AMERICAN CHAMPION ENTERTAINMENT INC, S-8, 2000-02-08

AMERICAN CHAMPION ENTERTAINMENT INC
S-8, 2000-02-08
MOTION PICTURE & VIDEO TAPE PRODUCTION

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As filed with the Securities and Exchange Commission on February 8, 2000
Registration No. 333-_____
- -----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
-------------------------------------
AMERICAN CHAMPION ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)

Delaware 94-3261987
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)

1694 The Alameda, Suite 100
San Jose, California 95126
(Address of principal executive offices) (Zip Code)
(408) 288-8199
---------------------------------------------
2000 STOCK INCENTIVE PLAN
---------------------------------------------
Anthony K. Chan
Chief Executive Officer
1694 The Alameda, Suite 100
San Jose, California 95126
(Name and address of agent for service)
(408) 288-8199
(Telephone number, including area code, of agent for service)

CALCULATION OF REGISTRATION FEE
-----------------------------------------------------------------------
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered(1) Per Share(2) Price(2) Fee
- ---------- ----------- ------------ ---------- -----------
Common Stock 1,500,000 $3.8125 $5,718,750.00 $1,509.75
$0.0001 par value shares
- -----------------------------------------------------------------------

(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the 2000 Stock Incentive Plan, by
reason of any stock dividend, stock split, recapitalization or other similar
transaction effected without the receipt of consideration which results in an
increase in the number of the outstanding shares of Common Stock of American
Champion Entertainment, Inc.

(2) Calculated solely for purposes of this offering under Rule 457(h) of
the Securities Act of 1933, as amended, on the basis of the average of the
high and low selling prices per share of Common Stock of American Champion
Entertainment, Inc. on February 2, 2000 as reported on the Nasdaq SmallCap
Market.

EXPLANATORY NOTE

The Prospectus filed as part of this Registration Statement has been
prepared in accordance with the requirements of Form S-3 and may be used for
reofferings and resales of registered shares of common stock which have been
issued upon the grants of common stock to employees, non-employee directors
and consultants of American Champion Entertainment, Inc.

PROSPECTUS

AMERICAN CHAMPION ENTERTAINMENT, INC.

1,500,000 SHARES OF COMMON STOCK

issued pursuant to the

AMERICAN CHAMPION ENTERTAINMENT, INC.
2000 STOCK INCENTIVE PLAN

This prospectus relates to the sale of up to 1,500,000 shares of common stock
of American Champion Entertainment, Inc. offered by certain holders of
American Champion securities. The shares may be offered by the selling
stockholders from time to time in regular brokerage transactions in
transactions directly with market makers or in certain privately negotiated
transactions. For additional information on the methods of sale, you should
refer to the section entitled "Plan of Distribution." We will not receive any
of the proceeds from the sale of the shares by the selling stockholders.

Each of the selling stockholders may be deemed to be an "underwriter,"
as such term is defined in the Securities Act of 1933.

On July 31, 1997, the common stock and our redeemable common stock purchase
warrants began trading on the Nasdaq SmallCap Market under the symbols "ACEI"
and "ACEIW," respectively. On February 3, 2000 the closing sale price of the
common stock and the common stock purchase warrants on Nasdaq SmallCap Market
was $3.9375 and $0.2500, respectively. See "Certain Market Information."

The securities offered hereby are speculative and involve a high degree of
risk and substantial dilution. Only investors who can bear the risk of loss
of their entire investment should invest. See "Risk Factors" beginning on
page 8.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary
is a criminal offense.

The date of this prospectus is February 8, 2000.

TABLE OF CONTENTS

Page

Company 5
Risk Factors 5
Material Changes 9
Incorporation of Certain Documents by Reference 9
Available Information 10
Use of Proceeds 10
Certain Market Information 11
Dividend Policy 11
Issuance of Common Stock to Selling Stockholders 11
Selling Stockholders 12
Plan of Distribution 13
Legal Matters 13
Experts 13

COMPANY

American Champion Entertainment, Inc. is a holding company, for our
wholly-owned subsidiary, America's Best Karate and its wholly-owned
subsidiary, American Champion Media, Inc. and its wholly-owned subsidiary
American Champion Marketing Group, Inc.

America's Best Karate owned, managed and operated one karate studio in the San
Francisco Bay Area under the name "ABK," until January 31, 2000, that provides
karate instruction to students of all ages and skill levels. The karate
studio was closed when the lease for the premise expired on January 31, 2000.
American Champion Media is a media production and marketing company. Through
American Champion Media and American Champion Marketing Group, American
Champion:

* develops, produces and markets "Adventures with Kanga Roddy," a television
program for pre-school and primary school children (the "Kanga Roddy
Series"); and

* licenses merchandising rights related to the Kanga Roddy Series and other
intellectual properties through acquisitions.

* develops, produces and markets various audio tapes, video tapes and
workbooks that specialize in fitness information.

American Champion was incorporated on February 5, 1997 under the laws of
Delaware. American Champion's executive offices are located at 1694 the
Alameda, Suite 100, San Jose, California 95126, and its telephone number is
(408) 288-8199.

RISK FACTORS

You should carefully consider the risks described below before making an
investment decision. The risks and uncertainties described below are not the
only ones facing American Champion. Additional risks and uncertainties not
presently known to us or that we currently deem immaterial may also impair our
business operations. The actual occurrence of the following risks could
adversely affect our business. In such case, the trading price of our common
stock could decline, and you may lose all or part of your investment.

This prospectus also contains forward-looking statements that involve risks
and uncertainties. Our actual results could differ materially from those
anticipated in the forward-looking statements as a result of certain factors,
including the risks described below and elsewhere in this prospectus.

We have a history of losses and expect to incur future losses. We sustained
operating losses of $801,416 in the year ended December 31, 1997, $1,923,516
in the year ended December 31, 1998 and $3,403,222 in the nine months ended
September 30, 1999. We expect to incur significant additional operating
losses for the foreseeable future as we continue to develop, produce and
market our media projects, including the Kanga Roddy Series. The development
and production costs (exclusive of marketing costs) for the remaining 12
episodes of the Kanga Roddy Series we are obligated to deliver is estimated to
be $2.6 million.

If we are unable to obtain financing, we will be unable to continue with
future production of the Kanga Roddy Series. Our development and production
of the Kanga Roddy Series requires substantial amounts of capital. We have
entered into a distribution agreement and a continuing distribution agreement
with KTEH, the public broadcasting station serving the San Jose, California
area, which obligate us to deliver a total of 41 episodes of the Kanga Roddy
Series. To date, we have completed 29 episodes of the Kanga Roddy Series.
Based on production of 29 episodes completed to date, we now estimate that the
average cost of developing and producing each episode of the Kanga Roddy
Series is $220,000 and that it will require an additional $2.6 million of
additional financing to complete the remaining 12 episodes of the Kanga Roddy
Series. On September 24, 1999 and January 5, 2000, we sold 7% convertible
debentures in the principal amounts of $1,000,000 and $1,250,000 respectively.

We are dependent on the success of the Kanga Roddy Series, and we cannot be
certain that the initial television viewership of the Kanga Roddy Series will
be maintained. We are dependent on the success of the Kanga Roddy Series,
which in turn is dependent upon unpredictable and volatile factors beyond our
control, such as children's preferences. The Kanga Roddy Series is currently
shown on public television stations which reach approximately 40 million
households. Although the Kanga Roddy Series has received positive acclaim and
positive Nielsen ratings on its estimated audience, the show must attract a
significant television audience over a long period of time before we realize
significant revenue and profitability. We cannot be certain that the initial
television viewership of the Kanga Roddy Series will be maintained.
Furthermore, to attract a significant television audience for the Kanga Roddy
Series over a long period of time, we need to complete additional episodes of
the Kanga Roddy Series.

If we are unable to attract a significant television audience for the Kanga
Roddy Series, it is doubtful that any significant licensing or merchandising
opportunities will arise. Our strategy in producing the Kanga Roddy Series
includes the licensing of its characters to others for the merchandising of a
variety of products ranging from toys to apparel. Our ability to successfully
exploit the merchandising opportunities afforded by the Kanga Roddy Series is
dependent on the popularity of the Kanga Roddy Series and the ability of our
characters to provide attractive merchandising features to its customers. If
we are unable to attract a significant television audience for the Kanga
Roddy Series, it is doubtful that any significant licensing or merchandising
opportunities will arise. Even if the Kanga Roddy Series is popular with
television audiences, we cannot be certain that licensing opportunities will
materialize as we must compete with hundreds of owners of creative content who
seek to license their characters and properties to a limited number of
manufacturers and distributors.

Our lack of significant experience with television programming or licensing
and merchandising could adversely affect our business. Prior to American
Champion's involvement with the Kanga Roddy Series, our business was primarily
the operation of its karate studios and the production of fitness video tapes
and we had no experience with the development and production of television
programming or with the licensing and merchandising of products. To date, we
have completed 29 half-hour episodes. However, the television and licensing
and merchandising businesses are complicated and the absence of experience in
such businesses could adversely affect our business.

The loss of the services of any of the following individuals, or of other key
personnel, could adversely affect our business. We are dependent on the
efforts and abilities of Anthony Chan and George Chung, our founders and
principal executive officers, and Jan D. Hutchins, President of American
Champion Media. We have entered into employment agreements, effective as of
August 5, 1997, with such individuals. We are also dependent on the efforts
and abilities of Joy Tashjian, President and CEO of American Champion
Marketing Group, a newly formed and wholly owned subsidiary; with whom we have
entered into an employment agreement effective on June 3, 1999. None of such
employment agreements contains non-competition provisions. See "Management--
Employment Agreements" of American Champion's Post-Effective Amendment No. 1
to its Form SB-2 Registration Statement. The loss of the services of any of
the above individuals, or of other key personnel, could adversely affect our
business. We have obtained "key-man" life insurance with $1,000,000 coverage
for each of Messrs. Chung and Chan.

