UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-KSB





þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal Year Ended June 30, 2005

or

 ̈

TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from   to

Commission File No. 000-49903

PRODIGITAL FILM STUDIOS, INC.

(formerly PRODIGITAL FILM LABS, INC.)

(Exact name of small business issuer in its charter)



|NEVADA                                                                                          | 91-2048620                          
|----------------------------------------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of
incorporation or organization)                                  | (I.R.S. Employer Identification No.)
|                                                                                                |                                     
|3675 Pecos-Mcleod, Suite 1400, Las Vegas, Nevada 89121-3881                                    
|(Address of principal executive offices) (Zip Code)                                            
|                                                                                               
|Issuer's telephone number:  (877) 804-3394                                                     
|                                                                                               
|Securities registered under Section 12(b) of the Exchange Act: None                            
|                                                                                               
|Securities registered under Section 12(g) of the Exchange Act:  Common Stock, $0.0001 Par Value
|                                                                                                |                                     
|                                                                                                |                                     



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 reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X]  No [  ]

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B 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 the Form 10-KSB or any amendment to this Form 10-KSB. [ ]

Registrant's revenues for its most recent fiscal year $0

Aggregate market value of the 9,299,600 shares of Common Stock held by non-affiliates of the Issuer as of August 25, 2005, was $2,789,880.

The number of shares of the Issuer's Common Stock, no par value, as of August 25, 2005, was 21,413,600

Transitional Small Business Disclosure Format    Yes [  ]  No [X]



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes        No   X



INDEX

|                 | PART I                                                                                                          | Page
|---------------- | --------------------------------------------------------------------------------------------------------------- | ----
|Item 1.          | Description of Business                                                                                         | 1   
|Item 2.          | Description of Property                                                                                         | 3   
|Item 3.          | Legal Proceedings                                                                                               | 3   
|Item 4.          | Submission of Matters to a Vote of Security Holders                                                             | 3   
|                 | PART II                                                                                                         |     
|Item 5.          | Market for Common Equity and Related Stockholder Matters                                                        | 3   
|Item 6.          | Management's Discussion and Analysis or Plan of Operations                                                      | 4   
|Item 7.          | Financial Statements                                                                                            | 9   
|Item 8
Item  8A. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures    | 25  
|                 | PART III                                                                                                        |     
|Item 9.          | Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act | 26  
|Item 10.         | Executive Compensation                                                                                          | 27  
|Item 11.         | Security Ownership of Certain Beneficial Owners and Management                                                  | 28  
|Item 12.         | Certain Relationships and Related Transactions                                                                  | 29  
|Item 13.         | Exhibits and Reports on Form 8-K                                                                                | 31  
|Item 14.         | Principal Accountant Fees and Services                                                                          | 31  
|                 |                                                                                                                 |     
|SIGNATURES       | 33                                                                                                             





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"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.



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.  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.  ProDigital intends to become an integral part of the cutting edge digital film market by:



·

supplying a full digital post-production editing and animation facility ("Post House") in the Okanagan Valley



We have built the only professional, fully digital, High Definition and Standard Definition post-production editing and animation facility ("Post House") in the Okanagan region, fully furnished with 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 and High Definition post production equipment, including the latest XSERVE RAID and  Mac G5 computer and software.  Our Post House now constitutes a complete and working professional Post House such as found in California.



Post-production tasks, including digital processing sound lab work, animation, and special computer generated effects can 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  post production process is faster and more efficient using computers.



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.



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 our complete digital Post House attractive to the industry.



*

creating our own, purely digital, productions



The Post House equipment has been tested by PrimeTime
Post, Inc. ("PrimeTime"), a company controlled by the Company's President, Darone Davis, with the offline production of a one-hour High Definition documentary television show for the Travel Channel and NHK (Japanese Broadcaster),
"Japanese Motorcycles: Samurai on Wheel.".



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ProDigital owns the equipment, which, pursuant to a verbal agreement at this time, will be leased by PrimeTime. PrimeTime in turn will rent out the equipment to clients and we will receive 85% of the gross equipment rental charged by PrimeTime.



ProDigital is now 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.



Although most of the filming activity in BC takes place in and around Vancouver, the Okanagan Valley, (less than an hour's 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 also been filmed here.



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.



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.  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.



ProDigital intends to construct large, purpose-built,
"Class A," professional production sound stage buildings complete with digital equipment on acreage just outside of the city of Penticton, BC.  There are several natural and secluded target sites hosting many different types of scenery and geology, yet located near the city, within an easy 15-minute drive from the Penticton airport and a 20-minute drive from the Post House.  Upon completion of securing a property, we plan to develop two to three
"Class A" production sound stages, outbuildings and supporting infrastructure, and executive accommodations on this site, subject to obtaining sufficient financing.  Upon completion of construction of our sound stages, we will have the only "Class A" production sound stages in the Okanagan Valley.



