

o the supply and demand for African-American advertising time.

Seasonal fluctuations are also common to the broadcast industry and are due
primarily to fluctuations in advertising expenditures by national and local
advertisers. The first calendar quarter typically produces the lowest broadcast
revenues for the year because of the normal post-holiday decreases in
advertising.

Currently most of our network advertising has been sold to direct response and
per inquiry advertisers. Going forward, we plan to deploy a network advertising
team consisting of account executives that will solicit advertising directly
from national advertisers as well as soliciting advertising from national
advertising agencies. Locally managed stations will also have account executives
that will solicit local and national advertising directly from advertisers and
from advertising agencies in the local markets.

We market our advertising time on the Urban Television network to:

o Advertising agencies and independent advertisers. We market
commercial time to advertising agencies and independent
advertisers. The monetary value of this time is based upon the
estimated size of the viewing audience; the larger the
audience, the more we are able to charge for the advertising
time.

To measure the size of a viewing audience, networks and
stations generally subscribe to nationally recognized rating
services, such as Nielsen. We do not currently have the
resources to subscribe to the Nielsen service and this hinders
our ability to attract the larger advertising clients.
Currently, a number of Urban Television's affiliate stations
are located in the smaller market areas of the country, which
is also not as desirable to the larger advertising clients.
Our goal is to enter into affiliate agreements with television
stations located in the top demographic market areas (ideally
stations that are already on a cable system), which would give
us the ability to justify the cost of Nielsen ratings that
would in turn justify charging higher rates for our
advertising time.

o Affiliate Stations. In exchange for providing programming and
advertising time to our affiliate stations, we retain
advertising time and gain access to the affiliate stations'
markets. In a traditional broadcasting contract, an affiliate
station would retain all available advertising time, which it

would then sell to outside advertisers, and the network would
receive a fee from the affiliate station. However, we believe
that with a network such as ours that currently is composed
primarily of small independent low power stations that cannot
afford a significant affiliation fee, we will have the ability
to generate larger revenues over time by taking half of the
affiliates advertising time, aggregating a number of the
affiliate stations and accumulating a large household coverage
base. This household coverage base of over the air broadcast
television stations (which a portion will be on local cable in
their local markets) can then be used to market the retained
commercial time to outside advertisers. Advertising time is
generally a component of the programming contract with
affiliate stations. As a result, our advertising spots are
inserted into the programs that go to the affiliates and we do
have to separately market the advertising time to our
affiliate stations.

o Program Owners: In exchange for licensing rights to select
programming, the program owner retains half of the available
advertising time in each program and we as the network get the
other half of the available advertising time in each program.
The program owner is then able to sell the advertising time he
retains to outside parties. We obtain programming by
contracting with program owners at the annual National
Association of Television Program Executives convention and by
contracting with program owners who during the year are
looking for distributions sources. In the future, to acquire
certain exclusive, original or first-run usage and licenses
for programming, we may be required to incur upfront
programming expenses.

Expenses

Our most significant expenses are satellite and uplink transmission costs,
master control costs, technology expenses, employee compensation, advertising
and promotional expenses, and production and programming expenses. In cases,
where we may in the future incur upfront programming expenses to procure
exclusive programming usages and licenses, upfront payments will, in most cases,
be amortized over the applicable contract term. Until cash flow permits, we do
not expect to acquire exclusive programming usages and licenses that require up
front costs. We will maintain tight controls over our operating expenses by
contracting master control and centralizing network programming, finance, human
resources and management information system functions. Depreciation of fixed
assets and amortization of costs associated with the acquisition of additional
stations are also significant elements in determining our total expense level.

As a result of attracting key officers and personnel to Urban Television, we may
offer stock grants or options as an alternate form of compensation. In the event
that the strike price of the stock option is less than the fair market value of
the stock on the date of grant, any difference will be amortized as compensation
expense over the vesting period of the stock options.

Our monthly operating expense level may vary from month to month due primarily
to the timing of significant advertising and promotion expenses. We will incur
significant advertising and promotion expenses associated with the growth of
Urban Television and with the establishment of our presence in new markets
associated with any new station lease or acquisition agreements. Increased
advertising revenue associated with these advertising and promotional expenses
will typically lag behind the incurrence of these expenses.

Advertising and Program Time Sales

The majority of all revenues generated come from the sale of national
advertising spots and program time slots and from advertising spots and program
time slots on managed local television stations.

Network Advertising. All operated stations as well as affiliates have a
percentage of available commercial time dedicated for "network" sales. The
commercials sold on the network are broadcast simultaneously and aired in the
affiliate markets that are at that time airing the network's programming.

National Spot Advertising. National advertisers have the opportunity to buy
"spot" advertising in specific markets. For example, an advertising agency in
New York would could use spot advertising to purchase commercials in Dallas or
Oklahoma City.

Currently the Company generates its Network and National spot advertising sales.
The Company's plan is to have the yet to be established sales personnel located
in all major markets that have a large concentration of advertising agencies
targeting the African-American market. The sales of our local spot advertising
would them be generated by these local sales staff personnel placed at each of
our television stations.

Local Spot Advertising. Advertising agencies and businesses located in specific
markets will buy commercial air-time in their respective market. This commercial
time will be sold in the market by a local sales force or as a specific buy from
a national client. Local spot advertising also includes event marketing. In
conjunction with a spot buy, the station incorporates events that may be held on
the premise of a business or advertiser for the purpose of driving traffic to
that place of business.

Program Time Sales. Also known as long-form programs are sold on the network and
on locally managed stations to companies wanting to purchase the television time
and air their own programs.

Results of Operations

Urban Television Network Corporation - Historical Results of Operations Year
ended September 30, 2004 compared to the year ended September 30, 2003.

Revenues. Revenues are primarily derived from sales of advertising and
programming time. Revenues for fiscal 2004 were $222,794 compared to $242,998
for fiscal 2003, an decrease of $20,204. The decrease in revenues is primarily
attributable to the not yet having implemented its revenue generation plan that
includes local advertising sales, for company operated stations, securing
network advertising at the best available rate, uplinking other parties signals
to the satellite, plus implementing a technology plan to assist its affiliates
with sale of their local advertising time. The Company has increased its
affiliate base over the last twelve months from 72 to 74 affiliates and 22
million to 24 million household coverage of its affiliate base.

Cost of Operations. Costs of operations were $1,361,567 for the 2004 fiscal year
and $994,168 for the 2003 fiscal year. The major components of cost of
operations for the years ended September 30, 2004 and 2003 were as follows:

2004 2003

Satellite and uplink services $ 329,104 $ 312,730
Master control and production 445,179 352,681
Station operating costs 358,222 136,066
Technology expenses 229,062 192,691
---------- ----------
Total Cost of Operations $1,361,567 $ 994,168
========== ==========

In November of 2002, the Company terminated an arrangement with a company in
Florida that provided satellite space, uplinking of the video signal to the
satellite, master control operations, trafficking and taking of live feeds. At
that time the Company secured its own satellite space on Telstar 5 (now Intelsat
5) from Loral Skynet (now Intelsat, Inc.) and uplinking services from Verestar,
Inc. in Dallas, Texas and is working with a group of the Company's shareholders
who are providing digital compression equipment, tape editing and master control
tape playback 24 hours per day, 7 days per week. The Company expects this new
arrangement to save it approximately $10,000 per month and give it more
flexibility in taking live feeds and changing programming and advertising
insertions.

The technology expenses increased by $36,371 for in 2004 as compared to 2003.
The Increase was attributable primarily to the continued growth of the Company.

General and Administrative. General and administrative expenses for the fiscal
year ended September 30, 2004 were $6,298,565 compared to $1,212,926 for the
2003 fiscal year.

Following is a comparative of the general administrative expense categories for
the periods ended September 30, 2004 and 2003.

2004 2003
---------- ----------

Administration cost $ 241,500 $ --
Stock based compensation 4,683,678 733,750
Consulting 239,884 13,000
Contract labor 3,501 3,000
Travel, conventions 161,402 34,309
Legal fees 507,950 194,224
Las Vegas office expenses 46,500 --
Programming 45,000 --
Commissions 31,270 24,928
Accounting fees 13,340 17,500
Public relations costs 18,253 31,848
Transfer Agent, permit fees 28,503 16,505
Rent expenses 80,571 26,000
Internet costs 21,908 24,322
Supplies - digital operations 58,794 --
Supplies 12,959 41,199
Telephone 66,015 32,495
Postage and shipping 8,935 7,719
Marketing,printing,promotions 22,681 1,095
Other 5,921 11,032
---------- ----------
TOTAL $6,298,565 $1,212,926
========== ==========

The increase in stock based compensation is due primarily to the Company's
adding additional management and directors as the result of the acquisition of a
majority interest in the Company's common stock by Wright Entertainment, LLC.

The increase in consulting fees is due the Company incurring limited consulting
expenses during the nine months ended June 30, 2003. In 2004 the company has
brought in additional financial and strategic consultants to assist the Company
in its continued growth.

The increase in travel and conventions is related to the Company's travel
related cost associated with the minority Las Vegas, Nevada group that purchased
majority control of the Company and also to increased attendance at national
television and cable conventions.

The increase in legal expense in 2004 is attributed primarily to legal expenses
related to the Company's becoming majority owned by a minority group, the
prosecution of a law suit involving a former employee and stockholder in which
the Company was granted a permanent injunction and judgment in the amount of
$1,575,850 and the settlement of a lawsuit in which the Company was named as a
defendant as the result of the Company airing a program that Pacific Family had
represented as having the copyright and rights to air. The settlement amount for
the Company was $50,000 to be paid at the rate of $5,000 per month beginning
September 1, 2004.

The increase in public relations is due to an increase in expenses for public
functions, announcements and support for minority groups.

The increase in transfer agent expenses is related primarily to the cost
incurred in the bridge loan investors converting their bridge loans to common
stock of the company.

The increase in rent expense is due the Company incurring additional space for
sales offices and studio production facilities.

Internet cost increased during the period September 30, 2004 due to the Company
installing its own high speed Internet line at the Arlington offices.

The increase in the supplies for digital operations is due to the Company's
conversion from a tape to digital server based master control program retention
and insertion operation. This will give the Company the ability to deliver a
consistent television signal to its affiliates and save on tape and labor costs
in the future.

The increase in marketing, printing and promotions increased in 2004 due the
Company developing marketing brochures and sponsoring events to promote the
network.

Interest expense for the fiscal year 2004 was $6,754 compared to $27,744 for
Fiscal year 2003. The decrease from 2003 to 2004 is due to the Company paying
down its debt and approximately $2000,000 of debt being assigned to Wright
Entertainment LLC to apply towards its stock subscription agreement with the
Company in October of 2003.