The failure of Joe Montana, Ronnie Lott, or their wives, or the San Francisco
49ers, to continue to actively support the Kanga Roddy Series could have an
adverse impact on our ability to market the Kanga Roddy Series. The success
of the Kanga Roddy Series depends in part on American Champion's continued
association with former 49ers Joe Montana and Ronnie Lott, and their wives,
and the San Francisco 49ers. Messrs. Montana and Lott have endorsed the Kanga
Roddy Series in news and television interviews and their wives are principal
actors in the Kanga Roddy Series. The failure of Joe Montana, Ronnie Lott, or
their wives, or the San Francisco 49ers, to continue to actively support the
Kanga Roddy Series could have an adverse impact on our ability to market the
Kanga Roddy Series. None of Joe Montana, Ronnie Lott, or their wives, or the
San Francisco 49ers are obligated to engage in any business transactions or
jointly participate in any opportunities with American Champion, and the
possibility exists that the current relationships between the parties could
materially change in the future.

Each of the industries in which we compete is highly competitive and most of
the companies with which we compete have greater financial and other resources
than us. With respect to our television production activities, we compete on
the basis of relationships and pricing for access to a limited supply of
facilities and talented creative personnel to produce its programs. Our
Kanga Roddy Series competes for time slots, ratings and related advertising
revenues and for the licensing and merchandising of products related to the
Kanga Roddy Series. Our fitness products compete with many other products
aimed at the fitness and weight loss markets, including other video tapes,
audio tapes and workbooks, and various types of exercise machinery. Many of
these competing products are sponsored or endorsed by celebrities and sports
figures, and are marketed by companies having significantly greater resources
than ours. The martial arts industry is also highly competitive. American
Champion's competitors include a variety of small to medium sized martial
arts instructional centers, many of which may be better established and
better financed than ours.

We may have to return America's Best Karate membership fees pursuant to the
terms of our standard contract with our students. Pursuant to the terms of its
standard contract with its students, ABK is required to refund:

(1) all funds received if a student cancels within three (3) days of signing a
membership contract,

(2) all "unearned" funds received in the event the student dies, becomes
permanently disabled, moves more than twenty-five (25) miles away from ABK or
ABK closes for more than thirty (30) consecutive days, and

(3) the outstanding amount of fees set forth in (1) and (2) above prior and
up to the time of sale of our ABK studios.

We do not currently maintain nor does it anticipate maintaining a reserve
account for return of membership fees. As a consequence, we may be unable to
refund membership fees which could adversely affect on our business and
prospects.

Messrs. Chan and Chung are in a position to strongly influence the election of
directors as well as affairs of American Champion. As of the date of this
prospectus, Anthony Chan and George Chung, American Champion's founders and
principal executive officers, collectively beneficially own 752,970 shares of
American Champion's outstanding common stock, representing approximately
12.78% of the outstanding shares prior to this offering and approximately
11.14% of the outstanding shares of common stock after this offering (assuming
no exercise of any outstanding options or any warrants). Since holders of
common stock do not have any cumulative voting rights and directors are
elected by a majority vote, Messrs. Chan and Chung are in a position to
strongly influence the election of directors as well as the affairs of
American Champion.

We have purchased liability insurance for our karate studios. In the event of
a claim brought by students or instructors injured during karate classes, we
have purchased liability insurance for each of our karate studios in the
amount of $1,000,000 per occurrence and $2,000,000 in the aggregate which we
believe is sufficient for current level of business operations. We cannot be
certain, however, that the present coverage will continue to be available in
the future or that we will be able to retain such coverage at a reasonable
cost. Further, we cannot be certain that such insurance will be sufficient to
cover potential claims, or that adequate, affordable insurance coverage will
be available to us in the future as we expand our operations. A successful
claim against us in excess of the liability limits or relating to an injury
excluded under the policy could adversely affect us.

If we do not continue to fulfill Nasdaq maintenance requirements, our
securities may be delisted from Nasdaq market. American Champion's common
stock is listed on Nasdaq SmallCap Market. The Securities and Exchange
Commission has approved rules imposing criteria for listing of securities on
Nasdaq SmallCap Market, including standards for maintenance of such listing.
For continued listing, a company, among other things, must have $2,000,000 in
net tangible assets, $1,000,000 in market value of securities in the public
float and a minimum bid price of $1.00 per share. We currently have
approximately $5,100,000 in net tangible assets and approximately $20,000,000
in market value of securities in the public float, with a bid price of $3.9375
per share. If we are unable to satisfy Nasdaq SmallCap Market's maintenance
criteria in the future, our securities may be delisted from Nasdaq SmallCap
Market. In such event, trading, if any, in our securities would thereafter be
conducted in the over counter market in the so called "pink sheets" or the
NASD's "Electronic Bulletin Board." As a consequence of such delisting, an
investor would likely find it more difficult to dispose of, or to obtain
quotations as to, the price of our securities. Our share price has been under
$1.00 per share continuously since August 9, 1999, and we reverse split our
common stock at the rate of 1 for 4 effective on January 4, 2000.

If we are unable to satisfy the maintenance requirements for Nasdaq SmallCap
Market and our common stock continues to trade below the minimum bid price of
$1.00 per share, trading would be conducted on the "pink sheets" or the
NASD's Electronic Bulletin Board. If the common stock is not quoted on Nasdaq
SmallCap Market, or we do not have $2,000,000 in stockholders' equity,
trading in the common stock would be covered by Rule-15g 9 promulgated under
the Securities Exchange Act of 1934 for non-Nasdaq SmallCap Market and
non-exchange listed securities. Under such rule, broker dealers who recommend
such securities to persons other than established customers and accredited
investors must make a special written suitability determination for the
purchaser and receive the purchaser's written agreement to a transaction
prior to sale. Securities are exempt from this rule if the market price is at
least $5.00 per share.

The Commission adopted regulations that generally define a penny stock to be
any equity security that has a market price of less than $5.00 per share,
subject to certain exceptions. Such exceptions include an equity security
listed on Nasdaq SmallCap Market, and an equity security issued by an issuer
that has:

(1) net tangible assets of at least $2,000,000, if such issuer has been in
continuous operation for three years,

(2) net tangible assets of at least $5,000,000, if such issuer has been in
continuous operation for less than three years, or

(3) average revenue of at least $6,000,000 for the preceding three years.

Unless an exception is available, the regulations require the delivery, prior
to any transaction involving a penny stock, of a disclosure schedule
explaining the penny stock market and the risks associated therewith.

If American Champion's securities were to become subject to the regulations
applicable to penny stocks, the market liquidity for its securities would be
severely affected, limiting the ability of broker dealers to sell the
securities and the ability of purchasers of the securities offered hereby to
sell their securities in the secondary market. There is no assurance that
trading in American Champion's securities will not be subject to these or
other regulations that would adversely affect the market for such securities.

This prospectus contains forward looking statements and their associated
risks. This prospectus contains certain forward-looking statements, including
among others:

(1) anticipated trends in our financial condition and results of operations;
and

(2) our business strategy for developing, producing, distributing, licensing
and merchandising the Kanga Roddy Series.

These forward-looking statements are based largely on our current expectations
and are subject to a number of risks and uncertainties. Actual results could
differ materially from these forward-looking statements. In addition to the
other risks described elsewhere in this "Risk Factors" discussion, important
factors to consider in evaluating such forward-looking statements include:

(1) changes in external competitive market factors or in American Champion's
internal budgeting process which might impact trends in our results of
operations;

(2) unanticipated working capital or other cash requirements;

(3) changes in our business strategy or an inability to execute our strategy
due to unanticipated change in the industries in which we operate; and

(4) various competitive factors that may prevent us from competing
successfully in the marketplace.

In light of these risks and uncertainties, many of which are described in
greater detail elsewhere in this "Risk Factors" discussion, we cannot be
certain that the events predicted in forward-looking statements contained in
this prospectus will in fact occur.

MATERIAL CHANGES

Between May 19, 1999 and June 7, 1999, American Champion issued to its
management an aggregate of 0.93 million options (adjusted for 1:4 reverse
split on January 4, 2000) pursuant to its 1997 Stock Plan and the Non-Employee
Directors Stock Option Plan. Of such options, 0.84 million were issued to the
officers and directors of American Champion as a group. On January 10, 2000,
American Champion issued 0.63 million share of common stock pursuant to its
2000 Stock Incentive Plan, to its officers and directors of American Champion
as a group. The following table sets forth the options and common stock
issued to certain of American Champion's directors and officers (adjusted for
1:4 reverse split on January 4, 2000):

Name Position Number of Options Date of Grant

George Chung Chairman of the Board 25,000 May 19, 1999
250,000 June 7, 1999

Anthony K. Chan President & CEO 25,000 May 19, 1999
250,000 June 7, 1999

Name Position Number of Options Date of Grant

George Chung Chairman of the Board 250,000 January 10, 2000

Anthony K. Chan President & CEO 250,000 January 10, 2000

INFORMATION INCORPORATION BY REFERENCE

The Securities and Exchange Commission (the "Commission") allows us to
"incorporate by reference" certain of our publicly-filed documents into this
prospectus, which means that information is considered part of this
prospectus. Information that we file with the Commission subsequent to the
date of this prospectus will automatically update and supersede this
information. We incorporate by reference the documents listed below and any
future filings made with the Commission under all documents subsequently filed
by us pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934 until the selling stockholders have sold all the shares.