The contract entered into June 29, 2004, by our President, Darone Davis, on behalf of the Company, for the purchase of the 102-acre property we had targeted as an excellent
"Class A" production sound stage site for approximately $425,000 (Cdn$535,000), expired after being extended until May 29, 2005, and the deposit of approximately $8,000 (CDN$10,000) was refunded to the Company.  We intend to purchase the property as soon as sufficient financing can be obtained and rezoning of the property to commercial status is completed.



On May 25, 2005, we entered into a contract to purchase a commercially zoned parcel of land consisting of approximately 103 acres for approximately $1,225,000 (CDN$1,500,000) and the issuance of 1,000,000 restricted common shares of the Company.



On June 24, 2005, we entered into a lease agreement with Moore Films, Inc. ("Moore") whereby Moore will lease camera equipment from ProDigital over a term from July 1, 2005 through October 31, 2005 for the sum of approximately $11,200 (Cdn$14,000) payable in equal monthly installments of approximately $2.800 (Cdn$3,500) per month inclusive of applicable taxes.



On June 28, 2005, an unbrokered private placement was entered into with a private investor who subscribed to purchase a total of 50,000 restricted common shares at a price of $1.00 per share for total proceeds to ProDigital of $50,000.  These shares have not been registered under the Securities Act of 1933(the
"Act"); however, they will be issued on the basis of statutory exemption provided by Section 3(b) and Section 4(2) of the Act and/or Regulation D



4

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(Rule 506) thereunder.  Subsequent to the fiscal year end, the total proceeds were received; however, at the date of this document, these shares have not yet been issued.



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 uses 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 commitment 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 3,200 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.  ProDigital has the right to renew the lease for a further term of three years exercisable by giving written notice of renewal to Orchard Breezes in the six-month period immediately before the expiry of the original fixed term of this lease. The renewed lease would be granted on the same terms as set out in this lease except as to base rent and without any further right of renewal. The term of the lease expires October 1, 2006, but we may continue to rent the premises on a month-to-month basis thereafter.   We also have an option to purchase the building and property from Orchard Breezes for $412,500 until December 1, 2007.



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



No matters were submitted to a vote of the security holders of the Company during the quarter ended June 30, 2005.  The Company has not set a date for the annual meeting to be held in 2005.



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).





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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, 2005:



|              | Year Ended June 30, 2006 | Year Ended June 30, 2005
|------------- | ------------------------ | ------------------------
|Quarter Ended | ($) High                 | ($) Low                 
|September 30  | 1.25                     | 0.75                    
|              | Year Ended June 30, 2005 | Year Ended June 30, 2004
|Quarter Ended | ($) High                 | ($) Low                 
|December 31   | 0.59                     | 0.20                    
|March 31      | 0.39                     | 0.10                    
|June 30       | 0.40                     | 0.15                    



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



Holders



As of August 25, 2005, we had 21,413,600 shares of Common Stock outstanding and approximately 47 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.



Recent Sales of Unregistered Securities



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, 2005.



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, 2005, through to the date of this document.



Plan of Operation



We have established the only professional Post House in the Okanagan Valley and 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.





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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 $405,900 as proceeds from unsecured convertible notes payable.  These notes bear interest at 6% to 10% per annum and $302,000 of notes 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), $90,000 of notes are convertible into common stock at a price of $1.00, and $13,900 of notes are convertible at a price of approximately $0.82(Cdn$1.00) per share.  The notes payable are payable on various dates and may be renewed for an additional year upon mutual agreement by both parties  The principal and accrued interests of overdue notes payable are payable on demand. Notes payable with principal totaling $272,000 plus accrued interest of $47,069 as at June 30, 2005, will be due in the next 12 months.  The remaining $133,870 of notes payable and accrued interest of $10,105 will become due on various dates in 2007.



Our financial statements have been prepared on a going concern basis. We have accumulated a deficit of $444,001 from inception to June 30, 2005. 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. 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, 2005 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. 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.



We have historically satisfied our working capital needs primarily by issuing convertible debentures to our controlling shareholder and at June 30, 2005 we had a working capital deficit $406,776, 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.



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 August 1, 2005 our cash balance was Cdn$535. We anticipate that we would require additional financing of about $6 - 7 million to carry out our business plan. We plan to raise the required capital through either debt or equity but we currently do not have any formal financing agreements or arrangements. In the meantime, we will continue to rely on the support of our President, Darone Davis and other related parties to finance our day-to-day operations.