Operating Results. We had a net operating loss of $7,525,621 for fiscal year
ended September 30, 2004 compared to a net operating loss of $2,039,109 for the
fiscal year ended September 30, 2003. The increased loss of $5,486,512 for 2004
was primarily attributed to the $5,085,639 increase in administrative expenses
of which $3,949,928 was attributable to an increase in stock based compensation,
$313,726 to an increase in legal expenses and $226,884 to an increase in
consulting expenses plus a $136,066 increase in station operating expenses.

Earnings Per Share of Common Stock. Income (loss) per common share is calculated
in accordance with Statement of Financial Accounting Standards ("SFAS") No. 128,
"Earnings per Share." Basic Income (loss) per share is computed by dividing the
net income (loss) by the weighted average number of common shares outstanding.
Diluted net income (loss) per share is computed similar to basic net income
(loss) per share, except that the denominator is increased to include the number
of additional common shares that would have outstanding if the potential common
shares had been issued and if the additional common shares were dilutive. Stock
options and warrants are anti-dilutive, and accordingly, are not included in the
calculation of income (loss) per share. The basic and diluted net loss per share
of common stock was $0.15 and $0.15 for the years ended September 30, 2004 and
2003, respectively.

Liquidity and Capital Resources

We have financed our operations through a combination of loans from
stockholders, proceeds from convertible promissory notes and revenues generated
from operations. The Company has incurred cumulative losses of $15,590,434 from
the inception of the Company through September 30, 2004.

Current liabilities at September 30, 2004 were $964,859 which exceeded current
assets of $23,850 by $941,009. The Company's cash position at September 30, 2004
was $8,995, a decrease of $226,413 from the position at September 30, 2003. As
discussed below, the Company's ability to continue its growth will require
additional funds from various sources. If adequate funds are not available on
acceptable terms, our business, results of operations and financial condition
could be materially adversely affected. In a worse case scenario, we would have
to scale back or cease operations, and we might not be able to remain a viable
entity. Amounts due to stockholders increased from $330,715 at September 30,2003
to $403,407 at September30, 2004 as the result of an additional net of $72,692
being contributed by stockholders during the fiscal year ended September 30,
2004. Accrued compensation is the result of management deferring a portion of
their annual compensation until the Company has funds available. Deferred income
is the result of the Company receiving full payment for a year contract to air
programming, which amount is being amortized on a monthly basis as the
programming is aired.

Our continued growth, will require additional funds that may come from a variety
of sources, including shareholder loans, equity or debt issuances, bank
borrowings and capital lease financings. We currently intend to use any funds
raised through these sources to fund various aspects of our continued growth,
including funding our working capital needs, acquisition of new stations,
performing digital upgrades of acquired stations, funding key programming
acquisitions, performing station capital upgrades, securing cable connections,
funding master control/ network equipment upgrades, making strategic
investments.

The Company's licensing agreements with program suppliers are generally for a
term of 13 to 52 weeks and are cancelable by either party upon thirty (30) days
written notice. These license agreements provide the Company with a source of
revenue by the Company's right to insert commercial spots during the programs.
The Company's policy is to recognize the revenue associated with these sources
of revenue at the time that it inserts the short-form advertising spots or airs
the long-form program at the network or local level. As the Company continues to
grow, it has been entering into new license agreements to replace existing
licenses for programs that do not fit into the Company's business model for a
minority focused television network. The cancelable feature of these license
agreements could effect the Company's source of revenue generation should a
program be cancelled by a licensor and the Company not be able to replace it
within the 30 day notice of cancellation period.

We had net losses $7,525,621 in 2004 and $2,039,109 in 2003. We expect these
losses to continue as we incur operating expenses in the growth of the Company's
television network and its affiliate base and convert them to an African
American format. We currently anticipate that our revenues as well as cash from
financings and equity sales will be sufficient to satisfy operating expenses by
the end of fiscal 2005. We may need to raise additional funds, however. If
adequate funds are not available on acceptable terms, our business, results of
operations and financial condition could be materially adversely affected.

Impact of inflation

Management does not believe that general inflation has had or will have a
material effect on operations.

Critical Accounting Policies

The discussion and analysis of the financial condition and results of operations
are based on the financial statements, which have been prepared in accordance
with generally accepted accounting principles. Note 1 of the Notes describes the
significant accounting policies essential to the financial statements. The
preparation of these financial statements requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ materially from those estimates.

We believe the following to be critical accounting policies and estimates. That
is, they are both important to the portrayal of the Company's financial
condition and results, and they require significant management judgment and
estimates about matters that are inherently uncertain. As a result of inherent
uncertainty, there is a likelihood that materially different amounts would be
reported under different conditions or using different assumptions. Although we
believe that our judgments and estimates are reasonable, appropriate and
correct, actual future results may differ materially from our estimates.

Revenue Recognition

The Company's sources of revenues include the sale of short-term national and
local spot advertising and long-form program time slots. The Company's policy is
to recognize the revenue associated with these sources of revenue at the time
that it inserts the short-form advertising spots or airs the long-form program
at the network or local level.

Non Goodwill Intangible Assets

Intangible assets other than goodwill consist of network assets acquired by
purchase. They are being amortized over their expected lives of 5 years and are
reviewed for potential impairment whenever events or circumstances indicate that
carrying amounts may not be recoverable. No impairment loss was recognized
during the reporting periods. On January 1, 2002, the Company adopted Statement
of Financial Accounting Standards No. 142, Goodwill and Intangible Assets. This
provides that a recognized intangible shall be amortized over its useful life to
the reporting entity unless that life is determined to be indefinite. The amount
of an intangible asset to be amortized shall be the amount initially assigned to
that asset less any residual value.

Stock Based Compensation

The Company accounts for equity instruments issued to employees for services
based on the fair value of the equity instruments issued and accounts for equity
instruments issued to other than employees based on the fair value of the
consideration received or the fair value of the equity instruments, whichever is
more reliably measurable. The determined value is recognized as an expense in
the accompanying consolidated statements of operations.

Contingencies

In the normal course of business, the Company is subject to certain claims and
legal proceedings. The Company records an accrued liability for these matters
when an adverse outcome is probable and the amount of the potential liability is
reasonably estimable. The Company does not believe that the resolution of these
matters will have a material effect upon its financial condition, results of
operations, or cash flows for an interim or annual period.

Recently Issued Accounting Pronouncements

Recently issued accounting pronouncements and their effect on us are discussed
in the notes to the financial statements in our September 30, 2004 audited
financial statements.

Item 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Financial Statements and Financial Statement Schedule filed as a part of
This Annual Report on Form 10-KSB are listed on the Index to Consolidated
Financial Statements and Consolidated Financial Statement Schedule on page F-1.

Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

The Company received formal notice on October 6, 2003, from Jack Burke, Jr.
C.P.A. that he had resigned as the Company's certifying independent accountant,
effective September 22, 2003. There were no disagreements related to accounting
principles or practices, financial statement disclosure, internal controls or
auditing scope or procedure during the past two fiscal years and interim
periods, including the interim period up through the date the relationship
ended.

On November 21, 2003 we retained Comiskey & Company, PC as our new independent
auditor.

Item 8A. Controls and Procedures.

Our management, including our Chief Executive Officer (the principal executive
officer), Ajibike Olunkunle Akinkoye, and our Chief Financial Officer (the
principal financial officer), Randy Moseley, have reviewed and evaluated the
effectiveness of our disclosure controls and procedures as of the end of the
period covered by this report. Based upon this review and evaluation, these

officers believe that our disclosure controls and procedures are effective in
ensuring that material information related to us is recorded, processed,
summarized and reported within the time periods required by the forms and rules
of the Securities and Exchange Commission.

Our management, including our principal executive officer and principal
financial officer, have reviewed and evaluated any changes in our internal
control over financial reporting that occurred as of the end of the period
covered by this report and there has been no change that has materially affected
or is reasonably likely to materially affect our internal control over financial
reporting.

Item 8B. Other Information

Not Applicable.

PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons: Compliance
with Section 16(a) of the Exchange Act

The directors and executive officers of the Company as of December 29, 2004 are
as follows:
Name Age Position
---- --- --------
Dr.Ajibike Olunkunle Akinkoye..... 55 Chairman of the Board and Chief
Executive Officer
Edward Maddox .................... 55 President and Director
Randy Moseley .................... 57 Executive Vice President, Chief
Financial Officer, Director
Carl Olivieri..................... 42 Executive Vice President, Director
Jacob R. Miles III ............... 51 Executive Vice President, Director
Clayton Wilkinson ................ 45 Director
Marc Pace......................... 49 Director
Stanley Woods .................... 52 Director, Secretary

The term of office for each director is one (1) year, or until his/her successor
is Elected at the Company's annual meeting and is qualified. The term of office
for Each officer of the Company is at the pleasure of the board of directors,
except for Randy Moseley and Stan Woods - See Item 10 - Executive Compensation.

Dr. Ajibike Olukunle Akinkoye. Chief Executive Officer, President and Director.
He was called into the Ministry and ordained an Assistant Pastor by the General
Overseer of the Redeemed Christian Church of God, Pastor Enoch Adejare Adeboye,
in 1992. Born in into an Anglican family in Nigeria on June 2, 1949, Pastor
Ajibike Olukunle Akinkoye attended a Catholic institution for his high school
education, and received Jesus as his personal Lord and Savior in 1984.. Among
other activities, he became one of the pioneers of the Video (and later,
Television) Ministry of the Church. He was ordained a full Pastor in 1995 at the
first ordination ceremony of the church in the United States of America.

It was right in the middle of his business enterprises that Dr. Akinkoye was
called to the Ministry, and he has not looked back since. He attended the
Redeemed Christian Bible College in 1994 and successfully completed the Advanced
Course. He was appointed the Pastor of the one-month old parish of the Redeemed
Christian Church of God, Dallas, in November 1994. The Church has grown to
become sixteen parishes as at the time of writing (November 2004) and he has
planted churches in other cities in the US. He was also appointed the Protocol
and Information Coordinator for the Redeemed Christian Church of God, North
America, Inc. In the Year 2001, having completed the Biblical Counseling courses
of the American Association of Christian Counselors he was among the first class
to graduate in its first ever commencement exercise. He was sworn in as an
American citizen on Saturday, June 21, 2002.

As Pastor Akinkoye began to work on the television project of RCCG in 2002, he
registered the church as an affiliate of Dallas Community Television. He
successfully completed training in Production, Directing, Editing, Truck
(Outside Broadcast Van), Portables, Studio, Lighting, etc.