The following documents filed with the Commission are incorporated
herein by reference:

1. American Champion's Registration Statement on Form SB-2 for its initial
public offering that became effective on July 30, 1997; and

2. The description of American Champion's common stock contained in American
Champion's Registration Statement on Form SB-2; and

3. Post-Effective Amendment No. 1 to American Champion's Registration
Statement on Form SB-2, as filed with the Commission on July 2, 1998 and
declared effective on July 17, 1998; and

4. American Champion's Proxy Statement for the 1999 Annual Meeting of
Stockholders held on May 5, 1999; and

5. American Champion's Annual Report on Form 10-KSB and it's amendment filed
on November 15, 1999 for its fiscal year ended December 31, 1998; and

6. American Champion's Quarterly Report on Form 10-QSB, as filed with the
Commission on May 17, 1999, as amended on November 15, 1999, which is hereby
incorporated by reference.

7. American Champion's Quarterly Report on Form 10-QSB, as filed with the
Commission on August 17, 1999, as amended on November 15, 1999, which is
hereby incorporated by reference.

8. American Champion's Quarterly Report on Form 10-QSB for the quarter period
ended September 30, 1999; and

9. American Champion's Definitive Proxy Statement for a Special Meeting of
Stockholders to be held on December 10, 1999.

The Company will provide without charge to each person to whom a copy of this
prospectus has been delivered, on written or oral request a copy of any or all
of the documents incorporated by reference in this prospectus, other than
exhibits to such documents. Written or oral requests for such copies should
be directed to Anthony K. Chan, American Champion Entertainment, Inc., 1694
The Alameda, Suite 100, San Jose, California 95126-2219 (telephone: (408)
288-8199).

ADDITIONAL INFORMATION AVAILABLE TO YOU

This prospectus is part of a Registration Statement on Form S-8 that we filed
with the Commission. Certain information in the Registration Statement has
been omitted from this prospectus in accordance with the rules of the
Commission. We file the annual, quarterly and special reports, proxy
statements and other information with the Commission. You can inspect and
copy the Registration Statement as well as reports, proxy statements and other
information we have filed with the Commission at the public reference room
maintained by the Commission at 450 Fifth Street, NW, Washington, D.C. 20549,
and at the following Regional Offices of the Commission: Seven World Trade
Center, New York, New York 10048, and Northwest Atrium Center, 500 West
Madison Street, Chicago, Illinois 60661. You can obtain copies from the
public reference room of the Commission at 450 Fifth Street, NW, Washington,
D.C. 20549, upon payment of certain fees. You can call the Commission at
1-800-732-0330 for further information about the public reference room. We
are also required to file electronic versions of these documents with the
Commission, which may be accessed through the Commission's World Wide Web site
at http://www.sec.gov. Our common stock is quoted on The Nasdaq National
Market Reports, proxy and information statements and other information
concerning American Champion may be inspected at The Nasdaq Stock Market at
1735 K Street, NW, Washington, D.C. 20006.

USE OF PROCEEDS

We will not receive any of the proceeds from the sale of the shares offered
hereunder by the selling stockholders. The offering is made to fulfill our
contractual obligations to the selling stockholders to register the common
stock held by or which are issuable to the selling stockholders.

CERTAIN MARKET INFORMATION

American Champion's common stock commenced trading on the Nasdaq SmallCap
Market under the symbol "ACEI" on August 1, 1997. The range of high and low
reported closing sales prices for the common stock as reported by Nasdaq
SmallCap Market since the commencement of trading were as follows:

High Low High Low
(adjusted for 1:4 reverse split on
January 4, 2000)

1997

Third Quarter $5.500 $4.125 $22.00 $16.50

Fourth Quarter $8.000 $4.813 $32.00 $19.25

1998

First Quarter $9.625 $7.750 $38.50 $31.00

Second Quarter $9.563 $6.563 $38.25 $26.25

Third Quarter $7.000 $3.500 $28.00 $14.00

Fourth Quarter $3.625 $0.969 $14.50 $3.88

1999

First Quarter $3.000 $1.063 $12.00 $4.25

Second Quarter $2.438 $0.781 $9.75 $3.12

Third Quarter $1.656 $0.516 $6.62 $2.06

Fourth Quarter $1.406 $0.313 $5.62 $1.25

The prices set forth above reflect inter dealer prices, without retail
mark-up, mark-down or commission and may not necessarily represent actual
transactions.

DIVIDEND POLICY

We intend to retain future earnings, if any, that may be generated from our
operations to finance the operations and expansion of American Champion. We
do not plan to pay dividends to holders of the common stock for the reasonably
foreseeable future. Any decision as to the future payment of dividends will
depend on the results of our operations and financial position and such other
factors as our Board of Directors, in its discretion, deems relevant.

ISSUANCE OF COMMON STOCK TO SELLING STOCKHOLDERS

The shares covered by this prospectus include:

Up to 1,500,000 shares of common stock that have been issued or are issuable,
to employees, non-employee directors and consultants of American Champion.

SELLING STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the common stock as of January 10, 2000 by each of the selling
stockholders, of shares of common stock granted to each of them pursuant to
the 2000 Stock Incentive Plan. Unless otherwise indicated below, to the
knowledge of American Champion, all persons listed below have sole voting and
investment power with respect to the shares of common stock, except to the
extent authority is shared by spouses under applicable law.

The information included below is based upon information provided by the
selling stockholders. Because the selling stockholders may offer all, some or
none of their shares, no definitive estimate as to the number of shares that
will be held by the selling stockholders after the offering can be provided
and the following table has been prepared on the assumption that all shares
offered under this prospectus will be sold.

Common Stock to be
Beneficially Owned
Common Stock Beneficially if All Shares Offered
Owned on January 10, 2000(1) Hereunder Are Sold

Shares That
May be Offered
Name Shares Percent(2) Hereunder Shares Percent
- ---------------------------- ------------ ------------ ----------------- ----------------------

Anthony K. Chan 376,485 6.39% 250,000 126,485 2.15%
George Chung 376,485 6.39% 250,000 126,485 2.15%
Jan D. Hutchins 30,000 * 25,000 5,000 *
Joy Tashjian 25,000 * 25,000 -- --
Mae Lyn Woo 25,000 * 25,000 -- --
William T. Duffy 12,000 * 12,000 -- --
Alan Elkes 12,000 * 12,000 -- --
E. David Gable 23,111 * 12,000 11,111 *
Ronald M. Lott 17,283 * 12,000 5,283 *
Sichenzia, Ross & Friedman, LLP 10,000 * 10,000 -- --

- ------------------------------
* Less than one percent (1%).

</TABLE>

(1) The number and percentage of shares beneficially owned is determined
in accordance with Rule 13d-3 of the Securities Exchange Act of 1934, and the
information is not necessarily indicative of beneficial ownership for any
other purpose. Under such rule, beneficial ownership includes any shares as
to which the selling stockholder has sole or shared voting power or investment
power and also any shares which the selling stockholder has the right to
acquire within 60 days of January 10, 2000.

(2) The percentage interest of each selling stockholder is based on the
number of shares of common stock beneficially owned by such stockholder
divided by the sum of the outstanding shares of common stock as of January
10, 2000. On January 10, 2000, American Champion had 5,892,298 shares
outstanding.

(3) The shares hereunder do not include shares which we anticipate to be
sold under a separate registration statement and prospectus.

PLAN OF DISTRIBUTION

Sales of the shares may be effected by or for the account of the selling
stockholders from time to time in transactions (which may include block
transactions) on the Nasdaq SmallCap Market, in negotiated transactions,
through a combination of such methods of sale, or otherwise, at fixed prices
that may be changed, at market prices prevailing at the time of sale or at
negotiated prices. The selling stockholders may effect such transactions by
selling the shares directly to purchasers, through broker-dealers acting as
agents of the selling stockholders, or to broker-dealers acting as agents for
the selling stockholders, or to broker-dealers who may purchase shares as
principals and thereafter sell the shares from time to time in transactions
(which may include block transactions) on the Nasdaq SmallCap Market, in
negotiated transactions, through a combination of such methods of sale, or
otherwise. In effecting sales, broker-dealers engaged by a selling
stockholder may arrange for other broker-dealers to participate. Such broker-
dealers, if any, may receive compensation in the form of discounts,
concessions or commissions from the selling stockholders and/or the purchasers
of the shares for whom such broker-dealers may act as agents or to whom they
may sell as principals, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions).

The selling stockholders and any broker-dealers or agents that participate
with the selling stockholders in the distribution of the shares may be deemed
to be "underwriters" within the meaning of the Securities Act of 1933. Any
commissions paid or any discounts or concessions allowed to any such persons,
and any profits received on the resale of the shares purchased by them may be
deemed to be underwriting commission or discounts under the Securities Act of
1933.

We have agreed to bear all expenses of registration of the shares other than
legal fees and expenses, if any, of counsel or other advisors of the selling
stockholders. The selling stockholders will bear any commissions, discounts,
concessions or other fees, if any, payable to broker-dealers in connection
with any sale of their shares.

We have agreed to indemnify the selling stockholders, or their transferees or
assignees, against certain liabilities, including liabilities under the
Securities Act of 1933 or to contribute to payments the selling stockholders
or their respective pledgees, donees, transferees or other successors in
interest, may be required to make in respect thereof.

LEGAL MATTERS

The valid issuance of the shares of common stock offered hereby has been
passed upon for American Champion by Sichenzia Ross & Friedman LLP, New York,
New York.