Our Plan of Operation for the next 12 months consists of:



1.

creating our own purely digital productions



2.

purchasing acreage in the Okanagan Valley for the purpose of building the
"Class A" sound stage buildings,



3.

commencing construction of two large, purpose-built,
"Class A," professional production sound stage buildings, complete with digital equipment, and executive accommodations on the Okanagan Falls acreage; and

To complete items 2 and 3 above and provide working capital for day-to-day operations, we anticipate that we would require additional financing of about $6  7 million:



|                                         | (US $)      |  | (Cdn $)    
|---------------------------------------- | ----------- |  | -----------
|Property purchase (projected)            | $ 1,649,000 |  | $ 2,021,000
|Roadwork, infrastructure and  excavation | 816,000     |  | 1,000,000  
|Sewage treatment plant and waste removal | 286,000     |  | 350,000    
|2
	"Class A" professional sound stages   | 1,632,000   |  | 2,000,000  
|Executive offices and cafeteria          | 571,000     |  | 700,000    



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|5 log cabins                                          | 408,000    |  | 500,000    
|----------------------------------------------------- | ---------- |  | -----------
|Outbuildings (maintenance shops, storage,
pump-house) | 163,000    |  | 200,000    
|Firehall and fire engine                              | 41,000     |  | 50,000     
|Fully outfitted gymnasium                             | 61,000     |  | 75,000     
|Payment of convertible notes due (1)                  | 359,000    |  | 440,000    
|Working capital and contingencies                     | 479,000    |  | 587,000    
|Total                                                 | $6,465,000 |  | $ 7,923,000

(1)

Represents estimated monies required for the settlement of the convertible notes payable and estimated accrued interest in the next 12 months if the convertible notes are not converted into common shares of the Company.



Working capital and contingencies include 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 later this year.  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 down expenditures, put the 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, our President, to cover administrative expenses.   We have no other planned capital expenditure except for the acquisition of various properties as described elsewhere in this Form 10 KSB and building of the two
"Class A" sound stages.



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 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 would 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 contract expired after being extended until May 29, 2005, and the deposit of approximately $8,000 (Cdn$10,000) was refunded to the Company.  We intend to purchase the property as soon as sufficient financing can be obtained and rezoning of the property to commercial status is completed.



In March 2005 we issued a convertible note to ATM Legends, Inc. for proceeds of $20,000 and a convertible note to D.M. Davis Family Trust, for which our President, Darone M. Davis, is Trustee, for proceeds of approximately $5,750 (Cdn $7,000).   The loans are unsecured, bear interest at 10% per annum and will be due on February 15, 2007 and March 24, 2007, respectively.  The notes and accrued interest are convertible into common shares of the Company at a price of one share for each $1.00 and approximately $0.82 (Cdn$1) of liability, respectively, commencing one year after the closing date of each note payable agreement.



Also in March 2005, the Company issued 700,000 common shares pursuant to the Agent Agreement dated March 4, 2005 (the
"Agent Agreement") for an unbrokered private placement, as finders' fees.  Under the Agent Agreement, in exchange for the common shares issued, Nick Mancuso, (the
"Agent") will raise $6 million in capital for the Company.  In the event that the Agent fails to raise the full amount of $6 million, the portion of the 700,000 common shares related to the shortfall will be returned to the Company.  As these shares are forfeitable and the Company has not received the services provided, these shares will not be considered issued for accounting purposes until the period when the Company receives the services.  The Agent Agreement expired on June 1, 2005, but was automatically extended on a month-to-month basis.



On May 25, 2005, we entered into a contract to purchase a commercially zoned parcel of land consisting of approximately 103 acres for approximately $1,230,000 (Cdn$1,500,000) and the issuance of 1,000,000 restricted common shares of the Company.





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On June 24, 2005, we entered into a lease agreement with Moore Films, Inc. ("Moore") whereby Moore will lease camera equipment from ProDigital over a term from July 1, 2005 through October 31, 2005 for the sum of approximately $11,200 (Cdn$14,000) payable in equal monthly installments of approximately $2,800 (Cdn$3,500) per month inclusive of applicable taxes.



On June 28, 2005, an unbrokered private placement was entered into with a private investor who subscribed to purchase a total of 50,000 restricted common shares at a price of $1.00 per share for total proceeds to ProDigital of $50,000.  These shares have not been registered under the Securities Act of 1933(the
"Act"); however, they will be issued on the basis of statutory exemption provided by Section 3(b) and Section 4(2) of the Act and/or Regulation D (Rule 506) thereunder.  Subsequent to the fiscal year end, the total proceeds were received; however, at the date of this document, these shares have not yet been issued.



We currently have no employees, full-time or otherwise and plan to continue maintaining the operations of the Company by engaging consultants on an as needed basis. We may hire employees on an as-needed basis in the future as our operations expand.



Application of Critical Accounting Policies



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, 2005 and 2004.



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



9

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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 12 of the audited financial statements.



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 Company is assessing the effect of the implementation of these new standards on the financial statements.



