UNITED STATES SECURITIES AND EXCHANGE COMMISSION









Washington, D.C. 20549











Form 10-KSB







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













For the Fiscal Year Ended:  June30, 2004













Commission file number: 000-49903







PRODIGITAL FILM STUDIOS, INC.

(formerly Prodigital Film Labs, Inc.)

















(Name of small business issuer in its charter)

















Nevada, United States

(State or other jurisdiction of incorporation or
organization)



91-2048620

(I.R.S. Employer ID Number)





















3675 Pecos-Mcleod, Suite 1400, Las Vegas, Nevada 89121-3881

(Address of principal executive offices)













(877) 804-3394



(Issuer's Telephone Number)





Page
1

---







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







Securities
to be registered pursuant to Section 12(g) of the Act:   Common Shares, $0.0001 par value







(Title of Class)









Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such report(s), and (2) has been
subject to such filing requirements for the past 90 days. Yes X  No













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











State the issuer's revenues for its most recent fiscal year:   $ 0











The aggregate value of the 7,713,600 shares of common stock held by
non-affiliates of the Issuer as of January 31, 2005 was $771,360.











The number
of shares of the Issuer's Common Stock, no par value, as of January 31, 2005,
was 19,713,600











Transitional Small Business Disclosure Format: Yes ___ No X





Page 2







---



























PRODIGITAL FILM STUDIOS, INC.











Form 10-KSB









TABLE OF CONTENTS

















PART I











Item
1.     Description of Business























Item
2.     Description of Property











Item
3.     Legal Proceedings











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











PART II











Item
5.     Market for Common Equity and Related Stockholder
Matters











Item
6.     Management's Discussion and Analysis or Plan of
Operation











Item
7.     Financial Statements











Item
8.     Changes In and Disagreements With Accountants on
AccountingAnd Financial Disclosure



Item 8A.   
Controls and Procedures













PART III











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













Item
10.    Executive Compensation











Item
11.    Security Ownership of Certain Beneficial Owners
andManagement













Item
12.    Certain Relationships and Related Transactions











Item
13.    Exhibits and Reports on Form 8-K



Item 14.   
Principal Accountant Fees and Services



Page 3





---















DEFINITIONS

|Post House | Full digital post-production editing and animation facility
|---------- | -----------------------------------------------------------



"SAFE HARBOR" STATEMENT UNDER THE UNITED STATES PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995.

This Form
10-KSB contains forward looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. ProDigital
Film Studios, Inc. is referred to herein as "ProDigital," "the Company," "we" or
"our". The
words or phrases "would be," "will allow," "intends to," "will likely result," "are expected
to," "will continue," "is anticipated," "estimate," "project," or similar expressions are intended to
identify "forward-looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. Actual results could differ materially from those projected in the forward
looking statements as a result of a number of risks and uncertainties. Statements made herein are
as of the date of the filing of this Form 10-KSB with the Securities and Exchange Commission
and should not be relied upon as of any subsequent date. Except as may otherwise be required
by applicable law, we do not undertake, and specifically disclaim, any obligation to update any
forward-looking statements contained in this Form 10-KSB to reflect occurrences, developments,
unanticipated events or circumstances after the date of such statement.



Page 4



---

PART I

ITEM    1.   
DESCRIPTION OF BUSINESS



General Description

Business Development

The Company was incorporated in the State of Nevada on May 2, 2000, under the name
"ProDigital Film Labs, Inc.", for the purpose of providing Film and Television production
studios and digital equipment, and full and complete digital post-production editing suites.

Effective July 13, 2004, our company name was changed from
"ProDigital Film Labs, Inc." to
"ProDigital Film Studios, Inc." to better define the total package of Post House and film studios
we intend to supply.   At that time the authorized share capital was increased from 10,000,000 to
40,000,000 at $0.0001 par value per share to facilitate a forward split of four post-split shares for
one pre-split share.

Business of Issuer

ProDigital Film Studios, Inc. is a
"New-Media Technology" business.  The Company was
organized to create the kind of film industry infrastructure in the Okanagan Valley region in the
interior of British Columbia ("BC"), necessary to divert and attract "Hollywood North"
production activities from the Vancouver, BC area, into the province's interior.

We are positioning the Company to take advantage of the incredible growth of the film industry
in BC.  According to data released by the BC Film Commission, from 1999 and through 2003,
the film industry spent over $5 billion dollars in BC, creating an economic impact of billions of
dollars more.  In 2003 alone, there was an increase of $500million in total production from the
2002 figures.  BC is an attractive movie and television production destination for foreign
companies due to favorable exchange rates, fabulous scenery, excellent government tax credits
and a vast pool of skilled film professionals.

We intend to become an integral part of the cutting edge digital film market by:

1.    supplying a full digital post-production editing and animation facility ("Post House");



2.    building large, purpose-built,
"Class A," professional production sound stage buildings,
complete with digital equipment, and executive accommodations; and

3.    creating our own purely digital productions.

Our goal is to be a technologically advanced Digital Movie and High Definition Television
production company that uses only digital imaging processes in the creation, development, and
production of movies and High Definition Television features.

Digital technology enables marketers in this industry to distribute movies and film through a file
medium as opposed to a large "can" holding hundreds of meters of celluloid tape and weighing
ten kilograms.  The digital film market will embrace the Internet, the High Definition Television
marketplace and digital movie theatre productions by producing high quality film
media/productions digitally for approximately one-fifth of the cost of using traditional celluloid
methods.  Post-production tasks, including digital processing sound lab work, animation, and
special computer generated effects will be completed at our Post House. Our Post House also
allows for Digital Mastering onsite.  The time and labor involved in the digital post-production
process is greatly reduced for editors, as the whole the whole post production process is faster
and more efficient using computers.

Film studios are in the market to acquire smaller companies that have already set up their studios
in the digital format rather than convert their own labs and substantial non-digital equipment
inventory. Most of their production efforts are being spent on film production to meet the
increasing demand for viable products in the marketplace, making a complete digital Post House
attractive to the industry.



Page 5

---

Through our research and interviews with the BC Film Commission, we have found that, because
of the tremendous growth of the industry, there is a shortage of "Class A" production sound
stages. "Class A" production sound stages are purpose-built, architecture-specific buildings.
They are not converted warehouses or steel clad buildings. There is not much competition for
owners of "Class A" sound stages as there are more productions than there are professional
facilities. Our competitors include the three major BC studios, Lions Gate, The Bridge, and
Vancouver Film Studios are all located in Vancouver.

Although most of the filming activity in BC takes place in and around Vancouver, the Okanagan
Valley, (less than an hour flight from Vancouver) has been the location of such noteworthy
full-length feature films as "The Pledge", "Snow Falling on Cedars", "My American Cousin",
and "Lunch With Charles". Many TV commercials and other TV shows have been filmed there
also. Upon completion, we will have the only "Class A" production sound stages in the
Okanagan Valley, where the real-estate costs are considerably lower than Vancouver and
vicinity.

Available to film production needs, a large talent pool of key and supportive film industry
personnel currently reside in the Okanagan Valley, and a local film school will serve as a
resource of cutting-edge talent. The Okanagan Valley offers, within less than an hour's drive:
vineyards,orchards, towns that maintain the original building styles of their particular eras,
semi-desert locales, beaches, alpine vistas and mountain lakes, ski hills, working
paddle-wheelers and a steam locomotive running on 20 kilometres of track. Cities of the
Okanagan Valley such as Kelowna and Penticton, are popular resort destinations for golfing,
beach and water activities, and skiing. The Okanagan Valley is a very sensible and attractive
business alternative to the congestion, stress, frustrating coastal weather/shooting conditions, and
lengthy waits for urban "Class A" production sound stages: factors which negatively impact big
city studio production, and will make us very competitive.

Our first order of business has been the construction and furnishing of the Post House in
downtown Penticton, BC. During the fiscal year ended June 30, 2004, we purchased two
complete, Standard Definition, professional AVID Xpress digital post-production editing suites,
a professional audio editing/recording studio, video cameras and lights, plus additional related
equipment, together constituting a complete and working professional Post House in California.
The total purchase price was $150,000, paid in cash by the Company.  ProDigital owns the
equipment, which, pursuant to a verbal agreement at this time, will be leased by PrimeTime Post,
Inc. ("PrimeTime"), a company controlled by our President, Darone Davis.  PrimeTime in turn
will rent out the equipment to clients and we will receive 85% of the gross equipment rental
charged by PrimeTime.

PrimeTime leases a 2000 sq. ft. building from Orchard Breezes Property Development Inc.
("Orchard Breezes"), a company controlled by our President, Darone Davis, which houses the
Post House.   We lease an adjoining 3200 square foot building and the adjacent 4000 square foot
parking lot from Orchard Breezes and we sublease 2800 square feet of the building and half of
the parking lot to an independent third party.  The term of the lease expires October1, 2006, but
we may continue to rent the premises on a month-to-month basis thereafter.  The property is in a
visible and prime location in Penticton and is easily expandable.

All of the necessary Standard Definition and High Definition digital post-production equipment
has now been installed in the downtown Penticton, BC, Post House.  The Post House is up and
running and the edit bays are fully functional.  The equipment has been tested by PrimeTime,
who produced on a testing basis, the first half of a rough edit for a one-hour High Definition
documentary television show for Travel Channel and NHK (Japanese Broadcaster), "Japanese
Motorcycles: Samurai on Wheels." We now have established the only professional Post House in
the Okanagan Valley of BC.



During the fiscal year ended June 30, 2004, we worked on securing a 102 acre property we have
targeted as an excellent "Class A" production sound stage site.  The natural and secluded site
hosts many different types of scenery and geology, yet is located an easy 10 minute drive from
the Penticton airport and a 15 minute drive from the Post House.  On June 29, 2004, our
President entered into a contract for the purchase of the 102-acre target property for
approximately $425,000 (Cdn$535,000).  Subject to receiving approval for rezoning, the
property will be used by us for the development of "Class A" production sound stages,
outbuildings and supporting infrastructure, and executive accommodations.  We have paid the
approximately $8,000 (CDN$10,000) deposit required on the purchase.   In order to complete the
purchase we must:



Page 6

---



a) with the assistance of the vendor obtain rezoning of the property from a rural classification to a
commercial classification on or before January 31, 2005 (which was extended to April 15, 2005
in January 2005); and



b) obtain suitable financing by January 31, 2005.