EXPERTS

No dealer, salesperson or other person is authorized to give any information
or to make any representations other than those contained in this prospectus,
and, if given or made, such information or representations must not be relied
upon as having been authorized by American Champion. This prospectus does not
constitute an offer to buy any security other than the securities offered by
this prospectus, or an offer to sell or a solicitation of an offer to buy any
securities by any person in any jurisdiction where such offer or solicitation
is not authorized or is unlawful. Neither delivery of this prospectus nor any
sale hereunder shall, under any circumstances, create any implication that
there has been no change in the affairs of American Champion since the date
hereof.

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

TABLE OF CONTENTS

Page

AMERICAN CHAMPION ENTERTAINMENT, INC.
1,500,000 SHARES OF COMMON STOCK
------------------------
PROSPECTUS
_______________

February 8, 2000

PART I

Item 1. Plan Information.

The documents containing the information specified in Item 1 will
be sent or given to participants in the Registrant's 2000 Stock
Incentive Plan as specified by Rule 428(b)(1) of the Securities Act of
1933, as amended (the "Securities Act"). Such documents are not required
to be and are not filed with the Securities and Exchange Commission (the
"Commission") either as part of this Registration Statement or as
prospectuses or prospectus supplements pursuant to Rule 424. These
documents and the documents incorporated by reference in this
Registration Statement pursuant to Item 3 of Part II of this Form S-8,
taken together, constitute a prospectus that meets the requirements of
Section 10(a) of the Securities Act.

Item 2. Registrant Information and the 2000 Stock Incentive Plan
Annual Information.

Upon written or oral request, any of the documents incorporated by
reference in Item 3 of Part II of this Registration Statement (which
documents are incorporated by reference in this Section 10(a)
Prospectus), other documents required to be delivered to eligible
employees, non-employee directors and consultants, pursuant to Rule
428(b) or additional information about the 2000 Stock Incentive Plan are
available without charge by contacting:

American Champion Entertainment, Inc.
1694 The Alameda, Suite 100
San Jose, California 95126
Attn: Anthony K. Chan
Chief Executive Officer

PART II. INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. Incorporation of Documents by Reference.

The Registrant hereby incorporates by reference into this Registration
Statement the documents listed below. In addition, all documents subsequently
filed pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act"), prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference into this Registration Statement and to
be a part hereof from the date of filing of such documents:

* Reference is made to the Registrant's prospectus relating to its
registration statement on Form S-3 (Registration No. 333-90459), as filed with
the Commission on January 5, 2000, as amended, which is hereby incorporated by
reference.

* Reference is made to the Registrant's annual report on Form 10-KSB, as filed
with the Commission on March 31, 1999, as amended on November 15, 1999, which
is hereby incorporated by reference.

* Reference is made to the Registrant's quarterly report on Form 10-QSB, as
filed with the Commission on May 17, 1999, as amended on November 15, 1999,
which is hereby incorporated by reference.

* Reference is made to the Registrant's quarterly report on Form 10-QSB, as
filed with the Commission on August 17, 1999, as amended on November 15, 1999,
which is hereby incorporated by reference.

* Reference is made to the Registrant's quarterly report on Form 10-QSB, as
filed with the Commission on November 17, 1999, which is hereby incorporated
by reference.

* The description of the Registrant's common stock is incorporated by
reference to the Registrant's registration statement on Form 8-A, as filed
with the Commission on July 14, 1997, as amended.

Item 4. Description of Securities.

Not Applicable.

Item 5. Interests of Named Experts and Counsel.

The balance sheet and financial statements of American Champion Entertainment,
Inc. for the years ended December 31, 1997 and December 31, 1998 have been
incorporated by reference herein and in the registration statement in reliance
upon the reports of Moss Adams LLP, independent certified public accountants,
also incorporated by reference herein, and upon the authority of such firm as
experts in accounting and auditing. The validity of the shares of common stock
offered hereby will be passed upon for the Registrant by Sichenzia, Ross &
Friedman, LLP, 135 West 50th Street, 20th Floor, New York, NY 10020.

Item 6. Indemnification of Directors and Officers.

The Registrant's Certificate of Incorporation limits, to the maximum
extent permitted by Delaware law, the personal liability of directors for
monetary damages for breach of their fiduciary duties as a director. The
Registrant's Bylaws provided that the Registrant shall indemnify its officers
and directors and may indemnify its employees and other agents to the fullest
extent permitted by Delaware law.

Section 145 of the Delaware General Corporation Law provides
that a
corporation may indemnify a director, officer, employee or agent made a
party to an action by reason of that fact that he or she was a director,
officer employee or agent of the corporation or was serving at the
request of the corporation against expenses actually and reasonably
incurred by him or her in connection with such action if he or she acted
in good faith and in a manner he or she reasonably believed to be in, or
not opposed to, the best interests of the corporation and with respect
to any criminal action, had no reasonable cause to believe his or her
conduct was unlawful.

Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons
controlling the Registrant pursuant to the foregoing provisions, the
Registrant has been advised that in the opinion of the Commission, such
indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable.

Item 7. Exemption from Registration Claimed.

Not Applicable.

Item 8. Exhibits.

EXHIBIT
NUMBER EXHIBIT

4.1 2000 Stock Incentive Plan.

4.2 2000 Stock Incentive Plan - Stock Grant Agreement

5.1 Opinion of Sichenzia Ross & Friedman, LLP

23.1 Consent of Moss Adams, LLP.

23.2 Consent of Sichenzia Ross & Friedman, LLP is contained
in Exhibit 5.1.

24.1 Power of Attorney (included in the Signature Page).

Item 9. Undertakings.

(a) The undersigned registrant hereby undertakes:

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

To include any material information with respect to
the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the Registration
Statement;

(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-
effective amendment any of the securities being registered which remain
unsold at the termination of the offering.

(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933,
each filing of the registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the Registration Statement shall be deemed
to be a new Registration Statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.

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

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933,
as amended, the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-8,
and has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in City of San
Jose, State of California, on this 8th day of February, 2000.

AMERICAN CHAMPION ENTERTAINMENT, INC.

By: /s/ Anthony K. Chan

Anthony K. Chan,
Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned officers and directors of American
Champion Entertainment, Inc., a Delaware corporation, do hereby
constitute and appoint Anthony K. Chan the lawful attorney in-fact and
agent with full power and authority to do any and all acts and things
and to execute any and all instruments which said attorney and agent,
determine may be necessary or advisable or required to enable said
corporation to comply with the Securities Act of 1933, as amended, and
any rules or regulations or requirements of the Securities and Exchange
Commission in connection with this Registration Statement. Without
limiting the generality of the foregoing power and authority, the powers
granted include the power and authority to sign the names of the
undersigned officers and directors in the capacities indicated below to
this Registration Statement, and to any and all instruments or documents
filed as part of or in conjunction with this Registration Statement or
amendments or supplements thereof, and each of the undersigned hereby
ratifies and confirms that said attorney and agent, shall do or cause to
be done by virtue thereof. This Power of Attorney may be signed in
several counterparts.

IN WITNESS WHEREOF, each of the undersigned has executed
this Power of Attorney and pursuant to the requirements of the
Securities Act of 1933, as amended, this Registration Statement has been
signed below by the following persons in the capacities on February 8,
2000.

Signature

<TABLE>
<CAPTION>
Signature Capacities
- --------------------------- ------------------------------------
<S> <C>
/s/ ANTHONY K. CHAN President, Chief Executive Officer
- ------------------------- (principal executive officer)
Anthony K. Chan and Director

/s/ ANTHONY K. CHAN Chairman of the Board and Director
- -------------------------
Anthony K. Chan
(attorney-in-fact) for George Chung

/s/ ANTHONY K. CHAN Director
- -------------------------
Anthony K. Chan
(attorney-in-fact) for William T. Duffy

/s/ ANTHONY K. CHAN Director
- -------------------------
Anthony K. Chan
(attorney-in-fact) for Alan Elkes

/s/ ANTHONY K. CHAN Director
- -------------------------
Anthony K. Chan
(attorney-in-fact) for E. David Gable

/s/ ANTHONY K. CHAN Director
- -------------------------
Anthony K. Chan
(attorney-in-fact) for Jan D. Hutchins

/s/ ANTHONY K. CHAN Director
- -------------------------
Anthony K. Chan
(attorney-in-fact) for Ronald M. Lott

/s/ ANTHONY K. CHAN Director
- -------------------------
Anthony K. Chan
(attorney-in-fact) for Joy M. Tashjian

/s/ ANTHONY K. CHAN Vice President and Chief Financial
- ------------------------- Officer (principal financial officer)
Anthony K. Chan
(attorney-in-fact) for Mae Lyn Woo

</TABLE>

<PAGE>

EXHIBIT 4.1

AMERICAN CHAMPION ENTERTAINMENT, INC.
2000 STOCK INCENTIVE PLAN

ARTICLE 1.

PURPOSE AND ADOPTION OF THE PLAN

1.1. Purpose. The purpose of the American Champion Entertainment,
Inc. 2000 Stock Incentive Plan (hereinafter referred to as the "Plan") is
to assist in attracting and retaining highly competent key employees,
non-employee directors and consultants and to act as an incentive in
motivating key employees, non-employee directors, legal counsel and
consultants of American Champion Entertainment, Inc. and its Subsidiaries
(as defined below) to achieve long-term corporate objectives.

1.2. Adoption and Term. The Plan has been approved by the Board of
Directors (hereinafter referred to as the "Board") of American Champion
Entertainment, Inc. (hereinafter referred to as the "Company"), to be
effective as of January 10, 2000 (the "Effective Date"). The Plan is
intended to be a broad based plan which all employees of the Company are
eligible for, and grants to be made to management personnel and members
of the board of directors shall not exceed 50% of the total number of
shares issuable under the Plan. Therefore the Plan does not require
shareholder approval pursuant to applicable rules and regulations of the
Nasdaq Stock Market. The Plan shall remain in effect until terminated by
action of the Board.