10

---



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, 2005 and 2004   
|                                                        |                                            | (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             





11

---







|Report of Independent Registered Public Accounting Firm
|-------------------------------------------------------



|To
		the Directors and Stockholders of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ProDigitalFilm Studios, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(A Development Stage Company)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|We have audited the
		Balance Sheets of ProDigital Film Studios, Inc. (a development stage
		company), as at June 30, 2005 and 2004 and the Statements of Changes in
		Capital Deficit, Operations and Comprehensive Loss and Cash Flows for
		the years then ended and for the period from May 2, 2000 (inception) to
		June 30, 2005. 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|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. The Company is
		not required to have, nor were we engaged to perform, an audit of its
		internal control over financial reporting. Our audits included
		consideration of internal control over financial reporting as a basis
		for designing audit procedures that are appropriate in the
		circumstances, but not for the purpose of expressing an opinion on the
		effectiveness of the Company's internal control over financial
		reporting. Accordingly, we express no such opinion. An audit also
		includes examining, on a test basis, evidence supporting the amounts and
		disclosures in the financial statements, assessing the accounting
		principles used and significant estimates made by management, as well as
		evaluating the overall financial statement presentation.  We believe
		that our audits provide a reasonable basis for our opinion.
|In our opinion, these
		financial statements present fairly, in all material respects, the
		financial position of ProDigital Film Studios, Inc. (a development stage
		company) as at June 30, 2005 and 2004 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, 2005 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 $444,001 since its inception and has a working
		capital deficiency of $406,776. 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|August 16, 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          



12

---





|ProDigital Film Studios, Inc.                        
|-----------------------------------------------------
|(A Development Stage Company)                        
|Balance Sheets                                       
|(Expressed in US Dollars)                            
|June 30                                              
|Assets                                               
|Current                                              
|Cash                                                 
|Receivables                                          
|Inventories                                          
|Prepaid expense                                      
|Total current assets                                 
|Due from related parties(Note 2)                     
|Property and equipment(Note 4)                       
|Real estate deposit(Note 5)                          
|Total Assets                                         
|Liabilities and Capital Deficit                      
|Liabilities                                          
|Current                                              
|Accounts payable and accrued liabilities             
|Current portion of convertible notes payable (Note 6)
|Due to
	related parties (Note 3)                     
|Unearned rental income and deposits                  
|Total current liabilities                            
|Due to related parties (Note 3)                      
|Convertible notes, net of current portion (Note 6)   
|Total liabilities                                    
|Capital Deficit                                      



13

---





|Capital Stock (Note 7)                                                                                                          |   |           |   |          
|------------------------------------------------------------------------------------------------------------------------------- | - | --------- | - | ---------
|Authorized                                                                                                                      |   |           |   |          
|40,000,000 common shares, par value                                                                                             |   |           |   |          
|of $0.0001 per share                                                                                                            |   |           |   |          
|Issued                                                                                                                          |   |           |   |          
|19,713,600 common shares                                                                                                        |   | 1,971     |   | 1,971    
|Additional paid-in capital                                                                                                      |   | 120,229   |   | 120,229  
|Deficit accumulated during the development stage                                                                                |   | (444,001) |   | (298,989)
|Accumulated comprehensive loss                                                                                                  |   |           |   |          
|- cumulative translation adjustment                                                                                             |   | (41,086)  |   | (11,038) 
|Total capital deficit                                                                                                           |   | (362,887) |   | (187,827)
|Total Liabilities and Capital Deficit                                                                                           | $ | 208,965   | $ | 199,861  
|The accompanying summary of significant accounting policies and notes are an integral part of these financial statements.
	
	14

|ProDigital Film Studios, Inc.                                                                                            
|-------------------------------------------------------------------------------------------------------------------------
|(A Development Stage Company)                                                                                            
|Statements of Changes in Capital Deficit                                                                                 
|(Expressed in US Dollars)                                                                                                
|For the period from May 2, 2000 (inception) to June 30, 2005                                                             
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|Issuance of stock at inception at                                                                                        
|$0.0000025 per share                                                                                                     
|Net loss for the period                                                                                                  
|Balance, June 30, 2000                                                                                                   
|Issuance of stock for cash at                                                                                            
|$0.0125 per share in May 2001                                                                                            
|Issuance of stock for cash at                                                                                            
|$0.0625 per share in May 2001                                                                                            
|Net loss for the year                                                                                                    
|Balance, June 30, 2001                                                                                                   
|Issuance of stock for cash at $0.0125                                                                                    
|per share in August 2001, net of share                                                                                   
|issuance costs                                                                                                           
|Issuance of stock for services                                                                                           
|at $0.0125 per share in August 2001                                                                                      
|Issuance of stock for convertible note                                                                                   
|at $0.25 per share in June 2002                                                                                          
|Net loss for the year                                                                                                    
|Balance, June 30, 2002                                                                                                   
|Issuance of stock for option to acquire                                                                                  
|a property at $0.0125 per share in                                                                                       
|August 2002                                                                                                              
|Net loss for the year                                                                                                    
|Foreign currency translation adjustment                                                                                  
|Balance, June 30, 2003                                                                                                   
|Net loss for the year                                                                                                    
|Foreign currency translation adjustment                                                                                  
|Balance, June 30, 2004                                                                                                   
|Net loss for the year                                                                                                    
|Foreign currency translation adjustment                                                                                  
|Balance, June 30, 2005                                                                                                   
|The accompanying summary of significant accounting policies and notes are an integral part of these financial statements.