Upon receipt of permission from the Regional District of the Okanagan Similkameen ("Regional
District") for the rezoning, and prior to the rezoning taking place, the deposit will increase to
Cdn $50,000 (approximately $40,000).  When the increased deposit has been paid, the vendor
will then sign all documentation required by the Regional District to officially rezone the
property.  The closing date for the purchase was originally set as February 14, 2005 but was
extended to April 29, 2005 in January 2005.



In support of the rezoning, our planned use of the property will be submitted to the authorities,
municipal meetings will then need to be held and public notices provided.  We anticipate the
creation by the Regional District of a completely new zoning classification for the property to
enable the building of "Class A" production sound stages outbuildings and supporting
infrastructure, and executive accommodations,  The successful rezoning will make this 102-acre
property one of only two sites in the Okanagan Valley on which large sound stages can be
constructed.  ProDigital previously rezoned the other site, but a deal on that property was not
consummated.



In addition to our search for investors to participate in a financing to assist us in the procurement
of the acreage for the production sound stages, we continue to examine other opportunities that
would be compatible with our objectives.

Another of our goals is to appoint well-known individuals with talent and experience to lead the
various aspects of our business. Initially, these people will serve as the Advisory Board, where
their unique and specific skills, film industry contacts, experience and expertise will aid in the
successful development of ProDigital.

There is no requirement for compliance with any environmental laws (federal, state, province and
local).

The Company has no revenues at this time and no employees, full-time or otherwise, but use
contractors as required. We may hire employees on an as-needed basis in the future as our
operations expand.

ITEM    2.    
DESCRIPTION OF PROPERTY



ProDigital presently maintains offices at 3675 Pecos-McLeod, Suite 1400, Las Vegas, Nevada
89121-3881 (a registered agent), at 1621 S. Latawah Street, Spokane, Washington 99203 (a
home office) and at 749 Main Street, Penticton, B.C. V2A 5E1, and can be reached at (877)
804-3394. There is no rent obligation for the offices in Las Vegas and Spokane.

PrimeTime leases a 2000 sq. ft. building from Orchard Breezes Property Development Inc.
("Orchard Breezes"), a company controlled by our President, Darone Davis, which houses the
Post House.   We lease an adjoining 3200 square foot building and the adjacent 4000 square foot
parking lot from Orchard Breezes for an annual lease payment of $22,041 (approximately
CDN$27,500), and sublease 2800 square feet of the building and half of the parking lot to an
independent third party.  The term of the lease expires October1, 2006, but we may continue to
rent the premises on a month-to-month basis thereafter.



The Company's President entered into a contract for the purchase of the 102-acre target
property for approximately $425,000 (Cdn$535,000), which property will be used by us for the
development of "Class A" production sound stages, outbuildings and supporting infrastructure,
and executive accommodations   The purchase option is subject to the completion of several
terms as set out in Item 1 above, including receipt of sufficient funds to finance the purchase.



Page 7

---

ITEM    3.   
LEGAL PROCEEDINGS



The Company is not involved in any material pending litigation, nor are we aware of any material
pending or contemplated proceedings against the Company.  We know of no material legal
proceedings pending or threatened, or judgments entered against, any of our directors or officers
in their capacity as such.

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



Effective July 13, 2004, our company name was changed from ProDigital Film Labs, Inc. to
"ProDigital Film Studios, Inc." to better define the total package of Post House and film studios
we intend to supply.   At that time the authorized share capital was increased from 10,000,000 to
40,000,000 at $0.0001 par value per share by virtue of a forward split of four post-split shares of
the Company's stock for one pre-split share.  Approval of the change of name, amendment to
the Articles of Incorporation and forward split was received by a majority (72.4%) of the
shareholders at a meeting held June 4, 2004.

ITEM    5.   
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS



Market Information

ProDigital's shares are quoted in the "Pink Sheets" electronic quotation system marketplace
under trading symbol "PRGT". At the date of this filing, 41 shareholders acquired 800,000
shares in a Rule 504 offering, an unknown number of shareholders bought their shares in the
market, and 4 shareholders have held their shares at least one year, and in most cases, for more
than two years since the date of issuance. All of the shareholders holding restricted shares would
be eligible for transactions under Rule 144, governed, however, by the volume limitations of
144(e) with respect to any existing or former shareholders that are officers, directors or affiliates
(or were at the time of the issuance of the shares).

Our Common Stock is not listed on any exchange.  The following table sets forth the high and
low bid prices for our Common Stock as reported by the "Pink Sheets", reported on a fiscal
quarter basis for the two most recent fiscal years ending June 30, 2004:

|              | Year Ended
		June 30, 2004 | Year Ended June 30,
		2003
|------------- | -------------------------- | --------------------------
|Quarter Ended | ($) High                   | ($) Low                   
|September 30  | 0.10                       | 0.10                      
|December 31   | 0.10                       | 0.10                      
|March 31      | 0.11                       | 0.10                      
|June 30       | 0.11                       | 0.11                      



The quotations reflect inter-dealer prices, without retail markups, markdowns, or commissions
and do not necessarily represent actual transactions.

Holders

As of January 31, 2005, we had 19,713,600 shares of Common Stock outstanding and
approximately 33 stockholders of record. This number of stockholders does not
include stockholders who hold our securities in street name.

Dividends

Holders of the our Common Stock are entitled to receive dividends when declared by the Board
of Directors out of funds legally available for distribution. Any such dividends may be paid in
cash, property or shares of the Company's Common Stock. No dividends have been earned
and no dividends have been paid since inception and it is not likely that any dividends on our
Common Stock will be declared at any time in the foreseeable future. Any dividends will be
subject to the discretion of our Board of Directors, and will depend upon, among other things,
our operating and financial condition, capital requirements and general business conditions.
Therefore, there can be no assurance that any dividends on our Common Stock will be paid in the
future.



Page 8

---

Recent Sales of Unregistered Securities

None.

Equity Compensation Plan Information

None.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers



We did not purchase any of our shares of common stock or other securities during the year ended
June 30, 2004.

ITEM    6.   
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION



The following discussion should be read in conjunction with our financial statements and the
related notes that appear elsewhere in this annual report. the following discussion contains
forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could
differ materially from those discussed in the forward looking statements. Our financial
statements are stated in United States dollars and are prepared in accordance with United States
Generally Accepted Accounting Principles.

We have not had any revenues from operations in each of the last two fiscal years, nor in the last
fiscal year and the period July 1, 2004, through to the date of this document.

Plan of Operation

We can take pride that one of ProDigital's original goals or
"raison d'etre" has been
accomplished - the establishment of the only professional Post House in the Okanagan Valley.
We are working on getting the word out to the film industry that we are ready for business.
Several production companies have expressed interest in using the Post House for upcoming
productions and, as we are in discussion with them, we will continually scout out new business.
Management is in the process of advertising in various newspapers, trade magazines and
websites and with numerous film commissioners, for an experienced studio manager/supervisor
to oversee the production process.  We are also looking at the possibility of a business
combination with a suitable entity as well as keeping an eye out for other attractive new business
opportunities.

We do not presently have any agreements, arrangements or understandings for new financing.
We are actively searching for new financing, but there is no assurance that our search will find
sufficient financing opportunities to allow us to meet our liabilities and commitments as they
come due, or if they become available, that financing can be obtained on commercially
reasonable terms. To date, we have received approximately $369,600 as proceeds from
unsecured convertible notes payable.  These notes bear interest at 6% to 10% per annum and are
convertible into common stock at a price of $0.25 per share (adjusted for the 4:1 forward
stock-split which became effective in July 2004). All notes payable will be renewed
automatically for one year at a time.  Notes payable with principal totaling $37,000 plus accrued
interest of $3,047 as at June 30, 2004, will be due in the next 12 months.  The remaining
$332,600 notes payable will become due on various dates in 2005 and 2006 commencing on
October 1, 2005.

There is substantial doubt about our ability to continue as a going concern as we have suffered
recurring losses from operations and have no established source of revenue. Accordingly, our
independent auditors included an explanatory paragraph in their audit opinion on our June 30,
2004 financial statements regarding concerns about our ability to continue as a going concern.
Our financial statements contain additional note disclosures describing the circumstances that
lead to this disclosure by our independent auditors.



Page 9

---



We are currently relying on financing mainly obtained by convertible loans from companies
owned or controlled by our President, Darone Davis, to fund our continuing operating expenses
and to fund the identification and evaluation of a suitable business opportunity or business
combination.  As of January 31, 2005 our cash balance was Cdn$1,699. We anticipate that we
would require additional financing of about $6 - 7million to carry out our business plan:



|                                                      | Estimated Cost  
|----------------------------------------------------- | ----------------
|102 acre property purchase                            | $     
		575,000
|Roadwork, infrastructure and excavation               | 820,000         
|Sewage treatment plant and waste removal              | 287,000         
|3 Class "A" professional sound stages                 | 2,460,000       
|Executive offices and cafeteria                       | 575,000         
|5 log cabins                                          | 410,000         
|Executive accommodations                              | 575,000         
|Outbuildings (maintenance shops, storage, pump house) | 164,000         
|Firehall and fire engine                              | 41,000          
|Fully outfitted gymnasium                             | 61,000          
|Total                                                 | $  5,968,000    

The balance of the funds will be used for labor, contingencies, accounting and filing fees and to
pay for general administration expenses for the next twelve months.  If funding is secured, we
believe construction of the infrastructure and sound stage studios could begin during the first half
of 2005.  We would likely seek to secure the necessary financing through a private placement of
our common shares. Should such external financing be unavailable, we may defer or slow
expenditures, put a property acquisition on hold until we are able to raise the necessary funds and
continue to rely on advances from companies controlled by Darone Davis to cover administrative
expenses.

We do, however, anticipate commencing revenues-generating activity from our now
fully-operational Post House which will help to cover administrative and general expenses.
Unfortunately, there can be no assurance that we will be successful in attracting a sufficient level
of interest in the Post House. Failure to attract necessary industry interest in the Post House as a
result of competition, technological change, or otherwise, would significantly harm our business.

In October 2003, we invested $150,000 in the two complete, Standard Definition, professional
AVID Xpress digital post-production editing suites, a professional audio editing/recording
studio, video cameras and lights, plus additional related equipment, together constituting a
complete and working professional Post House in California.

In August 2004, we invested an additional $31,500 (Cdn$42,062) in High Definition post
production equipment, including the latest XSERVE RAID and PowerMac DP2.0 computer and
software for the Post House.  Also, our President has entered into a contract for the purchase of a
102-acre target property for approximately $425,000 (Cdn$535,000).  Subject to receiving
approval for rezoning, the property will be used by us for the development of a
"Class A"
production sound stages and executive accommodations.  Our President paid a approximately
$8,000 (CDN$10,000) deposit on the purchase.  The purchase of the property is subject to a
number of conditions as described  in Item 1. above including receipt of sufficient funds to
finance the purchase.