ARTICLE II.

DEFINITIONS

For the purposes of this Plan, capitalized terms shall have the
following meanings:

2. 1. Award means any grant to a Participant of one or more of a
combination of Restricted Shares described in Article VII and Performance
Awards described in Article VIII.

2.2. Award Agreement means a written agreement between the Company
and a Participant or a written notice from the Company to a Participant
specifically setting forth the terms and conditions of an Award granted
under the Plan.

2.3. Award Period means, with respect to an Award, the period of
time set forth in the Award Agreement during which specified target
performance goals must be achieved or other conditions set forth in the
Award Agreement must be satisfied.

2.4. Beneficiary means an individual, trust or estate who or which,
by a written designation of the Participant filed with the Company or by
operation of law, succeeds to the rights and obligations of the
Participant under the Plan and an Award Agreement upon the Participant's
death.

2.5. Board means the Board of Directors of the Company.

2.6. Change in Control means, and shall be deemed to have occurred
upon the occurrence of, any one of the following events:

(a) The acquisition in one or more transactions by any
individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) (a "Person") of beneficial ownership
(within the meaning of Rule l3d-3 promulgated under the Exchange Act) of
shares or other securities (as defined in Section 3(a)(10) of the
Exchange Act) representing 30% or more of either (i) the Outstanding
Common Stock or (ii) the Company Voting Securities; provided, however,
that a Change in Control as defined in this clause (a) shall not be
deemed to occur in connection with any acquisition by the Company, an
employee benefit plan of the Company or any Person who immediately prior
to the Effective Date is a holder of Outstanding Common Stock or Company
Voting Securities (a "Current Stockholder") so long as such acquisition
does not result in any Person other than the Company, such employee
benefit plan or such Current Stockholder beneficially owning shares or
securities representing 30% or more of either the Outstanding Common
Stock or Company Voting Securities; or

(b) Any election has occurred of persons as directors of
the Company that causes two-thirds or more of the Board to consist of
persons other than (i) persons who, were members of the Board on the
Effective Date and (ii) persons who were nominated by the Board for
election as members of the Board at a time when at least two-thirds of
the Board consisted of persons who were members of the Board on the
Effective Date; provided, however, that any person nominated for election
by the Board when at least two-thirds of the members of the Board are
persons described in subclause (i) or (ii) and persons who were
themselves previously nominated in accordance with this clause (b) shall,
for this purpose, be deemed to have been nominated by a Board composed of
persons described in subclause (ii); or

(c) Approval by the stockholders of the Company of a
reorganization, merger, consolidation or similar transaction (a
"Reorganization Transaction"), in each case, unless, immediately
following such Reorganization Transaction, more than 50% of,
respectively, the outstanding shares of common stock (or similar equity
security) of the corporation or other entity resulting from or surviving
such Reorganization Transaction and the combined voting power of the
securities of such corporation or other entity entitled to vote generally
in the election of directors, is then beneficially owned, directly or
indirectly, by the individuals and entities who were the respective
beneficial owners of the Outstanding Common Stock and the Company Voting
Securities immediately prior to such Reorganization Transaction in
substantially the same proportions as their ownership of the Outstanding
Common Stock and Company Voting Securities immediately prior to such
Reorganization Transaction; or

(d) Approval by the stockholders of the Company of (i) a
complete liquidation or dissolution of the Company or (ii) the sale or
other disposition of all or substantially all of the assets of the
Company to a corporation or other entity, unless, with respect to such
corporation or other entity, immediately following such sale or other
disposition more than 50% of, respectively, the outstanding shares of
common stock (or similar equity security) of such corporation or other
entity and the combined voting power of the securities of such
corporation or other entity entitled to vote generally in the election of
directors, is then beneficially owned, directly or indirectly, by the
individuals and entities who were the respective beneficial owners of the
Outstanding Common Stock and the Company Voting Securities immediately
prior to such sale or disposition in substantially the same proportions
as their ownership of the Outstanding Common Stock and Company Voting
Securities immediately prior to such sale or disposition.

2.7 Code means the Internal Revenue Code of 1986, as amended.
References to a section of the Code include that section and any
comparable section or sections of any future legislation that amends,
supplements or supersedes said section.

2.8 Committee means the committee established in accordance with
Section 3.1.

2. 9. Company means American Champion Entertainment, Inc., a
Delaware corporation, and its successors.

2.10 Common Stock means Common Stock of the Company, par value
$0.0001 per share.

2.11. Company Voting Securities means the combined voting power of
all outstanding securities of the Company entitled to vote generally in
the election of directors of the Company.

2.12. Date of Grant means the date designated by the Committee as
the date as of which it grants an Award, which shall not be earlier than
the date on which the Committee approves the granting of such Award.

2.13. Effective Date shall have the meaning given to such term in
Section 1.2.

2.14. Exchange Act means the Securities Exchange Act of 1934, as
amended.

2.15. Merger means any merger, reorganization, consolidation, share
exchange, transfer of assets or other transaction having similar effect
involving the Company.

2.16. Non-Employee Director means a member of the Board who (i) is
not currently an officer or otherwise employed by the Company or a parent
or a subsidiary of the Company, (ii) does not receive compensation
directly or indirectly from the Company or a parent or a subsidiary of
the Company for services rendered as a consultant or in any capacity
other than as a director, except for an amount for which disclosure would
not be required pursuant to Item 404(a) of Regulation S-K, (iii) does not
possess an interest in any other transaction for which disclosure would
be required pursuant to Item 404(a) of Regulation S-K, and (iv) is not
engaged in a business relationship for which disclosure would be required
pursuant to Item 404(b) of Regulation S-K.

2.17. Outstanding Common Stock means, at any time, the issued and
outstanding shares of Common Stock.

2.18. Participant means a person designated to receive an Award
under the Plan in accordance with Section 5. 1.

2.19. Performance Awards means Awards granted in accordance with
Article VIII.

2.20. Plan means the American Champion Entertainment, Inc. 2000,
Stock Incentive Plan as described herein, as the same may be amended from
time to time.

2.21 Restricted Shares means Common Stock subject to restrictions
imposed in connection with Awards granted under Article VII.

2.22. Retirement means early or normal retirement under a pension
plan or arrangement of the Company or one of its Subsidiaries in which
the Participant participates.

2.23. Subsidiary means a subsidiary of the Company within the
meaning of Section 424(f) of the Code.

2.24. Termination of Employment means the voluntary or involuntary
termination of a Participant's employment with the Company or a
Subsidiary for any reason, including death, disability, retirement or as
the result of the divestiture of the Participant's employer or any
similar transaction in which the Participant's employer ceases to be the
Company or one of its Subsidiaries. Whether entering military or other
government service shall constitute Termination of Employment, or whether
a Termination of Employment shall occur as a result of disability, shall
be determined in each case by the Committee in its sole discretion. In
the case of a consultant who is not an employee of the Company or a
Subsidiary, Termination of Employment shall mean voluntary or involuntary
termination of the consulting relationship for any reason. In the case of
a Non-Employee Director, Termination of Employment shall mean voluntary
or involuntary termination, non-election, removal or other act which
results in such Non-Employee Director no longer serving in such capacity.

ARTICLE III.

ADMINISTRATION

3.1. Committee. The Plan shall be administered by a committee of
the Board (the "Committee") comprised of at least one person. The
Committee shall have exclusive and final authority in each determination,
interpretation or other action affecting the Plan and its Participants.
The Committee shall have the sole discretionary authority to interpret
the Plan, to establish and modify administrative rules for the Plan, to
impose such conditions and restrictions on Awards as it determines
appropriate, and to take such steps in connection with the Plan and
Awards granted hereunder as it may deem necessary or advisable. The
Committee may, subject to compliance with applicable legal requirements,
with respect to Participants who are not subject to Section 16(b) of the
Exchange Act, delegate such of its powers and authority under the Plan as
it deems appropriate to designated officers or employees of the Company.
In addition, the Board may exercise any of the authority conferred upon
the Committee hereunder. In the event of any such delegation of authority
or exercise of authority by the Board, references in the Plan to the
Committee shall be deemed to refer to the delegate of the Committee or
the Board, as the case may be.

ARTICLE IV.

4.1. Number of Shares Issuable. The total number of shares
initially authorized to be issued under the Plan shall be 1,500,000
shares of Common Stock. The number of shares available for issuance under
the Plan shall be subject to adjustment in accordance with Section 9.7.
The shares to be offered under the Plan shall be authorized and unissued
shares of Common Stock, or issued shares of Common Stock which will have
been reacquired by the Company.

ARTICLE V.

PARTICIPATION

5.1. Eligible Participants. Participants in the Plan shall be such
key employees, consultants, legal counsel and non-employee directors of
the Company and its Subsidiaries, whether or not members of the Board, as
the Committee, in its sole discretion, may designate from time to time.
The Committee's designation of a Participant in any year shall not
require the Committee to designate such person to receive Awards in any
other year. The designation of a Participant to receive an Award under
one portion of the Plan does not require the Committee to include such
Participant under other portions of the Plan. The Committee shall
consider such factors as it deems pertinent in selecting Participants and
in determining the types and amounts of their respective Awards. Subject
to adjustment in accordance with Section 9.7, during any fiscal year no
Participant shall be granted Awards in respect of more than 500,000
shares of Common Stock.

ARTICLE VI.

INTENTIONALLY LEFT BLANK

ARTICLE VII.