Prior to his ordination he had successfully reached a respected height in his
chosen and varied careers. Having studied French, English and German for his
first degree and obtained a First Class (Honors) in French as major and German
as subsidiary, he had been awarded a scholarship by the University of Ibadan,
Nigeria, to study for a Master's and a Doctorate degree in France. For the
Master's degree, he wrote his dissertation on the Sociology of Literature and
Comparative Literature (French and English). He also took specialized courses in
Psychology, Philosophy, and Communication Arts under the renowned Professor
Robert Escarpit. As he proceeded to study for the PhD he was awarded an
equivalent of the M.A. in French by the University of Pennsylvania while doing
part of his field work in Philadelphia, PA. in 1974 -75. He later obtained the
"Doctorate" from the University of Bordeaux. His doctoral thesis on French and
English writers of the Black Diaspora was received and registered at the
University of Paris.

Immediately Dr. Akinkoye completed his doctoral work in 1975 the University of
Ibadan employed him as a Lecturer, and he served the Nigerian premier
institution in growing capacities for seven years. After that he decided to go
into (education- elated) business. He is himself an author. He started with
printing and publishing, and later teamed up with some members of his family to
build a viable group of companies dealing extensively with major international
corporations. Through one of the companies he successfully designed and executed
a World Bank financed project for the government of the Federal Republic of
Nigeria. Simultaneously, he made his knowledge of French, German and English
available to Nigerian and foreign businesses and individuals who desired to do
business with one another but were hampered by language or inadequate profiling.

Edward Maddox, President and a Director of the Company since April of 2004. Mr.
Maddox has over 30 years of experience in television, mass media, finance and
politics. Mr. Maddox is a former Executive Vice President of Black Entertainment
Television (BET). He was former Special Assistant to Senior Vice President,
Finance and Administration, for The Times Mirror Corporation. He was the first
minority broadcaster to be a Host/Moderator on C-SPAN, a position that he held
for twelve years. Mr. Maddox is the Founder, President and CEO of Powerhouse
Corp, Inc., a multi-ethnic public relations firm. He was formerly the Executive
Vice President of FreedomCard, Inc., the first minority owned credit card in the
U.S. Mr. Maddox was the Founder, President and CEO of Summit 2000, Inc., a
non-profit umbrella organization of fifteen national non-profit professional and
civil rights groups. Mr. Maddox was the Founder and CEO of The Maddox Company, a
Washington D.C. based business and political consulting firm. Mr. Maddox was a
Senior Vice president for Cranston Prescott, a subsidiary of Kemper Financial.
Mr. Maddox was Staff Assistant to the President for the Former President of the
United States Jimmy Carter during President Carter's Administration, after being
a Staff Member of President Carter's successful Presidential campaign. Mr.
Maddox was a former Honor's Attorney for the U.S. Department of Transportation.
Mr. Maddox is a graduate of Boalt Hall, School of Law, University of California,
Berkley California, Editor-in-Chief of the Black Law Journal, and holds a B.A.
in Political Science from the University of California at Los Angeles (UCLA).

Randy Moseley, Executive Vice President, Chief Financial Officer, Director. Mr.
Moseley was co-founder of the Company in October 2001 and was the President,
Chief Executive Officer and Chief Financial Officer until the Company's
management was reorganized In October of 2003 when Wright Entertainment, LLC
purchased 51% of the Company's common stock. Prior to the founding of Urban
Television Network Corporation in October 2001, Mr. Moseley was Executive Vice
President and Chief Financial Officer of Tensor Information Systems, Inc., a
custom software development company based in Fort Worth, Texas from November
1999. Prior to joining Tensor, Mr. Moseley served as Executive Vice President
and Chief Financial Officer for American Independent Network, Inc. ("AIN"), a
network for independent broadcast television stations and cable operators. AIN
merged with Hispanic Television Network, Inc. in November 1999 and its name
changed to Hispanic Television Network, Inc. Previously, Mr. Moseley held
positions with Jerry Lancaster & Associates Inc. and Ernst & Young. Moseley
received a bachelor's degree in business administration from Southern Methodist
University and is a certified public accountant. Mr. Moseley has affiliations
with the Texas Society of CPAs and the American Institute of CPAs.

Jacob R. Miles III, Executive Vice President of Network Operations, Director.
Mr. Miles is also currently President of Grapevine Entertainment Services and
Production, Inc., which position he has held since 2002. Prior to 2002, Mr.
Miles served as President and CEO of Urban Cool Network, Inc., an Internet
Portal targeted at the Urban Community from 1997 to 2002. Mr. Miles also serves
as President of the Dallas-Fort Worth chapter of the National Association of
Minorities in Cable.

Carl Olivieri, Executive Vice President of Marketing and Corporate Operations,
Director. Mr. Olivieri is also President 2002 of Soul to Sole Ventures, Inc. in
Los Angeles, CA. Sole to Soul provides retail clients with services relating to
customer service shopping, loss prevention, store safety, operating expense
control, and in-store marketing evaluations. Mr. Olivieri served as field
operations manager for U.S. Retail from January 2000 to May 2002. He managed 165
stores nationwide and was responsible for directing the operations and
HR/Training for the managers to insure that the policies and training programs
were linked to both strategic and sales goals. Mr. Olivieri served as regional
manager for U.S. Retail from January 1997 to January 2000 and was responsible
for the sales performance, personnel and operations for 30 stores in a seven
state area. Mr. Olivieri is also the Chief Executive Officer of Black Buddha
Music, which released its first artist in February 2004. He is also an
independent film producer and his latest project is the just-released, 60-minute
documentary on Tupac Shakur titled, "2Pac 4Ever".

Stanley Woods, Corporate Secretary and Director. He has served as President of
Cresson Investments, Inc., a corporate planning and consulting firm, since
October of 2001. Mr. Woods taught at the junior college and high school levels
from 1997 to 2001. He received a Bachelor's Degree in Business Administration
from Tarleton State University in 1978.

Marc Pace, Corporate Director. He presently owns and operates M3X Real Estate
Development and has been involved in the real estate development business for
the past ten years plus being involved in several oil and gas development
projects. He received a Bachelor's Degree in Business Management from Texas Tech
University in 1976.

Clayton Wilkinson, Corporate Director. He is presently President of R. J. Halden
Holdings, Inc. In 1994, Mr. Wilkinson co-founded TEAMeffort Ministries, a youth
missions organization in Tampa, Florida, and was Executive Director until 2004.
Previously, Mr. Wilkinson was the Founder and President of Camp Eagle Christian
Retreat Center in the Texas Hill Country. Prior to Camp Eagle, Mr. Wilkinson was
the Pastor of Westchester Community Church in Grand Prairie, Texas. Mr.
Wilkinson has also served as a Regional Event Volunteer Coordinator and speaker
for Promise Keepers. Prior to going into full-time ministry Mr. Wilkinson was
Vice-President - Real Estate for the First National Bank of Kerrville, Texas.
Mr. Wilkinson holds a Master of Biblical Counseling degree from Colorado
Christian University, a Bachelor of Commerce degree from Schreiner College and
is a graduate of the National Commercial Lending School at the University of
Oklahoma.

Compensation of Directors

The Company does not pay any cash compensation for attendance at directors
meetings or participation in directors' functions.

Committees of the Board of Directors

Audit Committee

On September 30, 2002, our Board approved an Audit Committee Charter. During
2003, the Board of Directors appointed Marc Pace and Stanley Woods to serve on
the on the audit committee. The audit committee will make recommendations
concerning the engagement of independent public accountants, review with the
independent public accountants the plans and results of such audit engagement,
approve professional services provided by the independent public accountants,
review the independence of the independent public accountants, consider the
range of audit and non-audit fees and review the adequacy of our internal
accounting controls.

Compensation Committee

We did not have a formal Compensation Committee during 2003 or 2004. We
anticipate forming such a committee to make recommendations to the Board
concerning compensation of our executive officers.

Compensation Committee Interlocks and Insider Participation

No executive officer or director of the company serves as an executive officer,
director or member of a compensation committee of any other entity for which an
executive officer, director or member of such entity is a member of the Board or
the Compensation Committee of the Board. There are no other interlocks.

Advisory Committee

The Company has named six individuals to its advisory committee (the "Advisory
Committee") with additional individuals to follow as the Company grows. Its
members are expected to come from major demographic areas across the country and
include people from corporate and entertainment fields. The advisory committee
members named are as follows:

Senator Manny Aragon - New Mexico Senator Aragon has dedicated his life to
public service. Senator Aragon brings a lifetime of wisdom and knowledge related
to the needs and desires of the Hispanic and other urban communities in America.
Senator Manny Aragon has served in the New Mexico State Senate representing
District 14 since 1975. He is currently the Majority Floor Leader, was
previously the President Pro-Tempore, and Chaired the Committees' Committee, the
Judiciary Committee, the Rules Committee, the Council of State Governments -
West, and the National Energy Council. He is currently a member of the National
Energy Council, National Association of Latino Elected Officials, Council of
State Governments - National, the Board of Directors of the National Democratic
Campaign Committee, the Board of the Mexican American State Legislator Policy
Institute, the New Mexico Bar Association and the Albuquerque Hispanic Chamber
of Commerce. In June of 2004, Senator Aragon was appointed by the Board of
Regents to be the new President of New Mexico Highlands University. Senator
Aragon has maintained a private law practice in Albuquerque, New Mexico since
1986. Senator Aragon received a Bachelor of Arts in Political Science from the
University of New Mexico in 1970 and a Juris Doctor from The University of New
Mexico School of Law in 1973.

Ramon Palameros - Deputy Director of U.S. Department of Housing and Urban
Development since 1977. Mr. Palameros helps manage the public housing systems of
about 300 cities in Texas. A native of San Antonio, Texas, Mr. Palameros earned
his undergraduate degree from Our Lady of the Lake University. He earned a
fellowship to the Nation's capital in Washington, D.C. where he earned a Masters
Degree in Public Administration from Washington, D.C. Branch of the University
of Southern California. Mr. Palameros was elected as a State Director for Latin
United of Latin American Countries (LULAC) in 1999 and was instrumental in
establishing the LULAC Texas State Office in Austin and opening the Texas Civil
Rights Office in San Antonio. Some of the creative initiatives led by Mr.
Palameros and his Executive Board include the Legislative Gala, the Annual Civil
Rights Symposium, the Leadership Academy for Adult Officers and joining with the
NAACP for promotion of civil rights for all Americans.