Application of Critical Accounting Policies

Our financial statements have been prepared on a going concern basis. We have accumulated a
deficit of $298,989 from inception to June 30, 2004. Our ability to continue as a going concern is
dependent upon our ability to generate profitable operations in the future and/or to obtain the
necessary financing to meet our obligations and repay our liabilities arising from normal business
operations when they come due. The outcome of these matters cannot be predicted with any
certainty at this time. We have historically satisfied our working capital needs primarily by
issuing convertible debentures to our controlling shareholder and at June 30, 2004 we had a
working capital deficit of $86,381, largely as a result of a majority of the convertible debentures
coming due within the next twelve months.  Repayment of such debentures will be at the
discretion of the controlling shareholder.  Management plans to continue to provide for our
capital needs by issuing equity securities. These financial statements do not include any
adjustments to the amount and classification of assets and liabilities that may be necessary should
we be unable to continue as a going concern.



Page 10

---

Use of Estimates

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

Impairment and Disposal of Long-Lived Assets



In accordance with Statement of Financial Accounting Standards ("SFAS") No.144,
Accounting for the Impairment or Disposal of Long-Lived Assets, the Company reviews the
carrying value of its long-lived assets for impairment whenever events and circumstances
indicate that the carrying value of the assets might be impaired and the carrying value may not be
recoverable. Recoverability of these assets is measured by comparison of the carrying value of
the assets to the undiscounted cash flows estimated to be generated by those assets over their
remaining economic lives and the eventual disposition of the assets. If the undiscounted cash
flows are not sufficient to recover the carrying value of such assets the assets are considered
impaired, the impairment loss is measured by comparing the fair value of the assets to their
carrying values. Fair value is determined by either a quoted market price or a value determined
by a discounted cash flow technique, whichever is more appropriate under the circumstances
involved. Accordingly, no impairment was recorded as at June 30, 2004 and 2003.

Off Balance-sheet Arrangements



As described below, due to our relationship with Orchard Breeze, a company controlled by our
President, we are presumed to have provided an implicit guarantee of the value of the lease
property to Orchard Breeze and as a result, we are deemed to hold a variable interest in Orchard
Breeze in accordance with FASB Interpretation ("FIN") No.46.



New Accounting Pronouncements



In January 2003, the Financial Accounting Standards Board ("FASB") issued FIN No. 46,
"Consolidation of Variable Interest Entities, an Interpretation of ARB 51", which was amended
in December 2003, ("FIN No. 46(R)"). The primary objectives of FIN No. 46(R) are to provide
guidance on the identification of entities for which control is achieved through means other than
voting rights (variable interest entities or "VIEs") and how to determine when and which
business enterprise should consolidate the VIE. This new model for consolidation applies to an
entity for which either: (1) the equity investors do not have a controlling financial interest; or (2)
the equity investment at risk is insufficient to finance that entity's activities without receiving
additional subordinated financial support from other parties. In addition, FIN No. 46(R) requires
that both the primary beneficiary and all other enterprises with a significant variable interest in a
VIE make additional disclosures.  In accordance with FIN 46(R), due to our relationship with
Orchard Breeze, a company controlled by our President, we are presumed to have provided an
implicit guarantee of the value of the lease property to Orchard Breeze and as a result, we are
deemed to hold a variable interest in Orchard Breeze. As another creditor of Orchard Breeze is
considered to be the primary beneficiary, we are not required under FIN 46(R) to consolidate
Orchard Breeze but only to provide additional disclosure. Accordingly, we have disclosed the
nature of our relationship with Orchard Breeze and our maximum exposure to loss as a result of
our involvement in this VIE in note 11 of the audited financial statements.



Page 11

---



On December 16, 2004, FASB issued SFAS No. 123 (revised 2004),
"Share-Based Payment."
SFAS No. 123(R) would require the Company to measure all employee stock-based
compensation awards using a fair value method and record such expense in its consolidated
financial statements. In addition, SFAS No. 123(R) will require additional accounting related to
the income tax effects and additional disclosure regarding the cash flow effects resulting from
share-based payment arrangements. For public entities that file as a small business issuer, SFAS
No. 123(R) is effective for the first interim or annual reporting period beginning after December
31, 2005.

In December 2004, FASB issued SFAS No. 153 to amend Opinion 29 by eliminating the
exception for non-monetary exchanges of similar productive assets and replaces it with general
exception for exchanges of non-monetary assets that do not have commercial substance.  A
non-monetary exchange is defined to have commercial substance if the future cash flows of the
entity are expected to change significantly as a result of the exchange.

The implementation of SFAS No. 123(R) and SFAS No. 153 is not expected to have a material
effect on our financial statements.

ITEM    7.   
FINANCIAL STATEMENTS



Index to Financial Statements

ProDigital Film Studios, Inc

(formerly ProDigital Film Labs, Inc

(A Development Stage Company)

Financial Statements

Years ended June 30, 2004 and 2003

(Expressed in US Dollars)

Contents



Report of Independent Registered Public Accounting Firm



Financial Statements



Balance Sheets

Statements of Changes in Capital Deficit

Statements of Loss and Comprehensive Loss

Statements of Cash Flows

Summary of Significant Accounting Policies

Notes to Financial Statements



Page 12

---

Report of Independent Registered Public Accounting Firm



To the Directors and Stockholders of

ProDigital Film Studios, Inc. (formerly ProDigital Film Labs, Inc.)

(A Development Stage Company)



We have audited the Balance Sheets of ProDigital Film Studios, Inc. (formerly ProDigital Film
Labs, Inc., a development stage company) as at June 30, 2004 and 2003 and the Statements of
Changes in Capital Deficit, Loss and Comprehensive Loss and Cash Flows for the years then
ended and for the period from May 2, 2000 (inception) to June 30, 2004, except that we did not
audit these financial statements for the period from May 2, 2000 (inception) to June 30, 2002;
those statements were audited by other auditors whose report dated October 5, 2002, expressed
an unqualified opinion on those statements. These financial statements are the responsibility of
the Company's management.  Our responsibility is to express an opinion on these financial
statements based on our audits. Our opinion, insofar as it relates to the amounts for the period
from May 2, 2000 (inception) to June 30, 2002 included in the cumulative totals, is based solely
upon the report of the other auditors.



We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform an audit to
obtain reasonable assurance 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 and the report of other auditors provide a reasonable
basis for our opinion.



In our opinion, based on our audits and the report of other auditors, these financial statements
present fairly, in all material respects, the financial position of ProDigital Film Studios, Inc.
(formerly ProDigital Film Labs, Inc., a development stage company) as at June 30, 2004 and
2003 and the results of its operations and its cash flows for the years then ended and for the
period from May 2, 2000 (inception) to June 30, 2004 in conformity with accounting principles
generally accepted in the United States of America.



The accompanying financial statements have been prepared assuming the Company will continue
as a going concern.  As discussed in Note 1 to the financial statements, the Company has no
established source of revenue, has accumulated losses of $298,989 since its inception and has a
working capital deficiency of $86,381. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.  Management's plans in regard to these
matters are described in Note 1.  These financial statements do not include any adjustments that
might result from the outcome of this uncertainty.



/s/ BDO Dunwoody LLP



Chartered Accountants

Vancouver, Canada

December 22, 2004



Page 13

---

PRODIGITAL FILM STUDIOS, INC.

(Formerly ProDigital Film Labs, Inc.)

(A Development Stage Company)

Balance Sheets

(Expressed in US Dollars)



|June
    30                                                            | 2004                 |  | 2003                   
|---------------------------------------------------------------------- | -------------------- |  | -----------------------
|                                                                       |                      |  |                        
|ASSETS                                                                 |                      |  |                        
|                                                                       |                      |  |                        
|Current                                                                |                      |  |                        
|Cash                                                                   | $             11,714 |  | $              
    125
|Amount receivable                                                      | 4,452                |  | 667                    
|Inventories                                                            | 2,932                |  | -                      
|Prepaid expenses                                                       | -                    |  | 1,781                  
|                                                                       |                      |  |                        
|Total current assets                                                   | 19,098               |  | 2,573                  
|                                                                       |                      |  |                        
|Due from
	related parties (note 2)                                     | 25,757               |  | -                      
|Property
	and equipment (note 3)                                       | 142,506              |  | 175                    
|Deposit
	(note 7)                                                      | 12,500               |  | 12,500                 
|                                                                       |                      |  |                        
|Total
    Assets                                                       | $         199,861    |  | $         15,248       
|                                                                       |                      |  |                        
|LIABILITIES AND CAPITAL DEFICIT                                        |                      |  |                        
|                                                                       |                      |  |                        
|LIABILITIES                                                            |                      |  |                        
|                                                                       |                      |  |                        
|Current                                                                |                      |  |                        
|Accounts payable and accrued liabilities                               | $         46,724     |  | $         55,100       
|Current portion of convertible notes payable (note 4)                  | 40,047               |  | 7,420                  
|Due to related parties (Note 5)                                        | 14,216               |  | 35,441                 
|Unearned rental income and deposits                                    | 4,492                |  | 6,789                  
|                                                                       |                      |  |                        
|Total current liabilities                                              | 105,479              |  | 104,750                
|                                                                       |                      |  |                        
|Convertible
	notes payable (note 4)                                    | 282,209              |  | -                      
|                                                                       |                      |  |                        
|Total liabilities                                                      | 387,688              |  | 104,750                
|                                                                       |                      |  |                        
|Capital
    deficit                                                    |                      |  |                        
|Capital Stock (note 6 and note 10)                                     |                      |  |                        
|Authorized                                                             |                      |  |                        
|40,000,000 common shares (post split), par value of $0.0001 per share  |                      |  |                        
|Issued                                                                 |                      |  |                        
|19,713,600 shares (post split) (2003 - 19,713,600 shares (post split)) | 1,971                |  | 1,971                  
|Additional paid-in capital                                             | 120,229              |  | 120,229                
|Deficit accumulated during the development stage                       | (298,989)            |  | (202,123)              
|Other comprehensive loss                                               |                      |  |                        
|- cumulative translation adjustment                                    | (11,038)             |  | (9,579)                
|                                                                       |                      |  |                        
|Total capital deficit                                                  | (187,827)            |  | (89,502)               
|                                                                       |                      |  |                        
|Total
    Liabilities and Capital Deficit                              | $         199,861    |  | $          15,248      
|                                                                       |                      |  |                        



The accompanying summary of significant accounting policies and notes are an
integral part of these financial statements.



