<PAGE>

                          SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C.  20549
                                     Form 10-KSB

[XX]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934

     For Fiscal Year Ended December 31, 1997              [Fee Required]
                           -----------------

[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES ACT OF
1934                                    [No Fee Required]

     For the transition period _______________ to _______________.

                             Commission File No. 1-11976

                              UNAPIX ENTERTAINMENT, INC.
--------------------------------------------------------------------------------
                (Exact name of registrant as specified in its charter)

         DELAWARE                              95-4404537
--------------------------------------------------------------------------------
(State or other jurisdiction of              (IRS Employer Identification No.)
incorporation of organization)

200 Madison Avenue, New York, NY                         10016
--------------------------------------------------------------------------------
(Address of principal executive offices)               (Zip Code)

Registrant's telephone number, including area code:  (212) 252-7600
                                                     --------------

Securities registered pursuant to Section 12(b) of the Act:

                                           Name of each exchange
Title of each class                         on which registered
-------------------                         -------------------

Common Stock                                American Stock Exchange
Class B Warrants                            American Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:  None

Check whether the issuer (i) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (ii) has been subject to such filing requirements for the past 90
days.
Yes  X    No
    ---      ---

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of the registrant's knowledge in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB ( ).

Issuer's revenues for its most recent fiscal year were $32,152,000.

The aggregate market value of the common stock held by non-affiliates of the
registrant is approximately $22,091,348 (based upon the closing sales price of
these shares on the American Stock Exchange on March 2, 1998).

On March 2, 1998, there was a total of 6,046,211 shares of the registrant's
common stock outstanding.

Documents Incorporated by Reference:


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1.   Proxy statement for 1998 Annual Meeting incorporated in Part III.

2.   Certain exhibits to Registration Statement, as amended, File No. 33-61798.

3.   Certain exhibits to Quarterly Report on Form 10-QSB for the quarterly
     period ended June 30, 1993.

4.   Certain exhibits to Quarterly Report on Form 10-QSB for the quarterly
     period ended September 30, 1993.

5.   Certain exhibits to Quarterly Report on Form 10-QSB for the quarterly
     period ended June 30, 1996.

6.   Certain exhibits to Quarterly Report on Form 10-QSB for the quarterly
     period ended March 31, 1997.

7.   Certain exhibits to Quarterly Report on Form 10-QSB for the quarterly
     period ended September 30, 1997.

8.   Certain exhibits to Annual Report on Form 10-KSB for the year ended
     December 31, 1993.

9.   Certain exhibits to Annual Report on Form 10-KSB for the year ended
     December 31, 1994.

10.  Certain exhibits to Annual Report on Form 10-KSB for the year ended
     December 31, 1995.

11.  Certain exhibits to Annual report on Form 10-KSB for the year ended
     December 31, 1996.

12.  Certain exhibits to Current Report on Form 8-K for Event of June 21, 1995.


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                                        PART I

ITEM 1.  BUSINESS

     Unapix Entertainment, Inc. (the "Company") is a world-wide licensor,
distributor and producer of programming and feature films, for the television
market, including free and pay television, cable and satellite, and the home
video market, including video cassette, laser discs and digital video disks
("DVD").  The Company's current "library" of films and programs includes feature
films, non-fiction series, children's programming, educational and special
interest programming, musical concerts, comedy shows, adventure series and
classic films and serials (together with music videos and audio recordings,
"Properties").

     Prior to 1993 the Company primarily focused on the international
distribution of older Properties.  During 1993 the Company expanded its
activities to exploit the increasing worldwide demand for television programming
and home video products resulting from the fractionalization of the television
viewing audience.  A shift has occurred from mass audiences dominated by a few,
free broadcast networks to niche audiences served by diverse cable, satellite
and free television services, home videocassette and other products.  Since 1993
the Company has primarily focused on the licensing and distribution of newer
Properties that are designed to appeal to a specific segmented audience.  In
1997 the Company produced a significant amount of non-fiction television
programs in order to further exploit this dynamic, and it expects this trend to
continue.

     In March 1997, the Company completed the acquisition of all of the capital
stock of Miramar Images, Inc. ("Miramar"), which primarily produces and
distributes music videos and audio recordings for the New Adult Contemporary
Market, i.e., products that are designed to appeal to individuals over the age
of 25.  

     Currently, in addition to Miramar, the Company's operations consist
principally of the following:  the distribution of videocassettes to domestic
home video rental stores primarily via sales to wholesalers, which is conducted
by A Pix Entertainment ("A Pix"); the distribution of Properties from the
Company's library to foreign broadcasters and home video publishers, which is
conducted under the name of Unapix International; the licensing of Properties to
the North American television market, which is conducted under the name Unapix
North America; and the marketing of products that are intended to be purchased
by consumers, which is conducted by Unapix/Miramar.  

     The Company was incorporated in Delaware on January 7, 1993 and is the
successor to Majestic Entertainment, Inc., which was incorporated in California
on January 6, 1986 and which was merged into the Company on March 23, 1993.

ACQUISITION OF FEATURE FILMS AND TELEVISION PROGRAMMING

     The Company continuously monitors the industry for available films and
television programming and attempts to acquire rights to such Properties which
it believes are saleable to various markets.  Before acquiring the rights to a
specific film or program, the Company analyzes its viability for licensing or
distribution in light of its projected costs and revenues and attempts to target
the Property's audience appeal.  The Company includes in its calculation the
degree to which it will be able to exploit the Property through its various
distribution channels, including within the North America home video rental and
television markets, the international video and television markets and the
consumer markets.  In determining the desirability of acquiring rights to films
or television programs, the Company examines their content, quality, theme,
participating talent (e.g., actors and directors), plot, format and other
criteria to determine the Properties' suitability for the commercial broadcast,
cable, satellite, pay television, and home video markets.  In acquiring finished
films or programming, management typically views a program or film in its
entirety to evaluate its commercial viability.


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     In order to obtain licensing or distribution rights with respect to films
or television programs, the Company generally enters into a licensing or
distribution arrangement with the copyright holder or another distributor (who
has a license from the copyright holder).  The rights may be limited to specific
media (e.g., broadcast television, cable or home video) or to particular
geographic areas and, in general are exclusive rights to such media and/or
geographic areas.  The rights are generally limited to a specified period of
time, ranging in most instances from seven to 21 years.  In acquiring rights,
the Company usually pays a non-refundable advance and/or commits to expend a
certain amount of funds on promotion.  In most cases, the producer or
distributor licensing the Property to the Company is entitled to receive the
revenues from the Company's distribution activities, after the Company has been
paid a specified distribution fee (which is a percentage of revenues) as well as
recouped its advance and specific recoupable marketing and other distribution
expenses.  In acquiring videocassette distribution rights for the "sell-through"
market (and in many cases for the domestic home video rental market)the Company
will agree to pay the licensor a royalty equal to a specific percentage of
revenues; after the Company has recouped its advance, it will then pay the
licensor its royalty and the Company will be entitled to retain all remaining
revenues.  The Company usually charges interest on its advances, which, similar
to the principal of the advances, is payable only out of royalties or
participations payable to the licensor.  

     While the majority of the films and television programs that the Company
acquired for distribution during 1997 were produced by others and had been
completed at the time the Company acquired rights therein, the Company has
increasingly been acquiring distribution rights in films and television programs
by funding all or a portion of their production.  In exchange for such funding,
the Company may acquire, in addition to its distribution rights, an ownership
interest in the Property entitling it to a percentage of profits from any
distribution thereof (whether or not effectuated by the Company).  Funding
productions often enables the Company to acquire distribution rights of longer
duration than it might otherwise have been able to obtain.  In consideration for
its involvement in a production, the Company may also receive a credit as
Executive Producer and an Executive Producer's fee.  Because production
arrangements necessarily entail unfinished programs, the Company is not able to
view the program prior to acquiring its rights, and therefore, there is the risk
that the finished product may be different from that which was initially
envisioned.  

     Production costs include the costs of acquiring or developing a screenplay,
film studio rental, cinematography, post-production and the compensation of
creative and other production personnel.  Major studios (such as Universal
Pictures, Warner Brothers, Twentieth Century Fox, Sony Pictures Entertainment,
Paramount Pictures, and The Walt Disney Company) generally fund production costs
from cash flow from their motion picture and related activities or, in some
cases, from unrelated businesses.  Independent production companies generally
avoid incurring substantial overhead costs by hiring creative and other
production personnel and retaining the other elements required for
pre-production, principal photography and post-production activities on a
project-by-project basis.  Independent production companies often arrange for
financing on a project by project basis.  

     After acquiring rights in a feature film or television program prior to 
production, the Company typically, at a minimum, has approval rights over key
product elements and maintains a production supervisory staff to carefully
monitor production and maintain quality control.  However, to date, the Company
has not acted as an independent production Company with respect to feature
films.  In connection with acquiring rights in non-fiction television
programming prior to production, the Company has (with increasing frequency)
been acting as an independent production company, retaining the personnel and
other elements required for production, and frequently developing concepts for
programs as well.   


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     To date, the Company has sought to limit its risk with respect to the
production of both television series and film.  In connection with the
production of television series or programs, the Company generally limits its
initial funding to the creation of print materials or the production of a short
demo film.  Additional financing of production by the Company is then
conditioned upon attaining a significant level of pre-sales of the series or
program based upon the demo film or print materials.  Pre-sales consist of
license fees paid or committed to be paid to the producer by third parties in
return for the right to exhibit the program or to distribute it in home videos,
television, international or ancillary markets.   While pre-selling a series
reduces the Company's risk, it does not entirely eliminate the risks to the
Company, which include the following:  failure to complete the production and
deliver the programs in which case the Company will either not be entitled to be
paid by the licensee to whom it pre-sold the programs or may have to reimburse
amounts already paid; a delay in completing production as to some or all of the
episodes comprising a series, which would result in the Company's not being paid
according to schedule by the licensee to whom it pre-sold the series and could
result in cancellation of the sale; and actual production costs significantly
exceeding the original production budget, thereby materially increasing the
Company's cash flow requirements and decreasing the ultimate profitability of
the series.  When a television program has a well-defined television or home
video audience and entails relatively limited production costs the Company has
funded its entire production without pre-selling the series. During 1997 the
Company completed production of approximately 65 hours of non-fiction television
programming.

     In connection with the financing of a feature film, the Company generally
commits to provide an amount of funding that, when added to other financial
commitments the producer already has received, equals the production budget.  In
most cases, the Company makes only limited commitments to advance funds prior to
completion of principal photography, when the bulk of production costs has
already been incurred.  In addition, in most instances when the Company provides
production financing of a feature film the producer obtains a completion bond
that guarantees delivery of a finished film.  In 1997 the Company co-financed
the production of eight films.

     There is no assurance that in the future the Company will not change its
conditions for providing production financing for feature films or television
programs.  

     The Company believes that through production financing it can acquire
distribution rights to higher quality films and programs with better production
values and more recognizable stars, as well as on more favorable terms, than can
be obtained after a Property is completed.

     To enhance the Company's position in a dynamic marketplace, given the
financial terms and available rights, the Company seeks to acquire distribution
rights in as many media and territories with respect to films and television
programs as is practicable.  This permits a single Property to be marketed by
more than one of the Company's divisions and subsidiaries and has permitted the
Company to exploit new technological developments such as DVD.

VIDEOCASSETTE DISTRIBUTION OF FEATURE FILMS TO NORTH AMERICAN HOME VIDEO RENTAL
STORES

     The Company, through A Pix Entertainment("A Pix"), is engaged in the
promotion and distribution of feature films for the home video rental market in
North America, consisting of video rental chains, individual video rental
stores, and supermarkets.  Videocassettes distributed by the Company for this
market typically have a suggested retail price of approximately $95, which
generally is too high to result in sales to consumers.  

     The Company commenced distributing videocassettes to the home video rental
market in 1994, releasing a total of 22 films during that year.  During 1995 and
1996 the Company released a total of 23 and 24 films, respectively.  The Company


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released 25 films in 1997 and expects to release a similar number in 1998.  Most
of the films distributed by the Company in this market to date have been films
that were released directly to the video rental market without any prior
exhibition in theaters or without a premiere on cable or broadcast television.

     The market for home videos has become increasingly competitive and video
rental outlets are becoming more selective in their choice of product.  In
addition, overall growth in the domestic home video market has slowed as growth
in the number of new outlets and new VCR homes has moderated.  The growth in
outlets designed to serve the rental market has remained essentially flat or has
actually declined for the past several years.  Furthermore technological
developments could make competing delivery systems economically viable and could
affect the home video marketplace.  This has resulted in a significant decrease
in the number of A Pix's competitors.

     The Company has been reacting to this evolving market by seeking to acquire
(i) increasingly higher quality films with more recognizable stars and better
production values that generally are targeted to niche audiences and (ii) all
North American distribution rights, which enables the Company's other divisions
to exploit new evolving technologies as well as presently existing distribution
channels such as the following:  pay-per-view, which allows cable television and
satellite service subscribers to purchase individual programs; pay television,
which allows cable television subscribers to view premium channels such as
HBO/Cinemax and ShowTime/The Movie Channel; and broadcast and basic cable
television delivery systems, which allow viewers to receive, without charge,
programming broadcast over the air by affiliates of the major networks (ABC,
CBS, NBC and Fox), newly formed networks (UPN and WB Network), independent
television stations and cable and satellite networks and stations. 
Approximately 68% of the Company's films distributed to the domestic home video
rental market during 1997 were subsequently licensed for exhibition on
pay-per-view and pay and basic cable television by the Company's North American
division.  Almost all feature films released by A Pix are subsequently
distributed to the consumer market by Unapix/Miramar.  In addition, certain
films that were previously released by A Pix are now being reformatted on DVD
for new distribution for purchase by consumers.  

     Notable films that have recently been released by A Pix or are scheduled to
be released by it within the next 12 months include the following:  "Diary of a
Serial Killer," starring Gary Busey, Michael Madsen and Arnold Vosloo; "Bram
Stoker's The Mummy" starring Lou Gossett, Jr., which is scheduled to premiere on
HBO in October 1998; and "Little Punks" starring Cathy Moriarty and Randy Quaid.


INTERNATIONAL OPERATIONS

     The Company, through its division Unapix International, exploits rights to
Properties in the international marketplace; marketing Properties to
broadcasters and others in more than 100 countries.  

     The Company's international library contains documentaries and television
series.  Its library also contains films in the drama, adventure, comedy,
horror, musical, war and western genres as well as music videos from Miramar. 
Many of the Company's recent acquisitions for international distribution consist
of documentaries and light entertainment programs from independent producers; a
number of which have aired on PBS, the Disney, Discovery and A&E Channels as
well as on The Learning Channel.  In addition, during 1997 the Company funded
all or a significant portion of the production of approximately 64 hours of
non-fiction television programming that it could exploit in the international
marketplace.


     During 1994, the Company formed a unit to concentrate on international
television distribution of educational programming.  Currently, the unit has
over 350 hours of telecourse programming in diverse areas, such as science,
humanities, business, sociology, child development and art.


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<PAGE>

     Notable Properties that the Company commenced distributing in the
international marketplace in 1997 or the first quarter of 1998 include the
following:  "Nova's Century of Discovery" (a series consisting of five two-hour
programs that explores 100 years of monumental achievements in a variety of
scientific fields); "Innovation" (a series consisting of three one-hour specials
exploring revolutionary medical technologies); "Banana Zoo" (a series consisting
of 26 half-hour programs that is designed to foster a child's love for nature
and animals); and "Inside the Actors Studio" (a series consisting of 42 one-hour
interviews with actors, directors, composers and playwrights that is exhibited
in the United States on Bravo, The Film and Arts Network and which won the 1997
Ace Award for Best Talk Show).

NORTH AMERICAN TELEVISION LICENSING

     The Company, through its division Unapix North America, licenses the
Company's feature films and television programs to domestic and Canadian
television networks, independent television stations, satellite networks and
cable system operators.  The Company also acts as a sales agent for other
distributors or producers with respect to the licensing of their programs in
these markets, for which the Company receives a sales commission.