Jill Darden - Publisher of the Fort Worth Black News, a newspaper highlighting
activities and accomplishments in the local African-American community. She also
produces and hosts a television show that is featured on the local cable system.
Ms. Darden graduated with a degree in Broadcast Journalism from the University
of Texas at Arlington. While in college, she was elected Miss UTA and became the
first African-American to hold the title. She was pictured in the national
publication of Ebony Magazine among black college queens. Ms. Darden has
received the Leadership Award From the U.S. Department of Commerce Minority
Business Development Agency. She has published a book of poetry call Back Talk,
poetic confessions from the soul and received the Paul R. Ellis Media Award from
the American Heart Association for her story, Search Your Heart.

Christian Diaz - Mr. Diaz is Co-Founder and Sr. Executive President of Interkard
International. Mr. Diaz, with over 25 years experience in direct sales and
international marketing, he brings a wealth of marketing and communications
experience to the Interkard team. Prior to Interkard, Chris served as Executive
Vice President of XENO Development, Inc., a holding company comprised of
Prodika, Inc., POWERmedia, Inc. and EyeQ Corp. As part of XENO's executive team,
he also served as Marketing Director of Prodika and President of XENO de las
Americas, a corporate division of XENO based in Puerto Rico that targets Latin
America. Diaz joined XENO from AmeriPlan USA where he held the position of
Director of Creative Services and Vice President of Marketing for the Eastern
Division and National Hispanic Market.

Since 1998, Mr. Diaz has served on Senator Orin Hatch's Senate Advisory Board on
Hispanic Affairs and also has served on the US Congressional Advisory Board
since 1984.

After formation, the Advisory Committee shall meet with the Company's Board of
Directors no less than quarterly for the purpose of discussing the Company's
operations. The Advisory Committee shall have no binding authority, but it may
advise and consult with the Chief Executive Officer and report to the Board of
Directors. The Company will reimburse the members of the Advisory Committee for
their expenses, but they shall not be paid any compensation for serving on the
Advisory Committee.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Directors and executive officers, and persons who own more than 10% of the
Company's Common Stock, to file with the Securities and Exchange Commission
(a)initial reports of beneficial ownership (From 3), (b) reports of changes in
(b) beneficial ownership of Common Stock of the Company (Form 4) and (c) annual
reports of beneficial ownership (Form 5). Copies of those reports must also be
furnished to us. Randy Moseley was delinquent in filing one Form 4 and Form 5.
Marc Pace, Carl Olivieri, and Stanley Woods were delinquent in filing one Form 4
and Form 5 each. Edward Maddox and Clay Wilkinson were delinquent in filing Form
5 each.

Item 10. Executive Compensation

Randy Moseley, President, Chief Executive Officer and Chief Financial Officer at
September 30, 2003, and currently Executive Vice President and Chief Financial
Officer, received stock (see table below) issued under the 2003 Non-Qualified
Stock Grant and Option Plan discussed below. Randy Moseley, President, Chief
Executive Officer and Chief Financial Officer and Stanley Woods, Secretary of
the Company have employment agreements as set forth below in this Item 10. There
is no health insurance, retirement, pension, profit sharing or similar program
currently in effect.

2003 Non-Qualified Stock Grant and Option Plan. The Company is authorized to
issue up to 4,800,000 shares of common stock under its 2003 Non-Qualified Stock
Grant and Option Plan (the "Plan") through an S-8 registration, as amended. The
Board of Directors has the authority to determine the persons to whom options
will be granted, The number of shares to be covered by each option. This Plan is
intended to serve as an inventive to and to encourage stock ownership by certain
directors, officers, employees of and certain persons rendering service to the
Company, so that they may acquire or increase their proprietary interest in the
success of the Company, and to encourage them to remain in the Company's
service. During the period ended September 30, 2003, the Company distributed
1,900,000 of the shares through grants. During the period ended September 30,
2004, the Company Distributed 1,586,000 shares through grants.

The following table provides information about our Chief Executive Officer and
each of our executive officers who received salary and bonus in the years ended
September 30, 2004 and 2003, that exceeded $100,000, these persons being
collectively referred to as "named executive officers."

Other Annual All Other
Name and principal position Year Salary Bonus Compensation Compensation
--------------------------- ---- ------ ----- ------------ ------------

Lonnie Wright 2004 $ 15,000.00 -- -- --
Chief Executive Officer

Edward Maddox 2004 $ 30,000.00 -- -- --
President (April - Sept)

Randy Moseley 2002 $ 00.00 -- -- --
Chief Executive Officer 2003* $150,000.00 -- -- --
2004** $200,000.00 -- -- --

Stanley Woods 2002 $ 00.00 -- -- --
Secretary 2003* $ 50,000.00 -- -- --
2004 $ 50,000.00 -- -- --

* Annual compensation in 2003 represents 600,000 shares of common stock issued
to Mr. Moseley and 200,000 shares of common stock issued to Mr. Woods under the
2003 Non-Qualified Stock Grant and Option Plan.

** In 2004, Mr. Moseley deferred $150,000 of his salary and the Company accrued
it as a payable at September 30, 2004.

Option Grants in Last Fiscal Year

We did not grant any options to our named executive officers during fiscal year
2004.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values

During fiscal year 2004, no options were exercised.

Stock Grants in Last Fiscal Year

During the 2003 fiscal year the Company issued stock grants for common stock
under the 2003 Non-Qualified Stock Grant and Option Plan for executive
compensation. Randy Moseley, President, Chief Executive Officer and Chief
Financial Officer was issued 600,000 common shares with 500,000 of the shares
being vested on January 9, 2004, valued for financial reporting purposes at
$150,000.00. The Company also issued Stan Woods, the corporate Secretary,
200,000 common shares with 100,000 of the shares being vested on January 9,
2004, valued for financial reporting purposes at $50,000.00.

During the 2003 fiscal year the Company issued stock grants for common stock
under the 2003 Non-Qualified Stock Grant and Option Plan for legal and
consulting services. The Company issued 400,000 shares for legal services and
700,000 shares for consulting Services, valued for financial reporting purposes
at $275,000.00.

During the 2004 fiscal year the Company issued stock grants for common stock
under The 2003 Non-Qualified Stock Grant and Option Plan for legal and
consulting services. The Company issued 75,000 for legal services and 1,511,000
for consulting services.

Employment Agreements with Executive Officers

In October 2003, the employment agreement of Randy Moseley was extended and
amended to allow for the naming of a new President and Chief Executive Officer
for the Company. Mr. Moseley accepted the officer position of Executive Vice
President and Chief Financial Officer and agreed to defer the payment of his

salary for the period from October 2, 2002 to September 30, 2003 with this
deferred year being added to the end of the original employment term to make the
term of the employment agreement now end on September 30, 2008. During the
period ended September 30, 2004, $150,000 of Mr. Moseley's annual compensation
was accrued as a payable.

Mr. Stanley Woods is employed pursuant to a three-year employment agreement that
commenced on October 2, 2002. The agreement provides for a base annual salary
equal to $50,000 and a possible annual cash bonus as determined by the Board of
Directors and/or the Compensation Committee. Mr. Woods was issued 200,000 shares
of common stock in June 2003 in lieu of his annual salary for the period ended
September 30, 2003.

Item 11. Security Ownership of Certain Beneficial Owners and Management

As of December 29, 2004, we had 127,063,384 shares of common stock outstanding.
The following table sets forth information concerning beneficial ownership of
shares of our common stock as of December 29, 2004:

o each person (or group within the meaning of Section 13(d)(3)
of the (Exchange Act) known to us to own more than 5% of our
outstanding common stock;
o each director;
o each executive officer; and
o all directors and executive officers as a group.

Except as otherwise noted, the named beneficial holder has sole voting and
investment power. The address for all officers and directors is 2707 South
Cooper Street, Suite 119, Arlington, Texas 76015.

Shares of Common Stock
Beneficially Owned (*)
------------------------
Number Percent
---------- ----------
World One Media Group, Inc.(2).......... ...... 70,000,000 55.1%
Dr. Ajibike Olukunle Akinkoye (1) (2) (3)...... 70,000,000 55.1%
Edward Maddox (1).............................. 2,500,000 2.0%
Randy Moseley...(1)(2) (4)..................... 3,060,000 2.4%
Marc Pace (1).................................. 1,000,000 0.8%
Stanley Woods (1).............................. 1,000,000 0.8%
Jacob R. Miles, III (1)........................ 1,150,000 0.9%
Carl Olivieri (1).............................. 1,000,000 0.8%
Clayton Wilkinson (1) ......................... 1,000,000 0.8%
All officers and directors as a group
(8 persons).................................... 80,710,000 63.5%

(1) Directors and Officers
(2) 5% Beneficial shareholder
(3) Dr. Ajibike Olukunle Akinkoye is a director and Chief Executive
Officer of the Company. He is also a director and Chief Executive
Officer of the World One Media Group, Inc. and director, Chief
Executive Officer and Majority shareholder of Redeemed Global Media
Group, Inc. which owns 80% World One Media Group, Inc., which gives
Dr. Akinkoye the right to vote the shares Owned by World One Media
Group, Inc.
(4) Randy Moseley's shares includes 1,500,000 shares owned by his spouse,
therefore he is deemed a beneficial owner of these shares. Does not
include an aggregate of 1,450,975 shares owned by Jonathan Moseley,
adult son of Randy Moseley, who does not reside with him. Mr. Moseley
disclaims beneficial ownership of the shares owned by his adult son.
-----------------
(*) As used in this table, "beneficial ownership" means the sole or shared
power to vote, or to direct the voting of, a security, or the sole or
shared investment power with respect to a security (i.e., the power to
dispose of, or to direct the disposition of, a security) and includes the
ownership of a security through corporate, partnership, or trust entities.
In addition, for purposes of this table, a person is deemed, as of any
date, to have "beneficial ownership" of any security that such person has
the right to acquire within 60 days after such date.

Item 12. Certain Relationships and Related Transactions

Urban-Texas is considered the accounting acquirer, and the accompanying
financial statements include the operations of Urban-Texas from the earliest
period presented. The transaction with the Company is presented as a
recapitalization of Urban-Texas.

The Company leases office space from one its shareholders and director for
$2,000 per month. The office space consist of approximately 2,000 square feet
located at 18505 Highway 377 South, Cresson, Texas 76035. The total rental
expense for the years ended September 30, 2003 and 2002 was $24,000 and $14,000,
respectively.