Page 14

---

PRODIGITAL FILM STUDIOS, INC.

(Formerly ProDigital Film Labs, Inc.)

(A Development Stage Company)

Statements of Changes in Capital Deficit

(Expressed in US Dollars)







|                                                                                                                 | Common Stock | Additional Paid-In Capital | Deficit Accumulated during the Development Stage | Other Comprehensive Loss        | Total Capital
    Deficit
|---------------------------------------------------------------------------------------------------------------- | ------------ | -------------------------- | ------------------------------------------------ | ------------------------------- | -------------------------
|                                                                                                                 | Shares       | Amount                    
|                                                                                                                 |              |                            |                                                  |                                 |                          
|Issuance of stock
    at inception at $0.000025
    per share                                                    | 12,000,000   | $             
    1,200   | $                  (900)                         | $                        
    - | $                  
    -
|                                                                                                                 |              |                            |                                                  |                                 |                          
|Net loss for the period                                                                                          | -            | -                          | -                                                | (13,021)                        | -                        
|                                                                                                                 |              |                            |                                                  |                                 |                          
|Balance, June 30, 2000                                                                                           | 12,000,000   | 1,200                      | (900)                                            | (13,021)                        | -                        
|                                                                                                                 |              |                            |                                                  |                                 |                          
|Issuance of stock for
    cash at $0.0125 per share in May 2001                                                  | 3,120,000    | 312                        | 38,688                                           | -                               | -                        
|                                                                                                                 |              |                            |                                                  |                                 |                          
|Issuance of stock for
	cash at $0.0625 per share in May 2001                                                     | 160,000      | 16                         | 9,984                                            | -                               | -                        
|                                                                                                                 |              |                            |                                                  |                                 |                          
|Net loss for the year                                                                                            | -            | -                          | -                                                | (54,427)                        | -                        
|                                                                                                                 |              |                            |                                                  |                                 |                          
|Balance, June 30, 2001                                                                                           | 15,280,000   | 1,528                      | 47,772                                           | (67,448)                        | -                        
|                                                                                                                 |              |                            |                                                  |                                 |                          
|Issuance of stock for
    private placement, net of share issuance costs at $0.0125 per share in August
    2001 | 3,200,000    | 320                        | 39,680                                           | -                               | -                        
|                                                                                                                 |              |                            |                                                  |                                 |                          
|Issuance of stock for
    services at $0.0125 per share in August 2001                                           | 160,000      | 16                         | 1,984                                            | -                               | -                        
|                                                                                                                 |              |                            |                                                  |                                 |                          
|Issuance of stock for
    convertible note at $0.25 per share in June 2002                                       | 73,600       | 7                          | 18,393                                           | -                               | -                        
|                                                                                                                 |              |                            |                                                  |                                 |                          
|Net loss for the year                                                                                            | -            | -                          | -                                                | (70,714)                        | -                        
|                                                                                                                 |              |                            |                                                  |                                 |                          
|Balance, June 30, 2002                                                                                           | 18,713,600   | 1,871                      | 107,829                                          | (138,162)                       | -                        
|                                                                                                                 |              |                            |                                                  |                                 |                          
|Issuance of stock for
    option to acquire a property at $0.0125 per share in August 2002 (Note 6)              | 1,000,000    | 100                        | 12,400                                           | -                               | -                        
|                                                                                                                 |              |                            |                                                  |                                 |                          
|Net loss for the year                                                                                            | -            | -                          | -                                                | (63,961)                        | -                        
|                                                                                                                 |              |                            |                                                  |                                 |                          
|Cumulative translation
    adjustment                                                                            | -            | -                          | -                                                | -                               | (9,579)                  
|                                                                                                                 |              |                            |                                                  |                                 |                          
|Balance, June 30, 2003                                                                                           | 19,713,600   | 1,971                      | 120,229                                          | (202,123)                       | (9,579)                  
|                                                                                                                 |              |                            |                                                  |                                 |                          
|Net loss for the year                                                                                            | -            | -                          | -                                                | (96,866)                        | -                        
|                                                                                                                 |              |                            |                                                  |                                 |                          
|Cumulative translation
	adjustment                                                                               | -            | -                          | -                                                | -                               | (1,459)                  
|                                                                                                                 |              |                            |                                                  |                                 |                          
|Balance, June 30, 2004                                                                                           | 19,713,600   | $   1,971                  | $  120,229                                       | $  (298,989)                    | $  (11,038)              
|                                                                                                                 |              |                            |                                                  |                                 |                          

The accompanying summary of significant accounting policies and notes are an
integral part of these financial statements.



Page 15

---

PRODIGITAL FILM STUDIOS, INC.

(Formerly ProDigital Film Labs, Inc.)

(A Development Stage Company)

Statements of Operations and Comprehensive Loss

(Expressed in US Dollars)



|                                            | For the years ended June 30, |  | For the period from May 2, 2000 (inception) to June 30, 2004
|------------------------------------------- | ---------------------------- |  | ------------------------------------------------------------
|                                            | 2004                         |  | 2003                                                        
|                                            |                              |  |                                                             
|Expenses (recovery)                         |                              |  |                                                             
|Automotive                                  | $                 
	959      |  | $              
    235                                     
|Brokerage fees                              | (1,531)                      |  | 2,960                                                       
|Contract fees                               | -                            |  | -                                                           
|Depreciation                                | 22,503                       |  | 44                                                          
|Foreign exchange loss (gain)                | 2,261                        |  | (881)                                                       
|Insurance                                   | -                            |  | 393                                                         
|Office and miscellaneous                    | 9,158                        |  | 1,223                                                       
|Professional fees                           | 31,167                       |  | 39,213                                                      
|Property taxes                              | 3,481                        |  | 11,525                                                      
|Rent                                        | 19,753                       |  | 18,018                                                      
|Telephone and utilities                     | 6,720                        |  | 3,502                                                       
|Travel                                      | 8,911                        |  | 3,574                                                       
|                                            | (103,382)                    |  | (79,806)                                                    
|                                            |                              |  |                                                             
|Other income
    (expenses)                 |                              |  |                                                             
|Interest expense                            | (19,836)                     |  | (420)                                                       
|Rental income                               | 26,352                       |  | 16,265                                                      
|                                            |                              |  |                                                             
|Net loss for the
    period                 | (96,866)                     |  | (63,961)                                                    
|                                            |                              |  |                                                             
|Foreign currency
    translation adjustment | (1,459)                      |  | (9,579)                                                     
|                                            |                              |  |                                                             
|Comprehensive loss                          | $         
	(98,325)         |  | (73,540)                                                    
|                                            |                              |  |                                                             
|Loss per share -
    basic and diluted      | $             
    (0.00)    |  | $              
    (0.00)                                  
|                                            |                              |  |                                                             
|Weighted average
    shares outstanding     | 19,713,600                   |  | 19,618,574                                                  
|                                            |                              |  |                                                             



The accompanying summary of significant accounting policies and notes are an
integral part of these financial statements.



Page 16

---

PRODIGITAL FILM STUDIOS, INC.

(Formerly ProDigital Film Labs, Inc.)

(A Development Stage Company)

Statements of Cash Flows

(Expressed in US Dollars)



|                                                                            | For the years ended June 30, |  | For the period from May 2, 2000 (inception) to June 30, 2004
|--------------------------------------------------------------------------- | ---------------------------- |  | ------------------------------------------------------------
|                                                                            | 2004                         |  | 2003                                                        
|                                                                            |                              |  |                                                             
|Cash flows from
    operating activities                                    |                              |  |                                                             
|Net loss for the period                                                     | $         
	(96,866)         |  | $              
    (63,961)                                
|Adjustments to reconcile net loss for the period                            |                              |  |                                                             
|to cash used in operating activities:                                       |                              |  |                                                             
|Depreciation                                                                | 22,503                       |  | 44                                                          
|Accrued interest on convertible notes                                       | 19,836                       |  | 420                                                         
|Stock issued for interest expense                                           | -                            |  | -                                                           
|Stock issued for services                                                   | -                            |  | -                                                           
|Changes in operating assets and liabilities:                                |                              |  |                                                             
|Amounts receivable                                                          | (3,785)                      |  | 1,189                                                       
|Inventories                                                                 | (2,932)                      |  | -                                                           
|Prepaid expenses                                                            | 1,781                        |  | 5,136                                                       
|Accounts payable and accrued liabilities                                    | (6,198)                      |  | 27,927                                                      
|Unearned rental income and deposits                                         | (2,297)                      |  | 6,068                                                       
|                                                                            |                              |  |                                                             
|Cash used in operating activities                                           | (67,958)                     |  | (23,177)                                                    
|                                                                            |                              |  |                                                             
|Cash flows from
    investing activity                                      |                              |  |                                                             
|Acquisition of property and equipment                                       | (164,834)                    |  | -                                                           
|                                                                            |                              |  |                                                             
|Cash flows from
    financing activities                                    |                              |  |                                                             
|Net advances (to) from related parties                                      | (48,836)                     |  | 23,189                                                      
|Net proceeds from issuance of share capital                                 | -                            |  | -                                                           
|Proceeds from convertible notes                                             | 295,000                      |  | -                                                           
|                                                                            |                              |  |                                                             
|Cash provided by financing activities                                       | 246,164                      |  | 23,189                                                      
|                                                                            |                              |  |                                                             
|Net increase in cash                                                        | 13,372                       |  | 12                                                          
|                                                                            |                              |  |                                                             
|Effect of foreign
	exchange on cash                                         | (1,783)                      |  | -                                                           
|                                                                            |                              |  |                                                             
|Cash,beginning
    of period                                                | 125                          |  | 113                                                         
|                                                                            |                              |  |                                                             
|Cash, end of
    period                                                     | $          11,714            |  | $                   
    125                                
|                                                                            |                              |  |                                                             
|Supplementary
    disclosure of cash flow information:                      |                              |  |                                                             
|Cash paid during year for:                                                  |                              |  |                                                             
|Interest                                                                    | $                    
    -  |  | $                       
    -                              
|Income taxes                                                                | $                    
    -  |  | $                       
    -                              
|                                                                            |                              |  |                                                             
|Supplemental
    disclosure of non-cash investing and financing activities: |                              |  |                                                             
|Issuance of stock upon conversion of note                                   |                              |  |                                                             
|payable and accrued interest                                                | $                    
    -  |  | $                       
	-                                 
|Issuance of stock for broker services                                       | $                    
    -  |  | $                       
	-                                 
|Issuance of stock for option to acquire property                            | $                    
	-     |  | $              12,500                                       
|                                                                            |                              |  |                                                             





The accompanying summary of significant accounting policies and notes are an
integral part of these financial statements.