15

---



|                                                | ProDigital Film Studios, Inc.
|----------------------------------------------- | -----------------------------
|(A Development Stage Company)                  
|Statements of Operations and Comprehensive Loss
|(Expressed in US Dollars)                      
|                                                |                              
|                                                |                              
|                                                |                              
|                                                |                              
|Expenses (recoveries)                           |                              
|Accounting and legal                            |                              
|Automotive                                      |                              
|Consulting fees (Note 9)                        |                              
|Depreciation                                    |                              
|Foreign exchange (gain) loss                    |                              
|Insurance                                       |                              
|Office and miscellaneous                        |                              
|Property taxes                                  |                              
|Rent (Note 9)                                   |                              
|Telephone and utilities                         |                              
|Transfer agent                                  |                              
|Travel                                          |                              
|                                                |                              
|Other income (expenses)                         |                              
|Interest on convertible notes                   |                              
|Rent                                            |                              
|Net loss for the period                         |                              
|                                                |                              
|Foreign currency translation adjustment         |                              
|                                                |                              
|Comprehensive loss for the year                 |                              
|                                                |                              
|Loss per share basic and diluted               |                              
|                                                |                              
|Weighted average shares outstanding             |                              



16





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

---





|ProDigital Film Studios, Inc.                         
|------------------------------------------------------
|(A Development Stage Company)                         
|Statements of Cash Flows                              
|(Expressed in US Dollars)                             
|                                                      
|                                                      
|                                                      
|                                                      
|                                                      
|                                                      
|Cash used in operating activities                     
|Net loss for the period                               
|Adjustments to reconcile net loss for the             
|period to cash used in operating                      
|activities:                                           
|Depreciation                                          
|Stock issued for interest expense                     
|Stock issued for services                             
|Accrued interest on convertible notes                 
|Unrealized foreign exchange gain on
	convertible notes
|Changes in operating assets and liabilities:          
|Amounts receivable                                    
|Inventories                                           
|Prepaid expenses                                      
|Accounts payable and accrued liabilities              
|Unearned rental income and deposits                   
|Cash used in operating activities                     
|Cash used in investing activities                     
|Due from related parties                              
|Acquisition of property and equipment                 
|Cash used in investing activities                     
|Cash provided by financing activities                 
|Net proceeds from issuance of  capital stock          
|Advances from (repayment to) related parties          
|Proceeds from convertible notes issued to related     
|parties                                               
|Proceeds from convertible notes                       
|Cash provided by financing activities                 
|Net increase (decrease) in cash                       
|Effect of foreign exchange on cash                    
|Cash,beginning of year                                
|Cash,end of year                                      
|Supplemental disclosure of cash flow                  
|information:                                          
|Cash paid for:                                        
|Interest and income taxes                             
|Supplemental disclosure of non-cash investing         
|and financing activities:                             
|Issuance of stock upon conversion of note             



17

---





|payable and accrued interest                                                                                                    | $                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | -                        | $ | - | $ | 18,400
|------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------ | - | - | - | ------
|Issuance of stock for broker services                                                                                           | $                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | -                        | $ | - | $ | 2,000 
|Issuance of stock for option to acquire a property                                                                              | $                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | -                        | $ | - | $ | 12,500
|The accompanying summary of significant accounting policies and notes are an integral part of these financial statements.
	
	18
|ProDigital Film Studios, Inc.                                                                                                  
|(A Development Stage Company)                                                                                                  
|Summary of Significant Accounting Policies                                                                                     
|(Expressed in US Dollars)                                                                                                      
|June 30, 2005 and 2004                                                                                                         
|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 (except leasehold improvements) at the rates as set out below:                                                                                                                                                                                                                                                                                    
|                                                                                                                                | Furniture and equipment
Studio equipment
Computer hardware
Computer software                                                                                                                                                                                                                                                                                                                                                                                                                                              | -
20%
-
20%
-
30%
-
100%
|                                                                                                                                | Leasehold improvements are depreciated over the shorter of the estimated life or the lease term.                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                | Depreciation is recorded at one-half of the above rates in the year of acquisition.                                                                                                                                                                                                                                                                                                                                                                                                                                      
|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.