On May 7, 2002, the new majority company shareholder, Urban Television, a Texas
corporation, authorized an amendment to the Articles of Incorporation changing
the corporate name from Waste Conversion Systems, Inc. to Urban Television
Network Corporation. This authorization was implemented by the written consent
of the majority shareholders in lieu of a special meeting. The new corporate
name became effective in June 2002 when the Amendment to the Company's Articles
of Incorporation were filed with the Nevada Secretary of State. This filing took
place after notice to the Company shareholders in accordance with the disclosure
provisions of the Schedule 14C Information Statement.

Urban Television Network Corporation (Urban-Texas), a Texas corporation, was
organized in October 2001 for the purpose of acquiring the original American
Independent Network (AIN) television broadcast signal and television network
affiliate base from Hispanic Television Network, Inc. AIN provided a general
market, family-oriented programming to its network affiliates. Urban-Texas
changed the AIN programming format when it acquired the broadcast signal and
affiliate base from HTVN to focus the programming content on the ethnic minority
programming interests of African-American viewers across the United States.

In year 2003, the Company began using the services of Clear Fork Communications,
a company (in which Marc Pace, a director of Urban Television, owns a 15%
interest), that provides the Company with the equipment and master control
services to put the Company's programming on the satellite for the broadcast
affiliates to receive and rebroadcast to their local markets. During the periods
ended September 30, 2004 and 2003, the total expense paid out for these services
was $430,367 and $345,081, respectively.

The Company uses the services of a Cresson Technology, Inc., company owned by
shareholders to provide it with technology services including Internet and
affiliate relations. During the period ended September 30, 2003, the total
expense paid out for these services was $192,691.

During the period ended September 2003, the Company executed interest bearing
notes with shareholders. The principal borrowed of $168,765 plus accrued
interest of $29,750 were converted to a non-interest payable to the shareholder.
As discussed below, the shareholder agreed to reduce the Company payable by
$198,515 to apply towards the purchase of common stock by Wright Entertainment
LLC during the period ended September 30, 2004.

The Company executed an interest bearing note with a shareholder of the Company
during the period ended September 30, 2003 to pay operating expenses. During the
period ended September 30, 2003 the amounts loaned totaled $132,200. During the
period ended September 30, 2004, the Company repaid $130,000 of the note
principal. The Company executed interest bearing noted with a shareholder of the
Company during the period ended September 30, 2004 to pay operating expenses.
During the period ended September 30, 2004 the amounts loaned totaled $400,000.

Item 13. Exhibits, LISTS and Reports on Form 8-K

(a) EXHIBITS

Exhibit No. Description and Method of Filing
----------- --------------------------------

2.0 Asset Purchase Agreement w/o Exhibits

10.1 Promissory Note

10.2 Satellite Transponder Space Service Agreement between Hispanic
Television Network, Inc. and Urban Television Network
Corporation dated on, or about October 28, 2001

10.3 Agreement between Hispanic Television Network, Inc. and Urban
Television Network Corporation dated November 13, 2001

10.5 Satellite Space Agreement with Loral Skynet dated on, or about
November 22, 2002

10.6 Employment Agreement by and between Randy Moseley and Urban
Television Network Corporation, dated October 2, 2002.

10.7 Employment Agreement by and between Stanley Woods and Urban
Television Network Corporation, dated October 2, 2002.

10.8* Bridge Loan Agreement and Promissory Notes with stockholder.

10.9* World One Media Group, Inc. Subscription Agreement

10.10* World One Media Group, Inc. Promissory Note to the Company

10.11* World One Media Group, Inc. Warrant Agreement with the Company

31.1* Certification by Chief Executive Officer, pursuant to 18 USC
Section 1350 as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.

31.2* Certification by Chief Financial Officer, pursuant to 18 USC
Section 1350 as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.

32.1* Certification by Chief Executive Officer, pursuant to 18 USC
Section 1850 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.

32.2* Certification by Chief Financial Officer, pursuant to 18 USC
Section 1850 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.

21* Subsidiaries of the Registrant.
-----------------
*Filed herewith.

(b) Reports on Form 8-K.

On October 10, 2003, we filed a Form 8-K announcing the resignation of
the Company's certifying accountant.

On October 30, 2003, we filed a Form 8-K announcing a change in Control
of the Company.

On December 2, 2003, we filed a Form 8-K announcing the engagement of a
certifying accountant.

On December 16, 2004, we filed a Form 8-K announcing the definitive
agreement with World One Media Group, Inc. and Wright Entertainment LLC. and the
resignation of Lonnie G. Wright as a director and Chief Executive Officer of the
Company.

On January 3, 2005, we filed a Form 8-K/A announcing the terms of the
subscription agreement with World One Media Group, Inc. and the appointment of
Ajibike Olukunle Akinkoye as Chairman of the Board and Chief Executive Officer
of the Company.

Item 14. Principal Accountant Fees and Services

Audit Fees. The aggregate fees billed by our auditors, for professional services
rendered for the audit of our annual financial statements for the years ended
September 30, 2004 and 2003, and for the reviews of the financial statements
included in our Quarterly Reports on Form 10-QSB during those fiscal years were
$13,340 and $13,000, respectively.

Audited Related Fees. The aggregate fees billed for assurance and related
services by our principal accountant that are reasonably related to the
performance of the audit or review of our financial statements, other than those
previously reported in this Item 14, for the fiscal years ended September 30,
2004 and 2003 were $-0- and $-0-, respectively.

Tax Fees. The aggregate fees billed for assurance and related services by our
principal accountant for tax compliance, tax advice and tax planning for the
fiscal years ended September 30, 2004 and 2003 were $-0- and $-0-, respectively.

All Other Fees. For the fiscal years ended September 30, 2004 and 2003, we did
not incur fees to auditors for services rendered to us, other than the services
covered in "Audit Fees".

Audit Committee. The Company's audit committee approved all the services
described Above in this Item 14 for the year ended September 30, 2004.

SIGNATURES

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

Urban Television Network Corporation

By: /s/ Dr. Ajibike Olukunle Akinkoye
--------------------------------------
Dr. Ajibike Olukunle
Akinkoye Chairman of the Board and CEO

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Registrant and in the
capacities indicated on January 13, 2005.

By:/s/ Dr. Ajibike Olukunle Akinkoye Title:Chairman of the Board Date: January 13, 2005
---------------------------------
Dr. Ajibike Akinkoye

By: /s/ Dr. Ajibike Olukunle Akinkoye Title:Chief Executive Officer Date: January 13, 2005
---------------------------------- and Director
Dr. Ajibike Akinkoye

By: /s/ Edward Maddox Title: President Date: January 13, 2005
---------------------------------- and Director
Edward Maddox

By: /s/ Randy Moseley Title:Executive Vice President Date: January 13, 2005
---------------------------------- Chief Financial Officer
Randy Moseley and Director

By: /s/ Clayton Wilkinson Title:Director Date: January 13, 2005
----------------------------------
Clayton Wilkinson

By: /s/ Carl Olivieri Title:Executive Vice President Date: January 13, 2005
---------------------------------- and Director
Carl Olivieri

By: /s/ Marc Pace Title:Director Date: January 13, 2005
----------------------------------
Marc Pace

By: /s/ Stanley Woods Title:Secretary, Director Date: January 13, 2005
----------------------------------
Stanley Woods

Report of Independent Registered Public Accounting Firm
-------------------------------------------------------

Board of Directors
Urban Television Network Corporation
Arlington, Texas

We have audited the accompanying consolidated balance sheets of Urban Television
Network Corporation (a Nevada corporation) and subsidiaries as of September 30,
2004 and 2003, and the related consolidated statements of operations, capital
deficit and cash flows for the years ended September 30, 2004 and 2003. 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 standards of the Public Company
Accounting Oversight Board (United States). 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 Urban Television Network
Corporation as of September 30, 2004 and 2003, and the results of its operations
and changes in its cash flows for the years ended September 30, 2004 and 2003 in
conformity with U.S. generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 12 to the
financial statements, the Company has suffered recurring losses from operations
that raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 12. The
financial statements may not include all adjustments that might result from the
outcome of this uncertainty.

/s/ Comiskey & Company, P.C.
-----------------------------
Denver, Colorado
December 10, 2004

Urban Television Network Corporation

Consolidated Balance Sheet

September 30, 2004 and 2003

2004 2003
------------ ------------

ASSETS
------
Current assets:
Cash and cash equivalents $ 8,995 $ 235,408
Accounts receivable 14,855 4,241
------------ ------------
Total current assets 23,850 239,649
------------ ------------

Furniture, fixtures and equipment, net 136,133 29,938
------------ ------------

Other assets
Network assets, net 98,340 137,465
Organizational costs 360 360
------------ ------------
98,700 137,825
------------ ------------

Total Assets $ 258,683 $ 407,412
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------

Current liabilities:
Accounts payable $ 334,403 $ 96,678
Due to stockholders 750 198,515
Notes payable to stockholders 402,657 132,200
Bridge loans payable -- 37,000
Accrued compensation 150,000 --
Accrued interest payable 10,049 4,550
Deferred revenue 67,000 --
------------ ------------
Total current liabilities 964,859 468,943
------------ ------------

Stockholders' equity (deficit):
Preferred stock, $1 par value, 500,000 shares authorized,
none issued -- --
Common stock, $.0001 par value, 200,000,000 shares authorized,
67,135,177 and 23,711,736 outstanding at September 30, 2004
and 2003 6,714 2,371
Additional paid-in capital 23,677,544 8,058,311
Stock subscription receivable (8,800,000) (57,400)
Accumulated deficit (15,590,434) (8,064,813)
------------ ------------

Total stockholders' equity (deficit) (706,176) (61,531)
------------ ------------

$ 258,683 $ 407,412
============ ============

See notes to financial statements.

Urban Television Network Corporation

Consolidated Statements of Operations

For the years ended September 30, 2004 and 2003

2004 2003
------------ ------------

Revenues $ 222,794 $ 242,998
------------ ------------

Expenses:
Satellite and uplink services 329,104 312,730
Master control and production 445,179 352,681
Station operating costs 358,222 136,066
Technology expenses 229,062 192,691
Administration 6,298,565 1,212,926
Depreciation and amortization 81,529 47,349
------------ ------------
Total expenses $ 7,741,661 $ 2,254,443
------------ ------------
Income loss from operations (7,518,867) (2,011,445)

Other income (expense)
Interest expense (net) (6,754) (27,664)
------------ ------------

Net income (loss) $ (7,525,621) $ (2,039,109)
============ ============

Earnings per share:

Net income (loss) $ (0.15) $ (0.15)

Weighted average number of common
shares outstanding 49,004,591 13,303,804

See notes to financial statements.