Page 17

---

ProDigital Film Studios, Inc.

(formerly ProDigital Film Labs, Inc.)

(A Development Stage Company)

Summary of Significant Accounting Policies

(Expressed in US Dollars)

June 30, 2004 and 2003



|Basis of Presentation                           | These financial statements are stated in US dollars and are prepared in accordance with US
generally accepted accounting principles.  The Company is currently in the development stage
and presents its financial statements in accordance with Statement of Financial Accounting
Standard ("SFAS") No. 7, "Accounting and Reporting by Development Stage Enterprises".                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|----------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Property and Equipment                          | Property and equipment are recorded at cost.  Depreciation is provided over the estimated useful
life of the property and equipment using the declining-balance method at the rates as set out
below:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                | Furniture and equipment                
    - 20%
	Studio equipment                            
	- 20%
	Computer hardware                        
	- 30%
	Computer software                         
	- 100%
	
	Depreciation is recorded at one-half
	of the above rates in the year of aquisition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Use of Estimates                                | The preparation of financial statements in accordance with generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses during the reporting
period.  Actual results could differ from management's best estimates as additional information
becomes available in the future.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Income Taxes                                    | The Company follows the provisions of SFAS No. 109, "Accounting for Income Taxes", which
requires the Company to recognize deferred tax liabilities and assets for the expected future tax
consequences of events that have been recognized in the Company's financial statements or tax
returns using the liability method. Under this method, deferred tax liabilities and assets are
determined based on the temporary differences between the financial statement carrying amounts
and tax bases of assets and liabilities using enacted rates in effect in the years in which the
differences are expected to reverse.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Financial Instruments                           | The fair value of the Company's cash, amounts receivable and accounts payable and accrued
liabilities approximate their net book value due to the relatively short term to maturity of these
instruments.  It is not practical to determine the fair market value of the amounts owing from and
to related parties and convertible notes payable due to the related party nature of the amounts and
an absence of a market for such financial instruments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|*Foreign Currency Translation and Transactions* | The Company's functional currency is
    the Canadian dollar as substantially all of the Company's operations are in
    Canada.  The Company uses the United States dollar as its reporting currency
    for consistency with other registrants of the Securities and Exchange
    Commission ("SEC").                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                | The Company translates assets and
    liabilities denominated in a foreign currency at the rate of exchange at the
    balance sheet date.  Revenues and expenses are translated at the average
    rate of exchange for the year.  Translation gains and losses are deferred as
    a separate component of capital deficit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                | Transactions undertaken in currencies other than the functional currency of
    the entity are translated using the exchange rate in effect as of the
    transaction date. Any exchange gains and losses are included in Other Income
    (Expenses) on the Statement of Operations and Comprehensive Loss.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Loss Per Share                                  | Loss per share is computed in
    accordance with SFAS No. 128, "Earnings Per Share". Basic loss per share is
    calculated by dividing the net loss available to common stockholders by the
    weighted average number of common shares outstanding for the year.  Diluted
    earnings per share reflects the potential dilution of securities that could
    share in earnings of an entity.  In a loss year, dilutive common equivalent
    shares are excluded from the loss per share calculation as the effect would
    be anti-dilutive.  Basic and diluted loss per share are the same for the
    years presented.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                | Common equivalent shares,
    consisting of shares issuable on conversion of convertible notes, totalling
	1,289,024 shares (2003 - 29,680)
    were not included in the computation of diluted earnings per share because
    the effect is anti-dilutive. No other adjustments were made for purposes of
    per share calculations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Comprehensive Income                            | The Company has adopted SFAS No. 130,
    "Reporting Comprehensive Income", which establishes standards for reporting
    and display of comprehensive income, its components and accumulated
    balances.  The Company is disclosing this information on its Statements of
    Operations and Comprehensive Loss.  Comprehensive income (loss) is comprised
    of net income (loss) and all changes to capital deficit except those
    resulting from investments by owners and distributions to owners.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Rental Income                                   | The Company recognizes rental income over the term of the lease of 41
    months.  Security deposits and rental income received in advance from the
    tenant are recorded as Unearned Rental Income and Deposits on the Company's
    Balance Sheets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Impairment or Disposal of Long-Lived Assets     | In accordance with SFASNo. 144,
	"Accounting for the Impairment or Disposal of Long-Lived
Assets", the Company reviews the carrying value of its long-lived assets for impairment
whenever events and circumstances indicate that the carrying value of the assets might be
impaired and the carrying value may not be recoverable. Recoverability of these assets is
measured by comparison of the carrying value of the assets to the undiscounted cash flows
estimated to be generated by those assets over their remaining economic lives and the eventual
disposition of the assets. If the undiscounted cash flows are not sufficient to recover the carrying
value of such assets the assets are considered impaired, the impairment loss is measured by
comparing the fair value of the assets to their carrying values. Fair value is determined by either a
quoted market price or a value determined by a discounted cash flow technique, whichever is
more appropriate under the circumstances involved. Accordingly, no impairment was recorded as
at June 30, 2004 and 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|New Accounting Pronouncements                   | In January 2003, the FASB issued FIN No. 46,
"Consolidation of Variable Interest Entities, an
Interpretation of ARB 51."  The primary objectives of FIN No. 46 are to provide guidance on the
identification of entities for which control is achieved through means other than voting rights
(variable interest entities or "VIEs") and how to determine when and which business enterprise
should consolidate the VIE.  This new model for consolidation applies to an entity for which
either: (1) the equity investors do not have a controlling financial interest; or (2) the equity
investment at risk is insufficient to finance that entity's activities without receiving additional
subordinated financial support from other parties.  In addition, FIN No. 46 requires that both the
primary beneficiary and all other enterprises with a significant variable interest in a VIE make
additional disclosures as described in note 11.  As amended in December 2003, the effective
dates of FIN No. 46 for public entities that are small business issuers, as defined ("SBIs"), are as
follows: (a) For interests in special-purpose entities: periods ended after December 15, 2003; (b)
For all VIEs created before January 31, 2003: periods ending after December 15, 2004; and (c)
For all VIEs created after January 31, 2003, FIN No. 46 is applicable immediately.  The
December 2003 amendment of FIN No. 46 also includes transition provisions that govern how an
SBI which previously adopted the pronouncement (as it was originally issued) must account for
consolidated VIEs.
	
The implementation of this standard did not have a material effect on the Company's financial
statements.
 On December 16, 2004, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 123 (revised 2004), "Share-Based Payment."
SFAS No. 123(R) would require the Company to measure all employee stock-based
compensation awards using a fair value method and record such expense in its consolidated
financial statements. In addition, SFAS No. 123(R) will require additional accounting related to
the income tax effects and additional disclosure regarding the cash flow effects resulting from
share-based payment arrangements. For public entities that file as a small business issuer, SFAS
No. 123(R) is effective for the first interim or annual reporting period beginning after December
31, 2005.
 In December 2004, FASB issued SFAS No. 153 to amend Opinion 29 by eliminating the
exception for non-monetary exchanges of similar productive assets and replaces it with general
exception for exchanges of non-monetary assets that do not have commercial substance.  A
non-monetary exchange is defined to have commercial substance if the future cash flows of the
entity are expected to change significantly as a result of the exchange.
 The implementation of these standards is not expected to have a material effect on the
Company's financial statements.



Page 18

---

ProDigital Film Studios, Inc.

(formerly ProDigital Film Labs, Inc.)

(A Development Stage Company)

Notes to Financial Statements

(Expressed in US Dollars)

June 30, 2004 and 2003





1.    Nature of Business and Ability to Continue Operations

The Company was incorporated on May 2, 2000 under the laws of the State of Nevada and
substantially all operations are located in Canada.  Its principal business activity consists of
developing a post production digital film studio and a digital film studio facility.

These accompanying financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America on a going concern basis which
presumes the realization of assets and the discharge of liabilities and commitments in the normal
course of operations for the foreseeable future.  As at June 30, 2004, the Company has no
established source of revenue, has accumulated losses of $298,989 since inception and has a
working capital deficiency of $86,381, factors which cast substantial doubt as to the Company's
ability to continue as a going concern.

The Company's ability to continue as a going concern is dependent upon the continued
financial support of its creditors and related parties and its ability to obtain financing to repay its
current obligations and fund working capital and its ability to achieve profitable operations.  A
significant portion of the Company's liabilities are either due on demand or have a maturity date
of less than one year.  The Company will seek to obtain creditors' consents to delay repayment
of these outstanding liabilities until it is able to replace this financing with funds generated by
operations, replacement debt or from equity financings through private placements.  There is no
assurance that the Company's creditors will agree to delay repayment of their outstanding
balances.  Management plans to raise approximately $6 to $7 million for the development of a
sound stage and to finance operations through future debt and equity capital.  Management also
plans to realize sufficient sales in future periods to achieve profitable operations.  The resolution
of the going concern issue is dependent upon the realization of management's plans.  There is
no assurance that the Company will be able to raise sufficient debt or equity capital, from the
sources described above, on satisfactory terms.  If management is unsuccessful in obtaining
financing or in achieving profitable operations, the Company will be required to cease
operations.  The outcome of these matters cannot be predicted at this time.

The financial statements do not give effect to any adjustments which could be necessary should
the Company be unable to continue as a going concern and, therefore, be required to realize its
assets and discharge its liabilities in other than the normal course of business and at amounts
differing from those reflected in the financial statements.



2.    Due from Related Parties

|                                                                         | 2004            | 2003             
|------------------------------------------------------------------------ | --------------- | -----------------
|                                                                         |                 |                  
|Due from a company owned by the
	Company's president                     | $   
    21,758 | $            
	- 
|Due from a company owned by the
	Company's president and a family member | 3,999           | -                
|                                                                         |                 |                  
|                                                                         | $    25,757     | $             
	-
|                                                                         |                 |                  

The amounts due from related parties are unsecured, non-interest bearing and have no specific
terms of repayment.



Page 19

---

ProDigital Film Studios, Inc.

(formerly ProDigital Film Labs, Inc.)