     Notable Properties that the Company has licensed in the North American
television market include the following: "Ushuaia:  Adventures of Nicolas Hulot"
(a series consisting of 26 one-hour episodes of a television series that had
been broadcast in France for many years.  The series began broadcast on CNBC in
January 1998); "Great Minds of Business," "Great Minds of Medicine," and "Great
Minds of Science," (each of which is a series consisting of five half-hour
programs.  Each episode focuses on a significant innovator within the particular
subject matter of the series.  The series were broadcast on 67% of the PBS
stations nationwide covering 18 of the top 20 domestic markets); and
"Superstructures" (a series consisting of five one-hour programs featuring
episodes on Nuclear Submarines, Tunnels, Skyscrapers, the Panama Canal and an
oil rig off the coast of Nova Scotia.  Three episodes aired on The Learning
Channel ("TLC") in November 1997 and the last two episodes are slated to be
exhibited by TLC in June 1998).  




CONSUMER PRODUCTS

     The Company, through its division Unapix/Miramar, conducts "sell-through"
operations, marketing products that are intended to be purchased by consumers
(such operations were formerly operated through the Company's division known as
Unapix Consumer Products).  Products marketed by this division primarily consist
of feature films, television series and special interest programs on
videocassettes.  Typical suggested retail prices for videocassettes to be
marketed as sell-through range from $9.95 to $19.95.  At such prices it is
believed that the product becomes attractive for consumer purchase.

     A portion of the Company's sell-through operations is conducted under the
name "Inner Dimension."  Inner Dimension currently distributes home videos and
audio books, which explore the dynamics of the human mind or body or
metaphysics, to retailers, mail-order companies, mass merchants and distributors
primarily in North America.  Many of the Properties marketed by Inner Dimension
were the same Properties that the Company marketed prior to 1997 under the name
"Mystic Fire."  The Company had operated Mystic Fire's catalogue and wholesale
business under exclusive license from 1995 through the end of 1996.  Programs
distributed by Inner Dimension include PBS specials such as the following:
Andrew Weil's "Eight Weeks to Optimum Health" and "Spontaneous Healing;"
Caroline Myss' "Three Levels of Power and How to Use them" and "Why People Don't
Heal and How They Can;" Deepak Chopra's "The Seven Spiritual Laws of Success"
and "The Way of the Wizard;" and Joseph Campbell's  "Mythos," hosted by Susan
Sarandon, which explores the world's most enduring archetypes.


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     In addition to the Inner Dimension operations, the Company also distributes
for consumer purchase films and programs licensed and distributed by the Company
in other markets as well as Properties acquired by the Company solely for
sell-through distribution.  The Company currently markets to consumers
approximately two titles per month that were previously released to the home
video rental market by A Pix; marketing for sell-through typically commences
approximately nine months after the initial rental market release.  In addition
to those Properties distributed by Inner Dimension and also marketed by the
Company's other divisions, notable Properties currently being distributed by
Unapix/Miramar include the following: "The U.S. News & World Report" (a
collection of three television series and two television specials consisting of
a total of 34 hours of programming which are marketed by the Company under the
label "U.S. News & World Report Video"), "Tread" and "Retread" (a series of two
90 minute episodes of video road trips that follow the manic exploits of world
champion mountain biking athletes);  and "Smithsonian World"  (consisting of
thirteen one-hour programs, which explore modern culture).

MARKETING OF FEATURE FILMS AND TELEVISION PROGRAMS

     In acquiring the rights to various film and television Properties, the
Company analyzes the viability of the Properties for distribution to the various
marketplaces in an effort to target the Properties' audience appeal.  After such
analysis, the Company markets the Properties to the various media in a selective
manner.  The Company and its key personnel have established contact with many
broadcasters, cable system operators and home video companies worldwide.  The
Company also presents certain of its films and television programs to foreign
and domestic broadcasters, cable system operators and home video companies who
are in attendance at the various international and domestic television
programming conventions such as NATPE, MIP, MIP Asia, MIPCOM, DISCOP East
Europe, the London Screenings, and the Los Angeles Screenings.  In addition,
with respect to certain of its non-fiction programming, i.e. to date its "Great
Minds" series, the Company has entered into arrangements with publications to
both promote the series and give the series greater prominence, such as Forbes
for "Great Minds of Business," Health magazine for "Great Minds of Medicine,"
and Discover magazine for "Great Minds of Science."

     In connection with its distribution of films and television programming to
the international marketplace and its licensing of such Properties to the North
American television market, the Company licenses Properties for exhibition
primarily via pay, basic cable, pay-per-view and broadcast television, and, in
the case of international distribution, also via home video publishers.  The
Company enters into license agreements with ultimate exhibitors, i.e.,
television networks, television stations and cable and satellite systems
operators, as well as sub-distributors.  The Company does not, with some minor
exceptions, directly distribute videocassettes internationally, rather, its
licenses videocassette distribution rights to sub-distributors.  During 1997 the
Company also licensed 67 feature films and eight television programs or series
(as well as nine music videos) for distribution on DVD.

     The Company's license agreement with a customer typically grants the
customer an exclusive license to either exhibit or distribute a specific film or
television program for a specified term, territory and medium, and in the case
of a license to a pay television channel or a broadcast or cable television
operator, the right to exhibit the Property for a specified number of times. 
Upon the execution of the license agreement, the Company typically delivers a
copy of the master of the film or television program in a format appropriate to
the customer's needs.  In consideration for the granting of the license to a
specific film or television program, the Company receives a licensing fee,
which, in the case of a license granted to a distributor or a pay-per-view
television exhibitor, is a percentage of revenues from the licensee's
distribution or exhibition of the Property and may include an advance of the fee
which is then recoupable from what otherwise would have been payable to the
Company.  In the case of a license granted directly by the Company to a
broadcast network or pay or basic cable television operator, the Company usually
receives a set license 


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fee that is not dependent upon the amount of revenue achieved by the channel,
network or operator from the exhibition of the licensed Property.

     In certain instances the Company has derived revenue streams from the
non-fiction programs that it has developed and produced from other than
licensing the Property for television exhibition or from videocassette, laser
disc or DVD distribution.  During 1997 the Company sold a sponsorship of its
"Great Minds of Business" series to Travelers Insurance and a sponsorship of its
"Great Minds of Medicine" to Schering/Plough.  The Company also licensed the
book rights to "Great Minds of Business" to John Wiley & Sons Publishing.  The
Company will seek sponsors for certain of the future Properties that it develops
as well as seek to exploit certain of these programs in a number of different
distribution platforms as was the case with "Great Minds of Business."

     The Company distributes videocassettes of feature films to the domestic
home video rental market primarily by selling them to  ten wholesale
distributors, who then sell the videocassettes to rental outlets, such as video
rental chains, individual video rental stores, and supermarkets.  The Company
also sells videocassettes directly to Blockbuster Entertainment.  During 1997,
an aggregate of approximately 22% of the Company's total revenues on a
consolidated basis arose from sales to two (2) videocassette distributors,
Ingram Entertainment, Inc. and Baker & Taylor, and one rental chain, Blockbuster
Entertainment.  The Company distributes videocassettes to the Canadian home
video rental market by sub-licensing the Canadian home video rights to a
Canadian distributor, who then distributes the Properties to Canadian rental
outlets.  In addition, the Company sub-licenses laser disc and DVD rights to
other domestic and Canadian distributors, who directly or indirectly, sell the
laser discs and DVDs to retail outlets.

     The Company selects an average of approximately two feature films for
release each month to the North American home video rental market. 
Approximately sixteen weeks prior to a video's retail release, the Company
embarks on a marketing campaign that includes advertising in distributor mailers
and trade publications and direct mailing of marketing literature and screening
copies of the video.  The Company sells video cassettes to the North American
home video rental market primarily on a "pre-order" basis.  Distributors who
meet certain sales and performance objectives may earn rebates, return credits
and cooperative advertising allowances.

     The Company believes that the packaging and art work for the video boxes,
posters, advertisements and other selling materials relating to the films it
distributes to the North American home video rental market are key factors in
determining the amount of sales.  The Company designs the promotional campaign
for each such Property it releases.  While some of the art works for packaging,
advertisements, trade show displays and posters are created entirely in-house,
the Company usually commissions outside parties to assist in the art work for
these materials.  The Company then arranges for the printing, production and
distribution of all promotional materials.  

     Most of the feature films the Company distributes to the domestic home
video rental marketplace are released directly to that market.  Since 1995 the
Company has not engaged in theatrical distribution, albeit it has distributed
films that were released by others theatrically.  Films that are first released
theatrically are generally released to the home video rental market four to six
months after the theatrical release.  Films that are first exhibited on cable
television are generally released to the home video rental market two to three
months after the television premiere.  It is expected that in the future a
greater percentage of the films the Company releases for the home video rental
market will first be released theatrically or premiere on cable television. 
Currently, two of the films that A Pix expects to release to the home video
rental market within the next 12 months,  "Bram Stoker's The Mummy" and "Devil
in the Flesh," have been licensed by the Company's North American division to
premiere on HBO during 1998.  The Company believes that a theatrical release  or
pay cable premiere of a film should complement its home video release by 


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generating greater interest and awareness of the film before it is marketed for
home videos.

     The Company markets films and television programs that are intended to be
purchased by consumers by the following means: (i) selling to distributors and
"rack-jobbers" who then sell the products to large retail outlets (such as "Best
Buy," "Music Land" and "Tower Records"), convenience stores (such as "Seven
Eleven") or mass merchants (such as "Sears"), or otherwise market the products
via shelf space they occupy at these locations, for resale to the ultimate
consumer, (ii) direct response advertisements appearing on the Company's
videocassettes and at the end of broadcasts of some of the Company's programs,
and (iii) sales to specialty retail outlets (such as governmental agencies, gift
stores, libraries, museums, Radio Shack, The Nature Company, The Sharper Image
and General Nutrition Centers).  In addition, the Company markets Properties
directly to consumers through their inclusion in catalogues operated by the
Company and others.  

MUSIC VIDEOS AND AUDIO TAPES AND COMPACT DISCS - MIRAMAR IMAGES, INC.

     On March 17, 1997 the Company acquired all of the capital stock of 
Miramar Images, Inc. ("Miramar") for an aggregate purchase price of 
approximately 313,500 shares of the Company's common stock.  The Company's 
shares had an aggregate fair market value of approximately $1,400,000 as of 
the closing date and were issued and delivered to certain creditors and 
shareholders of Miramar in exchange for Miramar capital stock and Miramar 
debt owed to them.  Additionally the Company incurred cash costs of $736,000 
and assumed liabilities of $964,000 in connection with the Acquisition.

     Miramar primarily produces and distributes music videos and audio
recordings for the New Adult Contemporary market, i.e., products that are
designed to appeal to individuals over the age of 25.  Miramar's videos are
primarily long form music videos that match visual images with music rather than
attempting to tell a story.  Miramar commenced operations in 1985 and was known
primarily as a "New Age" label.  Early Miramar productions included "Natural
States," "Desert Vision," and "Canyon Dreams."  During the 1990's Miramar
progressed from merely being a "New Age" label and began producing videos that
utilize a computer animated medium rather than traditional cinematography, such
as "The Mind's Eye," "Beyond the Mind's Eye" and "The Gate to the Mind's Eye." 
During 1997 Miramar continued this trend by releasing "TeleVoid," which was
first released on DVD and is now being marketed on videocassette.  Miramar
markets the soundtracks to a number of its videos separately as audio products. 
In addition, Miramar's record division produces and markets audio albums
independent of videos.  Artists who have recorded on the Miramar label include
the following:  Tangerine Dream; Pete Bardens; Jan Hammer; Thomas Dolby; and
Abraxas Pool.  Audio only albums that have been released by Miramar include: 
"Drive"; "220 Volt Live"; and "Tyranny of Beauty."  While most of Miramar's
products are marketed to adults, Miramar has a children's line of videos,
examples of which are "Gift of the Whales," "Imaginaria," and "Elroy's Toy." 
Currently Miramar has distribution rights with respect to 36 video titles and 93
audio titles.

     A significant portion of Miramar's videos are conceived of entirely by
Miramar in-house personnel.  After a concept has been agreed upon, Miramar will
license existing film footage from film libraries or retain cinematographers,
usually on a "work for hire" basis, to create the visual images for the video. 
Licenses for film footage typically will require a small royalty advance as well
as payment of a small royalty in exchange for the right to use the film footage.
Computer animation and nature/soundscape long-form music videos have been
created in this manner.  Miramar also obtains manufacturing and distribution
rights for a significant portion of its videos through licenses from independent
production companies.  These licensed productions include children's
educational, children's animation and nature/soundscape titles which, in the
opinion of Miramar's management, have the look and feel of Miramar's own
productions.  The remainder of Miramar's videos consist of both videos which are
compilations of existing 


                                          10

<PAGE>

Miramar video product and independently produced videos with respect to which
Miramar has purchased all copyrights.  

     Soundtracks for videos as well as recordings that are released only as
audio compact discs and tapes are primarily obtained from artists and their
agents who approach Miramar seeking a distribution label.  In almost all cases,
the music has been recorded on a relatively high quality master when it is
presented to Miramar.  Miramar may re-sequence and remix the master, however,
rarely will it arrange for a record to be produced by an artist in a recording
studio.

     Most recordings are acquired by Miramar's purchasing the master.  Such
master purchase arrangements usually enable Miramar to have distribution rights
in all media and territories in perpetuity to the recordings thereon.  The
artist is usually prohibited from rerecording the music on the master for a
period of three to seven years.   To a lesser extent, Miramar may acquire
recordings by obtaining the exclusive right to distribute the recordings on
audio tapes and compact discs, and where applicable, use the recordings in
conjunction with videos.  The license will usually be limited to a certain time
period and territory.  In acquiring distribution rights to recordings under
either master purchase arrangements or license agreements, Miramar usually pays
a small royalty advance as well as royalties based upon net sales.  In some
instances Miramar may sign an exclusive recording agreement with a particular
musician or musical group, whereby Miramar agrees to acquire the recording that
has already been presented to Miramar by the musician or musical group and has
the option to acquire the next subsequent recordings at an agreed upon fee
structure.

     Miramar distributes its products to both the "traditional retail
marketplace," such as retail record and video stores and chain bookstores, as
well as specialty retail outlets (alternative markets), such as governmental
agencies, gift stores, libraries, museums, Radio Shack and The Sharper Image. 
In January, 1998 Miramar entered into a distribution agreement with Distribution
North America ("DNA"), a division of Valley Media, Inc., for distributing its
videocassettes and audio compact discs and tapes in the "traditional retail
marketplace" in United States, which is the principal territory in which
Miramar's products are sold.  The distribution agreement with DNA expires in
January 2001.  Miramar maintains an in-house sales department that promotes and
markets its products particularly targeting the alternative market; it also
utilizes radio air play, television exposure, retail promotion, and publicity
and advertising to create demand within both the traditional and alternative
markets.  Miramar from time to time has licensed its videos for exhibition on
PBS and the Disney Channel.  It also markets its products through direct
response television advertisements and direct mail, including through catalogues
operated by the Company and others.

FOREIGN SALES

     Revenues derived by the Company from foreign markets were 
$6,358,000 and $4,805,000, in the years ended December 31, 1997 and 1996,
respectively.  The Company is subject to various risks inherent in foreign trade
which could have a significant impact on the Company's ability to market its
Properties competitively.  These risks include economic or political instability
and artificial ceilings placed on the demand for the Company's Properties in
foreign markets by foreign government's implementation of local content and
quota requirements prohibiting or limiting the quantity of foreign-made feature
films and television programs which may be exhibited or broadcast in one or more
foreign countries.  

GOVERNMENT AND OTHER REGULATION

     United States television stations and networks as well as foreign
governments impose restrictions on the content of motion pictures which may
restrict in whole or in part exhibition on television or in a particular
territory.  There can be no assurance, therefore, that current or future 


                                          11

<PAGE>

restrictions on the content of the Company's films, may not limit or affect the
Company's ability to exhibit certain of such motion pictures in such media or
markets.

EMPLOYEES

     Currently the Company and its subsidiaries, including Miramar, have 80
employees, five of which are part-time.  

COMPETITION

     Success in the distribution of films, television programming and audio
compact discs and tapes is largely dependent upon a company's ability to acquire
distribution rights to products at attractive prices and upon the subsequent
performance of these products in the marketplace.  The Company faces significant
competition both in obtaining distribution rights and in selling products.