RESTRICTED SHARES

7.1. Restricted Share Awards. The Committee may grant to any
Participant an Award of such number of shares of Common Stock on such
terms, conditions and restrictions, whether based on performance
standards, periods of service, retention by the Participant of ownership
of purchased or designated shares of Common Stock or other criteria, as
the Committee shall establish. It is not a criteria of the Plan that the
Restricted Shares be issued pursuant to any specific criteria. With
respect to performance-based Awards of Restricted Shares intended to
qualify for deductibility under Section 162(m) of the Code, performance
targets will include specified levels of one or more of operating income,
return or investment, return on stockholders' equity, earnings before
interest, taxes, depreciation and amortization and/or earnings per share.
The terms of any Restricted Share Award granted under this Plan shall be
set forth in an Award Agreement which shall contain provisions determined
by the Committee and not inconsistent with this Plan.

(a) Issuance of Restricted Shares. As soon as practicable after
the Date of Grant of a Restricted Share Award by the Committee, the
Company shall cause to be transferred on the books of the Company or its
agent, shares of Common Stock, registered on behalf of the Participant,
evidencing the Restricted Shares covered by the Award, subject to
forfeiture to the Company as of the Date of Grant if an Award Agreement
with respect to the Restricted Shares covered by the Award is not duly
executed by the Participant and timely returned to the Company. All
shares of Common Stock covered by Awards under this Article VII shall be
subject to the restrictions, terms and conditions contained in the Plan
and the applicable Award Agreements entered into by the appropriate
Participants. Until the lapse or release of all restrictions applicable
to an Award of Restricted Shares the share certificates representing such
Restricted Shares may be held in custody by the Company, its designee,
or, if the certificates bear a restrictive legend, by the Participant.
Upon the lapse or release of all restrictions with respect to an Award as
described in Section 7.1 (d), one or more share certificates, registered
in the name of the Participant, for an appropriate number of shares as
provided in Section 7.1 (d), free of any restrictions set forth in the
Plan and the related Award Agreement (however subject to any restrictions
that may be imposed by law) shall be delivered to the Participant.

(b) Stockholder Rights. Beginning on the Date of Grant of
a Restricted Share Award and subject to execution of the related Award
Agreement as provided in Section 7.1 (a), and except as otherwise
provided in such Award Agreement, the Participant shall become a
stockholder of the Company with respect to all shares subject to the
Award Agreement and shall have all of the rights of a stockholder,
including, but not limited to, the right to vote such shares and the
right to receive dividends; provided, however, that any shares of Common
Stock distributed as a dividend or otherwise with respect to any
Restricted Shares as to which the restrictions have not yet lapsed, shall
be subject to the same restrictions as such Restricted Shares and held or
restricted as provided in Section 7.1 (a).

(c) Registration of Shares. None of the Restricted Shares
may be sold, assigned, pledged, hypothecated or transferred without
Registration under the Securities Act of 1933 as amended or exemption
there from. It is anticipated that at the time of issuance the Company
will have in effect a Registration Statement on Form S-8 or such other
comparable form such that the Restricted Shares will be registered for
resale upon issuance.

(d) Delivery of Shares Upon Vesting. Upon expiration or
earlier termination of the forfeiture period without a forfeiture and the
satisfaction of or release from any other conditions prescribed by the
Committee, or at such earlier time as provided under the provisions of
Section 7.3, the restrictions applicable to the Restricted Shares shall
lapse. As promptly as administratively feasible thereafter, subject to
the requirements of Section 9.5, the Company shall deliver to the
Participant or, in case of the Participant's death, to the Participant's
Beneficiary, one or more share certificates for the appropriate number of
shares of Common Stock, free of all such restrictions, except for any
restrictions that may be imposed by law.

7.2. Terms of Restricted Shares.

(a) Forfeiture of Restricted Shares. Subject to Sections
7.2(b) and 7.3, Restricted Shares shall be forfeited and returned to the
Company and all rights of the Participant with respect to such Restricted
Shares shall terminate unless the Participant continues in the service of
the Company or a Subsidiary as an employee until the expiration of the
forfeiture period for such Restricted Shares and satisfies any and all
other conditions set forth in the Award Agreement. The Committee shall
determine the forfeiture period (which may, but need not, lapse in
installments) and any other terms and conditions applicable with respect
to any Restricted Share Award.

(b) Waiver of Forfeiture Period. Notwithstanding anything
contained in this Article VII to the contrary, the Committee may, in its
sole discretion, waive the forfeiture period and any other conditions set
forth in any Award Agreement under appropriate circumstances (including
the death, disability or Retirement of the Participant or a material
change in circumstances arising after the date of an Award) and subject
to such terms and conditions (including forfeiture of a proportionate
number of the Restricted Shares) as the Committee shall deem appropriate.

7.3. Change in Control. Unless otherwise provided by the Committee
in the applicable Award Agreement, in the event of a Change in Control,
all restrictions applicable to the Restricted Share Award shall terminate
fully and the Participant shall immediately have the right to the
delivery of share certificates for such shares in accordance with Section
7.1 (d).

ARTICLE VIII.

PERFORMANCE AWARDS

8.1. Performance Awards.

(a) Award Periods and Calculations of Potential Incentive
Amounts. The Committee may grant Performance Awards to Participants. A
Performance Award shall consist of the right to receive a payment
(measured by the Fair Market Value of a specified number of shares of
Common Stock, increases in such Fair Market Value during the Award Period
and/or a fixed cash amount) contingent upon the extent to which certain
predetermined performance targets have been met during an Award Period.
Performance Awards may be made in conjunction with, or in addition to,
Restricted Share Awards made under Article VII. The Award Period shall be
two or more fiscal or calendar years as determined by the Committee. The
Committee, in its discretion and under such terms as it deems
appropriate, may permit newly eligible employees, such as those who are
promoted or newly hired, to receive Performance Awards after an Award
Period has commenced.

(b) Performance Targets. The performance targets may
include such goals related to the performance of the Company and/or the
performance of a Participant as may be established by the Committee in
its discretion. In the case of Performance Awards intended to qualify for
deductibility under Section 162(m) of the Code, the targets will include
specified levels of one or more of operating income, return on
investment, return on stockholders' equity, earnings before interest,
taxes, depreciation and amortization and/or earnings per share. The
performance targets established by the Committee may vary for different
Award Periods and need not be the same for each Participant receiving a
Performance Award in an Award Period. Except to the extent inconsistent
with the performance-based compensation exception under Section 162(m) of
the Code, in the case of Performance Awards granted to employees to whom
such section is applicable, the Committee, in its discretion, but only
under extraordinary circumstances as determined by the Committee, may
change any prior determination of performance targets for any Award
Period at any time prior to the final determination of the value of a
related Performance Award when events or transactions occur to cause such
performance targets to be an inappropriate measure of achievement.

(c) Earning Performance Awards. The Committee, on or as
soon as practicable after the Date of Grant, shall prescribe a formula to
determine the percentage of the applicable Performance Award to be earned
based upon the degree of attainment of performance targets.

(d) Payment of Earned Performance Awards. Payments of
earned Performance Awards shall be made in cash or shares of Common Stock
or a combination of cash and shares of Common Stock, in the discretion of
the Committee. The Committee, in its sole discretion, may provide such
terms and conditions with respect to the payment of earned Performance
Awards as it may deem desirable.

8.2. Terms of Performance Awards.

(a) Termination of Employment. Unless otherwise provided
below or in Section 8.3, in the case of a Participant's Termination of
Employment prior to the end of an Award Period, the Participant will not
have earned any Performance Awards for that Award Period.

(b) Retirement. If a Participant's Termination of
Employment is because of Retirement prior to the end of an Award Period,
the Participant will not be paid any Performance Award, unless the
Committee, in its sole and exclusive discretion, determines that an Award
should be paid. In such a case, the Participant shall be entitled to
receive a pro-rata portion of his or her Award as determined under
subsection (d) of this Section 8.2.

(c) Death or Disability. If a Participant's Termination
of Employment is due to death or to disability (as determined in the sole
and exclusive discretion of the Committee) prior to the end of an Award
Period, the Participant or the Participant's personal representative
shall be entitled to receive a pro-rata share of his or her Award as
determined under subsection (d) of this Section 8.2.

(d) Pro-Rata Payment. The amount of any payment to be
made to a participant whose employment is terminated by Retirement, death
or disability (under the circumstances described in subsections (b) and
(c)) will be the amount determined by multiplying (i) the amount of the
Performance Award that would have been earned through the end of the
Award Period had such employment not been terminated by (ii) a fraction,
the numerator of which is the number of whole months such Participant was
employed during the Award Period, and the denominator of which is the
total number of months of the Award Period. Any such payment made to a
Participant whose employment is terminated prior to the end of an Award
Period shall be made at the end of such Award Period, unless otherwise
determined by the Committee in its sole discretion. Any partial payment
previously made or credited to a deferred account for the benefit of a
Participant in accordance with Section 8. 1 (d) of the Plan shall be
subtracted from the amount otherwise determined as payable as provided in
this Section 8.2(d).

(e) Other Events. Notwithstanding anything to the
contrary in this Article VIII, the Committee may, in its sole and
exclusive discretion, determine to pay all or any portion of a
Performance Award to a Participant who has terminated employment prior to
the end of an Award Period under certain circumstances (including the
death, disability or Retirement of the Participant or a material change
in circumstances arising after the Date of Grant), subject to such terms
and conditions as the Committee shall deem appropriate.

8.3. Change in Control. Unless otherwise provided by the Committee
in the applicable Award Agreement, in the event of a Change in Control,
all Performance Awards for all Award Periods shall immediately become
fully payable to all Participants and shall be paid to Participants
within thirty (30) days after such Change in Control.