18

---





|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.
|------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

19

---



|ProDigital Film Studios, Inc.                
|---------------------------------------------
|(A Development Stage Company)                
|Summary of Significant Accounting Policies   
|(Expressed in US Dollars)                    
|June 30, 2005 and 2004                       
|Fair Value of Financial Instruments          
|Foreign Currency Translation and Transactions
|                                             
|                                             
|Loss Per Share                               
|                                             

20

---



|ProDigital Film Studios, Inc.              
|-------------------------------------------
|(A Development Stage Company)              
|Summary of Significant Accounting Policies 
|(Expressed in US Dollars)                  
|June 30, 2005 and 2004                     
|Comprehensive Income                       
|Rental Income                              
|Impairment or Disposal of Long-Lived Assets



21

---





|Comparative Figures | Certain of the comparative figures have been reclassified to conform with the current year's presentation.
|------------------- | ----------------------------------------------------------------------------------------------------------



22





|ProDigital Film Studios, Inc.             
|------------------------------------------
|(A Development Stage Company)             
|Summary of Significant Accounting Policies
|(Expressed in US Dollars)                 
|June 30, 2005 and 2004                    
|New Accounting Pronouncements             



23

---





|ProDigital Film Studios, Inc.    
|---------------------------------
|(A Development Stage Company)    
|Notes to the Financial Statements
|(Expressed in US Dollars)        
|June 30, 2005 and 2004           
|1.                               
|                                 
|                                 



24

---





| | 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 two sound stages 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

25



|ProDigital Film Studios, Inc.    
|---------------------------------
|(A Development Stage Company)    
|Notes to the Financial Statements
|(Expressed in US Dollars)        
|June 30, 2005 and 2004           
|2.                               
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 



26

---





|ProDigital Film Studios, Inc.    
|---------------------------------
|(A Development Stage Company)    
|Notes to the Financial Statements
|(Expressed in US Dollars)        
|June 30, 2005 and 2004           
|3.                               
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 



27

---





| |  |                      |   | 436,769 |   | 300,958
| |  | -------------------- | - | ------- | - | -------
| |  | Less current portion |   | 313,539 |   | 48,870 
| |  |                      | $ | 123,230 | $ | 252,088





28

---





|ProDigital Film Studios, Inc.    
|---------------------------------
|(A Development Stage Company)    
|Notes to the Financial Statements
|(Expressed in US Dollars)        
|June 30, 2005 and 2004           
|4.                               
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|5.                               
|                                 
|                                 
|                                 
|6.                               
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 



29





| |  |                      |   | 59,559 |   | 35,514
| |  | -------------------- | - | ------ | - | ------
| |  | Less current portion |   | 38,814 |   | 5,393 
| |  |                      | $ | 20,745 | $ | 30,121





30





| |    | ProDigital Film Studios, Inc.    
| | -- | ---------------------------------
| |    | (A Development Stage Company)    
| |    | Notes to the Financial Statements
| |    | (Expressed in US Dollars)        
| |    | June 30, 2005 and 2004           
| | 6. | Convertible Notes - Continued    
| |    |                                  
| |    |                                  
| |    |                                  
| |    |                                  
| |    |                                  
| |    |                                  
| |    |                                  
| |    | 7.                               
| |    |                                  
| |    |                                  



| |  |  | In May 2005, the Company entered into a Contract of Purchase and Sale Agreement to purchase a property in Okanagan Falls in exchange for approximately $1.2 million (CDN$1.5 million) in cash and one million restricted common shares of the Company.  The restricted shares were issued as a refundable deposit upon execution of the agreement.  The agreement will expire on August 31, 2005 and the Company is negotiating with the Vendor to extend the term of the agreement..  As these restricted shares can not be sold to a third party, they will be returned if the acquisition fell through and the Company has not yet purchased the property, these shares will not be considered issued for accounting purposes until the period when the Company purchases the property.
| |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 

31

|   |             | ProDigital Film Studios, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- | ----------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |             | (A Development Stage Company)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |             | Notes to the Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |             | (Expressed in US Dollars)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |             | June 30, 2005 and 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|8. | Commitments
|   |             | Commitments not disclosed elsewhere in the financial statements are as follows:
On October 5, 2003, the Company entered into an agreement with a company controlled by the Company's president and a significant stockholder (the
"Optionor Company"), to lease a property, which consists of a building and a parking lot (Note 5(a)), for an annual lease payment of approximately $24,000 (CDN$29,400).  The lease expires on October 1, 2006 but the Company may continue to rent the premises on a month-to-month basis thereafter. The required minimum annual lease payments over the remaining term of the lease until October 1, 2006 are as follows:
|   |             | For the year ended June 30:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |             | 2006                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |             | 2007                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |             | The Company subleases a portion of the building to an independent third party for annual rent of approximately $28,000 (CDN$35,400) and the sublease expires in December 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |             | On June 24, 2005, the Company entered into a lease agreement with a film company to lease ProDigital's camera equipment to the film company for the sum of approximately $11,200 (Cdn $14,000) payable in equal month instalments of approximately $2,800 (Cdn$3,500) for the period from July 1, 2005 to October 31, 2005.  These camera equipment are included as studio equipment in the Company's Property and Equipment as described in Note 4.                                                                                                                                                                                                          
|   | 9.          | Related Party Transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |             | Related party transactions not disclosed elsewhere in these financial statements include:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |             | Rental expenses incurred with a stockholder                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |             | Consulting fees incurred with an officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |             | Transactions with related parties are recorded at the exchange amount, being the amount established and agreed to by the related parties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     



32

---





|ProDigital Film Studios, Inc.    
|---------------------------------
|(A Development Stage Company)    
|Notes to the Financial Statements
|(Expressed in US Dollars)        
|June 30, 2005 and 2004           
|10.                              
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 



33

---





|11. | Subsequent Event                                                                                                                                                                            
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | Subsequent to June 30, 2005, the Company received proceeds of $50,000 for a private placement of 50,000 shares of its common stock at $1.00 per share.  These shares have yet to be issued..