     Competition for distribution rights to films, television programs and
recordings is based primarily on the amount of royalty advances that companies
are willing to offer to producers and recording artists and the producers' and
artists' perception of the Company's marketing capabilities and its commitment
to marketing the property.  The Company's principal competitors for acquisitions
of films and television programs are companies such as New Line Cinema, Live
Entertainment, Trimark Entertainment, Columbia Tristar Home Video, BMG
Entertainment,  All American Television and Tapestry International.  The
Company's principal competitors for recordings are Windham Hill, Private Music,
and Narada Media; however, to the Company's knowledge, Private Music and Narada
Media do not produce or distribute long form music videos to any significant
extent.  Many of the Company's competitors have significantly greater financial
resources and longer operating histories than the Company.  In general, the
Company acquires films, television programming, videos and recordings that are
designed to appeal to a specific and limited audience, and which can be promoted
with a limited advertising budget.  Many of the films and television programs
the Company acquires may appeal to such a targeted audience that competitors who
are financially stronger than the Company may not actively pursue them, and the
competitors that do seek to acquire distribution rights in them may be
financially weaker than the Company, do not have as good a marketing reputation,
or are unable to exploit the films or programs in as many markets as the Company
(i.e. domestic television, domestic home video rental, consumer or international
markets).  Most of the recordings that Miramar seeks to acquire are not pursued
by major record labels because of their limited appeal.  The Company believes
that Miramar can compete against other smaller record labels for acquisitions of
recordings because of Miramar's reputation in the industry and the fact that it
produces videos that it believes attract artists to its label as such videos
provide another outlet for their music.

     In marketing films, television programs, recordings and music videos, the
Company competes against the same competitors with whom it competes for the
acquisition of such products, as well as major studios and record companies,
such as Time/Warner, The Walt Disney Company, MCA, Paramount, Fox,
Sony/Columbia, and Geffen Records.  Since the Company expends significantly less
on product acquisitions than many of these competitors it believes it can
produce profits from even modest sales volumes.

SERVICEMARKS AND TRADEMARKS

     The Company has registered the service mark "UNAPIX" and the trademark
"MIRAMAR PRODUCTIONS" with the United States Patent and Trademark Office.  The
Company has applied for federal registration of the following trademarks or
service marks: "A-PIX," "INNER DIMENSION," "UNAPIX FILMS," "UNAPIX CONSUMER 


                                          12

<PAGE>

PRODUCTS," "THE HORROR SHOP," "GREAT MINDS OF            ," "Miramar" and
related logo treatments and designs.

FACTORS WHICH MAY AFFECT RESULTS

     THIS ANNUAL REPORT ON FORM 10-KSB CONTAINS "FORWARD-LOOKING STATEMENTS"
WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. 
SUCH STATEMENTS MAY CONSIST OF ANY STATEMENT OTHER THAN A RECITATION OF
HISTORICAL FACT AND CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY
SUCH AS "EXPECT," "ESTIMATE," "ANTICIPATE," "MAY," "BELIEVE," OR "CONTINUE" OR
THE NEGATIVE THEREOF AND SIMILAR EXPRESSIONS AND VARIATIONS THEREOF.  THE READER
IS CAUTIONED THAT ALL FORWARD-LOOKING STATEMENTS ARE NECESSARILY SPECULATIVE AND
THAT THERE ARE CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL EVENTS OR
RESULTS TO DIFFER MATERIALLY FROM THOSE REFERRED TO IN SUCH FORWARD-LOOKING
STATEMENTS.  CERTAIN OF THOSE RISKS AND UNCERTAINTIES ARE SET FORTH BELOW. 
HOWEVER, THE RISKS HIGHLIGHTED BELOW AND ELSEWHERE IN THIS ANNUAL REPORT SHOULD
NOT BE ASSUMED TO BE THE ONLY THINGS THAT COULD AFFECT THE COMPANY'S FUTURE
PERFORMANCE.  THE COMPANY DOES NOT HAVE A POLICY OF UPDATING OR REVISING
FORWARD-LOOKING STATEMENTS AND THUS IT SHOULD NOT BE ASSUMED THAT SILENCE BY THE
COMPANY'S MANAGEMENT OVER TIME MEANS THAT ACTUAL EVENTS ARE BEARING OUT AS
ESTIMATED IN SUCH FORWARD-LOOKING STATEMENTS.     

NATURE OF THE ENTERTAINMENT INDUSTRY - The film, television programming and
audio compact disc and tape distribution business involves a substantial degree
of risk.  The success of a product depends upon unpredictable and changing
factors such as competition and audience acceptance, which may bear little or no
correlation to the Company's production and other costs.  Audience acceptance of
the Company's products represents a response not only to the artistic components
of the products, but also to the level of advertising and promotion by the
distributor and availability of alternative forms of entertainment and leisure
time activities, general economic conditions and public taste, and other
intangible factors, all of which change rapidly and cannot be predicted with
certainty.  In addition, as a result of the Company increasing its resources to
film and television product earlier in its production and acquisition stages,
the possibility always exists that the finished product may be different from
that which was initially envisioned.  Therefore, there is a substantial risk
that some or all of the Company's products may not be commercially successful,
resulting in costs not being recouped or anticipated profits not being realized.

CAPITAL INTENSIVE INDUSTRY; ADDITIONAL FINANCING REQUIREMENTS - The  film,
television programming and audio compact disc and tape distribution and
licensing industry is capital intensive and requires significant expenditures of
funds to  establish a library of Properties from which revenues may be
generated.  The Company could be dependent upon future financing in order to
compete more effectively in the marketplace.  The Company's cash requirements
have been and will continue to be significant.  If additional funding is
unavailable to the Company when needed, the Company could be required to curtail
significantly one or more aspects of its operations and the Company's business
and financial condition could be materially adversely affected.

DEPENDENCE UPON KEY PERSONNEL - The Company is highly dependent on the services
of Herbert M. Pearlman, its Chairman of the Board, David M. Fox, its President,
David S. Lawi, its Treasurer and Chairman of the Executive Committee, Scott
Hanock, its Senior Vice President and Managing Director of International Sales
and Marketing, and Robert Baruc, its Executive Vice President (and President of
A Pix Entertainment). The loss of the services of one or more of Messrs.
Pearlman, Fox, Lawi, Hanock, or Baruc would have a material adverse effect upon
the Company's business.  Presently, the Company has key man life insurance only
on the lives of Messrs. Fox and Baruc, in the amounts of $1,000,000 and
$750,000, respectively.

COMPETITION - The Company currently competes with other home video and
television licensing and distribution companies as well as other recording
companies, including many of which have longer-standing relationships in the
industry, significantly greater financial resources and more extensive libraries


                                          13

<PAGE>

than the Company.  There can be no assurance that the Company will be able to
compete successfully against these other companies.

SHIFT IN STRATEGY - Although members of management of the Company have prior
experience in film and television program productions, the Company itself has a
limited track record in such activities. This shift in strategy toward an
increased emphasis on motion picture production may increase the rewards
available to the Company, but may increase the risks as well.





ITEM 2.  PROPERTIES

     The Company's principal executive offices, consisting of approximately
11,254 square feet, are located at 200 Madison Avenue, 24th Floor, New York, New
York 10016.  The Company occupies these offices pursuant to an eleven-year lease
that commenced in May 1996 and provides for annual rent of $281,350 during the
first three years, annual rent of $298,231 during the next three and one-half
years, and annual rent of $320,739 during the remainder of the lease term.

     The Company also leases approximately 3,400 square feet of office space
located at 4515 Van Nuys Boulevard, Sherman Oaks, California 91403.  The current
lease is for a term of three years, commencing April 1996, at a base annual rent
of $44,400 for the first year, $45,600 for the second year and $46,200 for the
third year. This space is used for the offices of Unapix International.     

     The Company also shares occupancy, with three other affiliated
corporations, of 4,500 square feet of office space located at 537 Steamboat
Road, Greenwich, CT.  All four corporations are tenants under a lease which is
for a term of three years commencing May 1995 with an annual base rent of
$99,000 for the first year, $103,500 for the second year and $108,000 for the
third year.  The Company currently pays approximately 25% of the rent.

     Miramar's offices, consisting of approximately 7,000 square feet of office
space, are located at 200 Second Avenue West, Seattle, Washington 98119. 
Miramar occupies these offices pursuant to a lease expiring in January 1999,
which provides for a current base annual rent of $99,000.

     The Company believes that its office space is adequate for its current
needs.


ITEM 3.  LEGAL PROCEEDINGS

     The Company is involved in legal proceedings which have arisen in the
normal course of business.  The Company believes that any liability which may
arise as a result of any such proceeding will not have a material adverse effect
on its financial condition.





ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     On October 6, 1997, the Company held its 1997 Annual Meeting of
Stockholders at which stockholders elected Lawrence Bishop and Walter M. Craig,
Jr. as directors of the Company to serve until the Company's Annual Meeting of
Stockholders in the year 2000, or until their successors are duly elected. 
4,455,120 shares were voted in favor of the election of such individuals and
votes were withheld with respect to 110,910 shares.  In addition to the 


                                          14

<PAGE>

individuals elected as directors at the 1997 Annual Meeting, Messrs. Herbert M.
Pearlman, David M. Fox, David S. Lawi, Robert Baruc, Scott Hanock and Martin D.
Payson continue to serve as directors of the Company.

     The stockholders also approved an amendment to the Company's Certificate of
Incorporation increasing the number of authorized shares of Common Stock from
20,000,000 shares to 40,000,000 shares.  The holders of record of 4,373,078
shares voted in favor of the amendment, including 3,985,752 shares of Common
Stock, 151,665 shares (including 43,331 shares of Common Stock) voted against
the amendment and 41,287 shares elected to abstain.

     In addition, the stockholders also approved an amendment to the Company's
1993 Stock Option Plan (the "Plan") at the Annual Meeting.  The amendment
increases the number of shares authorized for issuance under the Plan from
600,000 shares to 875,000 shares.  Holders of 4,299,730 shares voted in favor of
the amendment, holders of 223,655 shares voted against the amendment and holders
of 42,645 shares voted to abstain with respect to the resolution. 






                                       PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED           
STOCKHOLDER MATTERS.

(a)  MARKET INFORMATION

     The Company's Common Stock and Class B Warrants are primarily traded on the
American Stock Exchange (the "AMEX") under the symbols UPX and UPX.WS.B,
respectively.  


     The following table sets forth the range of high and low sales prices of
the Company's securities as reported by the AMEX.

<TABLE>
<CAPTION>
                                                     American
                                                  Stock Exchange
                                                  --------------

                                                  Low       High
                                                  ---       ----
<S>                                             <C>         <C>
1996
----

First Quarter       Common Stock                  4  3/8    5  1/2
                    Class B Warrants                 7/8    1  3/8

</TABLE>
                                          15

<PAGE>

<TABLE>
<S>                                             <C>         <C>
Second Quarter      Common Stock                  3  5/8    4 11/16
                    Class B Warrants                 1/2    1  3/16

Third Quarter       Common Stock                  3  1/2    4  7/8
                    Class B Warrants                 9/16      7/8

Fourth Quarter      Common Stock                  3  1/4    4  7/16
                    Class B Warrants                 7/16      3/4


1997
----

First Quarter       Common Stock                  3 13/16   4  3/4
                    Class B Warrants                 9/16      7/8

Second Quarter      Common Stock                  3  9/16   4 11/16
                    Class B Warrants                 9/16   1

Third Quarter       Common Stock                  4  1/8    4 15/16
                    Class B Warrants                 5/8    1

Fourth Quarter      Common Stock                  3 13/16   5  3/8
                    Class B Warrants                 9/16   1  5/16

</TABLE>
___________________________






(b)  HOLDERS

     As of March 3, 1998, there were, to the best of the Company's knowledge,
approximately 201 and 29 holders of record (not beneficial holders) of the
Company's Common Stock and Class B Warrants, respectively.

(c)  DIVIDENDS

     The Company has not paid any cash dividends.  The Company does not
anticipate paying any cash dividends in the foreseeable future, and is
prohibited from paying any cash dividends on its common stock under its working
capital credit facility.  In April 1996 the Company declared a 5% stock dividend
on its outstanding shares of Common Stock.  The record date for the dividend was
Monday, April 22, 1996, and the payment date was Monday, May 6, 1996.

(d)  RECENT SALES OF UNREGISTERED SECURITIES

     Set forth below is a description of all sales of unregistered securities
during the fourth quarter of 1997 (sales of unregistered securities during the
first three quarters of 1997 were previously reported on the Company's Quarterly
Reports on Form 10-QSB).  

     In October through December of 1997 the Company sold a total of 5.2 Units
of its securities.  Each Unit was priced at $250,000 and consisted of (i) a
$250,000 principal amount 10% Convertible Subordinated Note due June 30, 2004,
convertible into the Company's common stock, $.01 par value per share ("Common
Stock"), at an conversion price of $5.00 per share; and (ii) 25,000 common stock
purchase warrants, each entitling the holder to purchase one share of common
stock at price of $6.00 per share and expiring June 30, 2004.  The offering was
made pursuant to the exemption contained in Section 4(2) of the Securities Act
of 1933, as amended (the "Act").  All of the investors were "accredited" (as
such 


                                          16

<PAGE>

term is defined in Rule 501 of Regulation D promulgated under the Act).  In
connection with the sale of the Units, the Company incurred a placement agent
fee of: $65,000 in cash; and 26,000 common stock purchase warrants, each
entitling the holder to purchase one share of Common Stock at a price of $5.00
per share and expiring December 31, 2002 (the "Placement Fee Warrants").  The
Placement Fee Warrants were issued pursuant to the exemption contained in
Section 4(2) of the Act.

     A total of 1,125 shares of Common Stock are issuable to a public relations
firm as partial consideration for services rendered during the fourth quarter of
1997.  The shares were issued pursuant to the exemption contained in Section
4(2) of the Act.

     Also see "Management's Discussion and Analysis or Plan of Operation -
Liquidity and Capital Resources" for a description of a private placement of
$5,250,000 of convertible notes that closed in February 1998.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
                                          
YEAR ENDED DECEMBER 31, 1997 COMPARED WITH YEAR ENDED DECEMBER 31, 1996 

     Revenues for the year ended December 31, 1997 increased by 43%, to
$32,152,000 from $22,413,000 in 1996.  This increase in revenues is primarily a
result of the increase in licensing and distribution revenues by 90%, to
$12,671,000 as compared  to $6,673,000 in 1996 due to the release of productions
to the markets, the continued growth of the library through acquisitions and
aggressive marketing in the domestic and foreign marketplaces. It is expected
that improvement in licensing revenues will be realized in 1998.   In addition,
home video revenues increased by 24%, to $19,481,000 from $15,740,320 in 1996. 
This increase was largely due to a significant increase in sales volume by the
video sell-through operations which began in 1996, and to a lesser extent to the
distribution of higher quality films to the rental marketplace. Sell-through
revenues are expected to increase significantly in the second half of 1998, due
to the continued growth in the Company's library of programming.  The Company
released 25 films to the rental marketplace in 1997.  It is expected that the
Company will release a similar number of films in 1998, however, these releases
will be of higher quality films which should increase revenue.

     Licensing and distribution costs for the year ended December 31, 1997
increased by 90%, to $8,947,000 as compared to $4,704,000 in 1996. This increase
reflects increased royalty and amortization expense associated with the higher
levels of revenues described above.  The increase in home video operating costs
of 21% to $12,574,000 from $10,373,000, represents the amortization of film
costs and royalty expense related to the increase in home video revenues,
described above.

     General and administrative costs increased by 18%, to $7,364,000  for the
year ended December 31, 1997, as compared to $6,224,000 in the same period in
1996.  This increase is chiefly attributable to costs related to the
infrastructure required to support the Company's expansion and diversification. 
These costs mainly consisted of increased staffing and office costs to support
the increased sales activity described above.


                                          17

<PAGE>

     Interest and debt expense increased to $1,433,000 in 1997 from $541,000 in
1996.  The increase reflects the interest and related expenses on the increase
in the 10% Convertible Notes issued in 1997 and the second half of 1996, as well
as increased borrowings under the bank line of credit.

