Market Opportunity:

The impact of digital technology on the domestic home entertainment market has been significant. Over the past 6 years, the digital video disk ("DVD") has evolved into the pre-dominant format for releasing motion pictures to the home entertainment market. The DVD format has the advantage of changing the home viewing of movies from a linear experience to a non-linear one and has introduced a number of compelling extra features that has increased the entertainment value of the product. 

In addition to the new physical dimensions of the DVD, the marketing of the format represents a paradigm shift from its predecessor, VHS. DVD was originally introduced as a "sell-through" product and remains so to this day. As a result, the DVD is offered in an ever expanding retail environment. This has had the impact of commoditizing the distribution of filmed entertainment. No longer does an independent producer, such as the company, require a major Hollywood studio to introduce a film in the theatrical market and then offer it for rental in specialty retailers such as Blockbuster Video. There are now a number of wholesalers and other distributors that service the various retail categories for DVD. Retailers of DVDs include mass merchandisers such as Wal-Mart, record chains such as Sam Goody, consumer electronics chains such as Best Buy, supermarkets, pharmacies, bookstores and online retailers such as Amazon.com. 

In addition to these channels, the internet offers a very effective platform for promoting and marketing DVD's directly to consumers. Netflix, the online subscription rental service, has built a subscriber base of approximately 2.6 million consumers in less than five years. In 2004, the domestic sale of DVD's reached approximately $20 billion with DVD players present in slightly over 60% of U.S. households.


Strategic Objectives:

Our objective is to control the copyrights to our work and oversee their distribution on various platforms. We seek to control distribution in one key medium in order to develop a profile for our titles and leverage that profile to gain distribution in other media.

Initially, we seek to release our movies on DVD in a series of compilations that combine the films with interesting interstitials and behind-the-scenes footage. The DVD compilations will be branded Urban S.L.A.M. (Short Live Action Movies) and will be marketed directly and through strategic resellers in an effort to build a sizable customer database. 

Long-term, management intends to position the company as an important financier and distributor of independent urban filmmakers. As our film library grows, we will seek to migrate our content onto digital cable and other platforms through third party distributors. It is expected that the initial release of our titles through the company's direct distribution system will give them a profile that can enhance their value as they are subsequently exploited on other distribution platforms.

Digital Cable Platform:

We believe the advent of digital cable service is an important development in opening up the possibility of content delivery via satellite transmission to independent suppliers like the Company. Notwithstanding the availability of Hollywood movies, it is our view that digital cable penetration rates will be driven by original content made available via video-on-demand. As a result, we believe that the next generation of cable programming networks will emerge from the VOD arena. We seek to position ourselves as a provider of original urban-oriented content for VOD.

Other Distribution Platforms:

In addition to VOD, we believe there are unique opportunities to extend the reach of our content onto new and developing distribution platforms. Management expects that mobile content downloads and internet protocol television ("IPTV") will reach critical mass over the next 5 years and that these platforms will present excellent growth opportunities for the Company.

Long-term objectives:

Long-term, we seek to leverage our distribution capability to position the Company as an important financer of feature films by independent urban filmmakers. Management believes the popular appeal of urban culture combined with the digitization of electronic media outlets worldwide creates a unique opportunity to build a strong content business.