(A Development Stage Company)

Notes to the Financial Statements

(Expressed in US Dollars)

June 30, 2004 and 2003



3.    Property and Equipment

|                        |               |                          | 2004           | 2003          
|----------------------- | ------------- | ------------------------ | -------------- | --------------
|                        |               |                          |                |               
|                        | Cost          | Accumulated Depreciation | Net Book Value | Net Book Value
|                        |               |                          |                |               
|Furniture and Equipment | $  6,656      | $      853               | $   5,803      | $   175       
|                        |               |                          |                |               
|Studio equipment        | 115,034       | 11,504                   | 103,530        | -             
|                        |               |                          |                |               
|Computer hardware       | 32,630        | 4,894                    | 27,736         | -             
|                        |               |                          |                |               
|Computer software       | 10,876        | 5,439                    | 5,437          | -             
|                        |               |                          |                |               
|Furniture and equipment | $     165,196 | $      22,690            | $   142,506    | $   175       
|                        |               |                          |                |               



4.    Convertible Notes Payable

|                                                                                                                                                                          | 2004            | 2003        
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------- | ------------
|                                                                                                                                                                          |                 |             
|Unsecured note payable bearing interest
		at 6% per annum, due on demand                                                                                                  | $      
		5,000 | $     5,000 
|                                                                                                                                                                          |                 |             
|Unsecured note payable issued to a family
		member of the Company's president, bearing interest at 6% per annum, due
		demand                                             | 2,000           | 2,000       
|                                                                                                                                                                          |                 |             
|Unsecured note payable bearing interest at 10%
		per annum, due June 2006                                                                                                 | 30,000          | -           
|                                                                                                                                                                          |                 |             
|Unsecured notes payable issued to a
		company controlled by the Company's president, bearing interest at 10%
		per annum, due September 2004, October 2005 and March 2006 | 265,000         | -           
|                                                                                                                                                                          |                 |             
|Accrued interest                                                                                                                                                          | 20,256          | 420         
|                                                                                                                                                                          | 322,256         | 7,420       
|Less: Current portion of
		convertible notes                                                                                                                              | 40,047          | 7,420       
|                                                                                                                                                                          |                 |             
|                                                                                                                                                                          | $     282,209   | $          -
|                                                                                                                                                                          |                 |             

Page 20

---



ProDigital Film Studios, Inc.

(formerly ProDigital Film Labs, Inc.)

(A Development Stage Company)

Notes to the Financial Statements

(Expressed in US Dollars)

June 30, 2004 and 2003



4.    Convertible Notes Payable- Continued

The notes payable and any accrued interest are convertible, at the option of the holder, into the
Company's common stock at a price of $0.25 per share (adjusted for the 4:1 forward stock-split
which became effective in July 2004, note 10(b)) for each $0.25 of liability commencing one
year after the closing date of the note payable agreement.

The $32,500 unsecured note payable and accrued interest issued to a company controlled by the
Company's president, which was due in September 2004, has not been repaid by the Company
as of the report date.  The amount owing was agreed upon by the parties to be due on demand.

5.    Due to Related Parties

|                                                     | 2004           | 2003        
|---------------------------------------------------- | -------------- | ------------
|                                                     |                |             
|Due to stockholders                                  | $   
    4,216 | $     25,441
|Due to a company controlled by a
    common director | 10,000         | 10,000      
|                                                     |                |             
|                                                     | $    14,216    | $     35,441
|                                                     |                |             

The amounts due to related parties are unsecured, non-interest bearing and have no specific terms
of repayment.



6.    Capital Stock

During the year ended June 30, 2003, the Company issued 1,000,000 shares of common stock at
$0.0125 per share (based on the fair value of the Company's common stock on the agreement
date) to a company controlled by a significant stockholder for the exclusive option to purchase a
property at a price of $425,000 for a five-year period. The Company currently leases the property
from the company (a stockholder) as disclosed in note 7.  The property consists of a building and
a parking lot which the Company currently subleases to an independent third party for a term of
41 months for a monthly lease payment of approximately $2,200 (CDN $2,950).

The annual minimum lease payments to be received through the sublease for the next two years
are approximately:

2005                       $   
26,200

2006                     
13,200

$    39,400



Page 21

---

ProDigital Film Studios, Inc.

(formerly ProDigital Film Labs, Inc.)

(A Development Stage Company)

Notes to the Financial Statements

(Expressed in US Dollars)

June 30, 2004 and 2003



7.    Related Party Transactions

Related party transactions not disclosed elsewhere in these financial statements include:

|                                                                                              | 2004               | 2003        
|--------------------------------------------------------------------------------------------- | ------------------ | ------------
|                                                                                              |                    |             
|Rental expenses incurred with a company owned
	by the Company's president and a family member | $    19,644        | $   
	18,018
|Non-refundable deposit for option to purchase
    property (Note 6)                           | $              
	- | $    12,500 
|                                                                                              |                    |             

Transactions with related parties are recorded at the exchange amount, being the amount
established and agreed to by the related parties.





8.    Commitment

a)    On October 5, 2003, the Company entered into a lease agreement with a company owned by the
Company's president and a family member for the currently leased property for an annual lease
payment of $22,041 (approximately CDN $27,500).  The lease will expire on October 1, 2006
and requires minimum annual lease payments as follows:



|For the
    year ended June 30: |             
|------------------------------- | ------------
|                                |             
|2005                            | $     22,041
|2006                            | 22,041      
|2007                            | 5,510       
|                                | $     49,592
|                                |             

b)    In June 2004, the Company's president has entered into a contract for the purchase of a 102
-
acre target property for approximately $425,000 (CDN $535,000).  Subsequent to receiving
approval for rezoning, the property will be used by the Company for the development of
"Class
A" production sound stages and executive accommodation.  The Company has paid
approximately $8,000 (CDN $10,000) as deposit in August 2004 pursuant to the purchase
contract.  In order to complete the purchase of the property, the Company must:

i)    with the assistance of the vendor obtain rezoning of the property from a rural
classification to a commercial classification on or before January 31, 2005; and



ii)    obtain suitable financing by January 31, 2005;



Upon receipt of the permission from the Regional District of the Okanagan Similkameen for the
rezoning, and prior to the rezoning taking place, the deposit will increase to approximately
$40,000 (CDN $50,000).  When the increased deposit has been paid, the vendor will then sign all
documentation require by the Regional District to officially rezone the property.  The closing
date for the purchase is February 14, 2005.



Page 22

---

ProDigital Film Studios, Inc.

(formerly ProDigital Film Labs, Inc.)

(A Development Stage Company)

Notes to the Financial Statements

(Expressed in US Dollars)

June 30, 2004 and 2003



9.    Income Taxes

The tax effects of temporary differences that give rise to the
Company's deferred tax assets are as follows:

|                                   | 2004                       | 2003                
|---------------------------------- | -------------------------- | --------------------
|                                   |                            |                     
|Net
    operating losses           | $      107,000             | $    76,000         
|Valuation
    Allowance            | $   (107,000)              | $ (76,000)          
|                                   |                            |                     
|Deferred
    tax asset (liability) | $                   
    - | $             
    -
|                                   |                            |                     

The provision for income taxes differs from the amount
computed using the federal statutory income tax rate as follows:

|                                                      | For the year ended June 30, 2004 | For the year ended June 30, 2003
|----------------------------------------------------- | -------------------------------- | --------------------------------
|                                                      |                                  |                                 
|Provision (benefit) at
    the federal statutory rate | $   
    (31,000)                | $   
    (24,000)               
|Increase in valuation
    allowance                   | 31,000                           | 24,000                          
|                                                      |                                  |                                 
|                                                      | $                 
    -         | $               
    -          
|                                                      |                                  |                                 

At June 30, 2004, the Company had losses available for income tax purposes of approximately
$292,000 (2003 - $202,000) which, if not used, will expire between the years 2007 and 2014.

The Company evaluates its valuation allowance requirements based on projected future
operations.  Management has recorded a valuation allowance because it believes it is more likely
than not that the future income tax benefits of the current loss will not be realized.  When
circumstances change and this causes a change in management's judgment about the
recoverability of deferred tax assets, the impact of the change on the valuation allowance will be
reflected in current income.



Page 23

---

ProDigital Film Studios, Inc.

(formerly ProDigital Film Labs, Inc.)

(A Development Stage Company)

Notes to the Financial Statements

(Expressed in US Dollars)

June 30, 2004 and 2003

10.    Subsequent Events

a)    Subsequent to June 30, 2004, the Company issued two convertible notes to a company controlled
by a director for proceeds of $40,000 and $20,000 and a convertible note to the family trust of a
director for proceeds of approximately $7,600. The unsecured notes bear interest at 10% per
annum and will be due on August 15, 2006, October 15, 2006 and July 10, 2006 respectively.
The notes payable and any accrued interest are convertible, at the option of the holder, into the
Company's common stock at a price of $0.25 per share (adjusted for forward stock-split, as
described in note (b) below) for each $0.25 of liability commencing one year after the closing
date of the note payable agreement.

b)    In July 2004, the Company changed its legal name from ProDigital Film Labs, Inc. to ProDigital
Film Studios, Inc. and split its common shares forward on a four new shares for one old share
basis.  Authorized common shares were increased to 40 million from 10 million to accommodate
the split. The effective date for the forward stock-split was July 13, 2004.  The financial
statements and references to common shares and loss per share have been adjusted retroactively
to account for the stock-split.

c)    In August 2004, the Company's president advanced approximately $31,500 (CDN $42,062) to
the Company as loan payable for the purchase of High Definition post production computer and
software equipment.  This loan is unsecured, non-interest bearing and payable on demand.



11.    Variable Interest Entities

The Company currently leases the property from a company owned by the Company's president
and a family member (the "Lessor").  This related party relationship between the Company and
the Lessor creates a presumption that the Company has provided an implicit guarantee of the
value of the property to the Lessor and would result in the Company deeming to hold a variable
interest in the Lessor.  As another creditor of the Lessor will absorb the majority of the expected
loss, this other creditor is considered to be the primary beneficiary of the Lessor and the
Company need not consolidate the Lessor as a variable interest entity ("VIE").  As at June 30,
2004, the estimated fair value of the leased property is $235,000 which represents the maximum
exposure of loss of the Company in the VIE.



Page 24

---

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



None.