     The Company had income before taxes of $2,293,000 for the year ended 
December 31, 1997 compared to $989,000 for the year ended 1996.   The 
increase is due to the increase in sales volume described above, partially 
offset by increases in general and administrative expenses and interest 
costs.  Management anticipates that as the number of higher quality and 
higher margin releases to the video and the licensing and distribution 
markets increase in 1998, the impact on operating results should continue to 
be favorable.  

LIQUIDITY AND CAPITAL RESOURCES
    
     For the year ended December 31, 1997, the Company had operating cash 
inflows of $10,791,000, as compared to $10,395,000 for the prior year. 
Investing activity cash requirements of $20,570,000 in 1997, largely 
consisting of film cost expenditures and expenditures relating to the 
acquisition of Miramar Images, were primarily met by cash inflows from 
operations, the proceeds of the private offerings of 10% convertible 
subordinated notes, described below, increased utilization of the Company's 
credit facility, and cash on hand.
    
     In the normal course of business the Company makes certain guarantees to 
producers and other third parties as to the minimum amount such parties will 
receive from the Company's distribution of their products.  The Company has 
committed to pay film acquisition advances and guarantees of approximately 
$3,000,000  as of December 31, 1997, which amounts are payable upon delivery 
of the films.  The Company also expects to incur significant additional costs 
relating to its continued expansion.  The Company has met its funding needs 
through utilizing cash on-hand, operating cash flows, its line of credit and 
other financings, including the financings described below.
    
     In the first half of 1997, the Company completed $1,250,000 of private 
offerings of units, each consisting of: a $250,000 principal amount 10% 
convertible subordinated note due June 30, 2003 convertible into the 
Company's common stock at a price of $4.50 per share and warrants to purchase 
25,000 shares of the common stock, at an exercise price of $6.00 per share 
expiring June 30, 2003.   (for further details concerning these private 
placement see footnote 4).  

                                          18

<PAGE>

     On May 2, 1997, the Company entered into a credit facility (the 
"Facility") with Imperial Bank (the "Bank") providing for borrowings of up to 
$7,000,000.  The Facility was amended on March 25, 1998 to provide for 
borrowings of up to $10,000,000.  Loans are extended and required to be 
repaid based upon the Company's outstanding accounts receivable and other 
contractual rights to payment.  Interest on the outstanding loan balance 
accrues at a rate of 1.25% per annum in excess of the Bank's publicly 
announced benchmark rate (9.75% at December 31, 1997).  The Company paid 
facility fees of $112,500 and is also required to pay an unused credit line 
fee at a rate equal to .5% per annum of the amount by which the collateral 
base exceeds the average daily loan balance during any calendar quarter.  The 
term of the facility expires on September 30, 1998.  The Company expects to 
renew or replace the facility prior to its scheduled maturity.  Oustanding 
amounts under the facility are secured by a security interest in 
substantially all of the Company's assets.  The facility contains restrictive 
covenants, including a prohibition on the payment of cash dividends on the 
Company's Common Stock and replaces the Company's previous credit facility of 
$2,500,000 with Atlantic Bank of New York (see footnote 4).

    In the first quarter of 1998, the Company completed a private placement of
$1,300,000 principal amount of 10% convertible notes due June 30, 2004 
($1,275,000 was received in 1997 and $25,000 was received in 1998).  The 
notes are convertible into common stock at $5.00 per share.  For every $1,000 
principal amount of notes purchased, the holders also received warrants to 
purchase 100 shares of common stock at $6.00 per share expiring June 30, 
2004.  

    In February 1998, the Company issued, in a private placement, $5,250,000 
principal amount of 10% convertible subordinated debentures due June 30, 2003 
convertible initially into common stock at $4.75 per share.  The conversion 
price is subject to adjustment in certain circumstances, including resets at 
September 1, 1998 and March 1, 1999 to 110% of the then current market price 
of the common stock but not less than $4.00 and $3.50, respectively.  For 
every $1,000 principal amount converted, the holder will recieve warrants to 
purchase 125 shares of common stock (an aggregate of 656,250) at $6.00 per 
share expiring June 30, 2003.  If a holder converts the note prior to 
September 1, 1999, (the first date that the notes can be redeemed at the 
Company's option), the holder will receive an amount equal to 75% of the 
interest which would have accrued from date of conversion through September 
1, 1999.  The Company also issued warrants expiring June 30, 2003 to purchase 
42,500 shares of common stock at $6.00 per share as a placement fee.  Notes 
in the principal amount of $900,000 were issued to certain investors in the 
film acquisition fund in exchange for their interests therein (Note 4).

    Short term loans aggregating $1,000,000 were obtained in December 1997 
and in 1998 from Mezzanine Financial Corp., the Chairman ($150,000) and the 
Secretary ($100,000) in order to enable the Company to fund program 
acquisitions in accordance with its expansion plans pending the completion of 
the private offering of 10% convertible notes.  The Chairman and Secretary 
are also officers and directors of Mezzanine Financial Corp.  Upon completion 
of the offering, proceeds of $250,000 were used to repay the loans from the 
Chairman and the Secretary, and proceeds of $650,000 were used to repay 
Mezzanine Financial Corp.  The remaining $100,000 of the Mezzanine loan was 
exchanged for an equivalent amount of 10% convertible subordinated notes.  
(See footnote 13)


                                          19

<PAGE>

     LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

     The Company will need additional funding sources to meet its cash 
requirements for the upcoming year as well as for future acquisitions.  The 
feature film, television and audio compact disc and tape licensing and 
distribution industries  require significant expenditures of funds to 
establish and expand a library of films, programs and audio products from 
which revenues may be generated.  The Company could be dependent upon future 
financing to continue its long term plans of expansion and growth. The 
Company anticipates that as its asset base grows it will secure increasing 
working capital lines of credit as well as explore other film acquisition 
financing arrangements.  It is also possible that the Company may have 
additional debt or equity financings.


ITEM 7.  FINANCIAL STATEMENTS.

See financial statements set forth in Item 13 of this annual report.


ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

     None.









                                       PART III

ITEM 9.   DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
          COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

     The information required by Item 9 is incorporated herein by reference to
the information set forth under the sections entitled "ELECTION OF DIRECTORS and
"EXECUTIVE OFFICERS" in the Company's definitive Proxy Statement for the Annual
Meeting of Stockholders for 1998 to be filed with the Securities and Exchange
Commission not later than 120 days after December 31, 1997 (the "Proxy
Statement").

ITEM 10.  EXECUTIVE COMPENSATION.

     The information required by Item 10 is incorporated herein by reference to
the material under this heading in the Proxy Statement.


                                          20

<PAGE>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The information required by Item 11 is incorporated herein by reference to
the information under this heading in the Proxy Statement.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The information required by Item 12 is incorporated herein by reference to
the information under this heading in the Proxy Statement.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K.

     (a)  (1)  Financial Statements

<TABLE>
<CAPTION>
                                                       Page
                                                       ----
<S>                                                    <C>
     Independent Auditor's Report...............       F-1
     Consolidated Balance Sheet as of 
        December 31, 1997.......................       F-2
     Consolidated Statements of Operations
        for the years ended December 31, 1997
        and 1996................................       F-3
     Consolidated Statements of Changes in
        Stockholders' Equity for the years  
        ended December 31, 1997 and 1996........       F-4
     Consolidated Statements of Cash Flows
        for the years ended December 31, 1997
        and 1996................................       F-5
     Notes to Consolidated Financial Statements.       F-7

</TABLE>


                                      21

<PAGE>

                  [LETTERHEAD OF RICHARD A. EISNER & COMPANY]


INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
   Unapix Entertainment, Inc.


We have audited the accompanying consolidated balance sheet of Unapix 
Entertainment, Inc. and subsidiaries as of December 31, 1997, and the related 
consolidated statements of operations, changes in stockholders' equity and 
cash flows for each of the years in the two-year period then ended. These 
consolidated financial statements are the responsibility of the Company's 
management. Our responsibility is to express an opinion on these consolidated 
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing 
standards. Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the financial statements are free 
of material misstatement. An audit includes examining, on a test basis, 
evidence supporting the amounts and disclosures in the financial statements. 
An audit also includes assessing the accounting principles used and 
significant estimates made by management, as well as evaluating the overall 
financial statement presentation. We believe that our audits provide a 
reasonable basis for our opinion.

In our opinion, the financial statements enumerated above present fairly, in 
all material respects, the consolidated financial position of Unapix 
Entertainment, Inc. and subsidiaries as of December 31, 1997, and the 
consolidated results of their operations and their consolidated cash flows 
for each of the years in the two-year period then ended in conformity with 
generally accepted accounting principles.



/s/ Richard A. Eisner & Company, LLP



New York, New York
March 27, 1998


                                      F-1
<PAGE>

                   UNAPIX ENTERTAINMENT, INC. AND SUBSIDIARIES

                           Consolidated Balance Sheet
                      (In thousands, except share amounts)


<TABLE>
<CAPTION>
                                                                                  December 31,
                                                                                      1997
                                                                                  ------------
<S>                                                                               <C>


                                    ASSETS (Note 4)

     Cash and cash equivalents                                                      $      425
     Accounts receivable- trade, net of allowances of $1,610                            14,355
     Film costs, released films, net of amortization
         of $41,630                                                                     17,535
     Film costs, unreleased films and films in process                                   6,277
     Product inventory                                                                   1,653
     Property and equipment, net                                                           685
     Other assets                                                                        3,139
     Excess of cost over fair value of  net assets acquired                              3,002
                                                                                    ----------
         Total Assets                                                               $   47,071
                                                                                    ----------
                                                                                    ----------

                          LIABILITIES AND STOCKHOLDERS' EQUITY

     Liabilities :

     Accounts payable and accrued expenses                                          $    7,306
     Deferred income taxes                                                                 997
     Royalty payable                                                                     3,745
     Bank line of credit                                                                 6,793
     Advances from affiliates                                                              300
     Acquisition fund payable                                                            1,035
     Variable rate senior subordinated notes                                             2,864
     10% convertible subordinated notes                                                  8,001
                                                                                      --------
         Total Liabilities                                                          $   31,041
                                                                                    ----------

     Stockholders' Equity :

     Common stock $.01 par value per share; 40,000,000 
         shares authorized; 6,002,000 shares issued and 
         outstanding                                                                        60

     Cumulative convertible series A 8% preferred stock, 
         $.01 par value per share; 3,000,000 shares 
         authorized; 505,000 shares issued and outstanding
         (aggregate liquidation preference of $1,515)                                        5

     Additional paid-in capital                                                         17,179
     Notes receivable from equity sales                                                 (2,017)
     Retained earnings                                                                     803
                                                                                    ----------
         Total Stockholders' Equity                                                 $   16,030
                                                                                    ----------
         Total Liabilities and Stockholders' Equity                                 $   47,071
                                                                                    ----------
                                                                                    ----------
</TABLE>

           See accompanying notes to consolidated financial statements


                                      F-2
<PAGE>


                   UNAPIX ENTERTAINMENT, INC. AND SUBSIDIARIES

                      Consolidated Statements of Operations
                    (In thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                           For the Years Ended December 31,

                                                               1997                       1996
                                                               ----                       ----
<S>                                                       <C>                        <C> 
Revenues:

         Licensing and distribution                    $     12,671               $      6,673
         Home video                                          19,481                     15,740
                                                       ------------               ------------
                                                             32,152                     22,413
                                                       ------------               ------------

Operating costs:

         Licensing and distribution                           8,947                      4,704
         Home video                                          12,571                     10,373
         General and administrative expenses                  7,364                      6,224
                                                       ------------               ------------
                                                             28,882                     21,301
                                                       ------------               ------------

Income from operations before other income (expenses)         3,270                      1,112
                                                       ------------               ------------

Other income (expenses):

         Interest and debt expense                           (1,433)                      (541)
         Interest income                                        456                        418
                                                       ------------               ------------
                                                               (977)                      (123)
                                                       ------------               ------------

Income before provision for income taxes               $      2,293               $        989

Provision for income taxes                                      946                        400
                                                       ------------               ------------

Net income                                             $      1,347               $        589
                                                       ------------               ------------
                                                       ------------               ------------

Net income per basic common share                      $        .21               $        .09
                                                       ------------               ------------
                                                       ------------               ------------

Net income per diluted common share                    $        .19               $        .08
                                                       ------------               ------------
                                                       ------------               ------------

Weighted average number of basic common shares 
    outstanding                                               5,796                      5,268
                                                       ------------               ------------
                                                       ------------               ------------

Weighted average number of diluted common shares 
    outstanding                                               6,465                      5,838
                                                       ------------               ------------
                                                       ------------               ------------


</TABLE>


           See accompanying notes to consolidated financial statements

                                      F-3
<PAGE>


                   UNAPIX ENTERTAINMENT, INC. AND SUBSIDIARIES

           Consolidated Statements of Changes in Stockholders' Equity
                                 (In thousands)

<TABLE>
<CAPTION>
                                                 Convertible Preferred
                                Common Stock             Stock
                                ------------     ---------------------
                                                                                           Notes          Retained
                                         Par                    Par       Additional     Receivable       Earnings
                                       Value                  Value        Paid-in        on Stock      (Accumulated)
                              Shares    ($.01)    Shares      ($.01)        Capital        Sales          (Deficit)        Total
                              ------    ------    ------      ------        -------        -----          ---------        -----
<S>                         <C>      <C>       <C>         <C>           <C>            <C>            <C>              <C>
Balance at

     January 1, 1996           4,931       $49       654        $  7        $14,723       ($2,091)       ($1,073)          $ 11,615

5% stock dividend                 249        3                                  (3)                             -                 -

Notes receivable on common
     stock sales and
     exercise of warrants                                                                       58              -                58

Warrant, option and
     private placement
     expenditures                                                              (86)                             -               (86)

Issuance of common stock            3        -                                  12                              -                12

Preferred stock dividend           23        -                                (138)                                            (138)

Common stock issued in    
     lieu of cash dividend                                                      86                                               86
Issuance of warrants                                                           679                              -               679

Preferred stock conversion        119        1       (116)       (2)             -                              -                (1)

Net income for the year
     ended December 31, 1996                                                                                   589               589
                             -------   -------   --------   --------     ----------     ----------      ---------       -----------

Balance at

     December 31, 1996         5,325        53        538          5        15,273         (2,033)            (484)           12,814

Notes receivable on common
     stock sales and
     exercise of warrants                                                                      16                                16

Acquisition of subsidiary        314         3                               1,397                                            1,400

Exercise of options and
     warrants                    109         2                                 271                                              273

Warrant, option and
     private placement
     expenditures                                                              (14)                                             (14)

Issuance of common stock         202         2                                   7                                                9

Preferred stock dividend          19                                           (61)                          (60)              (121)

Common stock issued in
     lieu of cash dividend                                                      82                                               82
Issuance of warrants                                                           224                                              224

Preferred stock conversion        33                 (33)

Net income for the year
     ended December 31,                                                                                   1,347               1,347
     1997                    -------   -------   --------   --------     ----------     ----------      ---------       -----------

Balance at
      December 31, 1997        6,002       $60       505          $5       $17,179      ($2,017)            $803           $16,030
                             -------   -------   --------   --------     ----------     ----------      ---------       ----------
-----------                  -------   -------   --------   --------     ----------     ----------      ---------       ----------
</TABLE>

           See accompanying notes to consolidated financial statements

                                      F-4
<PAGE>


                   UNAPIX ENTERTAINMENT, INC. AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                         For the Years Ended December 31,


                                                                                             1997                       1996
                                                                                             ----                       ----
<S>                                                                                     <C>                        <C> 
CASH FLOWS FROM OPERATING ACTIVITIES:

     Net income                                                                         $   1,347                  $     589
     Adjustments to reconcile net income to net cash provided by operating
       activities:

         Amortization and depreciation                                                     15,200                     10,033
         Deferred income taxes                                                                867                        360
         Accretion of debentures discount                                                      90                         49
         Film rights received                                                                (900)
         Loss on disposal of assets                                                             -                          2
         Increase in accounts receivable, net                                              (3,802)                    (1,765)
         Increase in product inventory                                                       (605)                      (341)
         Increase in other assets                                                            (800)                    (1,326)
         Increase (decrease) in accounts payable and
              accrued expenses                                                             (1,582)                     1,300
         Increase in royalties payable                                                        976                      1,494
                                                                                        ---------                  ---------
Total cash flows provided by operating activities                                          10,791                     10,395
                                                                                        ---------                  ---------