ARTICLE IX.

TERMS APPLICABLE TO ALL AWARDS GRANTED UNDER THE PLAN

9.1. Plan Provisions Control Award Terms. The terms of the Plan
shall govern all Awards granted under the Plan, and in no event shall the
Committee have the power to grant any Award under the Plan the terms of
which are contrary to any of the provisions of the Plan. In the event any
provision of any Award granted under the Plan shall conflict with any
term in the Plan as constituted on the Date of Grant of such Award, the
term in the Plan as constituted on the Date of Grant of such Award shall
control. Except as provided in Section 9.3 and Section 9.7, the terms of
any Award granted under the Plan may not be changed after the Date of
Grant of such Award so as to materially decrease the value of the Award
without the express written approval of the holder.

9.2. Award Agreement. No person shall have any rights under any
Award granted under the Plan unless and until the Company and the
Participant to whom such Award shall have been granted shall have
executed and delivered an Award Agreement or the Participant shall have
received and acknowledged notice of the Award authorized by the Committee
expressly granting the Award to such person and containing provisions
setting forth the terms of the Award.

9.3. Modification of Award After Grant. No Award granted under the
Plan to a Participant may be modified (unless such modification does not
materially decrease the value of that Award) after its Date of Grant
except by express written agreement between the Company and such
Participant, provided that any such change (a) may not be inconsistent
with the terms of the Plan, and (b) shall be approved by the Committee.

9. 4. Limitation on Transfer. Except as provided in Section 7.1(c)
in the case of Restricted Shares, a Participant's rights and interest
under the Plan may not be assigned or transferred other than by will or
the laws of descent and distribution and, during the lifetime of a
Participant, only the Participant personally (or the Participant's
personal representative) may exercise rights under the Plan. The
Participant's Beneficiary may exercise the Participant's rights to the
extent they are exercisable under the Plan following the death of the
Participant.

9. 5. Taxes. The Company shall be entitled, if the Committee deems
it necessary or desirable, to withhold (or secure payment from the
Participant in lieu of withholding) the amount of any withholding or
other tax required by law to be withheld or paid by the Company with
respect to any amount payable and/or shares issuable under such
Participant's Award and the Company may defer payment of cash or issuance
of shares upon exercise or vesting of an Award unless indemnified to its
satisfaction against any liability for any such tax. The amount of such
withholding or tax payment shall be determined by the Committee and shall
be payable by the Participant at such time as the Committee determines in
accordance with the following rules:

(a) The Participant shall have the right to elect to meet
his or her withholding requirement (i) by having withheld from such Award
at the appropriate time that number of shares of Common Stock, rounded up
to the next whole share, the Fair Market Value of which is equal to the
amount of withholding taxes due, (ii) by direct payment to the Company in
cash of the amount of any taxes required to be withheld with respect to
such Award or (iii) by a combination of withholding such shares and
paying cash.

(b) The Committee shall have the discretion as to any
Award to cause the Company to pay to tax authorities for the benefit of
the applicable Participant, or to reimburse such Participant for, the
individual taxes which are due on the grant, exercise or vesting of any
Award or the lapse of any restriction on any Award (whether by reason of
such Participant's filing of an election under Section 83(b) of the Code
or otherwise), including, but not limited to, Federal income tax, state
income tax, local income tax and excise tax under Section 4999 of the
Code, as well as for any such taxes as may be imposed upon such tax
payment or reimbursement.

(c) In the case of Participants who are subject to
Section 16 of the Exchange Act, the Committee may impose such limitations
and restrictions as it deems necessary or appropriate with respect to the
delivery or withholding of shares of Common Stock to meet tax withholding
obligations.

9. 6. Surrender of Awards. Any Award granted under the Plan may be
surrendered to the Company for cancellation on such terms as the
Committee and the Participant approve.

9. 7 Adjustments to Reflect Capital Changes.

(a) Recapitalization. The number and kind of shares
subject to outstanding Awards, the Purchase Price or Exercise Price for
such shares, the number and kind of shares available for Awards
subsequently granted under the Plan and the maximum number of shares in
respect of which Awards can be made to any Participant in any calendar
year shall be appropriately adjusted to reflect any stock dividend, stock
split, combination or exchange of shares, merger, consolidation or other
change in capitalization with a similar substantive effect upon the Plan
or the Awards granted under the Plan. The Committee shall have the power
and sole discretion to determine the amount of the adjustment to be made
in each case.

(b) Merger. After any Merger in which the Company is the
surviving corporation, each Participant shall, at no additional cost, be
entitled upon any exercise of an Option or receipt of any other Award to
receive (subject to any required action by stockholders), in lieu of the
number of shares of Common Stock receivable or exercisable pursuant to
such Award prior to such Merger, the number and class of shares or other
securities to which such Participant would have been entitled pursuant to
the terms of the Merger if, at the time of the Merger, such Participant
had been the holder of record of a number of shares of Common Stock equal
to the number of shares of Common Stock receivable or exercisable
pursuant to such Award. Comparable rights shall accrue to each
Participant in the event of successive Mergers of the character described
above. In the event of a Merger in which the Company is not the surviving
corporation, the surviving, continuing, successor or purchasing
corporation, as the case may be (the "Acquiring Corporation), will either
assume the Company's rights and obligations under outstanding Award
Agreements or substitute awards in respect of the Acquiring Corporation's
stock for outstanding Awards, provided, however, that if the Acquiring
Corporation does not assume or substitute for such outstanding Awards,
the Board shall provide prior to the Merger that any unexercisable and/or
unvested portion of the outstanding Awards shall be immediately
exercisable and vested as of a date prior to such merger or
consolidation, as the Board so determines. The exercise and/or vesting of
any Award that was permissible solely by reason of this Section 9.7(b)
shall be conditioned upon the consummation of the Merger. Any Options
which are neither assumed by the Acquiring Corporation not exercised as
of the date of the Merger shall terminate effective as of the effective
date of the Merger.

(c) Options to Purchase Shares or Stock of Acquired
Companies. After any merger in which the Company or a Subsidiary shall be
a surviving corporation, the Committee may grant substituted options
under the provisions of the Plan, pursuant to Section 424 of the Code,
replacing old options granted under a plan of another party to the merger
whose shares of stock subject to the old options may no longer be issued
following the merger. The manner of application of the foregoing
provisions to such options and any appropriate adjustments shall be
determined by the Committee in its sole discretion. Any such adjustments
may provide for the elimination of any fractional shares which might
otherwise become subject to any Options.

9.8 No Right to Employment. No employee or other person shall have
any claim of right to be granted an Award under the Plan. Neither the
Plan nor any action taken hereunder shall be construed as giving any
employee any right to be retained in the employ of the Company or any of
its Subsidiaries.

9.9. Awards Not Includable for Benefit Purposes. Payments received
by a Participant pursuant to the provisions of the Plan shall not be
included in the determination of benefits under any pension, group
insurance or other benefit plan applicable to the Participant which is
maintained by the Company or any of its Subsidiaries, except as may be
provided under the terms of such plans or determined by the Board.

9.10. Governing Law. All determinations made and actions taken
pursuant to the Plan shall be governed by the laws of the State of
Delaware and construed in accordance therewith.

9.11. No Strict Construction. No rule of strict construction shall
be implied against the Company, the Committee or any other person in the
interpretation of any of the terms of the Plan, any Award granted under
the Plan or any rule or procedure established by the Committee.

9.12. Captions. The captions (i.e., all Section headings) used in
the Plan are for convenience only, do not constitute a part of the Plan,
and shall not be deemed to limit, characterize or affect in any way any
provisions of the Plan, and all provisions of the Plan shall be construed
as if no captions had been used in the Plan.

9.13. Severability. Whenever possible, each provision in the Plan
and every Award at any time granted under the Plan shall be interpreted
in such manner as to be effective and valid under applicable law, but if
any provision of the Plan or any Award at any time granted under the Plan
shall be held to be prohibited by or invalid under applicable law, then
(a) such provision shall be deemed amended to accomplish the objectives
of the provision as originally written to the fullest extent permitted by
law and (b) all other provisions of the Plan, such Award and every other
Award at any time granted under the Plan shall remain in full force and
effect.

9.14. Amendment and Termination.

(a) Amendment. The Board shall have complete power and
authority to amend the Plan at any time without the authorization or
approval of the Company's stockholders, unless the amendment (i)
materially increases the benefits accruing to Participants under the
Plan, (ii) materially increases the aggregate number of securities that
may be issued under the Plan or (iii) materially modifies the
requirements as to eligibility for participation in the Plan, but in each
case only to the extent then required by the Code or applicable law, or
deemed necessary or advisable by the Board. No termination or amendment
of the Plan may, without the consent of the Participant to whom any Award
shall theretofore have been granted under the Plan, materially adversely
affect the right of such individual under such Award.

(b) Termination. The Board shall have the right and the
power to terminate the Plan at any time. No Award shall be granted under
the Plan after the termination of the Plan, but the termination of the
Plan shall not have any other effect and any Award outstanding at the
time of the termination of the Plan may be exercised after termination of
the Plan at any time prior to the expiration date of such Award to the
same extent such Award would have been exercisable had the Plan not been
terminated.

<PAGE>

EXHIBIT 4.2

STOCK GRANT AGREEMENT
Pursuant to
American Champion Entertainment, Inc.
2000 Stock Incentive Plan

This Stock Grant Agreement (the "Agreement"), dated _________________ , 2000,
is made by and between American Champion Entertainment, Inc., a Delaware
corporation (the "Company"), and ________________________ (the "Grantee").