34

---





|ProDigital Film Studios, Inc.    
|---------------------------------
|(A Development Stage Company)    
|Notes to the Financial Statements
|(Expressed in US Dollars)        
|June 30, 2005 and 2004           
|12.                              
|                                 



35

---



ITEM 8.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON

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, 2005. 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, 2005.

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.



36

---



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 and Position                                               | Age | Date Elected or Appointed Director
|--------------------------------------------------------------- | --- | ----------------------------------
|Darone Davis (1)
Director , President & Chief Executive Officer | 41  | May 2, 2002                       
|Christopher Dieterich
Director                                  | 58  | September 20, 2002                
|Marco Warger
Director                                           | 36  | February 14, 2005                 
|Linda Holmes (2)
Corporate Secretary                            | 55  | 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 25 years, specializing in SEC filings and venture capital arrangements for the past six years.



Linda Holmes



Ms. Holmes, appointed Secretary to the Company effective September 10, 2004, 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



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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:
"IGC")) and as secretary to Global Precision Medical Inc., a public medical device technology company (NASD Pink Sheets:
"GBPM").



Marco Warger



Mr. Warger is the project supervisor for the construction of ProDigital's sound stages. He graduated from Southern Alberta Institute of Technologies in Calgary, Alberta, Canada, in 1992 as a journeyman plumber and gas fitter. He is president of Digital Yesteryear Conversions, a private company, as well as of Albatross Plumbing, Heating & Gas Fitting Ltd.  Mr. Warger has been in the construction industry for the past 18 years, 13 of those year in the Okanagan Valley, and has built a solid reputation of completing all projects on time with the highest standards of quality.



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 does not have an
"audit committee financial expert". The Board of Directors does not have an audit committee financial expert at this time due to the fact that the Company has only limited operations and no revenues. As such the entire Board of Directors is acting as an audit committee.

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:

|                |                                      | No. of forms not filed in a timely manner
|--------------- | ------------------------------------ | -----------------------------------------
|Name            | Director, Officer or 10% Shareholder | Form 3                                   
|Darone M. Davis | Director, President & Treasurer      | 1                                        
|Marco Warger    | Director                             | 1                                        
|David Huck      | 10%+  shareholder                    | 1                                        



Audit Committee Financial Expert



The entire Board of Directors of Prodigital Film Studios, Inc.
serves as the Company's Audit Committee.  As of June 30, 2005, our Board of Directors has not desi gnated an
audit committee financial expert
 as that term is defined in Item 401(e)(2) of Regulation S-B.  Prodigit al is currently searching for independent financial expert to invite into the audit committee.

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, 2005, 2004 and 2003 to our Named Executive Officers and no officers or directors received annual compensation in excess of $100,000 during those periods.





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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, 2005.



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, 2005.



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.



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. ProDigital's Secretary, Linda Holmes, is the sole proprietor of Latitude 49 ̊. The consulting agreement ran from September 10, 2004 to October 10, 2004, and was 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. The consultancy agreement was not renewed and Ms. Holmes invoices ProDigital periodically for work performed. Under the terms of the consultancy agreement, Latitude 49 ̊ was paid a fee of $2,000 (Cdn$2,500) for the period September 10, 2004 through October 10, 2004. She was paid $1,280 (Cdn$1,600) from October 10, 2004 to November 30, 2004, and $2,400 (Cdn$3,000) for the period December 1, 2004 through June 10, 2005.



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 August 25, 2005, by (a) each 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 August 25, 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, WA  99203                        | Director,
President & Treasurer | 12,000,000(1)                             | 56.04%          
|Christopher Dieterich
Suite 800
11300 W. Olympic Blvd.
Los Angeles, CA  90064 | Director                        | 0                                         | 00.00%          
|Marco Warger
2628 Forsyth Drive
Penticton  BC  V2A 8Y9
Canada                 | Director                        | 114,000                                   | 00.53%          