CASH FLOWS FROM INVESTING ACTIVITIES -

     Film cost expenditures                                                               (19,600)                   (17,635)
     Acquisition of subsidiary                                                               (736)                         -
     Purchase of property and equipment                                                      (234)                      (304)
                                                                                        ---------                  --------- 
Total cash flows used by investing activities                                             (20,570)                   (17,939)
                                                                                        ---------                  ----------

CASH FLOWS FROM FINANCING ACTIVITIES:

     Proceeds from 10% convertible notes private placement                                  2,525                      5,948
     Net borrowings under bank line of credit                                               6,484                        309
     Proceeds from employee notes receivable                                                   55                         56
     Proceeds from warrant and option exercises                                               234                          -
     Private placement expenditures                                                           (14)                       (86)
     Proceeds from advances from affiliates                                                   300                          -
     Preferred stock dividend                                                                 (39)                       (52)
                                                                                        ---------                  ---------
Total cash flows from financing activities                                               $  9,545                   $  6,175
                                                                                        ---------                  ---------
</TABLE>



                                      F-5

<PAGE>


                   UNAPIX ENTERTAINMENT, INC. AND SUBSIDIARIES

                Consolidated Statements of Cash Flows (continued)
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                           For the Years Ended December 31


                                                                                                1997                     1996
                                                                                                ----                     ----
<S>                                                                                         <C>                      <C> 
NET DECREASE IN CASH AND CASH EQUIVALENTS                                                  $    (234)               $  (1,369)

CASH AND CASH EQUIVALENTS AT BEGINNING OF
         YEAR                                                                                    659                    2,028
                                                                                           ---------                ---------

CASH AND CASH EQUIVALENTS AT END OF YEAR                                                   $     425                $     659
                                                                                           ---------                ---------
                                                                                           ---------                ---------



SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

         Film cost additions                                                                   1,812                    1,106
         Acquisition of subsidiary                                                             2,365                        -
         Warrants issued                                                                         224                      292
         Conversion of accrued liability to acquisition fund payable                              71                       79
         Preferred stock dividend paid in common stock                                            82                       86
         Notes received for employee common stock purchase                                        39                        -
         Conversion of debt to equity                                                              -                       12
         Other                                                                                     8                        -
                                                                                           ---------                ---------

                                                                                              $4,601                   $1,575
                                                                                           ---------                ---------
                                                                                           ---------                ---------


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

         Cash paid for interest                                                              $ 1,390                  $   632
                                                                                           ---------                ---------
                                                                                           ---------                ---------

         Cash paid for taxes                                                               $      65                $      44
                                                                                           ---------                ---------
                                                                                           ---------                ---------

</TABLE>

               See accompanying notes to consolidated financial statements

                                      F-6
<PAGE>

                   UNAPIX ENTERTAINMENT, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements



1. Business Organization and Summary of Significant Accounting Policies:

         Business organization and presentation:

Unapix Entertainment. Inc. and its subsidiaries (the "Company"), is a 
world-wide licensor, distributor and producer of programming and feature 
films for the television market, including free and pay television, cable and 
satellite, and the home video market, including video cassette, laser disc 
and digital video disks.

         Significant Accounting Policies:

The following is a summary of significant accounting policies consistently
followed by the Company in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles which
require management to make estimates and assumptions that effect the amounts
reported in the financial statements and related notes. Actual amounts could
differ from those estimates.

Principles of consolidation:

The consolidated financial statements include the accounts of Unapix
Entertainment, Inc. and its wholly - owned subsidiaries. All significant
intercompany balances and transactions have been eliminated.

Revenue and cost recognition:

Revenues earned under non-cancelable film and television programming licenses
are recognized when the films or programming are made available to the licensee
and all other conditions of the sale are met. Home video and direct marketing
revenues are recorded upon shipment. The Company provides for estimated future
returns and allowances at the time the units are sold. Revenues relative to
other services are recognized when such services are performed.

Film costs include the direct costs of acquiring and producing films and
television programming, as well as exploitation costs which benefit future
periods. The Company amortizes film costs using the
individual-film-forecast-computation method. This method amortizes costs in the
same ratio that current gross revenues bear to anticipated total gross revenues
for each particular film. The anticipated total gross revenues are reviewed
quarterly by management, which may result in revised amortization rates and,
when applicable, write downs to net realizable value. Direct costs, such as
duplication and shipping, are expensed as the related product is shipped.

Film costs are stated at the lower of unamortized historical cost or estimated
net realizable value. Participation, royalty, and commission expense, to the
extent that such amounts can be reasonably estimated, are accrued when revenue
is recognized on the related license agreement.

                                      F-7
<PAGE>

                   UNAPIX ENTERTAINMENT, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)


1. Business Organization and Summary of Significant Accounting
Policies: (continued)

Property and equipment:

Property and equipment, which are stated at cost, are depreciated using the
straight-line method over estimated useful lives of 3 to 10 years.

Earnings Per Common Share

Effective for the year ended December 31, 1997, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share". In
accordance with SFAS 128, the Company provides earnings per basic and diluted
share.

The net income per basic common share is computed by dividing the net income
available to common shareholders by the weighted average number of common shares
outstanding.

 Net income per diluted share is computed by dividing the net income available
to common shareholders, adjusted on an as if converted basis, by the weighted
average number of common shares outstanding plus potential dilutive securities.
<TABLE>
<CAPTION>


                                                                                   Shares (in thousands)
                                                                              ------------------------------
                                                                                1997                  1996
                                                                              --------              --------
<S>                                                                         <C>                   <C> 
Weighted average  basic shares outstanding                                     5,796                 5,268
Effect of dilutive securities:
  Options                                                                        550                   506
  Warrants                                                                       119                    64
                                                                              --------              --------
Weighted average dilutive shares outstanding                                   6,465                 5,838
                                                                              --------              --------
                                                                              --------              --------
</TABLE>

<TABLE>
<CAPTION>

                                                                                  Dollars (in thousands)
                                                                              ------------------------------
                                                                                1997                  1996
                                                                              --------              --------
<S>                                                                      <C>                   <C> 
Net income                                                                    $1,347                  $589
Less preferred stock dividends                                                   121                   138
                                                                              --------              --------
Net income available to common shareholders
  per basic and dilutive share                                                $1,226                  $451
                                                                              --------              --------
                                                                              --------              --------
</TABLE>

                                      F-8
<PAGE>

                   UNAPIX ENTERTAINMENT, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)


1. Business Organization and Summary of Significant Accounting
Policies: (continued)

Earnings Per Common Share (continued)

Securities not included in the calculation of diluted earnings per share for the
years ended December 31, because of their anti-dilutive effects are as follows
(in thousands):
<TABLE>
<CAPTION>

                                                                                1997                  1996
                                                                               -----                 -----
<S>                                                                         <C>                   <C> 
Options                                                                          340                   102
Warrants                                                                       2,047                 3,097
Shares issuable on conversion of preferred stock                                 505                   538
Shares issuable on conversion of debentures                                    1,860                 1,327
                                                                               -----                 -----
                                                                               4,752                 5,064
                                                                               -----                 -----
                                                                               -----                 -----
</TABLE>

In February 1998 the Company issued $5,250,000 principal amount of 10%
convertible subordinated debentures due June 30, 2003 convertible, initially,
into common stock at $4.75 per share. For every $1,000 principal amount
converted, the holder will receive warrants to purchase 125 shares of common
stock at $6.00 per share expiring June 30, 2003. The Company also issued
warrants expiring June 30, 2003 to purchase 42,500 shares of common stock at
$6.00 per share as a placement fee.

Cash Equivalents

The Company considers all highly liquid investments purchased with a maturity of
three months or less to be cash equivalents.

Stock Options and Warrants:

The Company accounts for stock options and warrants issued to employees in
accordance with Accounting Principles Board Opinion 25 "Accounting for Stock
Issued to Employees." For financial statement disclosure purposes and issuance
of options and warrants to non-employees for service rendered, the Company
follows SFAS 123, "Accounting for Stock-Based Compensation."

Recent Pronouncements

In June 1997, the Financial Accounting Standards Board issued Statements of 
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" and 
No. 131, "Disclosure About Segments of an Enterprise and Related 
Information", effective for fiscal years beginning after December 15, 1997. 
The Company believes their adoption will not have a significant effect on its 
disclosures regarding financial position or results of operations.

EXCESS OF COST OVER FAIR VALUES OF NET ASSETS ACQUIRED

Excess of cost over the Fair Value of net assets acquired is being amortized 
on a straight line basis over 20 years and is evaluated periodically, and 
adjusted if necessary, if events and circumstances indicate that the carrying 
amount is impaired.


                                      F-9
<PAGE>

                   UNAPIX ENTERTAINMENT, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)


2. Film Costs

The Company's film costs include, in thousands:
<TABLE>
<CAPTION>

                                                                              December 31,
                                                                                  1997
                                                                              ------------
<S>                                                                            <C>
                           Films released                                       $ 59,165
                           Accumulated amortization                              (41,630)
                                                                              ------------
                                                                                  17,535

                           Films completed - not released                          2,409
                           Films in process                                        3,868
                                                                              ------------
                                                                                $ 23,812
                                                                              ------------
                                                                              ------------
</TABLE>

The company expects that it will amortize approximately 80% of its remaining
film costs during the three-year period ending December 31, 2000.

3. Property and Equipment, Net

Property and equipment, net, consists of the following, in thousands:

<TABLE>
<CAPTION>

                                                                              December 31,
                                                                                  1997
                                                                              ------------
<S>                                                                           <C>
                           Furniture and equipment                                $  830
                           Leasehold improvements                                    198
                                                                              ------------
                                                                                   1,028

                           Less accumulated depreciation                            (343)
                                                                              ------------
                                                                                  $  685
                                                                              ------------
                                                                              ------------
</TABLE>
                                      F-10

<PAGE>

                   UNAPIX ENTERTAINMENT, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)


4. Financing

In 1996 and through the first half of 1997, the Company completed a 
$7,222,500 private offering of units (proceeds of 
$5,947,500 in 1996 and $1,275,000 in 1997), each consisting of a $250,000 
principal amount of convertible subordinated notes due June 30, 2003 
convertible into common stock at $4.50 per share and warrants to purchase 
25,000 shares of common stock, at an exercise price of $6.00 per share 
expiring June 30, 2003. Such warrants (722,500) were valued at $471,000
(unamortized balance of $410,000 at December 31, 1997) and recorded as debt 
discount. The warrants and notes are redeemable by the Company under certain 
circumstances. The Company incurred placement and finders' fees of $394,000 
and granted warrants to purchase 295,000 shares of common stock at $4.50 
expiring in five years. Such warrants were valued at $167,000 and recorded as 
deferred financing costs which are being amortized over the term of the notes.

On May 2, 1997, the Company entered into a revolving credit facility (the 
"Facility") with Imperial Bank (the "Bank") providing for borrowings of up to 
$7,000,000. The Facility was amended on March 25, 1998 to provide for 
borrowings of up to $10,000,000. Loans are extended and required to be repaid 
based upon the Company's outstanding accounts receivable and other 
contractual rights to payment. Interest on the outstanding loan balance 
accrues at a rate of 1.25% per annum in excess of the Bank's publicly 
announced benchmark rate (9.75% at December 31, 1997). The Company paid 
facility fees of $112,500 and is also required to pay an unused credit line 
fee at a rate equal to .5% per annum of the amount by which the collateral 
base exceeds the average daily loan balance during any calendar quarter. The 
term of the facility expires on September 30, 1998. Outstanding amounts under 
the facility are secured by a security interest in substantially all of the 
Company's assets.

The facility contains restrictive covenants that require minimum tangible net 
worth. The covenants also, among other things, prohibit the payment of cash 
dividends on the Company's common stock, require minimum amounts of tangible 
net worth and limit (a) the Company's ratio of debt to net worth on a 
consolidated basis, (b) the amount of cost that the Company can incur in 
producing, financing or acquiring entertainment properties, (c) the amount of 
cost and expenses that the Company may incur with respect to theatrical 
releases of films, and (d) the Company incurring losses for two consecutive 
quarters.

The Facility replaces the Company's previous credit facility with Atlantic Bank
of New York that permitted borrowings of up to $2,500,000 (the "Atlantic
Facility"). Proceeds from the Facility were utilized to repay the Atlantic
Facility in full.

The variable rate senior subordinated notes ("variable rate notes") of 
$2,864,000, net of unamortized discount of $161,000 at December 31, 1997 were 
issued with common stock purchase warrants in a private placement. The units 
were sold only to accredited investors by officers of the Company (without 
remuneration). Certain customers of an investment advisory firm, of which a 
director of the Company is an Executive Vice President, acquired the units in 
the placement. The variable rate notes bear interest at a rate of 10% per 
annum through 1998 and at 3% over the prime rate for the remaining four 
years, provided however, that the rate does not fall below 8% or exceed 12% 
per annum. Mandatory repayment of 10% of the original principal amount will 
commence in 1999, followed by 15% of the original principal amount in 2000 
and 2001 with the balance due in 2002.

                                      F-11
<PAGE>

                   UNAPIX ENTERTAINMENT, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)



4. Financing (continued)

The variable rate notes are subordinated to indebtedness of the Company to a 
bank or other financial institution. The Company may redeem all or a portion 
of the Variable Rate Notes at any time after December 31, 1997 at a premium 
over the principal amount of the notes of 6%, which declines annually at the 
rate of 2% until January 1, 2001, after which the redemption price will be 
the principal amount of the notes. A total of 410,000 warrants were issued in 
this offering, each such warrant entitles the holder to purchase one share of 
common stock at an exercise price of $3.70 per share and expires on December 
31, 2001. The holders of the warrants are entitled to certain registration 
rights with respect to the shares issuable upon exercise thereof.

In December 1993, the Company developed an acquisition fund for the purpose of
funding the acquisition of the distribution rights to independently produced
films. The initial investors were the Chairman, Secretary and an investor who is
a customer of an investment advisory firm, of which a director of the Company is
an Executive Vice President, and a partnership of which the same Director is a
general partner. The acquisition fund provided $150,000 in 1993, $200,000 in
1994, $79,000 in 1996 and $71,000 in 1997. The oral agreement provided for: (i)
a term to be determined (ii) the acquisition fund to recoup 110% of its
investment in any one film from the first dollars of gross receipts; (iii) the
fund to receive up to 20% of the net profits of each film in which it invests;
(iv) roll-over of the fund's receipts into other films; and (v) shortfall of
investment in any film to be recovered in shares of common stock of the Company
issued at market, or if market is less than $2.86 a share, at the lower of $2.86
or 125% of market. The initial funding of the fund was fully utilized to acquire
film distribution rights. The investors also received 36,750 Class B warrants
for providing such funding, which were valued at $12,000 and were charged to
expense. In February 1998, the fund was terminated and the investors exchanged
their interests in the acquisition fund for $900,000 principal amount of 10%
convertible subordinated debentures due June 30, 2003 and one investor's
interest was exchanged for a $200,000 promissory demand note with interest at
10%.

In the fourth quarter of 1997, the Company sold in a private placement 
$1,275,000 principal amount of 10% convertible notes due June 30, 2004. The 
notes are convertible into common stock at $5.00 per share. For every $1,000 
principal amount of notes purchased, the holders also received warrants to 
purchase 100 shares of common stock at $6.00 per share expiring June 30, 
2004. Such warrants (127,500) were valued at $86,000 and recorded as debt 
discount. The notes are redeemable by the Company beginning July 1, 1999 at a 
premium. The warrants are redeemable on or after July 1, 2000. The Company 
also issued warrants expiring December 31, 2002 to purchase 26,000 shares of 
common stock at $5.00 per share as a placement fee. Such warrants were valued 
at $21,000 and recorded as deferred financing costs which are being amortized 
over the term of the notes.