Urban Television Network Corporation

Consolidated Statements of Capital Deficit

For the years ended September 30, 2004 and 2003

Additional Stock Total
Common Stock Paid-In Subscription Capital
Shares Amount Capital Receivable Deficit Deficit
------------ ------------ ------------ ------------ ------------ ------------

Balance, September 30, 2001 311,636 $ 31 $ 5,444,567 $ -- $ (5,444,598) $ --

Recapitalization of
private company 800,000 80 518,785 -- -- 518,865

Stock issued to Hispanic
Television Network 5,000 1 9,999 -- -- 10,000

Net loss for year ended
September 30, 2002 -- -- -- -- (581,106) (581,106)
------------ ------------ ------------ ------------ ------------ ------------
Balance, September 30, 2002 1,116,636 112 5,973,351 -- (6,025,704) (52,241)

Recapitalization of
private company 13,248,000 1,325 238,594 -- -- 239,919

Stock issued for services 7,275,000 727 810,523 -- -- 811,250

Stock issued for bridge
loan conversions 1,957,300 196 978,454 -- -- 978,650

Stock Subscription 114,800 11 57,389 $ (57,400) -- --

Net loss for year ended
September 30, 2003 -- -- -- -- (2,039,109) (2,039,109)
------------ ------------ ------------ ------------ ------------ ------------
Balance, September 30, 2003 23,711,736 2,371 8,058,311 (57,400) (8,064,813) (61,531)

Stock subscription 14,000,000 1,400 6,998,600 (6,800,000) -- 200,000

Stock subscription received -- -- -- 57,400 -- 57,400

Stock issued for management
Services 4,000,000 400 1,999,600 (2,000,000) -- --

Stock issued for services 21,053,000 2,106 4,710,322 -- -- 4,712,428
-0-
Stock issued for bridge
loan conversions 4,135,441 414 1,852,234 -- -- 1,852,648

Stock issued for equipment 120,000 12 29,988 -- -- 30,000

Stock issued to vendor 115,000 11 28,489 -- -- 28,500

Net loss for year ended
September 30, 2004 -- -- -- -- (7,525,621) (7,525,621)
------------ ------------ ------------ ------------ ------------ ------------
Balance, September 30, 2004 67,135,177 $ 6,714 $ 23,677,544 $ (8,800,000) $(15,590,434) $ (706,176)
============ ============ ============ ============ ============ ============

See notes to financial statements.

Urban Television Network Corporation

Consolidated Statements of Cash Flows

For the years ended September 30, 2004 and 2003

2004 2003
----------- -----------

Operating activities:
Net (loss) $(7,525,621) $(2,039,109)
Adjustments to reconcile net (loss) to
cash provided (used) by operating activities:
Depreciation and amortization 81,529 47,349
Stock issued for services 4,740,928 811,250
Net change in assets and liabilities:
Accounts receivable (10,614) 2,827
Accounts payable 237,725 35,875
Accrued compensation 150,000 --
Deferred revenue 67,000 --
Accrued interest payable 7,089 (8,021)
----------- -----------

Net cash provided (used) by operating activities (2,251,964) (1,149,829)
----------- -----------

Investing Activities:
Purchase of equipment (118,704) (5,084)
Recapitalization of private company -- 239,919
----------- -----------
Total investing activities (118,704) 234,835
----------- -----------
Financing activities:
Proceeds from shareholders advances 401,207 298,127
Repayments on shareholder advances (130,000) (164,177)
Proceeds from bridge loans 1,873,048 1,015,650
----------- -----------
Total financing activities 2,144,255 1,149,600
----------- -----------

Net increase (decrease) in cash (226,413) 234,606
Cash, beginning of period 235,408 802
----------- -----------

Cash, end of period $ 8,995 $ 235,408
=========== ===========

Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest $ -- $ 6,936
Income taxes $ -- $ --
Non cash transactions:
Common stock issued for services $ 4,740,928 $ 811,250
Common stock issued for equipment $ 30,000 $ --
Debt forgiveness applied to stock subscription $ 200,000 $ --

See notes to financial statements.

Urban Television Network Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2004 and 2003

1. Significant Accounting Policies

Description of Business

Urban Television Network Corporation (the "Company") formerly known as
Waste Conversion Systems, Inc. was incorporated under the laws of the state
of Nevada on October 21, 1986. The principal office of the corporation is
2707 South Cooper Street, Suite 119, Arlington, Texas 76015.

In January 2002, the Company underwent a change of control in connection
With Urban Television Network Corporation, a Texas corporation,
(Urban-Texas) Agreeing to deposit $100,000 into an attorneys escrow account
in return for receiving a balance sheet with no assets and no liabilities.
The directors of the Company appointed Urban-Texas officers as new officers
of the Company, and at the same time resigned their board positions and
appointed the directors of Urban-Texas as the Company's new board of
directors. Urban-Texas agreed to deposit 300,000 shares of the Company's
common stock into the attorney's escrow account after the completion of the
Stock Exchange Agreement described below, dated February 7, 2003.

On February 7, 2003, the Company entered into a Stock Exchange Agreement
with the majority shareholders of Urban-Texas. Among other things, the
Agreement provided for the Company's purchase of approximately 90% of the
issued and outstanding capital stock of Urban-Texas (13,248,000 of
14,759,000 shares) in exchange for the Company's issuance of 13,248,000
shares of its authorized but unissued common stock, $.0001 par value (the
"Exchange Shares"), to the majority shareholders of Urban-Texas. In June
2003, the remaining 10% of Urban- Texas was acquired by Company.

Urban-Texas is considered the accounting acquirer, and the accompanying
financial statements include the operations of Urban-Texas from the
earliest period presented. The Company operated from May 1, 2002 to
February 7, 2003 as a 71% subsidiary of Urban-Texas, a predecessor entity
to the existing business. The May 1, 2002 and February 7, 2003 transactions
with the Company are presented as a recapitalization of Urban-Texas.

The Company is authorized to issue 200,000,000 shares of $.0001 par value
stock and 500,000 shares of $1.00 par value preferred stock.

The Company is engaged in the business of supplying programming to
broadcast television stations and cable systems. Formerly the Company's
business had been the marketing of thermal burner systems that utilize
industrial and agricultural waste products as fuel to produce steam, which
generates electricity, air-conditioning or heat.

Accounting Method

The Company records income and expenses on the accrual method.

Urban Television Network Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2004 and 2003

1. Significant Accounting Policies - continued

Revenue Recognition

The Company's sources of revenues include the sale of short-form national
and local spot advertising and long-form program time slots. The Company's
policy is to recognize the revenue associated with these sources of revenue
at the time that it inserts the short-form advertising spots or airs the
long-form program at the network or local level.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company
and its subsidiaries. All material intercompany accounts and transactions
are eliminated. The Company owns 100% of Urban Television Network
Corporation, a Texas corporation and 100% of Waste Conversion Systems Of
Virginia, Inc.

Non Goodwill Intangible Assets

Intangible assets other than goodwill consist of network assets acquired by
purchase. They are being amortized over their expected lives of 5 years and
are reviewed for potential impairment whenever events or circumstances
indicate that carrying amounts may not be recoverable. No impairment loss
was recognized during the reporting periods. On January 1, 2002, the
Company adopted Statement of Financial Accounting Standards No. 142,
Goodwill and Intangible Assets. This provides that a recognized intangible
shall be amortized over its useful life to the reporting entity unless that
life is determined to be indefinite. The amount of an intangible asset to
be amortized shall be the amount initially assigned to that asset less any
residual value.

Income (Loss) Per Share

Income (loss) per common share is calculated in accordance with Statement
of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share".
Basic Income (loss) per share is computed by dividing net income (loss) by
the weighted average number of common shares outstanding. Diluted net
income (loss) per share is computed similar to basic net income (loss) per
share, except that the denominator is increased to include the number of
additional common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares were
dilutive. Stock options and warrants are anti-dilutive, and accordingly,
are not included in the calculation of income (loss) per share.

Comprehensive Income

Comprehensive income (loss) and net income (loss) are the same for the
Company.

Cash

For purposes of the statement of cash flows, the Company considers
unrestricted cash and all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash.

Concentration of Credit Risk

The Company at times maintains cash in excess of federally insured limits.
The amount in excess of the federally insured limits at September 30, 2004
was $-0-.

Urban Television Network Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2004 and 2003

1. Significant Accounting Policies - continued

Advertising Costs

The Company expenses non-direct advertising costs as incurred. The Company
did not incur any direct response advertising costs for the periods ended
September 30, 2004 and 2003.

Stock Based Compensation

The Company accounts for equity instruments issued to employees for
services based on the fair value of the equity instruments issued and
accounts for equity instruments issued to other than employees based on the
fair value of the consideration received or the fair value of the equity
instruments, whichever is more reliably measurable. The determined value is
recognized as an expense in the accompanying consolidated statements of
operations.

Use of Estimates

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

Recent Accounting Standards

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity".
This Statement establishes standards for classifying and measuring as
liabilities Certain financial instruments that embody obligations of the
issuer and have characteristics of both liabilities and equity. SFAS No.
150 is effective at the beginning of the first interim period beginning
after June 15, 2003; including all financial instruments created or
modified after May 31, 2003. SFAS No. 150 currently has no impact on the
Company.
In November 2004, the FASB issued SFAS No. 151, "Inventory Costs - an
amendment of ARB No. 43, Chapter 4." This Statement clarifies the
accounting for abnormal amounts of idle facility expense, freight, handling
costs, and wasted materials. This Statement is effective for inventory
costs incurred during fiscal years beginning after June 15, 2005. The
initial application of SFAS No. 151 will have no impact on the Company's
financial statements.

In December 2004, the FASB issued SFAS No. 152, "Accounting for Real Estate
Time-Sharing Transactions - an amendment of FASB Statements No. 66 and 67."
This Statement references the financial accounting and reporting guidance
for real estate time-sharing transactions that is provided in AICPA
Statement of Position 04-2, "Accounting for Real Estate Time-Sharing
Transactions." This Statement also states that the guidance for incidental
operations and costs incurred to sell real estate projects does not apply
to real estate time-sharing transactions. This Statement is effective for
financial statements for fiscal years beginning after June 15, 2005. The
initial application of SFAS No. 152 will have no impact on the Company's
financial statements.

In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary
Assets - an amendment of APB Opinion No. 29." This Statement eliminates the
exception for nonmonetary exchanges of similar productive assets and
replaces it with a general exception for exchanges of nonmonetary assets
that do not have commercial substance. A nonmonetary exchange has
commercial substance if the future cash flows of the entity are expected to
change significantly as a result of the exchange. This Statement is
effective for nonmonetary asset exchanges occurring in fiscal periods
beginning after June 15, 2005. The Company does not expect application of
SFAS No. 153 to have a material affect on its financial statements.