ITEM 8A.   
CONTROLS AND PROCEDURES



As required by Rule 13a-15 under the Exchange Act, we have carried out an evaluation of the
effectiveness of the design and operation of our company's disclosure controls and procedures as
at June 30, 2004. This evaluation was carried out under the supervision and with the participation
of our company's Principal Executive Officer and Acting Chief Financial Officer. Based upon
that evaluation, our Principal Executive Officer and Acting Chief Financial Officer concluded
that our company's disclosure controls and procedures are effective. There have been no
significant changes in our company's internal controls or in other factors, which could
significantly affect internal controls during the quarter ended June 30, 2004.

Disclosure controls and procedures are controls and other procedures that are designed to ensure
that information required to be disclosed in our company's reports filed or submitted under the
Exchange Act is recorded, processed, summarized and reported, within the time periods specified
in the Securities and Exchange Commission's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to ensure that
information required to be disclosed in our company's reports filed under the Exchange Act is
accumulated and communicated to management, including our company's Principal Executive
Officer and Acting Chief Financial Officer as appropriate, to allow timely decisions regarding
required disclosure.



Page 25

---

PART III

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



The following table sets forth certain information regarding the Company's directors and
executive officers as of the date of this report:







|Name                                                           | Age | Date Elected or
      Appointed
|-------------------------------------------------------------- | --- | -------------------------------
|Darone Davis (1),Director, President & Chief Executive Officer | 40  | May 2, 2002                    
|Christopher Dieterich,
	Director                               | 57  | September 20, 2002             
|Linda Holmes (2),Corporate
	Secretary                          | 54  | N/A                            

(1)    Darone Davis was appointed President May 2, 2002 and served as Secretary and
Treasurer from September 30, 2003 to October 16, 2003 and again from August 27, 2004 until
September 10, 2004, when he resigned as Secretary.





(2)    Linda Holmes was appointed Secretary September 10, 2004.



The following sets out the principal occupation, past five years' business experience and other
directorships held by each of the directors and executive officers of the Company:

Darone Davis

Darone Davis, President, Treasurer and Director of ProDigital, is in charge of the day-to-day
operations of the Company.  He is an entrepreneur with several years of experience in the Capital
Markets industry and in asset management. Mr. Davis was instrumental in the initial strategies
involved in the creation and successful structuring of several US companies. After the creation of
these companies, he was directly involved in raising start-up financing, including a $6 million
private placement for a private company developing an AIDS vaccine.  Mr. Davis also serves as
an Asset and Financial Manager, managing many different wealthy family and International
Trusts, providing sound and creative Estate Planning solutions.

Christopher Dieterich

Christopher H. Dieterich, a director of the Company graduated from Virginia Polytechnic
Institute in 1969 with a B.S. in Engineering. He subsequently attended the University of
California at Berkeley where, in 1970, he received his Masters degree in Engineering. In 1979,
Mr. Dieterich graduated from the University of California at Los Angeles with Juris Doctorate.
Mr. Dieterich served in United States Air Force as an instructor pilot from 1971 to 1976, and
maintains licenses as multi-engine, jet and piston, instrument instructor for FAA ratings.
Christopher Dieterich has been an attorney licensed to practice in California for the past 24 years,
specializing in SEC filings and venture capital arrangements for the past six years.

Linda Holmes

Ms. Holmes, Secretary to the Company, has been a self-employed securities compliance
consultant to both private and publicly-traded companies since 1998.  Prior to 1998, she held
various positions from director, secretary, director of corporate and public relations, and director
of investor relations with mineral exploration and mining companies.  She currently serves as a
director and secretary to IGC Resources Inc., a public mineral exploration and development
company (TSX Venture Exchange) and as secretary to Global Precision Medical Inc., a public
medical device technology company (OTCBB).



Page 26

---



None of the officers or directors has been involved in a bankruptcy, criminal conviction, or
subject to any order, judgment or decree, not subsequently reversed, suspended or vacated by any
court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or
otherwise limiting his involvement in any type of business, securities or banking activities, or
found to be guilty of any securities laws infractions.

There are no family relationships between any of the officers and/or directors.



ProDigital's Board
of Directors acts as the audit committee; and, therefore, does not have an
"audit committee financial expert."



Compliance with Section 16(a) of the Exchange Act



Under Section 16 of the Securities Exchange Act 1934, our directors and executive officers and
persons holding more than 10% of the Company's Common Stock are required to report their
initial ownership of Common Stock and subsequent changes to that ownership to the Securities
and Exchange Commission by specified due dates.  Based solely on a review of copies of such
forms, or written representations of such persons, to our knowledge all of these filing
requirements were satisfied, with the exception of the following directors, officers or 10%
shareholders, who failed to file required forms in a timely manner:

|                |                                 | Number of forms not filed in a timely manner
|--------------- | ------------------------------- | --------------------------------------------
|Name            | Director, Officer or 10% Holder | Form 3                                      
|                |                                 |                                             
|Darone M. Davis | Director, President & Treasurer | 1                                           
|David Huck      | 10%+ shareholder                | 1                                           



Code of Ethics



The Company has adopted a Code of Ethics that applies to the Company's principal executive
officer, principal financial officer, principal accounting officer or controller or persons
performing similar functions. A copy of the Code of Ethics will be made available to any
shareholder, free of charge, upon written request to the Company.

ITEM 10.    
EXECUTIVE COMPENSATION





No compensation was paid by ProDigital, for the fiscal years ended June 30, 2004, 2003 and
2002 to our Named Executive Officers and no officers or directors received annual compensation
in excess of $100,000 during those periods.

Named Executive Officers are all individuals serving as ProDigital's Chief Executive Officer
("CEO") or acting in a similar capacity during the last completed fiscal year, regardless of
compensation level.

Option/SAR Grants

We do not have a stock option plan.  Accordingly, no options and no stock appreciation rights
(SARs) were granted during the year ended June 30, 2004.

Director Compensation

We do not have a compensation committee. We reimburse our directors for expenses incurred in
connection with attending board meetings but did not pay director's fees or other cash
compensation for services rendered as a director in the year ended June 30, 2004.

We have no formal plan for compensating our directors for their service in their capacity as
directors. No director received and/or accrued any compensation for his or her services as a
director, including committee participation and/or special assignments.



Page 27

---



Employment/Consulting Agreements

On September 10, 2004, we entered into a consulting agreement with Latitude 49 Securities
Compliance ("Latitude 49") to provide corporate and securities compliance and disclosure
services for and on behalf of the Company together with the primary responsibility of assisting in
administration of our ongoing corporate and securities disclosure and filing obligations, and such
other consultative services as may from time to time be agreed upon between the parties, from
September10, 2004 to October 10, 2004, subject to negotiation at the end of the one-month
period as to further services that may be required, as decided by the Board of Directors at that
time. Under the terms of the consultancy agreement, Latitude 49 was paid a fee of Cdn$2,500
for the first month and Cdn$800 for subsequent months to the end of December 31, 2004, and
was reimbursed for reasonable expenses incurred for the period from September 10 - October 10,
2004. ProDigital's Secretary, Linda Holmes, is the sole proprietor of Latitude 49.

ITEM 11.   
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT



The following table contains information with respect to the beneficial ownership of our
Common Stock, as of January 31, 2005, by (a)e ach person who is known by us to be the
beneficial owner(s) of more than 5% of the outstanding shares of Common Stock, (b) each
director of ProDigital, (c) each of our executive officers named in the Executive Compensation,
Summary Compensation Table, below, and (d)all directors and executive officers of ProDigital
as a group.

The Company has no subsidiaries and, therefore, no officer or director of the Company owned
any stock in any subsidiary of the Company as of January 31, 2005.



|Name and Address of Beneficial Owner                                                           | Designation or Positions Held                                       | Amount and Nature of Beneficial Ownership | Percent of Class
|---------------------------------------------------------------------------------------------- | ------------------------------------------------------------------- | ----------------------------------------- | ----------------
|Darone
		Davis
		1621 S.
		Latawah Street
		Spokane,
		Washington 99203                        | Director,
		President & Treasurer                                   | 6,000,000                                 | 30.44%          
|Christopher Dieterich
		Suite 800
		11300 W.
		Olympic Blvd.
		Los
		Angeles, California 90064 | Director                                                            | 0                                         | 00.00%          
|Linda
		Holmes
		P.O. Box
		1609
		12406
		Wright Avenue
		Summerland, BC V0H 1Z0              | Secretary                                                           | 0                                         | 00.00%          
|Orchard
		Breezes Property Development, Inc. (1)
		723 Main
		Street
		Penticton,
		BC V2A 5E1 | 5%+ Shareholder                                                     | 6,000,000                                 | 30.44%          
|Summer
		Holdings, LLC
		1623 E.
		Chicago Street
		Chandler,
		AZ 85225                       | 5%+ Shareholder                                                     | 3,280,000                                 | 16.64%          
|Spectrum Management LDC
		1623 E.
		Chicago Street
		Chandler,
		AZ 85225                      | 5%+ Shareholder                                                     | 2,400,000                                 | 12.17%          
|                                                                                               | Directors
		and executive officers of
		ProDigital
		as a group (1) | 12,000,000                                | 89.69%          



(1)    Darone Davis is a director, officer and the controlling shareholder of Orchard Breezes.





The above ownership percentages are based on 19,713,600 shares of our issued and outstanding
Common Stock as of January 31, 2005. Except as otherwise indicated, we believe that the
beneficial owners of the Common Stock listed above, based on information furnished by such
owners, have sole investment and voting power with respect to such shares, subject to
community property laws where applicable. Beneficial ownership is determined in accordance
with the rules of the SEC and generally includes voting or investment power with respect to
securities. There are no shares of Common Stock subject to options or warrants currently
exercisable, or exercisable within 60 days.



Page 28

---

Change in Control

We are unaware of any contract or other arrangement, the operation of which may, at a
subsequent date, result in a change of control of our company.

ITEM 12.    
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



The following describes the transactions during the last two years, or proposed transactions, in
excess of $60,000 to which the Company was or is to be a party in which any director, executive
officer, 5% or greater shareholder or any member of the immediate family of the aforementioned
persons had or is to have a direct or indirect material interest.

September 11, 2003, the Company issued a convertible note to Golden Terra, LLC, a company
controlled by common director, Darone Davis, for proceeds of $30,000. The unsecured note
bears interest at 10% per annum and was due on September11, 2004.  The note is automatically
renewed annually. The note payable and any accrued interest are convertible, at the option of the
holder, into the Company's Common Stock at a price of $0.25 per share (adjusted for the 4:1
forward stock-split which became effective in July 2004) for each $0.25 of liability commencing
one year after the closing date of the note payable agreement.