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|Name and Address of Beneficial Owner                                   | Designation or
Positions Held                                 | Amount and            Nature of Beneficial Ownership | Percent of Class
|---------------------------------------------------------------------- | ------------------------------------------------------------- | ---------------------------------------------------- | ----------------
|Linda Holmes
P.O. Box 1609
12406 Wright Avenue
Summerland, BC  V0H 1Z0 | Secretary                                                     | 0                                                    | 00.00%          
|Summer Holdings, LLC
1623 E. Chicago Street
Chandler, AZ 85225         | 5%+ Shareholder                                               | 3,280,000                                            | 14.93%          
|Spectrum Management LDC
1623 E. Chicago Street
Chandler, AZ 85225      | 5%+ Shareholder                                               | 2,400,000                                            | 11.21%          
|                                                                       | Directors and executive officers of ProDigital as a group (1) | 12,114,000                                           | 56.57%          

(1)

Of this total, Mr. Davis owns 6,000,000 shares of Common Stock in ProDigital and Orchard Breezes Property Development Inc., a private company for which ProDigital's President, Darone Davis, is a director, officer and the controlling shareholder owns 6,000,000 shares of Common Stock of ProDigital.



The above ownership percentages are based on 21,413,600 shares of our issued and outstanding Common Stock as of August 25, 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.



Equity Compensation Plan Information



None.





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.



Related Party Transactions



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 September 11, 2004.  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



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lot to an independent third party for a term of 41 months for approximately $2,200 per month.  Our lease with Orchard Breezes expires October 1, 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: |          | 
|--------------------------- | -------- | 
|2006                        | $
24,000 | 
|2007                        | 6,000    | 
|                            | $
30,000 | 



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 may be renewed for one year from the date of the original due date and annually thereafter upon mutual agreement between both parties.



July 10, 2004, the Company issued a convertible note to Darone Davis, Trustee for DM Davis Family Trust, for proceeds of $8,120 (Cdn $10,000). The unsecured note bears interest at 10% per annum and comes due on July 10, 2006.  The note may be renewed for one year from the date of the original due date and annually thereafter upon mutual agreement between both parties. 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 $0.82 (Cdn $1)  per share for each $0.82 (Cdn $1) 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 may be renewed for one year from the date of the original due date and annually thereafter upon mutual agreement between both parties. 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 $1 per share for each $1 of liability commencing one year after the closing date of the note payable agreement.



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 may be renewed for one year from the date of the original due date and annually thereafter upon mutual agreement between both parties. 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 $1 per share for each $1 of liability commencing one year after the closing date of the note payable agreement.



On March 24, 2005, the Company entered into a convertible loan agreement with the D.M. Davis Family Trust, for which our President acts as Trustee, for approximately $5,750 (CDN $7,000).  The unsecured note payable bears interest at 10% per annum and is due March 24, 2007. Each note and accrued interest are convertible into the Company's common stock at a price of one share for approximately $0.82 (CDN $1.00) of liability commencing one year after the closing date of each note payable agreement.

We entered into a contract on May 25, 2005, to purchase a commercially zoned parcel of land consisting of approximately 103 acres for approximately $1,230,000 (CDN$1,500,000) and the issuance of 1,000,000 restricted common shares of the Company.



On May 29, 2005, the contract entered into June 29, 2004, by our President, Darone Davis, for the purchase of the 102-acre property we had targeted as an excellent
"Class A" production sound stage site for approximately $425,000 (Cdn$535,000), expired after extensions had run out and the deposit of approximately $8,000 (CDN$10,000) was refunded to the Company.  We intend to purchase the property as soon as sufficient financing can be obtained and rezoning of the property to commercial status is completed.





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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         | ByLaws, 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 June 4, 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 were filed in the Company's Form 10-QSB quarterly report for the period ended September 30, 2004                     
|10.9        | Finders' Fee Agreement between the Company and Nick Mancuso dated March 4, 2005.                                                             
|10.10       | Contract of Purchase and Sale between the Company and 586519 B.C. Ltd. dated May 25, 2005                                                    
|Exhibit No. | The following documents are filed herewith in this Annual Report on Form 10-KSB for the fiscal year ended June 30, 2005                      
|10.11       | Lease Agreement between the Company and Moore Films, Inc. dated June 24, 2005                                                                
|10.12       | Subscription Agreement for common shares of Prodigital from J. Trevino Jr. dated June 28, 2005                                               

(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, 2005.



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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
|------------------- | --------------------------------------------- | -------------------------------------------------
|                    | C$                                            | C$                                               
|2005                | Note 1                                        | 16,900                                           
|2004                | 18,700                                        | 11,621                                           

Note 1

June 30, 2005 audit fees are expected to be approximately $17,000.

Audit-Related Fees

None.



Tax Fees

|Year ended June 30, | Fees for preparation of
tax returns | 
|------------------- | ----------------------------------- | 
|                    | C$                                  | 
|2005                | Note 1                              | 
|2004                | 3,500                               | 

Note 1

The fees for preparation of the Company's corporate tax returns for the year ended June 30, 2005 are expected to be approximately $3,500



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 2005.



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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:

October 13, 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

October 13, 2005

Title:

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





By:

/s/ Marco Warger

October 13, 2005

Title:

Director











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