In December 2004, the FASB issued a revision to SFAS No. 123, "Share-Based
Payment." This Statement supercedes APB Opinion No. 25, "Accounting for
Stock Issed to Employees" and its related implementation guidance. It
establishes standards for the accounting for transactions in which an
entity exchanges its equity instruments for goods or services. It also
addresses transactions in which an entity incurs liabilities in exchange
for goods or services that are based on the fair value of the entity's
equity instruments or that may be settled by the issuance of those equity
instruments. This Statement does not change the accounting guidance for
share-based payment transactions with parties other than employees provided
in Statement No. 123 as originally issued and EITF Issue No. 96-18. This
Statement is effective for public entities that file as small business
issuers as of the beginning of the first fiscal period that begins after
December 15, 2005. The Company has not yet determined the impact of SFAS
No. 123 (revised) on its financial statements.

Stock Options

The Company accounts for non-employee stock options under SFAS 123, whereby
option costs are recorded at the fair value of the consideration received
or the fair value of the equity instrument issued, whichever is more
reliable measurement, in accordance with EITF 96-18 "Accounting for Equity"
Instruments That Are Issued to Other Than Employees for Acquiring or in
Conjunction with Selling Goods or Services.

2. Accounts receivable

Accounts receivable consists of normal trade receivables. The Company
assesses the collectibility of its accounts receivable regularly. Based on
this assessment, an allowance for doubtful accounts is recorded. At
September 30, 2004 and 2003, an allowance for doubtful accounts was not
considered necessary.

3. Network Assets - Amortization

Network assets consist of intangibles other than Goodwill. These assets are
recorded at cost and consist of amounts paid to acquire the television
network affiliate base from Hispanic Television Network, plus technology
consulting directly related to setting up the affiliate network. These
assets automatically renew every year unless either party terminates the
agreement by such notification to the other party. A useful life of five
(5) years is estimated for the assets. These agreements are not expected to
be terminated by either party prior to its useful life period. Total
amortization of these assets has been $107,288 and the amortization for the
periods ended September 30,2004 and 2003 was $39,125 and $39,125,
respectively.

Urban Television Network Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2004 and 2003

3. Network Assets - Amortization - continued

Future amortization of the Network assets at September 30, 2004 will be
$98,340 and on an annual basis be as follows:

Year ended September 30, 2005 $39,125
Year ended September 30, 2006 $39,125
Year ended September 30, 2007 $20,090

4. Furniture, Fixtures and Equipment

Furniture, fixtures and equipment, their estimated useful lives, and
related accumulated depreciation at September 30, are summarized as
follows:

Range of
Lives in
Years 2004 2003
-------- --------- ---------

Master Control, Editing Equipment 3-5 $ 67,749 $ 19,545
Studio and Production Equipment 3-5 60,500 3,000
Production Van 5 45,000 --
Affiliated Receiver Equipment 5 20,247 20,247
--------- ---------
191,496 42,792
Less: Accumlated Depreciation (55,363) (12,854)
--------- ---------
$ 136,133 $ 29,938
========= =========

The Company acquired equipment totaling $148,704 during the year ended
September 30, 2004 and $5,084 during the year ended September 30, 2003.
Total depreciation expense for the periods ended September 30, 2004 and
2003 was $42,509 and $8,224, respectively.

5. Related Party Transactions

In May 2002, the Company issued 16,000,000 (800,000 after the 1 for 20
Reverse) shares to Urban Television Network Corporation, a Texas
corporation for asset purchase of network assets - See footnote 1.

The Company has leased office space from one its shareholders and director
for $2,000 per month. The total rental expense for the years ended
September 30, 2004 and 2003 was $24,000 and $14,000, respectively.

In year 2003, the Company began using the services of a company owned by
shareholders, one being a director of the Company, that provides the
Company with the equipment and master control services to put the Company's
programming on the satellite for the broadcast affiliates to receive and
rebroadcast to their local markets. During the periods ended September 30,
2004 and 2003, the total expense paid out for these services was $430,367
and $345,081, respectively.

The Company uses the services of a company owned by shareholders to provide
it with technology services including Internet and affiliate relations.
During the periods ended September 30, 2004 and 2003, the total expense
paid out for these services was $229,062 and $192,691, respectively.

During the period ended September 2003, the Company executed an interest
bearing note with a shareholder. The principal borrowed of $168,765 plus
accrued interest of $29,750 were converted to a non-interest payable to the
shareholder. As discussed below, the shareholder agreed to reduce the
Company payable by $198,515 to apply towards the purchase of common stock
by Wright Entertainment LLC during the period ended September 30, 2004.

Urban Television Network Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2004 and 2003

5. Related Party Transactions - continued

The Company executed an interest bearing note with a shareholder of the
Company during the period ended September 30, 2004 to pay operating
expenses. During the period ended September 30, 2004 the amounts loaned
totaled $400,000. See Note 6, Disclosure of Terms, Interest Rate and
Conversion Privileges.

On October 30, 2003, the Company completed a stock subscription agreement
with Wright Entertainment, LLC, a Nevada limited liability company, whose
owner and managing director is Lonnie G. Wright, Chairman and Chief
Executive Officer of the Company. Wright Entertainment, LLC entered into
the stock subscription agreement for Fourteen Million (14,000,000) common
shares for Seven Million ($7,000,000) Dollars or Fifty ($0.50) Cents per
share. The stock sale was structured as an installment stock sale.The terms
of the stock sale are as follows: $500,000 down, the $6,500,000 balance
payable on a promissory note at $875,000 Dollars quarterly, including 6%
interest on the declining balance. A portion ($200,000) of the $500,000
down payment was satisfied by one of the Company's lenders forgiving
$198,515 of advances due the lender and $1,485 of accrued interest on a
note payable to the lender. Subsequent to September 30, 2004, this
subscription agreement was terminated by mutual agreement between the
Company and Wright Entertainment LLC - See footnote 13 - Subsequent Events
which describes this event which also included the termination of 4,000,000
shares that has been issued to Wright Entertainment and were to be vested
to Wright Entertainment upon the full payment of the subscription
agreement.

6. Notes Payable

Notes payable at September 30, 2004 and 2003 consist of:

2004 2003
-------- --------
Notes payable to stockholders at 6%
interest payable on September 30, 2004 $ 2,657 $132,200

Note payable to stockholder at 6%
interest payable July 31, 2005 $228,290 --

Note payable to stockholder at 6%
interest payable August 31, 2005 $171,710 --
-------- --------
$402,657 $132,200
-------- --------

The holders of the July and August 2005 notes have a UCC-1 lien against the
Company's assets.

The loans are convertible at any time before the maturity date into the
Company's common stock at the rate of five shares of common stock for each
dollar of loan amount plus accrued interest through the date of conversion.

7. Convertible Bridge Loan

Convertible bridge loans at September 30, 2004 and 2003 consist of:

2004 2003
-------- --------
Convertible bridge loan payable to
individuals at 6% interest payable
on February 14, 2004 $ 0 $ 37,000
-------- --------

The convertible bridge loans are convertible at any time before the
maturity date into the Company's common stock at the rate of two shares of
common stock for each dollar of convertible bridge loan plus accrued
interest through the date of conversion. See Note 9 for amounts advanced on
convertible bridge loans and amounts converted to common stock during the
year ended September 30, 2004.

Urban Television Network Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2004 and 2003

8. Income Tax

The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes". This
standard requires, among other things, recognition of future tax
consequences, measured by enacted tax rates attributable to taxable and
deductible temporary differences between financial statement and income tax
bases of assets and liabilities. Valuation allowances are established, when
necessary, to reduce deferred tax assets to the amount expected to be
realized. Income tax expense is the tax payable for the period and the
change during the period in the deferred tax asset and liability.

Temporary differences between the financial statement carrying amounts and
tax basis of assets and liabilities did not give rise to significant
portions of deferred taxes at September 30, 2004 and 2003.

The (provision) benefit for income tax consist of the following:

2004 2003
------ ------
Current $ 0 $ 0
Deferred 0 0
------ ------
$ 0 $ 0
====== ======

The Company's utilization of any tax loss carryforward available to it will
be significantly limited under Internal Revenue Code Section 382, if not
totally, by recent stock issuances and changes in control. The Company has
established a 100% valuation allowance until such time as it is decided
that any tax loss carryforwards might be available to it. The Company
accounts for income taxes pursuant to the Statement of Financial Accounting
Standards No.109. The Company has no current or Deferred income tax
component. For teh year ended September 30, 2004, the Valuation Allowance
increased by approximately $1,100,000.

9. Capital Stock

In May 2002, the Company issued 16,000,000 (800,000 after the 1 for 20
reverse) shares to Urban Television Network Corporation, a Texas
corporation for asset purchase of network assets -See footnote 1.

In September 2002, the Company issued 100,000 (5,000 after the 1 for 20
reverse) shares to Hispanic Television Network, Inc. as part of the mutual
settlement agreement between the two companies to cancel the Satellite
Transponder Service Agreement and notes payable/receivable.

On November 21, 2002 the Company completed a 1:20 reverse stock split and
Amended its Articles of Incorporation to increase its authorized common
shares to 200,000,000 and adjust its par value to $0.0001 per share.

In December 2002, the Company issued 300,000 shares of its common stock for
consulting and legal services, which the Company valued at $82,500.

On February 7, 2003, the Company entered into an Exchange Agreement with
the majority shareholders of Urban Television Network Corporation, a Texas
corporation (Urban-Texas). The Company acquired 90% of the issued and
outstanding capital stock of Urban-Texas in return for 13,248,000 shares of
the Company's common stock - See footnote 1.

Urban Television Network Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2004 and 2003

9. Capital Stock - continued

In May 2003, the Company issued 5,075,000 shares of its common stock for
consulting services, which the Company had approved in February of 2003 and
valued at $253,750.

In June 2003, the Company issued 1,900,000 of its common stock for employee
compensation, consulting services and legal services, which the Company
valued at $475,000 under the Plan.

During the period ended September 30, 2003, the Company issued 1,957,300
Shares of its common stock to Bridge Loan Lenders who elected to convert
$978,650 of bridge loans to common stock at the rate of 2 shares for each
dollar of bridge loan converted.

The accompanying financial statements have been restated to reflect the
reverse of 1 for 20 stock split.

In October 2003, the Company issued 100,000 shares of its common stock for
services rendered, which the Company valued at $60,000.