                                      F-12

<PAGE>

                   UNAPIX ENTERTAINMENT, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)



4. Financing (continued)

Maturities of debt subsequent to December 31, 1997, in thousands, are as
follows:
<TABLE>
<CAPTION>
        <S>                                              <C>
         1998                                             $ 7,293
         1999                                                 302
         2000                                                 454
         2001                                                 454
         2002                                               1,815
         Thereafter                                         9,333
                                                          -------
                                                           19,651
         Less debt discount                                  (658)
                                                          -------
                                                          $18,993
                                                          -------
                                                          -------
</TABLE>

The 1998 maturities includes $6,793,000 outstanding under the bank line
of credit which the Company expects to renew or replace prior to its scheduled
maturity in September 1998.

5. Stockholders' Equity

In April 1996, the Company declared a special 5 percent stock dividend, payable
on May 6, 1996 to stockholders of record of its common stock on April 22, 1996.
The company issued 249,000 shares of common stock pursuant to the declared stock
dividend.

In June 1996, the Company entered into an agreement with an investor relations
firm, pursuant to which the Company issued 300,000 common stock purchase
options. Each option entitles the holder to purchase one share of Common Stock
at a price of $3.875, which was the market price as of the date of the
Agreement. The options have a term of five years and were valued at
approximately $160,000. The Company is also obligated to issue an additional
100,000 options if all of the Company's Class B Warrants have been exercised
prior to June 3, 1998. If all the Class B Warrants are exercised during the one
year period, the additional options will also have a term of five years.

In September 1995, the Company completed the placement of 420,000 shares of
common stock under a stock purchase plan ("the Plan") which permitted certain of
the Company's employees, directors and consultants to purchase units ("Units"),
each of which consists of one share of common stock, one common stock purchase
warrant with an exercise price of $19.05 per share and one common stock purchase
warrant with an exercise price $28.57 per share. The warrants expire on December
31, 2000. They are redeemable by the Company (at a price of $0.025 per warrant)
at any time after the closing sales price of the common stock has been at least
125% of the then effective exercise price of the warrants for a period of 20
consecutive business days after the underlying shares of common stock have been
registered under the Securities Act of 1933. The purchase price of each unit was
$4 (which was the closing market price of the common stock on effective date of
the Plan). The Company ascribed a diminimus value to the common stock purchase
warrants.

                                      F-13
<PAGE>

                   UNAPIX ENTERTAINMENT, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)


5. Stockholders' Equity (continued)

The Plan permitted participants to acquire Units by paying 5% of the total price
upon purchase and delivering a promissory note for the remaining 95% of the
price. Each note provides for the annual payment of 5% of the original principal
amount thereof, commencing in 1996, with a balloon payment of the remaining
unpaid principal amount of the Note payable on a specified date in 2005 (the
"Maturity Date"). Interest accrues on each Note at a rate of 6% per annum,
payable on the last day of each year throughout the term of the Note, with all
remaining accrued and unpaid interest due on the Maturity Date.

Each participant pledged 95% of the Units that they acquired under the plan to
the Company as security for such participant's Note. Such Units may be released
to the participant as the Note is paid under certain circumstances. Participants
are permitted to make payments under their Notes by delivering shares of common
stock that they own, including pledged shares, which are credited against
amounts owed under their Notes at fair market value thereof. Purchasers of Units
are entitled to certain registration rights with respect to the securities
comprising the Units.

As of December 31, 1997 there are 505,000 shares of Cumulative Convertible
Series A 8% Preferred Stock outstanding. Each share has a liquidation preference
of $3.00 plus accumulated and unpaid dividends; is convertible into 1.05 shares
of common stock at any time prior to redemption; and is entitled to one vote.
Semi-annual dividends of $0.12 per share are payable on June 30 and December 31.
The Company may redeem the shares if the market price of the common stock has
exceeded twice the then applicable conversion price at a time when the
underlying shares of common stock are registered under the Securities Act of
1933. The Company may redeem the shares at a premium of 4% declining annually at
the rate of 1% until January 1, 2002, after which the redemption price will be
$3.00. The Company accepted 9% promissory notes aggregating $95,000, of which
$10,250 was paid as of December 31, 1997, from three officers in connection with
their participation in the preferred stock offering. The corresponding shares
are held by the Company as collateral for the notes. The Company declared
preferred stock dividends of $121,000 and $138,000 for the years ended December
31, 1997 and 1996, respectively. Shareholders were given the option of receiving
shares of common stock (at a price equal to 90% of the average closing sales
price of the common stock over the last 10 trading days preceding the dividend
payment date) in lieu of the cash dividend declared, which resulted in $82,000
and $86,000 of the dividends being paid in shares of common stock for the years
ended December 31, 1997 and 1996, respectively, and the remainder in cash.

As of December 31, 1997, there were 1,393,000 B warrants outstanding and
2,554,000 other warrants. The Class B warrants are exercisable at $4.29, and are
redeemable by the Company at $0.10 per warrant provided the common stock has a
high bid closing price of at least $5.71 for the prior 20 consecutive trading
days and 30 days prior notice is given to the warrant holders. In addition,
there were 2,330,000 options and 55,000 preferred stock options outstanding as
of December 31, 1997.

                                      F-14
<PAGE>

                   UNAPIX ENTERTAINMENT, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)


5. Stockholders' Equity (continued)

Warrants:

A summary of the status of the Company's warrants as of December 31, 1997 and
1996, and changes during the years ended on those dates is presented below:

<TABLE>
<CAPTION>
                                              1997                                        1996
                                 --------------------------------          --------------------------------
                                                   Weighted                                    Weighted 
                                   Shares          Average                   Shares            Average
                                    (000)        Exercise Price              (000)          Exercise Price
                                 ----------    ------------------          ----------    ------------------
<S>                                 <C>            <C>                         <C>           <C> 
Outstanding at beginning            3,593           $ 9.07                       2,762          $10.12

Granted                               354           $ 5.61                         831          $ 5.58

Exercised                               -           $    -                           -          $    -

Forfeited                               -           $    -                           -          $    -
                                 ----------    ------------------          ----------    ------------------

Outstanding at end
  of year                           3,947           $ 8.76                       3,593          $ 9.07
                                 ----------    ------------------          ----------    ------------------
                                 ----------    ------------------          ----------    ------------------

Warrants exercisable at                    
  year-end                          3,947           $ 8.76                       3,593          $ 9.07
                                 ----------    ------------------          ----------    ------------------
                                 ----------    ------------------          ----------    ------------------

Weighted-average fair
  value of warrants
  granted during the                     
  year                                     $ .65                                        $ .63
                                           -------                                      -------
                                           -------                                      -------
</TABLE>

The following table summarizes information relating to warrants outstanding at
December 31, 1997:
<TABLE>
<CAPTION>


                                              Warrants Outstanding                                     Warrants Exercisable
                         ----------------------------------------------------------------      -----------------------------------
                            Number             Weighted-Average                                   Number   
        Range             Outstanding             Remaining             Weighted-Average        Exercisable      Weighted-Average
   Exercise Prices        at 12/31/97          Contractual Life          Exercise Price         at 12/31/97       Exercise Price
 ------------------      -------------        ------------------       ------------------      -------------    ------------------
  <S>                       <C>                  <C>                        <C>                  <C>               <C>

    $3.14 -  $4.50           2,210                    2                      $ 4.18                2,210             $ 4.18

    $4.91 -  $6.00             897                    6                      $ 5.95                  897             $ 5.95

   $19.05 - $28.57             840                    3                      $23.81                  840             $23.81
                         -------------        ------------------       ------------------      -------------    ------------------

    $3.14 - $28.57           3,947                    3                      $ 8.76                3,947             $ 8.76
                         -------------        ------------------       ------------------      -------------    ------------------
                         -------------        ------------------       ------------------      -------------    ------------------
</TABLE>

                                      F-15
<PAGE>

                   UNAPIX ENTERTAINMENT, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

5. Stockholders' Equity (continued)

Employee Stock Option Plan:

The 1993 Option Plan (the "Plan") authorizes the grant of options to purchase up
to an aggregate of 875,000 shares. Both non-qualified options and options
intended to qualify as "Incentive" stock options under Section 422 of the
Internal Revenue Code of 1986, as amended, may be granted under the Plan. A
Stock Option Committee of the Board of Directors administers the Plan. As of
December 31, 1997, the exercise price of any option granted under the Plan shall
not be less than the fair market value of the common stock on the date of the
grant.

A summary of the status of the Company's employee stock options as of December
31, 1997 and 1996, and changes during the years ending on those dates is
presented below:

<TABLE>
<CAPTION>


                                      1997                        1996
                                      ----                        ----
                                            Weighted                     Weighted
                                Shares       Average        Shares        Average     
                                (000)     Exercise Price     (000)     Exercise Price
                                -----     --------------     -----     --------------
<S>                             <C>         <C>             <C>        <C>
Outstanding at
 beginning of year               419        $   3.52          265        $   3.16

Granted                           71        $   4.59          154        $   4.15

Exercised                       (68)        $  (2.86)         --         $    --

Forfeited                       (24)        $  (4.40)         --         $    --
                                ---         --------          ---        --------

Outstanding at end
     of year                    398         $   3.77          419        $   3.52
                                ---         --------          ---        --------
                                ---         --------          ---        --------

Options exercisable at
 year-end                       381         $   3.76          385        $   3.48
                                ---         --------          ---        --------
                                ---         --------          ---        --------

Weighted-average fair
    value of options
    granted during the
    year                                    $   1.91                     $    .55
                                            --------                     --------
                                            --------                     --------
</TABLE>


                                      F-16

<PAGE>

                   UNAPIX ENTERTAINMENT, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

5. Stockholders' Equity (continued)

Other Options:

In April 1993, the Company granted options ("Earning Performance Options") to
purchase an aggregate of 945,000 shares of Common Stock at an exercise price of
$2.86 per share to employees and other persons considered to be instrumental to
the progress of the Company. The Earnings Performance Options are exercisable at
various times through June 2003.

A summary of the status of the Company's other stock options as of December 31,
1997 and 1996, and changes during the years ending on those dates is presented
below:

<TABLE>
<CAPTION>


                                      1997                        1996
                                      ----                        ----
                                            Weighted                     Weighted
                                Shares       Average        Shares        Average     
                                (000)     Exercise Price     (000)     Exercise Price
                                -----     --------------     -----     --------------
<S>                             <C>         <C>             <C>        <C>


Outstanding at beginning
 of year                        1,536       $    2.98        1,173       $   2.79

Granted                           491       $    4.45          400       $   3.88

Exercised                        (40)       $   (1.79)         --        $    --

Forfeited                         --        $      --          (37)      $  (6.39)

Outstanding at end
 of year                       1,987        $    3.37        1,536       $   2.98
                               -----        ---------        -----       --------
                               -----        ---------        -----       --------

Options exercisable at
 year-end                      1,412        $    3.341       1,097       $   2.94
                               -----        ---------        -----       --------
                               -----        ---------        -----       --------

Weighted-average fair
    value of options                                 
    granted during the
    year                                    $     1.85                   $    .49
                                            ----------                   --------
                                            ----------                   --------

</TABLE>

                                      F-17


<PAGE>

                   UNAPIX ENTERTAINMENT, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

5. Stockholders' Equity (continued)

The following table summarizes information related to options outstanding at
December 31, 1997:

<TABLE>
<CAPTION>


                                                 
                                              Options Outstanding                                 Options Exercisable
                          ------------------------------------------------------------     --------------------------------
                            Number             Weighted-Average          Weighted-           Number          Weighted-
        Range             Outstanding             Remaining               Average          Exercisable        Average 
   Exercise Prices        at 12/31/97          Contractual Life         Exercise Price      at 12/31/97     Exercise Price 
   ---------------        -----------          ----------------         --------------     ------------     ---------------
   <S>                    <C>                  <C>                      <C>                <C>              <C>
   $1.10 - $3.12             1,243                    5                   $   2.72                904          $   2.67

   $3.81 - $5.00             1,142                    6                   $   4.21                889          $   4.19
                             -----                   ---                    ------              ------            ------
   $1.10 - $5.00             2,385                    5                   $   3.43              1,793          $   3.41
                             -----                   ---                    ------              ------            ------
                             -----                   ---                    ------              ------            ------
</TABLE>


The fair value of each warrant and option grant is estimated on the date of
grant using the Black-Scholes option-pricing model with the following
weighted-average assumptions used for grants in 1997 and 1996: expected
volatility of thirty-seven (37%) percent, risk-free interest rates ranging from
4.95% to 6.49%, and expected life ranging from 3 to 10 years.

The Company applies APB Opinion 25 and related Interpretations in accounting 
for its options. Accordingly, no compensation cost has been recognized for 
its stock option grants. The effect of applying SFAS No. 123 on 1997 and 1996 
pro forma net income is not necessarily representative of the effects on 
reported net income for future years due to, among other things, (1) the 
vesting period of stock options and (2) the fair value of additional stock 
options in future years. Had compensation costs for the Company's stock 
option grants been determined based on the fair value at the grant dates for 
awards consistent with the method of SFAS 123, the Company's net income and 
earnings per share would have reduced to the pro forma amounts indicated 
below (in thousands) except per share data.

<TABLE>
<CAPTION>

                                              1997                 1996
                                              ----                 ----
<S>                      <C>              <C>                  <C>
Net Income               As reported      $     1,347          $       589

                         Pro forma        $       718          $       538

Net Income Per Basic     As reported      $       .21          $       .09
 Common Share                             
                         Pro forma        $       .10          $       .09

Net Income Per Diluted   As reported      $       .19          $       .08
 Common Share
                         Pro forma        $       .10          $       .08

</TABLE>

                                      F-18


<PAGE>

                   UNAPIX ENTERTAINMENT, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

5. Stockholders' Equity (continued)

On October 6, 1997, the stockholders approved an amendment to the Company's
certificate of incorporation increasing the number of authorized shares of
common stock from 20,000,000 to 40,000,000 shares.

6.  Financial Instruments

Other than cash and cash equivalents the Company's financial instruments consist
of the credit facility, Acquisition Fund payable, 10% Convertible Subordinated
Notes and Variable Rate Senior Subordinated Notes described in Note 4 and notes
receivable from common stock and convertible preferred stock sales described in
Note 5. Management believes that based on the current interest rate, and
provision for future adjustment of such rate, the fair value of the credit
facility, acquisition fund payable, the variable rate notes and 10% convertible
subordinated notes approximates their face value. The fair value of the notes
receivable from common stock and convertible preferred stock sales is not
readily determinable.

7. Income Taxes

The provision for income taxes for 1997 consists of current Federal and State
income taxes of $22,000 and $57,000, respectively, and deferred taxes of
$867,000. The provision for income taxes for 1996 consists of current state
taxes of $40,000 and deferred taxes of $360,000. Deferred income taxes reflect
the impact of temporary differences between the amounts of assets and
liabilities for financial reporting purposes and the tax law treatments of such
amounts. The principal items comprising deferred taxes are differences in
accounts receivable valuation reserves, film inventory amortization and net
operating losses.

The deferred tax assets (liabilities) as of December 31, 1997, in thousands, are
as follows:

<TABLE>
<S>                                                         <C>
Accounts receivable and general reserves                    $     262

Film inventory amortization                                    (2,038)

Net operating loss carryforwards                                  572

Other items                                                       207
                                                                  ---
Net                                                         $    (997)
                                                                 -----
                                                                 -----

</TABLE>

                                      F-19

<PAGE>

                   UNAPIX ENTERTAINMENT, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

7. Income Taxes (continued)

A reconciliation between the actual income tax expense and income taxes computed
by applying the Federal income tax rate to income before taxes, in thousands, is
as follows:
<TABLE>
<CAPTION>

                                               1997                1996
                                               ----                ----
<S>                                         <C>                  <C>
Computed at federal statutory rate 
  of 34%                                    $     780            $    335

Permanent differences                              65                  28

State taxes, net of federal benefit                94                  26

Other                                               7                  11
                                            ---------            --------
                                            $     946            $    400
                                            ---------            --------
                                            ---------            --------

</TABLE>

At December 31, 1997, net operating loss carryforwards available to reduce
future taxable income amounted to approximately $1,430,000, expiring at various
dates through 2010.

8. Operating Leases

The Company leases office facilities and certain equipment under non-cancelable
lease agreements expiring through January 2007. Total lease expense for the
years ended December 31, 1997 and 1996 were $506,000 and $317,000, respectively.

