THE MARKET

Industry and Market Analysis

The Domestic Market
Motion picture and television production is a mature, moderate growth business, with generally low margins. But within this large and complex industry there are areas of rapid growth and attractive profitability. The Company will concentrate its business focus on these more attractive niches of the industry.

Second, in order to build an entrenched, defensible position against new and existing competitors, the Company must differentiate itself. The Company's abilities to offer an attractive environment, and to move quickly and selectively in choosing partners and projects, will help the Company to build a unique and recognizable image.

The Worldwide Market
Film producers, television networks and commercial houses are taking their productions to many foreign countries in search of modern stages, good equipment and affordable pricing. Recent events since have boasted the desire of producers, directors and actors to produce locally, especially in the Southern California area, where most are personally located. Additionally, recent tax credits passed by Congress have only enhanced that desire, by eliminating the economic incentives normally associated with moving to a foreign-based production facility.

The Company is well positioned to capitalize on this new demand, by offering the advantage of low-cost film production and distribution through the utilization of our strong relationships with independent studio and equipment house facilities, co-production arrangements with foreign producers, distributors, and broadcasters, and government agencies. Additionally, our independent studio relationships will also provide an additional avenue for partial production financing and increased distribution opportunities.