The Grantee is a ______________________________ of the Company.

For Grantee's service to the Company including ______________________________

the Compensation Committee (the "Committee") of the Board of Directors has
determined that it is in the best interests of the Company to issue to the
Grantee restricted common stock of the Company as compensation for said
services that the Grantee has rendered and will continue to render to the
Company, on the terms and conditions set forth herein.

In consideration of the premises and the mutual agreements set forth below,
the parties hereto agree as follows:

1. Grant of Stock. Pursuant to the terms and conditions set forth
herein, the Company hereby grants and issues to the Grantee (the "Grant") as
of the date hereof (the "Grant Date"), up to an aggregate of _________________
shares (the "Shares") of common stock, par value $.0001 per share, of the
Company (the "Common Stock") as hereinafter provided.

2. Non-transferability. Until the Shares hereunder shall vest in
accordance with Section 3 hereof, the Shares and any other rights granted
hereunder shall not be transferable or assignable by the Grantee (whether by
operation of law or otherwise) except by will or the laws of descent and
distribution or, if then permitted under Rule 16b-3, pursuant to a qualified
domestic relations order as defined under the Code or Title I of the Employee
Retirement Income Security Act of 1974, as amended, or the rules thereunder.

3. Vesting of Shares. Subject to the other terms set forth herein, the
Shares will vest with the Grantee in full on ______________ , 2000.

4. Taxes. The Company or any Subsidiary or Affiliate is authorized to
withhold from any distribution of Shares amounts of withholding and other
taxes due in connection with any transaction involving the Grant, and to take
such other action as the Committee may deem advisable to enable the Company or
such Subsidiary or Affiliate and the Grantee to satisfy obligations for the
payment of withholding taxes and other tax obligations relating to the Grant,
if any. This authority shall include authority to withhold or receive Shares
or other property and to make cash payments in respect thereof in satisfaction
of the Grantee's tax obligations.

5. Termination of Employment. Upon termination of Grantee's employment
for any reason, including the breach by the Grantee of the employment
agreement among the Grantee and the Company or its subsidiaries, if any, any
Shares not already vested in accordance with Section 3 hereof, shall be
subject to immediate forfeiture in all respects and Grantee shall have no
right or claim to any such unvested Shares.

6. Adjustments. In the event that the Committee shall determine, in its
sole discretion, that any dividend or other distribution (whether in the form
of cash, shares of Common Stock or other property), recapitalization, stock
split, reverse split, any reorganization, merger, consolidation, spin-off,
combination, repurchase, share exchange, license arrangement, strategic
alliance or other similar corporate transaction or event affects the Shares
such that an adjustment is appropriate to prevent dilution or enlargement of
the rights of the Grantee, then the Committee shall make such equitable
changes or adjustments as it deems necessary or appropriate to any or all of
the number and kind of Shares which may thereafter be issued in connection
herewith.

7. No Rights as Stockholder. The Grantee shall have no rights as a
stockholder with respect to any Shares subject to the Grant prior to the date
on which such Shares shall vest in accordance with Section 3 hereof.

8. Representations of the Company.

a. Organization and Standing. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.

b. Corporate Power. The Company has all necessary corporate
power and authority to execute, deliver and perform this Agreement and the
transactions contemplated hereby, and has all requisite corporate power and
authority to issue the Shares hereunder and to carry out the transactions
contemplated hereby.

c. Shares. Upon issuance, the Shares will be duly authorized, validly
issued, fully paid and nonassessable, and issued in accordance with
applicable laws.

9. Representations of the Grantee.

a. Authority. The Grantee has duly executed and delivered this Agreement to
the Company, and its obligations hereunder are the legal, valid and binding
obligations of the Grantee and are enforceable in accordance with their terms.

b. Restriction on Transfer; Risk of Forfeiture. The Grantee hereby
acknowledges and agrees that the Shares have not been registered under the
Securities Act of 1933, as amended (the "Act"), or qualified with the
securities regulatory agency of any state and may not be resold or otherwise
disposed of unless registered under the Act or qualified with the securities
regulatory agency of any state which has jurisdiction over any such transfer
or unless an exemption from such registration or qualification is available.
The Grantee will transfer the Shares only in accordance with the applicable
requirements of all federal and state securities laws. The Grantee
acknowledges that the certificate(s) evidencing the Shares will bear a legend
regarding restriction on transfer. The Grantee further acknowledges that the
Shares are subject to a substantial risk of forfeiture as set forth in Section
5 hereof.

c. Investment. The Grantee is receiving the Shares for its own account, for
investment purposes only, and not for the account of any other person, and not
with a view to, or for offer or sale in connection with, any distribution,
assignment or resale to others or to fractionalization in whole or in part.

10. No Rights to Continued Employment. Nothing in the Grant or this
Agreement shall confer upon the Grantee the right to continue in service or
be entitled to any remuneration or benefits not set forth in this Agreement
or to interfere with or limit in any way the right of the Company or any
Subsidiary or Affiliate to terminate the Grantee's service as an officer of
the Company or any Subsidiary or Affiliate.

11. Compliance with Legal and Exchange Requirements. The granting,
issuance and delivery of the Shares pursuant to the terms of this Agreement and
the other obligations of the Company hereunder shall be subject to all
applicable federal and state laws, rules and regulations, and to such
approvals by any regulatory or governmental agency as may be required. The
Company, in its discretion, may postpone the issuance or delivery of Shares
hereunder until completion of such stock exchange listing or registration or
qualification of such Shares or other required action under any state, federal
or foreign law, rule or regulation as the Company may consider appropriate,
and may require the Grantee to make such representations and furnish such
information as it may consider appropriate in connection with the issuance or
delivery of Shares in compliance with applicable laws, rules and regulations.

12. Change in Control Provisions. In the event of a Change in Control, as
defined in the 2000 Stock Incentive Plan (the "Plan"), the Shares shall become
fully vested, whether or not theretofore vested as forth herein, as more fully
described within the Plan.

13. Notices. All notices or any other communications hereunder shall be
in writing and delivered personally or by registered or certified mail or
overnight courier, addressed, if to the Company, to American Champion
Entertainment, Inc., 1694 The Alameda, Suite 100, San Jose, California 95126,
Attention: Secretary; and if to the Grantee, at the address set forth on the
signature page hereof, subject to the right of either party to designate at
any time hereafter in writing some other address.

14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without giving effect to
the conflict of laws principles thereof.

15. No Assignment. Neither this Agreement nor any of the rights or
obligations of the Grantee hereunder may be transferred or assigned by the
Grantee except as set forth in paragraph 2 hereof.

16. Benefits. This Agreement shall be binding upon and inure to the
benefit of the parties hereto. This Agreement is for the sole benefit of the
parties hereto and not for the benefit of any other party.

17. Severability. If any provision of this Agreement shall be determined
to be illegal and unenforceable by any court of law, the remaining provisions
shall be severable and enforceable in accordance with their terms.

18. Amendments. No modification, amendment or waiver or any provision of
this Agreement shall be effective unless it is in writing and signed by the
parties hereto.

19. Counterparts. This Agreement may be executed in counterparts, each of
which shall constitute one and the same instrument.

IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by the Chief Executive Officer, and Grantee has executed
this Agreement, both as of the day and year first above written.

AMERICAN CHAMPION ENTERTAINMENT, INC.

By: __________________________________
Anthony K. Chan, President & CEO

GRANTEE

By: __________________________________

Name in print: _______________________

Address: _____________________________

<PAGE>

EXHIBIT 5.1

SICHENZIA, ROSS & FRIEDMAN LLP
Attorneys At Law
135 West 50th Street, 20th Floor
New York, New York 10020
_____________________

Telephone: (212) 664-1200
Facsimile: (212) 664-7329
E-Mail: [email protected]

February 8, 2000

VIA ELECTRONIC TRANSMISSION

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549

Re: American Champion Entertainment, Inc.
Form S-8 Registration Statement

Ladies and Gentlemen:

We refer to the above-captioned registration statement on Form S-8 (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Act"), filed by American Champion Entertainment, Inc., a Delaware corporation
(the "Company"), with the Securities and Exchange Commission.

We have examined the originals, photocopies, certified copies or other
evidence of such records of the Company, certificates of officers of the
Company and public officials, and other documents as we have deemed relevant
and necessary as a basis for the opinion hereinafter expressed. In such
examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as certified copies or
photocopies and the authenticity of the originals of such latter documents.

Based on our examination mentioned above, we are of the opinion that the
securities being registered to be sold pursuant to the Registration Statement
are duly authorized and will be, when sold in the manner described in the
Registration Statement, legally and validly issued, and fully paid and
non-assessable.

We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to our firm under "Legal Matters"
in the related Prospectus. In giving the foregoing consent, we do not hereby
admit that we are in the category of persons whose consent is required under
Section 7 of the Act, or the rules and regulations of the Securities and
Exchange Commission.

Very truly yours,

/s/ Sichenzia, Ross & Friedman, LLP
Sichenzia, Ross & Friedman, LLP

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in this Registration Statement of
American Champion Entertainment, Inc. on Form S-8 of our reports on the
consolidated financial statements of American Champion Entertainment, Inc. and
its subsidiaries dated February 11, 1998 and March 11, 1999 (except for note
21, as to which the date is November 11, 1999), appearing in the Annual
Reports on Form 10-KSB and 10-KSB/A of American Champion Entertainment, Inc.
for the years ended December 31, 1997 and December 31, 1998. We also consent
to the reference to us under the caption "Experts".

/s/ Moss Adams L.L.P.
Moss Adams L.L.P.

San Francisco, California
February 8, 2000