Minimum future payments, in thousands, as of December 31, 1997 are:

<TABLE>
   <S>                                                      <C>
   1998..............................................           $528
   1999..............................................            512
   2000..............................................            502
   2001..............................................            483
   2002 .............................................            487
   2003 and later...............................               1,494
                                                               -----
   Total lease payments.....................                $  4,006
                                                            --------
                                                            --------
</TABLE>


Included in the above minimum future payments, is the cost of certain executive
offices, occupied pursuant to an office sharing arrangement with an affiliate at
the monthly base rate of $2,700.


                                      F-20

<PAGE>

                   UNAPIX ENTERTAINMENT, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

9. Commitments and Other Matters

Credit risk exists with respect to accounts receivable which are primarily due
from video distributors, television stations, pay cable channels and video
distributors. One customer in 1997 accounted for 12% of revenues and two
customers in 1996 accounted for 16% and 9% respectively.

As of December 31, 1997, commitments for advances and guaranteed royalties
amounted to $3,000,000.

10. Related Party Transactions

General and administrative costs include $132,000 and $182,000 for services
rendered by an affiliate for the years ended December 31, 1997 and December 31,
1996, respectively.

11. Export Sales

<TABLE>
<CAPTION>

                                                           December 31
                                                           -----------
                                                          (in thousands)

                                                        1997           1996
                                                        ----           ----
<S>                                                   <C>            <C>
Europe                                                $3,260         $1,972

Asia                                                   1,070            987

Latin America                                            968            900

Africa                                                   356            580

Middle East                                              329            216

Other                                                    375            150
                                                      ------         ------
                                                      $6,358         $4,805
                                                      ------         ------
                                                      ------         ------
</TABLE>


Export sale contracts are generally denominated in US dollars. For the years
ended December 31, 1997 and 1996, there were no significant foreign exchange
gains or losses.


                                      F-21


<PAGE>

                   UNAPIX ENTERTAINMENT, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

12. Acquisition of Subsidiary

In March 1997 the Company acquired all of the capital stock of Miramar 
Images, Inc. ("Miramar"), a producer and distributor of music videos and 
audio recordings primarily for the New Adult Contemporary market, for 313,500 
shares of the Company's common stock valued at $1,400,000 and by assuming 
certain obligations of $964,000 and $736,000 of other costs. The acquisition 
of Miramar is being accounted for as a purchase and the Company recorded 
$3,100,000 of excess of cost over fair value of net assets in connection with 
the acquisition which is being amortized over 20 years. The operating results 
of Miramar have been included in the consolidated statement of operations 
from the date of aquisition.

In connection with the acquisition, the Company entered into a four-year
employment agreement with the current president of Miramar providing for, among
other things, an annual salary of $125,000 per year, a performance bonus equal
to 5% of Miramar's pre-tax profit (as defined), and one-half of one percent of
the increase of the gross revenues of Miramar over its revenues for the
immediately preceding year. In addition, for each fiscal year commencing on or
after January 1, 1998, if such increase in revenues is equal to or greater than
20% of such preceding year's gross revenues, then the president also will
receive one-half of one percent of the excess of such previous year's gross
revenues over the gross revenues realized by Miramar during the second
immediately preceding fiscal year. The Company also issued an aggregate of
210,000 stock options to Miramar employees and consultants (including the
current president). Each option entitles the holder to purchase one share of the
Company's Common Stock at a purchase price of $4.375 (i.e. $.125 above the
market price of the Company's Common Stock on the closing date of the
acquisition), subject to the holder's continuing to be employed by the Company.
The options have a term of ten years, but subject to certain exceptions, will
not be exercisable for a period of 9.5 years unless Miramar's operations attain
certain earnings thresholds.

Assuming the acquisition of Miramar had taken place on January 1, 1996, the
proforma revenue and net income for the Company would have been as follows:

<TABLE>
<CAPTION>
                                                        Proforma
                                              in thousands except per share
                                              -----------------------------
                                                1997                 1996
<S>                                            <C>                 <C>
Revenues                                       $ 32,561            $  24,577

Net income                                     $  1,159            $     47
                                               --------             ------- 
                                               --------             ------- 

Net income (loss) per common 
 share:

      Basic                                    $    .18            $   (.02)
                                               --------             ------- 
                                               --------             ------- 
      Diluted                                  $    .16            $   (.02)
                                               --------             ------- 
                                               --------             ------- 
</TABLE>

                                      F-22

<PAGE>

                   UNAPIX ENTERTAINMENT, INC. AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (Continued)

13.      Subsequent Events

In February 1998, the Company issued, in a private placement, $5,250,000
principal amount of 10% convertible subordinated debentures due June 30, 2003
convertible initially into common stock at $4.75 per share. The conversion price
is subject to adjustment in certain circumstances, including resets at September
1, 1998 and March 1, 1999 to 110% of the then current market price of the common
stock but not less than $4.00 and $3.50 respectively.

For every $1,000 principal amount converted, the holder will receive warrants to
purchase 125 shares of common stock (an aggregate of 656,250) at $6.00 per share
expiring June 30, 2003. If a holder converts the note prior to September 1,
1999, the holder will receive an amount equal to 75% of the interest which would
have accrued from date of conversion through September 1, 1999. The Company also
issued warrants expiring June 30, 2003 to purchase 42,500 shares of common stock
at $6.00 per share as a placement fee. Notes in the principal amount of $900,000
were issued to certain investors in the film acquisition fund in exchange for
their interests therein (Note 4).

Short term loans of $1,000,000 were obtained in December 1997 ($300,000) and
January 1998 ($700,000) from Mezzanine Financial Corp. ($750,000), the Chairman
($150,000) and the Secretary ($100,000) in order to enable the Company to fund
program acquisitions in accordance with its expansion plans pending the
completion of the private offering of 10% convertible notes. The Chairman and
Secretary are also officers and directors of Mezzanine Financial Corp. Upon
completion of the offering, proceeds of $250,000 were used to repay the loans
from the Chairman and the Secretary, and proceeds of $650,000 were used to repay
Mezzanine Financial Corp.. The remaining $100,000 of the Mezzanine loan was
exchanged for an equivalent amount of 10% convertible subordinated notes.


                                      F-23


<PAGE>

     (b)  Reports on Form 8-K

     The Company did not file any current Reports on Form 8-K during the fourth
quarter of 1997.

     (c) Exhibits

<TABLE>
<CAPTION>

Exhibit
Number    Description
------    -----------
<S>       <C>
 3.1      Company's Certificate of Incorporation, dated January 7, 1993
          [incorporated herein by reference to Exhibit 3.1 to the Company's Form
          SB-2 Registration Statement, File No. 33-61798 (the "Registration
          Statement")]

 3.1.1    Amendment No. 1 to Company's Certificate of Incorporation, dated March
          15, 1993 [incorporated herein by reference to Exhibit 3.1.1 to the
          Registration Statement]

 3.1.2    Certificate of Ownership and Merger, dated March 23, 1993
          [incorporated herein by reference to Exhibit 3.1.2 to the Registration
          Statement]

 3.1.3    Amendment No. 2 to Company's Certificate of Incorporation, dated April
          21, 1993 [incorporated herein by reference to Exhibit 3.1.3 to the
          Registration Statement]

 3.1.4    Amendment No. 3 to Company's Certificate of Incorporation,  dated June
          10, 1993 [incorporated herein by reference to Exhibit 3.1.4 to the
          Registration Statement]

 3.1.5    Certificate of Designations, Preferences and Rights of Series A 8%
          Cumulative Convertible Preferred Stock [incorporated herein by
          reference to Exhibit 3.1.5 to the Company's Annual Report on Form
          10-KSB for 1993 (the "1993 Form 10-KSB")]

 3.1.6    Certificate of Increase to the Certificate of Designations,
          Preferences and Rights of Series A 8% Cumulative Convertible Preferred
          Stock [incorporated herein by reference to Exhibit 3.1.6 to the
          Company's Annual Report on Form 10-KSB for 1994 (the "1994 Form
          10-KSB")]

 3.1.7    Certificate of Ownership and Merger, dated August 8, 1996, merging A
          Pix Entertainment, Inc. into the Company [incorporated herein by
          reference to Exhibit 3.1.7 to the Company's Annual Report on Form
          10-KSB for 1996 (the "1996 Form 10-KSB")]

 3.1.8    Certificate of Amendment of the Company's Certificate of
          Incorporation, dated October 7, 1997, increasing the number of
          authorized shares of common stock [incorporated herein by reference to
          Exhibit 3 to the Company's Quarterly Report on Form 10-QSB for the
          Quarterly Period ended September 30, 1997]

 3.2      By-Laws of the Company [incorporated herein by reference to 
          Exhibit 3.2 to the Registration Statement]

 4.1      Form of Common Stock Certificate [incorporated herein by reference to
          Exhibit 4.1 to the Registration Statement]

 4.2      Form of Class B Warrant Certificate [incorporated herein by reference
          to Exhibit 4.3 to the Registration Statement]

 4.3      Form of Class B Warrant Agreement between AST and the Company
          [incorporated herein by reference to Exhibit 4.5 to the Registration
          Statement]


                                          22

<PAGE>

Exhibit
Number    Description
------    -----------

 4.4      Form of Underwriter's Unit Purchase Option [incorporated herein by
          reference to Exhibit 4.6 to the Registration Statement]

 4.5      Form of Variable Rate Senior Subordinated Note due December 31, 2001
          [incorporated herein by reference to Exhibit 4.8 of the 1994 Form
          10-KSB]

 4.6      Form of Common Stock Purchase Warrant Certificate for Warrants issued
          together with Variable Rate Senior Subordinated Notes due December 31,
          2001 [incorporated herein by reference to Exhibit 4.9 of the 1994 Form
          10-KSB]

 4.7      Common Stock Purchase Warrant Certificate issued to Atlantic Bank of
          New York entitling it to purchase 20,000 shares of Common Stock
          [incorporated herein by reference to Exhibit 10.3 of the Company's
          Current Report on Form 8-K for event of June 21, 1995]

 4.8      Common Stock Purchase Warrant Certificate entitling the holder to
          purchase 15,000 shares of common stock at an exercise price of $4.25
          per share and expiring on June 30, 2000 [incorporated herein by
          reference to Exhibit 4.11 of the Company's Annual Report on Form
          10-KSB for 1995 (the "1995 Form 10-KSB")]

 4.9      Common Stock Purchase Warrant Certificate entitling the holder to
          purchase 10,000 shares of common stock at an exercise price of $4.50
          per share and expiring on December 31, 2000 [incorporated herein by
          reference to Exhibit 4.12 of the 1995 Form 10-KSB]

 4.10     Form of 10% Convertible Subordinated Note due June 30, 2003 having a
          conversion price of $4.50 per share [incorporated herein by reference
          to Exhibit 4.1 to the Company's Quarterly Report on Form 10-QSB for
          the Quarterly Period ended June 30, 1996 (the "June 1996 Form
          10-QSB")]

 4.11     Form of Common Stock Purchase Warrant Certificate, entitling the
          holder to purchase shares of Common Stock at $6.00 per share and
          expiring on June 30, 2003 [incorporated herein by reference to Exhibit
          4.2 to the June 1996 Form 10-QSB]

 4.12     Form of Common Stock Purchase Warrant Certificate, entitling the
          holder to purchase shares of Common Stock at $4.50 per share and
          expiring on December 31, 2001 [incorporated herein by reference to
          Exhibit 4.15 of the 1996 Form 10-KSB] 

 4.13     Form of 10% Convertible Subordinated Note due June 30, 2003 having a
          conversion price of $4.75 per share(1)

 4.14     Form of 10% Convertible Subordinated Note due June 30, 2004 having a
          conversion price of $5.00 per share (1)

 4.15     Form of Common Stock Purchase Warrant Certificate, entitling the
          holder to purchase shares of Common Stock at $6.00 per share and
          expiring on June 30, 2004 (1)

 4.16     Form of Common Stock Purchase Warrant Certificate, entitling the
          holder to purchase shares of Common Stock at $5.00 per share and
          expiring December 31, 2002 (1).

                                          23

<PAGE>

Exhibit
Number    Description
------    -----------

*10.1     Employment Agreement between the Company and David Fox [incorporated
          herein by reference to Exhibit 10.1 to the Registration Statement]

*10.1.1   Form of Amendment No. 1 to Employment Agreement between the Company
          and David Fox [incorporated herein by reference to Exhibit 10.1.1 to
          the Registration Statement]

*10.2     Employment Agreement between the Company and Scott Hanock
          [incorporated herein by reference to Exhibit 10.2 to the Registration
          Statement]

*10.2.1   Form of Amendment No. 1 to Employment Agreement between the Company
          and Scott Hanock [incorporated herein by reference to Exhibit 10.2.1
          to the Registration Statement]

*10.2.2   Form of Amendment No. 2 to Employment Agreement between the Company
          and Scott Hanock [incorporated herein by reference to Exhibit 10.2.2
          to the Registration Statement]

*10.3     Form of Employment Agreement between the Company and Herbert M.
          Pearlman [incorporated herein by reference to Exhibit 10.4 to the
          Registration Statement]

*10.4     Form of Employment Agreement between the Company and  David S. Lawi
          [incorporated herein by reference to Exhibit 10.5 to the Registration
          Statement]

*10.5     1993 Stock Option Plan, as amended (1)

 10.6     Lease Agreement for Sherman Oaks, California offices [incorporated
          herein by reference to Exhibit 10.8 to the Registration Statement]

 10.7     Lease Extension Agreement, dated April 22, 1996, relating to Sherman
          Oaks, California offices [incorporated herein by reference to Exhibit
          10.7 to the Company's 1996 Form 10-KSB]

 10.8     Lease Extension Agreement, dated March 12, 1997, relating to Sherman
          Oaks, California offices [incorporated herein by reference to Exhibit
          10.8 to the Company's 1996 Form 10-KSB]

 10.9     Form of Lease Agreement for 537 Steamboat Road, Greenwich, CT offices
          [incorporated herein by reference to Exhibit 10.9 to the 1994 Form
          10-KSB]

 10.10    Lease Agreement for 200 Madison Avenue Location [incorporated herein
          by reference to Exhibit 10.9 to the 1995 Form 10-KSB]

*10.11    Stock Option Agreement between the Company and David Fox (embodied in
          Exhibit 10.1) [incorporated herein by reference to Exhibit 10.1 to the
          Registration Statement]

*10.12    Form of Earnings Performance Stock Option Agreement between the
          Company and Herbert M. Pearlman, dated April 23, 1993 [incorporated
          herein by reference to Exhibit 10.18 to the Registration Statement]

                                          24

<PAGE>

Exhibit
Number    Description
------    -----------

 10.12.1  Schedule of omitted documents in the form of Exhibit 10.12, including
          material detail in which such documents differ from Exhibit 10.12
          [incorporated herein by reference to Exhibit 10.18.1 to the
          Registration Statement]

*10.13    Employment Agreement between the Company and Robert Baruc
          [incorporated herein by reference to Exhibit 10.1 of the Company's
          Quarterly Report on Form 10-QSB for the Quarterly Period ended June
          30, 1993]

*10.14    Amendment No. 1 to Employment Agreement of Robert Baruc [incorporated
          herein by reference to Exhibit 10.16 to the Company's 1996 Form
          10-KSB]

*10.15    Employment Agreement between the Company and Robert Miller
          [incorporated herein by reference to Exhibit 10.17 to the Company's
          1996 Form 10-KSB]

*10.16    Employment Agreement between the Company and Timothy Smith
          [incorporated herein by reference to Exhibit 10.18 to the Company's
          1996 Form 10-KSB] 

 10.17    Agreement under which Strategic Growth International serves as
          Investor Relations Consultant to the Company [incorporated herein by
          reference to Exhibit 10.1 to the June 1996 Form 10-QSB]

 10.18    Stock Purchase Agreement, dated March 17, 1997, relating to the
          Company's purchase of all of the capital stock of Miramar Images, Inc.
          ("Miramar") [incorporated herein by reference to Exhibit 10.24 to the
          1996 Form 10-KSB]

 10.19    Pooled Consideration Agreement, dated March 17, 1997, entered into in
          connection with the Company's purchase of Miramar [incorporated herein
          by reference to Exhibit 10.25 to the 1996 Form 10-KSB]

 10.20    Settlement Agreement, dated March 17, 1997, among the Company, Miramar
          and Steven Churchill, entered into in connection with the Company's
          purchase of Miramar [incorporated herein by reference to Exhibit 10.26
          to the 1996 Form 10-KSB]

 10.21    Assignment Agreement, dated March 17, 1997, among the Company, Miramar
          and Charles Walsh, entered into in connection with the Company's
          purchase of Miramar [incorporated herein by reference to Exhibit 10.27
          to the 1996 Form 10-KSB]

 10.22    Agreement, dated October 16, 1996, between the Company and Strategic
          Growth International relating to payment of Finder's Fee with respect
          to private placement [incorporated herein by reference to Exhibit
          10.28 to the 1996 Form 10-KSB]

 10.23    Lease Agreement, as amended to date, for Miramar's offices at 200
          Second Avenue West, Seattle, Washington [incorporated herein by
          reference to Exhibit 10.29 to the 1996 Form 10-KSB]

 10.24    Revolving Credit Loan and Security Agreement, dated April 16, 1997,
          among Imperial Bank, Unapix Entertainment, Inc., A Pix Entertainment,


                                          25

<PAGE>

Exhibit
Number    Description
------    -----------

          Inc. and Miramar Images, Inc.  [incorporated by reference to Exhibit
          10.1 to the Company's Quarterly Report on Form 10-QSB for the
          Quarterly Period ended March 31, 1997]

 10.25    Amendment No. 1 to Revolving Credit Loan and Security Agreement, 
          entered into March 25, 1998, by and between (i) Unapix 
          Entertainment, Inc. and Miramar Images, Inc. and (ii) Imperial Bank.