On October 5, 2003, we entered into a lease agreement with Orchard Breezes Property
Development Inc. ("Orchard Breezes"), a company controlled by our President, Darone Davis,
for a 3200 square foot building and adjacent 4000 square foot parking lot from Orchard Breezes,
and sublease 2800 square feet of the building and half of the parking lot to an independent third
party for a term of 41 months for approximately $2,200 per month.  Our lease with Orchard
Breezes expires October1, 2006, but we may continue to rent the premises on a month-to-month
basis thereafter.  The minimum annual lease payments required are:

For the year ended June 30:

|For the
    year ended June 30: |             
|------------------------------- | ------------
|                                |             
|2005                            | $     22,041
|2006                            | 22,041      
|2007                            | 5,510       
|                                | $     49,592
|                                |             

October 1, 2003, we received proceeds of $210,000 and issued a convertible note payable to
Golden Terra, LLC, a company controlled by our President, Darone Davis. The unsecured note
bears interest at 10% per annum and is due on October 1, 2005.  The note payable and accrued
interest are convertible at the option of the holder at a price of $0.25 per share, adjusted for the
4:1 forward stock-split which became effective in July 2004. The note is automatically renewed
for one year from the date of note and annually thereafter.

July 10, 2004, the Company issued a convertible note to Darone Davis, Trustee for DM Davis
Family Trust, for proceeds of $10,000. The unsecured note bears interest at 10% per annum and
comes due on July 10, 2006.  The note is automatically renewed annually. The note payable and
any accrued interest are convertible, at the option of the holder, into the Company's Common
Stock at a price of $0.25 per share (adjusted for the 4:1 forward stock-split which became
effective in July 2004) for each $0.25 of liability commencing one year after the closing date of
the note payable agreement.

August 15, 2004, the Company issued a convertible note to Golden Terra, LLC, a company
controlled by common director, Darone Davis, for proceeds of $40,000. The unsecured note
bears interest at 10% per annum and comes due on August 15, 2006.  The note is automatically
renewed annually. The note payable and any accrued interest are convertible, at the option of the
holder, into the Company's Common Stock at a price of $0.25 per share (adjusted for the 4:1
forward stock-split which became effective in July 2004) for each $0.25 of liability commencing
one year after the closing date of the note payable agreement.



Page 29

---

October 15, 2004, the Company issued a convertible note to Golden Terra, LLC, a company
controlled by common director, Darone Davis, for proceeds of $20,000. The unsecured note
bears interest at 10% per annum and comes due on October 15, 2006.  The note is automatically
renewed annually. The note payable and any accrued interest are convertible, at the option of the
holder, into the Company's Common Stock at a price of $0.25 per share (adjusted for the 4:1
forward stock-split which became effective in July 2004) for each $0.25 of liability commencing
one year after the closing date of the note payable agreement.

On June 29, 2004, our President entered into a contract for the purchase of the 102-acre target
property for approximately $425,000 (Cdn$535,000).  Subject to receiving approval for rezoning,
the property will be used by us for the development of "Class A" production sound stages,
outbuildings and supporting infrastructure, and executive accommodations.  We have paid the
approximately $8,000 (CDN$10,000) deposit required on the purchase. The purchase of the
property is subject to a number of conditions as described  in Item 1, Description of Business of
this Form 10 KSB,  including receipt of sufficient funds to finance the purchase.



Page 30

---

ITEM 13.    
EXHIBITS AND REPORTS ON FORM 8-K



(a)    Exhibits.



|Exhibit No. | The following documents were filed previously in the Company's Form10-SB, Amendment No.
2, Registration Statement                            
|----------- | ---------------------------------------------------------------------------------------------------------------------------------------------
|3.1         | Articles of Incorporation dated May 2, 2000                                                                                                  
|3.2         | By-Laws, adopted on March 15, 2000                                                                                                           
|10.1        | Option to Purchase Contract between between Sigma Business Consulting Ltd. And ProDigital
on February 26, 2002                               
|10.2        | Commercial Property Lease Agreement between Sigma Business Consulting Ltd. And ProDigital
on June 1, 2000                                    
|10.3        | Commercial Auto sublease between Sigma Business Consulting Ltd. and ProDigital on June 13,
2000                                              
|10.4        | Enabaca Capital
Investment proposal for $30 million financing arrangement dated June4, 2002                                                  
|10.5        | Letters of Intent from GEOTHEATRE Productions Inc. to utilize ProDigital's future production
facilities, dated January 8 and February 1, 2002
|            |                                                                                                                                              

|Exhibit No. | The following documents were filed in the Company's Annual Report on Form 10-KSB for the
fiscal year ended June 30, 2003
|----------- | ------------------------------------------------------------------------------------------------------------------------
|10.4 (1)    | Commercial Property Lease between Orchard Breezes Property Development, Inc. and
ProDigital dated October 5, 2003       
|            |                                                                                                                         

|Exhibit No. | The following documents were filed in the Company's Form 10-QSB quarterly report for the
period ended December 31, 2003 
|----------- | ------------------------------------------------------------------------------------------------------------------------
|3.3         | Certificate of Amendment to Articles of Incorporation effective July 13, 2004                                           
|4.1         | Form of Convertible Loan Agreement between the Company and a subscriber.                                                
|10.7        | Contract of Purchase and Sale and Addendum between the Company and  Juric Holdings Ltd.
dated June 29, 2004.            
|10.8        | Consulting Agreement between the Company and Linda Holmes (Latitude 49? Securities
Compliance) dated September 10, 2004.
|            |                                                                                                                         

|Exhibit No. | The following documents are filed herewith in this Annual Report on Form 10-KSB for the fiscal
year ended June 30, 2004                                                                                                       
|----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.1        | Certification of the Chief Executive Officer and Acting Chief Financial Officer
Pursuant to Rule 13A-14 or 15D-14 of the Securities Exchange Act of 1934, as
adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|32.1        | Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section
906 of the
Sarbanes-Oxley Act of 2002                                                                                                         
|            |                                                                                                                                                                                                                               

(1)    Should have been filed as Exhibit 10.6





(b)    Reports on Form 8-K.



No reports on Form 8-K were filed during the fourth quarter of the fiscal year ended June
30, 2004.







ITEM 14.   
PRINCIPAL ACCOUNTANTS FEES AND SERVICES



Audit Fees



|Year Ended June 30, | Fees for audit of annual financial statements | Fees for review of quarterly financial statements
|------------------- | --------------------------------------------- | -------------------------------------------------
|                    | $                                             | $                                                
|2004                | Note 1                                        | 11,621                                           
|2003                | 13,100                                        | -                                                





Note 1 - June 30,
2004 audit fees are expected by be approximately $12,300.



Page 31

---



Audit-Related Fees



None.

Tax Fees



|Year ended June 30, | Fees for preparation of tax returns
|------------------- | -----------------------------------
|                    | $                                  
|2004                | Note 1                             
|2003                | 5,686                              



Note 1   
-    The fees for preparation of the Company's corporate tax returns for the year ended June
30, 2004 are expected to be approximately $2,500



All Other fees



None.

Audit Committee Prior Approval Policies

The Company does not have an Audit Committee; therefore, no policies or procedures other than
those required by SEC rules on auditor independence, have been implemented.  No non-audit
services, except for the preparation of corporate tax returns, were provided by the Company's
principal independent accountants in 2004.



Page 32



---

SIGNATURES

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

PRODIGITAL FILM STUDIOS, INC.

By:   /s/ Darone Davis



Name:  Darone Davis



Title:    President



Date:    February 16, 2005





In accordance with the Exchange Act, this report has been signed below by the following persons
on behalf of the Issuer and in the capacities and on the dates indicated. Each individual whose
signature appears below hereby designates and appoints Darone Davis as such person's true and
lawful attorney-in-fact and agent (the "Attorney-in-Fact") with full power of substitution and
resubstitution, for each person and in such person's name, place and stead, in any and all
capacities, to sign any and all amendments to this Annual Report on Form 10-KSB, which
amendments may make such changes in this Annual Report on Form 10-KSB as the
Attorney-in-Fact deems appropriate and to file each such amendment with all exhibits thereto,
and all documents in connection therewith, with the Securities and Exchange Commission,
granting unto the Attorney-in-Fact full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises, as fully to all intents and
purposes as such person might or could do in person, hereby ratifying and confirming all that the
Attorney-in-Fact, or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.

By:  /s/ Darone Davis

February 16, 2005



Title: President, Principal Executive Officer, Acting Chief Financial Officer and Director





By:  /s/ Marco Warger

February 16, 2005



Title:  Director



Page 33

---

EXHIBIT 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER AND ACTING CHIEF
FINANCIAL OFFICER PURSUANT TO RULE 13A-14 OR 15D-14 OF THE SECURITIES
EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002



I, Darone Davis, certify that:



1.    I have reviewed this annual report on Form 10-KSB for the fiscal year ended June 30,
2004, of ProDigital Film Studios, Inc.;





2.    Based on my knowledge, this annual report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the
period covered by this report;





3.    Based on my knowledge, the financial statements, and other financial information
included in this annual report, fairly present in all material respects the financial condition,
results of operations and cash flows of the small business issuer as of, and for, the periods
presented in this report.







4.    I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and
have:







a)    designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material information
relating to the small business issuer, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this report is being
prepared;







b)    evaluated the effectiveness of the small business issuer's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures as of the end of the period covered by this report based on such
evaluation; and







c)    disclosed in this report any change in the small business issuer's internal control
over      financial reporting that occurred during the registrant's most recent fiscal quarter (the
small business issuer's fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the small business issuer's internal control
over financial reporting; and





5.     I have disclosed, based on my most recent evaluation of internal control over financial
reporting, to the RegistrantÆs auditors and the audit committee of the RegistrantÆs board of
directors (or persons performing the equivalent functions):







a)    all significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely affect the small
business issuer's  ability to record, process, summarize and report financial information; and







b)    any fraud, whether or not material, that involves management or other employees
who have a significant role in the small business issuer's  internal control over financial
reporting.



Date:  February 16, 2005



/s/ Darone Davis





Darone Davis





Chief Executive Officer and Acting Chief Financial Officer



Page 34

---

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report of ProDigital Film Studios, Inc. (the
"Company") on Form
10K-SB for the fiscal year ended June 30, 2004, as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I, Darone Davis, Chief Executive Officer and
Acting Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as
adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 that:

1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, and

2) The information contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.



By: /s/ Darone Davis

Darone Davis

Chief Executive Officer & Acting Chief Financial Officer

February 16, 2005





Page 35