In October 2003, the Company issued 100,000 shares of its common stock to
management for services, which the Company valued at $25,000.00.

In October 2003, the Company issued 120,000 shares of its common stock as
part of the purchase of videoing and production equipment. The shares were
valued at $30,000 in the purchase.

In April 2004, the Company issued 8,300,000 shares of its common stock to
management, directors and advisory board members for management services,
which the Company valued at $2,075,000.

In April 2004, the Company issued 7,167,000 shares of its common stock for
legal services, strategic planning services, financial planning services
and technology consulting services, which the Company valued at $1,791,750.

In April 2004, the Company issued 15,000 shares of its common stock in lieu
Payments due on a television station lease agreement, which the Company
valued at $19,500.

In July 2004, the Company issued 1,000,000 shares of its common stock to
Directors, which the Company valued at $100,000.

In August 2004, the Company issued 2,900,000 shares of its common stock to
Employees, directors and advisory board members for management services,
which the Company valued at $290,000.

Urban Television Network Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2004 and 2003

9. Capital Stock - continued

In August 2004, the Company issued 100,000 shares of its common stock in
lieu Payments due on a television station lease agreement, which the
Company valued at $9,000.

In September 2004, the Company issued 1,506,000 shares of its common stock
for services rendered, which the Company valued at $301,200.

During the period ended September 30, 2004, the Company issued 4,135,441
shares of its common stock to Bridge Loan Lenders who elected to convert
$1,852,648 of bridge loans to common stock at an average conversion price
of $.447 per share.

Non-Qualified Stock Grant and Option Plan

The Company is authorized to issue up to 6,800,000 shares of common stock
under its 2003 Non-Qualified Stock Grant and Option Plan (the "Plan")
through an S-8 registration, as amended. This Plan is intended to serve as
an incentive to and to encourage stock ownership by certain directors,
officers, employees of and certain persons rendering service to the
Company, so that they may acquire or increase their proprietary interest in
the success of the Company, and to encourage them to remain in the
Company's service. During the period ended September 30, 2003, the Company
had distributed 1,900,000 of the shares through grants. During the period
ended September 30, 2004, the Company had distributed 1,606,000 of the
shares through grants.

10. Preferred Stock

The Articles of Incorporation of the Company authorize issuance of a
maximum of 500,000 shares of nonvoting preferred stock with a par value of
$1.00 per share. The Articles of Incorporation grant the Board of Directors
of the Company authority to determine the designations, preferences, and
relative participating, optional or other special rights of any preferred
stock issued.

No preferred shares had been issued as of September 30, 2004 and 2003.

11. Commitments and Contingencies

Satellite Transponder Lease

The Company entered into a Satellite space segment service agreement with
Loral Skynet (now Intelsat, Inc.) on November 20, 2002 for 6 MHz of
satellite Bandwidth on Telstar 5 (now Intelsat 5) for a period of three
year ending on November 21, 2005. For the periods ended September 30, 2004
and 2003, the amounts expensed were $216,516 and $201,887, respectively.

Future lease payments due during the term of the lease ending on November
21, 2005 will equal $252,602 and be due as follows:

Year ended September 30, 2005 $216,516
Year ended September 30, 2006 $ 36,086

Signal Uplink Lease

The Company entered into a Full Time Broadcast Agreement with Verestar,
Inc. on November 21, 2002 for a full time redundant 6 MHz digital C-band
uplink service for a period of three years ending on November 21, 2005. For
periods ended September 30, 2004 and 2003 the amounts expensed for Uplink
services were $96,000 and $110,843, respectively.

Urban Television Network Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2004 and 2003

11. Commitments and Contingencies - continued

Future lease payments due during the term of the lease ending on November
21, 2005 will equal $112,000 and be due as follows:

Year ended September 30, 2005 $96,000
Year ended September 30, 2006 $16,000

Station Lease

The Company entered into a station programming agreement for Channel 19 in
Oklahoma City beginning October 1, 2003 for a period of five years. For the
Period ended September 30, 2004 the amount expensed was $55,000.

Future lease payments due during the term of the lease ending September 30,
2008 will equal $331,200 and be due as follows:

Year ended September 30, 2005 $72,000
Year ended September 30, 2006 $79,200
Year ended September 30, 2007 $86,400
Year ended September 30, 2008 $93,600

Facilities Space Lease

The Company entered into a lease for office space on March 15, 2002 for a
period of three years ending on March 31, 2005. The Company entered into a
lease for office and uplink space on March 1, 2004 for a period of one year
ending on February 28, 2005 a the rate of $2,330 per month. For periods
ended September 30, 2004 and 2003, the amount expensed for office space
lease was $20,000 and $14,000.

Employment Agreements

Mr. Randy Moseley is employed pursuant to a five-year employment agreement
that commenced on October 2, 2002. The agreement provides for a base annual
salary equal to $200,000 and a possible annual cash bonus as determined by
the Board of Directors and/or the Compensation Committee. In October 2003,
the employment agreement of Mr. Moseley was extended and amended to allow
for the naming of a new President and Chief Executive Officer for the
Company. Mr. Moseley accepted the officer position of Executive Vice
President and Chief Financial Officer and agreed to defer the payment of
his salary for the period from October 2, 2002 to September 30, 2003 with
this deferred year being added to the end of the original employment term
to make the term of the employment agreement now end on September 30, 2008.
During the period ended September 30, 2004, $150,000 of Mr. Moseley's
annual compensation was accrued as a payable.

Mr. Stanley Woods is employed pursuant to a three-year employment agreement
that commenced on October 2, 2002. The agreement provides for a base annual
salary equal to $50,000 and a possible annual cash bonus as determined by
the Board of Directors and/or the Compensation Committee. Mr. Woods was
issued 200,000 shares of common stock in 2003 in lieu of his annual salary
for the period ended September 30, 2003.

Legal Matters

In June of 2004, the Company was granted a motion for default judgment and
entry of permanent injunction against a former independent contractor and
his companies. The default judgment is for $1,575,850 and the permanent
injunction is against the defendants, their officers, agents, employees,

Urban Television Network Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2004 and 2003

11. Commitments and Contingencies - continued

and all persons acting in concert with them. The defendants were further
enjoined from contacting the directors, officers, agents, consultants,
servants, and employees of the Company. The Company has made the decision
not to record the default judgment as an asset until at such time as it is
confident that asset value can be recovered from the defendants.

In August of 2004, the Company settled a lawsuit brought by Three F
Productions, Inc. vs. Pacific Family Entertainment LLC, et al. which
included the Company as a defendant as the result of the Company airing a
program that Pacific Family Entertainment had represented as having the
copyright and rights to air. The settlement amount for the Company was
$50,000 to be paid at the rate of $5,000 per month beginning September 1,
2004.

12. Going Concern

The Company has suffered recurring losses from operations and has a deficit
in both working capital and stockolders' equity. In order for the Company
to sustain operations and execute its television broadcast and programming
business plan , capital will need to be raised to support operations as the
company executes its business plan. These conditions raise substantial
doubt about the Company's ability to continue as a going concern.

The Company may raise additional capital through operating cash flows, the
sale of its equity securities, or debt securities. Subsequent to year end
the Company has raised additional capital of approximately $450,000 from
bridge loans, that were subsequently converted to common stock.

13. Subsequent Events

On December 13, 2004, we entered into a definitive agreement with World One
Media Group, Inc., a Nevada corporation. The definitive agreement called
for World One to purchase 70,000,000 restricted common shares for
$7,000,000. The subscription agreement signed on December 23, 2004 set the
terms of the installment purchase at $100,000 being paid on December 23,
2004 and with a promissory note bearing no interest being executed for the
remaining $6,900,000 and being paid at the rate of $150,000 every 45 days
beginning on January 31, 2005 until promissory note has been paid in full.
All the shares are pledged as collateral for the promissory note and will
be physically held by the Company. Additionally, World One will be issued
warrants for 80,000,000 shares of common stock that can be exercised for
$.01 per share at any time after the Company's stock price has maintained a
$10 bid price for 20 consecutive trading days. The total warrants
exercisable will be subject the available authorized and unissued shares of
the Company at the time of exercise.

As part of the definitive agreement, Wright Entertainment LLC which had
previously entered into a stock subscription agreement for 14,000,000
shares agreed to the termination and cancellation of that agreement by the
Company and further agreed to the termination and cancellation of 4,000,000
shares that had been issued in Wright Entertainment LLC's name and were to
be vested when Wright Entertainment LLC completed the payment for its
subscription agreement. The definitive agreement calls for the Company to
pay Wright Entertainment LLC, owned by Lonnie G. Wright, $300,000 ($60,000
at the signing and $15,000 per month for sixteen months beginning January
15, 2005) and issue Wright Entertainment LLC 1,000,000 shares of the
Company's restricted common stock.

In summary, World One Media Group, Inc.'s acquisition of 70,000,000 Million
restricted common shares and the cancellation of 18,000,000 common shares
in the name of Wright Entertainment LLC leaves World One Media Group, Inc.
owning approximately 57% of the Company's 127,063,384 outstanding shares.

The 127,063,384 shares outstanding referred to in the previous paragraph
were arrived at by taking the 67,135,177 shares outstanding at September
30, 2004 and subtracting the 18,000,000 shares of Wright Entertainment LLC
that were cancelled, and adding the 70,000,000 shares issued to World One
Media Group, Inc., 5,058,207 shares issued for bridge loan conversions,
1,000,000 shares issued to Lonnie G. Wright as set forth in the definitive
agreement, 1,770,000 shares issued to management and consultants for
services, and 100,000 shares issued in lieu of lease obligations on the
Oklahoma station operated by the Company.

Urban Television Network Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2004 and 2003

13. Subsequent Events - continued

The shares issued above were issued in a private transaction pursuant to
Section 4(1) and 4(2) of the Securities Act of 1933, as amended. These
shares are considered restricted securities and may not be publicly resold
unless registered for resale with appropriate governmental agencies or
unless exempt from any applicable registration requirements.

On December 14, 2004, we accepted the resignation of Lonnie G. Wright as
Chief Executive Officer and member of our Board of Directors, to be
effective on December 14, 2004. Mr. Wright's resignation was not the result
of any disagreement between us and him. Rather, Mr. Wright voluntarily
resigned in conjunction with the Company's entering into a definitive
agreement with World One Media Group, Inc. to purchase of controlling
interest in the Company.

On December 28, 2004, the Company's Board of Directors elected Ajibike
Olukunle Akinkoye as a member of the Board of Directors and Chief Executive
Officer of the Company.