 21.1     Subsidiaries [incorporated herein by reference to Exhibit 21.1 to the
          1996 Form 10-KSB]

 23.1     Consent of Richard A. Eisner & Company, LLP. (1)

 27.1     Financial Data Schedules (1)
</TABLE>
___________________________________

(1) Filed herewith.

* Management contract or compensatory plan or arrangement.


                                          26

<PAGE>

                                     SIGNATURES


In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized on the 14th day of April, 1998.


                              UNAPIX ENTERTAINMENT, INC.



                              By: /s/ David M. Fox
                                 -------------------------------------
                                 David M. Fox
                                 President, Chief Executive Officer
                                 (principal executive officer)



                              By: /s/ Daniel T. Murphy
                                 -------------------------------------
                                 Daniel T. Murphy
                                 Chief Financial Officer
                                 (principal financial officer)



                              By: /s/ Steven P. Low
                                 -------------------------------------
                                 Steven P. Low
                                 Chief Accounting Officer
                                 (principal accounting officer


                                          27

<PAGE>

In accordance with the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.


/s/ Herbert M. Pearlman
-------------------------     Chairman of the
Herbert M. Pearlman           Board of Directors                 April 14, 1998



/s/ David M. Fox
-------------------------     President, Chief Executive
David M. Fox                  Officer and Director               April 14, 1998


/s/ David S. Lawi
-------------------------     Chairman of the Executive
David S. Lawi                 Committee, Treasurer,
                              Secretary, and Director            April 14, 1998


/s/ Robert Baruc
-------------------------     Executive Vice President
Robert Baruc                  and Director                       April 14, 1998


/s/ Scott Hanock
-------------------------     Sr. Vice President of Inter-
Scott Hanock                  national Sales and Marketing
                              and Director                       April 14, 1998


/s/ Martin D. Payson
-------------------------     Director                           April 14, 1998
Martin D. Payson


/s/ Walter M. Craig, Jr.
-------------------------     Director                           April 14, 1998
Walter M. Craig, Jr.


/s/ Lawrence Bishop
-------------------------     Director                           April 14, 1998
Lawrence Bishop


                                          28

<PAGE>
                                 EXHIBIT INDEX
 
<TABLE>
<CAPTION>
 EXHIBIT                                                                                              SEQUENTIAL
 NUMBER                                          DESCRIPTION                                         PAGE LOCATION
---------  ---------------------------------------------------------------------------------------  ---------------
<S>        <C>                                                                                      <C>
 
3.1        Company's Certificate of Incorporation, dated January 7, 1993 [incorporated herein by
           reference to Exhibit 3.1 to the Company's Form SB-2 Registration Statement, File No.
           33-61798 (the "Registration Statement")]
 
3.1.1      Amendment No. 1 to Company's Certificate of Incorporation, dated March 15, 1993
           [incorporated herein by reference to Exhibit 3.1.1 to the Registration Statement]
 
3.1.2      Certificate of Ownership and Merger, dated March 23, 1993 [incorporated herein by
           reference to Exhibit 3.1.2 to the Registration Statement]
 
3.1.3      Amendment No. 2 to Company's Certificate of Incorporation, dated April 21, 1993
           [incorporated herein by reference to Exhibit 3.1.3 to the Registration Statement]
 
3.1.4      Amendment No. 3 to Company's Certificate of Incorporation, dated June 10, 1993
           [incorporated herein by reference to Exhibit 3.1.4 to the Registration Statement]
 
3.1.5      Certificate of Designations, Preferences and Rights of Series A 8% Cumulative
           Convertible Preferred Stock [incorporated herein by reference to Exhibit 3.1.5 to the
           Company's Annual Report on Form 10-KSB for 1993 (the "1993 Form 10-KSB")]
 
3.1.6      Certificate of Increase to the Certificate of Designations, Preferences and Rights of
           Series A 8% Cumulative Convertible Preferred Stock [incorporated herein by reference to
           Exhibit 3.1.6 to the Company's Annual Report on Form 10-KSB for 1994 (the "1994 Form
           10-KSB")]
 
3.1.7      Certificate of Ownership and Merger, dated August 8, 1996, merging A Pix Entertainment,
           Inc. into the Company [incorporated herein by reference to Exhibit 3.1.7 to the
           Company's Annual Report on Form 10-KSB for 1996 (the "1996 Form 10-KSB")]
 
3.1.8      Certificate of Amendment of the Company's Certificate of Incorporation, dated October
           7, 1997, increasing the number of authorized shares of common stock [incorporated
           herein by reference to Exhibit 3 to the Company's Quarterly Report on Form 10-QSB for
           the Quarterly Period ended September 30, 1997]
 
3.2        By-Laws of the Company [incorporated herein by reference to 3.2 to the Registration
           Statement]
 
4.1        Form of Common Stock Certificate [incorporated herein by reference to Exhibit 4.1 to
           the Registration Statement]
 
4.2        Form of Class B Warrant Certificate [incorporated herein by reference to Exhibit 4.3 to
           the Registration Statement]
 
4.3        Form of Class B Warrant Agreement between AST and the Company [incorporated herein by
           reference to Exhibit 4.5 to the Registration Statement]
 
4.4        Form of Underwriter's Unit Purchase Option [incorporated herein by reference to Exhibit
           4.6 to the Registration Statement]
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
 EXHIBIT                                                                                              SEQUENTIAL
 NUMBER                                          DESCRIPTION                                         PAGE LOCATION
---------  ---------------------------------------------------------------------------------------  ---------------
<S>        <C>                                                                                      <C>
4.5        Form of Variable Rate Senior Subordinated Note due December 31, 2001 [incorporated
           herein by reference to Exhibit 4.8 of the 1994 Form 10-KSB]
 
4.6        Form of Common Stock Purchase Warrant Certificate for Warrants issued together with
           Variable Rate Senior Subordinated Notes due December 31, 2001 [incorporated herein by
           reference to Exhibit 4.9 of the 1994 Form 10-KSB]
 
4.7        Common Stock Purchase Warrant Certificate issued to Atlantic Bank of New York entitling
           it to purchase 20,000 shares of Common Stock [incorporated herein by reference to
           Exhibit 10.3 of the Company's Current Report on Form 8-K for event of June 21, 1995]
 
4.8        Common Stock Purchase Warrant Certificate entitling the holder to purchase 15,000
           shares of common stock at an exercise price of $4.25 per share and expiring on June 30,
           2000 [incorporated herein by reference to Exhibit 4.11 of the Company's Annual Report
           on Form 10-KSB for 1995 (the "1995 Form 10-KSB")]
 
4.9        Common Stock Purchase Warrant Certificate entitling the holder to purchase 10,000
           shares of common stock at an exercise price of $4.50 per share and expiring on December
           31, 2000 [incorporated herein by reference to Exhibit 4.12 of the 1995 Form 10-KSB]
 
4.10       Form of 10% Convertible Subordinated Note due June 30, 2003 having a conversion price
           of $4.50 per share [incorporated herein by reference to Exhibit 4.1 to the Company's
           Quarterly Report on Form 10-QSB for the Quarterly Period ended June 30, 1996 (the "June
           1996 Form 10-QSB")]
 
4.11       Form of Common Stock Purchase Warrant Certificate, entitling the holder to purchase
           shares of Common Stock at $6.00 per share and expiring on June 30, 2003 [incorporated
           herein by reference to Exhibit 4.2 to the June 1996 Form 10-QSB]
 
4.12       Form of Common Stock Purchase Warrant Certificate, entitling the holder to purchase
           shares of Common Stock at $4.50 per share and expiring on December 31, 2001
           [incorporated herein by reference to Exhibit 4.15 of the 1996 Form 10-KSB]
 
4.13       Form of 10% Convertible Subordinated Note due June 30, 2003 having a conversion price
           of $4.75 per share(1)
 
4.14       Form of 10% Convertible Subordinated Note due June 30, 2004 having a conversion price
           of $5.00 per share (1)
 
4.15       Form of Common Stock Purchase Warrant Certificate, entitling the holder to purchase
           shares of Common Stock at $6.00 per share and expiring on June 30, 2004 (1)
 
4.16       Form of Common Stock Purchase Warrant Certificate, entitling the holder to purchase
           shares of Common Stock at $5.00 per share and expiring December 31, 2002 (1)
 
*10.1      Employment Agreement between the Company and David Fox [incorporated herein by
           reference to Exhibit 10.1 to the Registration Statement]
 
*10.1.1    Form of Amendment No. 1 to Employment Agreement between the Company and David Fox
           [incorporated herein by reference to Exhibit 10.1.1 to the Registration Statement]
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
 EXHIBIT                                                                                              SEQUENTIAL
 NUMBER                                          DESCRIPTION                                         PAGE LOCATION
---------  ---------------------------------------------------------------------------------------  ---------------
<S>        <C>                                                                                      <C>
*10.2      Employment Agreement between the Company and Scott Hanock [incorporated herein by
           reference to Exhibit 10.2 to the Registration Statement]
 
*10.2.1    Form of Amendment No. 1 to Employment Agreement between the Company and Scott Hanock
           [incorporated herein by reference to Exhibit 10.2.1 to the Registration Statement]
 
*10.2.2    Form of Amendment No. 2 to Employment Agreement between the Company and Scott Hanock
           [incorporated herein by reference to Exhibit 10.2.2 to the Registration Statement]
 
*10.3      Form of Employment Agreement between the Company and Herbert M. Pearlman [incorporated
           herein by reference to Exhibit 10.4 to the Registration Statement]
 
*10.4      Form of Employment Agreement between the Company and David S. Lawi [incorporated herein
           by reference to Exhibit 10.5 to the Registration Statement]
 
*10.5      1993 Stock Option Plan, as amended (1)
 
10.6       Lease Agreement for Sherman Oaks, California offices [incorporated herein by reference
           to Exhibit 10.8 to the Registration Statement]
 
10.7       Lease Extension Agreement, dated April 22, 1996, relating to Sherman Oaks, California
           offices [incorporated herein by reference to Exhibit 10.7 to the Company's 1996 Form
           10-KSB]
 
10.8       Lease Extension Agreement, dated March 12, 1997, relating to Sherman Oaks, California
           offices [incorporated herein by reference to Exhibit 10.8 to the Company's 1996 Form
           10-KSB]
 
10.9       Form of Lease Agreement for 537 Steamboat Road, Greenwich, CT offices [incorporated
           herein by reference to Exhibit 10.9 to the 1994 Form 10-KSB]
 
10.10      Lease Agreement for 200 Madison Avenue Location [incorporated herein by reference to
           Exhibit 10.9 to the 1995 Form 10-KSB]
 
*10.11     Stock Option Agreement between the Company and David Fox (embodied in Exhibit 10.1)
           [incorporated herein by reference to Exhibit 10.1 to the Registration Statement]
 
*10.12     Form of Earnings Performance Stock Option Agreement between the Company and Herbert M.
           Pearlman, dated April 23, 1993 [incorporated herein by reference to Exhibit 10.18 to
           the Registration Statement]
 
10.12.1    Schedule of omitted documents in the form of Exhibit 10.12, including material detail
           in which such documents differ from Exhibit 10.12 [incorporated herein by reference to
           Exhibit 10.18.1 to the Registration Statement]
 
*10.13     Employment Agreement between the Company and Robert Baruc [incorporated herein by
           reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-QSB for the
           Quarterly Period ended June 30, 1993]
 
*10.14     Amendment No. 1 to Employment Agreement of Robert Baruc [incorporated herein by
           reference to Exhibit 10.16 to the Company's 1996 Form 10-KSB]
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
 EXHIBIT                                                                                              SEQUENTIAL
 NUMBER                                          DESCRIPTION                                         PAGE LOCATION
---------  ---------------------------------------------------------------------------------------  ---------------
<S>        <C>                                                                                      <C>
*10.15     Employment Agreement between the Company and Robert Miller [incorporated herein by
           reference to Exhibit 10.17 to the Company's 1996 Form 10-KSB]
 
*10.16     Employment Agreement between the Company and Timothy Smith [incorporated herein by
           reference to Exhibit 10.18 to the Company's 1996 Form 10-KSB]
 
10.17      Agreement under which Strategic Growth International serves as Investor Relations
           Consultant to the Company [incorporated herein by reference to Exhibit 10.1 to the June
           1996 Form 10-QSB]
 
10.18      Stock Purchase Agreement, dated March 17, 1997, relating to the Company's purchase of
           all of the capital stock of Miramar Images, Inc. ("Miramar") [incorporated herein by
           reference to Exhibit 10.24 to the 1996 Form 10-KSB]
 
10.19      Pooled Consideration Agreement, dated March 17, 1997, entered into in connection with
           the Company's purchase of Miramar [incorporated herein by reference to Exhibit 10.25 to
           the 1996 Form 10-KSB]
 
10.20      Settlement Agreement, dated March 17, 1997, among the Company, Miramar and Steven
           Churchill, entered into in connection with the Company's purchase of Miramar
           [incorporated herein by reference to Exhibit 10.26 to the 1996 Form 10-KSB]
 
10.21      Assignment Agreement, dated March 17, 1997, among the Company, Miramar and Charles
           Walsh, entered into in connection with the Company's purchase of Miramar [incorporated
           herein by reference to Exhibit 10.27 to the 1996 Form 10-KSB]
 
10.22      Agreement, dated October 16, 1996, between the Company and Strategic Growth
           International relating to payment of Finder's Fee with respect to private placement
           [incorporated herein by reference to Exhibit 10.28 to the 1996 Form 10-KSB]
 
10.23      Lease Agreement, as amended to date, for Miramar's offices at 200 Second Avenue West,
           Seattle, Washington [incorporated herein by reference to Exhibit 10.29 to the 1996 Form
           10-KSB]
 
10.24      Revolving Credit Loan and Security Agreement, dated April 16, 1997, among Imperial
           Bank, Unapix Entertainment, Inc., A Pix Entertainment, Inc. and Miramar Images, Inc.
           [incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form
           10-QSB for the Quarterly Period ended March 31, 1997]
 
10.25      Amendment No. 1 to Revolving Credit Loan and Security Agreement entered into March 25,
           1998, by and between (i) Unapix Entertainment, Inc., and Miramar Images, Inc. and (ii)
           Imperial Bank. (1)
 
21.1       Subsidiaries [incorporated herein by reference to Exhibit 21.1 to the 1996 Form 10-KSB]
 
23.1       Consent of Richard A. Eisner & Company, LLP. (1)
 
27.1       Financial Data Schedules (1)
</TABLE>
 
------------------------
 
(1) Filed herewith
 
*   Management contract or compensatory plan or arrangement.